Allied Irish Banks Plc v Namdawn Ltd ; Allied Irish Banks Plc v Hirar Properties Ltd ; Allied Irish Banks Plc v NCW Properties Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Twomey |
| Judgment Date | 21 March 2019 |
| Neutral Citation | [2019] IEHC 191 |
| Date | 21 March 2019 |
| Court | High Court |
| Docket Number | [2013 No. 2656 S] [2013 No. 2414 S] [2013 No. 2413 S] |
[2019] IEHC 191
THE HIGH COURT
Twomey J.
[2013 No. 2656 S]
[2013 No. 2414 S]
[2013 No. 2413 S]
AND
AND
AND
Summary judgment – Loan – Guarantee – Plaintiff seeking summary judgment – Whether there was a fair and reasonable probability of the defendants having a real or bona fide defence to the summary judgment
Facts: The plaintiff, Allied Irish Banks plc (AIB), applied to the High Court for summary judgment in the sum of €2,862,916.30 against the first defendant, Hirar Properties Ltd, in respect of a loan, as well as an application for summary judgment in the sum of €2,250,000 against the second defendant, Mr Ryan, of Ballyclough, County Limerick in respect of a guarantee of that loan. The loan in question was extended by AIB to Hirar in connection with a property known as The Globe, on Cecil Street in Limerick city. The defence put forward by Hirar to the application for summary judgment was that prior to the re-structuring of the loan in May 2008 (pursuant to which Mr Ryan agreed to guarantee that loan), AIB made representations and/or entered into a collateral contract that it would support Hirar’s project to have The Globe developed as a hostel by means of investments under the Business Expansion Scheme (BES). Hirar claimed that AIB breached the collateral agreement when, after receiving a request from Hirar/Mr Ryan by letter dated 10th December 2009, AIB failed to provide its consent to the creation of leases over The Globe, which would have facilitated the BES investment. Hirar claimed this led to the BES scheme being abandoned, deprived Hirar of funds and led to a loss on the part of Hirar. Hirar had expected to make a profit on the project, in light of its previous experience using BES investments to develop hostels.
Held by Twomey J that there was not a fair and reasonable probability of the defendants having a real or bona fide defence to the summary judgment.
Twomey J held that he would hear from counsel regarding the terms of the orders to be made.
Judgment approved.
This case ( Record No. 2013/2414S) is an application for summary judgment by the plaintiff (‘AIB’) in the sum of €2,862,916.30 against the first named defendant (‘Hirar’) in respect of a loan, as well as an application for summary judgment in the sum of €2,250,000 against the second named defendant (‘Mr. Ryan’) of Ballyclough, County Limerick in respect of a guarantee of that loan.
The loan in question was extended by AIB to Hirar in connection with a property known as The Globe, on Cecil Street in Limerick city.
The defence put forward by Hirar to this application for summary judgment is that prior to the re-structuring of that loan in May 2008 (pursuant to which Mr. Ryan agreed to guarantee that loan), AIB made representations and/or entered into a collateral contract that it would support Hirar's project to have The Globe developed as a hostel by means of investments under the Business Expansion Scheme (‘BES’).
Hirar claims that AIB breached this collateral agreement when, after receiving a request from Hirar/Mr. Ryan by letter dated 10th December 2009, AIB failed to provide its consent to the creation of leases over The Globe, which would have facilitated the BES investment. Hirar claims this led to the BES scheme being abandoned and deprived Hirar of funds and led to a loss on the part of Hirar. Hirar had expected to make a profit on the project, in light of its previous experience using BES investments to develop hostels.
This is a case where prior to Mr. Ryan's involvement, Hirar owned The Globe subject to an underlying loan which it had received from AIB. Mr. Ryan states that in April/May of 2008 he was approached by AIB to see if he was interested in acquiring the shares in Hirar, and thereby acquiring The Globe, subject to the underlying loan. Mr. Ryan avers that this approach was made because AIB was concerned that the then owner of Hirar was not able to service the loans.
Mr. Ryan agreed to acquire Hirar and take on the underlying loan and on 26th May, 2008, he received a letter of sanction from AIB (‘Letter of Sanction’) in which the amount of the loan is stated to be €2,250,000 and its purposes is stated as follows:
‘Take over existing loan in the company name re the premises known as the Globe, Cecil Street, Limerick.’
The security is stated to be, inter alia:
‘Letter of guarantee from JP Ryan in the sum of €2,250,000 (two million two hundred and fifty thousand Euro) supported’
It is to be noted that there is no reference in the Letter of Sanction to the development of The Globe as a hostel or to the fact that AIB would support the use of a BES scheme to fund the development of The Globe.
It is also relevant to note that AIB did not provide any new funding to Hirar or Mr. Ryan arising from this Letter of Sanction. This is because Mr. Ryan was taking over the existing funding and agreeing to guarantee it arising from his acquisition of the shares in Hirar and thereby his acquisition of The Globe, since Hirar was the owner of The Globe.
However, Mr. Ryan avers that in May 2008, around the time of the Letter of Sanction, he explained to AIB his plan to convert The Globe into a hostel with the assistance of BES investors. He avers in particular that he had “agreed” with AIB that:
‘the Bank would be flexible in the funding to ensure that any necessary amendments would be made to facilitate BES investors in the Project”
There is no mention of leases in this alleged agreement and, in particular, it is relevant to note the vagueness of this alleged agreement, which is that AIB would be “flexible in the funding” in order to ensure that “any necessary amendments” would be made to facilitate BES investment.
Since Mr. Ryan is alleging that these negotiations with the Bank amounted to a binding commitment, it is significant that Mr. Ryan avers that he was unhappy with the terms of the Letter of Sanction and that he negotiated an amendment to the interest rates, which led to his receiving a subsequent Letter of Sanction with reduced interest rates. Although Mr. Ryan claims that he reached “agreement” with AIB regarding “flexibility in funding” and “amendments to facilitate BES investors”, these matters are not referred to in the Letter of Sanction. Despite this, Mr. Ryan does not seem to have regarded the Letter of Sanction he received as incomplete, since he did not seek to amend the Letter of Sanction to insert those terms when he was inserting new terms regarding interest rates.
Mr. Ryan also avers that well over a year after the Letter of Sanction, in November 2009, while he was doing works on The Globe, he met Mr. Liam Healy of AIB at that property and that Mr. Ryan reminded Mr. Healy of the “ loan negotiations” and that Mr. Healy indicated to Mr. Ryan that:
‘I should work ahead and that whatever approvals I needed at the time would be forthcoming. I advised Liam that as the BES approval had been received that my advisors would be writing shortly to the Bank to complete whatever formalities were necessary for the transaction to be finalised’
However, Mr. Ryan goes further than this. This is because he swore a...
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