Summary judgment dismissed where complex commercial facts require full trial on oral evidence.

[2001] IESC 94

THE SUPREME COURT

6/01

Denham J

McGuinness J.

Hardiman J.

BETWEEN

AER RIANTA CPT

Plaintiff/Respondent

and

RYANAIR LIMITED

Defendant/Appellant

JUDGMENT of Mr. Justice Hardiman delivered the 13th day of November, 2001.

1. This is the Defendant’s appeal against the judgment and order of the High Court (Mr. Justice Kelly) made the 5th December, 2000.

By this order the learned trial judge acceded to the Plaintiff’s motion for liberty to enter final judgment against the Defendant in the

sum of £356,777.00 with interest in the sum of £76,963.00, making a total of £433,740.00.

2. The proceedings were initiated by summary summons dated the 28th July, 1999 which claimed monies allegedly due for landing

charges and passenger 1load fees in respect of the Defendant’s aircraft on the Dublin/Paris/Dublin and Dublin/Brussels/Dublin routes. A

further claim incorporated in the proceedings, in respect of the Bristol route, was settled between the parties and was not the

subject of argument in the High Court or in this Court.

3. The proceedings came before the Court by way of motion for summary judgment, pursuant to order 37 of the Rules of the Superior

Courts. This is amongst the best known of legal procedures and the criteria to be applied on such an application have been the

subject of a number of much cited judgments in the Superior Courts here and in the neighbouring jurisdiction. Indeed, at the start of

the hearing of the present appeal Counsel assured us that there was agreement between them that the test set out in the judgment

of this Court in First National Commercial Bank plc v. Anglin [1996] 1 IR 95 was the correct test to apply. However, it transpired in

the course of the argument that Counsel were no means agreed on what this test meant: each advanced an interpretation of it

which, if accepted, would dictate a resolution of the present appeal in favour of his own client.

The procedure

4. Order 37 of the Rules of the Superior Courts deals with the hearing of proceedings commenced by summary summons. Each

relevant summary summons to which an appearance has been entered is to be set down before the Master, by the Plaintiff, on motion

for liberty to enter final judgment for the amount claimed plus interest. Thereafter, by Order 37 Rule 6:-

“In contested cases, the Master shall transfer the case, when in order for hearing by the Court, to the Court list for

hearing on the first opportunity......”.

5. Order 37 Rule 7 provides:-

“Upon the hearing of any such motion by the Court, the Court may give judgment for the relief to which the Plaintiff may appear to be

entitled or may dismiss the action or may adjourn the case for plenary hearing as if the proceedings had been originated by plenary

summons, with such directions as to pleadings or discovery or settlement of issues or otherwise as may be appropriate, and generally

may make such order for determination of the question and issue in the action as may seem just”.

6. Rule 7 sets out the essence of the procedure. The last phrase expresses the overall principle: the Court must arrange for the

determination of the issues in such manner as seems just. The Plaintiff, on a motion for summary judgment, may obtain liberty to

enter final judgment but only for such sum or other relief as he, at this first stage, appears entitled to. Since it has earlier been

provided (Order 37 Rule 3) that the Defendant may oppose the motion by affidavit, the Plaintiff’s apparent entitlement must subsist

despite what the Defendant has deposed to. Since the order provides for alternative, more searching and elaborate, methods of

resolving the issues, the Plaintiff’s entitlement must appear clearly enough to render these unnecessary.

The criteria

7. All the cases to which we have been referred feature formulations, in the context of particular facts, of the degree to which the

Plaintiff’s entitlement must be established and of the nature of averment by the Defendant which will preclude summary judgment.

8. Although some form of summary procedure seems to have existed from a remote time, the procedure in its recognisably modern

form seems to date from the time of Judicature Acts. The criteria for its exercise appear to me to have been most clearly expressed in

certain of the older cases. In Sheppards and Co. v. Wilkinson and Jarvis 6 TLR 13, Lord Esher said:-

“..... The rule which had always been acted upon by this Court in considering cases under Order 14 was that the summary

jurisdiction conferred by that order must be used with great care. A Defendant ought not to be shut out from defending

unless it was very clear indeed that he had no case in the action under discussion. There might be either a defence to

the claim which was plausible, or there might be a counterclaim pure and simple. To shut out such a counterclaim if there

was any substance in it would be an autocratic and violent use of Order 14. The Court had no power to try such a

counterclaim on such an application, but if they thought it so far plausible that it was not unreasonably possible for it to

succeed if brought to trial, it ought not to be excluded”.

