McAteer & Ors v Fried & Ors (Approved)

Factual and Procedural Background

The plaintiffs, including Company A and its appointed joint receivers, sought relief against the defendants concerning loan facilities secured by properties at two addresses in The City. The receivers were appointed over charged properties pursuant to deeds of appointment dated 19th April 2013. These loan facilities were transferred from Company A to Company B in March 2015, with Company B substituted as plaintiff for the purposes of receivership. The plaintiffs initiated plenary proceedings in May 2015 seeking various reliefs, including injunctive orders to restrain the defendants from interfering with the receivers' functions and claims for repayment of debts under loan facilities. The defendants delivered defences and counterclaims. The present application arises from a notice of motion issued by the plaintiffs in October 2019 seeking summary judgment against the first defendant and orders related to rent payments from the charged properties. The hearing was conducted alongside related summary proceedings concerning judgment against other defendants.

Legal Issues Presented

1. Whether the court has jurisdiction to grant summary judgment in plenary proceedings for liquidated sums.
2. Whether the plaintiffs have provided admissible and sufficient evidence to establish the debt claimed against the first defendant.
3. Whether the defendants have raised credible and bona fide defences to the claims.
4. Whether the receivers are entitled to the rents and payments from the charged properties pending trial.
5. The procedural propriety and timing of seeking summary judgment after extensive plenary proceedings and delay.

Arguments of the Parties

Plaintiffs' Arguments

• The plaintiffs assert entitlement to summary judgment against the first defendant for liquidated sums pursuant to the loan facility letter and the assignment of the facilities to Company B.
• They rely on an inherent jurisdiction of the court to grant summary judgment in plenary proceedings, citing precedent supporting such jurisdiction.
• The plaintiffs contend the first defendant admitted indebtedness in pleadings and affidavits, thus negating any real defence.
• They argue that the alleged loan restructuring agreement relied upon by the defendants was never finalized and therefore does not constitute a defence.
• Regarding rent, the plaintiffs claim the rent and payments from the charged properties belong to the receivers and should be paid to them pending trial.
• They reject criticisms about the absence of stamp duty payment, relying on precedent holding that certain debt factoring agreements are exempt from stamp duty.
• The plaintiffs contend that the defendants cannot both rely on and deny the assignment of the loan facilities, invoking the principle against approbation and reprobation.

Defendants' Arguments

• The first defendant contends the summary judgment application is procedurally irregular in plenary proceedings and criticizes the delay of over five years before bringing the motion.
• He disputes the contractual basis for the claimed US Dollar amount and challenges the characterization of the loan facilities as demand loans, arguing they are term facilities requiring an identifiable event of default before repayment is due.
• The defendants criticize the plaintiffs' evidence, particularly the redacted assignment documentation and the affidavits of the plaintiffs' witness, who lacks direct access to original bank records and personal knowledge of the loan accounts.
• The first defendant asserts bona fide defences including limitation defences and reliance on an agreement with the bank for a loan restructure and rescheduling, which he alleges the bank breached.
• He claims the bank and receivers were aware of and consented to the leases and tenancies of the charged properties and are estopped from denying their validity.
• Regarding rent, the defendants argue the receivers are not entitled to rents absent possession or a contractual right, citing established case law to support that the mortgagor retains income rights until possession is taken.
• The defendants emphasize the receivers’ delay and the impropriety of seeking mandatory relief without an application for possession and in the context of ongoing related litigation.
• The fourth defendant, though not providing evidence, submits that there is a serious question to be tried regarding the validity of the leases and the receivers’ appointment, rendering the application premature.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first addressed procedural objections, particularly the appropriateness of seeking summary judgment in plenary proceedings. It acknowledged the inherent jurisdiction recognized in Abbey International Finance to grant summary judgment where no real defence exists but contrasted this with Judkins, which emphasized strict adherence to plenary procedures. The court observed that the present case involved extensive pleadings and significant delay before the summary judgment application was made, differing markedly from the immediate admission of debt in Abbey.

Regarding the plaintiffs’ evidence, the court found the affidavits of the plaintiffs’ witness inadequate and inadmissible, noting the lack of personal knowledge, absence of access to original bank records, and failure to establish a reliable course of dealing. The court relied on the reasoning in Promontoria (Aran) Limited v. Burns to underscore the evidential deficiencies.

The court distinguished the present case from Ulster Bank Ireland Limited v. O’Brien, where the affidavit came from a senior bank employee with direct management responsibility and corroborating documents. Here, the plaintiffs failed to produce comparable evidence.

The defendants’ bona fide defences, including the alleged loan restructure and limitation defence, were not finally adjudicated but were sufficient to preclude summary judgment. The court also found the plaintiffs’ attempt to treat the defendants’ failure to respond as an admission misplaced, given the lack of admissible evidence requiring such a response.

On the issue of rent, the court noted the absence of any contractual or charge provision entitling the receivers to rents without possession. The court cited Turner v. Walsh to affirm that mortgagors retain income rights absent possession or notice. Given the receivers had not sought possession and there were substantial issues concerning lease validity, the court declined to grant mandatory relief for rent collection pending trial.

The court emphasized the significant and unexplained delay by the plaintiffs in bringing the summary judgment motion after years of plenary proceedings, noting the principle that delay defeats equity.

In conclusion, the court found the plaintiffs’ application for summary judgment and related relief inappropriate and determined that the action should proceed to plenary hearing for full adjudication.

Holding and Implications

The court DISMISSED the plaintiffs’ application for summary judgment and related interlocutory orders.

The direct effect of this decision is that the claims against the first defendant and the relief sought by the receivers regarding rent payments will proceed to a full plenary hearing. The court’s ruling does not establish new precedent but underscores the necessity of proper evidential foundation and procedural compliance when seeking summary relief in plenary proceedings, especially after extensive litigation and delay. The plaintiffs were given a period to make submissions to facilitate the matter’s progression to trial and to address costs related to the present application.