Brosnan v Cramer
| Jurisdiction | Ireland |
| Judge | Mr. Justice Garrett Simons |
| Judgment Date | 14 March 2023 |
| Neutral Citation | [2023] IEHC 111 |
| Court | High Court |
| Docket Number | 2021 No. 398 S |
[2023] IEHC 111
2021 No. 398 S
THE HIGH COURT
Andrew Walker SC and Martin Scanlon for the plaintiff instructed by Holmes O'Malley Sexton LLP
John O'Regan for the defendant instructed by Crowley Millar Solicitors LLP
JUDGMENT of Mr. Justice Garrett Simons delivered on 14 March 2023
This judgment is delivered in respect of an application to enter summary judgment against the defendant pursuant to Order 37 of the Rules of the Superior Courts. It is alleged that the defendant is obliged to indemnify the plaintiff in respect of loan repayments made by the latter to Allied Irish Banks (“ AIB”). AIB had granted a series of loans to the defendant as debtor, with the plaintiff acting as guarantor. The plaintiff contends that he has repaid a principal sum of €425,000 (together with interest) to AIB and is now entitled to an indemnity from the defendant. The sum claimed by the plaintiff in these proceedings is €484,166.67 plus continuing interest. The interest claimed as of 11 June 2021 is €238,201.47.
The defendant seeks to resist the application for summary judgment on three grounds as follows. First, it is said that it had been agreed between the plaintiff and the defendant that any monies paid by the former on foot of the various guarantees were to be debts of a US company in respect of which both the plaintiff and defendant were shareholders. The company is known as Futures Group Inc. It is said by the defendant that all parties were agreed that the monies owing to AIB were a corporate debt and that they were not monies personally owed by the defendant. It is further said that the loan monies were recorded in the company's books as a corporate debt.
Secondly, the defendant makes the related point that the conduct and representations of the plaintiff gave rise to an estoppel. I understood this argument to be made in the alternative only, and as intended to address the contingency that a court might determine that the alleged agreement (described above) was not supported by valuable consideration and hence not enforceable as a matter of contract law. In such a contingency, the defendant seeks to rely on an estoppel instead. The factual matters relied upon are broadly similar to those relied upon in respect of the first ground.
Thirdly, it is said that almost all of the alleged debt is statute-barred. This third ground of defence is controversial in that the defendant had previously averred on affidavit that he would not be pursuing a defence under the Statute of Limitations.
It may be of assistance to the reader to flag at this early stage that there are significant factual disputes between the plaintiff and defendant in their respective affidavits. Moreover, the defendant has expressly averred as to the existence of the alleged agreement. Notwithstanding these factual disputes, the plaintiff invites the court to determine the proceedings conclusively on the basis of a summary hearing without oral evidence or cross-examination. The plaintiff submits that the proposed defence comprises no more than a “ bare assertion” that an agreement had been entered into. The plaintiff is critical of what he says is the lack of detail or specificity in relation to the alleged agreement. It is said, for example, that the precise nature of the agreement changes throughout the documentation and that it is unclear as to whether or not the defendant asserts that the plaintiff is entitled to recover the monies, which he paid to AIB pursuant to the various guarantees, as against the company directly.
For the reasons which follow, I have concluded that the defendant should be granted leave to defend and that the case should be remitted to plenary hearing.
The principles governing an application for summary judgment are well established. In brief, the court must assess whether the defence set out in the affidavits, together with the documents exhibited therewith, is credible, or in other words, whether there is a fair or reasonable probability of the defendant having a real or bona fide defence to the claim. In deciding whether the defendant has a credible defence, the court should concentrate its attention on the matters put forward by the defendant. ( Aer Rianta cpt v. Ryanair Ltd (No 1) [2001] 4 I.R. 607, [2002] 1 I.L.R.M. 381).
The term “ credible” in relation to a defence has a very narrow meaning. A defence is not incredible simply because the judge is not inclined to believe the defendant. Rather, it must be clear that the defendant has no defence. ( Irish Bank Resolution Corporation v. McCaughey [2014] IESC 44, [2014] 1 I.R. 749).
