National Asset Loan Management DAC Ltd v Breslin

• Jurisdiction: Ireland
• Court: Court of Appeal (Ireland)
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 26 October 2017
• Neutral Citation: [2017] IECA 283
• Date: 26 October 2017
• Docket Number: Neutral Citation Number: [2017] IECA 283

BETWEEN

NATIONAL ASSET LOAN MANAGEMENT DESIGNATED ACTIVITY COMPANY LIMITED

PLAINTIFF / RESPONDENT

- AND -

MICHAEL BRESLIN

DEFENDANT / APPELLANT

[2017] IECA 283

Whelan J.

Ryan P.

Irvine J.

Whelan J.

Neutral Citation Number: [2017] IECA 283

[Appeal number 2017/279]

THE COURT OF APPEAL

CIVIL

Guarantee – Indemnity – Debts – Appellant seeking to appeal against High Court judgment and consequential Commercial Court orders – Whether guarantee was not validly created or was otherwise unenforceable

Facts: The appellant, Mr Breslin, appealed to the Court of Appeal against the judgment of McGovern J delivered on 26th May, 2017 and consequential orders made in the Commercial Court granting summary judgment pursuant to order 37 RSC against him in the sum of £9,397,725.60, sterling and costs. The appellant claimed he was induced by Anglo Irish Bank in October 2008 to enter into a guarantee of the debts of Car Park Solutions Ltd (the company) incurred mainly in the acquisition of a property at Waterloo Road, London, on the basis of representations made by Mr Feeney, director of UK lending at Anglo that construction finance would be furnished for the purpose of facilitating the completion of the building of a hotel and facilities (the Waterloo Road project). This alleged representation, he contended, operated as a condition precedent to the guarantee coming into effect. Since construction finance (estimated to be in the region of £40 million) was never advanced by the bank the appellant contended that he was not bound by his guarantee. The appellant denied that an unlimited guarantee and indemnity executed by him on or about 5th November, 2008, for the debts of the company was acquired by the respondent, National Asset Loan Management DAC Ltd (NALM), when the "bank assets" (as defined in the National Asset Management Agency Act 2009) arising from the credit facilities granted by Anglo to the company transferred to NALM on the 13th December, 2010 under the provisions of Part 6 of the Act. It was contended that the appellant's guarantee was not effectively acquired at that time by the respondent. The appellant asserted that the guarantee was not validly created or was otherwise unenforceable having regard to the provisions of two floating charges created in February 2008 by Anglo in favour of the Central Bank of Ireland and Financial Services Authority of Ireland. The appellant relied on negative pledge clauses contained in the said floating charges as invalidating the guarantee. The appellant claimed he had been released from the guarantee on foot of an agreement (the American document) concluded between Irish Bank Resolution Corporation in special liquidation of the one part and the appellant and his wife of the other part. The appellant claimed that notwithstanding that NALM was not a party to the American document, it was nonetheless binding on the respondent. The appellant challenged the constitutionality of ss. 101, 105 and 108 of the 2009 Act.

Held by Whelan J that the facts averred to in the various affidavits sworn by or on behalf of the appellant and the arguments advanced thereon taken at their highest did not establish any real or probable bona fide defence to the respondent's claim. Whelan J held that the appellant failed to put forward any credible basis for believing that evidence might be forthcoming to support any ground of appeal relied upon or proposed ground of defence advanced.

Whelan J held that the appeal should be dismissed on all grounds.

Appeal dismissed.

JUDGMENT of Ms. Justice Máire Whelan delivered on the 26th day of October 2017

1 This is the defendant's appeal against the judgment of McGovern J. delivered on 26th May, 2017 and consequential orders made in the Commercial Court granting summary judgment pursuant to order 37 RSC against the defendant in the sum of £9,397,725.60, sterling and costs.

2 The appellant is a highly successful and experienced businessman. He has extensive corporate experience at chief executive level with various corporations in the United States of America since the 1980s and is, according to his affidavit sworn 30th July, 2015, president and chairman of a corporate group in New Jersey. He appears to have had prior experience and familiarity with the process of negotiating with lending institutions and personally guaranteeing a bank loan (appellant's affidavit 1st March, 2017, para. 26).

