Allied Irish Banks Plc v Donohoe

• Jurisdiction: Ireland
• Judge: Mr. Justice William M. McKechnie
• Judgment Date: 10 April 2019
• Neutral Citation: [2019] IESC 25
• Date: 10 April 2019
• Court: Supreme Court
• Docket Number: Court of Appeal Record Number 2014/1174 Supreme Court Record Number 92/14

[2019] IESC 25

THE SUPREME COURT

McKechnie J.

McKechnie J.

MacMenamin J.

Charleton J.

Court of Appeal Record Number 2014/1174

Supreme Court Record Number 92/14

BETWEEN

ALLIED IRISH BANKS PLC

Plaintiffs/Respondent

-AND-

DANIEL DONOHOE & SYLVIA DONOHOE

Defendants/Appellants

Banking and finance – Debt – Summary summons – Appellants seeking to appeal against High Court order – Whether an arguable defence to the claim by the respondent could be established

Facts: The plaintiff/respondent, Allied Irish Banks plc, and the defendants/appellants, Mr and Mrs Donohoe, had a business relationship between them in that from time to time the Bank would advance monies to Mr and Mrs Donohoe, subject to the certain terms and conditions. It was the Bank’s case that as of 15th March, 2012 the defendants were indebted to it in the principal sum of €564,532.15. Following the issuance of a summary summons and the taking of the necessary procedural steps appropriate to that process, the High Court by order dated 10th day of February, 2014, gave judgment in favour of the plaintiffs in the amount of €563,242.56 with costs following the event, this following a partial repayment in the sum of €1,289.59 by the defendants which saw the principal amount reduced. The defendants’ appealed to the Supreme Court from that order. The grounds of appeal were that the trial judge: a) failed to take account of the fact that the appellants had been incorrectly named throughout proceedings; b) erred in law and in fact by failing to take account that the appellants had not been served with a letter of demand by the respondent; c) erred in law by failing to take account that the respondent was in breach of the Bankers Books Evidence Act in endeavouring to prove the alleged debt; d) erred in law in failing to require the respondent to open the affidavits grounding its application, thus preventing the appellants from responding to same; and e) erred in failing to consider the failure by the respondent in their summary summons and grounding affidavits in not referring to the fact that the loan was a secured loan, furnished on foot of a loan offer and secured by way of deed of mortgage.

Held by McKechnie J that an arguable defence to the claim by the Bank could not be established.

McKechnie J held that the appeal would be dismissed.

Appeal dismissed.

JUDGMENT of Mr. Justice William M. McKechnie delivered on the 10th day of April, 2019

Introduction

1 Allied Irish Banks Group plc., being the original applicant and now the respondent in this appeal, is a public limited company licensed to carry on the business of banking, inter alia, in this jurisdiction with a registered address at Ballsbridge, Dublin 4. The defendants are husband and wife and reside at Bunclody, County Wexford. On the 10th day of February, 2014, the Bank obtained judgment by way of summary process against the defendants, both jointly and severally. The present appeal before this Court is what is generally known as ‘a legacy appeal’, meaning that it predated the full effect of the 33rd Amendment to the Constitution, and thus the operational regime of the Court of Appeal. Such however is a side note. The circumstances giving rise to this appeal can briefly be described as follows.

2 For several years prior to 2012, the plaintiffs and the defendants had a business relationship between them in that from time to time the Bank would advance monies to Mr. and Mrs. Donohoe, subject to the certain terms and conditions. It is the Bank's case that as of 15th March, 2012 the defendants were indebted to it in the principal sum of €564,532.15. Following the issuance of a Summary Summons and the taking of the necessary procedural steps appropriate to that process, the High Court by order dated 10th day of February, 2014, gave judgment in favour of the plaintiffs in the amount of €563,242.56 with costs following the event, this following a partial repayment in the sum of €1,289.59 by the defendants which saw the principal amount reduced. It is the defendants” appeal from that order which is the subject matter of this decision.

The Accounts:

3 By way of an offer document, dated the 7th December, 2007, the plaintiffs, Allied Irish Banks (‘AIB’ or ‘the Bank’) offered the defendants a loan in the amount of €515,000 with an additional overdraft facility of €10,000. The purpose was to enable them to purchase lands at Ballyboy, Ferns, Co. Wexford (Folio 46611F County Wexford). This offer was accepted in writing by both defendants, on the same day. On the 17th December, 2007 the full loan was drawn down in that the Bank sent a draft in the larger sum of €520,551.05 to the appellants” solicitor. The sum of €515,000 was on foot of account number 933414-21636-126 (‘Account -126’) with the balance of €5,551.05 taken from the defendants” existing account being account number 933414-2163-043 (‘Account-043’). The Account -126 was restructured as follows.

