Irish Bank Resolution Corporation Ltd (in special liquidation) v Peter Lavelle

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 21 May 2015
• Neutral Citation: [2015] IEHC 321
• Court: High Court
• Date: 21 May 2015

[2015] IEHC 321

THE HIGH COURT

[No. 2190 S/2013]

Irish Bank Resolution Corp Ltd (in special liquidation) v Lavelle

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED (IN SPECIAL LIQUIDATION)

PLAINTIFF

AND

PETER LAVELLE

DEFENDANT

Banking & Finance – Summary judgment – Practice and Procedures – Substitution of parties – S. 28 (6) of the Supreme Court of Judicature Act (Ireland) – O. 15 r. 2 of the Rules – O. 17 r. 4 of the Rules

Facts: The applicant sought an order for being substituted as sole plaintiff in the proceedings as having purchased the credit facilities from the defendant inclusive of rights and benefits from the plaintiff. The defendant contended that the applicant failed to show evidence of legal assignment under s. 28 (6) of the Supreme Court of Judicature Act (Ireland) and could not be impleaded as party pursuant to o. 17 r. 4 and o.15 r. 2 of the Rules. The defendant contended that filing of a counterclaim by him against the plaintiff would necessitate the plaintiff to remain a party to the proceedings.

Ms. Justice Baker made an order for substituting the applicant as the sole plaintiff in place of plaintiff in the proceedings. The Court held that the loan sale agreement between the applicant and the defendant was the prima facie evidence of an assignment in writing of the chose in action to the applicant thereby meeting the criteria set by s. 28 (6) of the Supreme Court of Judicature Act (Ireland). The Court found that o.15 r. 2 had no application in the case as it pertained to an action commencing in the name of wrong plaintiff due to bona fide mistake. The Court held that o.17 r. 4 would be applicable to the proceedings as the phrase ‘change’ encompassed a change in the identity of a body who now owned the chose in action.

1 1. This is a motion by Stapleford Finance Limited ("Staplefor") to be substituted as sole plaintiff in these proceedings in place of Irish Bank Resolution Corporation Ltd. (In Special Liquidation), ("IBRC"). Stapleford claims to have purchased the defendant's credit facilities including all rights and benefits thereunder from IBRC and makes the application for substitution in that context.

2 2. The defendant opposes the application for substitution, and contends that IBRC ought not be removed from the proceedings. While the opposition to the application was originally voiced as opposition to the joining of Stapleford to the proceedings, in the course of argument counsel for the defendant accepted that her opposition was primarily to the removal of IBRC as plaintiff, and she does not object to the continuation of the proceedings by IBRC and Stapleford as co-plaintiffs.

3 3. IBRC supports the application by Stapleford.

The law

4 4. Counsel accept that the law on the substitution of parties is found in a number of recent High Court authorities starting with IBRC v. Comer & Anor. [2014] IEHC 671, and thereafter, IBRC (In Special Liquidation) v. Morrissey [2014] IEHC 470, IBRC (In Special Liquidation) v. McCaughey [2014] IEHC 517, Lombard IrelandLimited v. Kevin Devlin Transport Limited & Anor. [2014] IEHC 653 and IBRC (In Special Liquidationj v. O'Driscoll (Unreported, High Court, 6 ^th February 2015, Peart J.)

5 5. Each of the judgments listed above were applications for substitution following the sale of loan books by lending institutions, and indeed most of them are made in proceedings in which IBRC had commenced proceedings. In each case IBRC was removed from the proceedings and substituted by the purchaser of the relevant loan book. Counsel for the defendant does not contend that Stapleford may not make the application although it is not yet a party to the proceedings: Bank of Ireland Finance Limited v. Browne (Unreported, High Court, 24 ^th June 1996, Laffoy J.).

6 6. Although the law is well established, and ought not to have caused much difficulty, the defendant raises a number of issues in respect of which no authority expressly on point has been identified. It is contended by counsel for the defendant that certain proofs have not been met by the applicant as follows:-

1 ) That the applicant has not shown evidence of a legal assignment for the purposes of s. 28(6) of the Supreme Court of Judicature Act (Ireland) 1877.

2 ) That a substitution application may not be made under to O. 17 r.4 of the Rules.

