Allied Irish Banks Plc v Pollock

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 21 October 2016
• Neutral Citation: [2016] IEHC 581
• Court: High Court
• Docket Number: [2015 No. 407 S]
• Date: 21 October 2016

BETWEEN

ALLIED IRISH BANKS PLC

PLAINTIFF

AND

MARY POLLOCK, WILLIAM ROCHE

AND

JUSTIN SULLIVAN

DEFENDANTS

[2016] IEHC 581

Baker J.

[2015 No. 407 S]

THE HIGH COURT

Banking & Finance – Repayment of loan facilities – Estate of the deceased – Cause of action – Date of redemption – The Civil Liability Act 1961 – Barred by limitation

Facts: The plaintiff sought judgement against the defendant on foot of two loan facilities. The plaintiff brought the claim against the second named defendant being the personal representative of the estate of the deceased husband of the first named defendant. The plaintiff argued that the cause of action arose only when a valid demand was made by the plaintiff against the estate of the deceased. The second named defendant argued that the terms of the contract of loan stated that the loans were to be repaid on or before the date of redemption. The key issues in the present case were whether the action against the estate of the deceased was statute-barred and whether the cause of action was subsisting at the date of the death of the deceased.

Ms. Justice Baker held that the action against the second named defendant was statute-barred. The Court rebutted the claim of the plaintiff that the loan facility was repayable only on demand. The Court found that the terms of the repayment clearly meant that the contract was for a fixed term and that the intention of the parties was that the monies would be repaid on or before the date of redemption. The Court held that under s. 9(2)(b) of the Act of 1961, as amended, the action against the deceased was required to be brought within two years of his death. The Court found that the cause of action under s. 8 of the Act of 1961 subsisted against the deceased and survived against the deceased's estate, but only for a period of two years provided by s.9 of the 1961 Act.

JUDGMENT of Ms. Justice Baker delivered on the 21st day of October, 2016.

1 Allied Irish Banks plc (the ‘Bank’) seeks judgment against the defendants arising from two loan facilities both of which were made in 2009 in the respective sums of €519,803.01 (‘facility one’) and €2,236,953.60 (‘facility two’). Both loans were accepted by the borrowers in the Bank's written form of acceptance and signed on 20th July, 2009 and the monies drawn down on 31st August, 2009. The loans were secured over certain real property in the title of the first defendant and her now deceased husband, Tom Pollock. This judgement is given in the claim by the plaintiff against the second defendant only as the personal representative in the estate of Mr. Pollock. The claim against the third defendant has been discontinued, and judgment has already been granted against the first defendant, Mrs. Pollock.

2 When the matter came on for hearing before me on a motion for summary judgment, counsel agreed that the appropriate way to deal with the action against the estate of the deceased was to deal with the preliminary point of law arising, whether the action against the estate was statute barred. In those circumstances the matter was adjourned to enable the preparation of legal submissions and the matter was reconvened for further argument.

3 It is well established that the court has a jurisdiction to determine an issue of law on the hearing of a summary motion and Clarke J. in McGrath v. O'Driscoll & Ors. [2006] IEHC 195, [2007] 1 I.L.R.M. 203, made it clear that the court could determine such a question provided:

‘…the issues which arise are relatively straightforward and where there is no real risk of an injustice being done by determining those questions within the somewhat limited framework of a motion for summary judgment.’

4 The correct approach appears to me to be explained by the Supreme Court in Danske Bank a/s trading as National Irish Bank v. Durkan New Homes & Ors. [2010] IESC 22, that the court may, but is not obliged to, determine a matter of law on a motion for summary judgment.

5 The matter which arises in this case is not one which engages issues of disputed facts. I consider that there is no risk of injustice being done to either party should I determine the question of the accrual of the cause of action on the motion for summary judgment, because both counsel have been given an opportunity to furnish written submissions, there is no disputed fact, and the question is one that can be determined on a consideration of the legal principles and arguments, and on a true construction of the written contract documents.

Facts

6 Thomas Pollock died on 7th November, 2010 and a grant of probate issued in his estate to one of his executors, William Roche, on 22nd January, 2015, the other executor, the third defendant, having renounced his right to probate.

