Feniton Property Finance dac v McCool

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 20 June 2019
• Neutral Citation: [2019] IEHC 473
• Docket Number: [2017/2383 S]
• Court: High Court
• Date: 20 June 2019

[2019] IEHC 473

THE HIGH COURT

Noonan J.

[2017/2383 S]

BETWEEN

FENITON PROPERTY FINANCE DESIGNATED ACTIVITY COMPANY

PLAINTIFF

AND

EUGENE McCOOL

DEFENDANT

Summary judgment – Borrowings – Bona fide defence – Plaintiff seeking summary judgment against the defendant – Whether the defendant had established that he had a fair or reasonable probability of having a bona fide defence to the proceedings

Facts: The plaintiff, Feniton Property Finance dac, applied to the High Court seeking summary judgment against the defendant, Mr McCool, in respect of both personal borrowings and borrowings of a company in respect of which a personal guarantee was given by Mr McCool. The company in question was Lyngarth Ltd and Mr McCool was a director and shareholder of that company.

Held by Noonan J that Mr McCool had not established that he had a fair or reasonable probability of having a bona fide defence to the proceedings and that it was clear that he had no defence. Noonan J noted that Mr McCool did not dispute the fact that he executed all the relevant documents and that the monies claimed to have been advanced were in fact advanced and had not been repaid.

Noonan J held that, in those circumstances, the plaintiff was entitled to judgment for the amount claimed.

Application granted.

JUDGMENT of Mr. Justice Noonan delivered on the 20th day of June, 2019

1 In this application for summary judgment, the plaintiff seeks judgment against the defendant (Mr. McCool) in respect of both personal borrowings and borrowings of a company in respect of which a personal guarantee was given by Mr. McCool. The company in question is Lyngarth Ltd (‘Lyngarth’) and Mr. McCool is a director and shareholder of that company.

Background Facts

2 In or around 2003, Mr. McCool was involved, inter alia, in property investment and owned a number of residential properties in the Clontarf area of Dublin. The plaintiff's predecessor, Bank of Scotland (Ireland) Ltd (‘BOSI’) advanced a loan of €150,000 to Mr. McCool on foot of a facility letter dated the 4th December, 2003 subsequently amended on the 21st March 2007. This was for the purposes of renovating the property known as 159 Howth Road, Dublin.

3 The business of BOSI vested in Bank of Scotland Ltd (‘BOS’) by virtue of an order of the Court of Session in Scotland made pursuant to UK regulations, The Companies (Cross Border Mergers) Regulations 2007, with effect from midnight on the 31st December, 2010. In 2015, by loan sale agreement and subsequent deed of assignment, BOS disposed of a loan portfolio to the plaintiff herein which included Mr. McCool's loan and the guarantee referred to below. The loan was granted by way of overdraft and was payable on demand.

4 In or about 1999, Lyngarth was involved in the purchase and development of a development site in Kinsale, County Cork, where a hostel known as Guardwell Lodge was constructed. By a facility letter dated 21st July, 1999 subsequently amended, ICC Bank Plc (‘ICC’) advanced €1.35 million to Lyngarth for the purchase and development of this property. ICC granted a further facility on the 21st February, 2002 to Lyngarth in the amount of €240,000 for the purposes of capital expenditure on the Kinsale property.

5 The business of ICC was transferred to BOSI in 2002 by virtue of the Central Bank Act (Approval of Scheme of Bank of Scotland (Ireland) Limited) Regulations, S.I. 27 of 2002. By a further facility given on the 8th April, 2008, BOSI agreed to advance €466,000 to Lyngarth for the purpose of converting the hostel property into sixteen apartments. On the 30th January, 2009, Mr. McCool entered into a written guarantee with BOSI whereby he guaranteed the obligations of Lyngarth in respect of all present and future advances from BOSI.

6 Default occurred on both the personal and company loans and in respect of the personal facility, a demand for payment was made by BOS on the 21st July, 2014 and subsequently by the plaintiff on the 2nd October, 2017. With respect to the company, three letters of demand were issued by BOS on the 21st July, 2014 demanding payment of the sums then due on each of the facilities. The letter of demand from the plaintiff of the 2nd October, 2017 above referred to also demanded payment on foot of Mr. McCool's personal guarantee of all sums then due by Lyngarth.

7 On the 9th October, 2014, BOS appointed a receiver over two residential properties owned by Mr. McCool at 145A and 157A Howth Road, Clontarf. On the same day, BOS also appointed a receiver in respect of Lyngarth's assets including the Kinsale property.

8 All of these facts emerge from a number of affidavits sworn by John Burke, a director of the plaintiff. Mr. Burke avers that as of the 2nd October, 2017, the total sum due by Mr. McCool on foot of the personal loan and the company guarantee was €2,631,185.27. Although Mr. McCool denies that he is indebted to the plaintiff in this amount or any amount, he does not dispute any of the facts set out in Mr. Burke's affidavits.

9 Mr. McCool has sworn a number of affidavits primarily focused upon his involvement with Lyngarth's dealings with the Kinsale property. He avers that when the hostel was built, the ground floor was leased to a third party. When Mr. McCool became involved in the matter, he says that he entered into an agreement to sell the Kinsale property for €2.9 million but this was contingent upon the buyout of the lessee on the ground floor.

10 He avers that ICC had agreed with Lyngarth to advance €100,000 for this buyout but ICC breached its contract with Lyngarth in this respect by refusing to advance the money in consequence of which the sale fell through. Mr. McCool says that this gives rise to a claim for damages against the plaintiff who now stands in the shoes of ICC. Clearly these events occurred prior to 2008 when it was decided to convert the hostel to apartments.

11 In that regard, Mr. McCool says that ICC's successor, BOSI, agreed to fund the apartment conversion. It would seem therefore that it must follow that any complaint Mr. McCool or Lyngarth had about the failed earlier sale was subsumed into the alleged new arrangement whereby BOSI was to advance €466,000 to enable the conversion to apartments to take place. He says that this was in reality a joint venture between Lyngarth and BOSI and as proof of that, he relies upon a letter written by Lyngarth's own solicitors, Messrs. William Fry, to their own client.

12 It appears to be common case that the first tranche of the loan, amounting to €70,000, was advanced to Lyngarth and was used for the purpose of stripping out much of the plumbing and electrical services of the building in preparation for the conversion. However, Mr. McCool says that BOSI then breached the contract by...