McMahon v Bank of Scotland Plc

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Twomey
• Judgment Date: 04 July 2017
• Neutral Citation: [2017] IEHC 438
• Docket Number: [2012 No. 4213P]
• Date: 04 July 2017

[2017] IEHC 438

THE HIGH COURT

CHANCERY

Twomey J.

[2012 No. 4213P]

BETWEEN:

ANGELA MCMAHON & PATRICK MCMAHON

PLAINTIFFS

-AND-

BANK OF SCOTLAND PLC

AND

(BY ORDER OF LAFFOY J. MADE ON 26 JULY, 2012)

SIMON DAVIDSON

DEFENDANTS

Banking & Finance – Practice & Procedures – Dismissal of claim – Vexatious proceedings – Abuse of process of law – Isaac Wunder order

Facts: The defendants filed a motion to strike out the plaintiffs' claim on the basis that it had disclosed no reasonable cause of action. The essence of the plaintiffs' claim was that they did not owe any money to the first named defendant because of securitisation and cross-border merger. The plaintiffs also challenged the validity of the appointment of the receiver in relation to the subject properties. The defendants asserted that the continuation of the present proceedings would lead to waste of time and money of the defendants and cause unnecessary burden on the Court's scant resources.

Mr. Justice Twomey dismissed the plaintiffs' claim. The Court also made an Isaac Wunder order on its own motion to prevent the plaintiffs from commencing any action directly or indirectly concerned with the subject properties without prior leave of the President of the High Court. The Court, however, held that the issuance of the Isaac Wunder Order would not preclude the plaintiffs from bringing an appeal against the present judgment and that the Isaac Wunder Order would not be applicable in relation to the named property. The Court permitted the plaintiffs to plead only one claim in relation to that named property, namely, the validity of the appointment of the receiver in relation to that property, by way of amendment of their statement of claim. The Court pointed out that the issuance of the Isaac Wunder Order would not preclude the plaintiffs from bringing any meritorious claim in future and thus, the plaintiffs could avail their right to access to the courts.

JUDGMENT of Mr. Justice Twomey delivered on the 4th day of July, 2017.

1 This case considers the plaintiffs' meaningless claims against a bank (e.g. that the bank “created currency” and that 97% of money is in the minds of bankers, that the plaintiffs have unknowingly taken part in the creation of currency and that they have been tricked into creating their own finance). It also considers claims by the plaintiffs which appear to be based on foreign law and which have no basis in Irish law such as that the bank was guilty of “fraud in the factum” and “fraud in inducement”.

2 In addition, the plaintiffs' claim involves an attempt by the plaintiffs to re-litigate cases before the Irish courts to which they were not even parties and in making their claims, the plaintiffs make baseless and very serious allegations against lawyers acting for the bank, while all the while showing complete disregard for the use of court resources.

3 In this case, this Court considers whether in all of these circumstances this Court should accede to the bank's claim for a dismissal of some or all of the plaintiffs' claims against the bank. This case also considers whether this Court should, on its own motion, make an Isaac Wunder order against the plaintiffs.

4 Subject to one claim relating to whether interest, which was incorrectly calculated by the bank, could affect the validity of the appointment of the receiver, this Court concludes that the plaintiffs' claims should be dismissed and an Isaac Wunder order should be made against them.

Background

5 The plaintiffs are lay litigants and are the owners of a home in Castleknock and five investment properties in different parts of Ireland. They are suing Bank of Scotland plc (‘BOS’) for damages in connection with its appointment of a receiver over the plaintiffs' properties. This appointment arises from loans which were made by Bank of Scotland (Ireland) Limited (‘BOSI’) to the plaintiffs for the purchase of the plaintiffs' properties and/or the re-financing of the loans for the purchase of those properties. The defendants are seeking to have the plaintiffs' claim dismissed on the grounds, inter alia, that it is frivolous and vexatious.

Preliminary issue

6 Towards the end of the hearing, counsel for BOS brought to the attention of the Court that a mistake had been made in the calculation of the interest on one of the loan accounts (loan account no. -504). This mistake related to the loan for one of the properties the subject of these proceedings (the property known as 29 Woodlands, Ballyjamesduff, Co. Cavan, the ‘Ballyjamesduff property’). For this reason, after all the other issues had been heard in this case, there was an adjournment of the hearing to the 14th June, 2017, to allow BOS to file affidavits to clarify the issue regarding the error made in the calculation of interest on loan account no. -504.

