Irish Bank Resolution Corporation Ltd v Higgins

• Jurisdiction: Ireland
• Judge: Mr. Justice Cooke
• Judgment Date: 23 April 2013
• Neutral Citation: [2013] IEHC 178
• Court: High Court
• Date: 23 April 2013

[2013] IEHC 178

THE HIGH COURT

[No. 2858 S./2012]

Irish Bank Resolution Corporation Limited v Higgins

MR JUSTICE COOKE

APPROVED TEXT

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED

PLAINTIFF

AND

NIALL HIGGINS AND VALERIE HIGGINS

DEFENDANTS

EEC REG 44/2001

EEC REG 44/2001 ART 27

EEC REG 44/2001 ART 23

EEC REG 44/2001 ART 28

EEC REG 44/2001 ART 2(1)

EEC REG 44/2001 ART 15(2)

EEC REG 44/2001 ART 3(1)

EEC REG 44/2001 ART 23(1)

POPELY v POPELY 2006 4 IR 356 2006/48/10287 2006 IEHC 134

GUBISCH MACHINEN FABRIK KG v PALUMBO CASE NO C-144/86 1987 ECR 4861

TATRY, IN RE CASE NO C-406/92 1999 QB 515 1999 2 WLR 181 1994 ECR I-5439

GANTNER ELECTRONIC GMBH v BASCH EXPLOITATIE MAATSHAPPIJ BV 2003 ECR I-4207

EEC REG 44/2001 ART 28 PARA 3

EEC REG 44/2001 ART 15

EEC REG 44/2001 S4

EEC REG 44/2001 ART 16

EEC REG 44/2001 ART 17

EEC REG 44/2001 ART ART 5(1)

ERICH GASSER GMBH v MISAT SRL 2005 AER (EC) 517 2005 QB 1 2004 3 WLR 1070 2003 ECR I-14693

BRUSSELS CONVENTION (EUROPEAN CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS) 1968 ART 17

BRUSSELS CONVENTION (EUROPEAN CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS) 1968 ART 21

BRUSSELS CONVENTION (EUROPEAN CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS) 1968 ART 22

Jurisdiction – Choice of court – Loans – Payment of loan – Outstanding loan repayments

Facts: Before the court was the issue of jurisdiction; a loan agreement which was the subject of proceedings in a French Tribunal, contained a governance clause conferring exclusive jurisdiction on Irish courts. The defendants, borrowers who the bank sought to recover payment from, in this hearing claimed that the court was obliged to stay the proceedings in Ireland, as the same cause of action between the same parties, was already subject to proceedings they had already instigated in France which formed the "first court seised" in conformance with Art 27 of Council Regulation 44/2001. The bank relied on Art 23 that the Irish courts had jurisdiction of the matter due to the governance clause.

Cooke J declined jurisdiction because of the governance clause would not accord with Art 23 despite the governing clauses of the agreement being valid; this did not exclude the French Tribunal where proceedings had already been commenced.

The proceedings in France did not question that Irish law was the substantive law governing the contracts. It did not go to the main issue of the Bank"s entitlement to recover the debt and that was the cause of action before the High Court, those proceedings did not therefore concern the "same action" under Art 27, Popley vPopley [2006] 4 IR 356 considered.

The court stayed proceedings until the issue of jurisdiction had been addressed and determined in the "first court seised" in France, after which the court would grant the bank"s application for judgment.

1 1. In this action commenced by summary summons on the 27 ^th July, 2012, the plaintiff ("the Bank") seeks to recover payment from the defendants of a sum of €2,805,116.47 which is claimed to be due and owing as the balance outstanding on foot of four loan agreements. The loan agreements are particularised in the summons and are dated the 20 ^th December, 2004; 17 ^th October, 2006; 18 ^th June, 2007 and 7 ^th February, 2008. The total amounts drawn down amounted to €3,282,550.66, and credit is given for total repayments made by the defendants in the sum of €477,434.19 leaving the balance outstanding in the amount claimed. The defendants, who appear personally without legal representation, have entered a conditional appearance for the purpose of contesting the jurisdiction of this Court.

2 2. The defendants are husband and wife and have been permanently resident in France since 2004 and it is not disputed that the loan agreements in question were made with them by the plaintiff's predecessor Irish Nationwide Building Society Limited ("INBS") for the purpose of enabling the defendants to finance the purchase of apartments and commercial properties by way of investment in France. Nor is it disputed that the amounts of the loans in question have been secured by charges taken in accordance with French law upon the properties concerned.

