This is the second and final instalment of our two-part update looking at recent developments in summary judgments in the Superior Courts. In this note we focus on the recent Supreme Court decision in Bank of Ireland Mortgage Bank v O’Malley (the “O’Malley Case”), which clarifies the level of detail which must be set out in summary summons proceedings (“Summary Proceedings”), specifically in debt recovery proceedings brought by financial institutions. It also reflects on recent Supreme Court comments on the summary judgment process in general.
Summary Proceedings are a fast-track procedure used by those who claim to be owed what is known as a ‘liquidated sum’. A large proportion of the cases which appear in the courts are issued by financial institutions pursuing debts due by borrowers on foot of unpaid loans. Summary Proceedings differ from other court processes (such as plenary proceedings with a full plenary hearing) in that there is no requirement for oral evidence (which involves examination and cross-examination of witnesses) nor is there a detailed exchange of pleadings or discovery. It is required that all of the relevant details of the dispute are contained in the summary summons, the sworn affidavits and exhibited documents. In the absence of oral evidence, the detail which should be contained in the documents before the court is crucial.
Background to the Case
The facts of the O’Malley case will be familiar to many financial institutions involved in Summary Proceedings. The matter concerned a loan which was in default. Summary Proceedings were issued by Bank of Ireland Mortgage Bank (“Bank of Ireland”) and the matter progressed through the High Court and then subsequently to the Supreme Court, on appeal.
The issue in dispute was that Mr O’Malley alleged that the summary summons and the sworn affidavit of Bank of Ireland were defective given the lack of detail concerning the sum actually due by him. In a request for particulars, which will be familiar to all financial institutions, Mr O’Malley asked for a detailed breakdown of the sum of monies alleged to be due. Bank of Ireland contended that it had satisfied its evidential burden of proof in the Summary Proceedings by providing the statement of account which set out the debt due. While the statement of account was exhibited to the affidavit of the bank official, there was no clear breakdown of the precise amount due by way of capital, interest, surcharges and penalties.
Supreme Court Decision
The Supreme Court considered the level of detail required in Summary Proceedings. In doing so, Chief Justice Clarke sought to balance the rights of both plaintiff and defendant. He placed emphasis on the fact that there is an obligation on any plaintiff in Summary Proceedings to produce prima facie and sufficient evidence of the debt. On the other hand, when a defendant is resisting Summary Proceedings he/she must make more than a mere assertion of a defence to meet the threshold entitling the defendant to a full or plenary hearing. In the words of Clarke CJ, “this obligation cuts both ways”.
On reviewing the summary summons and affidavit before the court, Clarke CJ found that the level of detail was insufficient as there were no particulars on how the sum allegedly due and owing was arrived at. In particular, while the statement of account was exhibited to the affidavit, it was not clear how the interest rate was actually applied and how the closing balance was reached. While Clarke CJ was not prescriptive as to how a financial institution should set out the debt position in the summary summons and affidavit, there is an expectation of a straightforward methodology for calculating the sums due (to include capital, interest, surcharges and/or penalties). The case was remitted back to the High Court to allow Bank of Ireland amend the summons and remedy the insufficiency.
This decision highlights that it is not enough to exhibit a statement of account to an affidavit in the expectation of Summary judgment being granted. A clear methodology must be set out in the summons and affidavits as to how the debt is due and owing, taking account of the capital sum, payments made, accrued arrears, interest charged and any surcharges or penalties applied.
While this is a relatively straightforward exercise for financial institutions who have owned the loan from drawdown to the issuance of proceedings, it may present difficulties for loans purchased by a new entity. In such circumstances, it is recommended that detailed information is obtained from the seller as to the debt due at the time of transfer of the loan. At the very least, an affidavit should be sworn by the seller which sets out the methodology (in respect of individual borrowers) underlying the debt due, and taking account of the matters specifically identified by the Supreme Court.
O’Malley represents a continuing line of decisions from the superior courts arising out of challenges and defences to Summary Proceedings. The challenge in O’Malley centred on technical arguments around the level of detail in the proceedings. In another recent case, Ulster Bank Ireland Limited v Beades  (“Beades”), the Supreme Court dismissed the argument that Summary Proceedings are a denial of access to the courts. Although acknowledging the summary judgment process is “truncated”, McKechnie J (giving judgment for the court) found that it is an entirely valid and regular one, facilitating justice between the parties and its efficient administration.
The courts are conscious of the competing interests of both parties in Summary Proceedings, and O’Malley illustrates that the exercise of summary judgment is strictly guarded by the courts. Although it can be said that the most complete hearing a litigant can obtain is by way of a full plenary hearing, it does not automatically follow that Summary Proceedings encroach unfairly on a litigants rights in that regard. This was made clear by the court in Beades with the court observing that justice is a two-way process involving the party who institutes the proceedings and the party against whom a cause of action is asserted.