Smith v McCarthy

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 17 May 2017
• Neutral Citation: [2017] IECA 168
• Date: 17 May 2017
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2017] IECA 168 Record No. 2016/313, 443 and 444

BETWEEN/

JUNE SMITH

PLAINTIFF / APPELLANT

- AND -

SHANE MCCARTHY, ACC LOAN MANAGEMENT LIMTIED, MICHAEL COLLINS & COMPANY, SOLICITORS, JAMES SMITH

AND

THE LAW SOCIETY OF IRELAND

DEFENDANTS / RESPONDENTS

[2017] IECA 168

Neutral Citation Number: [2017] IECA 168

Record No. 2016/313, 443 and 444

THE COURT OF APPEAL

Abuse of process – Strike out proceedings – Bound to fail – Appellant seeking to appeal against High Court decisions to strike out proceedings – Whether appellant’s claims were bound to fail

Facts: O’Regan J, in an ex tempore judgment delivered on 15th June 2016, struck out the claim as against the first two defendants/respondents, Mr McCarthy (the receiver) and ACC Loan Management Ltd, as an abuse of process. Subsequently, in ex tempore judgments delivered on 27th July 2016, Gilligan J struck out the proceedings as against the third defendant/respondent, Michael Collins & Co., solicitors and the fifth defendant/respondent, the Law Society of Ireland, on the ground that each set of proceedings was unlikely to succeed. The plaintiff/appellant, Ms Smith, appealed to the Court of Appeal against those decisions.

Held by Hogan J that so far as the claims against ACC and the receiver were concerned, he agreed with the conclusion of O’Regan J that they were plainly abusive and represented an impermissible collateral attack upon the validity of the High Court order of Kelly J of February 29th 2012, which ruling was never appealed. Hogan J held that the claim against Mr Collins and his firm was bound to fail. Hogan J therefore dismissed the appeal against the decision of Gilligan J to strike out the claim pursuant to the court’s inherent jurisdiction. Hogan J held that it was manifest from a consideration of both first principles and the relevant authorities that the plaintiff’s claim as against the Law Society had no reasonable prospect of success and was bound to fail. Hogan J accordingly dismissed the appeal against the decision of Gilligan J to strike out such proceedings pursuant to the Court’s inherent jurisdiction.

Hogan J held that he would accordingly affirm the respective decisions of O’Regan J and Gilligan J to strike out the proceedings as against the first, second, third and fifth defendants.

Appeal dismissed.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 17th day of May 2017

1 The present proceedings were commenced by the plaintiff in May 2016, but, as I propose to chronicle in the course of this judgment, as against the first three defendants they are substantially the re-iteration of claims advanced in other parallel and satellite proceedings. To appreciate this it is necessary that this judgment should be read in conjunction with the linked appeal in proceedings brought by the plaintiff's daughter, Ms. Jane Smith, involving the same parties (with the exception of the Law Society), the decision in which is also being delivered this morning. Given the overlap between the facts of the two cases, for convenience some of this judgment draws heavily on the narrative of the salient facts found in the judgment which has just been delivered in the related Jane Smith appeal.

2 In an ex tempore judgment delivered on 15th June 2016, O'Regan J. struck out the claim as against the first two defendants (respectively, the receiver and ACC Loan Management Ltd.) as an abuse of process. Subsequently, in ex tempore judgments delivered on 27th July 2016, Gilligan J. struck out the proceedings as against the third defendant, Michael Collins & Co., solicitors and the fifth defendant, the Law Society of Ireland, on the ground that each set of proceedings was unlikely to succeed. The plaintiff, Ms. June Smith, has now appealed to this Court against these decisions.

3 I should say that, in strictness, the wording used by Gilligan J. was incorrect. The strike out jurisdiction under Ord. 19, r. 28 is confined to cases where no reasonable cause of action is disclosed or where the action is frivolous or vexatious. The Court also has a supplementary inherent jurisdiction to strike out proceedings which ‘must fail’: see Barry v. Buckley [1981] I.R. 306, 308, per Costello J. It is, however, this latter test (‘must fail’) which I propose to apply in considering whether these proceedings should be struck out on this ground.

The background to the present proceedings

4 In October 2007 the plaintiff's daughter, Ms. Jane Smith and her father, Mr. James Smith, approached the Agricultural Credit Corporation (‘ACC’) seeking a loan facility in the sum of €1.25m. to assist with the purchase of certain lands which were about to be sold by public auction and also in order to redeem certain borrowings from AIB. At that public auction the plaintiff's father, Mr. James Smith, committed to purchasing the lands in the sum of €1.825m. This was a considerably higher sum than had previously been proposed or envisaged.

