High Court: Plaintiff engaged in ‘legal bluff’ by seeking summary judgment without adequate particulars

About this case:

• Citation:
  [2022] IEHC 247
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice David Holland

Mr Justice David Holland rejected the plaintiff’s submission that the appropriate order was for reserved costs or costs to be in the cause. The court held that the summons was fundamentally defective because it did not particularise the claim and amounted to a “legal bluff”. Further, the court stated that the plaintiff knew that it was not entitled to summary judgment but proceeded to issue the summons anyway.

Background

The plaintiff, Cabot Financial (Ireland) Limited issued a motion for summary judgment against the defendant in May 2021. The plaintiff sought the repayment of approximately €209,000 on foot of a summons issued in September 2020. Cabot had previously purchased a loan provided to the defendant by First Active plc in August 2000.

The defendant swore a replying affidavit in the matter which took issue with the plaintiff’s claim. In particular, the defendant asserted that the plaintiff had not properly particularised the debt pursuant to the O’Malley judgment.

The summons described that the opening balance of the defendant’s debt was approximately €190,000, which was entered on a statement of account in October 2015. No statement of account from before October 2015 were produced. As such, the defendant averred that the statement of account did not provide a proper calculation of the debt, including the application of interest and surcharges.

As a result of the defendant’s affidavit, Cabot consented to the matter being transferred to plenary hearing. However, the defendant submitted that he was entitled to his costs of defending the summary claim. It was argued that the summons was defective on its face and did not satisfy the test for summary judgment.

In response, the plaintiff relied on ACC Bank plc v. Hanrahan [2014] IESC 40, which stated that the best course of action in most summary-to-plenary cases was for costs to be in the cause or reserved.

High Court

Mr Justice Holland began by outlining the relevant sections of the Legal Services Regulation Act 2015 relating to the court’s discretion to award costs. The court then considered recent case law and emphasised that summary judgment will only be granted where a debt is “clearly” due and owing (see Promontoria (Aran) Ltd v. Burns [2020] IECA 87; AIB v Cuddy [2020] IECA 211).

Next, the court considered O’Malley in significant detail. It was held by the Supreme Court that a full breakdown of a debt should be provided to a defendant when a plaintiff seeks summary judgment, which included details of interest and surcharges.

The court held that this calculation of a debt was important because a plaintiff was entitled to seek summary judgment in the Central Office if no appearance was entered by a defendant (Bank of Scotland v. Fergus [2020] IESC 91). A prima facie case must still be made out if judgment is sought in the Office, the court said. As such, a plaintiff, “knowing it does not have the necessary proofs, is not entitled to issue an O’Malley-deficient summary summons and on foot of an O’Malley-deficient affidavit seek summary judgment on a ‘let’s see if the defendant denies it’ basis”.

Finally, the court considered ACC v Hanrahan. The court noted that the general rule for costs to be in the cause or reserved was expressly limited to “most cases”, which implied that a court could depart from the general rule in the appropriate circumstances. Further, ACC held that costs could be awarded against a plaintiff who pursued a “manifestly unreasonable” approach in the proceedings.

Mr Justice Holland doubted whether the “manifestly unreasonable” standard applied in the present case, as the court in ACC v Hanrahan was concerned with the plaintiff losing a contested summary judgment application. In the present case, no such contest occurred. Accordingly, it did not necessarily follow that ACC v Hanrahan applied to the plaintiff’s decision to issue the motion without the necessary proofs, the court said.

Applying the case law to the costs application, the court stated that “it was clear that the Plaintiff’s papers were not and had never been, as to particulars or evidence, O’Malley-compliant and that the Plaintiff could not have obtained summary judgment on those papers”. The plaintiff abandoned its summary claim due to a deficiency in its papers, the court held.

The plaintiff must have been aware that it was missing 15 years of financial records which were required for judgment, the court said. During the course of the proceedings, the defendant was obliged to incur costs from the ongoing litigation.

The court held that the plaintiff took a risk by issuing the defective summons and should bear the costs of that risk. The court rejected a submission that the summons could be issued to see if the defendant would defend the action. In the present case, the defendant could not decide whether to defend the action for want of an O’Malley-compliant summons.

The court described the plaintiff’s motion for judgment as a “legal bluff”. If the ACC v Hanrahan test of “manifest unreasonableness” applied, then the decision to issue the summons satisfied that test. However, the court was happy to rest on the basis that the plaintiff took a risk to issue the summons which contained defects.

Conclusion

The court adjourned the matter to plenary hearing and awarded the costs of defending the motion to the defendant.