National Asset Loan Management Ltd v Crosbie

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan,MR JUSTICE MICHAEL PEART
• Judgment Date: 24 June 2016
• Neutral Citation: [2016] IECA 188
• Date: 24 June 2016
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2014/1395 [Article 64 Transfer]

[2016] IECA 188

THE COURT OF APPEAL

CIVIL

Peart J.

Finlay Geoghegan J.

Record Number: 2014/1395

[Article 64 Transfer]

Ryan P.

Finlay Geoghegan J.

Peart J.

BETWEEN/

NATIONAL ASSET LOAN MANAGEMENT LIMITED

PLAINTIFF/RESPONDENT

- AND -

HENRY A. CROSBIE

DEFENDANT/APPELLANT

Summary judgment – Loan facilities – Bona fide defense – Appellant seeking to appeal against a High Court order granting judgment against him on the respondent?s motion for summary judgment – Whether appellant had established on affidavit a bona fide defence to the claim

Facts: The appellant, Mr Crosbie, appealed to the Court of Appeal against an order of the High Court (Keane J) dated 31st July 2014 granting judgment against him in the sum of ?77,095,090.59 on the motion for summary judgment of the respondent, National Asset Loan Management Ltd. The trial judge was satisfied that the appellant had not established on affidavit a bona fide defence to the claim. That judgment sum arose on foot of certain loan facilities granted to the appellant by Allied Irish Banks plc, and on foot of certain personal guarantees executed by the appellant in the bank?s favour. The liabilities on foot of those loans and guarantees were transferred to the respondent, which is a subsidiary of the National Asset Management Agency (NAMA), under the NAMA Act. A letter of demand in respect of the sums claimed to be due was served on the appellant on the 10th March 2014, and they were not paid. Prior to that letter of demand, there had been extensive discussions, negotiations, correspondence and interaction generally between the parties which was directed towards trying to achieve a consensual approach to an optimal result for both parties, including an agreement as to a realisation of assets, including certain assets which did not form part of the security provided by the appellant in respect of the facilities in question. This course of dealing resulted in a Memorandum of Understanding between the parties dated 2nd March 2012, and an Amendment Agreement to it dated 2nd March 2012. However, the respondent terminated that agreement as it considered that there had been a significant non-disclosure of assets by the appellant. Since the respondent was nevertheless anxious to try and retain the cooperation of the appellant by a consensual realisation of assets, there was a further round of extensive engagement and negotiation which resulted in a further agreement in August 2012. The agreement was not committed to writing and executed by the parties, but its details were summarised in a letter written by the appellant?s solicitor to the respondent?s solicitor on the 24th August 2012, and that summary account was confirmed in a letter from the respondent?s solicitor dated 28th August 2012 (the McCabe letter). The appellant contended for an interpretation of the McCabe letter which would mean that although the appellant did not deny that he owed the amounts claimed, the respondent was not entitled to sue for judgment in respect thereof, and that in so far as the agreement might be seen as one whereby the respondent agreed not to take enforcement action in respect of certain assets, and agreed to negotiate a settlement with KBC Bank and ABN AMRO??on a pari passu basis based upon the value of assets that would be available for distribution on an assumption that Mr Crosbie was at this date declared bankrupt?, it was implicit that proceedings seeking judgment would not be commenced. The respondent submitted in response that nowhere in the McCabe letter was there any reference to any forbearance to sue on its part, or that it constitutes debt forgiveness or an acknowledgement that the agreement was in full and final settlement.

Held by Peart J that the trial judge was correct to conclude that the McCabe letter could not reasonably be construed as meaning that NAMA had agreed that it would not pursue a claim against the appellant for the amount due, and that no bona fide defence had been raised on the affidavits in that regard. Peart J did not consider it appropriate that the appellant should be allowed to plead a counterclaim in these summary proceedings.

Peart J held that he would dismiss the appeal.

Appeal dismissed.

JUDGMENT OF MR JUSTICE MICHAEL PEART DELIVERED ON THE 24TH DAY OF JUNE 2016:

1 The defendant appeals against the order of the High Court (Keane j.) dated 31st July 2014 granting judgment against him in the sum of ?77,095,090.59 on the plaintiff's motion for summary judgment. The trial judge was satisfied that the defendant had not established on affidavit a bona fide defence to the claim.

