Connell v Danske Bank

• Jurisdiction: Ireland
• Judge: Ms. Justice Stewart
• Judgment Date: 14 December 2017
• Neutral Citation: [2017] IEHC 765
• Docket Number: [2014 No. 4532 P]
• Court: High Court
• Date: 14 December 2017

[2017] IEHC 765

THE HIGH COURT

CHANCERY

Stewart J.

[2014 No. 4532 P]

BETWEEN

JOHN CONNELL

PLAINTIFF

AND

DANSKE BANK A/S

DEFENDANT

Banking and Finance - Practice & Procedure - Loan default - Restructuring agreement - Parol evidence - Validity of oral evidence - Inherent jurisdiction - Fraudulent misrepresentation - O. 19, r, 28 of the Rules of the Superior Courts - Striking out of claim

Facts: The defendant filed a motion to strike out the plaintiff's claim. In the same motion, the defendant also sought an order for summary judgment against plaintiff for defaulting on the payment of loan. The plaintiff contended that he was forced to sign the facility letters and deprived of the opportunity to get legal advice before signing those letters. The defendant contended that the plaintiff was strongly encouraged by the bank to seek independent legal advice before signing. The defendant presented warnings and declarations included in the facility letters, which the plaintiff signed.

Ms. Justice Stewart refused to grant an order for summary judgment to the defendant. The Court also refused the application to strike out the plaintiff's claim. The Court observed that the onus rested solely on the defendant to establish that an order for striking out the proceedings should be made. The Court pointed out that there were deficiencies in the evidence presented before the Court and the Court was not informed about the full facts of the case and thus, in those circumstances, an order for striking out the claim could not be made. The Court held that the business manager of the defendant did make a misrepresentation as to the intended agreement and thus, there was a fraudulent misrepresentation. The Court opined that there was no clear, undisputed evidence that the relevant land loan was in default before the defendant closed the plaintiff's accounts.

JUDGMENT of the Hon. Ms. Justice Stewart delivered on the 14th day of December, 2017.

1 The motion currently before the Court relates to a plenary summons dated 16th May, 2014, which seeks numerous reliefs which relate primarily to the operation of a facility letter dated 22nd September, 2011. On 24th October, 2016, the defendant issued a notice of motion seeking to have the plaintiff's claim dismissed as not disclosing a reasonable cause of action, unsustainable, bound to fail, frivolous and vexatious and/or an abuse of process. Dismissal was sought pursuant to O. 19, r. 28 of the Rules of the Superior Courts and/or pursuant to the Court's inherent jurisdiction. The defendant also seeks judgment against the plaintiff for the monies owed under the facility letter and has sought summary judgment from this Court in the same notice of motion that sets out its application to strike out the plaintiff's claim.

2 The grounding affidavit to this motion was sworn by Marie Moylett, a debt recovery manager employed by the defendant, and is dated 23rd August, 2016. She sets out therein the following background facts. Two loans were provided to the plaintiff by the defendant (referred to herein as the Land Loan and the Shed Loan) on 18th June, 2007, and 4th September, 2008. The Land Loan amounted to €120,000 for assistance in the purchase of lands and was to be repaid on a capital-and-interest bi-annual basis over 25 years. The Shed Loan amounted to €80,000 for assistance in the construction of a slatted shed and was to be repaid on a consecutive quarterly basis over ten years. These loans were regularly in arrears and gave rise to a letter of demand dated 3rd December, 2010, in respect of the Shed Loan, which became immediately due and owing. Some payments were made but the majority of the debt remained unsatisfied and another demand letter issued on 7th June, 2011. Following negotiations between the parties, both loans were restructured by way of supplemental facility letters dated 19th and 22nd September, 2011 (both of which were signed by the plaintiff on the 23rd September). The latter of these restructured the Shed Loan and is the subject matter of these proceedings. The plaintiff continued to default on the Shed Loan and a letter of demand issued in respect of both loans on 12th November, 2013. The Bank appointed a receiver in respect of these loans on 17th April, 2014, per the terms of a mortgage dated 20th August, 2007, which operates over the plaintiff's land and acts as security for both loans.

