Morrissey v Irish Bank Resolution Corporation Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Gerard Hogan |
| Judgment Date | 25 May 2017 |
| Neutral Citation | [2017] IECA 162 |
| Date | 25 May 2017 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Neutral Citation Number: [2017] IECA 162 Record No. 2016/024 Record No. 2015/567 Record No. 2015/608 |
[2017] IECA 162
THE COURT OF APPEAL
Hogan J.
Peart J.
Irvine J.
Hogan J.
Neutral Citation Number: [2017] IECA 162
Record No. 2016/024
Record No. 2015/567
Record No. 2015/608
AND
AND
Implied terms – Loan sale – Overcharging of interest – Respondent seeking to recover monies – Whether respondent was entitled to recover judgment against the appellant following a loan sale
Facts: The appellant, Mr Morrissey, prior to the banking collapse in September 2008, was a major customer of Anglo Irish Bank Corporation. Mr Morrissey was very heavily indebted to Anglo. The fundamental question which arose in a series of appeals was whether Anglo's ultimate successor, the second respondent, LSREF III Stone Investments Ltd, was entitled to recover judgment against him following a loan sale by the first respondent, Irish Bank Resolution Corporation Ltd (IBRC). The litigation gave rise to a series of procedural rulings and reserved judgments from a series of High Court judges, including Kelly J, Finlay Geoghegan J, McGovern J and Costello J. Questions such as implied terms of good faith, admitted overcharging of interest by Anglo, the validity of the assignment of the loans and the constitutionality of s. 12 of the Irish Bank Resolution Corporation Act 2013 all arose in the appellant's appeal to the Court of Appeal.
Held by Hogan J that the appellant was bound by the various (un-appealed) rulings of the High Court as to the scope of the proceedings, specifically the rulings of Kelly J of 8th December 2011 and 23rd January 2012 and, in particular, the appellant's contention that the illegal conduct of Anglo in the general conduct of its banking affairs was outside the scope of the proceedings unless he could show that the relationship between the parties was fiduciary in nature; as Finlay Geoghegan J subsequently ruled in a judgment delivered on 14th May 2013 that there was no such fiduciary relationship and as this particular ruling was not appealed, the appellant could not re-open the issue of the scope of the proceedings and seek to rely on the (alleged) general illegal conduct of Anglo in the way in which its banking functions were actually operated. Hogan J held that, so far as the over-charging of interest was concerned, the action for debt recovery is a quintessentially common law action and there is no room for the application of standard equitable principles such as the principle that he who comes to equity must do so with clean hands; the common law seeks rather only to inquire whether the sums claimed are lawfully due or not. Hogan J held that the evidence before the High Court suggested that the Bank was at worst careless in its computation of the interest issue and there was no evidence of any intention to deceive. Hogan J held that there was no evidence to suggest that the loan sales involved anything more than the assignment of a bare loan sale, together with the associated right to sue in respect of the recovery of the loans; in those circumstances, there was no basis for contending that the loan sale agreement was champertous. Hogan J held that the decision of Costello J of 11th March 2015 striking out the majority of the defence and counter-claim of 11th January 2015 as an abuse of process was plainly correct in view of the earlier findings of the High Court in a series of rulings and judgments. Hogan J held that, given that Costello J found that the loan sales as between IBRC and Stone were perfectly valid independently of any reliance upon s. 12 of the Irish Bank Resolution Corporation Act 2013, it follows that Mr Morrissey qua plaintiff in the 2014 plenary proceedings had no standing to challenge the constitutionality of the section, precisely because he will not benefit in any tangible or practical way from a finding of unconstitutionality.
Hogan J held that he would dismiss the appeal.
Appeal dismissed.
1. Prior to the banking collapse in September 2008 the defendant, Mr. Morrissey, was a major customer of Anglo Irish Bank Corporation ('Anglo'). It is not in dispute that Mr. Morrissey was very heavily indebted to Anglo. The fundamental question which arises in this series of appeals is whether Anglo's ultimate successor, LSREF III Stone Investments Ltd. ('Stone') is entitled to recover judgment against him following a loan sale by Irish Bank Resolution Corporation Ltd. ('IBRC').
