Bank of Ireland v Balford Construction Ltd and Bank of Ireland v McNicholas

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Cian Ferriter
• Judgment Date: 02 June 2022
• Neutral Citation: [2022] IEHC 356
• Docket Number: Record Number 2019/1051 S

Between:-

The Governor and Company of the Bank of Ireland

Plaintiff

and

Balford Construction Limited

Defendant

Between:-

The Governor and Company of the Bank of Ireland

Plaintiff

and

Peter McNicholas and Nancy McNicholas

Defendants

[2022] IEHC 356

Record Number 2019/1051 S

Record Number 2019/1052 S

THE HIGH COURT

Summary judgment – Loan facilities – Arguable defence – Plaintiff seeking summary judgment – Whether the defendants had raised an arguable defence

Facts: Mr and Mrs McNicholas were both directors of Balford Construction Ltd (the company). Mrs McNicholas was the secretary of the company. The company banked with the plaintiff, Bank of Ireland (the Bank). The Bank advanced various facilities to the company and Mr and Mrs McNicholas entered various guarantees in respect of those facilities. The company also mortgaged its interest in property in Swinford, County Mayo on which the company developed a series of houses. The Bank applied to the High Court for summary judgment in the sum of €2,661,194 against the company as claimed in proceedings between the Bank and the company (the company proceedings). The Bank also applied for summary judgment against each of Mr and Mrs McNicholas in separate proceedings between the Bank and Mr and Mrs McNicholas (the guarantor proceedings). In the guarantor proceedings, the Bank sought summary judgment jointly and severally against Mr and Mrs McNicholas in the sum of €1,082,501, and summary judgment in the amount of €250,000 against Mr McNicholas only. Ms McNicholas on behalf of the company advanced an argument to the effect that there was no valid consideration for either the 2009 or 2010 facilities such that those facilities, and the Bank’s claims for judgment on foot of them, were void. The company and Mr McNicholas contended that the Bank failed to particularise the debt alleged to be owed in the proceedings. Mr McNicholas sought to contend that the appointment of a receiver by the Bank over the property charged in folio 46290F (i.e. the secured property) was unlawful. The company and Mr McNicholas contended that the Bank breached its duty to the company as mortgagor by selling the mortgaged property at an undervalue. The defendants contended that the Bank’s petition to wind up the Company in November 2015 was “a malicious abuse of process”. Mr McNicholas asserted that “a number” of the guarantees on the face of it signed by Mrs McNicholas, were in fact signed by him without her authority.

Held by Ferriter J that he did not believe there was any arguable contention to the effect that the 2009 or 2010 loan facilities were void for want of consideration or were otherwise “illusory and have no legal effect” to deploy the company’s formulation. He was satisfied that the requirement set out in Bank of Ireland Mortgage Bank v O’Malley [2020] 2 ILRM 423 that the defendants have sufficient information and detail to know the basis on which the sums claimed are calculated and to decide whether there was any point in pursuing the defence, were met. He held that as a matter of law alleged infirmities in the receiver’s appointment were irrelevant to the issue of the bank’s entitlement to summary judgment: Danske Bank A/S v Gillic [2015] IEHC 375. He held that no prima facie evidence had been advanced as to why the independent valuation obtained by the Bank was incorrect or should not have been relied upon by the Bank or to otherwise support the contention that the sale was at an undervalue. He held that no stateable claim in actionable malicious abuse of process had been prima facie made out on any evidence tendered by the Company or Mr McNicholas. He held that the presence of Mrs McNicholas signature on guarantees without her knowledge or authorisation would have called out for proper explanation if an arguable defence was to be disclosed and that was not done.

Ferriter J granted summary judgment to the Bank as follows: (i) against the company in the sum of €2,661,194; (ii) against Mr and Mrs McNicholas jointly and severally in sum of €1,082,501; and (iii) against Mr McNicholas alone in the sum of €250,000.

Application granted.

Judgment of Mr. Justice Cian Ferriter delivered this 2 ^nd day of June 2022

Introduction

1 Peter McNicholas and Nancy McNicholas are husband and wife. They live in Swinford, County Mayo. They are both directors of a construction company, Balford Construction Ltd (the “company”) which has its registered office in Swinford. Mrs. McNicholas is the secretary of the company. The company banked with Bank of Ireland (the “Bank”). The Bank advanced various facilities to the company and Mr. and Mrs. McNicholas entered various guarantees in respect of those facilities. The company also mortgaged its interest in property in Swinford on which the company developed a series of houses.

