Downes and Howard Ltd v Everyday Finance DAC
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 19 June 2020 |
| Neutral Citation | [2020] IEHC 306 |
| Docket Number | 2019 No. 7845P |
| Court | High Court |
| Date | 19 June 2020 |
AND
[2020] IEHC 306
Quinn J.
2019 No. 7845P
THE HIGH COURT
COMMERCIAL
Injunction – Appointment of receivers – Amended settlement agreement – Plaintiff seeking an injunction to restrain the appointment of receivers – Whether the appointment of receivers was in breach of the terms of an Amended Settlement Agreement
Facts: The plaintiffs, Downes and Howard Ltd, Waymill Ltd, Lapovo Ltd, and the Howards, applied to the High Court for an injunction to restrain the appointment of receivers over a portfolio of properties on which the defendant, Everyday Finance DAC, held mortgages and charges, and for an injunction directing the defendant to remove receivers already appointed. The plaintiffs claimed that the appointment of receivers was in breach of the terms of a certain Amended Settlement Agreement which they had made with Allied Irish Banks Plc and AIB Mortgage Bank before the banks sold the plaintiffs’ loans and attendant security to the defendant.
Held by Quinn J that, on the evidence before the court in this application, the plaintiffs had not established a fair bona fide question to be tried as to the existence of the Amended Settlement Agreement relied on by them.
Quinn J held that the injunction should be refused.
Application refused.
This judgment relates to an application by the plaintiffs for an injunction to restrain the appointment of receivers over a portfolio of properties on which the defendant holds mortgages and charges, and for an injunction directing the defendant to remove receivers already appointed.
The plaintiffs claim that the appointment of receivers is in breach of the terms of a certain Amended Settlement Agreement which they had made with Allied Irish Banks Plc and AIB Mortgage Bank (“the banks”) before the banks sold the plaintiffs' loans and attendant security to the defendant.
I have concluded that on the evidence before the court in this application the plaintiffs have not established a fair bona fide question to be tried as to the existence of the Amended Settlement Agreement relied on by them. Therefore, the injunction should be refused.
During the years from 2003 to 2013 the plaintiffs borrowed from the banks to part finance the purchase and construction of 56 commercial and residential properties. The properties were located in Cork, Limerick, Ennis, Kilkee, Nenagh, Tipperary and Tullamore.
The facilities granted to the plaintiffs were amended and replaced from time to time and on 24 February, 2016, a Deed of Settlement was entered into between the plaintiffs and the banks. By this Deed of Settlement the banks agreed to accept in full and final settlement of all the loans then due by the plaintiffs the amount of €9,850,000 provided that amount was paid by 30 June, 2016 (“the Latest Repayment Date”).
It was also a condition of the settlement that pending the Last Repayment Date two of the plaintiffs would make interim payments which between them amounted in total to €50,000 per month and the banks reserved the right to apply these interim payments in their discretion against interest or principal amounts then due.
The Deed of Settlement provided that on payment of these amounts the plaintiffs would be released from the balance of all of the facilities and all security held by the banks would be released.
It was a condition of the settlement that there be produced to the banks a valuation by a valuer appointed by the banks confirming that the aggregate open market value of the secured properties did not at that time exceed €9.6 million.
The Deed of Settlement contained a number of standard conditions including the provision of valuations, certain corporate certificates and mandates.
Clause 21 concerning “Variation” was in the following terms:
“No variation of this Deed shall be effective unless it is in writing and signed by the parties.”
No evidence was given on this application as to the total amounts originally advanced by the banks or as to the balance due at the time when the original settlement was made. It was said in submissions that a balance in the order of €25 million was due at the time of the application for the injunction. There was exhibited by the defendant certain letters of demand which were served by it on 26 November, 2019, totalling a sum of €22.8 million, due at that time.
The Last Repayment Date of 30 June, 2016, was extended twice by agreement between the parties, firstly to 30 December, 2016, and then to 30 June, 2017.
