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Cite as: [2019] IEHC 841

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THE HIGH COURT
[2019] IEHC 841
[2017 No. 449 S.]
BETWEEN
HAVBELL DAC
PLAINTIFF
AND
HARRY HILLIARD AND URSULA HILLIARD
DEFENDANT
JUDGMENT of Mr. Justice Barr delivered on the 6th day of December, 2019
Introduction
1.       This is an application by the plaintiff seeking summary judgment against the defendants
in the sum of €1,869,031.90.
2.       The indebtedness of the defendants is alleged to have arisen as a result of six loans
furnished to the defendants by Permanent TSB in the years 2003 to 2007. On or about
17th June, 2015, Irish Life and Permanent PLC assigned the debts, the subject matter of
the defendants’ loans, to the plaintiff. The defendants were notified of the assignment of
the loans by letter dated 23rd June, 2015, sent by Capita Asset Services (Ireland) Limited
on behalf of the plaintiff. On or about 16th September, 2016, Havbell Limited converted
from a private company limited by shares to a designated activity company pursuant to
the Companies Act 2014.
3.       The plaintiff alleges that when the defendants failed to make the repayments due under
the loans as and when they fell due, the plaintiff by letter dated 29th November, 2016,
demanded payment of all sums due and owing on all six facilities. A further demand was
made of the defendants by the plaintiff’s solicitor by letter dated 9th January, 2017. The
plaintiff states that despite these demands, the defendants have failed, refused and
neglected to pay the sums due to it.
4.       There are a number of matters that are not in dispute between the parties. The
defendants do not dispute that the original loans were drawn down from Permanent TSB.
Nor do they dispute that the debt, the subject matter of those loans, was transferred to
the plaintiff.
5.       While a number of grounds of defence to this application for summary judgment were set
out in the affidavits sworn by the first defendant, and were set out in the written
submissions of counsel on behalf of the defendants, at the hearing the defendants
resisted the application for summary judgment on the following grounds:
(a) While it was not accepted that there was any default on the part of the defendants
in making the repayments due in respect of the loans, it was submitted that if there
was any such default, on any particular loan, it was denied that the plaintiff had the
right to call in all the loans, either in the circumstances alleged or at all. The
defendants do not dispute that the demands as set out above were made of them
by the plaintiff, but they dispute the entitlement of the plaintiff to make such
demands.
Page 2 ⇓
(b) There is a dispute in relation to the interest rates that were applied by both
Permanent TSB and the plaintiff on the various loan accounts. In particular, the
defendants alleged that the bank acted unlawfully in two respects: firstly, it
misapplied a payment made by the defendants of circa €160,000, which was made
in 2007, to the wrong account. They applied that payment to the account bearing
the lowest rate of interest, whereas it should have been applied to the account
bearing the highest rate of interest, which it is alleged would have led to a saving of
almost €52,000. Secondly, it is alleged that the interest rates applied to the various
accounts are not correctly stated in the statements of accounts used to ground the
plaintiff’s application for judgment herein. In this regard the defendants rely upon a
report from a Mr. Eddie Fitzpatrick dated 27th September, 2017.
(c) It is alleged that the receiver appointed by the plaintiff over certain of the
defendants’ properties, which had been given as security in respect of certain of the
loans, acted unlawfully in two respects: by selling two properties at a gross
undervalue and by retaining rents paid by tenants of the various properties and not
applying the rents to reduction of the loan accounts.
6.       It is submitted on behalf of the defendants that having regard to these issues of both fact
and law, it is not appropriate that the plaintiff be awarded summary judgment in the sum
claimed, but instead the matter should be remitted to plenary hearing.
The Plaintiff’s Claim
7.       Having regard to the matters that are not in dispute between the parties and to the
matters that are in dispute as outlined above, it is only necessary to set out a brief
summary of the plaintiff’s claim for judgment herein.
8.       The plaintiff’s application for judgment is based on a number of affidavits sworn by Mr.
Carl Smith, a Director of the plaintiff company. In his first affidavit sworn on 8th
September, 2017, Mr. Smith outlined in paragraphs 4 – 15, the six loan accounts held by
the defendants with Permanent TSB. The first facility was created by letter of offer dated
20th January, 2003, wherein the defendants accepted a loan of €200,000, which was
secured as a mortgage on a property at 145 Emmet Road, Inchicore, Dublin 8. That
facility was drawn down to account number 38492303 (hereinafter the “2303 account”).
The second loan facility was created by letter of offer dated 30th June, 2003, wherein the
defendants accepted a loan from Permanent TSB of €150,000, which was also secured as
a mortgage on the property at 145 Emmet Road, Inchicore, Dublin 8. This facility was
drawn down to account number 38568133 (hereinafter the “8133 account”).
