Promontoria (Aran) Limited -v- Hughes & anor; Promontoria (Aran) Limited -v- Hughes; Promontoria (Aran) Limited -v- Hughes & anor, [2017] IEHC 592 (2017)

Docket Number:2016 2379 S; 2016 2380 S; 2016 2381 S
Party Name:Promontoria (Aran) Limited, Hughes & anor; Promontoria (Aran) Limited -v- Hughes; Promontoria (Aran) Limited -v- Hughes & anor
 
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THE HIGH COURT[2016 No. 2379 S.]

[2016 No. 2380 S.]

[2016 No. 2381 S.]

BETWEEN

PROMONTORIA (ARAN) LIMITEDPLAINTIFFAND

JOHN HUGHES AND MARGARET HUGHESDEFENDANTSAND

BETWEEN

PROMONTORIA (ARAN) LIMITEDPLAINTIFFAND

JOHN HUGHESDEFENDANTAND

BETWEEN

PROMONTORIA (ARAN) LIMITEDPLAINTIFFAND

JOHN HUGHES AND THOMAS BROWNEDEFENDANTS

JUDGMENT of Mr. Justice Brian McGovern delivered on the 18th day of October, 2017

  1. This matter comes before the court as an application for summary judgment in highly unusual circumstances. The application for summary judgment was heard by Barrett J. on 11th May, 2017, and he delivered judgment on 11th July, 2017. His judgment was a comprehensive one dealing with all the issues that arise on the papers before me including the same written legal submissions. On 24th July, 2017, the defendant, Mr. Thomas Browne, and his solicitor, Mr. Paul Meagher, swore affidavits grounding an application ex post facto for Barrett J. to recuse himself on the basis that the learned judge was a former company secretary of IBRC at a time when it decided to commence litigation against Mr. Browne for a sum of approximately €50m. It is not necessary for me to set out what is contained in the affidavits save to say that Mr. Meagher had no knowledge of any possible conflict of interest on the part of Barrett J. before Mr. Browne approached him sometime after the judgment was delivered.

  2. Mr. Browne avers that he did not realise who Barrett J. was when the matter proceeded as if he had done so he would have brought an application at that stage for the judge to recuse himself. There is no suggestion that the IBRC proceedings against Mr. Browne were in any way connected with these proceedings nor is there any indication that Barrett J. was aware of any possible conflict of interest. Indeed, other than stating that Barrett J. was, at the relevant time, at senior management level in IBRC, there is no averment that he was actually involved in the decision to prosecute proceedings against Mr. Browne.

  3. What is extraordinary is that Mr. Browne himself held a senior executive position in IBRC and one would have thought that if he had attended court he would have immediately identified the connection between himself and Barrett J. of which he now complains. It appears, however, that Mr. Browne let Mr. John Hughes “make the running” so far as these proceedings were concerned and represent the interest of all the defendants. It seems he was not present in court at the earlier hearing.

  4. In any event, Barrett J. decided, out of an abundance of caution, to recuse himself even though he had already delivered his judgment and it was published on the Courts Service website. I have been informed that the judgment has not been perfected and has been vacated.

  5. The only material fact that has changed since the hearing before Barrett J. is that counsel for the plaintiff has informed the court that it is not pursuing the claim for €502,864.59 on the current account or overdraft facility referred to in proceedings [2016 No. 2380 S.].

  6. The hearing before me was essentially on the same documents and facts as that which took place before Barrett J. and in which he delivered a judgment which has now been vacated.

  7. Having considered the papers and the arguments advanced by counsel, I am satisfied that the plaintiff is entitled to summary judgment against the defendants for the sums other than those arising in the current account. The defendants have not met the low threshold required by Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 I.R. 607, or Harrisrange Limited v. Duncan [2003] 4 I.R. 1, in order to have the matter remitted for plenary hearing.

  8. Although the judgment of Barrett J. delivered on 11th July, 2017, has been vacated, I have read the document and am in agreement with its contents. Since it no longer has the status of a judgment, I am appending that document to this judgment and I adopt the contents of it as my judgment in the matter save for the references to the current account and overdraft facility. It is wholly unsatisfactory that the scarce resources of the court have been taken up with a second hearing which could have been avoided had Mr. Browne taken a more proactive role in these proceedings when they were before Barrett J. Since I am in agreement with the views expressed by Barrett J., it would be wholly wasteful of further court time if I had to repeat everything that is in that “judgment” and I do not propose to do so because I am in agreement with it.

