McDonagh v Ulster Bank Ireland Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Keane
• Judgment Date: 22 October 2014
• Neutral Citation: [2014] IEHC 476
• Court: High Court
• Docket Number: [No. 8343P/2014]
• Date: 22 October 2014

[2014] IEHC 476

THE HIGH COURT

[No. 8343P/2014]

McDonagh v Ulster Bank Irl Ltd

No Redaction Needed

BETWEEN

BRIAN McDONAGH

PLAINTIFF

AND

ULSTER BANK IRELAND LIMITED

DEFENDANT

BAMBRICK v COBLEY 2006 1 ILRM 81 2005/3/573 2005 IEHC 43

TATE ACCESS FLOORS INC v BOSWELL 1991 CH 512 1990 3 ALL ER 303 1991 2 WLR 304

ATKIN v MORAN 1871 6 IR EQ 79

LLOYDS BOWMAKER LTD v BRITANNIA ARROW HOLDINGS LTD 1988 3 AER 178 1988 1 WLR 1337

CAYNE v GLOBAL NATURAL RESOURCES PLC 1984 1 AER 225

Interlocutory Injunction – Interim Injunction – Land & Property – Bank Loan - Repayments

Facts: The case at hand concerned two applications. The first was the plaintiff”s application for an interlocutory injunction pending trial. The second was the defendant”s application for an order setting aside the interim injunction that had been granted to the plaintiff on an ex parte basis in October 2014. In August 2007, the plaintiff and his two brothers acting in partnership purchased lands in Kilpeddar, County Wicklow ("the Kilpeddar lands") for €22 million. In January 2009, the plaintiff and his brothers entered into a loan agreement with the defendant Ulster Bank Ireland Limited ("the bank") to borrow the sum of €21,855,000 in order to fund that purchase. The plaintiff and his brothers subsequently drew down those funds. Following some legal disputes which arose in connection with the development of the Kilpeddar lands, the plaintiff failed to keep up repayments and entered into a compromise agreement with the bank on the 13th March 2013. The purpose of that agreement was to assist the bank in seeking to recover as much as possible of the debt to it that the plaintiff had incurred in respect of a number of loan accounts associated with the purchase of various properties, including the Kilpeddar lands. While the compromise agreement commenced with the statement that it was made on the 13th March 2013, it also contained a definition of the term "effective date", the text of which had been inserted by hand and initialled by the plaintiff. It provided that the effective date of the agreement was to be three weeks from the 27th May 2013. A plenary summons was issued on the 1 ^st Oct 2014 on foot of which the plaintiff sought various reliefs against the bank. The most significant was an order directing specific performance of the compromise agreement or, in the alternative, an order awarding damages for breach of that agreement. The plaintiff also sough orders restraining the bank from appointing receivers to any of his properties covered by the compromise agreement or, indeed, from taking any steps to enforce or recover the plaintiffs liabilities or loans. From the affidavits sworn by the plaintiff, it emerged that each of these remedies was sought by reference to the plaintiffs assertion that he had complied with the terms of the compromise agreement but that the bank had not.

Held by Justice Keane in light of Bambrick v Cobley [2005] IEHC 43 the plaintiff had failed to disclose vital facts when applying for, and obtaining, an interim injunction ex parte. Such failed disclosures included, the date upon which the compromise agreement, dated the 13th March 2014, was to become effective, amongst others. In determining whether those undisclosed facts were material to the application for interim ex parte relief that was made by the plaintiff, Justice Keane reasoned that they were capable of affecting the mind of the court and should have been disclosed in the context of the ex parte application for interim relief. In concluding the court stated that, the facts that were not disclosed were directly relevant and, therefore, reasonably material, to the specific allegations made by the plaintiff of breach of the compromise agreement by the bank. Second, non-disclosure amounted to a culpable failure on the part of the plaintiff. Third, Justice Irvine found that no other aspect of the overall circumstances in the case was directly relevant to the exercise of the discretion at issue. He therefore, concluded that he would exercise his discretion by acceding to the application to discharge the interim injunction and against any consideration of the application for interlocutory relief. He also refused the plaintiffs application for an interlocutory injunction.

Introduction

1 There are two applications before the Court. The first is the plaintiff's application for an interlocutory injunction pending trial. The second is the defendant's application for an order setting aside the interim injunction that was granted to the plaintiff on an ex parte basis by Moriarty J. on the 1 ^st October 2014.