9.       The third facility was created by letter of offer dated 1st February, 2005, from Permanent
TSB, wherein the defendants accepted a loan of €250,000 secured as a mortgage on a
property at 2 Woodford Cottages, Palmerstown Village, Dublin 20. It was drawn down to
account number 99069597931747 (hereinafter the “1747 account”). The fourth facility
was created by letter of offer dated 18th July, 2005, wherein the defendants accepted a
loan from Permanent TSB of €150,000, which was also secured against the property at
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145 Emmet Road, Dublin 8. The fourth facility was drawn down to account number
99076498294308 (hereinafter the “4308 account”).
10.       The fifth facility was created by letter of offer dated 18th October, 2005, under which the
defendants received a loan of €220,000 from Permanent TSB, which was further secured
as a mortgage on the property at 145 Emmet Road, Dublin 8. The fifth facility was drawn
down to account number 99076490011233 (hereinafter the “1233 account”). The sixth
facility was created by letter of offer dated 16th February, 2007, wherein the defendants
accepted a loan from Permanent TSB of €1,106,000 secured as a mortgage on a number
of properties including, inter alia, 39 Herberton Road, Crumlin, Dublin 12 and 34
Gleneaston Lodge, Leixlip, County Kildare. That facility was drawn down to account
number 99076498294308 (hereinafter the “4308 account”).
11.       Mr. Smith averred that all of the loans were subject to the terms of the various letters of
offer and the terms and conditions contained therein and in particular the terms and
conditions set out in the Letter of Approval, the General Mortgage Loan Approval
conditions and the Irish Permanent Mortgage Conditions. He exhibited copies of the
various letters of offer and the terms and conditions attaching to each loan.
12.       On or about 17th June, 2015, Irish Life and Permanent PLC transferred to the plaintiff a
number of loans, including the loans outlined above which had been made by Permanent
TSB to the defendants. The defendants were notified of the assignment of their loans by
letter dated 23rd June, 2015, sent by Capita Assets Services (Ireland) Limited on behalf
of the plaintiff. On 16th September, 2016, Havbell Limited converted from a private
company limited by shares to a designated activity company pursuant to the Companies
Act 2014. The defendants do not challenge the assignment of the debts to the plaintiff.
13.       Mr. Smith has sworn at paragraph 19 et seq. that in breach of the terms of the first to
sixth facilities the defendants had, since in or about June 2011, periodically failed to make
the required repayments on the first, second, fourth and fifth facilities. By letter dated
29th November, 2016, the plaintiff demanded payment of the sums due and owing on all
of the six facilities pursuant to the “all sums due” nature of the said facilities. He exhibited
a copy of the letters of demand. By further letter dated 9th January, 2017, the plaintiff
through its solicitor wrote to the defendants seeking immediate repayment of the amount
then due and owing as of 29th November, 2016. He exhibited a copy of the
correspondence from the plaintiff’s solicitor.
14.       He went on to state that despite the terms of the letters of demand, the defendants had
failed, refused and neglected to pay the sums due on foot of the said loan accounts. He
exhibited statements of account for each of the loan facilities.
15.       In a supplemental affidavit sworn on 22nd February, 2019, Mr. Smith gave an overview of
the accounts as of 25th February, 2019. In relation to the account bearing Havbell
account number 80000324, the last payment of any kind was made to this account in the
sum of €162,894 on 6th June, 2017. That was the proceeds of sale from 145 Emmet
Road, Inchicore, Dublin 8. As of 25th February, 2019, the arrears on the account stood at
Page 4 ⇓
€49,049.17. The total amount outstanding as of that date was €49,236.23. In relation to
the loan account bearing Havbell account number 80000365, there had been no payment
made to that account since the transfer of the account to Havbell in 2015. Mr. Smith
pointed out that, as could be seen from the defendants’ own account statements
exhibited in the supplemental affidavits sworn by the first defendant, there had been
consistently unpaid direct debits since 9th June, 2011. The arrears on that account as of
12th February, 2019, stood at €220,643.77, the total amount outstanding at 25th
February, 2019, stood at €221,485.24.
16.       With regards to the account bearing Havbell account number 80000426, the last payment
to the account of any kind was €800 on 8th February, 2018. As of 12th February, 2019,
the arrears on the account stood at €4,176.79. The total amount outstanding as of 25th
February, 2019, stood at €949,606.71.
17.       In relation to account bearing Havbell number 80001124 the defendants had maintained
payments in excess of the monthly instalments for some time. The last payment to the
account was made on 8th February, 2019, in the sum of €280. As of 12th February, 2019,
the arrears on the account stood at €84,832.36. The total amount outstanding as of 25th
February, 2019, stood at €240,269.41. Mr. Smith stated that the arrears were historic in
nature and predominately accrued prior to the migration of the defendants’ loans.
Nevertheless, the loan remained significantly in arrears.