5 Shortly after the public auction a revised loan application was submitted to ACC in the joint names of Mr. James Smith and Ms. June Smith who are both married to each other. By that loan application the Smith parents sought two loans: the first in the sum of €800,000 and the second in the sum of €1.296m. It later emerged that the lands which were purchased with the assistance of these loans were registered in the name of the Mr. James Smith. Gilligan J. considered that it was very likely that this step had been taken by the Smiths for reasons of tax efficiency as he was the only person who could obtain farm consolidation relief.

6 While the (apparent) discrepancy between the terms of the loan offer and the registration of the title is a matter upon which Ms. June Smith has sought to place some reliance in the course of this appeal, what is not in doubt is that by separate facility letters dated the 11th November 2007 ACC offered to advance these loan facilities to Mr. and Ms. Smith. They accepted the terms of the facility letters in writing and drew down the full amount of these loan sums. The facility in the sum of €1.296m. was a bridging loan which was for a term of one year, while the facility in the sum of €800,000 was repayable on demand, or in the absence of such a demand, over a period of twenty five years.

7 A condition precedent to ACC's obligation to advance monies under the facilities was the requirement that the Smiths' solicitor, Mr. Michael Collins, furnish ACC a letter confirming that signed contracts for the sale of other lands for €1m.were in place. Mr. Collins did, in fact, provide such confirmation to ACC by letter dated the 26th November 2007 although, as it happens, Ms. June Smith now asserts that she did not, in fact, instruct Mr. Collins to his effect.

8 In September 2008 the Smiths executed a deed of mortgage and charge in favour of ACC over a number of parcels of land extending to over a hundred and eighty acres. The plaintiff's daughter, Ms. Jane Smith, claims, however, to enjoy a prior leasehold interest in those lands with the exception of sixty two acres. (This issue is addressed in the companion appeal). The first named defendant, Mr. McCarthy, was ultimately appointed as a receiver over these lands pursuant to the mortgage by ACC in March 2014. In later injunction proceedings the Smiths conceded that the mortgage was valid.

9 On the 17th July 2008 certain employees of ACC were informed by the Smith parents that the contracts of sale were not, in fact, in place. At that stage ACC was not informed that a letter of instruction had been written by Mr. Collins without, it is claimed, having been instructed to do so by the Smith parents.

10 In November 2008 the bridging loan expired and in November 2011 ACC issued summary proceedings seeking the repayment of all sums due on the facilities. The Smiths instructed a new solicitor to enter an appearance on their respective behalves and in an affidavit sworn by Ms. June Smith, on behalf of both herself and her husband, the bank's entitlement to judgment was disputed on a number of discrete grounds.

11 11. The principal defence advanced by the Smiths was in essence the same as that relied on by Ms. Jane Smith in these proceedings, namely, that the letter from Mr. Collins confirming that contracts for the sale of lands for €1m. were in place in November 2007 had, in fact, been written without appropriate instructions. In particular, it was not alleged that ACC either knew that the contracts for sale were not in fact in place or that ACC knew that (assuming for the moment that it is the case), Mr. Collins had written the letter to ACC without such instructions.

12 The summary judgment application was heard on the 29th February 2012. The application proceeded in the absence of the Smiths and the High Court (Kelly J.) entered judgment in the sum of €1.933m. as against the Smiths on a joint and several basis. The curial part of the order of Kelly J. specifically recited that the Court had had regard to the affidavit of Ms. June Smith in respect of which the contracts for sale issue had been raised, but that the High Court was nonetheless satisfied that no arguable defence had been thereby demonstrated.

13 On the 27th March 2014 ACC appointed the first named defendant, Mr. McCarthy, to act as receiver of the lands which were the subject of the charges created by the November 2007 facility letters. The receiver, finding himself unable to secure possession of those lands, commenced separate proceedings in June 2014 seeking injunctions restraining, inter alia, the Smith parents from interfering with the receivership or further trespassing upon the properties.

14 The High Court (Gilligan J.) granted an interlocutory injunction to that effect on the 17th October 2014. The Smiths then instructed Mr. Collins to enter an appearance and a defence was delivered in response to the statement of claim of the receiver. In that defence it was pleaded...