Promontoria (Aran) Ltd v Huges

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice Max Barrett
• Judgment Date: 11 July 2017
• Neutral Citation: [2017] IEHC 447
• Date: 11 July 2017
• Docket Number: 2016 No. 2379S 2016 No. 2380S 2016 No. 2381S

BETWEEN:

(1) PROMONTORIA (ARAN) LIMITED

Plaintiff

– and –

JOHN HUGHES

AND

MARGARET HUGHES

Defendants

(2) PROMONTORIA (ARAN) LIMITED

Plaintiff

– and –

JOHN HUGHES

Defendant

(3) PROMONTORIA (ARAN) LIMITED

Plaintiff

– and –

JOHN HUGHES

AND

THOMAS BROWNE

Defendants

[2017] IEHC 447

Barrett J.

2016 No. 2379S

2016 No. 2380S

2016 No. 2381S

THE HIGH COURT

Banking & Finance – Non-payment of debt – Summary judgment – Lack of arguable defence – Delay

Facts: The plaintiff sought an order for summary judgment against the defendants for their failure to meet their debt obligations. The plaintiff had filed three sets of summary debt recovery proceedings out of which only one proceeding had been defended by the defendants as they had acknowledged their obligations to pay the debt in relation to the other two proceedings. The defendants took the plea that the relevant debt had been written off by the predecessor of the plaintiff and that they never signed the offer-letter.

Mr. Justice Max Barrett granted the desired relief to the plaintiff. The Court held that the defendants had no bona fide defence and all the allegations made therein were baseless without any supporting evidence. The Court held that the filing of complaint before the Financial Service Ombudsman would not be a ground to grant a stay as that complaint was based on the wrong understanding of the applicable fact and there was no real prospect of the complainant/defendants securing the desired relief.

JUDGMENT of Mr Justice Max Barrett delivered on 11th July, 2017.

I. Overview

1 These are three sets of factually overlapping summary debt recovery proceedings. One set of proceedings ( Promontoria (Aran) Limited v. John Hughes and Margaret Hughes) is defended. In the other two sets of proceedings, the relevant debts were effectively acknowledged at hearing. A question arises in all three sets of proceedings as to whether a stay ought to be granted following judgment in order to facilitate a determination, if determination there is to be, regarding certain complaints made to the Financial Services Ombudsman.

2 In this last regard it is perhaps appropriate to note that the Financial Services Ombudsman has, in a letter of 24th February, 2017, expressed the preliminary view to the solicitors for the defendants that, so far as the defendants' complaints are concerned, he should make a decision pursuant to s.57BZ of the Central Bank Act 1942, as amended, not to investigate the complaints made for the reason identified in s.57BZ(1)(d) (being that, in the within court proceedings ‘ there is or was available to the complainant[s] an alternative and satisfactory means of redress in relation to the conduct complained of’). Since that letter issued, the correctness of the said preliminary view has been challenged by the defendants in correspondence with the Financial Services Ombudsman; however, the Ombudsman's preliminary view remains unchanged; thus it is, to put matters at their most favourable to the defendants, not at all clear at this time that there will ever be a determination by the Financial Services Ombudsman of their complaints.

II. Promontoria (Aran) Limited v. John Hughes and Margaret Hughes

(i) The Parties.

3 The plaintiff, Promontoria, is a single-member private company limited by shares. Each of the defendants is a natural person who has availed of commercial loans to facilitate property investment and/or development. Promontoria's claim arises on foot of one loan and one current account originally operated by Ulster Bank Ireland Limited (“Ulster Bank”).

(ii) The Loan Offer-Letter.

4 By loan offer-letter of 21st February, 2011, Ulster Bank offered to make available to the defendants a demand loan facility in the sum of €2.384m (the “Loan Facility”), subject to the terms and conditions prescribed therein and Ulster Bank's then General Terms and Conditions for Lending to Partnerships. The loan letter and the General Terms and Conditions contain, inter alia, the following express terms and conditions:

(1) Letter, “Purpose” Clause.

‘The Facility shall be made available for the sole purpose of:

(i) continuation of the existing facility to assist with the purchase of a property [in Dublin (the “Dublin Property”)]…

(ii) refinancing the Borrower's fixed rate loan, now expired, provided to assist with the purchase of the Property in the amount of €1,384,000.’

The term “Borrower” is defined in the loan letter and embraces both of Mr and Ms Hughes.

(2) Letter, “Interest Rate” Clause.