18.       In relation to account bearing Havbell number 80001214 the defendants had failed to
make a single payment to the account since its migration to the plaintiff. Indeed, as could
be seen from the statements exhibited in the first defendant’s supplemental affidavit, the
defendants began to regularly miss direct debit payments on that account as far back as
13th June, 2011. As of 12th February, 2019, the arrears on the account stood at
€145,562.54. The total amount outstanding as of 25th February, 2019, stood at
€249,509.08.
19.       Finally, in relation to account bearing Havbell number 80001272, the last payment of any
kind to the account was €35,491.34 on 14th November, 2017. That was the proceeds of
sale from 40 The Corrib, Glenriada, Strokestown Road, County Longford. As of 12th
February, 2019, the arrears on the account stood at €106,013.46. The total amount
outstanding as of 25th February, 2019, stood at €218,326.63. Mr. Smith exhibited up to
date statements of account in respect of each of these accounts.
20.       In his first affidavit, Mr. Smith averred at paragraph 23 that a receiver had been
appointed by the plaintiff over properties secured by the facilities in January 2017. As of
the date of swearing that affidavit the receiver had taken in €36,650 in rental income
from the properties and that had been credited against the indebtedness, so that the total
amount then due and owing by the defendants stood at €1,869,031.90.
21.       In summary therefore the respective arrears across the six accounts claimed by the
plaintiff as set out above, amounted to a total arrears balance across the six accounts of
€610,278.01. The total principle and arrears balance on the accounts as of 25th February,
Page 5 ⇓
2019, stood at €1,928,433.30. Taking account of receipts that had been made in the
interim, the plaintiff was therefore seeking judgment in the sum claimed of
€1,869,031.90.
Submissions on Behalf of the Defendants
22.       On behalf of the defendants, Ms. Taylor B.L. made a number of submissions. Firstly, she
submitted that as this was an application for summary judgment, it was well settled that
there was a low threshold which had to be crossed by the defendant in order to persuade
the Court to have the matter remitted to plenary hearing. In this regard she referred the
Court to the decisions in Aer Rianta CPT v. Ryanair Limited [2001] 4 IR 607, Harrisrange
Limited v. Duncan [2003] 4 IR 1, First National Commercial Bank v. Anglin [1996] 1 IR
75, National Westminster Bank PLC v. Daniel [1993] 1 WLR 1453 and Allied Irish Banks
PLC & another v. Killoran & another [2015] IEHC 850.
23.       Counsel submitted that the first issue which would be raised on behalf of the defendants
was that, while it was accepted that the plaintiff had made demands for payment of the
defendants, it was disputed that they had a right to do so. In particular, the defendants
would allege that even if it were established that there was a default on the part of the
defendants in making repayments due on foot of any of the individual loan accounts
(which was not admitted), that did not entitle the plaintiffs to call in all the loans as they
had purported to do. In those circumstances the demands made of the defendants in
respect of the loans on which repayments were being made, were unlawful demands and
therefore there was no lawful basis for them to obtain judgment in respect of the sums
due on any such loan accounts.
24.       Secondly, counsel submitted that there was considerable confusion in relation to the
amounts claimed by the plaintiff on foot of the various loans. In particular, different total
amounts had been claimed at various stages in the proceedings, including a figure that
was later admitted as being incorrect, as set out at paragraph 3 of the first affidavit sworn
by Mr. Smith. It was submitted that where a plaintiff was seeking summary judgment, the
Court must be certain that the actual amount in respect of which judgment was claimed,
was properly due and owing by the defendants. It was submitted that in view of the
confusion in relation to the total sums claimed at various stages in the proceedings to
date, one could not say with certainty what amount, if any, may be due and owing by the
defendants to the plaintiff.
25.       Furthermore, on the same issue, the defendants would raise the defence that the
payment which they had made on or about 18th September, 2007, in the sum of
€160,000 was incorrectly applied to account number 1233 when it ought to have been
applied to account number 4308, that being the account with the highest interest rate. It
was submitted that this was not without significance, as the defendants had exhibited a
report from an expert, Mr. Eddie Fitzpatrick, stating that had the payment of €160,000
been made to the higher interest bearing account, rather than the lowest such account,
there would have been a saving of almost €52,000, which would have been available to
the defendants to make repayments on the various loans.
Page 6 ⇓
26.       It was further submitted on the issue concerning the interest rates, that it was the opinion
of Mr. Fitzpatrick that the interest rates charged by the plaintiff on the various accounts
were incorrect. In a report dated 27th September, 2017, Mr. Fitzpatrick had noted that
the interest rates on the accounts which were subject to the standard variable rates, had
increased by September 2017 to margins which were considerably in excess of the ECB
rate, or the three month Euribor rate. In such circumstances he stated that questions
needed to be asked as to what exactly were these rates varying against and why those
rates were not moving in line with market rates. He went on to state that it was difficult
to quantify the actual monetary effect that those variable interest rates had had on the
defendants’ accounts, as there were many issues to consider including the interest rate
actually applied and the effect of that on the repayment schedule. However, he was able
to give the following opinion:
“I would have no hesitation in stating that if you were to take all the above into
consideration there is a greater chance than not that you would not have been in
arrears at any time”.