3 ) That a substitution order may not be made under O. 15 r.14, and that a party may be added and not substituted under that Order.

4 ) That O. 15 r.2 is available to an applicant in limited circumstances only, not applicable in this case, namely where there was a bona fide mistake at the commencement of the action.

5 ) Because this defendant has advanced a counterclaim to which s. 12(2)(b) of the Irish Bank Resolution Corporation Act 2013 applies, and by virtue of which IBRC retains obligations, it ought not to be removed from the proceedings.

7 7. I will deal with each of the objections in turn but before I do so I will briefly set out the nature of the proceedings and the motion.

The proceedings

8 8. IBRC seeks summary judgment for the recovery of monies in the sum of more than €5.7 million arising from a number of loan agreements. A motion seeking liberty to enter final judgment issued on the 20 ^th May, 2014 returnable for the 30 ^th June, 2014, and was listed for mention and has travelled with the application for substitution.

9 9. The application for substitution was brought by Stapleford by notice of motion dated the 23 ^rd July, 2014 and has been adjourned from time to time for the purposes of completing the affidavit evidence. In all, six affidavits have been sworn in the motion, including an affidavit of Peter Lavelle, the defendant, sworn on the 27 ^th November, 2014. While it is the case that applications for substitution may be brought ex parte the application was brought on notice in the light of correspondence from the solicitors for the defendant requesting that they be given notice of the application, and identifying the fact that the defendant asserts a counterclaim against IBRC.

10 10. The motion seeks relief pursuant to O. 17 r.4 and/or O. 15 r.14 and ancillary orders dispensing with the need for further service. Having regard to the objections raised by Mr Lavelle, I turn now to deal with the applicable provisions of the Rules on which he relies, but will first deal with the assignment of the debt and how this is said to have been done.

Section 28 of the Supreme Court Judicature Act (Ireland) 1877

11 11. Section 28(6) of the Supreme Court Judicature Act (Ireland) 1877 provides the means by which a legal assignment of a debt may be effected:-

"Any absolute assignment, by writing under the hand of the assignor (not purporting to be by way of charge only), of any debt or other legal chose in action, of which express notice in writing shall have been given to the debtor trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed,) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same, without the concurrence of the assignor: Provided always, that if the debtor, trustee, or other person liable in respect of such debt or chose in action shall have had notice that such assignment is disputed by the assignor or any one claiming under him, or of any other opposing or conflicting claims to such debt or chose in action, lie shall be entitled, if he think fit, to call upon the several persons making claim thereto to interplead concerning the same, or he may, if he think fit, pay the same into the High Court of Justice under and in conformity with the provisions of the Acts for the relief of trustees."

12 12. An assignment of a debt or chose in action, thus, is made in writing under the hand of the assignor, and express notice in writing is to be given to the debtor. The effective date of assignment is the date of such notice. It was contended that Stapleford has not taken an assignment in writing of the relevant part of the IBRC loan book. Further affidavit evidence was adduced to add exhibits previously redacted, and in the course of argument counsel accepted that the affidavit evidence of the applicant now establishes that an assurance has been effected which prima facie transfers the loan book.

13 13. In IBRC v. Comer & Anor, Kelly J. identified the test applicable to an application for substitution, namely that there be prima facie evidence of an assignment of the relevant debt. His judgment has been approved in a number of later cases, specifically by Finlay Geoghegan J. in IBRC (In Special Liquidation) v. Morrissey and Costello J. in IBRC (In Special Liquidation) v. McCaughey and more recently by Peart J. in IBRC (In Special Liquidation) v. O'Driscoll. The rationale for this approach is found in the old case of Long v. Crossley [1877] CH 388, referred to by Costello J. in her judgment, that the object of the Rules was that a case be framed so that it can be adjudicated upon by the court. Peart J. in IBRC (In Special Liquidation) v. O'Driscoll commented that the matter was "procedural and simple", and was so characterised notwithstanding that applications for substitution are brought on notice. This approach is consistent with the general approach of the courts that the function of pleadings is to ensure that all issues are before the court.

14 14. The evidence before me that Stapleford has taken an assignment is as follows: til By loan sale agreement dated the 28 ^th March, 2014 IBRC, acting...