Irish Bank Resolution Corporation (in special liquidation) v Gerard McCaughey

JurisdictionIreland
JudgeMr. Justice Clarke
Judgment Date11 July 2014
Neutral Citation[2014] IESC 44
CourtSupreme Court
Docket Number[S.C. No. 70 of 2014]
Date11 July 2014
Irish Bank Resolution Corp (in special liquidation) v McCaughey
Between/
Irish Bank Resolution Corporation (in special liquidation)
Plaintiff/Respondent

and

Gerard McCaughey
Defendant/Appellant

[2014] IESC 44

Clarke J.

Laffoy J.

Dunne J.

[Appeal No: 70/2014]

THE SUPREME COURT

Bank debt - Summary judgment jurisdiction of the High Court - Special liquidation - Sums of money lent - Repayment and interest to be charged - Various investments - Loan agreements - Collateral agreement - Counter-claim - Mis-selling various investment projects - Whether arguable case - Whether investment project had come to an end

Facts A series of credit agreements and facility letters between Mr. McCaughey and Anglo were executed between the 1st September, 2006 and 28th March, 2007. Each agreement contained a number of common features. Each was executed by the defendant. Each expressly provided that the facility was to be repayable on demand by the Bank at its sole discretion without providing a reason for such demand. They were all expressly stated to be repayable on or before a specified date, the latest of which was March 2008. Each was provided subject to the Bank"s general conditions governing personal loans. If there was any conflict between the terms of facility and the general conditions, the terms of facility would prevail. Mr McCaughey contended a collateral contract had been entered into at the time of the advance of each of the relevant loans, which was to the effect that the monies would not be repayable until the investment project for which the relevant monies were advanced came to an end, or, until the relevant funds into which the monies were placed were liquidated. The trial judge accepted this as a triable issue. The trial judge found that the duration of some of the relevant funds and investments had come to an end, and thus, even on the terms of the alleged collateral contract, Mr. McCaughey was found not to have raised arguable grounds of defence. In relation to Mr McCaughey"s counter-claim which alleged negligence, misrepresentation, negligent misstatement, breach of duty and breach of contract against Anglo, the trial judge found no evidence pointing to the assertions made. On appeal, Mr. McCaughey challenged the finding of the trial judge that the duration of the Woolgate Fund had come to an end because a receiver had been appointed and the relevant properties sold. Mr. McCaughey also contended that the trial judge erred in finding that the New York Hotels Fund had closed and that it was, from an economical and practical point of view, also at an end.

Held The test applied in summary judgment applications is that of Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 I.R. 607. Mr McCaughey argued the New York Hotels Fund was not at an end. The judge concluded an arguable case had been put forward in this regard, stating "once there remains some prospect that the fund will have some return (however minor) the fund cannot be said to be at an end, and therefore, the argument goes, whether as a matter of collateral contract or misrepresentation or promissory estoppel, Anglo is not yet entitled to call in the loan".

The judge decided no arguable grounds had been made out for the suggestion that the Woolgate Fund was not at an end. In addition, the judge confirmed Kelly J. was correct in concluding that no arguable basis had been put forward for a claim of mis-selling in respect of the Woolgate investment.

-Appeal allowed in part, insofar as it relates to the New York Hotels loan. Claim in that regard to be remitted to plenary hearing but on the clear basis that Mr. McCaughey is confined to making a case that the loan is not yet due because of a collateral contract, representation or promise made to the effect that the loan would not become due until the relevant investment was at an end.

- As far as the Woolgate loan is concerned, appeal dismissed.