Counsel submitted that on the basis of that report, there was a serious issue to be tried,
which of itself warranted the case being remitted to plenary hearing.
27.       Finally, counsel stated that there were serious issues to be determined in relation to the
conduct of the receiver, who had been appointed over some of the properties secured
under the loans. In particular, it would be alleged by the defendants that the receivers
sold two of the properties at a gross undervalue. In this regard, the first defendant had
exhibited to his affidavit a report from an estate agent showing that the properties at
Emmet Road, Dublin 8 and the Longford property had been sold at significant undervalue.
It was submitted that had the properties been sold at their true market value, a far
greater sum would have been available to the defendants to make repayments under the
loans and no question of arrears would have arisen.
28.       Counsel further submitted that the receiver had acted inappropriately in failing to account
for rents received by him from the properties over which he had been appointed. It was
submitted that the defendants were entitled to have that issue litigated and to have the
amount of those rents set off against any amount found to be due and owing by the
defendants to the plaintiff.
29.       In support of these submissions, counsel referred to the decision of Ní Raifeartaigh J. in
AIB v. Marino Motor Works Limited [2017] IEHC 522, where the defendant had also
furnished a report from an expert, wherein his review of the statements of accounts had
identified a significant difference between the interest charges on the bank statements
and his independent calculations. He had stated that the scale of the discrepancies were
very significant”. He had stated that according to the bank statements there “are
significant overcharges” and “when you take into account the compounding effect that
these overcharges are a significant portion of the outstanding debt”. Counsel submitted
that Mr. Fitzpatrick’s report was to like effect. In the Marino Motor Works case the learned
Judge had come to the conclusion that having regard to these matters, it was a not a
Page 7 ⇓
case that was suitable for disposal by way of summary judgment. She stated as follows at
paragraph 32:
“Having regard to all of the above matters, it seems to me that the matter is not
suitable for disposal by way of summary judgment. I have reached this conclusion
with some considerable reservation, but my concern is that a summary judgment
would be entered for a particular sum when neither the defendant nor the court is
in a position to check, on the information available, that the figures are correct.
This is not a straightforward case of a single loan with a single loan account on
which the interest charged can be easily calculated. There were multiple accounts
and the interest calculation is potentially complex. It has not been done in a
manner sufficiently transparent for a professional accountant, on the information
available to date, to be able to assess whether the figure is correct. Further, the
bank has refused to provide the information when it was requested, albeit that the
request was made late in the day.”
30.       Counsel submitted that the facts in this case in relation to the dispute concerning interest
as set out in Mr. Fitzpatrick’s report, meant that this case was very similar to the
circumstances in the Marino Motor Works case. Accordingly, it was submitted that this
action should be remitted to plenary hearing. Counsel further submitted that where
expert evidence was necessary, it was settled that it was not appropriate to award
summary judgment; see decision in Munster Based Metals Limited v. Bula Limited,
(Unreported, High Court 29th July, 1983).
31.       Counsel submitted that there were mixed issues of law and fact in relation to the issues
concerning the conduct of the receiver. It was submitted that it was manifestly unfair for
the plaintiff to have an “each way bet” by appointing a receiver in the full knowledge that
the rental income had previously been used to discharge the loan and then seek summary
judgement as a result of an alleged “default”, which only arose because the receiver
ceased to apply the monies collected to that loan. The “default” was engineered by the
receiver to the benefit of the plaintiff. It was submitted that that would constitute a
perverse “double whammy” inflicted on the defendants and, on that basis alone, it was
submitted that the matter should not be dealt with summarily.
32.       Counsel referred to the decision of O’Brien C.J. in Crawford v. Gillmor [1891] 3 LR Ir 238,
where he stated as follows at page 245:
“Final judgment should not be given on a motion for final judgment in any case
where any serious conflict as to matter of fact or any real difficulty as to matter of
law arises.”
33.       Counsel also referred to the dicta of Finley C.J. in Irish National Bank v. Graham [1995] 2
IR 244 at page 249 – 250:
“The purpose of a plenary hearing instead of a summary judgment in a case of this
description is for the purpose of resolving a dispute of fact which remains between
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the parties and the determination or resolution of which is necessary for the
decision in the case.”
34.       Counsel also referred to the decision in Bank of Ireland v. Education Building Society
[1991] 1 IR 220 and to the principles set down by McKechnie J. in Harrisrange Limited v.
