Judge rules debtor being pursued by bank should get full hearing

The High Court has made a ruling which may make it more complicated for banks to get summary judgment orders against people who owe them money, including home owners.

In a case where AIB was seeking summary judgment against Marino Motor Works Ltd, the holding company of Barry’s of Bantry, a car dealership and repair business in Co Cork, Ms Justice Úna Ní Raifeartaigh has ruled in favour of the defendant and said the matter should go to a full hearing.

This was because the court found that neither it nor the defendant were in a position to check the claims of the bank in relation to the accumulated interest, which the court heard constituted a significant proportion of the total debt being sought.

The bank was seeking summary judgment of €728,388 arising from loans issued in 2002 and 2008 to Marino Motors and to Mairead and Sean Barry.

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The court heard the Master of the High Court had instructed the defendant's accountant, Brian Weakliam, to conduct a review of the accumulated interest, but the bank said it did not have to give the information being sought by the accountant.

Mr Weakliam, a former accountant with AIB, said it was unusual that interest on two accounts was accumulating in one account and that this made it difficult and complex to check the interest charges involved. The procedure was specifically provided for in the terms for the loans, the judge noted.

Ms Justice Ní Raifeartaigh, in an unreported ruling on Tuesday, said it was with some reservation that she was deciding the case was not suitable for summary judgment.

It was not because there was an error in the interest calculation, but because neither the court nor the defendant were in a position, with the information available, to check.

‘Doomed to failure’

She also accepted a second argument that there were grounds for a counter-claim by the defendant that the actions of the bank had contributed to the financial difficulties of the business, which culminated in it losing the Opel dealership, which in turn contributed the difficulties in meeting loan obligations.

She said she “did not underestimate the difficulties of any defendant bringing such a claim home successfully.”

However she was not in a position to conclude that the defendant’s case was “doomed to failure”.

Gary Fitzgerald BL, who represented Marino Motors, said the ruling would mean that in future banks would have to give more information as to how they arrived at their interest calculation.

This could allow for more challenges to how those calculations had been conducted, something that could be availed of by commerical and retail banking customers against whom banks wanted to have orders issued on a summary basis.