Promontoria (Finn) Ltd v Boyle

JurisdictionIreland
JudgeMr. Justice Twomey
Judgment Date20 March 2019
Neutral Citation[2019] IEHC 463
CourtHigh Court
Docket Number[2018 No. 965 S]
Date20 March 2019

[2019] IEHC 463

THE HIGH COURT

COMMERCIAL

Twomey J.

[2018 No. 965 S]

BETWEEN
PROMONTORIA (FINN) LIMITED
PLAINTIFF
AND
HERBERT BOYLE

AND

PAUL KELLY
DEFENDANTS

Summary judgment – Loans – Legal title – Plaintiff seeking summary judgment arising from its purchase of loans taken out by the defendants – Whether the plaintiff had correct legal title as the assignee of the loans so as to enforce them against the defendants

Facts: The plaintiff, Promontoria (Finn) Ltd, sought summary judgment in the sum of STG£3,268,428.44, arising from its purchase of loans taken out by the defendants, Mr Boyle and Mr Kelly, from Ulster Bank Ireland Ltd and Ulster Bank Ltd (collectively the “Bank”). The defendants disputed Promontoria’s entitlement to summary judgment on a number of grounds, including whether Promontoria had correct legal title as the assignee of the loans from the Bank, so as to enforce them against the defendants.

Held by the High Court (Twomey J) that there was no fair and reasonable probability of the defendants having a real or bona fide defence to the claims seeking summary judgment in respect of Facility B (which had a sum due of STG£584,587.43 as of 29th June, 2018) and in respect of Facility C (which had a sum due of STG£2,457,448.13 as of 29th June, 2018), as well as the interest from Facility B in the interest roll up account (which had a sum due of STG£177,101 as of 29th June, 2018). The Court would hear from counsel regarding the precise terms of the order in respect of this summary judgment.

Twomey J held that, as regards Facility A (the overdraft, which had a sum due of STG£49,291.88 as of 29th June, 2018), it was subject to the 12 year statute of limitations, which meant that even though these proceedings were outside the normal six year time limit (as they were issued after the sixth year anniversary of the due date for the overdraft of 1st November, 2011), these proceedings could, because of s. 36(1)(a) of the Statute of Limitations 1957, seek any principal sum of money due on Facility A. It was not clear to the Court how much, if any, of the sum of STG£49,291.88 was a principal sum; accordingly, whether all or any of the sum claimed by Promontoria under Facility A was a principal sum of money was not a matter that was easily determinable from the evidence before the Court. While this would mean that this matter should be sent for plenary hearing, the Court believed there was merit in adopting the approach of Noonan J in Promontoria v Burns [2019] IEHC 75. Twomey J held that the evidence regarding Facility A was insufficient to grant summary judgment. Mindful of the possibility of greater costs being unnecessarily incurred, the Court held that it would therefore discuss with the parties if they wished to put further evidence before the Court regarding any principal sum due on Facility A in which case the Court could make such order for determination of the questions in issue in the action as may seem just.

Judgment approved.

JUDGMENT of Mr. Justice Twomey delivered on the 20th day of March, 2019
INTRODUCTION
1

This is a claim by the plaintiff (‘Promontoria’) jointly and severally against the defendants (‘Mr. Boyle’ of Donnybrook, Dublin 4 and ‘Mr. Kelly’ of Rathmines, Dublin 6) seeking summary judgment in the sum of STG£3,268,428.44, arising from its purchase of loans taken out by Mr. Boyle and Mr. Kelly from Ulster Bank Ireland Limited, a company incorporated in Ireland (‘UBIL’) and Ulster Bank Limited (‘UBL’), a company incorporated in Northern Ireland, collectively the ‘Bank’.

BACKGROUND FACTS
2

The borrowings arose from a facility letter (‘Facility Letter’) which is dated on its face 9th May, 2011, but which was accepted by Mr. Boyle and Mr. Kelly on 23rd May, 2011. This Facility Letter is signed on behalf of UBIL and UBL and it provided for the renewal/restructuring of previous facilities granted to Mr. Boyle and Mr. Kelly in connection with their purchase of 45 apartments above the Malmaison Hotel in Liverpool. The Facility Letter contains the following three loan facilities:

• Facility A which is from UBL and is an overdraft facility in the sum of STG£50,000. The repayment terms are stated to be as follows:

‘The Facility is repayable on demand in accordance with normal banking practice. Without prejudice to the Bank's overriding right to call for a repayment on demand it is agreed that the Facility will be cleared in full by 31st October 2011.’

• Facility B is from UBL and is a committed loan facility in the sum of STG£570,000. The repayment terms are stated to be as follows:

‘The facility is advanced on an interest only basis for a further period until 31st October 2011 when the repayment arrangement is due for review or until the borrowing is cleared in full, whichever date is earlier.’

