Summary proceedings are initiated where a claim is for a liquidated sum or a set figure.
The test for a summary judgment application to succeed was identified in Aer Rianta v. Ryanair [2001] 4 I.R. 607, where it was held that there must be no fair probability of a bona fide defence. More recently, in IBRC v. McCaughey [2014] 1 IR 749, the court found that it must be clear that the defendant has no arguable defence.
The basis for obtaining summary judgment was considered again by the Court of Appeal in May 2018 in AIB v Stack & Stack [2018] IECA 128.
The facts
Mr & Mrs Stack (the defendants) had guaranteed the obligations of a company and, following the liquidation of the company, AIB (the bank) sought judgment for over €3,000,000. The bank’s application for summary judgment was opposed by the defendants on grounds including that;
- There was no proof that the company had accepted the terms set out in the letter of loan sanction;
- The loan was not conditional on guarantees being provided;
- Mrs Stack’s signature was a forgery; and
- Mrs. Stack had no involvement in the day to day running of the company and had never received any independent legal advice.
The bank argued that the company had accepted the loan facility by special resolution, which had been signed by each of Mr. and Mrs Stack and that the company subsequently drew down sums that would otherwise have been unavailable to the company. The bank provided proof that Mr. Stack had executed the guarantee which was only required by reason of the acceptance of the company of the loan facility.
The High Court decision
At the summary judgment hearing it was held that the defendants had not demonstrated the probability of a bona fide or credible defence and for that reason the High Court refused to refer the proceedings to plenary hearing. The trial judge was not satisfied as to the defendants’ claims and held that the claim that Mrs Stack’s signature was a forgery was no more than a bald assertion unsupported by any evidence and was inconsistent with other documentary evidence.
Court of Appeal
An appeal was filed by the defendants and the Court of Appeal considered the test to assess whether summary judgment should be granted. It held that before concluding that summary judgment should be granted, the court must be satisfied that it is “very clear” that the defendant has no defence to the proceedings.
The Court of Appeal acknowledged that it is well established that the threshold which a defendant must exceed to achieve a plenary hearing is a low one. However, the defence must amount to more than mere assertion or statement. There must be substance to the proposed defence, the substance must be based on facts which, if true and established, would amount to a defence, and the defence must also be credible.
In this case, the Court of Appeal was not satisfied that the defendants had put before the High Court any credible basis for believing that evidence may be forthcoming to support the facts that the defendants claimed. It held that a bald averment by a defendant, including that their signature as appears on a contractual document is a forgery, depending on the circumstances of the case, may well be insufficient to establish the probability that they have a bona fide and credible defence to a claim premised on the validity of that signature.
Illustration of court’s approach
While the defendants made many claims to avoid summary judgment being granted against them, this case is a good illustration of the perspective of the courts in such matters as they will not allow bald assertions or claims of defendants that lack credibility to be used as a basis to avoid summary judgment.
