Allied Irish Banks Plc v Joe O'Callaghan

• Jurisdiction: Ireland
• Judge: Mr. Justice Garrett Simons
• Judgment Date: 18 January 2021
• Neutral Citation: [2021] IEHC 14
• Docket Number: 2016 No. 1703 S
• Court: High Court
• Date: 18 January 2021

Between

Allied Irish Banks Plc

Plaintiff

and

Joe O'Callaghan

Anthony Peyton

Paddy Lawlor

Brendan Neligan

Defendants

[2021] IEHC 14

2016 No. 1703 S

THE HIGH COURT

Summary judgment – Loan facility – Cross-examination – Plaintiff seeking leave to dispense with cross-examination – Whether the plaintiff should be required to make its deponents available for cross-examination pursuant to Order 37, rule 2 of the Rules of the Superior Courts

Facts: The plaintiff, Allied Irish Banks plc (the bank), applied to the High Court seeking to recover what it alleged was the outstanding balance owed to it pursuant to a loan facility granted to the defendants, Mr O'Callaghan, Mr Peyton, Mr Lawlor and Mr Neligan (the borrowers). The bank chose to pursue the matter by way of summary summons, and issued a motion seeking liberty to enter final judgment. The court was concerned with a procedural question, namely whether the bank should be required to make its deponents available for cross-examination pursuant to Order 37, rule 2 of the Rules of the Superior Courts. Counsel on behalf of the bank submitted that cross-examination would only be appropriate where there was a conflict of fact on issues which were relevant to the determination of the application to enter judgment. It was further submitted that no “prejudice” would be suffered by Mr Neligan were the application to enter judgment to be considered on the basis of affidavit evidence alone, particularly in light of the fact that Mr Neligan had averred to all matters in dispute between the parties. The court was said to be well positioned to consider all issues in dispute between the parties based on the comprehensive nature of the affidavits. Counsel on behalf of Mr Neligan submitted that cross-examination was essential to determine the true position, so as to assist the court in determining the issues between the parties.

Held by Simons J that the bank had chosen to join issue with one of the borrowers (Mr Neligan) on matters which were directly relevant to the grounds upon which he sought leave to defend the proceedings. Simons J found that the bank’s replying affidavit contained a number of sweeping statements which go well beyond the mere citation of, or comment upon, the content of documents which had been exhibited in the proceedings. Simons J held that Mr Neligan was entitled to cross-examine the deponent on his sweeping statements. Simons J held that cross-examination would also be allowed in respect of the first deponent because of the link between the two affidavits in terms of exhibited documentation.

Simons J held that the bank’s application for special leave to be allowed to rely upon the two affidavits filed on its behalf without having to produce either deponent for cross-examination would be refused. Simons J held that Mr Neligan was entitled to his costs under Part 11 of the Legal Services Regulation Act 2015 and Order 99 on the basis that he had been “entirely successful” in resisting the bank’s motion. Simons J held that this costs order was subject to a stay on execution pending the determination of the proceedings (including any appeal).

Application refused.

JUDGMENT of Mr. Justice Garrett Simons delivered on 18 January 2021

INTRODUCTION

1 The plaintiff in these proceedings (“ the bank”) seeks to recover what it alleges is the outstanding balance owed to it pursuant to a loan facility granted to the defendants (“ the borrowers”). The bank has chosen to pursue the matter by way of summary summons, and has since issued a motion seeking liberty to enter final judgment. The judge hearing that application will have to consider whether there is a fair or reasonable probability that the borrowers have a real or bona fide defence to the claim. That issue is not, however, yet before the court. Rather, the only matter which the court is currently concerned with is a narrower procedural question, namely whether the bank should be required to make its deponents available for cross-examination pursuant to Order 37, rule 2.

PROCEDURAL HISTORY

2 Insofar as relevant to the issues to be determined in this judgment, the procedural history can be shortly stated as follows. The proceedings relate to a loan facility said to have been made available to the borrowers in September 2008. The loan facility involved the restructuring of a previous loan facility, together with an additional advance of funds. The loan facility had been secured on lands (“ the mortgaged property”) upon which a number of apartments have since been erected by the borrowers.

