Introduction
In Havbell DAC v Harris and Another [2020] IEHC 147, the High Court refused an application for summary judgment and found that the Plaintiff had failed to furnish sufficient details in support of its claim that the monies sought were due and owing by the Defendants. The summary judgment procedure is a form of “fast tracking” and has traditionally been relied upon by creditors as a means of obtaining a court judgment in cases where a debtor does not have any real defence to the claim for the monies owed. This ruling will be highly significant for financial and credit institutions and the strict requirements laid down by the High Court as to proof of the debt claimed should be noted for all future applications for judgment against debtors.
The High Court’s decision in Havbell follows the 2019 Supreme Court ruling in Bank of Ireland Mortgage Bank v O’Malley [2019] IESC 84 which refined the requirements for pleadings in summary judgment proceedings. In O’Malley, The Supreme Court ruled that in judgment proceedings, the court pleadings (a Summary Summons) and affidavit grounding the claim must provide “at least some straightforward account of how the amount said to be due was calculated and whether it includes surcharges and/ or penalties as well as interest.”
The Harris case came before the High Court as an application to amend the Plaintiff’s proceedings in light of the O’Malley decision. The Plaintiff sought to include further particulars of the debt claimed in its Summary Summons – in particular to specify the opening balance on the Defendants’ loan account, the level of interest it was claiming as well as details of credits due against the sums owed. While the High Court permitted the Plaintiff to amend its proceedings to include these further details, it nonetheless proceeded to rule that these were insufficient to entitle the Plaintiff to an Order for Judgment against the Defendants.
High Court ruling
In particular, the Court ruled that the proceedings contained insufficient detail as to how the interest claimed by the Plaintiff had been calculated. All that the Summary Summons did was make reference to the applicable rate of interest as of 26 October 2017. Following the Supreme Court ruling in O’Malley, the High Court noted that there is a requirement to provide specificity as to how interest claimed was calculated. The calculation of interest was not just a matter of evidence but must be specifically referenced in the pleadings themselves or alternatively within an identifiable document in order to sustain a claim for summary judgment. Referencing The Supreme Court’s ruling in Bank of Scotland v Fergus [2019] IESC 91, the High Court noted that the purpose of these obligations is to ensure that debtors have the opportunity to ascertain whether any mistakes may have been made in the calculation of the interest claimed or whether penalties may have been misapplied. If a debtor is to be in a position to interrogate the sums claimed, this requires the interest rate as it varied from time to time to be specified, together with the time periods involved.
The Summary Summons also made general reference to statements of account issued to the Defendants but failed to highlight any identifiable, specific statement. While O’Malley recognised that details of the debt claimed can be provided indirectly by reference to an identified document and did not necessarily have to be pleaded within the body of the Summary Summons, a general plea stating that “the Defendants have been regularly supplied with statements of account” did not suffice.
The Court also found that the Summary Summons did not contain any explanation as to how there was a difference of approximately €120,000 between the opening balance in the statement of account relied upon by the Plaintiff and the level of the sums originally drawn down by the Defendants. Similarly, no explanation was set out in the Summary Summons as to the basis upon which this opening balance had been calculated. In the High Court’s view, these differences had to be explained and explained precisely.
Finally, the High Court noted that the summary judgment application made no reference to the restructuring of the loan facility, which it was common case had commenced as an interest-only loan. As the loan terms had subsequently changed to also provide for the repayment of principal, there was an obligation on the Plaintiff to include these details in its pleadings. In light of these shortcomings, the High Court ruled that the Plaintiff’s judgment application did not contain sufficient particulars of the debt claimed against the Defendants. The High Court therefore held that it would not be appropriate to grant summary judgment in favour of the Plaintiff and directed that the case should be determined by a plenary (fully contested) hearing.
Comment
This decision will underscore for financial and credit institutions as well as legal practitioners the importance of ensuring that detailed particulars of debts claimed are pleaded in both the Summary Summons and subsequent affidavit grounding the application for judgment. Should these particulars fall short of the standards specified in the recent case law from the Irish courts, creditors will no longer succeed in obtaining Orders for Judgment on foot of the summary judgment procedure.
