Langan v Promontoria (Aran) Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Twomey |
| Judgment Date | 31 July 2019 |
| Neutral Citation | [2019] IEHC 602 |
| Date | 31 July 2019 |
| Court | High Court |
| Docket Number | [2017 No. 966 P.] [2017 No. 77 COM] |
[2019] IEHC 602
THE HIGH COURT
COMMERCIAL
Twomey J.
[2017 No. 966 P.]
[2017 No. 77 COM]
AND
Injunctive relief – Declaratory relief – Legal charge – Plaintiff seeking injunctions and declarations to the effect that an apartment is no longer charged in favour of the defendant for borrowings extended to the plaintiff and his company – Whether a binding agreement to the effect that the legal charge over the apartment had been released was ever reached
Facts: The plaintiff, Mr Langan, sought injunctions and declarations in relation to Apartment 902, Belvedere Heights, 199 Lisson Grove, London, United Kingdom to the effect that the apartment is no longer charged in favour of Ulster Bank/Promontoria for borrowings extended to Mr Langan and his company. Mr Langan also sought declarations that the assignment of a legal charge, loan facilities and guarantees from Ulster Bank Ireland Ltd to the first defendant, Promontoria, is invalid. The second defendant, Mr O’Brien, was sued in his capacity as receiver over the London Apartment. Mr Langan alleged that he made a binding agreement with Ulster Bank between May and September 2008 to the effect that a legal charge over the London Apartment had been released, which charge had been executed on the 8th February, 2002 by Mr Langan in favour of Ulster Bank. This issue of whether such an agreement was ever reached was the subject of a factual dispute between the parties. Mr Langan claimed that the assignment by Ulster Bank to Promontoria of the aforementioned legal charge, as well as loan facilities and guarantees was invalid. Mr Langan relied on this technical legal argument to deny that he was liable for the monies claimed to be due and owing to Promontoria. In its defence to the proceedings, Promontoria included a counterclaim against Mr Langan pursuant to the terms of the legal charge over the London Apartment, along with loan facility letters and guarantees. Promontoria sought judgment against Mr Langan in the sum of €4,309,428.
Held by the High Court (Twomey J) that it rejected Mr Langan’s claims that there was any agreement between Ulster Bank and Mr Langan that the charge would be released. The Court also rejected Mr Langan’s technical legal arguments alleging that the assignment and transfer of the loan facilities, the guarantees and the charge to Promontoria were not properly effected.
Twomey J held that the Court would refuse the reliefs sought by Mr Langan and would hear counsel in relation to the terms of any order sought regarding Promontoria’s counterclaim in the sum of €4,309,428.
Reliefs refused.
This is a case in which the plaintiff (‘Mr. Langan’) seeks injunctions and declarations in relation to Apartment 902, Belvedere Heights, 199 Lisson Grove, London, United Kingdom (the ‘London Apartment’) to the effect that the apartment is no longer charged in favour of Ulster Bank/Promontoria for borrowings extended to Mr. Langan and his company. Mr. Langan also seeks declarations that the assignment of a legal charge, loan facilities and guarantees from Ulster Bank Ireland Limited (‘Ulster Bank’) to the first named defendant (‘Promontoria’) is invalid. The second named defendant, Mr. O'Brien, is sued in his capacity as receiver over the London Apartment.
This judgment considers two issues, first the allegation by Mr. Langan that he made a binding agreement with Ulster Bank between May and September 2008 to the effect that a legal charge over the London Apartment had been released, which charge had been executed on the 8th February, 2002 by Mr. Langan in favour of Ulster Bank (the ‘Charge’). This issue of whether such an agreement was ever reached is the subject of a factual dispute between the parties and occupied the majority of the hearing time of this action.
The second issue relates to claims made by Mr. Langan that the assignment by Ulster Bank to Promontoria of the aforementioned legal charge, as well as loan facilities and guarantees is invalid. Mr. Langan relies on this technical legal argument to deny that he is liable for the monies claimed to be due and owing to Promontoria.
In its defence to these proceedings, Promontoria includes a counterclaim against Mr. Langan pursuant to the terms of the legal charge over the London Apartment, along with loan facility letters and guarantees as detailed below. Promontoria seeks judgment against Mr. Langan in the sum of €4,309,428.
For the reasons set out below, this Court finds that there was no binding agreement by Ulster Bank for the release of the Charge and that the loans and underlying security were properly transferred by Ulster Bank to Promontoria and will hear from counsel regarding the counterclaim seeking judgment in the sum of €4,309,428.
