High Court: Summary judgment for €11m granted despite inadequate particulars of the debt in the summons
The High Court has granted summary judgment against a defendant for €11 million despite the summons and grounding affidavit containing inadequate particulars of the debt.
About this case:
Citation: IEHC 114
Judge:Mr Justice Michael Quinn
The court held that the defendants had exhibited a detailed statement of account which was already in their possession at the time the proceedings issued. As such, the defendants were not entitled to rely on the Supreme Court decision in Bank of Ireland Mortgage Bank v. O’Malley  IESC 84 to have the case sent to plenary hearing.
The court also rejected arguments from the defendants that the plaintiff was in breach of a collateral agreement to extend the maturity dates of the loans and that the plaintiff’s assignment of the loans amounted to champerty.
In 2004, KBC Bank provided a loan to the first defendant, Emerald Properties (IRL) Limited, for up to €10,750,000. The security for the facility was nine properties at Lansdowne Road, Lansdowne Park and Herbert Park. The second and third defendants, Mr John McCarthy and Mrs Wendy McCarthy, were directors of Emerald Properties and provided personal guarantees over the loan.
The terms of the facility were amended from time to time under amending facility letters between November 2004 and June 2010. The amount owing increased under each new facility and the maturity date for the loans was extended on each occasion. The final amending letter in June 2010 saw the total value of the loan at €13,271,820.
In 2014, after the company fell into default, KBC demanded repayment of the facilities and appointed receivers over the secured properties. In November 2018, the loans were sold by KBC to Beltany Property Finance DAC. Summary proceedings were issued by Beltany in 2019 against the defendants seeking €12 million.
In August 2020, Beltany sold the loans to the ultimate plaintiff, Pepper Finance Corporation (Ireland) DAC. Pepper Finance was subsequently substituted as the plaintiff in the case and brought the case to trial.
The application for summary judgment was grounded on an affidavit from the director of Beltany. As part of the application, a one-page statement of accounts was exhibited, which referred to an opening balance of €12,209,936 at the time Beltany acquired the loan.
In defending the application for summary judgment, the defendants made three submissions. First, it was argued that the statements of accounts provided by Beltany and the plaintiff did not sufficiently particularise the debt in line with the decision in O’Malley. Second, it was said that KBC was in breach of a collateral contract, where Mr McCarthy agreed in 2008 to use personal funds to pay down Emerald’s loan, in exchange for the bank not appointing a receiver. Third, it was claimed that the transfer of the defendants’ liabilities from Beltany to Pepper after the proceedings had issued amounted to maintenance and champerty.
In the High Court, Mr Justice Michael Quinn rejected the defendants’ submissions and granted judgment of approximately €11 million in favour of Pepper Finance. The court began by outlining the well-established case law relating to summary judgment and proceeded to consider the evidence presented by Mr McCarthy.
The court held that Mr McCarthy had presented no details of the collateral contract which he had allegedly formed with the bank in 2008. There was no evidence of how long the agreement was to last and the assertion that the bank would refrain from placing Emerald into receivership was vague.
Mr McCarthy attempted to rely on correspondence and minutes of meetings with the bank in support of the collateral contract, but Mr Justice Quinn determined that there was nothing in the letters which was consistent with the existence of such an agreement. The letters merely reflected ongoing discussions about the facilities and purely operational matters of the loans, the court said. Further, there was no explanation why Mr McCarthy signed the further facility letters without insisting that the collateral contract be reflected in the agreements.
Second, the court rejected the defendants’ claim that the assignment of the loans amounted to the assignment of a “bare right to ligate” and therefore offended the rule against champerty. Mr Justice Quinn considered the decisions in SPV Osus Ltd v HSBC Institutional Trust Services (Ireland) Ltd  IESC 44 and Morrissey v IBRC  IECA 162, holding that there was nothing “champertous” about the assignment of a loan after proceedings had issued.
Finally, the court rejected the defendants’ submissions that the plaintiff had failed to evidence proper particulars of the debt. Mr Justice Quinn held that the one-page statement of account evidence by the plaintiff was clearly inadequate if it was the only evidence before the court. Further, the court was not convinced that the amended summons, which said that the debt was calculated based on statements “furnished from time to time” by the bank/Beltany/Pepper, satisfied the test in O’Malley.
However, it was noted that Mr McCarthy had also exhibited a report from his financial advisors, which was prepared using detailed statements of Mr McCarthy’s bank account. The statement was 29 pages long and had entries dating back to 2004. As such, the court said it was clear that the defendants were in possession of a comprehensive statement of accounts prior to the proceedings. The court considered the O’Malley decision and held that a court is entitled to take account of any information sent to a debtor in advance of proceedings. In light of the detailed statement which Mr McCarthy had exhibited, he “cannot protest that the claim is insufficiently particularised such as to justify remitting it to plenary hearing”.
The court noted that Pepper Finance had waived approximately €1.3 million from the debt in pursuit of summary judgment. Accordingly, the court granted summary judgment for the amount claimed, less the sum of €1.3 million.
The court held that the defendants had not raised an arguable defence and granted judgment in the sum of approximately €11 million.