Allied Irish Banks Plc v McGowan

• Jurisdiction: Ireland
• Judge: Mr. Justice Richard Humphreys
• Judgment Date: 27 February 2020
• Neutral Citation: [2020] IEHC 148
• Docket Number: [2018 No. 238 S]
• Court: High Court
• Date: 27 February 2020

BETWEEN

ALLIED IRISH BANKS PLC

PLAINTIFF

AND

MARTIN MCGOWAN

AND

PATRICIA MCGOWAN

DEFENDANTS

[2020] IEHC 148

Richard Humphreys J.

[2018 No. 238 S]

THE HIGH COURT

Summary judgment – Plenary hearing – Adjournment – Plaintiff seeking summary judgment – Whether the plaintiff sufficiently particularised the sum claimed

Facts: The defendants, Mr and Ms McGowan, said that they acquired Scholars Townhouse Hotel in Drogheda in or about 2005. The hotel was bought with a loan from Bank of Scotland (Ireland), but subsequently the business needed an overdraft facility, so the defendants approached the plaintiff, Allied Irish Banks PLC (AIB). The defendants said that between 2005 and 2010, Bank of Scotland (Ireland) provided AIB with a letter of credit, but was not prepared to renew that letter after 2010. The plaintiff said that each of the defendants entered into an overdraft facility on 1st June, 2010 for €100,000 with an interest rate of 7.95%. Both of the letters concerned were exhibited and both stated that the overdraft was repayable on demand. According to the defendants, they then entered into a debt settlement arrangement with Bank of Scotland (Ireland). They said that had AIB called in the letter of credit, then the overdraft would have been rolled up with the other debt to Bank of Scotland (Ireland) and settled at that time, albeit that the exact time was unspecified. The plaintiff said that it was not clear to it that there would not be an extension of the Bank of Scotland (Ireland) letter of credit. The defendants said that the overdraft facility expired on 16th February, 2012 and had exhibited a letter from AIB supporting that. The plaintiff had exhibited a letter dated 29th May, 2013 stating that the overdraft would expire on 5th June, 2013. The plaintiff claimed the defendants continued to draw down on the overdraft facility until 2013. According to the plaintiff, the last payment made by the defendants in part-satisfaction of the debt was on 26th February, 2015. That was said to be in the amount of €1,000 as appeared on p. 827 of an 832-page exhibit of statements. The natality of that particular information was an exhibit to a misnamed “supplemenatal” affidavit of Mr Mulholland, which exhibit the plaintiffs admitted they did not serve on the defendants, through human error, prior to the hearing of this motion. The plaintiff contended that a default in payment occurred and it demanded the sum due on 6th February, 2018; and again letters to each defendant were exhibited. On 27th February, 2018 a summary summons was issued seeking judgment in the sum of €122,202. On 31st July, 2018, the plaintiff issued a notice of motion for summary judgment. The defendants, Mr and Ms McGowan, submitted that the plaintiff had not particularised the debt sufficiently in terms of principal versus interest in line with Bank of Ireland Mortgage Bank v O'Malley [2019] IESC 84. The plaintiff submitted that if the High Court remitted the matter to plenary hearing on the basis of O’Malley, Humphreys J should give leave to defend only on that ground.

Held by Humphreys J that the plaintiff had failed to comply with the onus on it to sufficiently particularise the sum claimed in accordance with O’Malley, because the summary summons merely offered a global sum without any adequate or proper breakdown. He held that as the plaintiff had not overcome the necessary onus to duly particularise the matter in evidence either, the case should be adjourned to plenary hearing. He noted that three elements of a possible defence had been positively identified: (i) failure to call in the letter of credit; (ii) the statute of limitations; and (iii) the question of penal interest. He noted that the penal interest issue was stated in the bank’s own correspondence and the statute point arose from the material exhibited. He held that where an application for summary judgment fails on an O’Malley basis, the default order must be general leave to defend.

Humphreys J held that the order would be: (i) to dismiss the plaintiff’s motion; (ii) to give the defendants leave to defend on any grounds that they may be advised; and (iii) to adjourn the matter to plenary hearing.

Motion dismissed.

JUDGMENT of Mr. Justice Richard Humphreys delivered on the 27th day of February, 2020

1 The defendants, who are husband and wife, say that they acquired Scholars Townhouse Hotel in Drogheda in or about 2005 and have operated that property since then. The hotel was bought with a loan from Bank of Scotland (Ireland), but subsequently the business needed an overdraft facility, so the defendants approached AIB. The date that happened is not altogether clear, but seems to have been in 2005.

2 The defendants say that between 2005 and 2010, Bank of Scotland (Ireland) provided AIB with a letter of credit, but was not prepared to renew that letter after 2010. The business was struggling at that time. The plaintiff says that each of the defendants entered into an overdraft facility on 1st June, 2010 for €100,000 with an interest rate of 7.95%. Both of the letters concerned were exhibited and both state that the overdraft is repayable on demand. According to the defendants, they then entered into a debt settlement arrangement with Bank of Scotland (Ireland). They say that had AIB called in the letter of credit, then the overdraft would have been rolled up with the other debt to Bank of Scotland (Ireland) and settled at that time, albeit that the exact time was unspecified.

3 The plaintiff says that it was not clear to it that there would not be an extension of the Bank of Scotland (Ireland) letter of credit. The defendants say that the overdraft facility expired on 16th February, 2012 and have exhibited a letter from AIB supporting that. The plaintiff has exhibited a letter dated 29th May, 2013 stating that the overdraft would expire on 5th June, 2013, but it is hard to know what that means in circumstances where there is previous correspondence indicating that the overdraft facility had already expired. The plaintiff claims the defendants continued to draw down on the overdraft facility until 2013.

4 According to the plaintiff, the last payment made by the defendants in part-satisfaction of the debt was on 26th February, 2015. That is said to be in the amount of €1,000 as appears on p. 827 of an 832-page exhibit of statements. The natality of that particular information is an exhibit to a misnamed “ supplemenatal” affidavit of Mr. Gary Mulholland, which exhibit the plaintiffs admit they did not serve on the defendants, through human error, prior to the hearing of this motion.

5 The plaintiff contends that a default in payment occurred and it demanded the sum due on 6th February, 2018; and again letters to each defendant are exhibited. On 27th February, 2018 a summary summons was issued seeking judgment in the...