Healy v Ulster Bank Ireland
| Jurisdiction | Ireland |
| Judge | Ms. Justice Faherty |
| Judgment Date | 27 November 2020 |
| Neutral Citation | [2020] IECA 332 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Appeal Number: 2018/000178 |
| Date | 27 November 2020 |
AND
[2020] IECA 332
Faherty J.
Haughton J.
Murray J.
Appeal Number: 2018/000178
THE COURT OF APPEAL
At issue in this appeal is whether the appellant (“Dr. Healy”) has a liability for loan facilities which were provided by the first respondent (“the Bank”) to him and one Dr. Patrick Cullen (“Dr. Cullen”), jointly and severally, in respect of which the second respondent (“Promontoria”) now claims entitlement pursuant to a deed of transfer effected between the Bank and Promontoria in 2014.
Dr. Healy is a registered medical practitioner and at material times conducted a general practice in County Westmeath.
In 2006 Dr. Healy and Dr. Cullen were in partnership together and involved in the development of certain properties in Coole, County Westmeath. Their joint endeavours arose out of a business plan whereby they bought an old hospital premises with a view to establishing a state-of-the-art medical centre and commercial outlets (to include a pharmacy and physiotherapy centre) described as Phase 1 of the development. They also acquired a greenfield site for the purposes of developing residential properties. The business structure decided upon was that in the first instance Dr. Healy and Dr. Cullen became partners in their medical practice. Secondly, they established a property partnership to hold the assets that had been acquired for their development of Phase 1 and the proposed development of the greenfield site. Thirdly, they set up a company, Coole Property Holdings Limited (“CPHL”) which was to be the development vehicle, with Dr. Healy and Dr. Cullen each becoming fifty percent shareholders in that company.
All of the monies for the development of Phase 1 and the acquisition of the greenfield site were provided by the Bank. Security for the loans was by way of a legal first charge over the lands at Coole.
Dr. Healy and Dr. Cullen successfully developed Phase 1. This allowed them to reduce their initial borrowings (in the order of €5.5m) to in or around €2.5m, with the greenfield site yet to be developed.
On 9 August 2006, they executed individual Guarantees underpinning the borrowings of CPHL and were at that stage intent on developing the greenfield site by building a residential development of twenty-two houses.
Subsequent to the execution of the Guarantees, a divergence of opinion arose between Dr. Healy and Dr. Cullen with regard to the development of the greenfield site. Dr. Healy wished to sell the site while Dr. Cullen wished to develop it and then sell it on. Dr. Healy's desire to sell was predicated on anticipated difficulties in the property market. By early January 2007 it seems that Dr. Cullen was coming around to Dr. Healy's way of thinking but by late January 2007 he was again expressing his desire that the site would be developed. As a result of their differences, it became clear that Dr. Healy and Dr. Cullen could no longer practice medicine in partnership or advance their joint commercial interests together.
Dr. Healy and Dr. Cullen, and their respective representatives, duly met in February 2007. Two representatives of the Bank, a Mr. Alan Leech and a Ms. Breeda Finnegan, were also present albeit that they did not sit in on the entire meeting. The Bank's position at that time was that it wanted its loans repaid. This is clear from the contents of an internal Bank memorandum prepared by Mr. Leech on 3 September 2007. The dispute between Dr. Healy and Dr Cullen was not resolved at the February meeting. However, negotiations then took place between their respective representatives in relation to one party buying the other party out. The outline of an agreement began to emerge in April 2007 when it was agreed that Dr. Cullen would buy out Dr. Healy's interests, including that their medical partnership would be dissolved.
Funding for Dr. Cullen to buy out Dr. Healy was provided by Bank of Scotland Ireland (hereinafter “BOSI”). A copy of the BOSI loan facility letter to Dr. Cullen dated 18 June 2007 was duly sent to the Bank. The sequencing set out in that letter was as follows:
“Loan A: To fund the acquisition of the Partners [Dr. Healy's] 50% interest in Medical practice for €2,660,000 including costs of €434,000;
Loan B: to refinance loan A on the completion of the contract for the sale of 22 residential units and the redemption of Ulster Bank's facility in full.”
On 21 June 2007, Ms. Finnegan of the Bank wrote to Messrs. Kennedy Fitzgerald Solicitors (the solicitors for Dr. Cullen) indicating that the Bank was consenting to BOSI taking a second legal charge over the property at Coole on the basis that the Bank was provided with written confirmation from Dr. Cullen's solicitor that an unconditional contract for the sale of the greenfield site was in place for €2,250,000 and a Solicitor's Undertaking to deliver the proceeds of the sale to the Bank without deductions. By letter of 22 June 2007, Messrs. Kennedy Fitzgerald responded stating, inter alia, “that all sale proceeds … shall be lodged to Ulster Bank”.