3 The plaintiff's action is grounded in allegations that the 2011 facility letter is void for uncertainty and that he was deprived of the opportunity to get legal advice before signing both the 2011 and the original Shed Loan facility letters. The challenge to the latter of these only arose in the plaintiff's Statement of Claim and was not included in the plenary summons. Ms. Moylett draws the Court's attention to the fact that the Land Loan is not challenged in any way and avers that this is sufficient to call in the Shed Loan, as the terms of the Shed Loan clearly state that it can be called in if the plaintiff defaults on any other facility provided by the defendant. Even if the 2011 facility letter were set aside, this would allegedly have no substantive impact on the position of the parties, as the Shed Loan would still be due and owing under its original terms (either on foot of its defaults under the original facility letter or on foot of the defaults of the Land Loan). Ms. Moylett avers that, as evidenced in the terms of the facility letters, the plaintiff was strongly encouraged by the Bank to seek independent legal advice before signing. In this respect, she refers to the warnings and declarations included in the facility letters, which the plaintiff signed. At the hearing, counsel also highlighted the warning box included at the bottom of various letters, which specifically states that default on one facility can lead to all loans being called in. The Court's attention is also drawn to terms in the facility letters, which state that said terms are only variable by a duly appointed signatory and such amendments must be in writing. In the run up to the restructuring, Ms. Moylett avers that the plaintiff was regularly contacted by the defendant to inform him that both of his loans were in arrears. Ms. Moylett avers that this ongoing correspondence and negotiation, along with the fact that the plaintiff was given a number of weeks to accept the facilities, is inconsistent with the plaintiff's allegation that he was rushed or pressured into the restructuring agreement.

4 Ms. Moylett avers that the Land Loan was restructured to facilitate 42 consecutive instalments every six months and that the plaintiff makes no complaint regarding this loan. She avers that the Shed Loan was restructured to facilitate two consecutive annual instalments to be repaid on a capital-and-interest basis and to conclude in September, 2013. However, the terms of the facility letter refer to a ten year repayment profile. According to Ms. Moylett, this means that interim repayments (in effect, the plaintiff's 2012 repayment) would be calculated as if the plaintiff had ten years to repay the loan but that the final payment of the loan (the balance of the loan minus the 2012 repayment) would still occur in 2013. One repayment was made by the plaintiff on 18th January, 2012. Ms. Moylett avers that this payment was insufficient to meet the terms of the restructuring and that the plaintiff was repeatedly contacted over the course of 2012 and 2013 to communicate that fact. On that basis, the letter of demand dated 12th November, 2013, calling in both loans was issued and a receiver was appointed six months later. Ms. Moylett also avers that the plaintiff did not adhere even to his alleged understanding of the loan's operation, as such understanding would mandate a payment after year 1 of the restructure, which was not made.

5 Ms. Moylett avers that interest continues to accrue on the outstanding debt, which amounts to approximately €156,313.83 as of the date of swearing. This amount comprises of the balance of the Land Loan and the Shed Loan plus interest, which accrues on a daily rate (€7.06 and €5.80 respectively). It is stated that the Bank would have sought summary judgment against the plaintiff, were it not for the existence of these proceedings, and that the substance of the plaintiff's action would not amount to a bona fide defence in summary proceedings. Ms. Moylett avers that, even if the plaintiff were to succeed on all the legal and factual issues, it would have no impact on his practical position because the Shed Loan remains due and owing under its original terms and/or on foot of the failure to repay the Land Loan. On that basis, it is stated that these proceedings are frivolous, vexatious and an abuse of process. Ms. Moylett swore a supplemental affidavit dated 9th February, 2017, in which she remedied a procedural flaw in her original affidavit related to the witnessing of one of the exhibits attached thereto.

6 The plaintiff, John Connell, swore an affidavit dated 7th March, 2017. He avers that he met with the Business Manager attached to his accounts at that time, Danny Hamilton, on the 9th and 23rd September, 2011. The plaintiff avers that the following agreement was reached at the first of these meetings:

- Payments made to him by the Dept. of Agriculture would be mandated directly to the defendant. The term of the Shed Loan would be extended from its remaining seven years to be paid over the course of ten years, with annual interim payments every December. Bi-annual payments would be made every June and December in respect of the Land Loan

Mr. Connell avers that, at the latter of these meetings, he was presented with documentation for the first time and advised to sign them accordingly. He avers that the contents of the facility letters were not read over to him and he did not receive any independent legal...