Allied irish banks plc



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THE HIGH COURT

[2013 No. 1956 S]

BETWEEN

ALLIED IRISH BANKS PLC.

PLAINTIFFS

AND

EDWARD COTTER

DEFENDANT

DECISION of the Master of the High Court 9th December 2014

1. The defendant in this case has asked for a ruling on whether the special endorsement of claim on the summary summons complies with O. 4,r. 4 of the Rules of the Superior Courts. And if it does not, he asks me to strike out the summons with costs.

2. Accordingly, the issues raised for consideration are:

(i) Whether the relevant rule is mandatory or directory.

(ii) What is the proper construction of the rule?

(iii) In what circumstances non-compliance might be forgiven or

(iv) whether a strike out is the appropriate sanction for non-compliance.

3. Although one is hardly likely to go wrong if the standard principles and canons of statutory interpretation are employed in interpreting any of the Rules of the Superior Courts which may be ambiguous, as one might do with any other Statutory Instrument, the Rules of Court are different to this extent: they are not expressed to be intended to have binding legal effect and, in point of fact, contain an express Order providing for the possibility of non-compliance. In short, they have an in-built mechanism for relief against the consequences of non-compliance and the Court is to retain always the duty of ensuring that justice prevails.

4. Can one then say that the Rules are never “mandatory”? Order 40, r. 4 reads:

Affidavits shall be confined to such facts as the witness is able of his own knowledge to prove, and shall state his means of knowledge thereof, except on interlocutory motions, on which statements as to his belief, with the grounds thereof, may be admitted.”

In Re Bovale Developments Ltd: Director of Corporate Enforcement v. Bailey & Anor. [2008] 2 ILRM 13, Irvine J. commented that:

This rule appears almost mandatory in its terminology when referring to non-interlocutory matters, and seems to be designed to ensure that there is no falling short of proper evidential proof when proceedings are to be disposed of on affidavit rather than by way of oral evidence.”

5. The judge noted the costs sanction in respect of affidavits “which shall unnecessarily set forth matters of hearsay” (“costs shall not be allowed”) and the sanction of a strike-out of scandalous material (O. 40, r. 12).

6. There are many other rules which are expressed in mandatory terms but, in practice, where non-compliance is overlooked.

7. In Tattensauffen & Jones Ltd. v. Pierse Contracting I looked at the consequences for a plaintiff seeking fast-track judgment if he omitted, in his grounding affidavit, to state his belief that the defendant “has no defence” (O. 37, r. 11), and concluded that if the defendant actually files a replying affidavit, the Court is free to disregard the plaintiff’s said omission, even though it is expressed in mandatory terms. I said that the purposive interpretation of the rule “recognises the redundancy of an averment of the sort omitted, given that the defendant has filed a replying affidavit. Whether the plaintiff is of the view that the defendant has a bona fide defence is no longer important: the Court will judge that for itself on the basis of the affidavit now filed . . .”

8. Or if one looks at the rules regarding service of a summons, although carefully couched and apparently stipulating strict standards for service, and requiring strict proofs thereof, if a defendant who has been irregularly served, in breach of same, appears to the summons, or appears in Court on the return date specified in a special summons, the plaintiff will submit that “appearance cures defect”, which is another way of stating that the technical non-compliance with what appeared to be mandatory requirements can be overlooked when all potential prejudice to the defendant is eliminated by his actual appearance at the appropriate time, even though he was not properly served.

9. Looking now at a defendant who arrives in Court to defend a motion for liberty to enter final judgment and contends that he should be entitled, technically, to have the summary summons struck out for want of particularity (in breach of O. 4, r. 4), one is tempted to follow the same logic. Isn’t the defendant here? Has all possible prejudice vanished? Isn’t the full story now set out in the plaintiff’s grounding affidavit?

10. Indeed, the same thinking seems to lie behind a 2012 decision to allow a plaintiff to recover, on a summary summons, losses which had not even arisen when the summons was issued, on the basis that the defendant’s later post-summons, non-payments were of a pattern with those which had been the basis of the claim as first pleaded. In Quarryvale Two Ltd & Quarryvale Three Ltd. v. Stephen Beere & Graham Beere (Unreported, the High Court, 14th December 2012), O’Neill J. stated

““Within the summary summons procedure, where serial or sequential claims arise out of circumstances similar to and closely associated with the causes of action raised in the endorsement of claim on the summary summons, additional claims can be the subject matter of the application for liberty to enter final judgment . . .

(as) If the additional claims sought to be made in the proceedings are so closely associated with the original clams made in the summary summons, then it makes complete sense, both in terms of procedural efficiency and the avoidance of unnecessary costs, to have the claims dealt with in the one set of proceedings.”

In Dublin Docklands Development Authority v. Jermyn Street Ltd & Black Tie Ltd. in 2010, Clarke J. stated:

Additional claims by the plaintiffs in their notice of motion for arrears of rent and service charges, and in respect of an insurance premium arising after the issuance of the original summary summons can be claimed in these proceedings.”