2 This judgment sets out my decision on the Bank's application for summary judgment in the sum of €2,661,194 against the company as claimed in proceedings High Court Record Number 2019/1051S between the Bank and the company (“the company proceedings”). It also set out my decision on the Bank's application for summary judgment against each of Mr. and Mrs. McNicholas in separate proceedings being proceedings bearing High Court Record Number 2019/1052S between the Bank and Mr. and Mrs. McNicholas (the “guarantor proceedings”). In the guarantor proceedings, the Bank seeks summary judgment jointly and severally against Mr. and Mrs. McNicholas in the sum of €1,082,501, and summary judgment in the amount of €250,000 against Mr. McNicholas only. Both applications were heard together on Tuesday, 10 ^th May last.

Preliminary Matters

3 At this hearing, the company was represented by Marilyn McNicholas and Company, solicitors. The principal of that firm is Marilyn McNicholas, who is the daughter of Mr. and Mrs. McNicholas.

4 No solicitors came on record for Mr. and Mrs. McNicholas in the guarantor proceedings.

5 At the outset of the hearing, Mr. Alan Lynskey applied for an adjournment of the hearing of the application against Mr. McNicholas. Mr. Lynskey is husband of Marilyn McNicholas (and, accordingly, son-in-law of Mr. and Mrs. McNicholas). He is not a qualified lawyer.

6 It is necessary to set the adjournment application in context. The two sets of proceedings have had a prolonged procedural history with allegations being made on behalf of the Bank that the company and Mr. and Mrs. McNicholas had “ flouted” directions made by the court at various points in respect of the delivery of replying affidavits, had repeatedly ignored correspondence from the Bank's solicitors which sought to advance the prosecution of the proceedings and had sought, in essence, to inappropriately drag the proceedings out.

7 The two applications had eventually been listed for hearing on 15 ^th March 2022, and, when they did not get on for hearing on that date, on 16 ^th March 2022. There again being no judge available to hear the applications on 16 ^th March 2022, the applications were adjourned to 10 ^th May 2022. When the matters did not get on for hearing on 16 ^th March, the court (Meenan J.) gave liberty to the company to deliver a further affidavit. Mr. McNicholas then swore a further affidavit on behalf of the company on 1 ^st April 2022, in the company proceedings, which appears to have been delivered a couple of days later. He also swore an affidavit of the same date in the guarantor proceedings. The Bank replied to each of those affidavits with an affidavit of Paul Diggin, an official with the Bank.

8 When the matters came before me for hearing on 10 ^th May 2022, Mr. Lynskey sought an adjournment on behalf of Mr. McNicholas in the guarantor proceedings on the basis that Mr. McNicholas was prejudiced in his ability to oppose the summary judgment application against him in light of receiving the Bank's further affidavit so late in the day. I ruled against Mr. McNicholas on the adjournment application. I was satisfied that Mr. McNicholas had had every reasonable opportunity to advance such grounds of arguable defence as he wished to and that he would not be unfairly prejudiced by the matter proceeding.

9 In circumstances where both matters were then proceeding to hearing, an application was made by Mr. Lynskey to make submissions on Mr. McNicholas' behalf. I was told by Mr. Lynskey that the Court of Appeal had previously permitted him to make submissions on Mr. McNicholas' behalf in separate proceeding. Mr. Lynskey had prepared ably marshalled written submissions which had been sent to the Bank just before the hearing (I should say for completeness that the Bank itself had delivered written submissions also just before the commencement of the hearing).

10 I gave permission to Mr. Lynskey to make submissions on behalf of Mr. McNicholas in circumstances where I wanted to ensure that Mr. McNicholas had every opportunity to present such arguments as he wished in opposition to the Bank's application for judgment against him. Mr. Lynskey made clear that he was not making submissions on behalf of Mrs. McNicholas. I allowed Mr. Lynskey to make submissions on behalf of Mr. McNicholas in the exceptional circumstances that arose at this hearing and I would not want the permission him in that regard to be taken as any form of precedent of wider implication.

11 I believe the correctness of proceeding with the hearing of both matters was borne out by the fact that the written submissions prepared by Mr. Lynskey on Mr. McNicholas' behalf were of assistance to the court during the course of the hearing, and the fact that Mr. Lynskey was well able to fully present any relevant arguments on behalf of Mr. Mr. McNicholas at the hearing of the matter.

12 As matters panned out at the hearing, Marilyn McNicholas and Mr. Lynskey divided their presentation of the issues between them which resulted in an efficient presentation of the matters as, in truth, there was a...