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Debt Problems | Bankruptcy

Summary Judgment Case-Supreme Court Decides Insufficient Details of How Debt Was Calculated

A Supreme Court decision of November 2019 provides some hope for anyone facing a summary summons action against them to have a debt judgment awarded.

The case is Bank of Ireland Mortgage Bank and Joseph O’Malley and involved a vitally important decision of the Supreme Court as to the level of detail the lender must provide in setting out its claim in the Summary Summons.

This case was Mr O’Malley’s appeal against the decision of the High Court to grant judgment against him in the sum of €221,795.53, together with the costs of the proceedings. Mr O’Malley appealed to the Supreme Court.

Background

Mr O’Malley had borrowed €225,000 in 2008 but experienced financial difficulty soon after. It was not disputed that Mr O’Malley received the money from the bank.

A summary summons was issued on behalf of the bank and the summons stated that he had neglected to pay the entire sum due of €221,795.53.

The bank issued a motion seeking judgment and the case came before the High Court. Mr O’Malley’s defence was that the pleadings of the Bank of Ireland in the case were defective insofar as the Bank had failed to provide sufficient details as to how the figure of €221,795.53 was arrived at. Mr O’Malley argued that he should have been able to see any bank surcharges being pursued and any penalties. He had sought a detailed breakdown from the bank and argued that he was entitled to a calculation from the bank showing how it arrived at the figure claimed and the bank had simply furnished a statement of account.

The High Court granted judgment against Mr O’Malley, however on the basis that the statement of account was sufficient, notwithstanding the recognition that the bank had not particularised principal and interest in the amount claimed. Mr O’Malley appealed this decision to the Supreme Court.

The Supreme Court

The Supreme Court first recognised the general principle and test in a summary judgment case as follows:

“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?”

The Supreme Court recognised that a dispute had emerged in this O’Malley case as to whether the claim was sufficiently particularised in the summary summons, in accordance with the rules of the superior courts.

The court noted that the obligation was to provide sufficient particulars in a summary claim to ensure the litigants know the case they have to meet.

Mr O’Malley’s case was that there was confusion and uncertainty on his part as to his liability in respect of the calculation of monies owed and that the method of calculating the principal and interest must be clear for the plaintiff to discharge the burden of proof.

The bank argued that the interest rate applied would be easy to calculate by any competent professional by reference to the statement of account furnished.

Mr O’Malley, in support of his case, relied on Allied Irish Banks v The George Limited (High Court, 21 July 1975) and Allied Irish Banks v Marino Motor Works Limited [2017] IEHC 522.

The Court then looked at two questions:

  1. The level of detail that needed to be included in the Special Indorsement of Claim to be compliant with the Court rules
  2. The evidence which needs to be put forward to justify the grant of a judgment on a summary basis within the confines of a motion for judgment

“In my view, it is appropriate to start by going back to the underlying rationale for the requirement as to detail.  Order 4, r. 4 simply requires that “all necessary particulars” should be stated.  What particulars are “necessary” is the real question.  But the rationale goes back at least 140 years, to the passage from the judgment of Cockburn C.J. in Walker v. Hicks, already cited above.  The defendant to a summons is entitled to have sufficient particulars to enable him “to satisfy his mind whether he ought to pay or resist”.

The Court notes that the special indorsement of claim sets out the terms of the loan, the fact that it was accepted and the monies were drawn down, and the Mr O’Malley had failed to repay the monies demanded. However, no detail was given as to how the sum of €221,795.53 was calculated. The only evidence of this was contained in the Statement of Account. That statement of account, however, did not indicate what interest rate was being applied from time to time. Also, there was no indication of how the closing balance of €221,795.53 was calculated.