Background

2 In August 2007, the plaintiff and his two brothers acting in partnership purchased lands in Kilpeddar, County Wicklow ("the Kilpeddar lands") for €22 million. In January 2009, the plaintiff and his brothers entered into a loan agreement with the defendant Ulster Bank Ireland Limited ("the bank") to borrow the sum of €21,855,000 in order to fund that purchase. The plaintiff and his brothers subsequently drew down those funds.

3 The plaintiff avers to certain legal disputes that arose in connection with the development of the Kilpeddar lands. Evidently, this had implications for the plaintiff's repayment of the loan in accordance with the terms of the loan agreement, although the plaintiff is reticent in addressing the nature and extent of his default in that regard.

4 The plaintiff does aver that he entered into a compromise agreement with the bank on the 13 ^th March 2013 and that the purpose of that agreement was to assist the bank in seeking to recover as much as possible of the debt to it that the plaintiff had incurred in respect of a number of loan accounts associated with the purchase of various properties, including the Kilpeddar lands.

5 While the compromise agreement commences with the statement that it is made on the 13 ^th March 2013, it also contains a definition of the term "effective date", the text of which has been inserted by hand and initialled by the plaintiff. It provides that the effective date of the agreement is to be three weeks from the 27 ^th May 2013.

6 Under the compromise agreement, the borrowers, including the plaintiff, assume the following principal obligations. They are to facilitate willingly, through their active cooperation, the recovery by the bank of the debt which each of them owes to it. They each acknowledge their indebtedness to the bank, amounting in the plaintiff's case to a cumulative personal indebtedness on various loan accounts at the present time amounting to €26,130,436.90 (according to the bank), and each acknowledges the security that he or she has provided to the bank in respect of the various loan agreements to which he or she is a party. Each borrower warrants to the bank in utmost good faith the contents of an updated statement of affairs prepared by him or her, upon the accuracy of which the validity of the compromise agreement depends, and each confirms in writing that he or she has no other undisclosed assets. Rents accruing to the various borrowers on certain identified properties are to be remitted into specified rent accounts. The borrowers, including the plaintiff, are to lodge the sum of €400,000 in cash with the bank in reduction of their overall borrowing. The borrowers, including the plaintiff, agree not to enter into any bankruptcy or insolvency arrangement during the currency of the agreement. The borrowers, including the plaintiff, agree to dispose of a number of specified properties for the best price reasonably obtainable within a specified time frame, and to remit the proceeds of sale to the bank, net only of taxes arising and agreed disposal costs. In particular, the borrowers, including the plaintiff, are to "instruct the agents to liaise fully with and disclose fully and frankly to the bank all details of the sales process and any negotiations relating thereto." The borrowers, including the plaintiff, are to notify the bank of all tenancies and licences affecting any of the properties and are to properly manage and insure those properties prior to sale.

7 The bank's obligations under the compromise agreement are essentially twofold. First, the bank is to postpone enforcement of the borrowers debts to enable the borrowers to take the steps required of them under the agreement. In particular, the bank agrees not to institute proceedings against the borrowers in respect of the debt during that period. Second, the bank is to acknowledge full implementation of the agreement as amounting to full and final settlement of the borrowers' debts to it.

The proceedings

8 A plenary summons issued on the 1 ^st October 2014 on foot of which the plaintiff seeks various reliefs against the bank. Perhaps the most significant of those is an order directing specific performance of the compromise agreement or, in the alternative, an order awarding damages for breach of that agreement. The plaintiff also seeks orders restraining the bank from appointing receivers to any of his properties covered by the compromise agreement or, indeed, from taking any steps to enforce or recover the plaintiff's liabilities or loans. From the affidavits sworn by the plaintiff, it emerges that each of these remedies is sought by reference to the plaintiff's assertion that he has complied with the terms of the compromise agreement but that the bank has not.

9 Broadly summarised, the plaintiff alleges that the bank has breached the compromise agreement in three ways. First, the plaintiff claims that the sum of €325,000 was wrongly debited from his account by the bank on the 27 ^th March 2013, in breach of the bank's obligation under the compromise agreement to postpone its rights and remedies under the relevant loan agreements between the bank and the plaintiff.

10 Second, the...