Smith v McCarthy

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 17 May 2017
• Neutral Citation: [2017] IECA 167
• Date: 17 May 2017
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2017] IECA 167 Record No. 2016/203 2016/204

[2017] IECA 167

THE COURT OF APPEAL

Hogan J.

Ryan P.

Irvine J.

Hogan J.

Neutral Citation Number: [2017] IECA 167

Record No. 2016/203

2016/204

BETWEEN/

JANE SMITH

PLAINTIFF / APPELLANT

- AND -

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

AND

JAMES SMITH

DEFENDANTS / RESPONDENTS

Abuse of process – Strike out proceedings – Unsustainable proceedings – Appellant seeking to appeal against High Court decision to strike out proceedings – Whether appellant’s claims were unsustainable

Facts: Gilligan J, on the 18th April 2016, struck out the proceedings against both the first and second defendants/respondents, Mr McCarthy (the receiver) and ACC Loan Management Ltd, and the third defendant/respondent, Michael Collins & Company, solicitors, on the ground that the proceedings were an abuse of process and were unsustainable. Gilligan J also struck out the proceedings as against the third defendant pursuant to Ord. 19, r. 28 on the ground that they were frivolous and vexatious. The plaintiff/appellant, Ms Smith, sought to appeal to the Court of Appeal against that decision.

Held by Hogan J that so far as the claims against ACC and the receiver were concerned, they were plainly abusive. Hogan J noted that the claim rested upon the defence arising from the contention that the letter of November 2007 from Mr Collins to ACC confirming that contracts for the sale of lands were in place was written without the authorisation of the Smith parents. Hogan J noted that this issue had been raised by the Smith parents on several occasions and had been rejected, most particularly by the High Court order of February 29th 2012 which was never appealed. Quite apart from the fact that these were claims which, subject to one exception, could only have been advanced by the Smith parents, Hogan J noted that these were claims which effectively replicated or duplicated the various claims and defences which the Smith parents had already advanced in separate proceedings. Hogan J held that the plaintiff’s claim against Mr Collins was based on the existence of a supposed broad-ranging duty of care which was neither recognised by authority nor consistent with fundamental principles of tort law. Hogan J held that the claim of fraud which the plaintiff made as against Mr Collins and, indeed, the ACC was entirely unparticularised and consisted of largely generalised allegations. Hogan J considered that these claims were, for several reasons, unsustainable.

Hogan J held that the proceedings had no reasonable prospect of success and he considered that Gilligan J was correct to strike them out pursuant to the Court’s inherent jurisdiction.

Appeal dismissed.

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

1 The appellant, Ms. Jane Smith, seeks to appeal the decision of the High Court (Gilligan J.) dated the 18th April 2016. In his ex tempore ruling delivered on that date Gilligan J. struck out the proceedings against both the first and second defendants (who are, respectively, a receiver and a credit institution) and the third defendant, a firm of solicitors, on the ground that these proceedings were an abuse of process and were unsustainable. Gilligan J. also struck out the proceedings as against the third defendant, Michael Collins & Co., solicitors, pursuant to Ord. 19, r. 28 on the ground that they were frivolous and vexatious.

2 The plaintiff is the daughter of Mr. James Smith, who is the fourth defendant. Her mother, Ms. June Smith, is also the appellant involving similar parties in a related appeal, judgment in which is also being delivered today. For convenience, I propose to refer to Mr. and Ms. Smith in this judgment as either ‘the Smith parents’ or ‘the parents’.

The background to the present proceedings

3 3. It is first necessary to consider the background to these proceedings which really cannot be understood without reference to other litigation involving the Smith parents.

4 In October 2007 the plaintiff and her father approached 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 to redeem certain borrowings from AIB. At that 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. 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.

6 As it happens, by separate facility letters dated the 11th November 2007 ACC offered to advance these facilities to the Smith parents. The Smith parents 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 that the Smith parents' 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, the plaintiff now asserts that her parents did not, in fact, instruct Mr. Collins to his effect.

8 In September 2008 the Smith parents 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 claims, however, to enjoy a prior leasehold interest in those lands with the exception of sixty two acres. 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 Smith parents 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 were not, informed 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 Smith parents instructed a new solicitor to enter an appearance on their 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 The principal defence advanced by the Smith parents was in essence the same contention which the plaintiff seeks to rely on 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 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), that Mr. Collins had written the letter to ACC without instructions.

12 The summary judgment application was heard on the 29th February 2012. The application proceeded in the absence of the Smith parents and the High Court (Kelly J.) and a judgment in the sum of €1.933m. as against the Smith parents 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 had determined 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 are at issue in the present proceedings. The receiver contended that he could not secure possession of those lands and to that land he commenced separate proceedings in June 2014 seeking injunctions restraining, inter alia, the Smith parents from interfering with the receivership or in trespassing upon the properties.

14 14. The High Court (Gilligan J.) granted an interlocutory injunction to that effect on the 17th October 2014. The Smith parents 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 that the mortgage and the borrowings were predicated upon an illegality by reason of certain alleged activities by ACC parent company, Rabobank, in connection with the setting of benchmark interest rates. The matter was due to be heard by the High Court (Gilligan J.) on the 1st December 2015.

15 At, however, a hearing before the High Court in June 2015 the plaintiff's mother, Ms. June Smith, claimed that she could not give up possession of the lands to the receiver by reason of a prior 2012 lease of these lands in favour of her daughter, the present plaintiff. Clause 7.17 of the mortgage prohibits the creation of such a lease without the prior consent of ACC and it is clear from the affidavit of ACC's solicitor, Mr. Conal Keane, dated 7th April 2016 that the bank had never consented to the creation of such a lease. Indeed, Mr. Collins apparently did not dispute the non-binding character of such a lease in the course of oral submissions made to the High Court on behalf of the Smith parents.

16 Insofar as Ms. Jane Smith endeavours to rely on the...