Mr. Langan is a businessman with an address at Malahide Marina Village, Malahide, County Dublin. He has been involved in the furniture retail business for over thirty years, having set up his business, Classic Furniture Limited (‘CFL’), in 1986. In his evidence to this Court, Mr. Langan advised that at the height of CFL's success, the company was operating seven retail outlets across Ireland and had a turnover of some €13 million. During this time, Mr. Langan was taking out a very significant income from the business of circa €300,000 per annum.
Although it appears that both Mr. Langan and his company, CFL, had dealings with several banks over a number of years, for the purposes of these proceedings, the primary focus is on the banking relationship between Mr. Langan/CFL and Ulster Bank. In this regard, Mr. Langan gave evidence that CFL's business banking relationship with Ulster Bank began in 1998 as a result of an ‘introduction’ to Ulster Bank by Ms. Imelda Lennon (‘Ms. Lennon’), the financial controller and joint-director of CFL. The banking relationship between CFL and Ulster Bank was managed by Mr. Neil Kinsella (‘Mr. Kinsella’), a relationship manager employed within Ulster Bank at that time, but now retired.
In his evidence to this Court, Mr. Kinsella stated that he managed the banking relationship between CFL and Ulster Bank between the years 2004 to 2008. Mr. Kinsella advised that in relation to CFL's day-to-day business with Ulster Bank he dealt directly with Ms. Lennon. However, ‘ when meetings were taking place, reviews or requests for additional facilities’, Mr. Kinsella advised that he would deal with both Ms. Lennon and Mr. Langan on those occasions.
It is relevant for an understanding of the issues in these proceedings to outline in some detail the various loan facilities extended by Ulster Bank to Mr. Langan, as well as seven personal guarantees signed by Mr. Langan. This understanding is particularly relevant in so far as this judgment considers the validity of the assignment and transfer of these loan facilities and guarantees from Ulster Bank to Promontoria.
Loan facility letter dated 9th April, 2008 with Mr. Langan
On 9th April, 2008 Ulster Bank agreed to renew certain loan facilities made in favour of Mr. Langan. The loan facility letter included three separate facilities - an overdraft (with a limit of €5,000) and two demand loan facilities. In particular, this facility letter provided for a new loan facility of €500,000 (the ‘First €500,000’) to Mr. Langan, which loan was to provide additional funds for investment in CFL. The total amount of the two loans under this personal facility to Mr. Langan was €912,000.
The loan facility provided that this loan was to be repaid from the net sale proceeds of a property owned by Mr. Langan on Green Street, Kilkenny (the ‘Kilkenny Property’) by 15th August, 2008.
Loan facility letter dated 9th April, 2008 with CFL
On the same date as the foregoing loan facilities were renewed in favour of Mr. Langan, Ulster Bank agreed to renew loan facilities (including a group overdraft) in favour of CFL in the sum of €4.14 million.
The purpose of these facilities was to provide working capital for CFL and to renew existing loan facilities which had originally been extended for, inter alia, the purpose of fitting-out various CFL retail units.
In the period between May 2002 and December 2008, Mr. Langan entered seven personal guarantees (the ‘Guarantees’) as security for the liabilities of CFL. The exact dates of the Guarantees are as follows:
• 7th May, 2002,
• 3rd September, 2003,
• 2nd October, 2003,
• 17th June, 2004,
• 24th April, 2006,
• 26th July, 2007,
• 23rd December, 2008.
These guarantees total an amount in excess of €3.3 million.
It is Mr. Langan's case that the assignment from Ulster Bank to Promontoria of the aforementioned loan facility letters, guarantees and the Charge over the London Apartment is invalid. Mr. Langan claims that Ulster Bank were not legally entitled to assign to Promontoria the loan facilities, guarantees and the Charge as they did not seek or obtain his prior consent to the assignment.
Mr. Langan also claims that the transfer from Ulster Bank to Promontoria of the loan facilities, guarantees and the Charge is invalid as the mechanics of the transfer were flawed and that the transfer was not properly effected.
The purpose of the Charge over the London Apartment was to provide Ulster Bank with security for the liabilities of both Mr. Langan and CFL to Ulster Bank.
As noted at the outset of this judgment, it is Mr. Langan's case that the Charge over the London Apartment was released by Ulster Bank. In support of his case that the Charge was released, Mr. Langan relies in particular, on an email dated 15th May, 2008 sent by Mr. Kinsella to Ms. Lennon (which is part of an email chain...
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An Application Pursuant to Section 115A(9) of the Personal Insolvency Acts 2012–2015 - David Langan
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