Irish Life and Permanent Plc t/a Permanent TSB v Kennedy

CourtHigh Court
JudgeMr. Justice Noonan
Judgment Date12 May 2019
Neutral Citation[2019] IEHC 272
Docket Number[2009 No. 1827 P.]
Date12 May 2019



[2019] IEHC 272

[2009 No. 1827 P.]


Bankruptcy – Defence – Standing – Plaintiff seeking an order giving directions in respect of the proceedings – Whether the Official Assignee was the only party entitled to either defend the plaintiff’s proceedings or to pursue the counterclaim

Facts: The plaintiff, Irish Life and Permanent plc trading as Permanent TSB (the Bank), in a motion issued on the 8th February, 2018, sought an order giving directions in respect of the proceedings and in particular, a direction that the Official Assignee in bankruptcy was the only party with standing to defend (including by way of counterclaim) the plaintiff’s claim together with an order striking out the defence and counterclaim.

Held by the High Court (Noonan J) that the Official Assignee was the only party entitled to either defend the Bank’s proceedings or to pursue the counterclaim.

Noonan J held that he would discuss further with the parties the consequential orders to be made following this determination.

Judgment approved.

JUDGMENT of Mr. Justice Noonan delivered on the 12th day of April, 2019
Background Facts

The first defendant (Mr. Kennedy) was formerly a practising solicitor and the second defendant (Mrs. Kennedy) is his wife. These proceedings brought by the plaintiff (‘the Bank’) concern two loan agreements entered into in 2006 and 2007 respectively. The 2006 loan was in the amount of €501,250 advanced by the Bank to Mr. Kennedy. That loan was to be secured on Mr. Kennedy's practice premises known as 4 Charles Street, New Ross, County Wexford. In entering into that agreement, Mr. Kennedy furnished the Bank with a solicitor's undertaking to procure a first legal charge over the property in favour of the Bank.


The 2007 loan was in the sum of €320,000 and was advanced to both Mr. and Mrs. Kennedy. On the Bank's case, that loan was to be secured by a first legal charge over Mr. and Mrs. Kennedy's family home known as Ardlegréine, Duncannon, Co. Wexford. The Bank says that it was a term of the agreement that the Bank would be granted a first legal charge over Ardlegréine and Mr. Kennedy gave a solicitor's undertaking in that respect. Although not necessarily relevant for the purposes of the application now before the court, Mr. Kennedy disputes that there was to be a charge over the family home and says that the solicitor's undertaking was inadvertently signed by his wife on his behalf when he was abroad in the United States.


In respect of the 2006 agreement, the Bank claims that contrary to the terms of the agreement and his solicitor's undertaking, 4 Charles Street was already the subject of prior incumbrances so that it was not then possible for the Bank to obtain a first legal charge, in breach of Mr. Kennedy's undertaking. This is effectively admitted by Mr. Kennedy at para. 8 of his defence and in his replying affidavit herein. It is also common case that subsequent to the institution of these proceedings, Mr. Kennedy rectified the position so that ultimately the Bank's security was put in place.


In connection with the 2007 loan, Mr. Kennedy says that the loan was part of a larger transaction which he agreed with the Bank's manager in New Ross whereby an additional €180,000 making in total €500,000 would be advanced by the Bank to enable him to build an extension to the family home Ardlegréine. He claims that in breach of that agreement, the Bank refused to advance the additional €180,000 but concedes that he obtained the money subsequently from Bank of Scotland (Ireland) Ltd who obtained a first charge on Ardlegréine. The Bank again claims this to have been a breach of the conditions of the 2007 loan and of his solicitor's undertaking, as the Bank was thereby precluded from obtaining a first legal charge over Ardlegréine.


It is common case that Mr. Kennedy defaulted on the payments due on foot of the loans and this ultimately resulted in the within proceedings being issued on the 25th February, 2009. Another of the complaints made by Mr. Kennedy in these proceedings is that he had a sum of €100,000 in his account which the Bank, he says unlawfully, set off against the debt due leaving him in a situation where he could no longer continue in practice.


