Allied Irish Banks Plc v Higgins and Others

 
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[2015] IECA 23

THE COURT OF APPEAL

Finlay Geoghegan J.

Peart J.

Mahon J.

Appeal No. 2014/196

[Article 64 Transfer]

Between
Allied Irish Banks plc
Plaintiff
and
Brian Higgins, Seamus Kavanagh, James Mansfield and Glen O'Callaghan
Defendants

Banking and finance – Facilities – Non est factum – Plaintiff seeking repayment of facilities – Whether defendant has an arguable defence of non est factum

Facts: The defendants, Mr Higgins, Mr Kavanagh, Mr Mansfield and Mr O”Callaghan, purchased a property of 4.5 acres in Duleek, Co. Meath. Subsequently they purchased an adjoining site of 1.1 acres. In 2004, the defendants accepted a facility of €673,000 offered by the plaintiff, Allied Irish Banks plc (AIB). In 2006, AIB offered to the defendants a further facility of €3,461,000 to fund developments on the site in Duleek. The third facility was an additional €500,000 in 2007 for additional costs not accounted for in the previous loan. The fourth facility was offered in 2008 for an additional sum of €1,300,000. The draw down of the additional €1,300,000 was to be against €1,500,000 net irrecoverable contracts for the sale of units at Duleek. It was to be payable on demand and at the pleasure of AIB subject to capital and interest moratorium until the 31st March, 2008, with clearance on full at that stage from 100% net site fines per completed unit at the site in Duleek. The facilities offered in 2009 were €772,187 and €5,331,229. Both facilities were stated to be repayable on demand and at the pleasure of the Bank subject to clearance in full by 28/02/2009 by way of refinance or otherwise. Whilst Mr Mansfield accepted that the signature on the second facility of €3,461,000 in 2006 is his, he stated that he signed a plain back sheet and deposed that at that stage nobody explained to him that it was a letter of sanction to borrow €3,461,000. He disputed signing the third and fourth letters of sanction. The defence put forward by Mr Mansfield was that of non est factum in relation to the alleged agreement in writing signed by Mr Mansfield on 20th January, 2009. In 2010, the trial judge found that there was no such arguable defence on the evidence before the High Court as he could not be said to have taken all reasonable precautions to find out what the document was. The High Court granted summary judgment against Mr Mansfield in the sum of €6,324,959.81. Mr Mansfield appealed to the Court of Appeal against that determination, submitting that the trial judge erred in the circumstances of the case in requiring evidence upon which it could be determined that it was arguable that Mr Mansfield could meet the third indent of the requirement of a defence of non est factum as set out in Saunders v Anglia Building Society [1971] AC 1004. Mr Mansfield submitted that as there was before the court evidence to satisfy the first two limbs of the test that it was incumbent on the court to remit the matter for plenary hearing in order that Mr Mansfield”s ability to meet the third indent be considered and determined at a full plenary hearing. AIB submitted that the trial judge was correct in his approach of requiring that Mr. Mansfield adduce evidence that he could separately satisfy the requirement that he took all reasonable precautions in the circumstances to find out what was the document he signed in order to establish an arguable defence of non est factum.

Held by Finlay Geoghegan, Peart and Mahon JJ that the trial judge was correct in his approach to the essential requirements of an arguable defence of non est factum. The Court considered that the law in relation to the defence of non est factum requires all persons to demonstrate, as an essential proof, that they took reasonable precautions in all the relevant circumstances to find out what was the document they signed; this is a separate and distinct obligation from adducing evidence to satisfy the first two limbs of the defence. The Court held that on the facts it was not in dispute that Mr Mansfield knew that he was signing an acceptance of a facility letter or that he was an, albeit in practical terms illiterate, businessman with commercial experience and of at least average intelligence where non-verbal reasoning is concerned. The Court held that he had not adduced any evidence which it could be said if accepted by a court could arguably constitute the taking of reasonable precautions.

Finlay Geoghegan, Peart and Mahon JJ held that they would dismiss the appeal.

Appeal dismissed.

