Barrett, t/a Corporate Recovery Services v Beglan and Another
| Jurisdiction | Ireland |
| Judge | Mr Justice Michael Peart,Mr. Justice Michael Peart |
| Judgment Date | 18 June 2009 |
| Neutral Citation | [2009] IEHC 293,[2007] IEHC 188 |
| Court | High Court |
| Date | 18 June 2009 |
[2007] IEHC 188
THE HIGH COURT
Between:
And
RSC O.19 r27
RSC O.19 r28
Practice and procedure - Loan agreement - Undertaking by solicitor - Repaid monies - Outstanding amounts - Pleadings and affidavits incorrectly drafted- Proceeding in the District Court or the Circuit Court- Abuse of process- Rules of the Superior Courts, Order 19
the first defendant seeks an order striking out the plaintiffs claim as it discloses no reasonable cause of action in accordance with O. 19 r.28 of the RSC. The plaintiff lent the defendant monies when the defendant appeared to be in financial difficulty. The two parties had signed an agreement which offered certain property as security. This security was due to be approved by the defendant’s solicitor but as matters developed no undertaking was given. It was not in dispute that £8,000 was repaid which was subject to the agreement of 30th November 2001 but that there were other outstanding amounts which were lent by the plaintiff over time also which had not been repaid. The Court took issue with the pleadings and affidavits of the plaintiff as having not been scrutinised.
Held by Mr Justice Peart that the defendant has repaid the sum of money referred to in the agreement of November 2001.A claim for interest on this amount can be pursued through the Circuit Court or District Court. Secondly, that no undertaking was given by the defendant’s solicitor in relation to the deeds referred to. Thirdly, the other sums referred which the plaintiff claims were lent to the defendant do not stand since they have been claimed in support of the claim for relief in the prayer in the statement of claim only. The proceedings were found to be an abuse of process and discloses no reasonable cause of action.
Reporter: E.C.
Mr Justice Michael Peart delivered on the 14th day of June 2007 :
The first named defendant seeks an order striking out the plaintiff's proceedings against him pursuant to either O. 19, r. 27 RSC or O. 19, r. 28 RSC. I shall refer to the first named defendant as "the defendant" as he is the sole moving party of the present motion. The second named defendant is not a party to this motion and may be no longer trading.
The former rule permits the Court to strike out any matter in any indorsement or pleading which may be "unnecessary or scandalous, or which may tend to prejudice, embarrass, or delay the fair trial of the action".
The latter rule on the other hand permits the Court to strike out the plaintiff's claim where "it discloses no reasonable cause of action", and "in any such case or in the case of an action ………being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed".
I will proceed with this application on the basis of the latter rule, namely O. 19, r. 28 RSC.
By way of brief background to this application, it appears that the plaintiff and the defendant came into contact at a time when the defendant was in some financial difficulty. The plaintiff appears to have been willing to lend him some money to assist in these difficulties at the end of November 2001.
The papers filed on this application reveal that on that date the two parties signed an agreement which has been exhibited. This is a hand-written document prepared and written by the plaintiff. It has been signed by each party. It simply states that in consideration of a drawdown of loan facilities referred to in a letter from the defendant's solicitors of the same date a sum of €3000 was received by the defendant, and that the defendant offered as security for this loan certain property comprised in Folio 157 of the Register of Freeholders, Co. Westmeath. The defendant also acknowledged in this document that his property was "at risk of sale should the loan be defaulted upon in the terms of such agreement" (sic). There is another annexed document relating to a facility fee and an applicable interest rate of 10% and there is mention of a repayment date of the 30th May 2002.
There is also among the papers exhibited an attendance note made by the defendant's solicitor on the 30th November 2001 in which the solicitor notes that he had a meeting with the defendant that morning and that he was instructed that the plaintiff was willing to lend a sum of £8000. The solicitor also notes that he rang the plaintiff to discuss this, and, inter alia, that the solicitor explained that he was willing to give an undertaking in relation to the title deeds of the lands which were being offered as security; but that he could not advise his client until he knew the full terms of the loan.