The interest rate stated in the “Interest Rate” clause of the loan letter as the “Bank's Cost of Funds rate varying including a rate of 1.50% per annum”. This yielded on 21st February, 2011, an annual percentage rate (APR) of 2.70% per annum.

(3) Terms and Conditions, Joint and Several Liability.

Under cl. 9.8 of the General Terms and Conditions, ‘ Where [as here] the Borrower includes more than one person, the liability of such persons for the repayment of the Facilities and for the performance of each Borrower's obligations under the Facility Letter shall be joint and several’.

(4) Letter, “Facility” Clause.

The facility is stated in the loan letter to be a “Demand Loan Facility”. Clause 3.2 of the General Terms and Conditions provides as follows in this regard:

‘A demand loan Facility is repayable on demand and the Bank may at any time by written notice: (a) terminate the Facility; and/or (b) demand immediate repayment of all or any amounts drawn and outstanding under the Facility and all accrued interest and other sums payable in respect of the Facility.

Immediately upon such a demand being made, the Borrower shall be liable to pay all such amounts, interest and other sums and any amount undrawn under the Facility shall be cancelled…’.

5 The terms and conditions of the loan facility were accepted by each of the defendants who thereafter had full use and benefit of the sum of €2.384m referenced above.

(iii) The Current Account.

6 It is claimed that on or about 2nd February, 2015, the defendants opened a business current account with Ulster Bank, subject to the then General Terms and Conditions for Business Lending to Partnerships. The current account did not have an agreed overdraft facility. However, the General Terms and Conditions provide at cl.3.2 that ‘ An overdraft Facility is repayable on demand’.

(iv) The Transfer.

7 By mortgage sale deed dated 16th December, 2014, made between Ulster Bank and Promontoria Holding 128 B.V. (“Holding”), Holding agreed to purchase, inter alia, all rights, title, interest and benefit (present and future) of Ulster Bank pursuant to the Loan Facility and the current account with effect from 12th March, 2015.

8 As demonstrated by counsel for the defendants at the hearing of the within application, the trail whereby one gets from an Ulster Bank loan to the plaintiff being the proper party to the within proceedings is not adequately set out in the pleadings. However, although this is an important matter, it is also in some ways a slight matter that can readily be addressed by the court requiring as a pre-condition to the issuance of any order pursuant to this judgment that Promontoria file a further affidavit which, after hearing any (if any) further argument that the parties might wish to make, the court considers to remediate any deficiency in the pleadings in this regard.

9 For the sake of completeness, notwithstanding that the debts sought in the other two proceedings are effectively acknowledged, the court would request that the to-be-sworn affidavit also trace the sequence of transfer of the other loans to Promontoria, which sequence presumably is all but identical in any event.

10 Although the court considers the foregoing the most pragmatic and sensible manner in which to proceed at this juncture, it is not clear to it why such an affidavit has not hitherto been sworn, or why the repeated and reasonable requests of Mr and Ms Hughes' solicitor that the plaintiff demonstrate that it is the proper party to bring the within proceedings have gone unheeded: it is eminently possible to prove title to a loan without also disclosing commercially sensitive information.

(v) The Demands.

11 In breach of the terms and conditions of the Loan Facility, the defendants have failed, refused and/or neglected to meet their obligations to the plaintiff. Moreover, in breach of the terms and conditions of the current account, the defendants have permitted the current account to remain continuously overdrawn. By letters of demand sent to the both defendants on 11th October, 2016, the plaintiff demanded immediate repayment of the sum of €1,608,712.70 (comprising €1,105,848.11 owing under the Loan Facility and €502,864.59 owing on the current account). In spite of the said letters of demand, as of the date of hearing the defendants had failed, refused and/or neglected to discharge the sums due and owing under the Loan Facility and the current account. The plaintiff has therefore come to court by way of the within summary proceedings seeking such amounts as it claims are now owing to it plus interest thereon.

(vi) The Defences Raised.

12 In essence, three defences and one additional point are raised by the defendants. These are as follows. First, that the defendants did not sign the offer-letter of 21st February, 2011. Second, that historically an oral agreement had been reached by the defendants with Ulster Bank that it would “write off” certain debt arising. Third, that the defendants never opened the purported current account. Fourth, not a defence but a point relevant to the stay application made, the defendants have made certain complaints to the Financial Services Ombudsman that have yet to be determined by same, though (as mentioned above) it may well be, at this point it seems more likely than not, that they...