Bank of Ireland v Walsh

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 08 May 2009
• Neutral Citation: [2009] IEHC 220
• Court: High Court
• Date: 08 May 2009

Bank of Ireland v Walsh

COMMERCIAL

BETWEEN

BANK OF IRELAND

PLAINTIFF

AND

MERVYN WALSH

DEFENDANT

[2009] IEHC 220

[No. 728 S/2009]

THE HIGH COURT

PRACTICE AND PROCEDURE

Summary summons

Commercial court - Summary judgment - Applicable principles - Test - Whether arguable defence - Director of property owning company - Personal guarantee - Defence - Cross-claim for damages for wrongful refusal to permit drawdown of facility - Set off - Whether terms of guarantee excluded set off - Contra proferentem - Whether clause limited to setting off of personal claim - Whether cross-claim credible - Evidence limited to assertions of defendant - Inconsistencies between assertions and documentation - Change in basis of computation of loss - Discretion - Harrisrange Ltd v Duncan [2003] 4 IR 1 applied; Aer Rianta CPT v Ryanair Ltd [2001] 4 IR 607 and Hyundai Shipbuilding and Heavy Industries Co Ltd v Pournaras [1978] 2 Lloyd's Rep 502 considered - Summary judgment granted (2009/728S - Finlay Geoghegan J - 8/5/2009) [2009] IEHC 220

Bank of Ireland v Walsh

: Proceedings were instituted for summary judgment for the sum of €4 million and interest in favour of the plaintiff against the defendant. The defendant was a director of a company and executed a guarantee in favour of the plaintiff subject to a limit of €4 million and interest. The company in question was a property owning company. In 2008, the plaintiff appointed a receiver over the company. The defendant alleged inter alia, that he had an arguable claim against the plaintiff and was entitled to a sum by way of set-off. The plaintiff alleged that that no such entitlement arose by virtue of the operation of a guarantee clause.

Held by Finlay Geoghegan J. that the defendant had not met the threshold of an arguable defence. The Court would exercise its jurisdiction to grant summary judgment. The principal amount of €4 million was not disputed. While the guarantee clause was not so clear as to exclude an arguable defence, it was confined to a defence based on a set-off as to personal entitlements only. There was no evidence of any challenge to the appointment by the plaintiff of a receiver or any explanation as to why no proceedings were commenced against the plaintiff until the day upon which the defendant swore his replying affidavit.

Reporter: E.F

HARRISRANGE LTD v DUNCAN 2003 4 IR 1 2002/12/2982

AER RIANTA CPT v RYANAIR LTD 2001 4 IR 607 2002 1 ILRM 381 2001/1/68

HYUNDAI SHIPBUILDING & HEAVY INDUSTRIES CO v POURNARAS 1978 2 LLOYD'S 502

HALSBURY'S LAWS OF ENGLAND 4ED PARA 190

ANDREWS & MILLETT LAW OF GUARANTEES 4ED 2006 PARA 11.006

O'DONOVAN & PHILLIPS THE MODERN CONTRACT OF GUARANTEE 2003 PARA 11.46

O'DONOVAN & PHILLIPS THE MODERN CONTRACT OF GUARANTEE 2003 PARA 11.48

O'DONOVAN & PHILLIPS THE MODERN CONTRACT OF GUARANTEE 2003 PARA 11.49

1 Ms. Justice Finlay Geoghegan delivered on the 8th day of May, 2009

2 1. The application to which this judgment relates is for summary judgment in the sum of €4 million and interest in favour of the plaintiff against the defendant.

3 2. The principles applicable to the determination of the plaintiff's application for summary judgment and the defendant's application for leave to defend are not in dispute. Counsel for both parties agree that they are those set out by McKechnic J. in Harrisrange Ltd. v. Duncan [2003] 4 I.R. 1. In that decision, having reviewed a number of prior decisions, McKechnie J. at p. 7, summarised those as follows:

4 i "(i) the power to grant summary judgment should be exercised with discernible caution;

5 (ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done;

6 (iii) in so doing, the court should assess not only the defendant's response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting affidavit evidence;

7 (iv) where truly there are no issues of simplicity only or issues easily determinable, then this procedure is suitable for use;

