Cabot Financial (Ireland) Ltd v Michael Kearney

• Jurisdiction: Ireland
• Judge: Mr. Justice Holland
• Judgment Date: 29 April 2022
• Neutral Citation: [2022] IEHC 247
• Court: High Court
• Docket Number: [2020/300 S]

Between

Cabot Financial (Ireland) Limited

Plaintiff

and

Michael Kearney

Defendant

[2022] IEHC 247

[2020/300 S]

THE HIGH COURT

Costs – Summary proceedings – Plenary hearing – Defendant seeking costs – Whether the costs of summary proceedings to date should be made costs in the cause or be reserved

Facts: The plaintiff, Cabot Financial (Ireland) Ltd, by notice of motion for summary judgment dated 31st May, 2021 and grounding affidavit of Mr Dillon sworn on that date, on foot of a summary summons issued 29th September 2020, claimed judgment for €209,825.41, as the most recent assignee of the lender’s interest in a loan made in August, 2000 by First Active plc to the defendant, Mr Kearney. The parties were agreed that the claim should go to plenary hearing, but disagreed as to the appropriate order for costs. The defendant sought the costs of the proceedings to date. The plaintiff said that the costs of summary proceedings to date should either be made costs in the cause or be reserved. The defendant said that the case should not have been commenced by summary summons, should have been commenced by plenary summons and that he had been unnecessarily put to the cost of the summary process to date. The plaintiff said that it was legitimate to sue for a liquidated sum by summary summons – if only in the expectation that the summary process would make clear whether the defendant would defend the action.

Held by the High Court (Holland J) that he was not persuaded that the Hanrahan test of manifest unreasonableness (ACC Bank plc v Hanrahan [2014] IESC 40) applies to proceedings sent to plenary hearing for want of a pleaded and evidenced prima facie claim – as opposed to by reason of the defendant’s raising a defence to a prima facie claim. If it does, he held that it was manifestly unreasonable of the plaintiff to issue a summary summons which it could not adequately specially indorse. If he was wrong in that regard, he held that it was in any event manifestly unreasonable of the plaintiff, having issued a motion for summary judgment in the absence not merely of O’Malley particulars (Bank of Ireland Mortgage Bank v O’Malley [2019] IESC 84) but of the requisite evidence of the claim to the specific liquidated sum claimed – or of any liquidated sum – not to have thereupon adjourned the matter to plenary hearing. He also bore in mind that one of the underlying rationales for summary proceedings is that they are expected to be ordinarily more expeditious than plenary proceedings; by their issue, the plaintiff asserted an entitlement to judgment sooner rather than later and to court resources to that end. He held that to make that assertion knowing that one cannot, when issuing the proceedings, adequately plead or prove a prima facie case for judgment is inconsistent with the invocation of the summary process. He considered that, with reference to the matters set out in s. 169(1) of the Legal Services Regulation Act 2015, as relevant by virtue of Order 99 rule 3(1) of the Rules of the Superior Courts, the conduct of the plaintiff in pursuit from September 2000 to April 2022 of proceedings at no point capable of realising their necessary purpose – judgment specifically summary – in circumstances in which the plaintiff must at all material times have known they lacked that capacity, was a factor weighing in favour of costs against the plaintiff. If he was wrong that the plaintiff’s actions were to be considered “conduct” for the purposes of s. 169(1) of the 2015 Act, he was content to rest his decision as to costs on the proposition that the plaintiff took a risk in launching specifically summary proceedings and should bear the costs of its eventuating by reason of the deficiencies in its own papers.

Holland J adjourned the matter to plenary hearing and awarded the defendant the costs of the proceedings to date, to be adjudicated in default of agreement. Holland J stayed execution of those costs pending final orders after the trial of the action.

Costs awarded to defendant.

RULING of Mr. Justice Holland delivered on the 29 ^th of April, 2022

1 . By notice of motion for summary judgment dated 31 ^st May, 2021 and grounding affidavit of Tom Dillon sworn on that date, on foot of a summary summons issued 29 ^th September 2020, the Plaintiff claimed judgment for €209,825.41, as the most recent assignee of the lender's interest in a loan made in August, 2000 by First Active plc to the Defendant 1. The parties are agreed that the claim should go to plenary hearing 2, but disagree as to the appropriate order for costs at this point.

