LSREF III Achill Investments Ltd v Corbett
| Jurisdiction | Ireland |
| Judge | Mr Justice Max Barrett |
| Judgment Date | 22 October 2015 |
| Neutral Citation | [2015] IEHC 652 |
| Court | High Court |
| Date | 22 October 2015 |
[2015] IEHC 652
THE HIGH COURT
BETWEEN:
Banking & Finance – Summary Judgment – Non-payment of loan – Arguable defence – Matrix of fact
Facts: The plaintiff sought an order for summary judgment against the defendants for default in payment of a loan drawn by the defendants. The defendants contended that the Court should consider the matrix of fact, that is, the circumstances surrounding the execution of facility agreements and a claimed discrepancy between what was agreed and what was signed.
Mr. Justice Max Barrett granted an order for summary judgment to the plaintiff. The Court in conformity with Aer Rianta c.p.t. v Ryanair Limited [2001] 4I.R. 607 held that the fundamental question that arose in an application for summary judgment was to see whether the defendant has a case and an arguable defence. The Court found that the defendants had no defence in the present case as there was no evidence any unconscionable bargain and proper demand letter were issued to the defendants asking for repayment of loan facilities. The Court observed that it was not obliged to consider the circumstances surrounding the execution of the agreement as the clause in the agreement to the effect of making the facility letter supersede over all prior agreements and arrangements or correspondence between the Bank and the borrower reflected the ultimate intent to be bound by the terms and conditions of the agreement. The Court held that the commencement of other proceedings by the defendants for a declaration that the appointment of the receiver by the plaintiff was void would not act as a bar for granting an order for summary judgment.
JUDGMENT of Mr Justice Max Barrett delivered on 22nd October, 2015.
(Square bracketed numbers are paragraph numbers)
| PART I: SUMMARY JUDGMENT FOR DEBT UNLIKELY GENERALLY TO BE SUCCESSFUL? | [1] |
| PART II: BACKGROUND FACTS | [8] |
| PART III: ABSENCE OF DEMAND/DEFAULT? | [13] |
| PART IV: THE FACILITY LETTER OF 11 TH JANUARY, 2011 | [14] |
| PART V: SOME TERMS DEFINED | [15] |
| i. Overview | [15] |
| ii. What is a facility agreement? | [16] |
| Facility agreement | [16] |
| Term loan | [17] |
| Overdraft facility | [18] |
| Revolving credit facility | [19] |
| Survival of a facility | [20] |
| iii. What is a condition precedent? | [21] |
| PART VI: EFFICACY OF JUNE 2011 FACILITY LETTER? | [24] |
| (a) No new drawdown | [25] |
| (b) Execution of new loan agreement in place of existing loan agreement | [27] |
| (c) Alleged fundamental breach by Ulster Bank | [28] |
| PART VII: EFFICACY OF OCTOBER 2010 FACILITY LETTER? | [29] |
| PART VIII: ALLEGED REPRESENTATIONS AND A POSSIBLE 'CULTURE CLASH' | [30] |
| PART IX: CONTRA PROFERENTEM AND 'MATRIX OF FACT' | [34] |
| PART X: APPOINTMENT OF RECEIVERS | [35] |
| PART XI: 'DEMI CONSUMERS' AND UNCONSCIONABLE BARGAINS | [36] |
| PART XII: CONCLUSION | [39] |
1. This is an application for summary judgment in respect of certain debts. Many such applications are brought. Yet the circumstances in which they will be successful seem unlikely to be especially numerous. Given the potential for unfairness which summary judgment inherently entails, it is clearly right as a matter of policy that such a judgment should not, to use a colloquial phrase, be obtained 'for the asking'. The decisions of the superior courts in this regard, especially the Supreme Court judgments referred to hereafter, consequently do not pitch high the hurdle for those seeking remittal to full hearing.
2. In Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 I.R. 607, Hardiman J. indicated, at 623. that:
"[T]he fundamental questions to be posed on an application [for summary judgment] such as this remain: is it 'very clear' that the defendant has no case? Is there either no issue to he tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?"
3. Further embellishments on such matters as the applicable judicial mind-frame to bring to summary applications for debt are to be found in the decisions of the High Court in Harrisrange Ltd. v. Duncan [2003] 4 I.R. 1, National Asset Loan Management Ltd. v. Barden [2013] IEHC 32, in which Charleton J. states that "A defence must, if the matter is to be remitted to-plenary hearing, have some reasonable foundation", and Cave Projects Limited v. Peter Gilhooley and Others [2015] IEHC 14.
