Ulster Bank Ireland Ltd v Quinn

JurisdictionIreland
JudgeMr. Justice McDermott
Judgment Date15 June 2015
Neutral Citation[2015] IEHC 376
CourtHigh Court
Date15 June 2015

[2015] IEHC 376

THE HIGH COURT

[No. 88 S./2013]
Ulster Bank Ireland Ltd v Quinn
No Redaction Needed

BETWEEN

ULSTER BANK IRELAND LIMITED
PLAINTIFF

AND

MICHAEL QUINN AND BRIDGET QUINN
DEFENDANTS

Banking & Finance – Default in repayment of loan – Summary judgment – Bona fide defence – O. 37, r. 2 of the Rules of the Superior Courts

Facts: The plaintiff sought an order for summary judgment against the defendants, which was claimed to be due and owing on foot of a guarantee furnished by the defendants. The defendants alleged that they were not allowed to cross-examine the representative of the plaintiff on affidavit and hence they had a good defence.

Mr. Justice McDermott granted an order for summary judgment against the defendants. The Court held that before granting an order for summary judgment, the Court must satisfy that the defendant had established probability of having a good defence. The Court observed that in deciding such cases, whether the evidence put forward by the defendant was credible, where there existed issues of facts that needed to be resolved, the process of summary judgment would not be of any help. The Court found that the defendants did not follow the proper procedures for issuing the notice to the representative of the plaintiff in order to cross-examine her under o. 37, r. 2 of the Rules of the Superior Courts. The Court held that in the absence of any conflict of facts and relevant documents, it would not be feasible to call for any representative for cross-examination.

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JUDGMENT of Mr. Justice McDermott delivered on the 15th day of June, 2015

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1. This is an application by the plaintiff seeking summary judgment in the sum of €97,574.73 which is claimed to be due and owing on foot of a guarantee famished by the defendants to the plaintiff as security for an overdraft facility furnished by the plaintiff to Clough Valley Stores Limited, which is now in receivership.

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2. An appearance was entered to the summary summons on 31 st May, 2013, and the motion seeking judgment issued on 15 th August, 2013.

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3. In an affidavit sworn on 9 th August, 2013, Mr. Eoin O'Shea, a senior manager of the plaintiff, claims that the defendants have no defence to the claim either at law or on the merits and that the appearance has been entered solely for the purpose of delay. The defendants appeared but were unrepresented at the hearing of this motion.

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4. The court has a jurisdiction to refuse leave to defend and to grant summary judgment but this must be exercised sparingly on the basis of the well established principles set down in Aer Rianta c.p.t. v. Ryanair (No. 1) [2001] 4 I.R. 607, in which Hardiman J. stated that the fundamental questions to be posed on an application such as this are:-

"Was it very clear that the defendant had no case? Was there either no issue to be tried or only issues which were simple and easily determined? Did the defendant's affidavits fail to disclose even an arguable defence?"

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5. A fair and reasonable probability of the defendants having a real or bona fide defence is not to be regarded as the same thing as a defence which will probably succeed or even a defence whose success is not improbable (per Hardiman J. at p. 621).

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6. McKechnie J. in Harrisrange Limited v. Duncan [2003] 4 I.R. 1, summarised the principles applicable in the following way:-

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i "(i) the power to grant summary judgment should be exercised with discernible caution;

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(ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done;

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(iii) in so doing the court should assess not only the defendant's response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting affidavit evidence;

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(iv) where truly there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use;

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(v) where however, there are issues of fact which, in themselves, are material to success or failure, then their resolution is unsuitable for this procedure;

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(vi) where there are issues of law, this summary process may be appropriate but only so if it is clear that fuller argument and greater thought is evidently not required for a better determination of such issues;

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(vii) the test to be applied, as now formulated is whether the defendant has satisfied the court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, 'is what the defendant says credible?', which latter phrase I would take as having as against the former an equivalence of both meaning and result;

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(viii) this test is not the same as and should be not elevated into a threshold of a defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence;

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(x) leave to defend should not be refused only because the court has reason to doubt the bona fides of the defendant or has reason to doubt whether he has a genuine cause of action;

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(ix) leave to defend should be granted unless it is very clear that there is no defence;

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(xi) leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally;

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(xii) the overriding determinative factor, bearing in mind the constitutional basis of a person's right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter judgment or leave to defend, as the case may be."

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7. The effect of the authorities was also summarised by Ryan J. (as he then was) in Allied Irish Banks Public Limited Company v. Farrell [2014] IEHC paras. 32 and 33.

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8. The documentary evidence exhibited by the parties in the case establishes the following facts:-

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(a) On 28 th October, 2010, the board of Clough Valley Stores Limited considered the terms of a facility letter from Ulster Bank Ireland Limited dated 15 th October, 2010 and a copy of the bank's standard terms and conditions governing business lending to companies known as "general conditions" which were produced at the meeting. It was noted that under the facility letter the bank agreed to make available to the company the overdraft facility set out in the letter. The meeting had been called to approve the acceptance by the company of the terms of the facility letter and a resolution to that effect was adopted. The defendants were each authorised to sign the facility letter to indicate acceptance of the terms on behalf of the company. The extract of the Board minutes exhibited is signed by Bridget Quinn as director/company secretary.

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(b) Pursuant to the terms of the facility letter of 15 th October, the Bank had agreed to provide and provided an overdraft facility in respect of account No. 10706499 to the company at the bank's Dundalk branch to a limit of €100,000 for the purpose of working capital. Repayment was subject to the bank's right to demand repayment at any time with a right to "review by 15 th January, 2011" and the bank was not obliged to continue the facility after that date. The letter was addressed to Clough Valley Stores Limited and the defendants, and it was indicated that if the facility letter was accepted, it should be returned, signed and dated by authorised persons together with a certified copy of a resolution of the board of directors. Both defendants signed the acceptance of the offer of loan facility on 28 th October, 2010, the same date as the passing of the company resolution required.

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(c) The defendants signed the guarantee, the subject matter of these proceedings, on 28 th October, 2010. Under paras. 1.1 and 1.2, in consideration of the bank providing the overdraft facility to Clough Valley Stores Limited, the defendants irrevocably guaranteed to discharge on demand the debtor company's obligations with interest from the date of demand, the liability not to exceed €100,000 together with interest on that sum. Under para. 2, the guarantors provided an indemnity for costs to the bank. Paragraph 9.2 provides that the bank shall not be obliged before making demand under the deed to take any action or obtain judgment against the debtor company, to make or file any claim in the insolvency of the debtor or to exercise diligence or make demands of the debtor under the facility letter. Paragraph 20.4 provides that the guarantors consented to service when required by post at their last known address and undertook to enter an unconditional appearance within fourteen days of the service of the proceedings.

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9. The guarantee stated at the top of the first page "warning: as a guarantor of this loan, you will have to pay off the loan, the interest and all associated charges if the borrower does not. Before you sign this guarantee you should getindependent legal advice". At the conclusion of the terms and prior to the space provided for signature, it is stated:-

"Important - you should read this carefully."

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Your rights.

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You are recommended to take independent legal advice before signing.

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The limit of your liability will be as provided in clauses 1 and 2."

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10. On the same date, 28 th October, 2010, each of the defendants signed documents headed "waiver of legal advice - fully involved director". The defendants separately signed waivers acknowledging the obligations incurred under the guarantee and that they might have to pay the bank instead of the borrower. They...

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