Bank of Scotland Plc v Mansfield

• Jurisdiction: Ireland
• Judge: Mr. Justice Kelly
• Judgment Date: 21 December 2011
• Neutral Citation: [2011] IEHC 463
• Court: High Court
• Date: 21 December 2011

[2011] IEHC 463

THE HIGH COURT

[No. 2892 S./2011]

Bank of Scotland PLC v Mansfield

COMMERCIAL

BETWEEN

BANK OF SCOTLAND PLC.

PLAINTIFF

AND

JAMES MANSFIELD

DEFENDANT

DANSKE BANK A/S (T/A NATIONAL IRISH BANK) v DURKAN NEW HOMES & ORS UNREP SUPREME 22.4.2010 2010/10/2392 2010 IESC 22

RSC O.37 r7

BANK OF IRELAND v WALSH UNREP FINLAY GEOGHEGAN 8.5.2009 2009/5/1036 2009 IEHC 220

HARRISGRANGE LTD v DUNCAN 2003 4 IR 1

MOOHAN & ORS v S&R MOTORS (DONEGAL) LTD 2008 3 IR 650

CHITTY ON CONTRACTS 29ED VOL 2 PARA 38-223

CHITTY ON CONTRACTS 29ED VOL 1 PARA 2-136

DONNELLY THE LAW OF BANKS AND CREDIT INSTITUTIONS 2000

PRACTICE AND PROCEDURE

Summary judgment

Guarantee - Arguable defence - Set off or counterclaim - Test to be applied - Whether fair of reasonable probability of real or bona fide defence - Whether counterclaim gave rise to equitable set off - Whether counterclaim arose from same facts as primary claim - Whether independent claim - Execution of judgment - Stay - Whether stay on judgment should be granted if counterclaim arose from different facts as primary claim - Contract - Loan of money - Whether valid contract concluded - Whether alleged contract vague or uncertain - Whether counterclaim of principle debtor actionable by guarantor - Danske Bank A/S t/a National Irish Bank v Durkan New Homes [2010] IESC 22 (Unrep, SC, 22/4/2010), Bank of Ireland v Walsh [2009] IEHC 220 (Unrep, Finlay Geoghegan J, 8/5/2009), Harrisrange Ltd v Duncan [2002] IEHC 14, [2003] 4 IR 1, Moohan v S&R Motors (Donegal) Ltd [2007] IEHC 435, [2008] 3 IR 650 and Prendergast v Biddle (Unrep, SC, 31/7/1975) approved - Summary judgment granted (2011/2892S - Kelly J - 21/12/2011) [2011] IEHC 463

Bank of Scotland plc v Mansfield

Facts: The plaintiff Bank sought summary judgment against the defendant in the sum of Eur 206,396,577.74 and interest. The claim was made on foot of guarantees given by the defendant to the Bank in respect of liabilities of three companies of which the defendant was a director. It was alleged that the plaintiff had agreed to advance substantial sums to the Mansfield Group and had reneged on the agreement. The Bank alleged that the facts did not give rise to a contractual obligation on the part of the Bank.

Held by Kelly J. that the plaintiff was entitled to judgment for the full amount claimed with no restriction being placed on the execution of the judgment by virtue of the alleged defence by way of counterclaim. The defendant had failed to demonstrate an arguable case or triable issue sufficient to warrant the application being refused.

Reporter: E.F.

1 JUDGMENT of Mr. Justice Kelly delivered on the 21st day of December, 2011

The Claim

2 1. The plaintiff (the Bank) seeks summary judgment against the defendant in the sum of €206,396,577.74 and interest.

3 2. The claim is made on foot of guarantees given by the defendant to the Bank in respect of the liabilities of three companies of which the defendant was a director or shareholder.

4 3. The companies in question were HSS, Jeffel and Parke.

5 4. The defendant does not deny that the funds in question were advanced to those companies nor does he deny that the companies have defaulted in repaying the sums to the Bank.

6 5. No issue arises as to the validity of the guarantees executed by the defendant in favour of the Bank, nor on the demand made on the defendant to honour the guarantees. In each case, the guarantees were "all sums due" and the amount claimed in respect of each of them is as follows:-

7 under the HSS guarantee the sum of €151,564,739.24;

8 under the Jeffel guarantee the sum of €41,222,647.70; and

9 under the Parke guarantee the sum of €13,609,191.30.