The proper approach to be taken to the assessment of disputed facts has been explained as follows by the Supreme Court in Irish Bank Resolution Corporation v. McCaughey (at paragraph 23 of the reported judgment):
“Insofar as facts are put forward, then, subject to a very narrow limitation, the court will be required, for the purposes of the summary judgment application, to accept that facts of which the defendant gives evidence, or facts in respect of which the defendant puts forward a credible basis for believing that evidence may be forthcoming, are as the defendant asserts them to be. The sort of factual assertions, which may not provide an arguable defence, are facts which amount to a mere assertion unsupported either by evidence or by any realistic suggestion that evidence might be available, or, facts which are in themselves contradictory and inconsistent with uncontested documentation or other similar circumstances such as those analysed by Hardiman J. in Aer Rianta c.p.t. v. Ryanair Ltd. [2001] 4 I.R. 607. It needs to be emphasised again that it is no function of the court on a summary judgment motion to form any general view as to the credibility of the evidence put forward by the defendant.”
This theme has been addressed more recently by the Court of Appeal in Allied Irish Bank plc v. Cuddy [2020] IECA 211. Collins J. emphasised the following points (at paragraphs 65 to 68 of his judgment). It is important to avoid conflating the threshold that a defendant seeking to resist summary judgment is required to surmount (a threshold that all the relevant authorities emphasise is a low one), on the one hand, and the burden that will rest on such a defendant in the event that summary judgment is refused and leave to defend is granted, on the other. The relevant test is not, at this stage, one of “ cogent evidence” and/or “ written evidence”. It is, rather, whether “ credible” evidence is before the court in the particular sense indicated in the authorities. That is not to suggest that the absence of such documentary evidence is irrelevant; it may be a factor, and an important factor, in assessing the credibility of a defence but the absence of documentary evidence does not necessarily require that the court refuse leave to defend.
There is one peculiar aspect of the present case which must be borne in mind in assessing whether the legal test for the grant of summary judgment is met. The plaintiff's case is predicated on his having an equitable right to recover from the defendant the monies paid out under the guarantees. The plaintiff cites in this regard the judgment of the Court of Appeal of England and Wales in Morris v. Ford Motor Co. Ltd [1973] Q.B. 792 (at 800) as follows:
“When a surety pays off the debt, he is entitled in his own name to sue the principal debtor for the amount, or to sue his co-sureties for contribution. He is entitled to any securities which may have been given for the debt by the principal debtor to the creditor. These rights do not depend upon contract, but upon the established principles of the courts of equity.”
The plaintiff also cites the judgment of the High Court (Finlay Geoghegan J.) in In re Eylewood [2010] IEHC 57, [2011] 1 I.L.R.M. 5.
The present case is not, therefore, a case where the debt is said to have arisen under a written contract between the parties. This feature distinguishes the present case from much of the case law relied upon by the plaintiff. The case law is typically concerned with circumstances where the debtor is seeking to rely on an oral agreement which contradicts the terms of a written contract between the parties (the existence of which written contract is not itself disputed). In such a scenario, a court may be prepared to dispose of the case in a summary manner, on the basis that the defence relied upon by the debtor is not credible. The finding of a lack of credibility will be premised on an irreconcilable conflict between the terms of the written contract and the asserted oral agreement. The parol evidence rule often plays a role in such cases.
No such conflict between a written contract and an oral agreement arises in the present case. Rather, the plaintiff's claim is predicated on an equitable right. It is accepted by both sides that any such equitable right is capable of being overridden by an agreement, express or implied, between the parties or by an estoppel arising from the conduct of the parties. See, Andrews and Millet, Law of Guarantees (Sweet & Maxwell, 5th ed., 2015) at pages 437 to 438. There is no requirement that such an agreement have been reduced to writing. It follows that it is open, in principle, to a principal debtor to resist a claim for an indemnity by a guarantor on the basis of an oral agreement to the effect that no such indemnity is required. Put otherwise, the absence of a written agreement would not be fatal to the asserted defence at the full trial, and a fortiori cannot be determinative of the application to enter summary judgment: see, by analogy, Allied Irish Bank plc v. Cuddy (cited above).
Here, it is common case that the parties...
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