2 That judgment sum arises on foot of certain loan facilities granted to the defendant by Allied Irish Banks plc., and on foot of certain personal guarantees executed by the defendant in the bank's favour. The liabilities on foot of these loans and guarantees were transferred to the plaintiff, which is a subsidiary of the National Asset Management Agency (NAMA), under the NAMA Act. A letter of demand in respect of the sums claimed to be due was served on the defendant on the 10th March 2014, and they were not paid.

3 Prior to that letter of demand, there had been extensive discussions, negotiations, correspondence and interaction generally between the parties and their representatives which was directed towards trying to achieve a consensual approach to an optimal result for both parties, including an agreement as to a realisation of assets, including certain assets which did not form part of the security provided by the defendant in respect of the facilities in question.

4 This course of dealing between the parties resulted in a Memorandum of Understanding between the parties dated 2nd March 2012, and an Amendment Agreement to it dated 2nd March 2012. However, the plaintiff terminated that agreement as it considered that there had been a significant non-disclosure of assets by the defendant.

5 Since the plaintiff was nevertheless anxious to try and retain the cooperation of the defendant by a consensual realisation of assets, there was a further round of extensive engagement and negotiation embarked upon by the parties and their professional advisers which resulted in a further agreement in August 2012 which is central to the issues sought to be raised by the defendant in resistance to the plaintiff's motion for summary judgment. The agreement reached was not committed to writing and executed by the parties, but its details are summarised in a letter written by the defendant's solicitor to the plaintiff's solicitor on the 24th August 2012, and that summary account is confirmed in a letter from the plaintiff's solicitor dated 28th August 2012. For convenience I will refer to this agreement as ?the McCabe letter?.

6 The defendant contends for an interpretation of the McCabe letter, including by reference to and in the context of all the background facts and circumstances, which if correct, would mean that although the defendant does not deny that he owes the amounts claimed, the plaintiff is not entitled to sue for judgment in respect thereof, and that in so far as the agreement might be seen as one whereby the plaintiff agreed not to take enforcement action in respect of certain assets, and agreed to negotiate a settlement with KBC Bank and ABN AMRO ?on a pari passu basis based upon the value of assets that would be available for distribution on an assumption that Mr Crosbie was at this date declared bankrupt?, it is implicit that proceedings seeking judgment would not be commenced.

7 It is submitted that the trial judge was incorrect to conclude that the defendant had failed to establish on affidavit an arguable bona fide defence in accordance with the well-known Aer Rianta principles. The authorities from which the relevant test for establishing a bona fide defence derives and is explained is well set forth in the trial judge's judgment, and in truth there is no issue taken with the trial judge's conclusions in relation to the test. It is his application of the test to the facts of this case, and his conclusions in that regard, with which the defendant takes issue.

8 I have thus far set out only a very brief summary of the nature of the issues arising on this appeal. The extensive detail of the general background to the proceedings, the negotiations and agreements referred to, and the parties' submissions are very extensively and well set forth in the trial judge's written judgment which he delivered on the 27th June 2014, and there is no need for that to be repeated in extenso in this judgment.

9 I will however set forth paragraphs 32 – 34 of the trial judge's judgment since they contain what is relevant in the McCabe letter which is essential to an understanding of the issues raised on this appeal:

?32. The defendant swore an affidavit in response [to the plaintiffs grounding affidavit] on the 23rd April 2014. He contends that he has a full defence to the plaintiff's claim ?based on the fact that [he] and NAMA, and by extension the plaintiff, entered into a solemn agreement in August 2012 ? under which it was agreed inter alia that, in consideration of his providing the plaintiff security interests in certain assets, in respect of which the plaintiff has no legal or equitable interest or claim, and control over a number of companies (trading and non-trading), the plaintiff agreed that it would no longer have recourse over [his] remaining assets, including his interest in its family home, his son's home and business carried on by his wife..

33. The defendant contends that the terms of what he describes as a ?comprehensive agreement? between him and the plaintiff are to be found in the text of a letter dated 24th August 2012 from his solicitor, Mr Liam McCabe, a partner in the firm of...