Seaconview dac v Chevas Securities Ltd ; Seaconview dac v Chevas Securities Ltd ; Fagan v Seaconview dac
| Jurisdiction | Ireland |
| Judge | Mr. Justice Twomey |
| Judgment Date | 11 July 2018 |
| Neutral Citation | [2018] IEHC 419 |
| Date | 11 July 2018 |
| Court | High Court |
| Docket Number | [2018 No. 389 S] [2018 No. 1982 P] [2018 No. 3775 P] |
[2018] IEHC 419
THE HIGH COURT
COMMERCIAL
Twomey J.
[2018 No. 389 S]
[2018 No. 1982 P]
[2018 No. 3775 P]
AND
AND
AND
AND
Summary judgment – Interlocutory injunction – Balance of convenience – Plaintiffs seeking summary judgment and an interlocutory injunction – Whether the balance of convenience supported an injunction
Facts: The first plaintiff, Seaconview DAC, applied to the High Court seeking summary judgment in the sum of €9,795,180.16 together with continuing interest against the first defendant, Chevas Securities Ltd, a company controlled by the second defendant, Mr Fagan, in relation to borrowings originally made by Ulster Bank Ireland Ltd to Chevas, and subsequently acquired by Seaconview. Seaconview and the receiver it appointed, Ms O'Dwyer of Duff & Phelps, the second plaintiff, also applied to the High Court seeking an interlocutory injunction preventing Chevas, Mr Fagan and his son from interfering with the receivership of certain properties which secured the foregoing borrowings. Another company controlled by Mr Fagan, New Vision Investments Property Management Ltd, acquired rights to the common areas of the two apartment blocks secured in favour of Seaconview. On that basis, it was claimed, on behalf of the defendants to the injunction proceedings, that the receiver was not entitled to use the common areas to access the apartment blocks to which she had been appointed receiver. Seaconview and the receiver argued that a right of way of necessity arose in favour of the receiver on the basis that if the defendants' claim was successful at the full hearing of the injunction application, it would effectively quarantine the two apartment blocks from the receiver.
Held by Twomey J that, having applied Aer Rianta v Ryanair [2001] 4 IR 607, Chevas did not have a credible defence to the application for summary judgment and accordingly judgment against Chevas would be granted. Relying upon Palaceanne Management Ltd v AIB plc [2017] IECA 141, Twomey held that the balance of convenience supported an injunction prohibiting the defendants to the injunction proceedings from interfering in any way with the access of the receiver to the two blocks of apartments as well as unlawful approaches to tenants regarding the non-payment of rents to the receiver.
Twomey J held that he would grant the summary judgment and the interlocutory injunction prohibiting any interference with the receiver using the common areas to access the two apartment blocks.
Applications granted.
This judgment considers two issues, first the application by Seaconview DAC ('Seaconview') for summary judgment in the sum of €9,795,180.16 together with continuing interest against the first named defendant, Chevas Securities Limited ('Chevas'), a company controlled by Mr. Seamus Fagan ('Mr. Fagan') in relation to borrowings originally made by Ulster Bank Ireland Limited ('Ulster Bank') to Chevas, and subsequently acquired by Seaconview.
The second matter for consideration is a motion by Seaconview and the receiver it appointed, Anne O'Dwyer of Duff & Phelps, (the 'Receiver'), for an interlocutory injunction preventing Chevas, Mr. Fagan and his son, Conor Fagan, from interfering with the receivership of certain properties which secured the foregoing borrowings. The key issue in relation to the second matter is that another company controlled by Mr. Fagan, New Vision Investments Property Management Limited ('New Vision'), acquired rights to the common areas of the two apartment blocks secured in favour of Seaconview. On this basis, it is claimed, on behalf of the defendants to the injunction proceedings, that the Receiver is not entitled to use the common areas to access the apartment blocks to which she has been appointed receiver. Seaconview and the Receiver argue that a right of way of necessity arises in favour of the Receiver on the basis that if the defendants' claim is successful at the full hearing of the injunction application, it would effectively quarantine the two apartment blocks from the Receiver.