Duncan [2003] 4 IR 1 and in particular to principle 5 thereof.
35.       In summary, it was submitted that given the serious irregularities in relation to the
interest charged, which had been supported by an accountant’s report; the “fire sale” of
two of the defendants’ properties and the receiver collecting rents and not applying same
to “arrear” accounts, the defendants would be entitled to a set off against any sum found
to be due and owing by them to the plaintiff. Having regard to the nature and number of
issues so raised, it was submitted that it was appropriate that the case be remitted to
plenary hearing.
The Plaintiff’s Submissions in Reply
36.       In relation to the default issue and the question of whether the plaintiff was entitled to
seek repayment from the defendants on all of the loan accounts, it was submitted that
under clause 2.5 of the Permanent TSB Mortgage Conditions 2002, it was provided as
follows:
“2.5 The mortgagor will and hereby covenants to pay to Permanent TSB and discharge
on demand (or on such terms as may otherwise be agreed in writing) the general
indebtedness and liability.”
37.       The term “the general indebtedness and liability” was defined in clause 1.21 to mean all
indebtedness and liability incurred by the mortgagor to Permanent TSB in the usual
course of banking business, being the balance or balances which on the account or
accounts of the mortgagor with Permanent TSB either alone or jointly with any other
person or persons remains or remain unpaid, whether at the date of the mortgage or at
any time thereafter. The clause further provided that this could be in respect of bills,
notes or drafts acceptances paid or discounted or advances made at the request of or to
the use or accommodation of the mortgagor and all monies for which the mortgagor may
in any way be liable to Permanent TSB either as principle or surety. It further provided
that interest would be payable from the date of demand at the rate or rates charged by
the bank and calculated according to the custom of bankers save and except the Advance
and interest thereon at the Applicable Rate.
38.       Mr. Rooney B.L. on behalf of the plaintiff submitted that clause 2.5 of the terms and
conditions applicable to each of the facilities, which had been exhibited in Mr. Smith’s
affidavit, explicitly allowed for demand to be made of the general indebtedness and
liability. In effect the plaintiff was entitled to make a demand on foot of each and every
loan facility whenever they chose. In this case, as had been set out in the supplemental
affidavit of Mr. Smith, all of the loan accounts remained in arrears to varying degrees and
no payments whatsoever were being made on four of the loan accounts. In these
circumstances it was submitted that there simply could not be any question as to the
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defendants being in default, nor to the right of the plaintiff to demand repayment of all
sums due and owing.
39.       Counsel further pointed out that it had been repeatedly stated in the two replying
affidavits sworn by the first defendant that he had not made any default in relation to his
indebtedness under the various loans. Counsel submitted that that was demonstrably
untrue. The account statements, which had been exhibited in both the affidavits sworn by
Mr. Smith and the affidavits sworn by the first defendant, clearly showed that while some
payments had been made on some of the accounts, there was an arrears balance across
all six accounts totalling €610,278.01. The total principle and arrears balance as of 25th
February, 2019, stood at €1,928,433.30. It was submitted that in these circumstances, it
was simply untrue to assert that the defendants had not defaulted on their repayment
obligations under the various loans. Such default was clearly visible from the statements
of account which had been exhibited.
40.       In relation to the points raised by the defendants concerning the interest rates which had
been charged by the plaintiff on the various loans, counsel made a preliminary objection
in relation to the report furnished by Mr. Fitzpatrick. He stated that this report should not
be considered by the Court for two reasons. Firstly, it was effectively hearsay and as such
its admission would be in breach of the provisions of the Rules of the Superior Court,
Order 40, rule 4.
41.       Secondly, he submitted that there was a more fundamental objection to the admission of
Mr. Fitzpatrick’s report in evidence. He submitted that the report was inadmissible, as
there was no evidence before the Court that Mr. Fitzpatrick was an expert as alleged.
There was no statement as to any qualifications or indeed even any experience that he
had in banking matters. The Court was totally in the dark as to whether he held any
relevant qualifications whatsoever. There was no curriculum vitae submitted with the
report, nor was there any indication thereon that he held any degrees, or other
qualifications in banking or financial matters. In such circumstances, it was submitted
that the Court should not take account of the opinions expressed by Mr. Fitzpatrick in his
brief report.
42.       Counsel further submitted that even if the Court were to hold against him on that point,
the report did not provide a basis on which the Court should reasonably deny the plaintiff
summary judgment in the matter. This was due to the fact that Mr. Fitzpatrick
acknowledged that some of the loans were on tracker rates and he stated that these were
very clearly identifiable and quantifiable. He did not make any specific complaint in
relation to the interest rates applied to those loans. He did highlight the standard variable
rates applied to two of the loans being account numbers 4308 and 2303. He went on to
comment upon the interest rates that had been charged and the margin by which they
exceeded the ECB rate, or the three month Euribor rate. Based on that, he stated that
questions needed to be asked: what exactly were these rates varying against and why the
rates were not moving in line with the market rates? He went on to state that it was
difficult to quantify the monetary effect that those interest rates had had on the
Page 10 ⇓
defendants’ accounts. He came to a somewhat vague conclusion, as set out earlier in the
judgment.