These extensions were not agreed in writing, although there was exhibited by the plaintiffs the draft of an amended Deed of Settlement said to have come into existence on or about 17 October, 2016, providing for the first of these extensions through to 31 December, 2016. The version of this document exhibited is unsigned and it is not claimed by any of the parties that it was signed.
The plaintiffs claim that in or about June 2017 a third amendment was agreed, this time to the effect that the Last Repayment Date would be extended indefinitely, provided the plaintiffs continued to make the monthly interim payments. It is not contended that that variation was made in writing. This is referred to as the “Amended Settlement Agreement”.
As to when the third amendment was agreed, the plaintiffs say in replies to particulars that it was made “when the latter date [being 30th June, 2017] expired”.
In the Plenary Summons the plaintiffs seek a declaration that the original Settlement Agreement was amended by agreement between the banks and the plaintiffs to the effect that the Last Repayment Date was indefinitely extended for as long as the monthly interim payments were made. They also seek an order for specific performance of the Amended Settlement Agreement, such that the defendant as the banks' successor-in-title would release the plaintiffs from their loans and release all the security in return for payments amounting in total to €9,850,000.
The plaintiffs say that in circumstances where they are now ready, willing and able to implement that Settlement, the defendant cannot rely on the demand letters of 26 November, 2019, which call for payment of the entire balance of €22.8 million and in default of such payment, appoint receivers.
The defendants admit that the first two amendments were made, namely the extensions to 30 December, 2016, and to 30 June, 2017. They deny that the third amendment was made and assert that the original Deed of Settlement, as amended twice by the extensions to 30 December, 2016, and 30 June, 2017, has expired and can no longer be relied on by the plaintiffs.
The plaintiffs were relying on securing alternative sources of finance to implement the settlement, and these efforts were ongoing when the two time extensions were agreed. These efforts continued after 30 June, 2017. During the second half of 2017 and through 2018 correspondence continued between the banks on the one hand and the plaintiffs' financial and legal advisors, being Mr. Harry Gleeson and Messrs. Thornton Solicitors, on the other hand.
The exhibited correspondence between the bank and Mr. Gleeson between October 2017 and March 2018 shows Mr. Gleeson indicating to the bank that progress was being made in terms of the refinancing and shows the bank pressing for updates from time to time.
The plaintiffs' case is that all of these communications took place in the context of an effort by the plaintiffs to implement the Amended Settlement Agreement and they claim that these communications evidence the existence of such an agreement. The defendants deny this.
The contents of a number of the emails exchanged between Mr. Gleeson and Mr. Egan in AIB are informative. Mr. Egan states on more than one occasion that the Settlement Agreement originally made expired on 30 June, 2017, and is therefore “now expired/defunct” (Mr. Egan's email 17 November, 2017). In his email of 1 December, 2017 Mr. Egan stated as follows:
“Again I will point this out that the deadline of 30th June, 2017 is twelve months beyond the original drop dead date and now nearly 22 months since the now expired/defunct Settlement Agreement was entered into. No bank approval is in place. Can you please send me a copy of the letter of sanction for the refinance and advise when this deal will close?
There has been an inordinate level of forbearance in this case, I need to update the bank's credit committee and based on the lack of progress the bank is reserving its rights beyond this date again (30th June, 2017).”
This reservation of rights position is repeated on a number of occasions by Mr. Egan, culminating in an email dated 16 March, 2018.
On 26 March, 2018, Messrs. Thornton wrote to Mr. Egan confirming the status of the plaintiffs' efforts to secure alternate finance and stated:
“I understand from our clients that they are most eager to forge progress here and are quite appreciative of the forbearance granted by AIB towards them thus far. I believe that our clients are continuing to make in full the repayments as agreed under the Settlement Agreement entered into previously and so are continuing to rely on the terms of the Settlement Agreement and goodwill of AIB for the short term.”
This assertion of reliance on the Settlement Agreement was not made in any of the earlier communications from Mr. Gleeson, even in reply to Mr. Egan's statements that that Agreement had expired in June 2017.
On 28 March, 2018, Mr. Egan replied in the following term:
“Dear Ms. Clancy,
Please be advised the...
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