9. The Order 14 referred to in this extract was introduced in the United Kingdom subsequent to the passing of the Judicature Acts. An

order in identical form existed in Ireland up to 1926. In Patrick J. Prendergast v. Ann Bullitt Biddle (Supreme Court unreported 31st

July, 1957), Lavery J. surveyed the history of the summary judgment procedure said:-

“The procedure by summary summons was provided in order to enable speedy justice to be done in particular cases where

there is either no issue to be tried or the issues involved are simple and capable of being easily determined”.

10. This observation is perfectly consistent with that in Sheppards case, quoted above. In an Irish case almost contemporaneous

with Sheppards, Crawford v. Gilmore [1891] IR 238, Sir Peter O’Brien C.J. said:-

“I think however that final judgment should not be given on a motion for final judgment in any case where any serious

conflict as to matter of fact or any real difficulty as to matter of law arises”.

11. In the same case, two of the judges in the Irish Court of Appeal made observations which have often been the subject of

approving comment. O’Brien CJ said:-

“I think the fact that this case has been so long at argument - and I do not think that it has been argued at unnecessary

length - shows that it is not a case for final judgment upon an interlocutory motion of this sort”.

12. Barry L.J. said:-

“I am of opinion that. the mere length of time which has been occupied by the argument of this case - and I do not think

one moment of our time was occupied unnecessarily - shows that it does not come within the rule which allows final

judgment to be marked on motion”.

13. This is an aspect of the test to which further reference will be made when considering the facts of the present case, below.

14. More recent Irish authority, in my view, supports the impression gleaned from authorities from the early days of the summary

judgment jurisdiction, that the Defendant’s hurdle on a motion such as this is a low one and that the jurisdiction is one to be used

with great care. In Bank of Ireland v. Educational Building Society [1999] 1 IR 220 Keane J. (as he then was) said:-

“The issue before the High Court, and which has arisen again in this Court, is as to whether the affidavits disclosed a

good defence to the Plaintiff’s claim which necessitates the case being sent for plenary hearing at this stage. The issues

of law and fact which arise cannot be conclusively resolved in favour of either party unless, as submitted on behalf of the

Plaintiff, the affidavits do not disclose even an arguable defence to its claim”.

15. In ACC Bank plc v. Malocco (High Court unreported 7th February, 2000) Ms. Justice Laffoy in refusing to give liberty to enter final

judgment said:-

“In my view, looking at the whole situation must involve an assessment of the cogency of the evidence adduced by the

Plaintiff in relation to the given situation which is to be the basis of the defence. Having regard to the course of

proceedings since the inception of the summary summons proceedings. I am not satisfied that I can exclude a fair or

reasonable probability of the Defendant having a real or bona fide defence.”.

16. In light of these authorities, I believe that the test for obtaining summary judgment has not changed since the early days of the

procedure in the late nineteenth and early twentieth centuries. The formulation used in Anglin and the cases cited in that judgment

are useful and enlightening expressions of the test, but I do not believe that this formulation expresses an altered criterion which is

more favourable to a Plaintiff than that derived from the other cases cited. The “fair and reasonable probability of the Defendants

having a real or bona fide defence”, is not the same thing as a defence which will probably succeed, or even a defence whose

success is not improbable.

17. On the hearing of this appeal, Counsel on both sides emphasised the formulation of the criteria for summary judgment contained in

the First National Commercial Bank v. Anglin, cited above. This formulation was in turn derived from Banque de Paris v. de Naray

[1984] 1 Lloyds Law Rep.21, which decision was itself reaffirmed in National Westminster Bank v. Daniel [1993] 1WLR 1453. It is in the

following terms:-

“The mere assertion in an affidavit of a given situation which was to be the basis of a defence did not of itself provide

leave to defend: the Court had to look at the whole situation to see whether the Defendant had satisfied the Court that

there was a fair or reasonable probability of the Defendants having a real or bona fide defence”.

18. This formulation was glossed by Glidewell L.J. in Daniels case as follows:-

“I think it right to ask, using the words of Ackner L.J. in the Banque de Paris case, at page 23, ‘Is there a fair or

reasonable probability of the Defendants having a real or bona fide defence?’. The test proposed by Lloyd L.J. in the

Standard Chartered Bank case, Court of Appeal (Civil Division), transcript No. 699 of 1990 ‘Is what the Defendant says

credible?’ amounts to much same thing as I see it. If it is not credible, then there is no fair or reasonable probability of the

Defendant having a defence”.

