Danske Bank v Michael Higgins and Another

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice McDermott
• Judgment Date: 05 June 2015
• Neutral Citation: [2015] IEHC 371
• Date: 05 June 2015

[2015] IEHC 371

THE HIGH COURT

[No. 3696 S/2013]

Danske Bank A/S (t/a Danske Bank) v Higgins

No Redaction Needed

BETWEEN

DANSKE BANK A/S TRADING AS DANSKE BANK

PLAINTIFF

AND

MICHAEL HIGGINS AND MAUREEN HIGGINS

DEFENDANTS

Banking & Finance – Default in repayment of loan – Summary judgment – Defence of non est factum

Facts: The plaintiff sought an order for summary judgment against the defendants pursuant to the default in repayment of loan facility advanced to the defendants. The defendants contended that they were not ad item with the plaintiff regarding the loan facility letter, that the plaintiff breached the Code of Conduct on Mortgage Arrears and that s. 30 and s. 54 of the Consumer Credit Act must be applied to the loan facility.

Mr. Justice McDermott granted an order for summary judgment against the defendants. The Court held that in order to plead the defence of non est factum, it must be shown that there was a fundamental difference between what was signed and what the defendants thought they were signing and the mistake must be of a general character and there should not be any negligence on part of defendants. The Court held that the loan facility document made it amply clear that the defendants had to repay the loan within six months installments to be paid each month and there was no ambiguity in the document to interpret it in a different manner. The Court held that it should exercise its discretion to grant summary judgment with care and caution and only in cases where a just and reasonable defence had been established. The Court refrained from doing a deep analysis of the Code of Conduct on Mortgage Arrears and observed that in a case where there was a breach of a moratorium, any order seeking possession would constitute illegality rather than compliance with the Code.

1 JUDGMENT of Mr. Justice McDermott delivered on the 5th day of June, 2015

2 1. The plaintiff seeks summary judgment in the amount of €253,959.68 pursuant to the terms and conditions of a loan facility made available to the defendants in accordance with the terms of a letter of the 14 ^th November 2012 which was duly accepted by the defendants on the 25 ^th November 2012 and drawn down to their account and which they have failed to repay despite a demand to do so.

3 2. An initial letter of demand issued on the 2 ^nd October 2013 followed by a further letter from the plaintiff's solicitors dated the 29 ^th October.

4 3. A summary summons issued on the 8 ^th November, 2013 and an appearance was entered on the 16 ^th December. A motion for judgment was issued on the 23 ^rd January 2014 grounded on the affidavit of Ms. Niamh Fitzmaurice.

5 4. The defendants contend that they have a bone fide defence to the plaintiff's claim and that the matter should be sent for trial by way of plenary hearing.

The Legal Test

6 5. The principles applicable to this application are well established. The court must consider whether it is satisfied that the defendants have established that there is a fair and reasonable probability that they have a real and bone fide defence. This does not mean that the defendants must establish that the defence will probably succeed; rather that it is probable that they have a bone fide defence (see Aer Rianta v. Ryanair [2001] 4 I.R. 607). These principles were summarised by McKechnie J. in Harrisrange Limited v. Michael Duncan [2003] 4 I.R. 1 as follows:-

7 i "(i) the power to grant summary judgment should be exercised with discernible caution;

8 (ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done;

9 (iii) in so doing the court should assess not only the defendant's response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting affidavit evidence;

10 (iv) where truly there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use;

11 (v) where however, there are issues of fact which, in themselves, are material to success or failure, then their resolution is unsuitable for this procedure;

12 (vi) where there are issues of law, this summary process may be appropriate but only so if it is clear that fuller argument and greater thought, is evidently not required for a better determination of such issues;

13 (vii) 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 said credible?", which latter phrase I would take as having as against the former an equivalence of both meaning and result;

14 (viii) this test is not the same as and should be not elevated into a threshold of a defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence;

15 (ix) leave to defend should be granted unless it is very clear that there is no defence;

16 (x) leave to defend should not be refused only because the court has reason to doubt the bona fides of the defendant or has reason to doubt whether he has a genuine cause of action;

17 (xi) leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally;

18 (xii) the overriding determinative factor, bearing in mind the constitutional basis of a person's right of access to justice either to assert or respond to litigation, is the achievement of a just result, whether that be liberty to enter judgment or leave to defend, as the case may be."

19 (See also Allied Irish Banks Plc. v. Farrell [2014] IEHC 395 per Ryan J.)

The Proposed Defence

20 6. The defendants raise three issues by way of an intended defence:-

21 a) The defendants state that they were not ad idem with the plaintiff in respect of the terms of the loan facility letter. The plaintiff maintains that the loan agreement was for a period of six months only and that the plaintiff was entitled to payment of the full amount at the end of that period or upon any default of payment within it. The defendants contend that the agreement was to provide a vehicle for a moratorium on payments pursuant to their previous agreements and give a breathing space within which payments of a lesser amount might be maintained subject to review after six months but that they would retain the full benefit of the long term home loan secured on their family home and 80 acres of farmland.

22 b) The defendants contend that the plaintiff was in breach of an implied term to deal with them fairly and in particular in accordance with the Code of Conduct on Mortgage Arrears (CCMA) (Central Bank of Ireland 2013).

23 c) The defendants claim that the provisions of s. 30 and 54 of the Consumer Credit Act 1995 ought to have applied to the loan facility and that these proceedings issued in breach of the protections provided by the Act.

Chronology of Events

24 7. The defendants obtained a fixed rate home loan from National Irish Bank (now the plaintiff) pursuant to a letter of offer dated 6 ^th June, 1997. The primary purpose of the loan was the purchase of the family home at 6 Woodhaven, Merlin Park, Galway and it was secured on that property and 80 acres at Kilkerrin, Mount Bellew, Ballinasloe, Co. Galway. This loan was for a period of 20 years from the drawdown of funds. The amount advanced was £290,000.

25 8. Mr. Higgins was running a farm business from the lands at Kilkerrin and Mrs. Higgins having taken redundancy from the Bank of Ireland in or about 1997 commenced to run a bed and breakfast business in the family home from about that time.

26 9. Additional loan facilities were granted by the bank from time to time. On the 2 ^nd April 2007 an amount of €265,000 was advanced primarily for the purpose of obtaining an advance of €20,000 to assist in the construction of a new slatted shed but also to restructure all existing term borrowings. The letter of offer stated that it superseded and cancelled the bank's facility letters dated the 6 ^th June 1997, 24 ^th April 2003, 7 ^th October 2005 and 26 ^th June 2006. This loan covered 118 months of instalments of capital and interest commencing on the date of drawdown of the loan.

27 10. A further restructuring of loan accounts was secured by the provision of additional loan facilities again by letter of loan offer dated 25 ^th June 2008 in the amount of €281,000. Once again a provision of new funds in the sum of €25,000 was advanced to assist in the construction of a farm building. This letter of loan also stated that it superseded and cancelled the bank's letter dated 2 ^nd April 2007. It was repayable by interest only repayments for the first 24 months followed by 156 consecutive monthly payments of interest and capital. It continued to be secured on the property and lands at Kilkerrin, Ballinasloe.

28 11. The defendants acknowledge that they had financial difficulties during 2011 and early 2012 which were caused by poor weather and the reduced profitability of the farm. They maintained communication with the bank concerning these difficulties and sought restructuring of the loan to overcome them. They claim that they sought a restructuring by way of six monthly repayments to cover interest and partial capital in the sum of €2,000 per month by way of a temporary moratorium.

The Agreed Terms

29 12. The defendants accept that the terms of the restructured loan facility are...