Supreme Court On Obligations In Lender Borrower Relationship: National Asset Loan Management Limited v Tom Coyle [2014] IESC 27

JUDGMENT OF THE SUPREME COURT DATED 9 APRIL 2014 (DELIVERED BY MR. JUSTICE CLARKE WITH MS. JUSTICE LAFFOY AND MS. JUSTICE DUNNE CONCURRING).

This judgment is a useful reminder that, while the threshold for defendants to raise an arguable defence in respect of summary judgment is low, where there are clear questions of law that can be decided on summary hearing and where there is no risk of injustice to the parties, the court is entitled to grant judgment on a summary basis.

The judgment emphasises that, in a lender/borrower relationship, the basis of the contractual relationship is the facility letter agreed to by the parties and that once the monies are either advanced or continued by the lender, there is an obligation on the part of the borrower to repay the monies advanced in accordance with the terms of the facility letter.

The judgment also provides useful confirmation that the mere fact of the transfer of the benefit of debts to NAMA, with the resultant opening and closing of accounts, does not in itself provide an arguable defence for summary judgment in respect of those debts.

Background

This Supreme Court judgment related to an appeal by the Defendant of a judgment of the High Court delivered by Mr. Justice McGovern on 19 December 2013 granting summary judgment to the Plaintiff in the sums of €49,856,925.50 and STG£10,567,723 on foot of a facility letter issued by Anglo Irish Bank Corporation Limited ("Anglo Irish Bank") dated 20 July 2010 on the basis that the Defendant had failed to establish any arguable defence in respect of the claim for judgment of the principal sum. These loan facilities had subsequently been transferred to NAMA.

An application for a stay on the execution of the Order of Mr. Justice McGovern was heard by the Supreme Court on 10 March 2014. During the hearing of the stay application, it became clear that one of the major issues to be determined was whether the Defendant had sufficient grounds to meet the criteria for a stay. In his judgment, Mr. Justice Clarke found that it became clear that it "would be an unnecessary use of scarce court resources to hear detailed submissions on the merits of the appeal solely for the purposes of deciding whether or not to grant a stay when, in reality, it would not take much longer to analyse those same grounds for the purposes of determining the substantive appeal." Accordingly, the appeal was heard by the Supreme Court shortly thereafter, on 27 March 2014 and judgment...