But it does not seem to me to be too much to ask that a financial institution, availing of the benefit of a summary judgment procedure, should specify, both in the special indorsement of claim and in the evidence presented, at least some straightforward account of how the amount said to be due is calculated and whether it includes surcharges and/or penalties as well as interest.  Indeed, if it really is as simple as counsel suggested, then I cannot see any reason why Bank of Ireland should not have set out those calculations.  A person confronted with a claim or a court confronted with a question of whether there is prima facie evidence for that claim is entitled to at least enough detail to know the basis on which the sum claimed is calculated.  The defendant is entitled to that information to decide whether there is any point in pursuing a defence or, indeed, potentially expending monies on procuring professional advice in that regard.  The court is entitled to that information to enable it to form an assessment as to whether there is sufficient evidence to say that the debt has been established on a prima facie basis.  Neither the defendant nor the court should be required to infer the methodology used, unless that methodology would be obvious to a reasonable person or is actually described in the relevant documentation placed before the court.

I would, therefore, conclude that there was insufficient evidence before the High Court to justify determining that Bank of Ireland had discharged the initial onus on it to produce prima facie evidence of its debt.  That quite a significant amount of money was likely to have been due can hardly be doubted, but a party claiming a liquidated sum gets the benefit of the summary procedure precisely because it is said that a specified amount of money is due.  In those circumstances, it is not unreasonable to require the plaintiff to show some basis to explain the calculation and justify, on a prima facie basis, the sum claimed

Decision

The Supreme Court then decided, in the interests of the case, to remit the case back to the High Court and the Bank could then apply to amend the special indorsement of claim to include such details as they may think appropriate in the light of this judgment and to “tender such further evidence as may be appropriate to fill the evidential gap identified”. It will then be a matter for the High Court Judge dealing with those applications.

The conclusions of the Supreme Court judgment are as follows:

Conclusions

8.1 For the reasons analysed earlier in this judgment, I would conclude that the special indorsement of claim in this case contains insufficient details of how the sum claimed is calculated so as to meet the requirements of O.4, r.4 of the Rules of the Superior Courts to the effect that all necessary particulars be provided.  The information is insufficient to allow, as the jurisprudence requires, a defendant served with a summary summons in that form to know whether they should concede or dispute the claim.  In so holding, I have indicated that, in my view, it is possible to rely on documentation available to a defendant (such as bank statements or statements of account) for the purposes of providing sufficient particulars in a special indorsement of claim, but only where the document or documents in question are incorporated by reference into the text of the endorsement.  No such incorporation occurred in this case and I am, therefore, of the view that, even if the Statement of Account provided sufficient particularisation of the claim, the special indorsement of claim would nonetheless be defective because that document is not referred to.  

8.2 I have also set out the reasons why I consider that Mr. O’Malley is entitled to put forward arguments based on what was said to be a lack of evidence sufficient to warrant the grant of judgment against him.  I have indicated the reasons why I consider that it is necessary for a financial institution suing for a liquidated sum said to be due on foot of a loan to at least put before the court a simple account of the basis on which it is said that the precise amount claimed is due.  That obligation is prior to and independent of the obligation of a defendant to put forward a positive defence.  In other words, the plaintiff must establish the liquidated debt on a prima facie basis before it is necessary for the defendant to establish any defence which meets the threshold for plenary hearing. 

8.3 For the reasons also set out earlier in this judgment, I would hold that there was insufficient detail in the evidence submitted to provide the Court with an ability to assess whether the precise claim to the debt alleged had been established on such a prima facie basis.  In my view, the observations in the summary judgment jurisprudence, which indicate that a defendant should not be given leave to defend if the basis put forward for resisting the plaintiff’s claim amounts to mere assertion, cut both ways.  A plaintiff, in order that a prima facie claim to the precise debt can be established, must do more than merely assert.  While the basis for there being a claim in general terms was fully set out by the Bank, it does not seem to me that the evidence as to why the precise sum claimed was said to be due amounted to anything much more than assertion.  In particular, it is not clear as to what calculation led to the assertion that the sum claimed was the precise amount due, nor as to the amount of capital and interest and whether the total included surcharges and/or penalties. 

8.4 In those circumstances, I would allow the appeal and remit the matter back to the High Court, subject to the comments contained in the “Consequences” section of this judgment as to how the matter should proceed from then on.

You can read the full Supreme Court Judgment in Bank of Ireland Mortgage Bank and Joseph O’Malley here.

Conclusion

The good news for Mr O’Malley is that he has successfully prevented this application for summary judgment against him by the lender. However, the case has been sent back to the High Court to decide how the matter is to proceed.