In ACC Loan Management v Patrick Cahalan, High Court, Noonan J, 3 March 2016 the High Court granted summary to ACC and rejected arguments based on claims of reckless lending and illegal funds.
The application for summary judgment was in respect of six different loan facilities in default. In the first replying affidavit, sworn by the defendant's solicitor, the sum due was not disputed and time was sought to deal with the liabilities.
Subsequently, the defendant swore further affidavits raising other issues.
The first issue raised was an allegation that ACC had engaged in "reckless lending". Noonan J pointed out that it was settled beyond dispute that there is no such tort as reckless lending, and it was not a matter which the courts have recognised as giving rise to any defence to a claim of summary judgment.
The second issue raised was an allegation of illegality in relation to the loan. The defendant alleged that ACC's parent company, Rabobank, was involved in the unlawful manipulation of EURIBOR and that capital made available by Rabobank to ACC to fund its lending activities in Ireland was tainted with illegality and could not be recovered. Noonan J noted that no authority in support of that proposition was advanced by the defence. He pointed out that the defendant's story was, unfortunately, an all-too-common one: in the good times, when credit was easily obtained, he borrowed very significant sums and when the economic collapse occurred he found himself unable to pay. While Noonan J was sympathetic towards the defendant's predicament he held that the defendant had not established that he had a fair or reasonable probability of having a real or bona fide defence. Noonan J held that there was no real connection between alleged illegal conduct by a related entity in another jurisdiction to the contract the subject-matter of the proceedings and, even if there were such a connection, the onus would be on the defendant to show that some loss had accrued to him from it, which the defendant had not done in this case. In the circumstances, Noonan J was satisfied that ACC was entitled to judgment.
Noonan J made some interesting comments about the recurring feature in summary judgment claims of ever-more creative grounds of defence being advanced by defendants, the overwhelming majority of which would be doomed to failure at a plenary hearing. In such circumstances, very substantial costs would fall to be paid by unsuccessful defendants which would only serve to compound the misery for such defendants which cannot be in their interests. Noonan J suggested that careful consideration should be given by defendants and their advisers to the reality of such defences before raising them.