Categories
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.

Categories
Debt Problems | Bankruptcy

Bank Debt/Summary Judgment Cases-Lessons from the Supreme Court in Bank of Scotland PLC v Jerry Beades

You may have heard of Mr. Jerry Beades, who is a well-known anti eviction activist and businessman.

The High Court in 2012 granted a judgment against him in favour of the Bank of Scotland plc in the sum of €9,684,987.04 together with costs. This judgment was in respect of a number of loans Mr. Beades had obtained from the bank.

Mr. Beades appealed this decision to the Court of Appeal and the case ended up in the Supreme Court who delivered a judgment on 29th July 2019. (Read the full decision here).

Mr. Beades represented himself in the High Court and Supreme Court and a review of the Supreme Court decision is worthwhile on a number of levels. Let’s take a look at the Supreme Court decision.

Supreme Court

The legal proceedings had originally commenced by way of a summary summons and Mr. Beades eventually filed a replying affidavit before the case was heard in the Commercial Court.

The claim by the bank was on foot of four facility letters and the application for judgment was grounded on sworn statements (affidavits) of Bank of Scotland and Certus employees.

Mr. Beades swore a replying affidavit in which he made a number of claims:

  • That one of the bank affidavits was ‘fraudulent’ by reason of being sworn in front of a person who Mr. Beades asserted was not a registered practicing solicitor in Ireland
  • The bank was in breach of its contract and its duty of care to him
  • There were delays with drawdown of facilities
  • The bank was in breach of its own terms and conditions by reason of its alleged failure to serve a demand letter on Mr. Beades at his Fairview address

The High Court found against Mr. Beades, however, because he had not denied in any of his affidavits signing the loan agreements or receiving the money from the lender. Accordingly, he had not demonstrated any arguable issued to prevent judgment being granted against him and judgment was granted to the bank. (Read the High Court decision here).

Even if he had a counterclaim it would not be a defence to the summary judgment application because Mr. Beades had put into evidence the following extract from the bank’s terms and conditions,

‘All sums payable in respect of principal interest or otherwise shall be payable gross without deduction on account of taxes, any set-off or counterclaim or on account of any charges, fees, deductions or withholdings of any nature . . .’

The substantive issue-did you receive the money?

The Judge in the High Court had asked Mr. Beades directly if he had received the money.

Mr. Beades viewed this as an inappropriate question but the Supreme Court agreed with Kelly J. of the High Court that this was the substantive issue in the case.

The Supreme Court went on to point out that when you are defending a debt claim such as this one you must pin your colours to some mast or other. That is to say, the defendant could claim he never made the agreement, or it is a case of mistaken identity, or an agreement was made but not performed, or that he did not receive the money.

He could also argue that he received the money but the agreement was breached by the lender, or that there was some issue of illegality, or undue influence, or unconscionability, or estoppel which prevents recovery.

This is a non-exhaustive list of issues which could have been advanced by Mr. Beades but he did not put any of these arguments forward and the Supreme Court went on to point to the old rule that the denial of a debt alone is not a defence.

Moreover Mr. Beades made a number of observations at the Supreme Court appeal which were entirely consistent with him having received the money-for example, ‘they gave me the wrong facility’ and ‘the bank continued to release funds for the building work. If the bank seriously thought it had no obligation to do so, they would have cut off the flow (especially when they had liquidity problems)’ and ‘the unfinished development at Fairview could be finished and the bank could get its money back, why this Mexican standoff?’

All of these statements were admissions that he had received the loan monies.

The Supreme Court also noted that notwithstanding that it was 7 years since the bank had obtained judgment against Mr. Beades he had never put forward the argument that the bank had not lent him the money.

Mr. Beades’ Arguments

The arguments put forward by Mr. Beades were based on technical matters relating to procedure, the admission of evidence, and the swearing of affidavits.

Mr. Beades had also put forward the argument that had the High Court case been heard by a different Judge there would have been a different outcome (Mr. Beades had claimed bias against him in the High Court although did not repeat this in the Supreme Court appeal).

The Supreme Court did not agree that a different judge would have arrived at a different decision and judgment would have been awarded against him based on the facts and evidence.

Inadmissible Evidence

Mr. Beades put forward the argument that the evidence to be offered by the bank must be sworn by a bank employee and the evidence of an employee of Certus, who provided support services to the Bank of Scotland, was insufficient and inadmissible. He was relying on 4 of the Bankers’ Books Evidence Act 1879.

This argument, held the Supreme Court, was misconceived as the section on which Mr. Beades relied referred to an entry in a book held by the bank. This did not cover a situation where someone was giving sworn evidence on affidavit as to facts within their knowledge.

The Supreme Court referred to Ulster Bank Ireland Ltd. v. O’Brien [2015] IESC 96, [2015] 2 I.R. 656 as authority for the proposition that “an affidavit sworn by a person other than the plaintiff who can swear positively to the relevant facts is sufficient”.(J. Laffoy)

The essential fact in this case was the Supreme Court was satisfied that Ms Tracy, who swore the affidavit, was capable of swearing positively to the facts showing that the Bank of Scotland was entitled to judgment.

In summary the Court held the contention that there was no admissible evidence of the arrangements between the bank, its predecessor, and the borrower, Mr. Beades, was misconceived.

