In light of the recent Supreme Court decision of Bank of Ireland Mortgage Bank v. O’Malley1, we look at its impact on the summary summons procedure generally. We also discuss certain potential issues facing loan purchasers and assignees of loans in seeking to utilise the summary judgment procedure to mount a prima facie claim to a debt.
Facts and Judgment
In 2014, a summary summons was issued on behalf of Bank of Ireland Mortgage Bank (“BoI”) for judgment of a sum owing on foot of a loan agreement. The special indorsement of claim gave details of a loan offer and referred to the fact that Mr O’Malley had failed to repay €221,795.53 in accordance with the terms of the loan offer.
Mr O’Malley argued that:
- BoI’s pleadings were defective in that there was a lack of detail with respect to the sum claimed and how that sum was calculated; and
- it was not clear which components of the claim related to principal, interest and any charges or penalties.
Fatally for the plaintiff, neither a statement of account nor a breakdown as to how the €221,795.53 sum was calculated was provided either in the indorsement of claim or in evidence.
Until now, such an approach to the special indorsement of claim would not have been unusual. The central issue in O’Malley therefore was whether the claim set out in BoI’s summary summons had been adequately particularised having regard to the requirements of the RSC2.
In considering well-established principles governing the test to be applied by a court in deciding whether to grant summary judgment to a plaintiff3, the Supreme Court ruled that BoI’s special indorsement of claim was inadequate to establish prima facia the debt due. The Court considered:
- the level of detail needed to be included in order for a special indorsement of claim to comply with the Rules of the Superior Courts; and
- the evidence needed to be put forward in order to justify the grant of judgment on a summary basis within the confines of a motion for judgment.
In doing so, the Court concluded that the fact that it is accepted that monies were drawn down and that there has been a failure to repay moneys demanded in accordance with the terms of the loan will not, of itself, prove prima facie the debt due.
Similarly, a bald reference to the sum purportedly due without details as to how the sum in question is calculated will not suffice when such a calculation, whether in the statement of account or otherwise, should be a simple step for any lender to take.
The Devil in the Detail
O’Malley has arguably recast the summary summons procedure in terms of how special indorsements of claims are to be particularised before the Courts in that the principal, interest and charges must each be particularised even where a defendant does not assert confusion or uncertainty as to its liability. An ability to calculate penalties and interest by reference to other documentation (such as a statement of account and the relevant terms and conditions of the loan) will not be sufficient. The precise detail [i.e. calculations] as to how these figures are arrived at needs to be expressly set out – it should be obvious to a reasonable person and not a skilled financial expert how the claim sought is calculated, the rationale being:
“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. The defendant is entitled to that information to decide whether there is any point in pursuing a defence… .”.4
This potentially raises difficult logistical issues for loan purchasers and assignees who very often are only provided with a closing figure on assignment and who may not have access to the underlying detail of how the sum claimed has arisen or the ability to discern to what extent the debt due relates to principal, interest, surcharges and penalties. This is especially so in circumstances where the original lender, depending on the terms of any undertakings given or further assurances contained in the loan sale, may no longer be under any obligation to cooperate with the loan assignee when it comes to any requests with respect to the loans sold/assigned. A further issue arises when it comes to the enforcement of purchased/assigned loans which are by no means recent and for which relevant underlying documentation may have been erased or destroyed in line with data retention policies.
Furthermore, the decision appears to suggest that if a claim is not sufficiently particularised, there is no summary claim to defend and accordingly, no obligation on the defendant to argue that there is “a fair and reasonable possibility of it having a real and bona fide defence”. That being the case, to what extent could this invite extant summary judgments, and in particular default judgments, or current proceedings to be appealed/remitted to the High Court irrespective of whether or not issues as to the adequacy or otherwise of the special indorsement of claim were raised by defendants in the proceedings below? This and how any such arguments from any contentious borrower would be viewed remains to be seen. In the meantime, we are reminded that the devil most certainly is in the detail when it comes to utilising the summary summons procedure.