Promontoria (Gem) Dac v Redmond

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 02 May 2018
• Neutral Citation: [2018] IEHC 231
• Docket Number: [2017 No. 2260 S]
• Court: High Court
• Date: 02 May 2018

BETWEEN:

PROMONTORIA (GEM) DAC

PLAINTIFF

-AND-

CIARAN REDMOND, MICHAEL O'NEILL, CLODY NORTON, PETER CREAN, T/A THE NORC PARTNERSHIP

DEFENDANTS

[2018] IEHC 231

[2017 No. 2260 S]

THE HIGH COURT

COMMERCIAL

Summary judgment – Loan facility – Settlement agreement – Plaintiff seeking summary judgment against the defendants – Whether defendants provided a credible defence to the proceedings

Facts: The plaintiff, Promontoria, applied to the High Court for summary judgment against the defendants arising from borrowings made by facility letter dated the 20th December, 2004. The borrowings were made for the purpose of building 16 apartments at Mill Race, Bunclody, Co. Wexford. Under the terms of the facility letter Anglo Irish Bank Corporation plc offered a loan facility of €3,896,000 to the defendants. The defendants accepted the facility letter and the Bank's General Conditions on the 5th January, 2005. Only two of the defendants contested the proceedings. The fourth defendant, Mr Crean, argued that the matter should go to a plenary hearing because he claimed that he reached a binding settlement agreement on the 16th February, 2018 with Promontoria whereby he settled his joint and several liability for his undertaking to pay €80,000. The third defendant, Ms Norton, also relied on the alleged settlement agreement as a defence to the summary proceedings against her, on the grounds that the claim against her could not be sufficiently particularised until the amount, if any, agreed to be paid by Mr Crean under the alleged settlement agreement was established at a plenary hearing on that issue.

Held by Twomey J that, in the circumstances and having born in mind that neither Mr Crean nor Ms Norton disputed that the sum of €3.89 million was borrowed and had not been paid back, no credible defence had been provided to these proceedings.

Twomey J held that the appropriate order to make was to grant summary judgment for the principal sum of €3,896,000.

Application granted.

JUDGMENT of Mr. Justice Twomey delivered on the 2nd May, 2018.

Summary

1 This case involves an application for summary judgment by the plaintiff ('Promontoria') against the defendants in the sum of €4,572,662.91 arising from borrowings made by facility letter dated the 20th December, 2004 ('the Facility Letter'). The borrowings were made for the purpose of building 16 apartments at Mill Race, Bunclody, Co. Wexford.

2 Under the terms of the Facility Letter Anglo Irish Bank Corporation plc ('Anglo') offered a loan facility of €3,896,000 to the defendants ('the Facility Letter'). The defendants accepted the Facility Letter and the Bank's General Conditions on the 5th January, 2005.

3 Only two of the defendants are contesting these proceedings. The primary defence to the summary judgment is provided by Mr. Peter Crean, the fourth named defendant ('Mr. Crean'). Mr Crean who, as well as having being involved in the proposed property development for which these funds were required, is a solicitor. He argues that the matter should go to a plenary hearing because he claims that he reached a binding settlement agreement on the 16th February, 2018 (the 'Alleged Settlement Agreement') with Promontoria whereby he settled his joint and several liability of €4.5 million for his undertaking to pay €80,000. The third named defendant, Ms. Clody Norton ('Ms. Norton'), also relies on the Alleged Settlement Agreement as a defence to the summary proceedings against her, on the grounds that the claim against her cannot be sufficiently particularised until the amount, if any, agreed to be paid by Mr. Crean under the Alleged Settlement Agreement is established at a plenary hearing on that issue.

4 Neither Mr. Crean nor Ms. Norton dispute that the monies were borrowed and that they have defaulted in the repayment of those monies.

Background

5 Pursuant to the NAMA Act, 2009, National Asset Management Limited ('NALM') became legally and beneficially entitled to the Facility Letter. By Global Assignment Deed dated 27th January, 2017, between NALM as assignor and Promontoria as assignee ('Global Assignment Deed'), the Facility Letter was transferred to Promontoria, although as noted hereunder, Mr. Crean alleges that this root of title whereby Promontoria became entitled to the Facility Letter is not sufficiently established.

6 By letter of demand dated 15th June, 2017, Promontoria sought the sum of €4,545,502.52 then due and owing under the Facility Letter from the defendants.