43.       Mr. Rooney B.L. stated that the loans in question were admitted to be subject to interest
at the standard variable rate. The bank was entitled to set that rate at whatever level it
chose. Mr. Fitzpatrick did not say that these rates were wrong or unlawful, he only asked
what the rates were varying against. A standard variable rate does not vary against
anything. He submitted that the bank was entitled to vary the rates as and when it chose.
It was clear from the statements of account that changes in interest rate had been
highlighted to the defendants as they were made over time.
44.       Counsel further pointed out that this case was very different to the report which had been
furnished by the expert in the Marino Motor Works case, there the defendant had
exhibited a report from a person who could fairly be said to be an expert. The Judge
noted that Mr. Weakliam, who had provided the report, was a fellow of the ACCA and a
licentiate of the Institute of Bankers in Ireland. He was a qualified accountant and had
worked as such and as a financial analyst with AIB Group from 1984 to 1996, before
founding a consultancy practice. Furthermore, it would appear from the content of the
report as quoted in the judgment, that he was able to give far more concrete examples of
where the bank had applied the wrong interest rate in that case. Counsel submitted that
Mr. Fitzpatrick’s report was glaringly deficient both in relation to a statement of his
qualifications and in relation to his conclusions.
45.       In relation to the defence raised in respect of the payment made in 2007 of €160,000,
counsel submitted that there was no evidence that the bank had acted wrongly, or in
breach of contract by applying that sum to the account against which it was actually
credited. In the course of submission to the Court, counsel for the defendants had stated
that that payment was made during the so called “Celtic Tiger” years and as such, there
was no paper work accompanying it. The defendants simply paid the money to the bank.
Mr. Rooney submitted that as the payment had been made in 2007 and as there had
been no objection by the defendants at any time subsequent thereto, until the present
proceedings that the money had been credited to the wrong account, their action, if any,
was long since statute barred. In these circumstances there was no merit in the point
raised on behalf of the defendants.
46.       Without prejudice to that submission, counsel stated that even taking that point at its
highest, that would only allow for a set off of €52,000 according to Mr. Fitzpatrick’s
report. If the Court chose to hold with the defendants on that point, it was submitted that
the appropriate course would be to grant the plaintiff judgment in the remainder of the
sum and remit the issue in respect of the misapplication of the payment and the resultant
alleged overcharging of interest of €52,000, to plenary hearing. In this regard counsel
referred the Court to the decision in AIB v. Killoran [2015] IEHC 850, at paragraph 55.
47.       Finally, in relation to the allegations made by the defendants that the receiver appointed
by the plaintiff had acted unlawfully or inappropriately by selling the two named
properties at a gross undervalue, and by allegedly not giving credit to the defendants for
Page 11 ⇓
the rents received by the receiver, in respect of the properties over which he had been
appointed, counsel stated that while it was not admitted that the receiver had acted in
any way inappropriately, insofar as the plaintiffs did have any complaint in relation to the
actions of the receiver this was a matter between the plaintiff and the receiver. In this
regard counsel relied on the decision in Close Invoice Finance Limited v. Gabriel Matthews
& another [2015] IECA 132, where it was held that generally speaking the receiver would
be deemed to be the agent of the debtor and not the agent of the debenture holder or
bank who had appointed him, unless the debenture holder or bank had directed the
receiver to act in a particular way.
48.       Without prejudice to the generality of that submission, counsel further stated that the two
properties in question had not been sold at undervalue. This was due to the fact that they
had been sold at auction and therefore had obtained the best price available on the
market at the time of sale.
49.       In relation to the issue concerning rents, while it was not conceded that the defendants
had any legitimate complaint in this regard, counsel pointed out that if they did have a
grievance that the receiver had not properly accounted for the rents received by him, that
was a matter between the defendants and the receiver. That was clear from the Close
Invoice case cited above and from the subsequent decision of Barrett J. in Ennis Property
Finance DAC v. Murphy [2017] IEHC 573. It was submitted that the mere assertion by the
defendants that the receiver had not properly accounted for the rents received by him,
was not sufficient to prevent the plaintiff obtaining summary judgment.
Conclusions
50.       The approach which the Court should take to an application such as this, is well settled in
law. The relevant test was set down by the Supreme Court as far back as 1996 in First
National Commercial Bank v. Anglin [1996] 1 IR 75. In that case Murphy J., giving the
judgment of the Court, endorsed the following test laid down in Banque de Paris v.