19. Considerable differences of emphasis, at least, arose on the hearing of this appeal as to the meaning of the tests formulated

above. Counsel on behalf of Aer Rianta emphasised the word “probability”. He resiled from the position that the Defendant had to

show probability of successfully defending the action, and was surely quite correct to do so. He urged however “a fair and reasonable

probability” obviously meant something more than a bare possibility and he urged that the adjective in the phrase “real defence”

should be interpreted in a similar fashion. He urged that the overall test, accordingly, should be read as meaning that the Defendant

had to show a probability that he had a defence which was not only bona fide but had a chance of success which was not

improbable.

20. Equally, Counsel for Aer Rianta urged the question “Is what the Defendant says credible?” does not involve giving the word

“credible” its literal meaning. He conceded that this literal meaning meant no more than capable of rational belief, or not incredible. In

its context, and in view of the previous formulation, however, Counsel submitted that the word “credible” should be given what he

said is its more usual contemporary meaning of “not improbable” or at least not “seriously improbable”. He contrasted these shades of

meaning with what he conceded to be the words proper or original connotation of “not incapable of rational belief”.

21. In my view, the fundamental question be posed on an application such as this remains: 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?

22. Anglin and the cases cited therein seem to me to focus on a specific aspect of these questions, that of credibility. It is indeed

true that “the mere assertion in an affidavit of a given situation which was to be the basis of a defence did not of itself provide leave

to defend”. (Daniel). Equally, “it is not sufficient that the Court should have reason to doubt the bona fides of the Defendant or to

doubt whether the Defendant has a genuine cause of action. (Anglin).

23. In all of these cases, however, the issue of credibility arose rather starkly. In Daniels the defence affidavits were mutually

contradictory. In de Naray the Defendant’s averments were flatly contradicted by those of the Plaintiff’s private detective which were

accepted to be accurate. In Anglin, the indisputable documentation of a commercial transaction rendered the alternatively chronology

proposed by the Defendant quite untenable.

24. I consider that the references in these cases to credibility and to fair and reasonable probability may be misleading if read without

reference to their own unique facts. Read in context, I do not consider that the passages quoted either alter the well established

criteria for the granting of summary judgment.

The facts of the present case.

25. Counsel for the Plaintiff conceded that the Defendant’s factual contentions were neither logically impossible nor capable of

outright contradiction by evidence which was itself unimpeachable. He submitted, however, that the Defendant’s contentions were

utterly improbable at least when viewed in their commercial context. This may be summarised as follows:-

The Plaintiff set up a scheme of charges and discounts which it says was unaltered and on the basis of which, applied to undisputed

traffic figures, its claim can be readily computed in the amount stated. The defence is that the scheme was varied in discussions

between the Defendant’s Chief Executive Mr. O’Leary and the Plaintiff’s representative Mr. Byrne, or alternatively that the said

discussions constitute an estoppel against the Plaintiff. The terms of these discussions are set out in considerable detail in the

Defendant’s affidavits and are rejected in very strong terms in a replying affidavit on behalf of the Plaintiff. The radical degree of

factual dispute between the parties can be gathered from the terms of the Defendant’s affidavit of the 2nd December, 1999 where at

paragraph 18 it is said:-

“There were no negotiations between the Plaintiff and the Defendant in early 1997 as contended by Mr. O’Leary in

paragraph 19 of his affidavit. I reject everything that is said by Mr. O’Leary in paragraph 20 of his affidavit. I regret to say

that none of the events described in paragraph 20 of Mr. O’Leary’s affidavit occurred”.

26. Again, at paragraph 25 of the same affidavit it is deposed:-

“For the avoidance of doubt, I wish to make it clear that in any event, there were no negotiations between the parties

along the lines contended for by Mr. O’Leary. I regret to say that there is no basis for Mr. O’Leary’s contentions that any

discussions took place between him and me, this deponent, relating to a variation of the discount scheme. No assurances

of any kind were given by me to Mr. O’Leary in the terms alleged or in any like terms”.

27. It thus appears that there is conflict of evidence of a much more radical and downright sort than is usual in commercial actions.

