National Asset Loan Management Ltd v Kelleher

Factual and Procedural Background

The Plaintiff, Company A, issued a summary summons seeking judgment for €46,834,472.35 pursuant to guarantees given by the Defendant for facilities advanced to companies of which the Defendant was the ultimate beneficiary. The guarantees related to loan facilities originally granted by a former bank to entities collectively referred to as the "Shelbourne Connection." The Plaintiff sought summary judgment and entry to the Commercial List. The Defendant did not dispute the guarantees or amounts owed but advanced two defences: (i) estoppel based on representations that the Plaintiff would not enforce the guarantees if the Defendant cooperated, and (ii) a counterclaim for damages arising from the Plaintiff's alleged reckless sale of a loan related to the Chicago Spire development at an undervalue, which allegedly diminished asset values and prevented the Defendant from discharging the guaranteed amounts.

The High Court, after hearing the summary judgment application, found the estoppel defence met the threshold of arguability per the Aer Rianta v. Ryanair test, but the counterclaim did not. The case was remitted to plenary hearing limited to the estoppel defence. The Defendant sought clarification on whether the counterclaim could be pursued in the plenary hearing, but the trial judge ruled that only the estoppel defence could be pleaded. The Defendant appealed this decision.

Legal Issues Presented

1. Whether the Court, when remitting a summary judgment claim to plenary hearing on the basis that only one of multiple defences meets the threshold of arguability, has jurisdiction to limit the defences to only those meeting that threshold.
2. Whether the Court has jurisdiction to preclude a Defendant from raising a counterclaim in the plenary hearing when the counterclaim does not meet the arguable threshold on summary judgment.
3. What criteria govern the Court's discretion to restrict defences and counterclaims upon remitting a summary judgment claim to plenary hearing.

Arguments of the Parties

Defendant's Arguments

• The Defendant contended that once the Court remits the entire claim to plenary hearing, it lacks jurisdiction to restrict the defences that may be raised, including counterclaims.
• The Defendant asserted a constitutional right of access to the courts to pursue the counterclaim, either within the plenary hearing or through separate proceedings.
• The counterclaim, although rejected as a defence at summary judgment, is an independent claim that could be pursued without leave of the Court and should not be precluded.
• The Defendant argued that the merits of the counterclaim are to be assessed only in the context of a stay application after judgment, not at the summary judgment stage.
• The Defendant submitted that the factual overlap between the estoppel defence and the counterclaim justifies litigating both together for convenience and efficiency.

Plaintiff's Arguments

• The Plaintiff submitted that the counterclaim was always dependent on the defence and was properly rejected at summary judgment for failing to meet the threshold of arguability.
• The Plaintiff argued that the only live issue permitted in the plenary hearing is the estoppel defence.
• The Plaintiff contended that the assets allegedly diminished in value belong to separate legal entities, not the Defendant personally, undermining the counterclaim.
• The Plaintiff maintained that the Court has discretion under Order 37 to restrict defences and counterclaims to those meeting the bona fide defence threshold to ensure efficient and fair administration of justice.
• The Plaintiff noted that if the Defendant brings separate proceedings for the counterclaim, the Plaintiff would argue res judicata based on the summary judgment ruling.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by affirming the purpose of the summary summons procedure as a means to achieve speedy justice in cases where issues are straightforward or no real defence exists, citing Prendergast v. Biddle. It emphasized that a defendant must meet the Aer Rianta threshold of raising a bona fide defence to avoid summary judgment.

The Court analyzed the two defences raised by the Defendant. It accepted the trial judge’s finding that the estoppel defence met the threshold and was therefore suitable for a plenary hearing. Conversely, the counterclaim related to damages from the alleged reckless sale of the Chicago Spire loan was deemed not to meet the threshold. The Court noted that the counterclaim was an independent claim, distinct from the guarantees underlying the Plaintiff’s claim, and not a defence by way of equitable set-off.

In addressing whether the Court could restrict the Defendant from raising the counterclaim in the plenary hearing, the Court considered the relevant procedural rules under Order 37 of the Rules of the Superior Courts. It concluded that the Court has broad discretion under Order 37, rules 7 and 10, to impose terms on leave to defend, including limiting defences and counterclaims to those meeting the bona fide defence threshold. This discretion is consistent with the purpose of summary proceedings to balance expeditious resolution with fairness.

The Court rejected the Defendant’s argument that the counterclaim could be pursued as a matter of right once the case was remitted to plenary hearing, noting that the procedural context and the nature of the counterclaim justified the restriction. The Court also observed that allowing the counterclaim would complicate and prolong the proceedings, contrary to the interests of justice and efficiency.

Finally, the Court acknowledged that the Defendant remains free to bring the counterclaim in separate proceedings, subject to any res judicata arguments by the Plaintiff, which the Court did not decide upon.

Holding and Implications

The Court DISMISSED the Defendant’s appeal.

The Court held that it is within the jurisdiction and discretion of the Court, upon remitting a summary judgment claim to plenary hearing, to restrict the defences and counterclaims to those that have met the bona fide defence threshold under Aer Rianta v. Ryanair. Consequently, the Defendant was properly precluded from pursuing the counterclaim related to the Chicago Spire loan in the plenary hearing, limiting the proceedings to the estoppel defence only.

This decision ensures that summary judgment procedures remain an effective filter to streamline litigation, preventing the unnecessary complication and delay that would result from allowing peripheral or independent claims to be litigated alongside the core dispute. The Defendant retains the right to pursue the counterclaim in separate proceedings, but this Court did not address any res judicata or abuse of process issues related to such separate claims.