Irish Bank Resolution Corporation Ltd v Tommy Kelly and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Birmingham
• Judgment Date: 06 March 2014
• Neutral Citation: [2014] IEHC 160
• Court: High Court
• Date: 06 March 2014

[2014] IEHC 160

THE HIGH COURT

[No. 4728S/2012]

Irish Bank Resolution Corporation Ltd v Kelly & Jaguar Capital Ltd

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED

PLAINTIFF

AND

TOMMY KELLY

DEFENDANT

JAGUAR CAPITAL LIMITED

THIRD PARTY

BARRETT SUMMARY JUDGMENT IN IRELAND: PRINCIPLES AND DEFENCES 2013

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DANSKE BANK AS T/A NATIONAL IRISH BANK v MULVANEY UNREP BIRMINGHAM 5.2.2014 2014 IEHC 45

Summary Judgement – Investment – Company – Acquisition of Property – Non-Recourse Loan Facility – Defences – Representations – Third Party – Plenary Hearing

Facts: The plaintiff bank had sought an application for summary judgment, together with interest. The application was resisted by the defendant who sought to have the matter remitted to a plenary hearing. The defendant also brought a motion seeking to have Jaguar Capital Limited joined as a third party to the proceedings. The defendants had participated in an investment by Jaguar Capital Limited. It was a requirement that each investor would structure their investment so that 50% of their investment came from their own funds while the remaining 50% would be borrowed by the individual investors from Anglo Irish Bank. Anglo Irish Bank did offer to advance a loan facility, on the condition that the loan was repayable on demand and be repaid on or before the 31st March, 2010. It was not, and solicitors for the bank requested that the breach be remedied. A formal demand and summary summons was subsequently issued. The defendant contended that the loan provided by Anglo Irish Bank was a non-recourse one. It was also argued by the defendant that it had been represented by Jaguar Capital Limited and its director, firstly, that the loan was non- recourse and that there would be no personal recourse on the part of Anglo to investors and secondly, that the security for the loan portion of the investment was to be limited to shares held by each investor in the holding company. It was argued that the plaintiff was disentitled from recovering against the defendant because of these representations.

Held by Justice Birmingham that the language of the loan facility letter posed formidable obstacles for the defendant. The letter stated that the facility was repayable in demand and without prejudice to that, and that it was to be repaid on or before the 31st March, 2010. Justice Birmingham noted that if the defendant believed that this was a non-recourse loan, that one would have expected the borrower to have been careful to see that the documentation accurately reflected that belief and that there was no ambiguity in that regard. In respects of the representations contended by the defendant, Justice Birmingham held that the interpretation which the defendant contended was not the only one available. He noted that considerable importance had been attached to a “structure diagram” showing reference to the non-recourse funding. However, Justice Birmingham noted that another way of viewing the diagram could be construed as showing two streams, one stream of investor funds and the other stream Anglo Irish Bank non-recourse funding meaning that in effect, non-recourse funding was available for senior debt as distinct from the individual investors. Furthermore, he contended that he could not exclude the possibility that an agency relationship would be established between the defendant and Anglo Irish Bank and Jaguar Capital Limited. Finally, based on the above determinations, Justice Birmingham reasoned that he was not prepared to accede to the application for summary judgment and that the matter would go to a plenary hearing. He further determined that if there was to be a plenary hearing, that it was appropriate that Jaguar Capital Limited be joined as a third party.

1 JUDGMENT of Mr. Justice Birmingham delivered the 6th day of March 2014

2 1. The primary matter before the court is an application by the plaintiff bank for summary judgment in the amount of €252,000 together with interest (the total amount standing at €255,050.29 as of the 17 ^th October, 2012). The application for summary judgment is resisted by the defendant who instead seeks to have the matter remitted to plenary hearing. Also before the court is a second motion brought by the defendant seeking to join as a third party Jaguar Capital Limited.

3 2. The basic facts are that in May/June 2007, the defendant following contact with a Mr. Gerry Jennings, a director of the proposed third party, decided to participate in an investment which was being undertaken by Jaguar Capital Limited.

4 The investment involves the acquisition of a property known as Beckett House, in Lambeth, London.

5 3. The project envisaged that would be investors would acquire shares in a special purpose investment vehicle, a Luxembourg company, Lambeth SA. It was also envisaged, and indeed the suggestion by the defendant is that this was a requirement that each investor was expected to structure their investment so that 50% of their investment came from their own funds while the remaining 50% would be borrowed by the individual investors from Anglo Irish Bank.

6 4. Anglo Irish Bank did in fact and this is not in dispute, offer to...