That might seem like a straightforward issue, but, unfortunately, it is not. The litigation has given rise to a series of procedural rulings and reserved judgments from a series of High Court judges, including Kelly J., Finlay Geoghegan J., McGovern J. and Costello J.. Questions such as implied terms of good faith, admitted overcharging of interest by Anglo, the validity of the assignment of the loans and, for good measure, the constitutionality of s. 12 of the Irish Bank Resolution Corporation Act 2013 all arise in this appeal.
It is also important to state at the outset that there is, I think, little doubt but that Anglo had lent Mr. Morrissey considerable sums of money. Anglo demanded repayment of these sums on 19th January 2010. As will be seen in greater detail in the course of this judgment, by a judgment of Finlay Geoghegan J. the High Court determined on 14th May 2013, that Anglo was entitled so to demand. As it happens, Mr. Morrissey has made no repayments worth speaking of. It is, however, true to say that there have been some asset sales which have reduced the level of indebtedness. The amount of the debt was quantified by Finlay Geoghegan J. by her decision of 29th October 2014 as being in the sum of €31,542,125. No appeal has been taken against the decisions to the effect that the debt is due or the quantification of that debt. The case now being pursued is largely to the effect that the illegal conduct of Anglo – including admitted overcharging of the defendant – precludes it from pursuing this debt recovery.
Before considering any of these issues, it is necessary first to sketch out some of the events which occurred in the aftermath of the banking crisis. Many of these events are very well known, but this short resumé is given simply for the purposes of completeness. In the aftermath of the global banking crisis which materialised in September 2008 it became clear that Anglo's financial position was unsustainable. Anglo was nationalised in January 2009 following the enactment of the Anglo Irish Bank Corporation Act 2009. Anglo and another financial institution, Irish Nationwide Building Society, were merged to form the Irish Bank Resolution Corporation ('IBRC'). In February 2013 the Oireachtas enacted the Irish Bank Resolution Corporation Act 2013 ('the 2013 Act').
The 2013 Act envisaged that IRBC would be placed into special liquidation, with Mr. Kieran Wallace and Mr. Eamonn Richardson (the third and fourth defendants, respectively) being appointed Special Liquidators. During the course of the liquidation of IBRC, the Special Liquidators offered portfolios of loans held by IBRC for sale to third party investors. In March 2014 the Special Liquidators entered into an agreement to sell a portfolio of loans to a third party, in this instance, Stone. The portfolio included the loans of Mr. Morrissey and the proceedings brought against Mr. Morrissey by IBRC in proceedings entitled Irish Bank Resolution Corporation Ltd. (In Special Liquidation) v. John Morrissey, Rec. No. 2011/1548 S ('the debt proceedings'). By deed of transfer dated 11th July 2014 the Special Liquidators transferred, inter alia, Mr. Morrissey's loans and the debt proceedings to the purchaser of those loans, namely, Stone.
During the period between 2014 and 2015 there were some seven reserved judgments involving these parties delivered by Finlay Geoghegan J. and Costello J.. In IBRC v. Morrissey [2014] IEHC 470 Finlay Geoghegan J. held (in a judgment delivered on 29th October 2014) that IBRC had overcharged the defendant in terms of interest payments by some €143,676 and she directed that this sum should be deducted from the sum claimed by the IBRC. There has been no appeal against that decision. Some two weeks later in a judgment delivered on 10th November 2014, Finlay Geoghegan J. made an order substituting Stone for IBRC in these proceedings: see IBRC v. Morrissey [2014] IEHC 14.
On 11th March 2015 Costello J. delivered two related judgments in this matter. In the debt proceedings, the judge held that save for issues relating to the validity of the assignment of the loans from IBRC to Stone the new defence and counterclaim filed by the defendant on 16th January 2015 should be struck out as abusive and an attempt to re-litigate matters already determined by the High Court: see LSREFIII Stone Investments Ltd. v. Morrissey [2015] IEHC 199. In the other judgment delivered on that day Costello J. held that Mr. Morrissey could not raise the constitutionality of s. 12 of the Irish Bank Corporation Resolution Act 2013 unless he followed the procedure specified by Ord. 60: see Morrissey v. IBRC [2015] IEHC 200. The constitutional issue was then ultimately addressed in the 2014 proceedings
On 5th October 2015 Costello J. gave judgment...
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