The agreements reached between Dr. Healy and Dr. Cullen were given effect to on 19 July 2007 when contracts were signed.
The Agreement providing for the dissolution of Dr. Healy's and Dr. Cullen's medical partnership (hereinafter “the Medical Partnership Agreement”) was executed on 19 July 2007 (the Cessation Date). Para. 6.2 provided as follows:
“As and from the Cessation Date Dr. C shall assume sole and absolute personal responsibility and liability for all of the debts of the medical and surgical partnership including but not limited to the creditors listed in the Third Schedule to include all Coole Surgery practice accounts; all Coole Surgery equipment accounts; the Coole site account; all insurance premiums; all professional fees due including but not limited to all sums due to Connellan, Solicitors and to Mr. Gerry Cuddy and/or HC Financial Services Limited for professional services rendered up to the Cessation Date; all sums due to Lombard & Ulster Banking Limited whether on foot of leases or lease agreements including but not limited to Agreements numbered 2000197679 and 2000205447 and all sums due to Ulster Bank Ireland Limited.”
Para. 6.4 provided:
Dr. C hereby covenants with and undertakes to Dr. H to fully indemnify him and to keep him fully and effectually indemnified from and against all claims, actions or causes of action (with the exception of claims for medical negligence against Dr. H personally), complaints, contracts, liabilities, agreements, promises, debts or damages, whether existing or contingent, and whether arising under statute, common law, equity or otherwise howsoever arising out of the forgoing for the periods before and after the Cessation Date.”
The dissolution Agreement in respect of Dr. Healy's and Dr. Cullen's property partnership (hereinafter “the Property Partnership Agreement”) was also executed on 19 July 2007. Dr. Cullen's assumption of liability in respect of that partnership was expressed in the following terms:
“6.2 With effect from the Cessation Date, Dr. C shall assume sole and absolute personal responsibility for all of the debts and liabilities, whether existing or contingent, of Coole Property Holdings Limited and the Partnership in respect of the period before and after the Cessation Date including but not limited to the Creditors listed in the Third Schedule hereto and including but not limited to all sums due to Ulster Bank Ireland Limited including but not limited to all sums due to that Bank on Accounts numbered 985430 02385039; 985430 02385112; 985430 02385385; 985430 02162164; 986130 36618141; 986130 36618067; 985430 02162081; the Coole site account; all insurance premiums; all professional fees due including but not limited to all sums due to Connellans, Solicitors and to Mr. Gerry Cuddy and/or HC Financial Services Limited and to Shelley Barrett, Architect for professional services rendered up to the Cessation Date and all sums due to Lombard & Ulster Banking Limited whether on foot of leases or lease agreements or otherwise howsoever.”
Pursuant to para. 6.6, Dr. Cullen covenanted with and undertook “to fully indemnify [Dr. Healy] and to keep him fully and effectually indemnified from and against all claims, actions or causes of action, complaints, contracts, liabilities, agreements, promises, debts or damages, whether existing or contingent, known or unknown and/or costs howsoever arising in respect of the forgoing in respect of the periods both before and after the Cessation Date.”
On the same date a contract for sale of the Coole site with planning permission for 22 residential units was entered into by Dr. Cullen with a third party, a Mr. Peter O'Reilly.
The consideration for Dr. Cullen's acquisition of Dr. Healy's interests was paid over to Dr. Healy's solicitor, Mr. Patrick Groarke. On 31 July 2007, Dr. Healy obtained a cheque representing these proceeds from Mr. Groarke. On the following day, 1 August 2007, Dr. Healy attended a meeting in the Mullingar branch of the Bank. He had an appointment to meet Mr. Leech. Dr. Healy was accompanied by his mother, Ms. Maria Healy.
On 1 August 2007 Dr. Healy deposited the sum of €2,213,607 (being the sum received from Mr. Groarke after certain deductions) with the Bank. There is no dispute but that the sum deposited represented the proceeds of the sale to Dr. Cullen of Dr. Healy's interest in the property partnership and the medical practice.
Dr. Healy claims that prior to depositing the said sum he was assured by Mr. Leech that he had no liability or exposure to the Bank in relation to the Coole project. He asserts that...
To continue reading
Request your trial
-
Lee and Another v Lee and Others
...that the Plaintiffs have not paid all of the moneys due for the purchase of the property. In Healy v Ulster Bank Ireland Ltd & Others [2020] IECA 332, for example, the Court of Appeal 9 (Faherty J.) at paragraph 72 of the court's judgment endorsed inter alia the following extract of the tri......