3 3. In evidence given by affidavit on their behalf, the first named defendant has explained that he and his wife sold their house in Ireland in 2004 and moved permanently to France where they acquired their current principal private residence which forms part of the security for the loans in question. They have been both resident and domiciled in France since and have no presence or business interests in Ireland.

4 4. The first named defendant explained that they had originally borrowed funds from a French bank but were encouraged in 2004 to transfer the borrowings to INBS which was at the time endeavouring to build up its loan book in France and had been licensed there as a bank for the purpose of carrying on banking business.

5 5. The defendant claims that until 2008 relations with INBS were good and the rental incomes from their investments were applied to service the loans. In 2008, however, it became apparent that INBS was facing financial difficulties and the defendants began to come under what he described as "extreme pressure" with constant telephone calls from INBS insisting that loans should be repaid. Furthermore, INBS imposed a series of increases in the rates of interest charged upon the loans.

6 6. According to the first named defendant he and his wife made repeated attempts to resolve the situation with INBS as demonstrated by the large volume of correspondence and emails exchanged, but without success. Ultimately, the defendants were obliged to seek legal advice in France with the result that in 2010 a proceeding was commenced by them against I.N.B.S. before the Tribunal de Grande Instance de Grasse, (the "French Tribunal"). It is the initiation and existence of this pending proceeding in France which gives rise to the issue as to jurisdiction now before this Court.

7 7. Briefly stated, the defendants contend that in accordance with the provisions of Council Regulation 44/2001 of the 22 ^nd December, 2000, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (O.J. L 12, of 16. 1.2001) (the "Brussels Regulation") this Court is obliged to stay the present proceeding in accordance with Article 27 because the same cause of action between the same parties is the subject of the French proceedings and the French Tribunal is "the Court first seised". The Bank, on the other hand, submits that the position is to be determined primarily by reference to Article 23-Prorogation of Jurisdiction, because each of the loan agreements contains a specific clause conferring exclusive jurisdiction upon the Irish courts and submitting all disputes to be determined in accordance with Irish law. The Bank also submits that, in any event, Article 27 does not apply because the causes of action before this Court and the French Tribunal are not the same within the sense of Article 27. In the alternative, the Bank argues that even if Article 28 of the Brussels Regulation could be said to apply upon the ground that the two sets of proceedings constitute "related actions", this Court then has a discretion as to whether grant or refuse the stay sought. It is argued that in that event there are strong reasons for refusing to exercise the discretion in favour of the defendants having regard particularly to the fact that the proceedings in France have been commenced in clear disregard of the jurisdiction clauses in the loan agreements.

8 8. It is necessary, accordingly, to examine these arguments in greater detail. Before doing so it should be pointed out that there is some uncertainty in the evidence placed before the Court as to the precise scope and effect of the pending proceedings before the French Tribunal. Affidavit evidence in that regard has been provided from Maitre Sichov, avocat of the Bar of Grasse, whose firm represents the defendants in that proceeding. That evidence has been replied to on behalf of the Bank by affidavit evidence of Maitre Pernot of the firm representing the Bank. In addressing the Court in person, the first named defendant sought to explain his understanding of the purpose of the French proceedings and the possible effects of the orders which the French Tribunal might make. It must be pointed out however, that such information is not admissible as evidence upon which the Court could assess the nature and effect of the French proceedings. The Court is confined for that purpose to the evidence given on affidavit by the French lawyers and to the terms of the summons and other papers in the French proceeding so far as made available to this Court in translation.

9 9. The primary rule as to jurisdiction in the Brussels Regulation is that contained in Article 2.1 namely, that persons domiciled in a Member State are to be sued in the courts of that Member State whatever their nationality. In this case, in the absence of any evidence to the contrary, it would appear clear that the defendants are now domiciled in France having become personally resident there and severed all contact with this Member State. Moreover, as explained below, the defendants may be deemed to be domiciled in France under Article 15.2 of the Brussels Regulation if it should be held that the loan agreements are "consumer contracts" in the sense of that Regulation.

10 10. According to Article 3.1, persons domiciled in a Member State may be sued in the courts of a different Member State only where one of the rules set out in Sections 2 to 7 of that Chapter (that is, Articles 2 to 24) of the Regulation apply. As already indicated, the...