Danske Bank a/s (t/a National Irish Bank) v Durkan New Homes and Others

JurisdictionIreland
CourtSupreme Court
JudgeDenham J.
Judgment Date22 April 2010
Neutral Citation[2010] IESC 22
Date22 April 2010
Danske Bank a/s (t/a National Irish Bank) v Durkan New Homes & Ors
Between/
Danske Bank a/s trading as National Irish Bank
Plaintiff/Respondent

and

Durkan New Homes, Don Casey, Marian Casey and Tullycross Developments Limited
Defendants/Appellants

[2010] IESC 22

Denham J.

Hardiman J.

Finnegan J.

[Appeal No: 296 of 2009]

THE SUPREME COURT

Abstract:

Practice and procedure - Summary judgment - Arguable defence - Contract - Recourse - Guarantee - Judgment - Substantive issues - Whether suitable for plenary hearing

Facts: The defendant/ appellants ought to appeal a decision of the High Court, where it was ordered that the plaintiff recover against the appellants the sum of Eur 29,460,000 and a further sum pursuant to a guarantee and indemnity between the bank and the appellants. The appellants raised the issue as to whether the case was suitable for summary judgment and also raised the substantive issues arising on the agreement. The bank had made loans to the appellants. There were limited recourse terms in the agreement. The bank submitted that it was entitled to summary judgment.

Held by the Supreme Court per Denham J. (Hardiman, Finnegan JJ. Concurring), that the appellants had shown that they had an arguable defence. In the circumstances as a matter of justice the case would be remitted to plenary hearing. There was a factual issue of the extent of banking hours and its application, if any.

Reporter: E.F.

RSC O.37 r7

BANK OF IRELAND v EDUCATIONAL BUILDING SOCIETY 1999 1 IR 220 1998 2 ILRM 451 1998/11/3359

AER RIANTA CPT v RYANAIR LTD 2001 4 IR 607 2002 1 ILRM 381 2001/1/68

MCGRATH v O'DRISCOLL & ORS 2007 1 ILRM 203 2006/35/7529 2006 IEHC 195

BANQUE DE PARIS & DES PAYS-BAS (SUISSE) SA v DE NARAY & WALTERS 1984 1 LLOYDS 21

1

Judgment delivered the 22nd day of April, 2010 by Denham J.

2

Judgment delivered by Denham J. [nem diss]

3

1. This is an appeal by Durkan New Homes, Don Casey, Marian Casey and Tullycross Developments Ltd., the defendants/appellants, referred to collectively in this judgment as "the appellants", from the order of the High Court of the 17 th July, 2009.

4

2. The High Court ordered that Danske Bank a/s trading as National Irish Bank, referred to in this judgment as "the bank", recover against the first, second and third named appellants the sum of €29,460,000.99 pursuant to the €29,460,000 facility letter dated 22 nd February, 2006 and the sum of €7,572,387.81 pursuant to the guarantee and indemnity dated 31 st March, 2006 between the bank and the first, second and third named appellants together with interest. And it was ordered that the bank do recover against the fourth named appellant the sum of €7,572,387.81 pursuant to the €7,640,000 facility letter dated 22 nd February, 2006 between the bank and the fourth named appellant and the sum of €29,460,000.99 pursuant to the guarantee and indemnity dated 31 st March, 2006 between the bank and the fourth named appellant together with interest.

5

3. While the appellants filed many grounds of appeal there were two fundamental issues before the Court:-

6

i "(i) whether this is a case for summary judgment; and

7

(ii) the substantive issues arising on the agreement.

Summary judgment
8

4. I shall consider first whether this is a case for summary judgment, as determined by the learned High Court judge, or whether he fell into error and it is a case for plenary hearing.

9

5. The basic facts of this case are that the bank made loans to the appellants. By letter dated the 22 nd February, the bank offered to the first, second and third named appellants a loan of €29,460,000 subject to terms. On the same date the bank offered to the fourth named appellant a loan of €7,640,000 on similar terms. The fourth named appellant guaranteed the loan to the first three appellants, and the first three appellants guaranteed the loan to the fourth named appellant. These were supported by legal charges over the properties referred to in the loan offer letters.

10

6. There were limited recourse terms in the agreement. These are set out in paragraphs 10 and 11 of the loan agreement. These provide:-

11

2 "10. Financial Covenants

12

(a) Throughout the term of the loan, the Borrowers' indebtedness to the Bank pursuant to this Facility Letter together with the indebtedness of Tullycross Developments Limited pursuant to the Company Facility Letter shall not exceed 70%combined value of the properties ("see Specified Percentage") detailed at paragraph 6 hereof.

13

(b) In the event that there is a breach of the Bank's requirements set out at subclause (a) hereof, the Borrowers shall either:-

14

(i) within four weeks of being called upon by the bank to do so pay (or procure payment) to the Bank such amount as would result in the total of such indebtedness not exceeding the Specified Percentage or

15

(ii) furnish to the Bank as soon as possible after they are requested to do so that in any event no later than four weeks from the date of such request such additional security acceptable to the Bank and its Solicitors (acting reasonably) as may be required by the Bank to ensure that the total amount of such indebtedness does not exceed the Specified Percentage

16

(iii) the Borrowers further agree to provide evidence of title to the Bank which is satisfactory to the Bank's Solicitors (acting reasonably) in relation to such additional security

17

(c) For the avoidance of any doubt the Borrowers acknowledge that the Bank will be entitled to call for valuations of the said properties at any time throughout the term of this loan as often as it may choose for the purposes of determining whether or not there has been a breach of the Bank's requirements as set out at subclause (a) hereof. The Bank shall be entitled to call for not more than four such valuations to be carried out at the Borrowers' expense. All (if any) further such valuations shall be carried out by a reputable valuer who shall in default of agreement between the Bank and the Borrowers be nominated by the Borrowers from a list of at least three reputable valuers to be furnished by the Bank to the Borrowers for such purpose. The written valuation of any such valuer shall (save in the case of manifest error) be conclusive and binding on both the Bank and the Borrowers.

18

(Emphasis added)

19

Paragraph 11(a) of the loan agreement provides:-

20

3 "11. RECOURSE

21

The Bank has agreed with the Borrowers that provided the Borrowers comply with their obligations as set out in paragraph 10(b) hereof and pay all interest due to the Bank pursuant to this Facility Letter the Bank's recourse will be limited to the respective interests in the properties detailed in paragraph 6 hereof. Accordingly:-

22

(a) Notwithstanding any other provisions of this Facility Letter or any of the Security Documents and save as expressly provided in sub clauses (b) and (c) hereof of this paragraph, the Banks recourse to the Borrowers in respect of the Borrowers' obligations hereunder and under the Security Documents and/or any judgment arising therefrom shall in each case be limited to their respective interests in the properties detailed in paragraph 6 hereof and the Bank shall not otherwise take or pursue any judicial or other steps or proceedings or exercise any right or remedy that it may have against the Borrowers for the discharge of any outstanding indebtedness in respect of the Loan or otherwise under this Facility Letter or the Security Documents and no action, proceedings, claim, levy, judgment or other process shall be taken or levied against the Borrowers save to the extent reasonably required by the Bank in connection with any enforcement or realisation of the security given pursuant to this Facility Letter.

23

(Durkan New Homes and Casey Loan Agreement)"

24

7. 30 th September, 2008 was the repayment date of the loan.

25

8. On the 30 th September, 2008 the appellants discharged all interest due, and claimed to be entitled to rely on the limited recourse provisions of the agreements.

26

9. The bank delivered a letter after close of business on the 30 th September, 2008 referring to a recent valuation of the property held as security of €45 million and called upon the...

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