10 6. As no issue was raised by the defendant touching upon the liability of the three companies in question and their failure to discharge it or on the validity of the guarantees or the lawfulness of the demands made on foot of them, prima facie he is obliged to discharge the amounts due to the Bank.

11 7. On this application for summary judgment, however, he contends that he has a defence to this claim and I must now examine that proposition.

The Test

12 8. The test to be applied by this Court on an application for summary judgment is well established. It has been stated and restated by the Supreme Court and this Court on many occasions in particular in recent times where applications for summary judgment, very often in respect of large amounts, are a commonplace.

13 9. The most recent statement from the Supreme Court on the topic is to be found in the judgment of Denham J. (as she then was) in Danske Bank A/S trading as National Irish Bank v. Durkan New Homes & Ors [2010] IESC 22.

14 10. Having recited the provisions of O. 37, r. 7 of the Rules of the Superior Courts that judge when on as follows:-

"Several cases were opened before the Court which have addressed this jurisdiction. These included Bank of Ireland v. Educational Building Society [1999] 1 I.R. 220 where Murphy J. emphasised that it was appropriate to remit a matter for plenary hearing to determine an issue which is primarily one of law where a defendant identified issues of fact which required to be explored and clarified before the issues of law could be dealt with properly. He stated at p. 231:-"

15 'Even if the position was otherwise, once the learned High Court Judge was satisfied that the defendant had 'a real or bona fide defence', whether based on fact or on law, he was bound to afford them an opportunity of having the issued tried in the appropriate manner.'

16 In Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 I.R. 607, Hardiman J. reviewed Irish cases and concluded at p. 623:-

17 'In my view, the fundamental questions to be posed on an application such as this remain: is it 'very clear' that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?'"

18 11. At para. 22 of her judgment Denham J. stated as follows:-

"As stated in Banque de Paris v. de Naray [1984] Lloyd's Rep. 21, by Acker L.J. at p.23:-"

19 'It is of course trite law that O. 14 proceedings are not decided by weighing the two affidavits. It is also trite that the mere assertion in an affidavit of a given situation which is to be the basis of a defence does not, ipso facto, provide leave to defend; the Court must look at the whole situation and ask itself whether the defendant has satisfied the Court that there is a fair or reasonable probability of the defendants having a real or bona fide defence.'"

20 12. In Bank of Ireland v. Walsh [2009] IEHC 220, Finlay Geoghegan J. set out the principles applicable to the determination of an application such as this by reference to a decision of McKechnie J. in Harrisgrange Limitedv. Duncan [2003] 4 I.R. 1. It is not necessary for me to repeat yet again the twelve considerations which he set out in that judgment but I do call attention to one of them where he said:-

"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."

21 13. Finlay Geoghegan J. said in relation to this:-

"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."

22 14. In view of the nature of the defence which is sought to be relied upon here, I ought to address the principles applicable where a defence by way of set off or counterclaim is sought to be advanced. This whole question was considered by Clarke J. in Moohan & Ors v. S&R Motors (Donegal) Limited [2008] 3 I.R. 650. He summarised the principles applicable as follows:-

23 2 "4.1 The test to be applied in deciding whether a party should be given leave to defend a summary judgment application was most recently addressed by the Supreme Court in Aer Rianta Cpt v. Ryanair Limited, [2001] 4 I.R. 607. In that case the court indicated that the test is as to whether, looking at the whole situation, the defendant has satisfied the court that there is a fair and reasonable probability that he has a real and bona fide defence. As pointed out by Hardiman J., the test does not mean that the party must establish that he has a defence which will probably succeed; rather he must establish that it is probable that he has a bona fide defence.

24 3 4.2 Where the nature of the defence put forward amounts to a form of cross claim slightly different considerations may apply. In those circumstances the court has a wider discretion. Where the defendant does not establish a bona fide defence to the claim as such, but maintains that he has a cross claim against the plaintiff, then the first question which needs to be determined is as to whether that cross claim would give rise to a defence in equity to the proceedings. It is clear from Prendergast v. Biddle (Unreported, Supreme Court, 21 ^st July, 1957) that the test as to whether a cross claim gives rise to a defence in equity, depends on whether the cross claim stems from the same set of facts (such as the same contract) as gives rise to the primary claim. If it does, then an equitable set off is available so that the debt arising on the claim will be disallowed...