Debt collection can be a complex issue especially when large amounts are involved. Most people assume that cases that go to court involve people giving evidence under oath. In debt collection cases some different procedures apply and a case can be heard based on written submissions alone!
Proceedings in the High Court are generally commenced by a document known as a Plenary Summons, whereas a in debt collection a Summary Summons is used. The difference is that a plenary trial allows a defendant defend the case by written paperwork known as pleadings, or oral evidence at trial.
In Summary proceedings these cases are dealt with without the need for oral evidence.
A recent case of Allied Irish Banks plc v Anthony McNamara is of interest as it permitted the proceedings to be transferred from a summary type matter to a plenary matter.
The facts of the case were as follows:
- Allied Irish Banks plc (AIB) agreed to lend Mr. McNamara almost €116,000.00, which was to be repaid over a 13-month period commencing on 30th September 2009.
- Mr. McNamara provided a charge over lands at County Clare, by way of security for the loan, and his solicitor provided certain title documents to AIB.
- Mr. McNamara defaulted on the loan and AIB terminated the loan facility and demanded repayment of the full amount of the debt owed by Mr. McNamara to AIB.
- AIB, by way of summary proceedings, sought to recover the debt of just over €113,000.00.
- Mr. McNamara sought to avoid this and it transpired that AIB had lost the title documents and were in the process of reconstructing the title to the lands at County Clare.
- Mr. McNamara brought a cross-claim against AIB for the loss of the documents, which he said would undervalue the property, or leave the property virtually unsaleable given the title concerns.
- Mr. McNamara that his cross-claim entitled him to defend the debt recovery proceedings either by way of written pleadings, or oral evidence and therefore he should be allowed a plenary hearing.
- The Court considered this in reference to the principles set out in Harrisrange Ltd. v Duncan  4IR 1,7.
- One of the principles set out in this case says that unless it is clear that there is no defence to a case, the defendant should be allowed the opportunity to defend the case. This was not disputed by either party.
- The Court held said as the AIB loan of €116,000.00 was conditional on the provision of security over the lands at County Clare, the loan and the security were “inexorably linked”.
- The fact that AIB had lost the title documents gave rise to the impression that a defence to the case could be mounted by Mr. McNamara and therefore the Court was satisfied that the case should be dealt with by way of plenary hearing.
The case highlights that the standard for what constitutes a ‘defence’ for a plenary hearing in debt recovery matters is low.
The judge in this case, Mr. Justice Barrett was quick to echo the sentiments of Mr. Justice McKechnie in the Harrisrange judgment that Courts should be mindful of their power to grant a summary judgment, where no pleadings or evidence are exchanged between plaintiff and defendant; and that this power “should be exercised with discernible caution.”
It is clear the court takes seriously the rights of all parties to have their case heard and the case is important in reaffirming these rights.