• Facility C is from UBIL and is a bridging loan facility in the sum of STG £2,550,000. The repayment terms are stated to be as follows:

‘The facility is advanced on an interest only basis for a further period until 31st October 2011 when the repayment arrangement is due for review or until the borrowing is cleared in full, whichever date is earlier.’

3

The Summary Summons gives a breakdown of the sum of STG£3,268,428.44 as follows, the sums being stated to be due as of 29th June, 2018:

Facility A - STG£49,291.88

Facility B - STG£584,587.43

Facility C - STG£2,457,448.13

Interest Roll Up Account - STG£177,101.00.

4

Mr. Boyle and Mr. Kelly had previously executed a legal charge in favour of UBIL on 21st April, 2008 charging 14 apartments above the Malmaison Hotel in Liverpool as security for borrowings from UBIL. The Facility Letter expressly provides that this charge was security for the borrowings set out in the Facility Letter, namely Facilities A, B and C..

5

The Facility Letter makes express reference to the Bank's General Conditions for Business Lending being applicable to the facilities in the Facility Letter and Clause 8.2 (a) of the General Terms and Conditions for Business Lending states:

‘Upon the occurrence of any of the events specified below, the Bank may by written notice to the Borrower terminate the Facility and/or demand immediate repayment of all or any amounts drawn and outstanding under the Facility and all accrued interest and other sums payable in respect of the Facility (and if the Facility is drawn or only partially drawn, the facility or the portion of the Facility which remains undrawn shall be cancelled) and the Bank may declare that the Security has become immediately enforceable;

(a) Non-Payment: the Borrower fails to pay on the due date any amount payable under this Agreement […]’

6

It is not disputed that Mr. Boyle and Mr. Kelly executed the Facility Letter, that they received the benefit of those monies advanced by UBIL and UBL and that the sums have not been repaid by Mr. Boyle or Mr. Kelly to UBIL or UBL or indeed to Promontoria (the successor in title to this Facility Letter). In particular, it is not disputed that Facility A, being the overdraft facility, which was repayable in full by 31st October 2011 was not paid in full by that date or indeed any other date by Mr. Boyle or Mr. Kelly. As a result, Promontoria claims that, pursuant to Clause 8.2(a) of the General Conditions, Messrs. Boyle and Kelly were in default in relation to Facility A and the Bank (or its successor in title) was entitled, as and from 1st November, 2011, to demand immediate repayment of all the amounts due under the Facility Letter, i.e. the amounts due under Facility B and C as well as under Facility A.

7

What the defendants do dispute is Promontoria's entitlement to summary judgment on a number of grounds, including whether Promontoria has correct legal title as the assignee of the loans from the Bank, so as to enforce them against the defendants. Although this Court does not propose to set out every ground in full, it has fully taken all grounds into account and sets out hereunder the key defences relied upon by the defendants.

Promontoria's chain of title to the Facility Letter
8

The first defence is that Promontoria is not legally entitled to stand in the shoes of the Bank under the Facility Letter so as to enable it to seek this summary judgment. The background to this defence is that a Mortgage Sale Deed (the ‘Mortgage Sale Deed’) dated 23rd July, 2015 was entered into between, inter alia, UBIL, UBL and Promontoria Holdings 152 B.V. whereby UBIL and UBL agreed to sell certain mortgage assets together with the underlying loans and security to Promontoria Holdings 152 B.V. Mr. Kelly and Mr. Boyle are specifically listed in the Schedule to the Mortgage Sale Deed as obligors, whose loans are being sold, as is the security over the 14 apartments in Liverpool. It seems clear to this Court therefore that UBIL and UBL agreed to sell to Promontoria Holdings 152 B.V. loans it had made to the defendants.

9

The next link in the chain of title is a Deed of Novation dated 14th September, 2015 between, inter alia, UBIL, UBL, Promontoria Holdings 152 B.V. and Promontoria. This provides for the novation of the Mortgage Sale Deed in favour of Promontoria. There can be little doubt that this Deed of Novation substitutes Promontoria in place of Promontoria Holdings 152 B.V. as the buyer of the loans under the Mortgage Sale Deed.

10

The final link in the chain of title is a Global Deed of Transfer dated 23rd October, 2015 entered into between UBIL and Promontoria. This is the formal assignment by UBIL of the benefit of loans and related security documents, which were agreed to be transferred under the terms of the Mortgage Sale Deed. Uncontroverted evidence was provided on affidavit on behalf of Promontoria to the Court of so-called “goodbye letters” from UBL and UBIL (and also “hello letters” from Promontoria), to Mr. Boyle and Mr. Kelly in relation to the assignment of the defendants' loans from UBL and UBIL to Promontoria,...

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