7 At the adjourned hearing, it transpired that interest was charged by BOSI at 1.45% over the European Central Bank rate, rather than at the rate of 1.05% over that rate, which was the rate which had been agreed by the plaintiffs. When a recalculation was done by BOS applying the correct interest rate, it became clear that if the correct interest rate had been applied, account no. -504 would not have been in arrears on the date of the demand made by BOSI on that loan account and that it would not have been in arrears on the date of the appointment of the receiver over that property. On the basis of this new information, counsel for BOS conceded that BOS did not now wish to press for dismissal in limine of the plaintiffs' claim insofar as it related to the appointment of a receiver over the Ballyjamesduff property. Instead, BOS indicated to the Court that it would consent to the plaintiffs amending their Statement of Claim to insert a claim that the error in the calculation of the interest on loan account no. -504 meant that the receiver over the Ballyjamesduff property was not validly appointed. The extent of the concession by BOS was that the error in the calculation of interest, which only came to light during the motion to dismiss the plaintiffs' claim, meant that it was no longer appropriate for BOS to press its claim that it was entitled to dismiss the plaintiffs' claim in limine insofar as it related to the appointment of the receiver over the Ballyjamesduff property. Counsel for BOS made it clear that BOS is still of the view that the receiver was nonetheless validly appointed over the Ballyjamesduff property, on the grounds inter alia of cross-securitisation, and that when this matter comes to a plenary hearing, it will be seeking to defeat the plaintiffs' claim on this basis.

8 In relation to this preliminary matter and in light of the concession made by the defendants, this Court will order that the plaintiffs are entitled to amend their Statement of Claim to claim that the receiver over the Ballyjamesduff property was not validly appointed on the grounds that at the date of the demand on loan account no. -504 and on the date that the receiver was appointed to the Ballyjamesduff property, loan no. -504 was not in arrears.

9 The remainder of this judgment will consider first, whether the other claims made by the plaintiffs are such as to justify the defendant's motion that they be dismissed on the grounds, inter alia, that they are frivolous and vexatious and secondly it will consider the plaintiffs' motion to amend the Statement of Claim and to add a defendant, Tanager Limited, to the proceedings.

Background

10 The Statement of Claim issued by the plaintiffs is difficult to understand in parts and in other parts it contains claims for which there is no basis in Irish law. For example, in the Statement of Claim dated 23rd July, 2012 the plaintiffs claim, inter alia, that:-

• BOSI committed a criminal offence of creating currency which only the Government and the Central Bank can do;

• BOSI created a debt (deposit) when in fact it offered a ‘loan of money’;

• there was no agreement by the plaintiffs to accept a substitute for ‘a loan of money’;

• there was never an intention on the part of BOSI or its successor to create an instrument at the inception of the contract;

• BOSI is guilty of unjust enrichment, fraud, insolvent trading, counterfeiting, false pretence, extortion and deceit;

• BOSI is guilty of fraud in inducement (which appears to be a concept of US law);

• BOSI is guilty of fraud in the factum (which also appears to be a concept of US law).

11 In addition, at paragraph 24 of their Statement of Claim, the plaintiffs state:-

‘The Defendant did not:

a. Act honourably on the contract because they sold on the loan or part of it (ie beneficial ownership of the loan) to a 3rd party.

‘A contract founded on a base and unlawful consideration, or against good morals, is null.’

NOR did they act in honour from the very instance of communication from the plaintiffs to them in Feb of 2011, when the defendant failed to answer relevant questions put to them or deliver documents requested.

b. Did not perform on the contract by not handing over “money” as agreed but rather a “promise to pay” which is more similar to “credit” than money.

c. Did breach contract law by:

i. Not presenting “full disclosure” of the contract together with the defendant's true intentions.

ii. Not bringing equal consideration to the contract, ie they brought “promises” not “money” to the contract.

iii. Bringing into the contract a 3rd party who by “privity of contract” was not and could not of been an “interested party”.’

12 When particulars were raised on this Paragraph 24 of the Statement of Claim by BOS, the plaintiffs stated in their Replies to Particulars as follows:-

‘The Plaintiffs claim that, 97% of the money in the minds of bankers is just numbers in a computer and could never be used or repaid or loaned as it is Virtual Money. The other 3% is...