DeNaray [1984] 1 Lloyd's Law Rep 21, which had been referred to in the judgment of the
President of the High Court and reaffirmed in National Westminster Bank PLC v. Daniel
[1993] 1 WLR 1453:
“The mere assertion in an affidavit of a given situation which was to be the basis of
a defence did not of itself provide leave to defend; the Court had to look at the
whole situation to see whether the defendant had satisfied the Court that there was
a fair or reasonable probability of the defendants having a real or bona fide
defence.”
51.       The test set down in the Anglin case has been applied in a number of cases in the
intervening years. The appropriate test was more recently set out in Aer Rianta CPT v.
Ryanair Limited [2001] 4 IR 607 in which case Hardiman J. stated as follows at page 623:
“In my view 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
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be tried or only issues which are simple and easily determined? Do the defendants
affidavits fail to disclose even an arguable case?”
52.       In Harrisrange Limited v. Duncan [2003] 4 IR 1, McKechnie J. having analysed the
relevant case law, set out a helpful summary of the relevant principles. It is not necessary
to set these out in this judgment, as they are very well known. The Court has had regard
to all of these cases and to the principles set out in Harrisrange in reaching its
determination herein.
53.       The Court has also had regard to the dicta of Moriarty J. in Allied Irish Banks v. Killoran
[2015] IEHC 850, where he warned that the Court should not accord substantive relief to
defendants in summary judgment motions who raise spurious, fanciful or conjectural
contentions to resist judgment. He advised that courts must be alert to defendants who
seek merely to defer the evil day on the basis of arguments that do not pass muster, and
must remain mindful of the de minimis rule in assessing summary judgment applications,
see paragraph 56 of the judgment.
54.       The first issue which the Court must determine is whether there was any default by the
defendants in making the repayments due on the loans as and when they fell due. In his
affidavit, the first defendant repeatedly stated that the defendants had not been in any
such default. I am satisfied having regard to the content of the statements of account
exhibited in the affidavits of Mr. Smith and also in the first defendant’s own affidavits,
that while some payments have been made in respect of certain of the accounts, there
are arrears owing on all the accounts. In these circumstances it cannot credibly be argued
that the defendants have not defaulted in their repayment obligations in respect of the
loans.
55.       In relation to the right of the plaintiff to call in the loans and seek repayment of all of
them, I am satisfied that at the date of demand by the plaintiff, they were entitled to do
so. This arises by virtue of the provisions of clauses 1.21 and 2.5 which gave them a right
to call in the loans on demand. Accordingly, given the level of default and arrears that
had arisen, they were entitled to issue the letters of demand which they did on 29th
November, 2016, and subsequently through their solicitor on 9th January, 2017.
Accordingly, I am satisfied that the plaintiff has made a lawful demand for repayment of
each of the loans. I am further satisfied having regard to the content of the affidavit
sworn by Mr. Smith and the documents exhibited thereto, that the level of arrears and
the level of total indebtedness as stated therein, is properly due and owing by the
defendants to the plaintiff.
56.       I turn now to the issue in respect of the interest rates that were applied by the plaintiff to
the various accounts. The defendants’ assertion that there is an issue to be tried in this
regard, is based on the report furnished by Mr. Eddie Fitzpatrick on 27th September,
2017. The first objection taken by Mr. Rooney B.L. on behalf of the plaintiff, to the
admission of that report was that it contained hearsay evidence and that as such its
admission was prohibited pursuant to the provisions of the Rules of the Superior Courts
Order 40, rule 4. I do not think that that submission is well founded. This is an application
Page 13 ⇓
for summary judgment and while it may not be technically an interlocutory application, it
is in the nature of an interlocutory application. In these circumstances as is recognised by
the rule, I think it is appropriate to admit hearsay evidence. However, I am not even sure
that the content of Mr. Fitzpatrick’s report could properly be classified as being hearsay
evidence. Hearsay evidence is where a person gives evidence of what was said to him by
a third party, who is not before the Court. While it could be argued that the fact that Mr.
Fitzpatrick’s report is merely exhibited in the affidavit sworn by the first defendant, that
that is therefore the giving of hearsay evidence by the first defendant in respect of what
he has been told by Mr. Fitzpatrick; I think that such argument is incorrect. Exhibiting the
report of Mr. Fitzpatrick, is similar to having Mr. Fitzpatrick swear his own affidavit in the
same terms as were set out in his report. Accordingly, I do not think that the report is
inadmissible pursuant to Order 40, rule 4.
57.       However, I think that Mr. Rooney’s second objection to the admission of Mr. Fitzpatrick’s
report is well founded. In that report, there is no indication whatsoever that Mr.
