Irish Life and Permanent Plc v Ronald Hudson and Miriam Hudson

• Jurisdiction: Ireland
• Judge: Mr. Justice Sean Ryan
• Judgment Date: 13 January 2012
• Neutral Citation: [2012] IEHC 11
• Court: High Court
• Docket Number: [No. 2228 S./2011]
• Date: 13 January 2012

[2012] IEHC 11

THE HIGH COURT

[No. 2228 S./2011]

Irish Life & Permanent PLC (t/a Permanent TSB) v Hudson

BETWEEN

IRISH LIFE AND PERMANENT PLC TRADING AS PERMANENT TSB

PLAINTIFF

AND

RONALD HUDSON AND MIRIAM HUDSON

DEFENDANTS

AER RIANTA v RYANAIR 2001 4 IR 607

NATIONAL COMMERCIAL BANK v ANGLIN 1996 1 IR 75

HARRISRANGE LTD v DUNCAN 2003 4 IR 1

FAMILY HOME PROTECTION ACT 1976

PRACTICE & PROCEDURE

Summary judgment

Mortgages - Applicable test - Whether clear no arguable defence existed - Influencing of application of criteria by circumstances of case - Application of test of credibility to proposed defence - Defence - Reliance on negligent misstatement of agent of plaintiff - Allegations of breach of contract and negligence - Whether plaintiff prima facie entitled to judgment - Whether account given by defendant credible - Alleged verbal statement inconsistent with signed and witnessed contracts - Behaviour of defendants inconsistent with proposed defences - Failure to raise matters prior to litigation - Commercial nature of transactions - Aer Rianta cpt v Ryanair Ltd [2001] 4 IR 607; First National Commercial Bank v Anglin [1996] 1 IR 75; Irish Dunlop Co Ltd v Ralph (1958) 95 ILTR 70; Banque de Paris v de Nara y [1984] 1 Lloyd's Rep 21; National Westminster Bank v Daniel [1993] 1 WLR 1453 and Harrisrange Ltd v Duncan [2003] 4 IR 1 considered - Judgment granted (2011/2228S- Ryan J - 13/1/2012) [2012] IEHC 11

Irish Life and Permanent Plc v Hudson

Facts The plaintiff bank sought summary judgment against the defendants on foot of a series of mortgages. The defendants had a number of loans relating to a number of properties and sought to resist summary judgment. It was contended on their behalf that they had been approached by a "a tied agent" of the plaintiff who suggested that they buy additional properties with mortgage facilities from the plaintiff. It was asserted that the defendants expressed concern as to their ability to repay any new mortgage commitments but were informed that the mortgages were to be non-recourse, interest only and were entirely dependent on the performance of the assets covered by the mortgages. In addition there was to be any danger to the private home of the borrowers even if the properties did not produce an income. Based on these reassurances the defendants bought two additional properties. It was also contended that valuations obtained were unrealistically high, particularly as to the potential rental income of the various properties.

Held by Ryan J in granting summary judgment. The court had to apply the credibility test to the proposed defence. The conduct of the defendants in seeking a new schedule of repayments made no sense if the assertions were true as they could have informed the bank that they were doing their best to let the properties but it was a matter for the bank because of the terms of the loans. The defendants' actions were not reconcilable with the case that the risk was that of the bank entirely and that the defendants were not exposed to these loans. The defendants should have ensured that these favourable terms were put into writing, were contained in the loan agreements and in any mortgage deeds. If the defendants were correct then all the loan documents would have to be torn up and the correspondence ignored. The plaintiff had established its prima facie entitlement to judgment.

Reporter: R.F.

Mr. Justice Sean Ryan

1 This is a claim by the plaintiff bank for summary judgment against the defendants on foot of a series of mortgages. According to the affidavits and exhibits filed by the bank, the defendants borrowed €1,978,750 million and they now owe over €2.1 million. The defendants have filed affidavits setting out proposed grounds of defence. The issue to be decided is whether the bank is entitled to summary judgment on its claim notwithstanding the defendants' case.

2 In 2003, the defendant and his wife acquired four properties which they let to tenants and they used the rental income to pay the mortgages. They got the loans for those properties - three houses in Clondalkin, Dublin and an apartment in Galway - with the assistance of a Ms. Susan Croke of Irish Mortgage Company. In 2006, the defendants bought two more houses for letting and Permanent TSB gave them a series of mortgages which superseded the previous loans for existing rental properties and funded the two new purchases. The defendants anticipated that they would have profitable assets which increased in value over time.