With respect, if judges wish to change the rules, they should approach the Rules Committee with their ideas. The summary summons fast-track is not to be loosely applied in the manner suggested. Such a claim in futuro is not a “debt” or a “liquidated demand” (O.2). Odger’s ‘On Pleadings’ 6th Edition, at p. 50, states without equivocation that “a plaintiff has no right to endorse his writ with any claim that has not at that time arisen”.

11. Going back to the early days of the fast-track procedure, we find in Walker & Anor. v. Hicks [1877] 3 QBD 8, Cockburn C.J. holds, at p. 9, that:

The object of a special endorsement is this . . . it is intended that the defendant should have an opportunity of avoiding such further proceedings by payment of the debt. I think a party, who is placed in the predicament of being liable to have a judgment signed against him summarily, is entitled to have sufficient particulars to enable him to satisfy his mind whether he ought to pay or resist.”

And in Sheba Gold Mining Co. v. Trubshawe [1892] 1 QBD 674,682 (Coleridge C.J.):

A man who is to be proceeded against summarily for judgment should know exactly how much he has to pay if he wishes to stay the action, and should not be called upon to take the risks of calculation.”

12. In Stacey & Harding Ltd. v. O’Callaghan [1958] I.R. 320, the plaintiff issued a summary summons for the price of goods sold and delivered. The endorsement of claim set out neither the nature and dates of the transactions giving rise to the claim, nor the method by which, and date on which the amount claimed was arrived at. Murnaghan J. held:

That the endorsement was insufficient in as much as such particulars were not given as might reasonably be necessary to enable the defendant to know whether he ought to pay or resist.”

13. There is no way of rationalising the loosening of standards which were strictly observed in the 1940s and 1950s when the standard regarding particularity in a special endorsement of claim were explored and pronounced.

14. Perhaps the “special” nature of such proceedings has been forgotten. In the past, courts were seriously exercised by the exceptional basis for fast-tracking claims. One recalls, for example, Meeres v. Connolly [1930] I.R. 333, as precedent for the principle that a Court can never amend a summons from plenary to summary or vice versa. Most judges nowadays would think that was daft.

15. In point of fact, in recent years, the overuse of the summary summons has meant that the special endorsement has been gradually reduced to a general endorsement (especially for liquidated debt cases) almost without anyone noticing. The particulars, which the old judgments were at pains to require, are now almost sketchy. In the case before me, the particulars consist of an account number and a figure for balance due on a specified date. That is all.

16. Order 4, r. 4 reads:

The indorsement of claim on a summary summons and on a special summons shall be entitled "SPECIAL INDORSEMENT OF CLAIM," and shall state specifically and with all necessary particulars the relief claimed and the grounds thereof. The indorsement of claim on a summary summons or a special summons shall be in such one of the forms in Appendix B, Part III, as shall be applicable to the case, or, if none be found applicable, then such other similarly concise form as the nature of the case may require.”

It was always the intention that, far from being closely modelled on the general endorsement of claim, the special endorsement should be a blend of general endorsement and the statement of claim which would be delivered later. It is a combination. The summons is to be “specially endorsed” with all the “necessary particulars”.

17. The rule does not say “unless the defendant already knows the particulars”, but, to be fair, the form in Appendix B, Part III at the back of the Rules sets out a sample special endorsement which includes the phrase “full particulars whereof having been furnished in writing to the defendant”. This is clearly not in line with the specific provisions of O.4, and see O. 19, r. 5(3) in this regard.

18. Another consideration. If there is a case against liberal construction of the Rules and in favour of strict construction against the plaintiff, it is surely when the defendant may suffer judgment merely on hearsay evidence. If one looks at the required content for an affidavit grounding an application for liberty to enter final judgment, and if one takes into account that such an affidavit may only be hearsay evidence, it is all the more important that the special endorsement should state the claim with all material facts particularised so that the deponent’s “no defence” belief may be seen to encompass all necessary detail. Hearsay evidence supporting an unparticularised claim is a recipe for injustice with a final determination resting on such infirm foundations.

19. Historically, the basis for the admission of hearsay evidence for interlocutory motions and its non-admissability at the stage of final determination (which is reflected in O. 40. r. 4 referred to above) is found expressed thus by Jessel M.R. in the following passage of Gilbert v. Endean [1878] Ch. 266, 267:

No doubt in the case of interlocutory applications the Court as a matter of necessity is compelled to act upon such evidence when not met by denial of the other side. In applications of that kind the Court must act upon such evidence, because no other evidence is obtainable at so short a notice, and intolerable mischief would ensue if the Court were not to do so. The object of these applications is either to keep matters as they are or to prevent the happening of serious or irremediable mischief and for those purposes the Court has been in the habit of acting upon this imperfect evidence. But the Court has no right to act upon it in finally adjudicating upon the right of parties. This point was in fact decided long ago in the Court of Chancery, for although motions for decree were held to be motions for various purposes, it was decided that they were not motions for the purpose of evidence because they were decisions on the ultimate rights of parties.”