3 The bank instituted these proceedings on 19 September 2016. Appearances have been entered on behalf of three of the four borrowers. The bank issued a motion seeking liberty to enter judgment on 29 March 2017. (Judgment has already been entered against the third-named defendant in the Central Office in circumstances where no appearance had been entered on his behalf).

4 One of the borrowers, Mr. Brendan Neligan, has filed two detailed affidavits setting out the basis upon which he seeks leave to defend the proceedings. First, it is said that the loan facility had been granted to the borrowers as a partnership, and that Mr. Neligan only held a 10 per cent shareholding in the partnership. The bank is said to have been on notice of the partnership arrangement, and of Mr. Neligan's limited exposure under the loan facility. Secondly, it is alleged that, as a result of misrepresentations made by the bank's senior management to its employees, Mr. Neligan was induced not to sell shares which he held in the bank. These shares were, seemingly, pledged as additional security under the loan facility. Thirdly, complaint is made as to the approach alleged to have been taken by the bank to the proposed sale of the apartments erected on the mortgaged property.

5 The bank has responded to the first, but not the second, of Mr. Neligan's affidavits. The response took the form of a replying affidavit sworn by Mr. Andrew Osborne. The relevant part of that affidavit reads as follows.

“5. In respect of paragraph 7 of Mr. Neligan's Affidavit, I say and believe that the Plaintiff is a stranger to the allegations that they were aware of a partnership between the Defendants and that in any case the terms and conditions provide that the borrowings were advanced on a joint and several conditions ( sic) as per the terms and conditions exhibited […].

6. In respect of paragraph 8 of Mr. Neligan's Replying Affidavit, I say and believe that no advice was provided to the Deponent in respect of the value of his shares pursuant to the loan facility. I further say and believe that no such advice could have been provided to the Deponent in circumstances where, by their very nature shares will rise and fall.

7. I say and believe that at no time was the Fourth Named Defendant induced to provide security as alleged or otherwise. I say that I have conducted a review of the Plaintiff's file and it is clear therefrom that there is no documentation to support the position averred to by the Fourth Named Defendant that any such advice was provided to the said Defendant in respect of his shares.

8. In reply to paragraph 10 and for the avoidance of doubt, I say and believe that at no time was an agreed settlement entered into by the Plaintiff and inter alia, the Fourth Named Defendant as alleged or at all.

9. In reply to paragraph 11 and 12 of the Fourth Named Defendant's Replying Affidavit, I say and believe that the delays alleged in the sale of the property were not as a result of any action or inaction on the part of the Plaintiff but were rather caused by the inability of the Defendants to obtain vacant possession of the property which was being rented by the Defendants.”

6 As appears, the content of Mr. Osborne's affidavit consists of a mixture of sweeping statements of fact, and comments on certain documentation.

7 The solicitors acting on behalf of Mr. Neligan served a notice requiring the production of the bank's two deponents for cross-examination. This notice was issued pursuant to Order 37, rule 2 of the Rules of the Superior Courts. The notice is dated 24 October 2019.

8 The bank, in response to this notice, issued a motion on 4 March 2020 seeking the special leave of the court to use the affidavit evidence without producing either deponent for cross-examination (“ the application for special leave”). This motion ultimately came on for hearing before me on 17 December 2020.

9 It should be explained that the only matter before the court on that date was the bank's application for special leave. It seems that the borrowers had previously objected to a proposal on the part of the bank that both (i) the application for special leave, and (ii) the application for liberty to enter judgment, should be listed together for hearing. The intention being that, in the event that the court refused the bank's application to dispense with cross-examination, the deponents would be made available for cross-examination immediately. Counsel for the bank had submitted that it would be a more efficient use of court time to list the two applications together. This is because there would be a significant overlap in the affidavit evidence and documents which would have to be opened to the court on each application. The borrowers' objection to this proposal prevailed at a call over of adjourned cases on 8 October 2020. The High Court (Barr J.) characterised an application to block cross-examination as a fundamental application, and accepted a submission that the parties might wish to appeal the outcome of the application. The matter was sent forward for hearing on the basis of the bank's application for special leave alone.

10 Finally, for the sake of completeness, it should be recorded that leave to amend the summary summons was granted, on the consent of the parties, on 13 July 2020. This amendment had been...