7 As well as his primary argument that he has a binding settlement agreement with Promontoria, Mr. Crean has also advanced a number of arguments in support of his contention that Promontoria should not get summary judgment, but that this matter should proceed to a plenary hearing. These arguments will be considered in turn in light of the test set down by McGuinness J. in Aer Rianta v. Ryanair [2001] 4 IR 607 at 615 that the key issue for this Court in deciding whether to grant a summary judgment is whether the defendant has a "credible defence".

Statute of Limitations claim

8 At para 4 of his affidavit, Mr. Crean avers that the plaintiff's claim is statute barred by s. 11 of the Statutes of Limitations Act, 1957. He avers that the last payment in respect of the Facility Letter was made "over six years ago and I believe it was in or about November 2009" and that the repayment date under Clause 7 of the Facility Letter was 1st December, 2005, which is also more than six years from when these proceedings were issued.

9 However, it seems clear to this Court that based on the judgment of Baker J. in Allied Irish Banks plc v. Pollock & anor [2016] IEHC 581, that the ordinary meaning of the terms of the Facility Letter need to be considered in reaching a conclusion on this statute of limitations claim. In this regard, Clause 7 of the Facility Letter states:

'The Facility is repayable on demand which demand may be served at any time by the Bank at its sole discretion and without stating any reason for such demand. Without prejudice to the demand nature of the Facility, the Facility shall be reviewed on or before 1st December 2005. In the meantime, interest is to be funded on a monthly basis.'

On the ordinary meaning of this clause, all that was going to happen on the 15th June, 2017, was a "review" of the facility and therefore this was not the repayment date in this Court's view. It is also the case that this clause explicitly states that the facility is "repayable on demand". Accordingly, this Court concludes that the cause of action in these proceedings arose when demand was made on the 15th June, 2017, and therefore there is no question of these proceedings being statute barred.

Condition precedent claim

10 Mr. Crean avers that Anglo failed to adhere to a condition precedent in the Facility Agreement, which related to Anglo obtaining a valuation of the property at Mill Race, Bunclody which property was to secure the loan. Clause 5(1) of the Facility Letter states:

'The Facility shall not be available for drawdown unless the Conditions Precedent set out in the General Conditions are satisfied and the Bank has received, in form and substance, satisfactory to it:

(i) A report, addressed to the Bank, from its nominated valuer (the 'Valuer') regarding the Property. The terms of reference for this report will be set out in the Banks letter of instruction to the Valuer.'

However, it seems clear to this Court that this condition precedent was waived by Anglo, since no valuation was obtained, yet Anglo proceeded to lend the money to the four defendants. There is nothing in the wording of the Clause 5 or in the other circumstances of this case which would lead this Court to conclude that the valuation was not for the benefit of Anglo alone, in order for it to be satisfied that it had sufficient security for the loan. It is also clear to this Court that the requirement to have a valuation is severable from the remainder of the Facility Letter and so on the authority of IBRC v. Cambourne Investments [2014] 4 IR 54 this Court finds that this is not a good defence to the summary judgment. In any case, as noted by Charleton J. in Cambourne, the obligation of the defendants to repay monies borrowed is not extinguished even where there has been failure to comply with a condition precedent.

The SME Code claim

11 Mr. Crean alleges that Link ASI Limited (formerly known as Capita Asset Services (Ireland) Limited) ('Link'), the company providing loan administration services on behalf of Promontoria, has made a number of breaches of the Code of Conduct for Business Lending to Small and Medium Enterprises issued by the Central Bank of Ireland ('SME Code'). In light of these alleged breaches it is Mr. Crean's case that Promontoria ought not be granted judgment or that the Court ought exercise its jurisdiction to stay the summary proceedings pending the plaintiff proving it and its agents are compliant with the SME Code or to explain why they are not so compliant.

12 As is clear from the judgment of Ryan J. (as he then was) in ACC Bank plc v. Deacon [2013] IEHC 427, compliance with the SME Code is not a prerequisite to establishing liability, nor does non-compliance furnish a defence. It follows that the alleged failure of Link to comply with the SME Code is a regulatory matter between the Central Bank and the regulated financial service providers and it does not provide any defence to the defendants to these summary proceedings.

Promontoria's title to bring these proceedings

13 Mr. Crean takes issue with the redacted Global Assignment Deed between NALM as assignor and Promontoria as assignee. Mr. Crean avers that the document is redacted to such a degree that it does not show what rights or title or interest was transferred from NALM, if any, to Promontoria. It is further averred that Promontoria has not established what rights, interests or benefits NALM...