The High Court has adjourned a bank’s claim against a solicitor for a plenary hearing, finding that disputed facts and legal questions about the scope of two undertakings could not fairly be decided through summary proceedings.
In a judgment delivered on 12 December 2014, Ms Justice Donnelly said the defendant had an arguable defence to ACC Loan Management Limited’s claim. The bank sought orders under a special summons over alleged breaches of undertakings connected with loans and property at Mountcharles, Co Donegal. It also sought damages calculated on a “no transaction” basis.
The bank said it advanced €500,000 under a facility intended to fund the purchase of two Mountcharles houses. One house had already been purchased, and part of the loan reimbursed the borrowers for that purchase. The bank alleged that the solicitor failed to provide title information, tell it promptly that a second purchase contract was conditional on planning permission, and notify it when that contract did not proceed. It said it would not have advanced the money had it known the relevant circumstances.
The solicitor disputed the bank’s account of the loan’s purpose and the scope of his undertakings. He said the first undertaking covered only the house already owned by the borrowers, while the second expressly made compliance conditional on completion of the second purchase and the grant of planning permission. He also said he had told a bank official about the planning condition in a telephone conversation. The official had no recollection of that conversation and found no record of it.
The judge noted that the folio specified in the first undertaking covered only one house, while the bank’s loan documents referred to two houses or properties. She said there was a real lack of clarity over which loan sanction letter, if any, was incorporated into that undertaking. Whether the bank was told about the handwritten qualification to the second undertaking, and whether the solicitor had a duty to draw it to the bank’s attention, were also unresolved.
The court held that the factual and legal issues were not sufficiently clear or straightforward for summary determination. Among the questions requiring fuller consideration were whether an undertaking incorporates the terms of a loan sanction letter, whether a solicitor must specifically alert a lender to a limitation or condition in an undertaking, and whether the solicitor could release loan money before the secured property was conveyed without expressly explaining that the undertaking allowed it.
The court did not decide whether the solicitor breached either undertaking or whether the bank was entitled to relief. It directed that the case proceed to a plenary hearing. The judge added that, even if a breach were established, a full hearing would be needed to calculate the bank’s true losses. Directions were to be given after discussion with counsel.