Launceston Property Finance DACv Walls

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 02 November 2018
• Neutral Citation: [2018] IEHC 610
• Court: High Court
• Docket Number: [2017 No. 416 S]
• Date: 02 November 2018

BETWEEN

LAUNCESTON PROPERTY FINANCE DAC

PLAINTIFF

AND

JOHN WALLS

DEFENDANT

[2018] IEHC 610

Noonan J.

[2017 No. 416 S]

THE HIGH COURT

Banking and finance – Loan facilities – Bona fide defence – Plaintiff seeking summary judgment – Whether the defendant established that he had a fair or reasonable probability of having a bona fide defence

Facts: Anglo Irish Bank Corporation Plc advanced two loans totalling just over €1 million to the defendant, Mr Walls, in 2008. The advances were made on foot of a loan facility letter of the 22nd September, 2008 in the amounts of €941,000 and €119,000 respectively, being in total €1,060,000. Certain loans held by Anglo's successor, Irish Bank Resolution Corporation Ltd, were sold in 2014 to the plaintiff, Launceston Property Finance DAC. The loan portfolio sale included the defendant's loans. Default occurred on the loan facilities and a demand for payment was made by the plaintiff on the 8th November, 2016 at which time the amount due on foot of the facilities was €1,326,819.78. Interest continued to accrue. The plaintiff issued a summary summons on the 9th March, 2017 and a motion for summary judgment on the 26th May, 2017. In the replying affidavits delivered by the defendant, a number of issues were canvassed at the hearing of the motion before the High Court (Noonan J) essentially resolving down to three points said to give rise to an arguable defence sufficient to have the matter remitted for plenary hearing. The first and principle ground relied upon by the defendant was that the plaintiff's claim had been the subject matter of a binding compromise entered into between the parties in 2016. The second matter argued by way of defence was that of contributory negligence. The third issue raised by way of defence was that the plaintiff's proofs were not in order because the loan transfer deed evidencing the transfer of the defendant's loan, inter alia, from IBRC to the plaintiff although exhibited in the plaintiff's affidavits was heavily redacted.

Held by Noonan J that the defendant had failed to establish that he had a fair or reasonable probability of having a bona fide defence as that expression is used in Aer Rianta v Ryanair [2001] IESC 94.

Noonan J held that the plaintiff was entitled to judgment for the sum claimed.

Relief granted.

JUDGMENT of Mr. Justice Noonan delivered on the 2nd day of November, 2018

1 The plaintiff brings the within motion for summary judgment as the successor in title of Anglo Irish Bank Corporation Plc which advanced two loans totalling just over €1 million to the defendant in 2008. The advances were made on foot of a loan facility letter of the 22nd September, 2008 in the amounts of €941,000 and €119,000 respectively, being in total €1,060,000.

2 Certain loans held by Anglo's successor Irish Bank Resolution Corporation Ltd, were sold in 2014 by IBRC to the plaintiff. The loan portfolio sale included the defendant's loans which are the subject matter of these proceedings.

3 Default occurred on the loan facilities and a demand for payment was made by the plaintiff on the 8th November, 2016 at which time the amount due on foot of the facilities was €1,326,819.78. Interest has since then continued to accrue. The plaintiff issued a summary summons on the 9th March, 2017 and a motion for summary judgment on the 26th May, 2017.

4 There is no dispute between the parties that the monies were advanced and not repaid nor is there any dispute as to the amount claimed. Although in the replying affidavits delivered by the defendant, a number of issues are canvassed, at the hearing of the motion before me, these essentially resolve down to three points advanced by the defendant which are said to give rise to an arguable defence sufficient to have the matter remitted for plenary hearing. I propose to deal with each of these in turn.

5 The first and principle ground relied upon by the defendant is that the plaintiff's claim has been the subject matter of a binding compromise entered into between the parties in 2016. It is alleged that this compromise was negotiated between the defendant's solicitor, James Flynn, who has sworn two affidavits, and Robert Dowling, an asset manager employed by Pepper Finance Corporation as agents for the plaintiff. The defendant's case in this regard is set out at para. 8 of Mr. Flynn's first affidavit sworn on the 27th July, 2017:

'8. I say that in September 2016 discussions took place between Mr. Robert Dowling of Pepper Finance and your deponent. I say that I understood these discussions to result in a concluded agreement wherein a valuation of the lands contained in the aforementioned Folio 4173 of County Dublin would be procured from an agent nominated by Mr. Robert Dowling, and when same were to hand this would be determinative of a compromise figure. I say that this agreement was reached in early November 2016 and the defendant's obligations thereunder were complied with insofar as a report was procured from Pepper Finance's nominee and the appropriate valuation amount was offered in full and final settlement...'

