Quigley and Others v Minister for Education and Others

JurisdictionIreland
CourtHigh Court
JudgeMr Justice Charleton,Miss Justice Laffoy
Judgment Date11 October 2012
Neutral Citation[2012] IEHC 414
Docket Number[2001 No. 18362P]
Date11 October 2012

[2012] IEHC 414

The High Court

No. 1029S/2012
No. 1473S/2012
National Asset Loan Management Ltd v MKI Property Investments & Ors
No Redaction Needed
Commercial

Between

National Asset Loan Management Limited
plaintiff

and

MKI Property Investments, Paul O'Brien, Greenband Investments and John Hegarty
defendants
National Asset Loan Management Limited

and

Greenband Investments, John Costello, John Hegarty, Paul O'Brien and MKI Property Investments

RSC O.37 r7

DANSKE BANK AS T/A NATIONAL IRISH BANK v DURKAN NEW HOMES & ORS UNREP SUPREME 22.4.2010 2010/10/2392 2010 IESC 22

NATIONAL ASSET MANAGEMENT AGENCY ACT 2009 S101

RSC O.60

PEEL & TREITEL THE LAW OF CONTRACT 13ED 2011 PARA 3.094

COURTNEY v MCCARTHY 2008 2 IR 376 2007/11/2296 2007 IESC 58

AMALGAMATED INVESTMENT & PROPERTY CO LTD (IN LIQUIDATION) v TEXAS COMMERCE INTERNATIONAL BANK LTD 1982 QB 84 1981 3 WLR 565 1981 3 AER 577

1

1. This is an application for summary judgment by the plaintiff, a subsidiary of the National Asset Management Agency, against John Hegarty, who is the fourth defendant in the 2012 No. 1029S proceedings and the third defendant in the 2012 No.1473S proceedings. Mr Hegarty inherited a scrap metal business from his family and developed it so that he accumulated substantial wealth. Details of his approach to business as have been given in the affidavits before this Court indicate prudence. This application arises from land development loans granted by Allied Irish Banks, p.l.c. (A.I.B.)to a consortium of which Mr. Hegarty was a member and were in relation to the building and fitting out of a shopping centre in Clonmel and the purchase of development land in Maynooth. In consenting on the 21 st of June, 2012 to the entry of a summary judgment against him to the sum of €15,515,678.50, John Hegarty made it clear that in respect of borrowings and guarantees by him for the Maynooth development he had no defence but that in the case of the liabilities arising from the Clonmel project, that his liability was limited by an express understanding between him and A.I.B. that recourse to him would be for only 50%; it is reasonable in that regard to include a sum for the fitting out of the centre which the bank also claims against him as part of this motion seeking €4,634,046.97.

Defence Claim
2

2. The defence of John Hegarty cannot be classified as weak or insubstantial. It applies to both sets of proceedings. In the course of a business meeting on the 30 th of April, 2009, John Hegarty claims that he raised concerns with two representatives of A.I.B. about the unknown quantum of borrowings of the other defendants to which his enterprise was bound. Willie Madden on behalf of the bank allegedly confirmed that as Mr. Hegarty only had a 50% interest in the Clonmel development, he would only be pursued for 50% of any liability that would arise. It is claimed that the bank treated this as an agreement. A note by Frank O'Shaughnessy who used to work for A.I.B. but who was then advising John Hegarty sets out that "should the bank have to make a call for other borrowings of either party for any liability - in such a scenario the bank could only seek to recoup 50% of the Clonmel liability from either party". He has also sworn an affidavit to that effect. A credit committee report of a later date notes that "Mister Hegarty will guarantee the obligations of MKIPI [first defendant in the first proceedings], restricted to his interest in the site …". Michael Fives, then senior manager of A.I.B. in Limerick, confirms in an affidavit before the court that his understanding was that the liability of John Hegarty would be 50% if it became necessary to pursue the parties. This was his understanding of the assurance allegedly given by Willie Madden. His account of matters is that this assurance was given in respect of any call that the bank might have to make "for other borrowings from either party" to the transaction in question. It suffices to note that in this and subsequent affidavits no definitive state of facts is arrived at such as could be relied upon definitively.