Fitzpatrick holds any qualification at all in relation to banking or financial matters. Nor is
there any statement that he has any experience in relation to banking or financial
matters. Broadly speaking, there are essentially two types of witnesses whose evidence
can be tendered to the Court. The first are witnesses as to fact, who can give evidence as
to what they saw and heard and did at a particular time. The second category is expert
evidence, where the expert due to his or her knowledge, qualifications and experience in
the relevant area, is permitted to give opinion evidence on the issue before the Court.
Experts are the only people permitted to give opinion evidence before a Court. While it is
certainly true that there is no specific threshold which has to be met before a person can
be classed as being an expert, there must be some evidence before the Court that the
person proffered as an expert, does in fact have some expertise and experience in the
relevant area upon which he or she proposes to give an opinion. In this case such
evidence is totally lacking. I simply do not know who Mr. Fitzpatrick is; what
qualifications, if any, he may hold and what experience, if any, he may have in banking
and financial matters. In the absence of any such evidence, I decline to admit Mr.
Fitzpatrick’s report in evidence.
58.       However, even if I am wrong in that, I am not satisfied that the content of his report
establishes an arguable defence on behalf of the defendants. All his report does is two
things: firstly, it states that had the payment made in 2007 of €160,000 been applied to
the highest interest bearing account, rather than to the lowest interest bearing account,
the defendants would have made a saving of circa €52,000. Secondly, he states that in
respect of two of the accounts, which were subject to the standard variable rate of
interest, questions needed to be asked in relation to the margin against which the
standard variable rate had been set. I accept the submissions made by Mr. Rooney B.L. in
this regard. As it was a standard variable rate, it was not computed against any particular
base level. It was a rate which the bank was entitled to charge and vary from time to
time. This it did over the years and notice to that effect was given in the statements of
account. The defendants did not object to such rates of interest being applied during that
time. Notwithstanding that, I do not see that they have any legitimate complaint in
Page 14 ⇓
relation to the rates of interest charged as set out in the statements of account exhibited
in respect of the relevant loans.
59.       Turning now to the allegation that the payment made on behalf of the defendants in 2007
was applied to the wrong account, I do not think that there is any substance to this
ground of defence. The defendants were not able to produce any documentary evidence
concerning the payment of this sum, nor any evidence that that sum had been credited
by the plaintiff to the wrong account. It was accepted by counsel on behalf of the
defendants that they were long since statute barred from making any complaint in this
regard. There is no evidence before the Court that Permanent TSB acted in breach of
contract or unlawfully in crediting that payment to the account to which it did.
Accordingly, this ground of defence is without substance.
60.       Finally, in relation to the assertion that the defendants have an arguable defence based
on the alleged wrongdoing of the receiver appointed by the plaintiff in selling two of the
properties at an alleged gross undervalue and in allegedly failing to account for rents
received by him in respect of the mortgaged properties, I am satisfied that the
defendants cannot legitimately resist summary judgment on this basis.
61.       It is well established in Irish law that a receiver, once appointed, becomes an agent of the
debtor, rather than of the party who appointed him. The debenture holder who appointed
the receiver can only become liable to the debtor company, or to guarantors in respect of
that company, in circumstances where it is established that the debenture holder directed
the receiver to act in such a way as to cause loss to the debtor and by extension to the
guarantors. This is clearly established in the decision of the Court of Appeal in Close
Invoice Finance Limited v. Matthews [2015] IECA 132 and in the decision of Barrett J. in
Ennis Property Finance DAC v. Raymond Murphy [2017] IEHC 573. Accordingly, I am of
the view that if the defendants have any legitimate grievance in respect of the conduct of
the receivership carried out by the receiver, their action, if any, is against the receiver.
Such allegations of misconduct do not afford them a defence to these proceedings, there
being no evidence before the Court that the plaintiff directed the receiver to act in any
particular way, or otherwise interfered in the receivership.
62.       Even if I were to hold that the actions of the receiver could provide a legitimate defence
to the within application for judgment, I am not satisfied that the grounds asserted by the
defendants as representing inappropriate or negligent behaviour on the part of the
receiver, are in fact established. While it is alleged that the two properties were sold at an
undervalue, they were sold at public auction and therefore it cannot be argued that they
did not achieve the best price available on the market at the time that they went to
auction. In relation to the allegation that the receiver did not apply the rents received in
the appropriate manner, there is no evidence of any such misapplication of funds by the
receiver.
63.       Having regard to my conclusions as set out above, I am not satisfied that the defendants
have reached the admittedly low threshold for resisting summary judgment as set out in
the cases cited earlier in this judgment. For the reasons set out herein, I am satisfied that
Page 15 ⇓
the plaintiff is entitled to summary judgment against the defendants. Accordingly, I award
the plaintiff judgment in the sum of €1,869,031.90 against the defendants jointly and
severally.


Result:     Plaintiff awarded summary judgment against the defendants




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