Bank of Ireland v Rogerson and Others (t/a The Corner Park Group)

CourtHigh Court
Judgeof Mr. Justice David Keane
Judgment Date14 August 2015
Neutral Citation[2015] IEHC 560
Date14 August 2015

[2015] IEHC 560


[No. 2711 S/2013]
Bank of Ireland v Rogerson & Ors (t/a The Corner Park Group)





Banking and Finance – Non-payment of loan – Summary judgment – Construction of loan agreement – Triable issue – Leave to defend

Facts: The second named plaintiff (the bank) sought an order of summary judgment against the defendants jointly and severally on account of non-repayment of the loan facility withdrawn by the defendants for developmental purposes. The second named plaintiff asserted that upon the plain construction of the loan agreement, it had recourse to the defendants personally for a sum of up to €1 million notwithstanding the facility letter which provided for the satisfaction of any amount due from the secured assets only. The defendants alleged that the bank's recourse to the defendants personally could arise only when there remained indebtedness after realisation of the secured property by the bank.

Mr. Justice David Keane refused to grant an order of summary judgment to the bank. The Court refused to grant an order for dismissing the proceedings on an application brought by the fifth, sixth and seventh named defendants. The Court reiterated the principles laid down in Harrisgrange Ltd. v. Duncan [2003] 4 I.R. 1 that the power to grant summary judgment should be exercised with discernible caution taking into account the defendant's responses and the evidence adduced by the plaintiff being alerted by the limitations exerted by any conflicting evidence. The Court observed that where there existed issues of facts that could only be ascertained by way of issuance of plenary summons, the procedure of summary judgment would not be appropriate. The Court observed that the words should be given their natural and ordinary meaning lest an intent to the contrary could be inferred from the circumstances surrounding the making of a contract. The Court found that since the subject case primarily dealt with the common intention of the parties prior to giving effect to the alleged loan agreement, the leave to defend must be granted to the defendants for the Court could not impute or infer objectively what was originally intended. The Court held that the issue pertaining to the construction of documents could not be resolved by granting summary judgment.


JUDGMENT of Mr. Justice David Keane delivered on the 14th August 2015


1. In these proceedings, the plaintiff seeks summary judgment against the defendants on a joint and several basis in the sum of €1,000,000, together with interest and costs.


2. The plaintiff is a bank and the defendants are a group of businessmen who in 2006 arranged to borrow the sum of €8,167,000, which they shortly afterwards drew down, to acquire certain lands at Newcastle, County Dublin for developments purposes ("the development property"). The loan was for a two-year term, with interest rolled up during that period, at the end of which it was to be cleared in full from the anticipated proceeds of the development or else refinanced. It is common case that the loan has not been repaid and it is averred on behalf of the bank that the overall debt due stood at in excess of €11 million in May 2014, whereas the value of the development property and other cross secured assets ("the secured assets") at that time was less than €4.5 million.


3. The agreement between the parties is evidenced by a letter of commercial loan offer ("the facility letter") dated the 13 th March 2006 and accepted by the defendants on the 21 st March 2006.


4. There is no dispute that, under the terms of the loan agreement, the bank is entitled to terminate the loan facility and to call for immediate repayment of the monies due on the occurrence of an 'event of default'. An event of default is defined under the loan agreement to include not only a breach of any term governing repayment of the principal and interest but also any material adverse change in the borrowers' circumstances. There does not appear to be any dispute that an event of default has occurred in the circumstances already outlined.

The bank's claim

5. The bank's claim in these proceedings is that, while the facility letter specifically provided that the bank's recourse to each of the defendants in respect of monies due and owing was to be limited to, and satisfied from, the secured assets only, the facility letter also contains a proviso whereby the bank is entitled to have recourse to the defendants and their assets in respect of any claim made under the indemnity clause of the agreement and, in addition, in respect of a joint and several liability of the defendants for a further sum of up to €1 million. The bank wrote to the defendants on the 7 th May 2013 demanding payment of the sum of €1 million. Having received no such payment, the bank now seeks summary judgment in that sum.

The defences advanced

6. The defendants who have entered an appearance in answer to the bank's claim (comprising all but the fourth named defendant) have between them identified three lines of defence. Those defences may be shortly summarised as follows:


(a) That on a proper construction of the loan agreement, as evidenced by the facility letter, the bank's recourse to the defendants personally for a sum of up to €1 million relates solely to the specific potential liability in respect of which they had indemnified the bank, which liability was, in fact, addressed prior to the execution of the loan agreement, so that no such recourse is now available;


(b) Further or in the alternative, that on a proper construction of the loan agreement, as evidenced by the facility letter, the bank's recourse to the defendants personally for a sum of up to €1 million can arise only in the event of a remaining indebtedness on the part of the defendants after the realisation of the secured property by the bank, which had not occurred when the proceedings issued, so that the bank's claim is premature; and


(c) In the event that the loan agreement, properly construed, does not limit the bank's recourse to the defendants personally for a sum of €1 million solely to any liability arising under the indemnity provided to the bank by the defendants (and which liability was, in fact, discharged prior to the execution of the contract), then the facility letter was drawn up and executed under a mutual mistake of fact and the defendants are entitled to rectification of the loan agreement to the extent necessary to include such a term.

The relevant terms of the loan agreement

7. Under the heading "Security" in the facility letter, beneath a list setting out the security documentation that the bank required the defendants to provide, the loan agreement provides as follows:

"Subject always to the proviso below but notwithstanding any other provision of this facility letter and the security documents referred to above ("the Security Documents"), the Bank's recourse to the Borrower in respect of all monies, obligations and liabilities now or hereafter due, owing or incurred by the Borrower (or any one or more of the Borrower) to the Bank under, pursuant to or in connection with this facility letter and/or the Security Documents whether actually or contingently, whether as principal or surety or otherwise and whether alone or jointly with another or others (the "Obligations") shall be limited to and satisfied out of the assets secured pursuant to the Security Documents. If such assets prove to be insufficient to meet all the Obligations, the Bank agrees that it shall not insofar as the Obligations are concerned have any further recourse to the Borrower or their other assets."


Provided always that the bank shall at all times have recourse to the Borrower and all their assets in respect of costs, expenses and any claims made by the Bank under the clause headed Indemnity herein and in addition the Borrower shall be liable to the Bank for a sum of up to €1,000,000 in addition to the assets secured pursuant to the Security Documents."


8. The facility letter contains the following clause under the heading "Indemnity":

"In the event of any stamp duty or other Revenue duty or levy arising in respect of any of the properties secured in favour of the Bank the Borrower shall immediately pay such stamp duty, duty or levy (together with any interest and/or penalties) to the Revenue Commissioners and shall indemnify and keep the Bank indemnified against any costs, liabilities and other expenses suffered or incurred by the Bank (whether before or after the enforcement of the security) as a result of the non-payment of the Borrower of any such stamp duty, duty or levy."

The evidence

9. There has been a significant exchange of affidavits between the parties concerning the circumstances in which the terms just quoted came to be inserted in the facility letter.


10. Briefly summarised, Mr Rogerson, the first named defendant, avers that he negotiated the loan agreement on behalf of the defendants with Des Ryan, a Senior Business Manager in the bank. According to Mr Rogerson, the particular terms at issue were tailored to the specific borrowing requirements of the defendants. In particular, the development property was to be acquired by the defendants on a "resting on contract" basis. This was a contractual mechanism, in widespread use at the time, whereby it was believed that liability to stamp duty on the transaction could be lawfully avoided. Mr Rogerson contends that, on behalf of the bank, Mr Ryan had a concern that a liability to stamp duty might arise and, should it do...

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