Feniton Property Finance DAC v McCool

JudgeMr. Justice Murray
Judgment Date06 October 2022
Neutral Citation[2022] IECA 217
CourtCourt of Appeal (Ireland)
Docket NumberCourt of Appeal Record No. 2019/378
Feniton Property Finance Designated Activity Company and Pepper Finance Corporation (Ireland) DAC
Eugene McCool

[2022] IECA 217

Woulfe J.

Murray J.

Haughton J.

Court of Appeal Record No. 2019/378

High Court Record No. 2017/2383S




JUDGMENT of Mr. Justice Murray delivered on the 6 th of October 2022

I Background

. The Order of the High Court under appeal issued following an application for judgment on foot of a summary summons and directed that the first plaintiff recover against the defendant in the sum of €2,429,789.73. The reasons for the Order are detailed in a reserved judgment delivered by Noonan J. ( [2019] IEHC 473). The alleged debt the subject of the claim is said by the plaintiffs to arise from a combination of personal borrowings and a guarantee executed by the defendant of monies advanced to Lyngarth Ltd. (‘Lyngarth’), a company of which he was a director and shareholder.


. The original personal borrowings (€150,000) are said to comprise what is described as ‘ an electronic overdraft facility’ advanced by Bank of Scotland (Ireland) Ltd. (‘BOSI’), and provided for in a facility letter of December 2003 as amended in March 2007. This advance is said to have been made available to pay tradesmen and suppliers for balances outstanding on redevelopment work in respect of a property at 159 Howth Road, Dublin. This loan is alleged to be repayable on demand. With interest, and at the time of the judgment of the High Court, the amount due on foot of this facility was said to be €325,780.91.


. As recorded in the summary summons, the borrowings of Lyngarth are alleged to comprise advances from ICC Bank plc (‘ICC’) on foot of facility letters of 21 July 1999 (as amended on 21 September 2004, 5 July 2006, 8 April 2008 and 4 December 2008), (£1,000,000, or €1,353,492.64), 21 January 2002 (as amended by letters of 21 September 2004, 5 July 2006 and 4 December 2008) (€240,605.37) and (following the transfer of the business of ICC to BOSI in 2002) a facility letter dated 28 January 2009. As recorded on the summons, €466,000.00 was advanced on foot of this facility, although in fact this was the amount of the facility, the evidence disclosing that €70,200.00 was drawn down. The first advance is said to have been for the purposes of the acquisition of a site and construction of a hostel in Kinsale, County Cork, the second for the purposes of funding capital expenditure and the third for the purposes of funding the costs of conversion of apartments in Kinsale.


. These facilities were said to have been originally repayable (in the cases of the first and second facilities) by (respectively) 80 and 89 monthly instalments of principal and interest commencing on a date not later than 1 May 2010, and (in the case of the third facility) by one payment not later than 2 years from the date of the facility or such other later date as BOSI might determine. As of the date of the commencement of the hearing of the application for judgment (16 May 2019), it was said that the sums due on foot of these three facilities were, respectively, €2,014,366.76, €434,691.18 and €133,774.99. These included surcharge and default interest. In advance of the second day of the hearing (17 May) the defendant delivered submissions in which inter alia he took issue with the application of default and surcharge interest to the company facilities. By letter dated 20 May, the first plaintiff's solicitors wrote recording their instruction not to seek judgment in respect of the default interest portion of the debt outstanding on these facilities, which at that point stood at €478,824.11. The effect was to reduce the sums due on foot of the combined personal and company facilities to a total of €2,429,789.73.


. The first plaintiff says that in consideration of ICC and BOSI agreeing to make available these facilities to Lyngarth, the defendant executed a guarantee and indemnity dated 30 January 2009 in favour of BOSI. It is said that pursuant to that instrument, the defendant guaranteed the payment on demand of all sums due and owing by Lyngarth to BOSI at the date of the guarantee or at any time thereafter on any account whatsoever, together with interest thereon.


. In March 2002, the business of ICC was transferred to and becaome vested in BOSI. This occurred via the Central Bank Act 1971 (Approval of Scheme of Bank of Scotland (Ireland) Limited and ICC Bank plc Order) 2002, SI No. 27 of 2002. As of 1 January 2011, the business of BOSI was vested in Bank of Scotland Ltd (‘BOS’), the alleged debts the subject of this claim being purportedly assigned by BOS to the first plaintiff in 2015. In the meantime (in October 2014) a receiver was appointed by BOS in respect of certain assets of Lyngarth and of two residential units owned by the plaintiff at 145A and 157A Howth Road (these having been charged as security for the personal facility). According to the plaintiff's submissions a total sum of €1,549,665.00 in net realisations was applied against the defendant's personal indebtedness to the first plaintiff, although this was applied to secured personal loans advanced to the defendant that are not the subject of these proceedings.