No demand letter served

Mr. Beades also made the argument that a letter of demand was not properly served upon him.

However, the Supreme Court held that Mr. Beades had failed to explain why evidence of delivery of a demand letter was a necessary proof when the original loan was for a facility for a fixed term and repayment was to be made at the end of the facility term and the term was up.

Affidavit evidence inadmissible

Mr. Beades had also raised a question about a further affidavit by the Bank’s side by reason of an allegation of fraud as a consequence of the solicitor who witnessed it being allegedly not a solicitor practicing in Ireland. He withdrew the allegation of fraud in the Supreme Court and accepted the solicitor was a registered practicing solicitor.

The Supreme Court also held

“In any event, O. 40, r. 15 RSC provides that “the court may receive any affidavit sworn for the purpose of being used in any cause or matter notwithstanding any defect by misdescription of parties or otherwise in the title or jurat, or any other irregularity in the form thereof…”.

Decision

The appeal was dismissed.

Read the full Supreme Court decision here: Bank of Scotland PLC v Beades [2019] IESC 61

Read the High Court case here: Bank of Scotland PLC v Jerry Beades

Conclusion

If you are facing debt collection proceedings the substantive, fundamental issue is whether you received the money or not. If you did it is unlikely any technical defence or arguments based on alleged procedural deficiencies will save the day for you.

Categories
Litigation

Courts in Ireland-Where to Pursue Your Legal Action

differential costs order

The legal system in Ireland is comprised of four jurisdictions:

  1. The Supreme Court
  2. The High Court
  3. The Circuit Court
  4. The District Court.

Supreme Court

The Supreme Court is principally a court of appeal as it hears appeals from the High Court against judgments and orders.

High Court

The High Court can hear virtually all actions, regardless of the amount involved. However, the Circuit Court has jurisdiction up to a value of €38,092.14 so the High Court will normally involve cases exceeding this amount.

It can also hear appeals from the Circuit Court and cases stated from the District Court. This occurs when a District Court judge refers a case on a point of law to the High Court for its determination before deciding a case.

Circuit Court

The Circuit Court can deal with actions up to a monetary value of €38,092.14 and there are 8 circuits:

  • Dublin
  • Cork
  • Midland
  • South eastern
  • Eastern
  • Northern
  • South western
  • Western.

The Circuit Court has jurisdiction in civil, criminal, and family law matters and can hear appeals from the District Court.

The Circuit Court can also hear equity proceedings eg an action for the dissolution of a partnership, for the administration of an estate of a deceased person, an action for the specific performance of a contract for the sale of land or the partition of an interest in land.

Generally, cases in the Circuit Court are brought in the Circuit Court area where the defendant lives or carries on business.

District Court

The District Court can deal with legal actions with a monetary value of €6,348.69.

It cannot hear actions arising from defamation, malicious prosecution or false imprisonment.

District Courts generally deal with

  • Debt recovery
  • Breach of contract
  • Actions in tort
  • Family law
  • Licensing matters
  • Recovery of arrears of rates
  • Ejectment proceedings (non-residential)
  • Debt collection enforcement applications.

2014 changes to monetary limits

Note: the monetary limits of the Courts were changed in 2014 as follows-
District Court up to €15,000, Circut Court up to €75,000.

The High Court hears cases in excess of €75,000.

Defendant outside the Jurisdiction

Where a defendant is abroad and outside the jurisdiction, it will be essential to establish that the Irish Court has jurisdiction.

Under Common Law Rules re jurisdiction an Irish court has jurisdiction if the defendant is physically served with the proceedings in this jurisdiction or where his solicitor accepts service of proceedings here.

An Irish court will also have jurisdiction where the parties agree.

If it is necessary to serve proceedings on someone outside the jurisdiction, the permission of the court must be obtained first.

The European Union has also sought to standardise the rules of jurisdiction between member states through:

  • Council regulation 44/2001 (‘Brussels 1’) which deals with jurisdiction and enforcement and recognition of judgments between member states in civil and commercial matters
  • European enforcement orders (regulation (EC) 805/2004)
  • Regulation (EC) 1896/2006 which introduced a new procedure for the recovery of cross border debts
  • The Lugano Convention
  • Council Regulation (EC) 44/2001 which deals with service of documents in civil or commercial matters in EU member states
  • The Hague Convention (later superseded by Regulation 1348/2000.
Categories
Business and Company Law Employment Law

Supreme Court rules Registered Employment Agreements Unconstitutional

The Supreme Court has today (9th May, 2013) ruled that REAs (registered employment agreements) are unconstitutional.

registered-employment-agreement-rea
Registered employment agreements outlawed by Supreme Court in 2013

These agreements are provided for under the Industrial Relations Act, 1946.

This case had previously been in the High Court where J. Hedigan dismissed the application..

The applicants are electrical contractors who in various ways, set out in these proceedings, seek to challenge a Registered Employment Agreement (“REA”) on grounds of invalidity ab initio and for unconstitutionality.

Read the full High Court decision here. NOTE: this is the June, 2011 decision of the High Court.

The full decision of the Supreme Court of 9th May, 2013 will be analysed here once made available.

A recommended resource for employers and employees to learn more about employment law in Ireland is http://EmploymentRightsIreland.com.