Seamus Downes v National Asset Loan Management Ltd and Promontoria (GEM) Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Alexander Owens |
| Judgment Date | 16 March 2021 |
| Neutral Citation | [2021] IECA 76 |
| Date | 16 March 2021 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Court of Appeal Record No. 2014/1238 |
[2021] IECA 76
Donnelly J.
Pilkington J.
Owens J.
Court of Appeal Record No. 2014/1238
[High Court Record Nos. 2012/1475S and 2012/4456S]
THE COURT OF APPEAL
CIVIL
Liabilities – Guarantee – Findings of fact – Appellant appealing against findings of the High Court – Whether there was evidence to support the findings of fact
Facts: Loans and associated security was transferred by Allied Irish Banks plc (AIB) to the respondent, National Asset Loan Management Ltd (NALM), under provisions of the National Asset Management Agency Act 2009 in late 2010. In 2011 and 2012 NALM sued the appellant, Mr Downes, and connected borrowers and guarantors for amounts claimed to be outstanding on loan and guarantee commitments to AIB. Mr Downes contested liability in two actions which were heard together in the Commercial Court. Judgment was given on 16 January 2014. In the first action Mr Downes was found liable to pay an amount in excess of €1,600,000. This related to a loan originally advanced by AIB to Mr Downes, Mr McMahon and Mr O’Brien to finance the purchase of a shopping centre at Castletroy, County Limerick. They were in partnership as solicitors and they were also members and directors of Mount Kennett Investments (MKI), an unlimited company. In the second action Mr Downes was found liable to pay €5,840,000 on a guarantee dated 13 June 2003 which they gave to AIB for MKI. The benefit of the facilities, securities, liabilities and judgments relating to Mr Downes and the connected borrowers and guarantors had been transferred by NALM to Promontoria (GEM) Ltd. The High Court judge concluded that any arrangements entered into between AIB and MKI and further separate guarantees given by Mr McMahon and Mr O’Brien for the liabilities of MKI to AIB in late 2010 did not result in discharge of the commitment of Mr Downes to answer for liabilities of MKI to AIB under the 2003 guarantee. He also concluded that AIB and NALM were not estopped from relying on the 2003 guarantee against Mr Downes, nor were they estopped from seeking repayment of the Castletroy loan. He rejected contentions that the benefit of these commitments had not been validly vested in NALM under the provisions of the 2009 Act. Mr Downes appealed to the Court of Appeal against those findings.
Held by Owens J that he agreed with the conclusions of the High Court and that there was ample evidence to support the findings of fact. Owens J held that there was no evidence of any agreement between Mr Downes and either AIB or NALM for release of his obligation to answer for the liabilities of MKI under the 2003 guarantee. Owens J held that any arrangements made by AIB with MKI and with Mr McMahon and Mr O’Brien in 2010 did not result in discharge of this obligation. Owens J held that the challenge to the validity of the transfer by AIB to NALM of the Castletroy and MKI loans and related security and surety arrangements was not maintainable in this action and was out of time.
Owens J held that these appeals would be dismissed. His provisional view was that the respondents were entitled to their costs of appeal. He had in mind to make a single order for costs of the appeal in the guarantee action and no order for costs of the appeal in the Castletroy loan action.
Appeal dismissed.
JUDGMENT of Mr. Justice Alexander Owens delivered on the 16th day of March, 2021 .
These appeals relate to loans and associated security transferred by Allied Irish Banks plc (AIB) to National Asset Loan Management Ltd (NALM) under provisions of the National Asset Management Agency Act 2009 (the 2009 Act) in late 2010. In 2011 and 2012 NALM sued Seamus Downes and connected borrowers and guarantors for amounts claimed to be outstanding on loan and guarantee commitments to AIB. Seamus Downes contested liability in two actions which were heard together in the Commercial Court.
Judgment was given on 16 January 2014. In the first action Seamus Downes was found liable to pay an amount in excess of €1,600,000. This related to a loan originally advanced by AIB to Seamus Downes, Denis McMahon and Paul O'Brien to finance the purchase of a shopping centre at Castletroy, County Limerick. They were in partnership as solicitors and they were also members and directors of Mount Kennett Investments (MKI) which is an unlimited company. In the second action Seamus Downes was found liable to pay €5,840,000 on a guarantee dated 13 June 2003 which they gave to AIB for MKI. The benefit of the facilities, securities, liabilities and judgments relating to Seamus Downes and the connected borrowers and guarantors has been transferred by NALM to Promontoria (GEM) Ltd.
