Burke & Anor v Anglo Irish Bank Corporation PLC & Anor

Factual and Procedural Background

The plaintiffs, a married couple and both solicitors by profession, initiated proceedings against the defendants, two banking entities, regarding an alleged contract for a loan facility. The plaintiffs claim that in December 2002 they entered into a contract with the defendants for a loan of €546,000 intended to purchase six sites in Kinvara, County Galway. Of this sum, only €54,000 was advanced, linked to a deposit payment, and the plaintiffs allege that the defendants wrongfully failed to advance the balance, breaching contract and duty, resulting in loss.

The defendants brought a notice of motion dated 5 January 2011 seeking three forms of relief: a preliminary issue trial on privity of contract or interest; striking out the claim under Order 19, rule 28 of the Rules of the Superior Courts 1986 as disclosing no reasonable cause of action; and striking out the action under the court's inherent jurisdiction. Ultimately, only the third relief was pursued.

There were related possession proceedings initiated by the defendants concerning the plaintiffs' family home, commenced in June 2008, with an order for possession made and under appeal. The current plenary summons was issued in December 2008. Attempts to consolidate these proceedings with the present claim were not successful.

The defendants argue that the plaintiffs never had contracts with them and, alternatively, that a condition precedent for the second tranche of funding—receipt of net proceeds from a property sale—was never fulfilled.

Complicating the matter is the involvement of a corporate entity, Burdale Limited, which the defendants contend was the contracting party. The plaintiffs deny any involvement with Burdale Limited, which was incorporated in 1989, struck off in 1999, and had unrelated individuals as directors. Key documents, including promissory notes, loan offer letters, and guarantees, refer to Burdale Limited as the borrower or principal, signed by the plaintiffs, particularly the first named plaintiff.

Later, another company, Burco Properties Limited, became involved as the borrowing vehicle, with documentation reflecting this change. There is disagreement over who proposed the use of these corporate entities, with affidavits from the defendants' representatives asserting the first named plaintiff proposed Burdale Limited, while the plaintiff alleges the bank suggested the corporate vehicle and even named it.

Legal Issues Presented

1. Whether the plaintiffs have privity of contract or any sufficient interest in relation to the contracts with the defendants.
2. Whether the plaintiffs’ claim discloses a reasonable cause of action or is frivolous or vexatious, justifying striking out.
3. Whether the plaintiffs’ action should be struck out pursuant to the court’s inherent jurisdiction.
4. Whether the condition precedent for the drawdown of the second tranche of funding was satisfied.

Arguments of the Parties

Defendants' Arguments

• The plaintiffs never had contracts with the defendants; the contracts were with Burdale Limited or other corporate entities.
• Even if a contract existed, a condition precedent requiring receipt of net proceeds from a property sale was not met, barring further funding.
• The plaintiffs’ claim discloses no reasonable cause of action and is frivolous or vexatious.

Plaintiffs' Arguments

• The plaintiffs contend they entered into a contract directly with the defendants in December 2002 for the loan to purchase the sites.
• They deny involvement with Burdale Limited and dispute that it was the contracting party.
• They argue the defendants breached their contractual and other duties by failing to advance the loan balance.
• They assert that even if Burdale Limited was involved, the contract existed in their favor and the defendants were obliged to fund the purchase.
• The plaintiffs challenge the condition precedent argument and suggest that the Area Manager’s alleged agreement to fund unconditionally should be considered.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Millstream Recycling Limited v. Gerard Tierney and Newton Lodge Limited (Unreported, High Court, Charleton J., 9th March 2010)	High Court’s power to dismiss claims if clearly unsustainable Close scrutiny required before striking out claims Disputed oral evidence cannot be relied upon to strike out Conflicts of fact resolved in favor of plaintiff Weak claims alone do not justify dismissal	The court relied on these principles to determine that the defendants’ application to strike out was premature given the existence of factual disputes.
Ruby Property Company Limited v. Kilty (Unreported, High Court, McCracken J., 1st December 1999)	Difficulty of striking out proceedings where factual disputes exist not resolved by documents	The court noted that unresolved factual disputes make striking out virtually impossible, supporting refusal to dismiss at this stage.

Court's Reasoning and Analysis

The court carefully examined the documentary evidence, affidavits, and the parties’ submissions. It recognized the significant difficulties the plaintiffs face due to the references to Burdale Limited in key documents, which could undermine their claim. However, the court emphasized that such difficulties do not suffice to strike out the claim at this stage.

The court highlighted established legal principles that require close scrutiny before dismissing claims, especially where factual disputes exist. It was noted that disputed oral evidence cannot be used by the defendants to succeed on a strike-out application, and any factual conflicts must be resolved in favor of the plaintiffs.

The court found that Burdale Limited did not exist at the relevant times and that Burco Properties Limited was incorporated later, complicating the contractual picture. The conflicting affidavits regarding who proposed the corporate vehicle and the plaintiffs’ denial of involvement with these companies created genuine factual disputes.

Regarding the condition precedent for the second tranche, the court acknowledged that non-compliance may present difficulties but was not sufficient to dismiss the claim at this stage. The court referred to section 37 of the Companies Act 1963 concerning contracts entered into on behalf of companies prior to their formation, noting the plaintiffs would have to face arguments about conditions of the contract if they rely on this provision.

Ultimately, the court concluded that the existence of factual disputes precluded the exercise of the jurisdiction to strike out or dismiss the proceedings at this preliminary stage. The court must wait until trial to resolve these conflicts of fact.

Holding and Implications

The court’s final ruling was to refuse the defendants’ application to strike out the plaintiffs’ claim at this stage. The court declined to dismiss the proceedings, emphasizing that factual disputes exist which must be resolved at trial.

The direct effect is that the plaintiffs’ claim will proceed to trial, allowing full examination of the disputed facts. The court did not establish any new legal precedent but reaffirmed the principle that strike-out applications require clear cases free of factual disputes.