Summary judgment
3

3. The motion before the Court is based on the Rules of the Superior Courts 1986, order 37 rule 7:-

Upon the hearing of any such motion by the Court, the Court may give judgement for the relief to which the plaintiff may appear to be entitled or may dismiss the action or may adjourn the case for plenary hearing as if the proceedings had been originated by plenary summons, with such directions as to pleadings or discovery or settlement of issues or otherwise as may be appropriate, and generally may make such order for determination of the questions in issue in the action as may seem just.

4

4. The law as to entering judgment in a summary manner is clear. The Court is required to analyse whether the facts require the entry of judgment hereby or to instead remit the matter to a plenary hearing. To enter judgment now, it must be very clear that the defendants have no defence. Should an issue of law arise, the Court is entitled, but not bound, to decide that issue at this hearing. The mere statement of a defence in an affidavit is not necessarily enough to require a case to be sent to a full hearing; any defence must have sufficient credibility to have a reasonable prospect of success. Where a case is based on documents, a defendant must be in a position to show that the defence which they seek to make is not totally undermined by the contract at issue or by the correspondence between the parties. Denham J. summarised the relevant law in Danske Bank a/s v. Durkan New Homes Ltd. (unreported, Supreme Court, 22 nd April, 2010) [2010] IESC 22 at paragraphs 14-16 in this way:-

14

Several cases were opened before the Court which have addressed this jurisdiction. These included Bank of Ireland v. Educational Building Society [1999] 1 I.R. 220 where Murphy J. emphasised that it was appropriate to remit a matter for plenary hearing to determine an issue which is primarily one of law where a defendant identified issues of fact which required to be explored and clarified before the issues of law could be dealt with properly. He stated at p.231:-

"Even if the position was otherwise, once the learned High Court Judge was satisfied that the defendant had "a real or bona fide defence", whether based on fact or on law, he was bound to afford them an opportunity of having the issued tried in the appropriate manner."

15

In Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 I.R. 607, Hardiman J. reviewed Irish cases and concluded at p.623:-

"In my view, the fundamental questions to be posed on an application such as this remain: is it "very clear" that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?"

16

In McGrath v. O'Driscoll [2007] 1 ILRM 203, Clarke J. described the law as follows, at p.210:-

"So far as questions of law or construction are concerned the court can, on a motion for summary judgment, resolve such questions (including, where appropriate, questions of the construction of documents), but should only do so where the issues which arise are relatively straightforward and where there is no real risk of an injustice being done by determining those questions within the somewhat limited framework of a motion for summary judgment."

5

5. I am applying these principles in this judgment. If any defence is reasonably capable of affecting the result, then leave to enter final judgment must be refused and, instead, the matter must be remitted for a plenary hearing on oral evidence. I have a discretion as to whether to decide complex issues of law on this hearing or to decline to decide such issues in favour of a fuller treatment of such issues in the course of a plenary hearing. It is clear that should this case be between A.I.B. and John Hegarty the defendant has raised sufficient controversy to require the Court to hear and resolve evidence. That is straightforward.

7

7. John Hegarty claims reliance on a representation by A.I.B. whereby the extent of his liability under a complex series of transactions was defined. The extent to which an overriding undertaking can undermine the terms of a written document can be considered in the context of a defence that a document was mistakenly signed, which is not the defence raised here, or whereby a misrepresentation redefined the liability of the parties so that a different consensus was arrived at should not be definitively stated here. That is a matter for trial. The objective principle in contract, however, should not favour a person who knows of the mistake of a party entering into a contract. Further, if a person has induced a mistake by some misrepresentation about a contract, liability can be avoided by the person so induced.

8

8. The plaintiff is not A.I.B., however. The plaintiff is a State financial management agency set up to take over problematic and non-performing loans from the problematic and ill-managed banks whose profligacy led to the guarantee by the Government of their debts in September 2008. As such, the plaintiff is claimed to have the benefit of s. 101 of the National Asset Management Agency Act 2009. This provides:

(1) If in relation to a bank asset that NAM A or a NAM A group entity has acquired-

(a) it is alleged that a representation was made to, a consent was given to, an undertaking was given to, or any other obligation was undertaken (by agreement or otherwise) in favour of, the debtor or another person by the participating institution from which the bank asset was acquired or by some person acting or claiming to act on its behalf,

(b) no such representation, consent, undertaking or obligation was...

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