3 There are five loans, the first four of which but not the fifth were to be repaid on an interest-only basis for the first three years pursuant to a special condition in their offer documents. The loan offer letters were dated and for the amounts and durations following:

5th April, 2006;	€774,000;	term 25 years;
8th June, 2006;	€773,250;	term 25 years;
7th September, 2006;	€54,000;	term 25 years;
18th December, 2006;	€322,500;	term 25 years.
25th May, 2007;	€45,000;	term 24 years.

4 The defendants signed and returned acceptances that were witnessed by their solicitor.

5 4. The defendants defaulted in the mortgage payments for more than two months on each loan and the mortgagee in those circumstances became entitled to demand full payment of capital and interest. The bank held off sending formal letters of claim for a period of six months from November, 2010 to April, 2011 on the basis of an accommodation with the defendants but the newly agreed payment schedule also fell into arrears. The plaintiff made demand for the full amount of the loans by letters of the 11^th May 2011. The defendants were unable to pay. The total sum now claimed is €2,107,679.59 plus continuing interest. The Bank seeks summary judgment on the basis that there is no defence to the action.

6 5. In Aer Rianta v Ryanair [2001] 4 I.R. 607, the Supreme Court endorsed two tests from the English jurisprudence that the Court had previously adopted in FirstNational Commercial Bank v. Anglin [1996] 1 I.R. 75. In the latter case, Murphy J delivering the judgment of the Court said:

"For the court to grant summary judgment to a plaintiff and to refuse leave to defend it is not sufficient that the court should have reason to doubt thebona fides of the defendant or to doubt whether the defendant has a genuine cause of action (see Irish Dunlop Co. Ltd. v. Ralph (1958) 95 I.L.T.R. 70)."

"In my view the test to be applied is that laid down inBanque de Paris v. de Naray [1948] 1 Lloyd's Law Rep. 21, which was referred to in the judgment of the President of the High Court and reaffirmed in National Westminster Bank Plc v. Daniel [1993] 1 W.L.R. 1453. The principle laid down in the Banque de Paris case is summarised in the headnote thereto in the following terms:-"

7 'The mere assertion in an affidavit of a given situation which was to be the basis of a defence did not of itself provide leave to defend; the Court had to look at the whole situation to be see whether the defendant had satisfied the Court that there was a fair or reasonable probability of the defendants having a real orbona fide defence.'

8 "In theNational Westminster Bank case, Glidewell L.J. identified two questions to be posed in determining whether leave to defend should be given. He expressed the matter as follows:-

9 'I think it right to ask, using the words of Ackner L.J. in theBanque de Paris case, at p. 23, 'Is there a fair or reasonable probability of the defendants having a real or bona fide defence?' The test posed by Lloyd L.J. in the Standard Chartered Bank case, Court of Appeal (Civil Division),Transcript No. 669 of 1990 'Is what the defendant says credible?', amounts to much the same thing as I see it. If it is not credible, then there is no fair reasonable probability of the defendant having a defence.'"

10 6. In Aer Rianta, McGuinness J. identified the issue "whether the proposed defence is so far fetched or so self contradictory as not to be credible." Hardiman J asked: "Is it 'very clear' that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?" The Court took the nature and context of the dispute into account. Hardiman J referred to the facts of the cases in the authorities cited and observed that in First National Commercial Bank v. Anglin [1996] 1 I.R. 75, "the indisputable documentation of a commercial transaction rendered the alternative chronology proposed by the defendant quite untenable."

11 7. It appears therefore that while the circumstances do not dictate the nature of the test by which the defence is judged, they influence the application of the criteria. Some points of differentiation of contractual claims may be identified: Is it a commercial transaction? Is the contract a familiar one or does it have unusual terms? Is there documentary evidence to contradict the case advanced by the defendant?

12 8. In Harrisrange Ltd v Duncan [2003] 4 IR 1 McKechnie J summarised the Courts' approach to summary judgment in 12 propositions, of which the following are particularly applicable in this case:-

13 (iii) the court should assess not only the defendant's response, but also in the context of the 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;

14 (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;

15 (xii) the overriding determinative factor, bearing in mind the constitutional basis of a person's right of access to...