  9. I would make the following additional comments. I am satisfied that sufficient proof has been furnished by the plaintiff of the transfer of the loan to it. I am also satisfied that insofar as the defendants or any of them failed to sign some of the facility letters this does not afford them a defence. Clause 11.2 of the Lender’s General Conditions state:-

    “If the Borrower draws down or avails of a Facility in whole or in part this will constitute acceptance (without amendment) of the terms and conditions of the Facility.”

    There is no doubt that some of the facility letters were signed and the failure to sign others is not a defence to the plaintiff’s claim. Where no draw down of funds took place in circumstances where some of the facilities were restructured this does not afford a defence so long as the defendants had the use of funds that were covered by the restructuring facility. See Governor and Company of the Bank of Ireland v. Flannagan & Anor [2015] IECA 56.

  10. Throughout the numerous affidavits and exhibits, no serious attempt has been made by the defendants or any of them to suggest that the monies claimed were not advanced and are still due.

  11. While the defendants attempt to set up a collateral agreement concerning the waiving of residual debt after the sale of the Ailesbury Wood property, there is no documentary or corroborating evidence to support what is a mere assertion in this regard. Furthermore, the sworn statement of affairs and other documents exhibited before the court are wholly inconsistent with any such agreement. It is inconceivable that the defendants’ solicitor would not have mentioned the alleged agreement in the letter of 18th October, 2016, in response to the demand from the plaintiff if such an agreement existed. Not only have the defendants offered no corroborating evidence of such an agreement but their own conduct, including the sworn statement of affairs, showing the residual debt as a current liability, amounts to an estoppel in respect of such a claim.

  12. So far as the complaint to the Financial Services Ombudsman (FSO) is concerned, this provides no defence to the claim. The defendants urge the court to stay these proceedings or any judgment that might be granted pending the conclusion of the deliberations of the FSO.

  13. The FSO has already declined to involve himself in these proceedings. Although he has been invited to reconsider the matter, he has not done so other than to state that he will await the development in these proceedings.

  14. The gist of the complaint to the FSO seems to be that the defendants were not given sufficient time to meet a settlement proposal from the plaintiff. However, there is no obligation on any plaintiff to make a proposal for settlement. On 1st August, 2016, the plaintiff set out the basis upon which it would be prepared to deal with the outstanding debts of the defendant. These proposals provided for the payment of €500,000 to the plaintiff within seven days and the provision of a power of attorney to the plaintiff in respect of selling off secured assets. On the expiration of that period, the offer lapsed. However, these proceedings did not commenced until 7th December, 2016, and by that time there was still no agreement in place.

  15. Section 57BX of the Central Bank Act 1942 (as amended) provides:-

    “An eligible consumer may complain to the Financial Services Ombudsman about the conduct of a regulated financial service provider involving:-

    (a) the provision of a financial service by the financial service provider, or

    (b) an offer by the financial service provider to provide such a service, or

    (c) a failure by the financial service provider to provide a particular financial service that has been requested.” [Emphasis added]

    None of these criteria are met by the defendants’ complaint to the FSO.

  16. I find no warrant in the legislation for the suggestion that the FSO should involve himself in disputes between a lender and a borrower in respect of disputed debts once the matter has proceeded to court. The reference to the FSO does not provide any defence to the proceedings.

  17. Finally, it has been suggested by counsel for the defendants the reference to the FSO should form the basis of a stay in the event that judgment is awarded. I reject that application on a number of grounds. In the first place, the remit of the FSO does not extend to these proceedings. Secondly, it is not clear what would happen if a stay was granted on that basis. Thirdly, I am satisfied that there would be unfair prejudice to the plaintiff if such a stay were to be granted. The defendants are significantly indebted both to the plaintiff and other parties and the prospects of recovery may be slim. If a stay were to be imposed on this judgment, other creditors might be able to take advantage of the position and leapfrog the plaintiff. This would clearly be unfair to the plaintiff. I will refuse a stay.

  18. The plaintiff is entitled to judgment in respect of the sums claimed other than the amount outstanding on the overdraft account. The plaintiff is entitled to judgment in proceedings bearing record number [2016 No. 2379 S.] against the defendants in the sum of €1,107,891.26. The plaintiff is entitled to judgment in proceedings number [2016 No. 2380 S.] against the defendant in the sum of €3,495,933.99; and the plaintiff is entitled to judgment in proceedings bearing record number [2016 No. 2081 S.] against the defendants in...

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