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Clarification of extension of summary judgment jurisdiction

AUTHOR(S): GearĂ³id Carey
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution
DATE: 30.10.2012

In a recent High Court decision in a matter proceeding in the Commercial List, Judge Kelly outlined that the jurisdiction of the Irish courts to award summary judgment against a defendant is broader than expressly provided for in the Court Rules. In Abbey International Finance Ltd v Point Ireland Helicopters Ltd(1) he specifically prepared a written note of a judgment he had delivered ex tempore on the basis that it dealt with important procedural issues.

Summary judgment in Irish procedure

Summary judgment in Irish procedure is available only for claims involving liquidated sums, where there is no dispute regarding liability. In simple terms, summary proceedings for recovery of such debts are brought by way of summary summons, on foot of which the plaintiff brings an application seeking judgment against the defendant, such application being determined on affidavit evidence alone. If it is clear from the affidavit evidence before the court that the defendant has no basis on which to defend the case, the plaintiff will obtain judgment against the defendant on a summary basis (ie, without the need for a full trial). However, the Court Rules do not expressly envisage a plaintiff obtaining judgment against a defendant on a summary basis where the relief sought is not a liquidated sum, irrespective of how weak the defendant's case may be.

Notwithstanding that, in this case the High Court proceeded to identify such a jurisdiction.

Facts

The plaintiff, Abbey International Finance Ltd, was an Irish registered limited company engaged in the leasing of aircraft. The first defendant was an Irish company (a special purpose vehicle to effect the leasing transactions which were the subject of the litigation); the second defendant was an Italian company (and the ultimate lessee/operator of the aircraft). The litigation concerned three helicopters and a medical kit, in respect of which lease arrangements had been entered into on various dates from 2008 to 2009. There were then subsequent sub-leases as between the defendants.

The plaintiff contended that there had been a default in respect of rental obligations under the leases and sub-leases. The High Court noted that the lease agreement had rent obligations which were "absolute and unconditional", and which were not affected by any set-off, counterclaim or defence. Indeed, the High Court noted that "it was difficult to conceive more water tight obligations to pay rent in accordance with the terms of the lease". Despite that, the first defendant had defaulted in its obligations and the plaintiff served notice of termination of the leases and went about exercising its rights under the security assignments.

In the proceedings before the High Court, which commenced in June 2012, the plaintiff sought both liquidated amounts and substantive relief in respect of the subject matter of the leases (ie, specific delivery of the aircraft and the medical kit to the plaintiff). Given the mix of reliefs sought, the plaintiff had decided to proceed by way of plenary summons. However, the plaintiff also contended that there was no defence to any aspect of the claim and applied for judgment for the entire amount of its claim – both summary judgment in respect of the moneys due and delivery of the aircraft. Alternatively, it sought injunctive relief. Accordingly, the question before the High Court was whether it was open to the plaintiff to bring a claim for summary judgment in respect of non-liquidated sums.

Decision

The High Court considered the summary summons jurisdiction (as outlined briefly above), arising from which was the question of whether it was open to a plaintiff to seek summary judgment in respect of unliquidated claims. However, the High Court was satisfied that the answer to that was in the affirmative, pursuant to both the inherent jurisdiction of the court and the specific rules which applied to cases transferred to the Commercial List of the High Court (as this matter had been). The High Court noted that, absent such jurisdiction, a meritorious defendant could significantly delay a plaintiff in obtaining justice. It said that it could see:

"no reason in either law of or logic why a defendant who has no defence to a liquidated claim may be subject to an application for summary judgement but not be so in the case of an action seeking unliquidated damages or other substantive reliefs."

Although the High Court acknowledged that there was no specific power in the Court Rules to permit such an application to be brought, the court had an inherent jurisdiction to permit summary judgment in such circumstances.

In support, the High Court cited Barry v Buckley,(2) where Judge Costello had stated that the court had an inherent jurisdiction to strike out or stay proceedings which were frivolous or vexatious or had no reasonable prospect of success. In this case, the High Court noted that a similar jurisdiction – effectively; to the converse – was argued to exist, enabling a plaintiff to obtain summary judgment without having to proceed to a plenary hearing if the defendant did not have a stateable defence. It also relied on Sun Fat Chan v Osseous Ltd,(3) where Judge MacCarthy in the Supreme Court had stated that "a defendant may be denied the right to defend an action in a plenary hearing if the facts are clear and it has shown that the defence is unsustainable". The High Court suggested that this statement accepted the logic and the justice in providing a mechanism for a plaintiff to obtain relief in all proceedings if the facts are clear and it can be demonstrated that there is no sustainable defence. Noting that the Court Rules are silent on the issue, the High Court observed that "the rules of court are the servants of justice and not its master". In this regard, it found support from Judge Geoghegan in Dome Telecom Ltd v Eircom Ltd,(4) where the court had opined that "if there is no rule in existence precisely covering the situation, [the court] has an inherent power to fashion its own procedure". Apart from the inherent jurisdiction, the High Court also noted that this litigation was proceeding before the Commercial List of the High Court. It also referred to various authorities confirming the expansive nature of the directions which could be made in the Commercial List.(5) In light of those wide powers, the High Court was also of the view that in proceedings in the Commercial List, it is open to a plaintiff to seek a summary disposal of claims other than liquidated damages in circumstances where a defendant is likely to be unable to demonstrate a real bona fide defence.

Having established that there was jurisdiction to grant summary judgment in non-liquidated damages cases, the High Court had to consider the relevant test to apply. It noted that Aer Rianta cpt v Ryanair Ltd(6) had determined the test applicable to summary judgment in relation to liquidated claims. In essence, this required the court to consider whether it was clear that the defendant had no case. Although the High Court accepted that this was a relatively low threshold for a defendant to meet in order to be permitted to defend the claim, it felt that it should also be the test applicable to non-liquidated damages cases. Applying that test here, the High Court gave the defendant conditional leave to defend the non-liquidated claim, although judgment was given in respect of the liquidated claim.

Comment

This case represents a significant development. It confirms that there is jurisdiction, in the Commercial List of the High Court in particular, pursuant to which a plaintiff may seek summary judgment in cases which are not limited to liquidated damages claims. Although the test that a defendant must meet before being permitted to defend formally the claim is low, justice for a plaintiff faced with an unmeritorious defence may well be available on a summary basis akin to other jurisdictions.

For further information please contact Gearoid Carey at Matheson by telephone (+353 1 232 2000), fax (+353 1 232 3333) or email (gearoid.carey@matheson.com).

Endnotes

(1) [2012] IEHC 374.

(2) [1981] IR 306.

(3) [1992] IR 425.

(4) [2008] 2 IR 726.

(5) In particular, Order 63A, Rule 5 and IBB Internet Services Ltd v Motorola Ltd [2011] 2 ILRM 326. However, it also relied on cases such as McCann v Desmond [2010] 4 IR 554; Kalix Fund Ltd v HSBC International Trust Services (Ireland) Ltd [2009] IEHC 457; and Sweetman v An Bord Pleanala [2009] IEHC 174.

(6) [2001] 4 IR 607.
 

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