Ulster Bank Ireland Ltd v Moyne

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 21 July 2015
• Neutral Citation: [2015] IEHC 483
• Docket Number: [2012 No. 944 S]
• Court: High Court
• Date: 21 July 2015

BETWEEN:

ULSTER BANK IRELAND LIMITED

PLAINTIFF

AND

ELENA MOYNE AND ALAN MOYNE

DEFENDANTS

[2015] IEHC 483

[2012 No. 944 S]

THE HIGH COURT

Banking & Finance – Default in payment of loan – Summary Judgment – Bona fide defence – Terms of facility letter

Facts: The plaintiff sought an order for summary judgment against the defendants for failure to pay the loan advanced by the plaintiff on foot of a guarantee executed by the defendants. The defendants alleged that the plaintiff was under an obligation to permit the withdrawal of the funds against the invoice in question.

Mr. Justice Noonan granted an order for summary judgment to the plaintiff. The Court held that before exercising the discretion to grant an order for summary judgment, the Court must see whether there existed an arguable defence supported by evidence as opposed to the issues that could easily be determined on the face of the record. The Court found that since the terms of the facility letter gave discretion to the plaintiff to permit drawdown against any invoice coupled with the fact that the loans were payable on demand, the defendants could not establish a credible and bona fide defence.

JUDGMENT of Mr. Justice Noonan delivered the 21st day of July, 2015.

1 The defendants (‘Mr. and Mrs. Moyne’) were shareholders and directors of a company called Take Stock Ltd. (‘the company’) which was founded by Mr. Moyne in 1998. In mid-2007, Mr. Moyne negotiated certain facilities with the plaintiff (‘the bank’) on behalf of the company. A facility letter was issued by the bank on the 23rd of May, 2007, which was signed on the 18th of June, 2007 by Mr. and Mrs. Moyne on behalf of the company in their capacity as directors. The facility letter provided for two separate facilities in favour of the company, the first described as an overdraft facility with a limit of €50,000 for the purpose of working capital and the second, a demand loan in the sum of €100,000 for the purpose of a stocking loan. Both facilities were unlimited as to time but payable on demand. The facilities were subject to terms and conditions set out in the letter. One of these was that the security required for the facility included, inter alia, the execution of a guarantee by Mr. and Mrs. Moyne in the sum of €150,000. This guarantee was duly signed on the 18th of June, 2007.

2 Various sums were drawn down on foot of these facilities by the company and there is no dispute but that on the 22nd of November, 2011, the sum of €114,976.22 was due by the company on foot of the facility.

3 Unfortunately, the business began to experience difficulty in or around 2009 and effectively ceased trading in early 2010. It would appear that the company was dissolved on the 25th of February, 2011. Letters of demand were issued by the bank to Mr. and Mrs. Moyne on the 24th of November, 2011 seeking payment of the above mentioned sum on foot of the guarantee. A summary summons was issued on the 12th of March, 2012, which was renewed on the 1st of July, 2013 and for a second time on the 9th of April, 2014. Following service of the summons, a motion for summary judgment issued on the 2nd of July, 2014 which came before the Master of the High Court and was subsequently transferred into the Judge's list for hearing.

4 The bank's application for judgment is grounded on an affidavit sworn by Eoin O'Shea, a senior manager in the bank's group centre in Georges Quay, Dublin 2. He makes the usual averments as to his means of knowledge and that the sum claimed is due and he exhibits the guarantee and letters of demand.

5 A replying affidavit was sworn by Mr. Moyne, who appeared in person, on the 24th of September, 2014. He makes a number of averments and submissions which he claims disclose a bona fide defence to the bank's claim. He suggests that the summary summons procedure is the incorrect mode of proceeding in this case. He alleges that the company was caused to default on the loan by the breach of contract of the bank in withholding the remainder of the loan. He alleges that the bank owed a duty of care to the defendants and he complains of the fact that documents relating to the company's dealings with the bank were sought and not furnished.

6 A supplemental affidavit in response was sworn by Mr. O'Shea on the 13th of March, 2015 taking issue with the various averments made by Mr. Moyne. This was in turn replied to by Mr. Moyne in a further affidavit sworn on the 28th of May, 2015.

7 In his second affidavit, Mr. Moyne again alleges that the company failed because of the bank's breach of contract. The breach complained of is alleged to have been a failure on the part of the bank to permit the company to draw down funds on presentation of an invoice. The invoice in question was from a creditor of the company called Secant, apparently a Canadian concern that supplied raw materials to the company to enable it to manufacture and produce its products for onward sale to customers. The invoice is dated the 24th of June, 2008 and is in the total amount of €44,350. It is a rather unusual document insofar as it does not identify the source from which it emanates and is simply produced on a blank piece of paper without any heading. It does not have the appearance of what one might expect in a normal commercial invoice.

8 Mr. Moyne alleges that the bank refused to permit a draw down of funds to pay this invoice with the result that the company could no longer supply its customers with its products leading to its ultimate failure. The underlying suggestion appears to be that had the company not failed as a result of the bank's alleged breach of contract, it would have been in a position to repay the loans and thus the...