7 The estate of the deceased argues that by virtue of s. 9 of the Civil Liability Act 1961 (the ‘Act of 1961’) the claim against the estate is statute barred, the proceedings not having been commenced within two years of the death of the deceased on 7th November, 2010. Proceedings were commenced on 3rd March, 2015 and the question of whether the action is time barred is the sole matter that I deal with in this judgment.

8 Section 9 of the Act of 1961 applies to a cause of action which subsisted at the date of the death and not a cause of action which arose after death. Whether the cause did subsist at the date of death of Mr. Pollock is the matter to considered.

9 No demand for payment was made at any time prior to 7th November, 2010, and the Bank does not present any argument that any valid letter of demand was served until 4th February, 2015, after a grant of probate had issued in the estate of the deceased. If the cause of action can be said to accrue only when demand was made, then the action is not one to which the provision of s. 9(2) apply, the six year time limitation provided by the Statute of Limitations 1957 is the relevant limitation, and the proceedings are not statute barred.

10 The case then comes down to a determination of two questions:

(a) The date of the accrual of the plaintiff's cause of action against the second defendant, and whether the cause of action was subsisting at the date of the death of the deceased; and

(b) Whether the proceedings are now capable of being maintained by the Bank against the second defendant having regard to ss. 8 and 9(2)(b) of the Act of 1961, as amended.

The loan sanctions

11 The claim in debt arises from two facilities contained in a letter to the first defendant and the deceased, and it is accepted that, although the language used in the operative parts of the letter is somewhat different, a proper construction should yield the result that each of them was repayable in the same manner and at the same time.

12 Facility one contained a clause dealing with the obligation of the borrower to repay the monies as follows:

‘Repayment: On demand and at the pleasure of the Bank, subject to clearance in full by way of refinance or otherwise by 30/09/2009. Monthly reductions of €5,000 to apply in the interim.’

13 The equivalent clause in facility two reads as follows:

‘Repayment: On demand and at the pleasure of the Bank, subject to capital and interest moratorium until 30/09/2009. Facility to clear in full by way of refinance or otherwise at that stage. Interest to be rolled up within the facility in the interim.’

14 In each case, the purpose of the loan was described as ‘continuation of existing loan…’, and those existing facilities were identified by reference to the amounts borrowed (or outstanding) in respect of each. The second facility was described as being for the purposes of the continuation of an existing loan facility originally sanctioned to assist with the purchase of investment properties, and to repay the capitalised interest for seven sequential months between December, 2008 and June, 2009.

15 The Bank's general terms and conditions contain at clause 3 the following sub-clauses:

‘3.1.1 Loan account facilities are repayable on demand. However, in normal circumstances, the Bank expects that the loan will be available as stated in the letter of sanction.

3.1.2 Without prejudice to the Bank's right to demand repayment at any time, the happening of any of the events set out in clause 4.2 may lead to the Bank making demand for payment, with or without notice to the Borrower.’

16 General condition 4.2 identifies an ‘event of default’ as follows:

‘4.2 A term loan though expressed to be repayable over or within a specified period may be terminated by the Bank and the Bank may demand early repayment at any time with or without notice to the Borrower upon the occurrence of any of the following events:’

17 The relevant events of default were a failure on the part of the borrower to make repayment on the date due, or the death of the borrower or any guarantor of the borrower.

The arguments

18 The plaintiff argues that the cause of action against the second defendant accrued only when a valid demand was made by the plaintiff against the estate of the deceased. The evidence is that a letter of demand was served on 4th February, 2015 following the extraction of a grant in the estate of the deceased. The Bank does not rely on an earlier letter of demand sent on 13th May, 2013.

19 The net question to be decided is whether the monies became due and owing to the Bank only following demand, or whether they were due on the passing of the date of redemption, being 30th September, 2009.

20 It is argued by the plaintiff that it cannot have been the intention of the parties that the loan agreed to be advanced by facility one was payable in full and without demand some six or seven weeks after the loan was accepted. It is argued that regard be had to the fact that provision was made for monthly repayments, and the plural was used, and the letter of offer expressly provided...