4 On 4th February, 2009, the Bank offered the defendants a renewal of the existing facilities in the sum of €516,500, which each of them accepted in written form on the 10th February, 2009. As such, in that month they borrowed the sum of €513,961.36 on foot of account number 933414-2163-209 (‘Account -209’) and used this money to close the original account, Account -126, in order to restructure their indebtedness. By reason of this arrangement the defendants in August, 2010, owed the Bank the sum of €507,843.22. Once again, this account, Account -209 was restructured in the manner next described, having remained open from February 2009 until its closure in August 2010.

5 By Credit Agreement dated 23rd August, 2010, the plaintiffs offered the defendants another loan to restructure their existing debt yet again, this time in the amount of €509,500. Thus on 23rd August, 2010, the appellants drew down €507,843.22 from an account with the number 933414-2136-472 (‘Account -472’) and used the sum to close Account -209. The former, Account -472 is one of the two accounts which make up the subject matter of the claim.

6 The second account subject to the claim has the account number 933414-21636-399 (‘Account -399’). This account was opened in a similar fashion to those mentioned above, and for a similar purpose, namely to restructure existing debt. It was created by Credit Agreement dated 24th August, 2010, upon which a loan was advanced to Mr. and Mrs. Donohoe in the amount of €23,000, which the plaintiffs accepted, again in writing on the same day. This money was credited to an earlier account, Account -043. Those matters stood until the bank sought payment by demand letters, followed by the institution of these proceedings.

High Court Proceedings

7 As above noted, the plaintiffs issued a summary summons on 9th July, 2012, claiming two amounts: the first on foot of Account -399, the sum of €7,989.23 and the second on foot of Account -472, the sum of €556,542.92 making a total claim of €564,532.15. Further, the Bank also claimed continuing interest on the principal sums at current bank rates, varying from time to time, until payment or judgment. This summons was served on both defendants shortly after the date of issue: on 31st July 2010 an appearance was entered by Mr. Cathal O'Donohoe, solicitor on behalf of both defendants.

8 Following this, on 20th September, 2012 a Notice of Motion was issued, in which liberty to enter final judgment in the sum claimed was sought. The motion was grounded upon the affidavit Mr. Tom O'Reilly, an employee of AIB which was sworn on 6th September, 2012. In this affidavit, Mr. O'Reilly makes no reference to the restructuring of different accounts which took place: he merely states the amount allegedly owed by the defendants on 15th March, 2012 as being €564,532.15 in total, and that by letters dated 19th July, 2012 the plaintiffs had, through its solicitors demanded repayment of this debt. The deponent goes on to state that the monies had not been repaid and that in his view the defendants had no bone fide defence either at law or on the merits to the claim made: as a result the entry of an appearance had been simply a delaying tactic. A supplemental affidavit sworn by Patrick MacNamara, another employee of AIB, on 11th November, 2013 stated that since the swearing of Mr. Tom O'Reilly's grounding affidavit the defendants had repaid €1,289.59 of the monies due but had failed to repay the remaining €563,242.56.

9 The matter eventually came on for hearing before Ryan J., as he then was, in the High Court on 10th February, 2014 having been transferred to that list by previous order of the Master of the High Court. The learned judge, having had regard to all of the affidavit evidence granted judgment against the defendants, plus the costs of the proceedings. This order, which had a six month stay on its execution, was perfected on 11th February, 2014.

10 Ryan J. wrote an accompanying ‘appeal note’ in this matter which serves the useful purpose of giving a more complete picture of the hearing and the manner in which the proceedings were engaged with by the defendants. The judge states that he attempted to explain the Court's function in what he described as a ‘straightforward case’: the Bank had lent the appellants money which they had failed to pay back, leaving the court with two options, the first being available only if the appellants had or may have had a defence whereby the matter would then be listed for full hearing or the second: if it was clear they did not have any defence, judgment would be entered against them, which of course is what happened

11 The first appellant's defence was per his affidavit dated 13th November, 2013 and was simply that the Bank had never established jurisdiction in the court in respect of this case: this because all correspondence from the Bank and all court documents including the initiating summary summons were defective in that...