IRISH BANK RESOLUTION CORP LTD (IN SPECIAL LIQUIDATION) v MCCAUGHEY UNREP KELLY 29.1.2014 2014 IEHC 230

AER RIANTA CPT v RYANAIR LTD 2001 4 IR 607 2002 1 ILRM 381 2001/1/68

BANK OF IRELAND v WALSH UNREP FINLAY GEOGHEGAN 8.5.2009 2009/5/1036 2009 IEHC 220

NATIONAL WESTMINSTER BANK PLC v DANIEL & ORS 1993 1 WLR 1453 1994 1 AER 156

BANQUE DE PARIS & DES PAYS-BAS (SUISSE) SA v DE NARAY & WALTERS 1984 1 LLOYDS 21

FIRST NATIONAL COMMERCIAL BANK PLC v ANGLIN 1996 1 IR 75 1996/11/3337

DANSKE BANK A/S (T/A NATIONAL IRISH BANK) v DURKAN NEW HOMES & ORS UNREP SUPREME 22.4.2010 2010/10/23922010 IESC 22

MCGRATH v O'DRISCOLL 2007 1 ILRM 203 2006/35/7529 2006 IEHC 195

LOPES v MIN FOR JUSTICE UNREP SUPREME 27.3.2014 2014 IESC 21

BARRY v BUCKLEY 1981 IR 306 1981/9/1485

MCCAUGHEY v ANGLO IRISH BANK CORP LTD & MAINLAND VENTURES CORP 2012 4 IR 417 2012/30/8875 2011 IEHC 546

MCCAUGHEY v IRISH BANK RESOLUTION CORP LTD & & MAINLAND VENTURES CORP UNREP SUPREME 13.3.2011 2013/37/10850 2013 IESC 17

HENDERSON v HENDERSON 1843-60 AER 378 67 ER 313 1843 3 HARE 100

PRENDERGAST v BIDDLE (ORSE MORE O'FERRALL) UNREP SUPREME 31.7.1957

MOOHAN & BRADLEY T/A BRADLEY CONSTRUCTION v S & R MOTORS (DONEGAL) LTD 2008 3 IR 650 2007/42/8816 2007 IEHC 435

1. Introduction
2

1.1 This case raises yet again questions about the exercise of the summary judgment jurisdiction of the High Court in bank debt cases. Given the large amount of applications for summary judgment in such cases which have come before the High Court, not least in recent years, and given the not insignificant number of appeals to this Court, it can I think, be said that the general principles for the exercise of the Court's jurisdiction are well settled. I will turn to those principles in early course for they were not a matter of any significant controversy between the parties on this appeal. I do, however, propose to make a number of minor observations for the purposes of seeking to bring some additional clarity to the proper approach.

3

1.2 The plaintiff/respondent is, of course, now in special liquidation. As the events which give rise to the issues on this appeal occurred before its name change, I will, in this judgment, refer to the plaintiff/respondent as "Anglo". There is no dispute but that Anglo lent significant sums of money to the defendant/appellant ("Mr. McCaughey"). Neither is there any dispute that the relevant sums have not been repaid and that interest also falls to be charged in respect of the accounts concerned.

4

1.3 However, when Anglo sued for the sums said to be due and, an appearance having been entered, brought a motion for summary judgment in accordance with the rules, Mr. McCaughey suggested that he had an arguable defence based, in very general terms, on two propositions. Some of the relevant monies had been advanced for the purposes of investments made by Mr. McCaughey in various projects which had been put together and promoted by Anglo. The relevant loan agreements provided that the sums advanced were to be repayable on demand and in any event by, at the very latest, March 2008, a date which had long since passed before any demand was made or any proceedings issued. On that basis, Anglo asserted that the monies were due. Mr. McCaughey's case on the summary judgment motion suggested that there was a collateral agreement entered into between him and Anglo at the time of the advance of each of the relevant loans, which was to the effect that the monies would not be repayable until the investment project for which the relevant monies were advanced came to an end, or, until the relevant funds into which the monies were placed were liquidated. Other legal defences were proposed based on the same facts as were said to give rise to such collateral contracts. In addition, Mr. McCaughey asserted that he had a counter claim arising essentially out of an allegation of the mis-selling of the various investment projects.

5

1.4 In a detailed judgment ( Irish Bank Resolution Corporation Limited v. McCaughey, [2014] IEHC 230) Kelly J. held that Mr. McCaughey had established an arguable defence in relation to some but not all of the loans. Insofar as the claims referable to those loans were concerned, the proceedings were remitted to plenary hearing. This Court was told that the pleadings in that regard have now closed and discovery is under consideration. However, Kelly J. was not satisfied, for reasons which it will be necessary to address in due course, that an arguable case had been made out in respect of the remaining loans. In respect of those parts of the claim final judgment was granted. As will appear later it is against certain aspects only of the order of Kelly J. that Mr. McCaughey has appealed to this Court. In order to understand the precise issues which fell for this Court to decide on this appeal it is necessary to start by considering the background facts and, thereafter, the ruling made in the High Court.

2. Background Facts and Issues
2

2.1 A series of credit agreements and facility letters between Mr. McCaughey and Anglo were executed between the 1 st September, 2006 and 28 th March, 2007. Kelly J. helpfully described the various facilities at paras.5, 6 and 7 of his judgment as follows:

2

2 "5. The first facility letter is dated 1st September, 2006 and was granted to part fund the defendant's investment in the AIAC Woolgate Exchanged Geared Property Fund. The second facility was dated 10th October, 2006 and had as its purpose the part funding of the defendant's equity investment in an entity called Peninsula Real Estate Fund which has been given the nomenclature for the purpose of these proceedings of the New York Hotel Fund. That is how I will refer to it.

6

6. The third facility was dated 17th November, 2006, and was broken down into three different elements. They were described as Facility A, B and C. Facility A was to...

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