But the Plaintiff contends that this conflict must be considered in the context of what it says is the commercial impossibility of a

variation of terms such as that claimed by the Defendant: such an arrangement would have to be reduced to writing and approved by

the Plaintiff’s board. Still more importantly, the Plaintiff contends that what Mr. O’Leary says is not credible: in the words of the

learned trial judge “ his credibility is undermined by the very documents he exhibits, his assertion of an agreement when the exact

opposite is indicated by those exhibits and the inconsistencies both as to the form of the agreement and when it was allegedly

entered into”.

28. It is undisputed that the scheme as it existed in January 1997 allowed discount only on new traffic, not on that which a carrier

merely took from a competitor or former carrier. The Defendant says that this was a critical commercial disincentive to its entry to

either of the two relevant routes. Another carrier had withdrawn from the Brussels route in January 1997. In the previous year this

carrier had flown 17,500 passengers on the route. If the scheme were unaltered, Ryanair would attract no discount in respect of the

first 17,500 passengers. The commercial impossibility of entering the route on this basis, combined with Aer Rianta’s need to entice a

new carrier on to the route, claims Ryanair, led to the alteration of the scheme.

29. The nub of the Defendant’s contentions in relation to the Paris route relates to the treatment of City Jet. The Defendant says

that this carrier had previously acted as a sub-contractor on the route to Air France/Air Inter. It was now to carry its own right. The

Defendant contends that it was agreed that City Jet would participate in the discount scheme only when its passenger numbers

exceeded those carried by Air France/Air Inter in 1996. In other words, City Jet was to be identified with those carriers under whose

umbrella it had previously flown on this route. Aer Lingus was the only other relevant carrier.

30. In my view, it is clear that there is a very substantial conflict of fact in the averments of the respective parties. Their versions

are set out in five affidavits sworn between the 21st September, 1999 and the 13th January, 2000. These affidavits and their

associated exhibits amount to 181 pages in the Books of Appeal before us. Both parties claim that the commercial realities of their

relations, properly understood, makes the other’s contentions implausible to the point of near impossibility. The affidavits deal with

this aspect at great length and it was fully explored in argument before us.

31. On the face of it, this case turns on a stark conflict of factual evidence. The alleged crippling implausibility which each side says

afflicts the others account depends on the view taken of extremely complex dealings and background facts, some of which are

themselves in dispute.

32. The length, complexity, and subtlety of the competing arguments, factual and legal, on affidavit and in court, recall all the

observations of O’Brien C.J. and his colleague in Crawford v. Gilmore, quoted above. The length of time and volume of paper required

by the Plaintiff to seek to demonstrate that the case is a clear one in itself suggests that it is not sufficiently clear for summary

judgment. Reading the affidavits and listening to the case argued with considerable intensity on both sides has led me to the view

that one cannot be confident where the justice of the case lies without hearing oral evidence and cross-examination. To me, at least,

it is not “very clear indeed” that the Defendant has no case. It is clear in my view, that the issues are not “simple and capable of

being easily determined”.

33. In light of that view, and since it follows that the case should go to plenary hearing, it is not desirable for this Court to enter

further into the merits. However, since the Plaintiff greatly emphasised its view that the correspondence and an internal memorandum

quoted was quite inconsistent with the Defendant’s case, and were successful in this before the learned trial judge, I will make one

observation. The correspondence is brief, consisting of a letter of the 14th February, 1997, the Defendant’s internal memorandum of

the 17th February, the Defendant’s letter of the same date to the Plaintiff, the Plaintiff’s reply of the 11th March, the Defendant’s

further reply of the same date. The second sentence of the Memorandum read:- “He (Mr. Byrne) also confirmed to me that to the

extent that Aer Lingus’s passenger carryings do not decline on either the Paris or Brussels route, then most or all of Ryanair’s traffic

will qualify for the growth rebates”. The purport of the third paragraph of the Defendant’s letter of the same date is similar, though

not identical.

34. In argument on the hearing of the appeal it was conceded, as it may not have been in the High Court, that the sentence quoted

is consistent only with the view that there was some variation of the scheme. This is of course the Defendant’s view only, and the

point may not be significant upon full hearing. But it seems to me to negative the Plaintiffs contention that the Defendants

correspondence is actually inconsistent with the scheme having been varied, on which a significant part of its argument centered.

Conclusion

I would set aside the order of the High Court and remit the action for plenary hearing.