Since that meeting with the defendant is noted as having taken place at 9.40am, I am assuming that the agreement written out by the defendant and signed as of that date by both parties was written out after 9.40am on that date, since it purports to set out the details of the loan arrangement.
A form of "Client Authority and Retainer" also appears to have been prepared by the defendant's solicitor and sent as a draft to the plaintiff by letter dated 30th November 2001. As matters developed, no undertaking was ever given by the defendant's solicitor to the plaintiff. However, the plaintiff has exhibited from his own file a copy of the "Client Authority and Retainer" form referred to and which appears to have been signed by the plaintiff and defendant. However, the solicitors say that this document was never sent to them, and that they never acted upon it by giving any undertaking in respect of the title deeds to the lands referred to. In fact it appears that the first occasion on which they saw the copy of the signed Client Authority and Retainer form was when the plaintiff sent this to them on the 11th June 2003. It would appear that by that date the plaintiff had lent further sums from time to time to the defendant, and was seeking security for a sum of about € 16500. The solicitors stated that they would need to get their client's instructions in relation to that request.
It appears to be not in dispute that between the 30th November 2001 and 30th December 2001 a sum of £8000 was loaned to the defendant by the plaintiff. It is also not in dispute that it was not repaid by the 30th May 2002. This is the only sum referred to in the agreement dated £8000. The loan facilities referred to in that document are those referred to in the letter of the same date from the defendant's solicitors, and that letter refers to a loan of "approximately £8000" only and not to any future advances.
There was correspondence between the defendant's solicitors and the plaintiff in June/July 2003 as to the amount which may be due to the plaintiff and the terms on which the solicitor was prepared to give an undertaking. In this regard the defendant was maintaining the position that only a sum of €8157.90 remained owing to the plaintiff on foot of the original loan, and that an undertaking over the deeds of the property would have to be limited to such a sum and not the much larger sum being claimed as owing by the plaintiff. This was unacceptable to the plaintiff.
Before the matter of any undertaking was resolved, however, the defendant's solicitors by letter dated 17th July 2003 sent to the plaintiff a cheque in the sum of €8157.90 in discharge of the balance of the original advance of £8000 referred to in the agreement dated 30th November 2001. The original sum of £8000, when converted into Euro became the sum of €10157.90. A sum of €2000 was repaid by the defendant on the 30th June 2002, leaving this balance of €8157.90. Upon receipt of this cheque the plaintiff wrote to these solicitors stating that he was not accepting this cheque in full settlement of the loan, as there was no allowance made for interest, and it ignored also the additional advances made from time to time since the date of the original advance. The cheque however was retained by the plaintiff and encashed by him.
The position is therefore that by the 17th July 2003 the principal of the original loan which was the subject of the agreement dated 30th November 2001, namely £8000 had been repaid. That payment did not address the question of interest on that sum up to the date of payment, or any other sums which may have been advanced from time to time in fairly small amounts subsequent to the original loan.
That is a general background against which the plaintiff's claim as stated in the Plenary Summons and Statement of Claim must be viewed.
One could reasonably expect that the plaintiff might have issued proceedings in either the District Court or Circuit Court, as may be appropriate, for the recovery of interest on foot of the original agreement, and perhaps further proceedings for the recovery of other sums advanced outside the agreement dated 30th November 2001. However, the plaintiff chose instead to issue High Court proceedings by way of Plenary Summons against both the defendant, Michael Beglan, and a company called ERT Foundation Limited which in November 2001 was a company operated by Michael Beglan, and for which the loan from the plaintiff was needed to assist in financial difficulties at that time. These proceedings which commenced on the 27th January 2005 (i.e. some eighteen months after the repayment of the original loan) seek orders for specific performance under three headings, as well as other reliefs. It is best if I set out verbatim the text of the Indorsement of Claim because of the unusual nature of the claims being made therein:
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