The learned High Court judge concluded that any arrangements entered into between AIB and MKI and further separate guarantees given by Denis McMahon and Paul O'Brien for the liabilities of MKI to AIB in late 2010 did not result in discharge of the commitment of Seamus Downes to answer for liabilities of MKI to AIB under the 2003 guarantee. He also concluded that AIB and NALM were not estopped from relying on the 2003 guarantee against Seamus Downes, nor were they estopped from seeking repayment of the Castletroy loan. He rejected contentions that the benefit of these commitments had not been validly vested in NALM under the provisions of the 2009 Act. This appeal is brought against those findings.
I agree with these conclusions of the High Court. There was ample evidence to support the findings of fact. There was no evidence of any agreement between Seamus Downes and either AIB or NALM for release of his obligation to answer for the liabilities of MKI under the 2003 guarantee. Any arrangements made by AIB with MKI and with Denis McMahon and Paul O'Brien in 2010 did not result in discharge of this obligation. The challenge to the validity of the transfer by AIB to NALM of the Castletroy and MKI loans and related security and surety arrangements was not maintainable in this action and was out of time.
The learned High Court judge decided that the evidence was insufficient to establish that AIB or NALM acted towards Seamus Downes in a manner which estopped recovery on foot of the 2003 guarantee or the calling in of the Castletroy loan. I agree that the evidence did not establish any tenable basis on which Seamus Downes could rely on an estoppel defence. I am not persuaded that there is anything which would justify us in upsetting these conclusions.
Seamus Downes was aware of his 2003 guarantee. In 2009 he got confirmation from AIB that the guarantee was not being relied on against him in respect of borrowings by MKI relating to a property in Pembroke Road in Dublin. The guarantee was for repayment of all present or future advances by AIB to MKI and other commitments of MKI to AIB of any type and contained a series of provisions which gave AIB maximum flexibility in dealing with the principal debtor and any sureties, including any of the guarantors under that guarantee, without necessity to refer to or obtain the consent of any other guarantor or surety. It specified that the maximum amount recoverable from “the Guarantor” was €5,840,000 plus interest from date of demand.
On 5 August 2010 AIB made an offer in a facility letter to MKI to continue loan facilities with a review date for all facilities of 1 September 2010. This required three guarantees from Seamus Downes, Denis McMahon and Paul O'Brien for the obligations of MKI for €7,944,386.68 each. A further facility offer was made to MKI in a letter dated 22 October 2010 in similar terms. This time the review date was 1 March 2011 and the guarantee sought from Seamus Downes was for €6,671,533.06. AIB sought guarantees for €7,893,541.68 from each of the others.
AIB sent a copy of the facility letter and a guarantee form to Seamus Downes with a covering letter requesting that he execute and return the guarantee. Some four years earlier he had terminated his partnership with Denis McMahon and Paul O'Brien. In 2010 he was still in the process of unwinding his business relationships with them and with MKI. He had engaged Dermot McEvoy in Eversheds to act as his solicitor in relation to these matters. When AIB requested the new guarantee in 2010 he sought advice from his solicitors. He decided not to give this guarantee to AIB. The others executed the new guarantees and returned them to AIB.
An Issue arose as to whether MKI had accepted the facility letter of 22 October 2010 and whether AIB had continued the MKI overdraft permission and other loans on that basis. The banking facilities of MKI were not withdrawn or treated as being in default and were continued by AIB. The learned High Court judge decided that it was not necessary for him to resolve the issue of whether any MKI banking facilities with AIB were extended under the 2010 facility letter.
I agree. There was no point in time at which MKI ceased to owe AIB the borrowings secured by the 2003 guarantee. Even if there had been a momentary satisfaction of all liabilities of MKI as a result of roll-over of AIB loan facilities to MKI at the end of 2010, this matter was covered by clause 2 of the 2003 guarantee which provides as follows:
“This Guarantee shall not be considered as satisfied by any intermediate payment or satisfaction (by the Guarantor or the Customer or any other person) of the whole or any part of any sum or sums of money owing as aforesaid but shall be a continuing security and shall remain in force notwithstanding any disability or the death of the Guarantor and shall extend to any sum or sums of money which shall from...
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