Jackie Greene Construction Ltd v Irish Nationwide Building Society,  IESC 2 (2019)
THE SUPREME COURTAppeal No: 2012/514
Jackie Greene Construction LtdPlaintiff/Appellantand
Irish Bank Resolution Corporation in special liquidation
Judgment of the Chief Justice, Mr. Justice Clarke, delivered the 24th January 2019
1.1 This judgment relates to an “old” jurisdiction appeal which formed part of the backlog which existed in this Court prior to the establishment of the Court of Appeal. This appeal was one of those which were transferred to the Court of Appeal by order of the Chief Justice (made with the concurrence of the other members of the Court) on the 29th October 2014. However, as part of the measures adopted by this Court to assist the Court of Appeal with its own backlog, this appeal was returned to this Court as a result of a determination made on the 26th October 2018 (Jackie Greene Construction Limited v. Irish Nationwide Building Society  IESCDET 165). It might briefly be noted at the outset that, on the 8th November 2018, the Court amended the title of the respondents in this appeal from “Irish Nationwide Building Society” to “Irish Bank Resolution Corporation in special liquidation”, as a consequence of the fact that the interests of Irish Nationwide now vest in that latter body. It should further be noted that, while the settlement agreement whose interpretation is at issue in this appeal was signed on behalf of Irish Nationwide, it is clear from the body of the text that it was the Irish Bank Resolution Corporation which was bound by the terms of the agreement. For the sake of clarity, I will use “IBRC” to describe the defendant/respondent in all instances.
1.2 In any event, none of those matters are of any particular relevance to the issues which now have to be resolved. When these proceedings were initially before the High Court they were compromised between the parties on terms which it will be necessary to set out in a little more detail. However, in substance the settlement terms provided that an expert should be appointed to assess the profits likely to be achieved from the completion of a property development which had been delayed in its completion largely because of the recession. Rather extraordinarily, having regard to the fact that IBRC (in its then operation as Irish Nationwide) was a financial institution, the original arrangements between the parties provided not just for the repayment of loan facilities furnished by IBRC to the plaintiff (“Jackie Greene Construction”) but also for a profit share between the parties. Thus, the arrangements generally provided for the distribution of the net funds generated by the sale of properties within the development so as to pay off the loan advanced by IBRC but then for the sharing of the profits generated thereafter. There were also specific measures agreed as to how the relevant funds would be held pending a final distribution between the parties.
1.3 Given that the finalisation of the sale of the units within the development was inevitably delayed by the recession, disputes arose between the parties as to what was to happen next and these proceedings ensued. The settlement arose in the context of those disputes.
1.4 Thereafter, the matter returned to the High Court as a result of a further dispute arising between the parties as to the proper interpretation of the settlement and the application of the settlement as properly interpreted to the particular circumstances which had arisen.
1.5 That matter was determined by Gilligan J. by a judgment delivered on the 26th June 2012 (Jackie Greene Construction v. Irish Nationwide Building Society (Unreported, High Court, Gilligan J., 26th June, 2012)) which resulted in an order of the High Court of the 27th July of the same year. That order made provision for what was to happen to the cash already held by the parties and further made provision for a judgment in favour of IBRC in the sum of €8,827,928.50, with credit being given for the cash already obtained together with further credit for 50% of the net proceeds of sale of any unsold units at the development. Provision was also made for a stay.
1.6 It is as against that judgment of the High Court that this appeal lies. In order to understand the precise issues which arise it is necessary to say a little about the original agreement between the parties and the dispute which was the subject of the settlement whose interpretation lies at the heart of this appeal.
The Original Agreement and the Dispute
2.1 The underlying proceedings in this case, which led to the settlement agreement forming the subject matter of the current appeal, concerned a series of loan facilities advanced to Jackie Greene Construction by IBRC for the purpose of the purchase of lands at College Drive, Terenure, and the construction of residential and commercial units on those lands (“the Development”).
2.2 As noted above, an aspect of the loan facilities advanced to Jackie Greene Construction was a profit-sharing arrangement, which, rather curiously, was referred to as an arrangement fee. The mechanism for the operation of the profit-sharing arrangement was set out in a number of supplemental loan agreements (“SLAs”) and essentially provided that Jackie Greene Construction was to lodge the net proceeds from the sale of the units at the Development to a designated account held with IBRC in the sole name of Jackie Greene Construction. On completion of the Development, the SLAs provided for a 50:50 distribution of the profits between the parties out of the funds in the account.
2.3 Jackie Green Construction lodged what it maintained were the net sale proceeds to the designated account. As at the 2nd February 2011, the relevant account contained €8,694,396.51. On 3rd February 2011, IBRC removed €6,279,354.06 from the account. Jackie Greene Construction alleged that this was done without prior notice, without their consent, and in circumstances where the Development was incomplete. Jackie Greene Construction issued proceedings seeking the return of that latter sum of money to the account.
2.4 It was, of course, against that backdrop that the settlement, whose terms are now disputed, was entered into between the parties. It is next appropriate, therefore, to turn to the terms of that settlement.
Terms of Compromise
3.1 Terms of compromise were entered into between the parties on the 22nd November 2011. A number of the terms of that agreement are of particular importance to the issues which now arise.
3.2 Clause 1 of the terms of compromise provided:-
“The Parties have agreed to an Expert determination in respect of the profit or loss of and concerning the Development of 7 acres at College Drive in Terenure … and as provided for in the Parties’ various Facility Letters and Supplemental Loan Agreements between 15th March, 2002 and 19th April, 2007.”
3.3 Clause 10 provided:-
“In making his decision as to the final determination of profit or loss for the Development, the Expert will carefully consider the possible sale price that can be achieved for the unsold units, and the length of time it may take to sell these units and complete the Development, including the likely ongoing costs while this sale process is undertaken. The Parties agree that all necessary valuations and appraisals in respect of the remaining units to be sold may be obtained by either party and submitted to the Expert as part of his determination. All requisite access to the units will be made available to Jackie Green Construction Limited in respect of any such valuations.”
3.4 Clause 12 provided:-
“The respective undertakings furnished by the parties shall continue and more particularly, in lieu of the undertaking to date furnished by Irish Nationwide Building Society, the Irish Bank Resolution Corporation undertakes to hold, free from charge or encumbrance the sum of €6,279,354.06 together with interest accrued since 4th February, 2011, and Jackie Green Construction Limited undertakes to take no steps to access or otherwise utilise the funds formerly in account number 301418439 and now in an account held in PTSB … in the sum of €2,415,042.45, pending the Expert’s decision of the profit or loss.”
3.5 Clause 13 of the compromise agreement governed what was to...
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