2 . The Defendant seeks the costs of the proceedings to date. The Plaintiff says that the costs of summary proceedings to date should either be made costs in the cause or be reserved. This judgment addresses only that issue of costs.

3 . The Defendant says that this case should not have been commenced by summary summons, should have been commenced by plenary summons and that he has been unnecessarily put to the cost of the summary process to date. The Plaintiff says that it was legitimate to sue for a liquidated sum by summary summons – if only in the expectation that the summary process would make clear whether the Defendant would defend the action.

Costs — General

4 . Insofar as here relevant, Ss.168 and 169 of the Legal Services Regulation Act 2015 provide, as to costs, as follows

“168. (1) Subject to the provisions of this Part, a court may, on application by a party to civil proceedings, at any stage in, and from time to time during, those proceedings—

(a) order that a party to the proceedings pay the costs of or incidental to the proceedings of one or more other parties to the proceedings, or

…….

(2) Without prejudice to subsection (1), the order may include an order that a party shall pay —

(a) a portion of another party's costs,

(b) costs from or until a specified date, ……

(c) costs relating to one or more particular steps in the proceedings,

……………..

169. (1) A party who is entirely successful in civil proceedings is entitled to an award of costs against a party who is not successful in those proceedings, unless the court orders otherwise, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties, including —

(a) conduct before and during the proceedings,

(b) whether it was reasonable for a party to raise, pursue or contest one or more issues in the proceedings,

(c) the manner in which the parties conducted all or any part of their cases,

…………

(2) …………………..

(4) Unless the court before which civil proceedings were commenced orders otherwise, or the parties to those proceedings agree otherwise, a party who discontinues or abandons the proceedings after they are commenced (including discontinuance or abandonment of an appeal) is liable to pay the reasonable costs of every other party who has incurred costs in the defence of the civil proceedings concerned until the discontinuance or abandonment.

5 provides, inter alia, as follows:

“2. Subject to the provisions of statute (including sections 168 and 169 of the 2015 Act) and except as otherwise provided by these Rules:

(1) The costs of and incidental to every proceeding in the Superior Courts shall be in the discretion of those Courts respectively.

………….

(3) The High Court, ….. upon determining any interlocutory application, shall make an award of costs save where it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application.”

3.(1) The High Court, in considering the awarding of the costs of any action or step in any proceedings, ……. shall have regard to the matters set out in section 169(1) of the 2015 Act, where applicable.

Summary Procedure — General

6 . It is necessary to review the basis on which summary judgment may be sought and granted as that sheds light on the issue of costs which now arises.

7 . In Promontoria v Burns 3 and AIB v Cuddy 4 Collins J observed that Order 37 RSC, which provides for summary judgment, “is intended to provide a relatively expeditious and inexpensive mechanism for recovering judgment for debts or liquidated demands which are clearly 5 due and owing.” Collins J observed that:

“It is obviously in the public interest, as well as the interests of creditors, that there should be such a mechanism and that it should operate effectively. It is not in the interests of the public — or in the interest of the parties — that straightforward claims for debt or liquidated demand should require to be determined by plenary hearing, with the additional delays and cost that such a hearing involves and the additional burden thereby placed on the resources of the justice system.”

8 . However, Collins J provided vital context in observing that summary judgment can be obtained only within the “proper parameters” and “critical guardrails” provided by Order 37 RSC — for the very reason that:

“A defendant against whom summary judgment is granted is thereby deprived of a full hearing on the merits. Ordinarily, they will not have an opportunity to cross-examine the deponent(s) for the plaintiff, will not be able to compel third parties to give evidence by way of sub-poena and will have no opportunity to seek discovery or avail of any of the other litigation tools available to parties in plenary proceedings. That is justified and proportionate where – and only where – “it is very clear that there is no defence”: Harrisrange 6, paragraph 9(ix).”

9 . Collins J spoke to a question whether a defendant had shown a bona fide defence but his rationale applies equally to the necessity of the Plaintiff's first showing a prima facie claim. It is important that summary judgment be available as an option in claims for liquidated demands but also important that the “guardrails” reflect the fact that summary judgment...