A recent decision of the Supreme Court has clarified the information relating to the overall debt which must be produced in order that a claim for summary judgment would succeed.

In the case of Bank of Ireland Mortgage Bank – v- O’Malley [2019] IESC 84, the Supreme Court allowed Mr. O’Malley’s appeal against an Order of the High Court granting summary judgement in favour of Bank of Ireland Mortgage Bank (“the Bank”) on the basis that there had been a lack of detail in the Summary Summons concerning the amount being claimed by the Bank.

Background

In 2008, the Bank advanced a mortgage loan facility to Mr. O’Malley. This facility had been secured by a First Legal Charge over a property in Westport, Co. Mayo. Mr. O’Malley subsequently defaulted on his mortgage repayments and in January 2014, the Bank issued High Court summary proceedings against Mr. O’Malley seeking judgement in the amount of €221,795.53. Mr. O’Malley defended the claim stating that the pleadings were defective in that there was a lack of detail concerning the amount claimed. He argued that it is necessary for a plaintiff in summary judgment proceedings to identify and prove three things (a) the amount of the principal sum still owing, (b) the interest which has accrued and been applied and (c), if applicable, any bank surcharges and/or penalties due.

Mr. Justice Cross during the High Court hearing noted that the Bank’s affidavit “did not particularise principal or interest as you would like it”. However, he held that a statement of account previously furnished by the Bank was sufficient to allow Mr. O’Malley to know the case that he had to meet. The High Court thus granted judgement in favour of the Bank for the full amount claimed.

Supreme Court

Mr. O’Malley appealed the decision to the Supreme Court and argued that the claim contained in the Summary Summons was not adequately particularised in accordance with the requirements of Order 4, Rule 4 of the Rules of the Superior Courts (“RSC”) which requires that the Special Indorsement of Claim in a Summary Summons “shall state specifically and with all necessary particulars the relief claimed and the grounds thereof”.

Chief Justice Clarke held that the Special Indorsement of Claim did not contain sufficient details of how the sum claimed was calculated and was therefore not in compliance with Order 4, Rule 4 RSC. He held that “a person confronted with a claim, or a court confronted with a question of whether there is prima facie evidence for that claim, is entitled to at least enough detail to know the basis on which the sum claimed is calculated”.

Clarke CJ held that this can be done either directly in the Summary Summons itself by including details in the Special Indorsement of Claim, or, alternatively, by reference to a detailed statement of account, which had previously been furnished to the borrower. However, if reliance is to be placed on a statement of account for the purposes of breaking down the sum in question it must be explicitly referred to in the Summary Summons.

Clarke CJ added that it was possible to rely on available documentation (such as bank statements or statements of account) but only where such documents are incorporated by reference into the text of the Special Indorsement of Claim. However, no such incorporation occurred in this case and Clarke CJ held that even if the statement of account provided sufficient particularisation of the claim, the Special Indorsement of Claim would nonetheless be defective because that document was not referred to.

On that basis Clarke CJ allowed the appeal and remitted the matter back to the High Court.

Implications

The consequence of this decision is that it is no longer sufficient to simply refer to the amount being claimed in the Summary Summons and exhibit a statement of account to the grounding affidavit in order to obtain Summary Judgement. Rather, it will now be necessary to provide specific details of the debt by setting out in the Special Indorsement of Claim the manner in which it is calculated and to produce a statement of account providing sufficient particularisation of the debt claimed. It is also prudent to provide the borrower with appropriate details, such as statements of account, prior to the commencement of proceedings. This is in light of Clarke CJ’s comment that the “more detail the borrower has been given in advance, the more it may be possible to justify a relatively shorthand way of describing how the amount due is calculated in the pleadings”.

While this may not be a significant hurdle for financial institutions who have provided the loans in question and who are in pursuit of the borrower, it may present difficulties for a third party who has acquired a loan book from a financial institution. In order to overcome any such difficulty, it is advisable to obtain complete statements of account for each account when purchasing a loan book from a financial institution so that this information can be produced as evidence in any subsequent claim for summary judgment.

It also means that all summary claims currently before the Courts, and which had been issued prior to this decision, will need to be revisited to determine whether they contain the level of detail as set out by the Supreme Court. If the proceedings do not contain the requisite detail, it may be necessary to apply to the High Court to amend the proceedings so as to be in accordance with this Supreme Court decision.