Aircraft Leasing Dispute Raises Issue Of The Remedy Of Summary Judgement For Non-Liquidated Sums
25 October 2012
Category: Legal Updates
The Court considered the availability of summary judgement procedures to litigants in Ireland as a means of speedy resolution of disputes where it can be shown that the defendant lacks a reasonable prospect of success.
The judgement in the case was delivered ex-tempore by Mr Justice Kelly on 27 July 2012.
Abbey, a limited liability Irish company was engaged in the business of aircraft leasing. Abbey agreed to lease three (3) helicopters (the “Aircraft”) and a medical kit to Point Ireland Helicopters (“Point”)2. Point subleased the Aircraft and medical kit to Elitaliana SpA. The defendants defaulted in payment of rent under the leases and subleases and the leases contained usual “hell or high water clauses”, absolute obligations and no deduction provisions. The defendants accepted that arrears of €3,195,000 were owed.
The Court, commented that it would be difficult to conceive more “watertight obligations to pay rent in accordance with the terms of the lease”. Abbey served notice of termination of the leases and subleases and went about exercising its rights under the security assignments. Shortly afterwards it commenced proceedings.
Abbey sought both liquidated amounts and substantive relief in respect of the Aircraft and medical kit, in particular an order for specific delivery up of the Aircraft and the medical kit to Abbey. Given the mix of reliefs, Abbey opted to proceed by way of plenary summons.
Abbey contended that there was no defence to any aspect of the claim and therefore brought a motion seeking summary judgement on the entire of its claim - the liquidated and non-liquidated sums - and sought summary judgement for the monies due and delivery up of the aircraft. Alternatively, Abbey sought injunctive relief.
The first issue was whether or not it is open to Abbey to bring a claim for summary judgement in respect of non-liquidated sums.
Jurisdiction of the Court
Kelly J. looked at the procedural steps to judgement for liquidated and non-liquidated sums. He noted that in proceedings for liquidated sums, a judgement may be marked against defendant in default of appearance or defence. A defendant is permitted to put his defence on affidavit and have it judicially tested against the low threshold of proof that needs to be achieved in order to avoid summary judgement. The Court held that in the absence of an ability to seek summary judgement in a non-liquidated claim, an unmeritorious defendant could delay proceedings for months or years. Kelly J. noted that this position would be unjust for an opposing meritorious plaintiff.
The question posed was “is it open to a plaintiff to seek summary judgement in respect of the un-liquidated claims?” Kelly J. answered the question in the affirmative and went on to say that he can “see no reason in either law 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 un-liquidated damages or other substantive relief.”
Kelly J. held that the Court had an inherent jurisdiction to hear the application and referenced, among other judgements, the judgement of Costello J. in the case of Barry v. Buckley3 where Costello J. held the court has an inherent jurisdiction to strike out or stay proceedings which are frivolous, vexatious or without reasonable prospect of success.
In addition, Kelly J. referenced the judgement of Geoghegan J. in the case of Dome Ireland Limited v. Eircom Limited to support his view that the mere fact that the Rules of the Superior Courts do not expressly provide for summary judgement for non-liquidated sums is no bar to such an application being made successfully4.
Commercial List of the High Court
Abbey had sought to have the case dealt with in the Commercial Court. In considering this Kelly J. cited his own judgement in IIB Services Limited v. Motorola Limited5 where he indicated the purpose of setting up the list was to achieve the objective of “speedy, efficient and just determination of commercial disputes”.
Kelly J. further cited the wide powers afforded to the Commercial List of the Court by referencing Order 63A, rule 5, of the Rules of the Superior Courts. He concluded that given these wide powers, it was open to a plaintiff, in plenary proceedings being heard in the Commercial List to seek a summary disposal of such proceedings in circumstances where a defendant is alleged to be unable to demonstrate a real or bona fide defence. Kelly J. summarised the position when he said:
“If the defence offered is alleged to be lacking any reasonable prospect of success then the plaintiff should have the ability to seek to recover judgement regardless of the type of proceedings. I believe that there is no good reason why such an application cannot be brought and considered by the court.”
Test to be applied on applications for summary judgement (both liquidated and non-liquidated sums)
Kelly J. held that the test to be applied in applications for summary judgement in respect of non-liquidated debt claims is the same test that the Court and Supreme Court have applied in several situations in applications for summary judgement for liquidated claims. The leading case on the principals to be applied is the decision of the Supreme Court inAer Rianta cpt v. Ryanair Limited6. Hardiman J formulated the test to be applied in the following terms:
“In my view, the fundamental questions to be posed on an application such as this remain: is it ‘very clear’ that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant’s affidavits fail to disclose even an arguable defence?”
As the judgement and note in Abbey Case were prepared by Kelly J in respect of the general procedural question, he did not find it necessary to deal with what occurred in the particular case in any detail suffice to record that summary judgement was given in respect of the liquidated claim for arrears of rent and conditional leave to defend was granted in respect of the other aspects of the claim.
The judgement of Kelly J. in this case provides welcome guidance to plaintiffs to launch an action in the Court for summary judgement, notwithstanding that proceedings may have commenced by way of plenary summons due to a mixture of reliefs sought. The success or otherwise of such action for non-liquidated sums will depend on, among other things, the plaintiff being able to prove that the defence offered is lacking any reasonable prospect of success and the defendant successful rebuttal before the Court and ability to demonstrate an arguable case for full plenary hearing.
1  IEHC 374
2 There were four separate lease agreements, one with respect to each helicopter dated 25 August 2008, 25 March 2009 and 29 September 2009 respectively and one for the medical kit dated 21 October 2008.
3  IR. 306
4  2 I.R. 726: Geoghegan J. stated, among other things, that “The rules of court are important and adherence to them is important but if an obvious problem of fair procedures or efficient case management arises in proceedings, the court, if there is no rule in existence precisely covering the situation, has an inherent power to fashion its own procedure and even if there was an applicable rule, the court is not necessarily hidebound by it”
5  2 ILRM 326
6  4 I.R. 607
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