. The assets and undertaking to which the Lyngarth receiver was appointed included a property owned by it in Kinsale, County Cork (to which I will return later). The receiver sold that property in September 2016. The first plaintiff says in its submissions that the sale of the Kinsale property by the receiver resulted in a total sum of €262,570 in net realisation being applied against Lyngarth's indebtedness to the first plaintiff. 1 These proceedings duly issued on 27 October 2017 (repayment of the personal facility and company facilities was demanded by BOS in July 2014 and by the first plaintiff in October 2017).


. Following the judgment of the High Court, the defendant applied to this court by motion dated November 2019 for the joinder of BOS, the receivers and Lyngarth as parties to the proceedings and for Orders combining all current proceedings and all proposed or future proceedings originating from the accounts of BOS with the defendant or Lyngarth. That application was refused on 21 February 2020 by order of Costello J.


. On 2 July 2021 (also by order of Costello J.) the second plaintiff (Pepper Finance Corporation (Ireland) DAC) was joined to the proceedings pursuant to Order 17 Rule 4 of the Rules of the Superior Courts (‘RSC’), the first plaintiff having on 7 August 2020 assigned the legal ownership of inter alia the loans and guarantee the subject of these proceedings to that entity. Costello J. made it clear that in the event that the appeal was unsuccessful, it would be necessary for liberty to execute the judgment under Order 42 Rule 36 RSC to be sought before the High Court by the second plaintiff. It is at that point that any issues around the validity of that assignment fall to be determined. The first plaintiff is now in voluntary liquidation. The plaintiffs have requested that the court make an order amending the title to the proceedings to reflect the fact that the first plaintiff is now in voluntary liquidation, a course of action to which the liquidator has consented.

II Relevant principles

. The relevant principles governing an application for summary judgment have been stated and restated many times. I summarised them in my judgment in Onyenmezu v. Firstcare Ltd. [2022] IECA 11 (at paras. 23 to 24). A court in exercising the jurisdiction to grant an application for summary judgment must proceed with care and caution. The fundamental question it must address on such an application is whether there is a fair and reasonable probability of the defendant having a real or bona fide defence, in law, on the facts or both. This is not the same thing as a defence which will probably succeed or even a defence whose success is not improbable. If the court concludes that there is a fair and reasonable probability of the defendant having a defence thus understood, the court must refuse to enter judgment. In interrogating that issue, the court must satisfy itself before entering judgment that it is ‘ very clear’ that the defendant has no defence. Necessarily, the court must assess the credibility of the defence presented, but in doing so does not engage in any qualitative assessment of the cogency of whatever evidence may be advanced by the defendant by way of asserting a defence. Indeed it must be remembered that in determining whether the defendant has established such a defence for the purposes of an application for summary judgment the court must assess not merely whether the defendant has established a fair and reasonable probability of a defence on the basis of facts known at the time of the application, but also whether there is a real prospect that some material support for that party's case would emerge if the case proceeded to plenary hearing with discovery, interrogatories and oral evidence.


. At the same time, while the court must be cautious in granting summary judgment, and while the requirement that a defendant establish a fair and reasonable probability of the defendant having a defence is a relatively low threshold, it is a threshold: it is neither in the public interest nor in the interests of the parties that straightforward claims for a debt or liquidated demands should require to be determined by plenary hearing, with the additional delay and cost that such a hearing involves and the additional burden thereby placed on the resources of the courts (see Promontoria (Aran) Ltd. v. Burns [2020] IECA 87 (‘ Burns’ at para. 4). The defendant must, accordingly, lay a basis on which the court can conclude that there is in truth an issue to be tried, and that that issue is neither...

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    ...upon the judgment of Murray J. in this Court in Feniton Property Finance DAC & Pepper Finance Corporation (Ireland) DAC v. Eugene McCool [2022] IECA 217 where, at para. 118, Murray J. stated: “In this case, unlike in O'Malley, the point as to deficiency of the pleadings was not raised in th......
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    ...to find that the properties had been sold at an undervalue (see paras. 37 and 38). 168 . In Feniton Property Finance DAC v. McCool [2022] IECA 217, the court had to consider whether the receiver had acted negligently in selling the property at what the borrower alleged was a gross undervalu......
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