The High Court has refused to grant summary judgment to the Governor and Company of the Bank of Ireland in a dispute over the alleged shortfall on two loans, giving the defendant leave to defend and directing the case to a plenary hearing.
In a judgment delivered on 13 July 2022, Ms Justice Siobhán Phelan also refused the defendant’s application to dismiss the proceedings for delay. She found that the five-year period between the 2013 proceedings and the bank’s 2018 motion for judgment was inordinate, and that parts of the delay were inexcusable. But she was not satisfied that the defendant had shown real prejudice to his ability to defend the claim. The balance of justice favoured allowing the case to proceed.
The loans, originally made by ICS Building Society in 2006 and secured against two properties in Clonskeagh, were pursued by the bank after the properties were sold and sale proceeds credited against the debt. The bank sought €166,106.62 at the May 2022 hearing. It said the balance arose after the proceeds were applied and interest accrued. The defendant disputed the calculations and argued, among other things, that the bank had no right to charge interest after the European Central Bank changed how it set its main refinancing rate in 2008.
The court found that the bank had sufficiently explained its calculations for the purpose of establishing a prima facie claim. It rejected several other defence points, including the argument that agreeing to the property sales meant the bank had given up its right to pursue any remaining shortfall. However, the bank had not put the scheme transferring the loans from ICS to Bank of Ireland into evidence. The judge said that omission was an arguable gap in the bank’s proof.
The central dispute concerned whether the loan terms permitted the interest rate applied after the ECB’s 2008 change to its refinancing operations. The bank’s witnesses said there had always been one relevant ECB rate and that the loans tracked it. The defendant’s expert argued that the specific minimum bid rate named in the contracts became unavailable, and that the bank had not followed the contractual steps required to apply another rate. The judge held that this conflict could not safely be resolved on affidavit evidence and that the defendant had raised an arguable defence with potential consequences for whether the loans were in default and what sums were owed. She did not decide which interpretation was correct.
The judge also declined to set aside the bank’s judgment motion because of procedural timing failures. She said those failures remained relevant to the delay assessment, but dismissing the motion at that stage would be disproportionate. The court will set timelines for the next steps in the proceedings after hearing from the parties.