The Summary Summons Procedure in Debt Collection-All Parts of the Debt Must Be Set Out in Full

bank of ireland v o'malley

This Supreme Court case has put the cat amongst the pigeons, to a certain extent, when the summary summons procedure is being used to collect debts.

In 2008, Bank of Ireland Mortgage Bank advanced a mortgage loan of €225,000 to Mr. Joseph O’ Malley. Shortly after the loan was advanced Mr. O’Malley ran into financial difficulties. The loan repayments stopped going to the bank in November 2011 and three years later in 2014 Bank of Ireland sought summary judgement for the outstanding amount, €221,795.53.

As with all judgement proceedings involving large mortgage sums the matter was before the High Court first where Mr O’ Malley argued that Bank of Ireland’s pleadings (court papers) were defective as they lacked detail as required by Order 4 Rule 4 of the Rules of Superior Courts. 

Order 4 Rule 4 states “state specifically and with all necessary particulars the relief claimed and the grounds thereof”, Mr O’Malley argued that in the pleadings before the court, Bank of Ireland had simply given a statement of account as the evidence to support their claim. It was argued by Mr O’Malley that such a process was defective as Bank of Ireland should have been required to outline each component that made up the debt claim. 

Each component would comprise figures such as the principal debt advanced plus interest due on the account plus surcharges and penalties. Mr. O Malley argued that simply putting a statement of the account before the court was insufficient as each component of the debt being sought needed to be evidenced in the court proceedings.

High Court decision 

Judgement was granted against Mr. O’Malley even though Bank of Ireland had simply put a statement of account before the court and did not outline specifically how the figure being sought had been arrived at.

As a result of this Mr O’ Malley appealed the decision to the Supreme Court. 

The question at hand in the Supreme Court judgement was what level of detail financial institutions need to provide in summary summons issued to debtors to be successful in obtaining a judgement.

The Chief Justice, Clarke CJ allowed Mr. O’Malley’s appeal, holding that Bank of Ireland’s claim had lacked the necessary detail required under Order 4 Rule 4 of the Rules of the Superior Courts. 

Clarke CJ further held that financial institutions should give a straightforward account of how the amount they are claiming for has been calculated. Based on this reasoning the appeal was allowed because there was insufficient evidence to justify the High Court order granting a summary judgement against Mr. O’ Malley.

Supreme Court decision

The matter was sent back to the High Court so that Bank of Ireland could provide more detail and further evidence of the debt claimed.

What does it mean for debt collection?

As a consequence of Clarke CJ effectively ‘sending’ the matter back to the High Court, many lenders are now seeking to amend any pleadings they have before the courts to introduce supplementary or extra evidence in order to satisfy the Rules of the Superior Courts.

A recent High Court decision in Havbell DAC v Harris saw a four-part test for parties seeking summary judgement being out by the judge.

  1. The plaintiff’s case must be sufficiently pleaded and particularised (meaning that each part of the debt that makes up the amount being sought needs to be outlined to the court).
  2. The plaintiff must specify evidence that establishes a prima facie or clearly identifiable case to grant the judgement.
  3. The court must enquire whether there is a fair and reasonable probability that the defendant will be able to put forward a real (bond-fide) defence against the plaintiffs claim.
  4. The defendant must show that they have a defence that goes beyond a mere assertion and is supported by evidence.

The decision and new test reached in O’Malley may pose problems for debt acquisition companies who may have incomplete records from the original lender and will be in a weak position to put any pressure on the original ledner to assist with any evidentiary difficulties.

Read the full decisions in Bank of Ireland Mortgage Bank v. Joseph O’ Malley IESC [2019] IESC 84 and

Havbell DAC v Harris [2020] IEHC 147