3 The respondent ('NALM') is a group entity within the National Asset Management Agency, a statutory body corporate established pursuant to the provisions of the National Asset Management Agency Act, 2009 ('the 2009 Act'). The appellant was sued in his capacity as a guarantor of the debts of Car Park Solutions Limited ('the company') to the failed banking entity formerly known as Anglo Irish Bank ('the Bank'). The company is a dissolved development company which had a registered office at Belturbet, Co. Cavan. In September 2007, the company acquired a property at Waterloo Road, London. The property was valued in September 2007, as a condition precedent to drawdown of the loan facility, at £25,700,000. Acquisition was financed in part by the bank by virtue of two on-demand loan facilities Facility 1 in the sum of £19,400,000 and Facility 2, a short-term bridging loan in the further sum of £2,000,000.

4 In 2008 the company sought an extension of the two loan facilities. The bank ultimately agreed to extend the loan terms to 31 March 2009 subject to certain prerequisites including, inter alia, that the appellant would execute a personal unlimited guarantee and indemnity in respect of the supplemental facilities. The alleged circumstances which led to the appellant executing the guarantee are in issue in this appeal.

5 The bank was taken into public ownership on 21st January, 2009 against a dismal economic background. In July 2011, it was restructured, with another bank entity, as Irish Bank Resolution Corporation ('IBRC'). Pursuant to Statutory Instrument No. 36 of 2013 IBRC was placed into special liquidation on 7th February, 2013. IBRC (in special liquidation) is successor in title to Anglo. NALM's position is that under the provisions of the 2009 Act, it acquired from Anglo the 'bank assets' of the company on the 13th December, 2010. The company's liability to Anglo on foot of the loan facilities exceeded £22 million as of August 2009. The liability was ultimately reduced by the receivers' sale of the mortgaged property (by then with the benefit of planning permission) for £16,000,000 on 16th March 2011.

6 The appellant's notice of appeal, filed 12th June, 2017, sets out 54 distinct grounds of appeal. However, at the hearing before this Court on 28th July, 2017, counsel for the appellant indicated that he was proceeding on five essential grounds as follows:

i. The appellant claims he was induced by the bank in October 2008 to enter into a guarantee of the debts of the company incurred mainly in the acquisition of the property on the basis of representations made by Fergal Feeney, director of UK lending at Anglo that construction finance would be furnished for the purpose of facilitating the completion of the building of a hotel and facilities at Waterloo Road, London SE1 ('the Waterloo Road project'). This alleged representation, he contends, operated as a condition precedent to the guarantee coming into effect. Since construction finance (estimated to be in the region of £40 million) was never advanced by the bank the appellant contends that he is not bound by his guarantee.

ii. The appellant denies that an unlimited guarantee and indemnity executed by him on or about 5th November, 2008, for the debts of the company was acquired by NALM when the 'bank assets' (as defined in the 2009 NAMA Act) arising from the credit facilities granted by Anglo to the company transferred to NALM on the 13th December, 2010 under the provisions of Part 6 of the Act. It is contended that the appellant's guarantee was not effectively acquired at that time by the respondent.

iii. The appellant asserts that the guarantee was not validly created or is otherwise unenforceable having regard to the provisions of two floating charges created in February 2008 by Anglo in favour of the Central Bank of Ireland and Financial Services Authority of Ireland. The appellant relies on negative pledge clauses contained in the said floating charges as invalidating the guarantee.

iv. The appellant claims he has been released from the guarantee on foot of an agreement ('the American document') concluded between IBRC in special liquidation of the one part and the appellant and his wife Dolores Breslin of the other part. The appellant claims that notwithstanding that NALM was not a party to the American document, it is nonetheless binding on the respondent.

v. The appellant challenges the constitutionality of sections 101, 105 and 108 of the NAMA Act 2009.

History

7 Barry Breslin and Francis Smith, the appellant's brother and cousin respectively, were involved in the business of property construction and development in Ireland and the United Kingdom for over two decades. In the years prior to 2007 they carried out developments including through a company Keelagh Homes Ltd. In early 2007 the directors of Keelagh identified a potential property investment in London being a premises at Partnership House, 157 – 183 Waterloo Road, London SE1 ('the property'). In mid-July, 2007 Barry Breslin and Francis Smith met with Anglo representatives in Dublin to discuss the proposed acquisition and development of the property. At that time the total cost of acquisition of the property and its development as a hotel was estimated at around £61 million. In an affidavit sworn on 1st March, 2017 Francis Smith deposed:-

'I believed that the most likely option available to us was that the full finance, to include construction finance,...