Judgment of the Court ( Finlay Geoghegan , Peart and Mahon JJ .) delivered on the 19th day of February 2015,
1

This judgment is given on an appeal brought by the third named defendant, James Mansfield (‘Mr. Mansfield’) against an order of the High Court (Kelly J.) made on the 3rd June, 2010 and perfected on the 17th June, 2010, granting summary judgment against Mr. Mansfield in the sum of €6,324,959.81.

2

A notice of appeal to the Supreme Court (204/2010) against the judgment of the High Court was filed on 25th June, 2010 on behalf of Mr. Mansfield. Prior to the establishment of the Court of Appeal on the 28th October, 2014, a hearing date had not been fixed. The appeal fell within the class of appeals transferred to the Court of Appeal pursuant to the Direction issued by the Chief Justice with the concurrence of the other judges of the Supreme Court pursuant to Article 64.3.1 of the Constitution on the 29th October, 2014. No objection was made by either party to the transfer of the appeal.

3

The Court reserved its judgment at the end of the hearing and now gives its decision. The Court is in agreement on the outcome of the appeal and the reasons therefore and hence has decided to deliver a single judgment of the Court.

4

In the High Court, at the date of issue of the summary summons, the plaintiff's claim against all four defendants was for a sum of €6,288, 437.13 for principal and interest allegedly due by the defendants jointly and severally in accordance with an agreement in writing evidenced in a letter of sanction dated the 19th January, 2009 and accepted by each of the defendants signing same on the 20th January, 2009.

5

The proceedings were entered into the Commercial List and upon the summary judgment application all four defendants sought to put forward an arguable defence upon the basis that the borrowings in question were made from the plaintiff (‘AIB’) as ‘consumers’ within the meaning of the Consumer Credit Act 1995. The trial judge found that there was no arguable defence upon such a basis and no appeal has been pursued by Mr. Mansfield against that determination. The remaining three defendants did not appeal the order granting judgment against each of them.

6

Mr. Mansfield advanced two further defences. Firstly, in relation to the claim made by AIB that the facilities in question were advanced to the defendants as members of a partnership, namely the ‘Duleek Partnership’ which they had formed for the purpose of acquiring certain lands in Duleek, Co. Meath and developing those lands for onward sale. Mr. Mansfield contended that he was not involved in the partnership. Rather that he was only involved in the purchase of the lands and only liable for one sixth of an initial borrowing of €673,000 for the purchase of a 1.1 acre site upon the basis that he was a one sixth co-owner of the said lands, but had nothing to do with subsequent borrowings in respect of the development of all the lands. The trial judge found upon the evidence before him that there was no arguable defence upon such a basis. There is no appeal by Mr. Mansfield against the rejection of that defence.

7

The second defence put forward was that of non est factum in relation to the alleged agreement in writing signed by Mr. Mansfield on 20th January, 2009. The trial judge found that there was no such arguable defence on the evidence before the High Court. The appeal is against that determination. Prior to considering the issues on the appeal it is necessary to set out in summary the relevant facts and evidence before the High Court.

Facts and Evidence before the High Court
8

The facts and evidence before the High Court relevant to the appeal were set out in two affidavits sworn on behalf of the plaintiff by Mr. Frank Dennehy and two affidavits of Mr. Mansfield sworn on the 29th March, 2010 and 26th April, 2010 respectively and the exhibits to those affidavits. There were also affidavits from the other defendants which are not germane to the appeal. The agreement comprised in the letter of sanction dated the 19th January, 2009, allegedly accepted by the defendants on the 20th January, 2009, upon which AIB sought judgment against all four defendants was the fifth letter of sanction relevant to the two facilities referred to therein.

9

The background to the facilities granted by AIB to the four defendants was the purchase by the four defendants of a property of 4.5 acres in Duleek, Co. Meath. That was purchased with funds of the four defendants in differing amounts. Subsequently it was decided by the four defendants to purchase an adjoining site of 1.1 acres. On the 19th April, 2004, all four defendants accepted a facility of €673,000 offered by AIB in a letter of sanction dated the 3rd March, 2003. It is not in dispute that all four defendants signed and accepted the facility which was subsequently drawn down, security having been given by way of legal charge over each site.

10

By letter of sanction of the 15th August, 2006,...

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