8 (v) where however, there are issues of fact which, in themselves, are material to success or failure, then their resolution is unsuitable for this procedure;

9 (vi) where there are issues of law, this summary process may be appropriate but only so if it is clear that fuller argument and greater thought is evidently not required for a better determination of such issues;

10 (vii) the test to be applied, as now formulated is whether the defendant has satisfied the court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, 'is what the defendant says credible?', which latter phrase I would take as having as against the former an equivalence of both meaning and result;

11 (viii) this test is not the same as and should not be elevated into a threshold of a defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence;

12 (ix) leave to defend should be granted unless it is very clear that there is no defence;

13 (x) leave to defend should not be refused only because the court has reason to doubt the bona fides of the defendant or has reason to doubt whether he has a genuine cause of action;

14 (xi) leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally;

15 (xii) the overriding determinative factor, bearing in mind the constitutional basis of a person's right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter judgment or leave to defend, as the case may be.

16 3. As appears from sub-paragraph (vii) above, the threshold is one of an arguable defence and is, in relative terms, a low threshold. However, in making that determination, the Court should have regard to whether what the defendant is saying is mere assertion and whether the proposed defence is credible in the sense explained by Hardiman J. in Aer Rianta c.p.t. v. Ryanair Ltd. [2001] 4 I.R. 607.

17 4. The defendant is a director of Largreen Ltd. ("Largreen"). On 14 ^th September, 2006, he executed a guarantee in favour of the plaintiff of liabilities of Largreen, subject to a limit of €4 million and interest ("the Guarantee"). Whilst, in his first replying affidavit, the defendant raised an issue in relation to the amount of €4 million, at the hearing of the application for summary judgment it was not in dispute that the defendant had executed the Guarantee of liabilities of Largreen in an amount of €4 million and interest referred to therein. Further, his counsel confirmed that the plaintiff was not required to produce in Court the original Guarantee.

18 5. Largreen is a property owning company with, inter alia, property at Portlaoise, County Laois. Such property was being built on by connected companies. It is not in dispute that the plaintiff had made a number of facilities available to Largreen for which it held the Guarantee as security. Further, that on 19 ^th December, 2008, Largreen was indebted to the plaintiff in the sum of €22,439,632.42 for which the plaintiff held the Guarantee from the defendant as security. Demands were made on the defendant for payment under the Guarantee by letters dated 19 ^th December, 2008, and 23 ^rd February, 2009.

19 6. On 12 ^th December, 2008, the plaintiff appointed a receiver over Largreen.

20 7. These proceedings were commenced on 23 ^rd February, 2009, and on 30 ^th March, 2009, admitted to the Commercial List and the application for summary judgment fixed for hearing on 23 ^rd April, 2009, with directions in relation to the delivery of any replying affidavit by the defendant.

21 8. On 15 ^th April, 2009, the defendant swore an affidavit in which he asserts that Largreen has a claim for damages, then estimated by him at €26,500,000, against the plaintiff for its alleged wrongful refusal to permit the drawdown of a facility of €1.9 million to complete a portion of the development at Portlaoise in September 2008. On the same day, the defendant caused a plenary summons to be issued with Largreen Ltd. (in receivership) as plaintiff, and the Bank of Ireland as defendant, claiming, inter alia, damages for negligence, breach of duty, breach of fiduciary duty, breach of contract, misrepresentation and unlawful interference with the business and economic interests of the plaintiff.

22 9. A further affidavit was sworn on 22 ^nd April, 2009, by Ms. Mary McCarthy, a senior business manager in the plaintiff's regional business unit, south east midlands and the original deponent for the plaintiff, in which she disputed a number of the factual matters in the defendant's affidavit and also pointed out that the damages estimated at paragraph 23 of the defendant's affidavit in the sum of €26.5 million, included a double count to the extent of €12.8 million.

23 10. The defendant swore a supplemental affidavit on the morning of the hearing, and in the absence of objection on behalf of the plaintiff, was permitted to file this in Court. In that affidavit, he implicitly accepts the clement of double count but provides a new estimate of alleged losses to which reference will be made below, and asserts that the true loss suffered by Largreen in respect of which it has a claim for damages against the plaintiff is €23,390,969.

24 11. The submission of counsel for the plaintiff that it is entitled to summary judgment must be considered in the context of the...