Danske Bank A/S (t/a National Irish Bank) v McFadden

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 27 April 2010
• Neutral Citation: [2010] IEHC 119
• Court: High Court
• Date: 27 April 2010

[2010] IEHC 119

THE HIGH COURT

[No. 4213 S/2009]

Danske Bank A/S (t/a National Irish Bank) v McFadden

COMMERCIAL

BETWEEN

DANSKE BANK A/S TRADING AS NATIONAL IRISH BANK

PLAINTIFFS

AND

NIALL MCFADDEN

DEFENDANT

REDMOND v IRELAND & AG 1992 2 IR 362 1992 ILRM 291 1991/10/2377

IRISH PRESS PLC v INGERSOLL IRISH PUBLICATIONS LTD 1995 1 ILRM 117 1995/3/905

EVANS v IRFB SERVICES (IRL) LTD 2005 2 IRLM 358 2005/24/4860 2005 IEHC 107

PRACTICE AND PROCEDURE

Stay

Appeal - Relevant considerations in granting stay pending appeal - Bona fide appeal - Balance interests to minimise risk of detriment to each party - Whether to grant stay pending appeal re judgment of circa six million euro - Difference between bona fide and tactical appeal - Balance analogous to balance of convenience test - Deny justice to neither party - Bona fide appeal re construction of terms of guarantee - Redmond v Ireland and Attorney General [1992] 2 IR 362 and Irish Press plc v Ingersoll Irish Publications Ltd (No 3) [1995] 1 ILRM 117 applied; Evans v IRFB Services (Ireland) Ltd [2005] IEHC 107 (Unrep, Clarke J, 11/4/2005) followed - Application for stay granted conditional on undertakings on both sides - Undertaking by plaintiff not to seek to have defendant made bankrupt; to repay any reasonable damages if defendant should succeed on appeal - Undertaking by defendant to preserve his assets pending appeal (2009/4213S - Clarke J - 27/4/2010) [2010] IEHC 119

Danske Bank A/S trading as National Irish Bank v McFadden

Facts The proceedings concerned a judgment having already been given by Clarke J (20/04/10) whereby the defendant remained liable under the terms of a guarantee to the plaintiff. As such it now fell to the court to decide whether a stay should be granted against the enforcement of the earlier judgment. It was contended that where a bona fide appeal was lodged, a stay should be granted. The defendant contended that a judgment without a stay rendered him liable to all potential forms of enforcement including bankruptcy which could have irreversible consequences. The plaintiff contended that there was a real risk that, in the event that a stay was placed on the order, then other creditors would pass them out in terms of priority for the realisation of security.

Held by Clarke J in making the following order and refusing a stay. In the event of an appeal on the matter, any such appeal would be a genuine appeal with genuine issues to be determined by the Supreme Court. In the circumstances the plaintiff would give an undertaking not to seek to have the defendant made bankrupt. This would protect the defendant to a certain extent whilst at the same time enable the plaintiff to enforce the judgment to some extent either in the form of actually recovering funds, or in securing priority over competing potential creditors. In addition the plaintiff would give an undertaking that if the defendant was successful on appeal, where funds had already been recovered or other actions taken, the plaintiff would pay any damages reasonably arising in such circumstances.

Reporter: R. F.

1. Introduction

2 2 1.1 This judgment is supplemental to the principal judgment in these proceedings delivered on the 20 ^th April last ("the principal judgment"). Terminology is used in this judgment in the same way as it is used in the principal judgment. For the reasons set out in the principal judgment I was satisfied that Mr. McFadden remained liable to NIB on the guarantee which is the subject of these proceedings.

3 3 1.2 As noted at para. 7.3 of the principal judgment, I requested counsel to provide up to date figures for the purposes of the order. When the matter was mentioned on Thursday last, the 22 ^nd April, it was agreed between counsel that the appropriate sum for inclusion in the order as of that day was €6,455,467.19 and that interest was continuing at a daily rate of €512.31. On that basis, given that five further days have elapsed, the sum as of today's date is €6,458,028.74.

4 4 1.3 It is agreed that, in the light of my judgment, the appropriate order is that judgment be entered against Mr. McFadden in the sum of €6,458,028.74 together with costs to be taxed in default of agreement. However, the issue which has now arisen between the parties is as to whether there should be a stay on that order pending appeal. Counsel for Mr. McFadden argued in favour of such a stay. Counsel for NIB opposed same. This judgment is directed to that issue. I turn firstly, to the relevant legal principles.

2. Legal Principles

2 2 2.1 It is clear from both Redmond v. Ireland & Anor [1992] 2 I.R. 362 and Irish Press Plc v. Ingersoll Irish Publications Limited [1995] 1 I.L.R.M. 117 that, in general terms, two broad issues will ordinarily arise for consideration in relation to whether a stay should be placed on an order of this Court pending appeal to the Supreme Court.

3 3 2.2 The first issue is that, in order that a stay might be considered, any such appeal must be bona fide. For example, McCarthy J. in Redmond noted that a heavy responsibility lay on the legal advisers of those seeking a stay to assist the court on the reality of an appeal and also noted that appeals have been known in the past to have been brought for tactical rather than bona fide reasons.

4 4 2.3 However, this issue does not arise in the current application. Counsel for NIB quite properly accepted that any appeal which might be brought in the circumstances of this case would be bona fide (while, of course, asserting that it would ultimately fail). Indeed, counsel himself drew attention to the fact that, on the issue of construction on which Mr. McFadden ultimately failed (despite succeeding on other issues), I had used the phrase "on balance" as a means of describing my view on relevant question. I am, therefore, satisfied that counsel was quite correct in characterising this as a case where, in the event of an appeal, any such appeal would be a genuine appeal with genuine issues to be...