6 This version of events is strongly contested by the plaintiff. Mr. Dowling has sworn an affidavit in which he accepts that it was agreed that a valuation report would be obtained but he vehemently disputes the proposition that any binding compromise was arrived at. In that regard, Mr. Dowling exhibits a chain of emails passing between himself and Mr. Flynn which culminated in the following exchange on the 2nd November, 2016, the date upon which Mr. Flynn alleges that a binding agreement was made:

'12.07

Robert,

I attach copy of valuation which I have only received this day. I understand from Mr. Farley that you have already been furnished with a copy. I await hearing from you.

Regards,

James Flynn.

12.14

Without prejudice

Subject to contract/contract denied

James,

What is your client's proposal in respect of his outstanding liabilities?

Regards

Robert

12.23

Robert,

The independent valuation of the lands which are landlocked is circa €108,000. What will your clients accept? Please treat as a matter of extreme urgency.

Regards

James Flynn

12.43

Without prejudice

Subject to contract/contract denied

James,

Our client would accept full repayment of the loan.

If you ( sic) client is not in a position to make a full repayment, can you please ask him to send to me his proposal in respect of outstanding liability.

Kind Regards,

Robert

13.47

Robert,

Our client's circumstances as well as his health has deteriorated. The offer is the value of the lands at €180,000.

Regards,

James Flynn.'

7 In his second affidavit, Mr. Flynn refers to the fact that agreement was reached to compromise the plaintiff's intended proceedings on the basis that the defendant would pay the plaintiff the market value of the securitised land in full and final settlement of the intended claim against him. He does not identify when this alleged agreement was reached, save it was apparently in September 2016 although para. 8 of Mr. Flynn's first affidavit is ambiguous in that regard suggesting the agreement had been reached in September and then on the 2nd November. How the agreement was reached is not stated and certainly the email chain which includes emails from September exhibited by Mr. Dowling goes no further than showing that it was agreed between the parties that a valuation would be obtained. The valuation report exhibited by Mr. Flynn shows that the value of the land as it stood was €108,000 with a prospective value of €256,500 in the event of access being obtained to it. Apparently as the land then stood, it was landlocked.

8 Mr. Flynn avers that he contacted Mr. Dowling by telephone indicating his client's willingness to pay the sum of €108,000. This is however contradicted by the email above by which Mr. Flynn conveyed an offer of €180,000 and whether this is a typographical error or not is not canvassed by Mr. Flynn in his affidavits.

9 The email exchange referred to above seems to me to be entirely inconsistent with the suggestion that a binding compromise was entered into on the same date. If such a compromise had been arrived at, it is surprising that six days later, on the 8th November, 2016 the plaintiff demanded repayment of the full amount outstanding and on the 13th November, 2016, appointed receivers over the lands in question.

10 Arising out of the alleged compromise referred to above, Mr. Walls commenced plenary proceedings against Launceston in which he sought an interlocutory injunction to restrain the sale of the property on the same basis i.e. that a binding compromise was made. That application came on for hearing before McDonald J. in June of this year and he delivered an ex tempore judgment on the 14th June, 2018 having heard two days of argument. Of particular note in relation to those proceedings, the affidavits relied upon by Mr. Walls are the same affidavits that are before the court in this summary judgment application. McDonald J. considered the content of these affidavits in considerable detail and I gratefully adopt his analysis of them. In dealing with the emails to which I have referred above, McDonald J. noted (at p. 17):

'What is I think of great significance is that Mr. Flynn does not, in fact, deal with the detail of the emails, although as we will see in a moment, those emails appear on their face, and I emphasise those words "on their face" to be inconsistent with the agreement for which he contends.'

The court went on to refer to para. 6 of Mr. Flynn's affidavit where he said:

' "I beg to refer to para. 8 of your deponent's affidavit sworn in these proceedings on the 27th July, 2017. I say that your deponent had a number of telephone conversations with Mr. Robert...