For the reasons set out in this judgment, this Court grants the summary judgment and grants the interlocutory injunction prohibiting any interference with the Receiver using the common areas to access the two apartment blocks.
Chevas borrowed circa €10 million from Ulster Bank which borrowings were restructured pursuant to a facility letter issued by Ulster Bank on the 26th September, 2013, ('the Facility Letter'). The Facility Letter provided eight separate facilities, which were intended for various commercial purposes including the purchase of investment properties. The borrowings were secured over a large number of properties, security being provided by Chevas between 2002 and 2007, and in particular security was provided to Ulster Bank in respect of two blocks of apartments (with 28 apartments in total) in Kimmage, Dublin, which are known as the Royston Village apartments. Mr. Fagan is a director as well as a shareholder in Chevas.
The facilities and the related securities were transferred by Ulster Bank to Seaconview by Deed of Transfer dated 23rd October, 2015.
By letter of demand of the 30th November, 2017, Seaconview demanded repayment by Chevas of the outstanding sums in relation to seven of the eight facilities and as of 29th November, 2017, the total sum due under those borrowings was €9,276,823.09. By letter of demand of the 7th December, 2017, Seaconview demanded repayment by Chevas of the outstanding sum in relation the eighth facility, and as of 5th December, 2017, the total amount due under this facility was €518,357. Thus, the total amount outstanding claimed by Seaconview as outstanding from Chevas is €9,795,180.16 plus continuing interest.
The Receiver was appointed as receiver over the secured assets on the 21st December, 2017.
The first issue to address is whether Seaconview is entitled to a summary judgment against Chevas. It is not disputed that the money was borrowed by Chevas and that Chevas owes Seaconview the outstanding sums due under the Facility Letter. Rather the first ground of opposition to the grant of summary judgment is Chevas' allegation that Chevas reached agreement with Ulster Bank that the demand loan ceased to be on-demand lending and so it was not open to Seaconview to demand payment under the Facility Letter in November and December of 2017.
This defence is that in or around May 2016 Seaconview agreed with Chevas to accept payment of the monthly sum of €30,000 from the rent of the properties, including the Royston Village apartments, which secured the borrowings. The extent of this claim is the following statement in Mr. Fagan's affidavit on behalf of Chevas:
'Through engagement Seaconview agreed to monthly payments in the monthly sum of €30,000. This was a significant increase in the payments under the terms of the relevant Facility Letter. Therefore there is no breach of the obligations of the Defendants, no default occurred and accordingly there was never a right to seek judgement in the amount sought[...]
The repayment of €30,000 per month was agreed with Seaconview and constituted an amended agreement between the parties. This amended agreement did not include a term that the facilities were repayable on demand. And for the purposes of these proceedings, as there was no breach of the amended agreement, there has been no default and there is no entitlement on the part of Seaconview to bring this action.'
As is noted below in detail, the Facility Letter expressly states that the facility " is repayable on demand" by Ulster Bank/Seaconview. Accordingly, although it is not explicitly stated by Mr. Fagan in this affidavit, it must be implicit in this defence put forward on behalf of Chevas, that the effect of this agreement by Chevas to accept this sum of money was to convert the on-demand lending of the Facility Letter to term lending, such that Seaconview was thereby preventing from calling in the loan and so is not now entitled to the judgment which it seeks.
Although the claim therefore is implicitly made that the on-demand loan ceased to be such, it is relevant to note that nowhere in Mr. Fagan's affidavit does he allege that there was a written or oral agreement on the part of Seaconview that the demand nature of the loans would be altered. Nor is there any reference to the provisions of the alleged agreement between Seaconview and Chevas regarding in particular the length of the "term' of the loan which was to replace the on-demand loan. The suggestion, that a simple acquiesce or agreement by a bank which is owed money by a lender, to accept a greater sum than the monthly repayments then due from a borrower who owes the lender money under the terms of the Facility Letter, amounts to a fundamental change in the nature...
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