4. The notion that a defence must have a 'reasonable foundation' or enjoy 'credibility' was amplified upon by the Supreme Court in its decision last year in Irish Bank Resolution Corporation (in special liquidation) v. McCaughey [2014] IESC 44. There, Clarke J., speaking for the Court, stated as follows:
2 "5.4 It is important… to re-emphasise what is meant by the credibility of a defence. [1] A defence is not incredible simply because the judge is not inclined to believe the defendant. [2] It must, as Hardiman J. pointed out in Aer Rianta, be clear that the defendant has no defence. [3] If issues of law and construction are put forward as providing an arguable defence, then the Court can assess those issues to determine whether the propositions advanced are stateable as a matter of law and that it is arguable that, if determined in favour of the defendant, they would provide for a defence. In that context and subject to the inherent limitations on the summary judgment jurisdiction identified in McGrath, the Court may come to a final resolution of such issues. [4] That the Court is not obliged to resolve such issues is also clear from Danske Bank v. Durkan New Homes.
3 5.5 In so far as facts are put forward, then, [5] subject to a very narrow limitation, the Court will be required, for the purposes of the summary judgment application, to accept the facts of which the defendant gives evidence, or facts in respect of which the defendant puts forward a credible basis for believing that evidence may be forthcoming, are as the defendant asserts them to be. [6] The sort of factual assertions, which may not provide an arguable defence, are facts which amount to a mere assertion unsupported either by evidence or by any realistic suggestion that evidence might be available, or facts which are in themselves contradictory and inconsistent with uncontested documentation or other similar circumstances such as those analysed by Hardiman J. in Aer Rianta. [7]It needs to be emphasised again that it is no function of the Court on a summary judgment motion to form any general view as to the credibility of the evidence put forward by the defendant.." [Emphasis added].
5. The plaintiff in the within proceedings has sought to place some reliance on the above-quoted text. However, the court is unconvinced that the text represents a significant change to the position applying under Aer Rianta. If one closely parses the numbered text, the following observations might be made:
(a) [2] appears to 'trump' [1] in that [2] tells us what "must" pertain, namely what Hardiman J. identified in Aer Rianta, viz. it must be clear that the defendant has no arguable defence;
(b) as regards [3] and [4], there is almost nothing that cannot be stated as a legal proposition and, as Charleton J. noted in his judgment in Oltech Systems (Ltd.)v. Olivetti UK Limited [2012] IEHC 512, para.8 , "[E]xperience demonstrates that there is little that cannot be argued" - though not quite nothing. Thus there seem likely, in practice, to be few instances in which the court will be required to resolve such issues as are put forward by a defendant. Moreover, where, as here, Senior Counsel presents before the court to argue for a defendant, that is surely indicative that counsel learned in the law and acting consistent with his (or her) responsibilities to the court has formed the professional opinion that whatever case is being presented is both stateable and arguable; this seems a factor to which the court may rightly have regard.
(c) as regards [5] and [7], these appear to place a defendant in quite a strong position: the court (I) is required, for the purposes of a summary judgment application, (i) to accept the facts of which the defendant gives evidence, (ii) to accept facts in respect of which the defendant puts forward a credible basis for believing that evidence may be forthcoming, and (II) has no function in forming a general view as to the credibility of the defendant's evidence.
(d) as regards [6], Clarke J. indicates that facts which "may not" provide an arguable defence include (i) unsupported assertions, (ii) assertions unlikely realistically to be supported, (iii) facts which are in themselves contradictory and inconsistent with uncontested documentation or similar circumstances.
6. In short, on careful analysis: [1] and [2] appear to leave the Aer Rianta test unchanged; [3] and [4] seem unlikely generally to be significant, especially when (as here) a case is stated and argued by counsel; [5] and [7] appear either consistent with, or to strengthen, a defendant's position under Aer Rianta; and [6] helpfully amplifies on Aer Rianta by pointing out that the kinds of things that the court might keep watchful for are such items as are referred to at (d)(i) - (iii).
7. So, is this a case for summary judgment?
8. These proceedings arise from the defendants' default in relation to certain loan facilities originally advanced to...
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