20. There is, perhaps, the sense that the assessment of what particulars are necessary must take place in an overall context where the defendant has actual knowledge (other than from the detail in the endorsement) of the state of play. It is a sort of “constructive knowledge” argument. He is the bank customer who is sent statements of account every quarter. He is the retailer who ordered the goods. And so on.

21. The problem with that viewpoint is that for the Court to be satisfied as to the basis of such a ruling, it would need evidence, which, of course, does not arrive until the grounding affidavit is filed.

22. We might end up with a special endorsement which was sufficiently particularised for a principal debtor (who knows the circumstances) but completely inadequate if the defendant is sued as a guarantor, since guarantors, as a rule, do not know the business details of the principal debtor and cannot be expected to concede the case merely on the strength of a letter from the creditor.

23. There is nothing in the old case law which hints at any sort of constructive knowledge exception to the general rule that the summons has to be specially endorsed, meaning it should contain the specifics of the material facts alleged. Accordingly, the quantum of detail required for claims cannot be varied by reference to the likely state of the defendant’s knowledge of the circumstances. In regard to the particularisation, one rule fits all: it is not to be decided on a case-by-case basis.

24. The phrase “all necessary particulars” in the rule translates as “particulars of all facts which must be proven”. In Caufield v. Bolger [1927] I.R., Hanna J. asks:

What is the meaning of the words ‘necessary particulars’ read in connection with the subject matter of the new rule?

In my judgment it connotes such particulars as are essential to make the endorsement a good statement of claim both in particularity of fact and in law. It is the analogue of the statement of claim in plenary proceedings. While it contemplates an abbreviated and concise form, this is no bar to its containing all essentials of a correct pleading.”

25. In Beaufort v. Ledwith [1894] 2 I.R. 16, an endorsement was held to be defective because it failed to set out the dates on which the “item for arrears” set out I the particulars became payable. Bank of Ireland v. Connell & Ors. [1942] 1 I.R. looked at, but did not rule on the effect of O. 19, r. 14 which implies the performance of conditions precedent in the plaintiff’s pleading. Murnaghan J. at p. 10, did not rule on the need to plead the performance of a condition precedent but simply commented that “I think the plaintiffs were well advised to lay a demand in their special endorsement”. In the same case, at p. 14, Meredith J. held, with reference to the phrase “the grounds thereof” that “the grounds are not so stated if the demand is not alleged and specified”.

26. Perhaps Meredith J. was of the view that the demand was not a condition precedent for the purposes of O. 19, or perhaps he thought that the special endorsement of claim is not a pleading and that O. 19 does not apply. He did not say. Certainly, the latter view is the one relied on by the plaintiffs who almost always refuse requests for particulars under O. 19, r. 7 on the basis that the special endorsement is not a pleading. Plaintiffs cannot have it both ways. It is better to regard the demand as a material fact (or “ground”) which is not implied and must be specifically pleaded.

27. In Allied Irish Banks v. The George Ltd. (Unreported, the High Court, Butler J. 21st July 1975), the judge was prepared to accept that a bank’s entitlement to interest [my emphasis] may be implied:

As I have already indicated in argument, unless there are special terms attached to the loan, the lending of money by a bank implies that the customer will repay the loan together with interest at the rate for the time being charged by the banks and normal bank charges. In the case of the ordinary advance or overdraft it is sufficient from the point of view of pleading to claim that the money was lent and that interest at the rate normally charged by banks and bank charges have been incurred. The agreement to pay this interest and these charges may be implied.”

28. The special endorsement of claim in the present matter is as follows:

SPECIAL ENDORSEMENT OF CLAIM


THE PLAINTIFF’S CLAIM is for €191,164.18 against the Defendant together with continuing interest at current bank rates being monies due by the defendant to the Plaintiffs for monies lent by the Plaintiffs to the defendant forborne at interest by the Plaintiffs from the defendant and paid by the Plaintiffs as Bankers for the defendant at his request within the last six years.

PARTICULARS

LOAN ACOUNT NO. 934151-004418478

30/05/13 - Amount formally demanded €191,164.18

TOTAL €191,164.18

29. In Bond v. Holton [1959] I.R. 302, Kingsmill Moore J. commented that:

In my opinion, where the summons does not specify a cause of action or disclose facts which, if true, necessarily amount to a cause of action, the defendant is entitled to have the action dismissed or struck out.”

The question, then, is straightforward. Does the special endorsement in this case particularise all the facts which the plaintiff must prove (or are they to be implied)? One yardstick which is employed is to ask whether, on the basis of the facts so alleged (and others which are implied), the defendant is able to judge whether to pay or resist.


30. The reality in this case is that all the material facts are either pleaded or implied, but only in a general way and without particularisation. The non-compliance with the rule could be waived if it were inconsequential, but in cases such as this, the failure to particularise could be unjust to a defendant who does not otherwise know that the case is about, and since we have no way of judging his state of knowledge, the Court must deal with it on the basis that he might not know.

31. Accordingly, the claim must fail.




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