A statement of claim was delivered by the Bank on the 2nd April, 2009 and the defendants delivered their defence on the 6th November, 2009 at which time Mr. Kennedy's firm, Simon W. Kennedy & Co., was on record for both defendants. The defence is accompanied by a counterclaim by Mr. Kennedy only which commences with the words:

‘The first named defendant repeats the defence herein and counterclaims as follows:-

The plaintiffs were at all material times the defendant's bankers herein. In respect of the property at Ardlegréine, Duncannon attempted to intimidate the first named defendant and the second named defendant by …’


The counterclaim goes on to set out five instances of the alleged intimidation which are broadly, first, that the Bank refused Mr. Kennedy access to the €100,000 referred to above, second, threatened to report him to the Gardaí, the Law Society and to sue him, third, threatened the viability of his practice causing him damage, fourth, discontinued his banking facilities and fifth, notified the Credit Bureau of his default. In the next paragraph, Mr. Kennedy pleads:

‘(f) In the context of the foregoing paragraph the first named defendant reserves his right to amend the counterclaim herein to include a claim for defamation, negligence, misrepresentation, abuse of power and position, negligence misstatement and arising therefrom, the infliction of emotional distress.’


This would appear to be a concession that the matters set out in that paragraph are not the subject matter of the counterclaim as it stands but may become so in the future. In the concluding paragraph headed ‘Particulars’, Mr. Kennedy pleads that particulars will be furnished following discovery and also the remedies and orders sought will be furnished on completion of discovery. He concludes by pleading that a claim for general and special damages will be made.


The nature of the cause of action pleaded in the counterclaim is somewhat unclear. What is clear however is that the counterclaim is made solely on behalf of the first defendant, Mr. Kennedy, and that the gravamen of the claim is that Mr. Kennedy's practice was damaged by the alleged wrongful acts of the Bank. Whilst he pleads that he suffered damage and injury, there is no overt plea that his personal or professional reputation has been damaged but rather he reserves the right to make a claim for defamation, suggesting by implication that no such claim is contained in the counterclaim as it stands. Nor does the counterclaim contain any plea that Mr. Kennedy has suffered personal injuries as a result of the matters complained of.


Following delivery of the defence and counterclaim, a notice for particulars was raised by the Bank on the 26th October, 2010, and a reply and defence to counterclaim was delivered on the 11th March, 2011. The defendant's replies to particulars were delivered on the 8th July, 2011 and the Bank raised further particulars on the 22nd November, 2011 at the same time as issuing a motion for discovery. The motion for discovery was dealt with on the 6th June, 2012.


In the meantime, the Revenue Commissioners, to whom Mr. Kennedy was substantially indebted in respect of tax arrears, issued bankruptcy proceedings against Mr. Kennedy.


On the 18th June, 2012, Mr. Kennedy was adjudicated bankrupt by order of the High Court (Dunne J.). This had the immediate effect of precluding Mr. Kennedy from continuing to practice as a solicitor. An application by Mr. Kennedy to show cause was dismissed on the 14th June, 2013.


As noted above, Mr. Kennedy ultimately perfected the Bank's security in respect of 4 Charles Street and in 2011, the Bank issued separate proceedings by way of special summons seeking an order for possession on foot of the security.


Arising from the institution of the special summons proceedings, Mr. Kennedy brought an application to have those proceedings consolidated with the within proceedings. On the 11th February, 2014, the High Court (Barrett J.) acceded to Mr. Kennedy's application and consolidated the two claims. The Bank appealed to the Supreme Court and ultimately the appeal was transferred to the Court of Appeal which determined the matter on the 3rd May, 2017 by allowing the appeal. This left the Bank free to continue the special summons proceedings and accordingly the Bank obtained an order for possession of 4 Charles Street on the 23rd June, 2017.

The Issue Arising on This Application

In this motion issued on the 8th February, 2018, the Bank seeks an order giving directions in respect of the proceedings and in particular, a direction that the Official Assignee in bankruptcy is the only party with standing to defend (including by way of counterclaim) the plaintiff's claim herein together with an order striking out the defence and counterclaim. In that respect, it is important to note the position of the Official Assignee. By letter of the 8th January, 2015 to the Bank, the Official Assignee said:

‘As Official Assignee of (Mr. Kennedy's) estate I am satisfied the Bank has an entitlement to obtain a money judgment against Mr. Kennedy for the loan advanced to him and that Mr. Kennedy has no right to defend such proceedings nor to pursue a counterclaim for damages…

Please provide this letter to the court confirming my position to it in respect of Mr. Kennedy litigating on his own behalf, which I again confirm he has no right as a bankrupt so to do, as I have no funds in the matter to be represented before the court. In that regard I agree with your...

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