Ulster Bank Ireland Ltd v Sean Fortune and Another

JurisdictionIreland
JudgeMs. Justice Barton
Judgment Date16 May 2014
Neutral Citation[2014] IEHC 272
CourtHigh Court
Date16 May 2014

[2014] IEHC 272

THE HIGH COURT

[No. 5800 S./2010]
Ulster Bank Ireland Ltd v Fortune

BETWEEN

ULSTER BANK IRELAND LIMITED
PLAINTIFF

AND

SEAN FORTUNE AND PAULINE FORTUNE
DEFENDANTS

FIRST NATIONAL COMMERCIAL BANK PLC v ANGLIN 1996 1 IR 75 1996/11/3337 1996 IESC 1

AER RIANTA CPT v RYANAIR LTD 2001 4 IR 607 2002 1 ILRM 381 2001/1/68

HARRISRANGE LTD v DUNCAN 2003 4 IR 1 2002/12/2982 2002 IEHC 14

BANK OF IRELAND v WALSH UNREP FINLAY GEOGHEGAN 8.5.2009 2009/5/1036 2009 IEHC 220

MCGRATH v O'DRISCOLL & ORS 2007 1 ILRM 203 2006/35/7529 2006 IEHC 195

GE CAPITAL WOODCHESTER LTD & GE CAPITAL WOODCHESTER FINANCE LTD v AKTIV KAPITAL ASSET INVESTMENT LTD & AKTIV KAPITAL ASA UNREP CLARKE 19.11.2009 2009/22/5542 2009 IEHC 512

DANSKE BANK A/S (T/A NATIONAL IRISH BANK) v DURKAN NEW HOMES & ORS UNREP SUPREME 22.4.2010 2010/10/23922010 IESC 22

BUSSOLENO LTD v KELLY & ORS 2012 1 ILRM 81 2011/7/1488 2011 IEHC 220

Summary judgment - Mortgage Loan Accounts - Current Account-Repayment of Debt - Facility Letter - Conditions - Liberty to enter final judgment - Leave to defend proceedings - Demand - Arguable defence - Terms and Conditions - Conflict of Evidence - Default Schedule - Plenary Hearing

Facts: This action was brought by the plaintiff against the defendants by summary summons to recover the sum of €1,130,652.99 on foot of two joint several mortgage loan accounts and joint and several current account. The plaintiff sought liberty to enter summary judgment for this sum with costs, claiming entitlement to judgment against the defendants on the basis money was loaned to the defendant. The plaintiff offered to advance to the defendants €190,000 to enable the defendants to purchase and renovate property, with conditions including the provision the plaintiff reserved the right to require repayment on demand should certain events occur. The defendants availed of the facilities offered to them by the plaintiff by the facilities letter and the loan of €190,000. By further facility letter the plaintiff offered the defendants a loan of €912,000 repayable on demand for a term of one year together with a variable rate of interest. Although the term of the loan was one year, the letter of offer provided for the interest only period of the loan to be extended to two years with an annual review after year one and in the absence of demand the defendants would repay the loan in full. The defendants availed of the facility and the loan remained unpaid. The defendants were unable to meet their repayment commitments. In June or July 2011 after the proceedings commenced, the defendants instructed their accountants to write to the plaintiff”s solicitors outlining proposals for repayment of the loans. The plaintiffs sought liberty to enter final judgment against the defendants and the proceedings were struck out. Both parties agreed it had to be determined whether the plaintiff should be given liberty to enter final judgment or whether the defendant should be given leave to defend the proceedings. The plaintiff”s responded to the defendants argument that the loan was to be repaid within one year of the sale of serviced sites or suitable repayment schedule being put in place by asserting it was intended if the loan was not repaid from the sale of serviced sites after one year from when the loan commenced then a suitable repayment programme was to be established. As such, the defendants were in default. Counsel for the plaintiff submitted there was no factual defence to the plaintiff”s claim in relation to the monies due on foot of the current account or loan account. Ms Justice Barton discussed the case of First National Commercial Bank Plc v Anglin [1996], case of which was the subject matter of the applicable legal principles and subsequent case of Aer Rianta CPT v Ryanair Limited [2001]. Ms Justice Barton also discussed the case of Harrisrange Limited v Duncan [2003], which contained the principles to be applied by a court in deciding whether to grant summary judgment or to give a defendant leave to defend and referred to the case of McGrath v. O”Driscoll [2007] and E Capital Woodchester Limited v Aktiv Kapital Asset Investment Limited [2009].

Ms Justice Barton held she was not satisfied the defendants met the low threshold of an arguable defence to the plaintiff”s claim in respect of the sums due on foot of the current account facility nor in respect of the term loan, the subject matter of the facility letter. Ms justice Barton held she was satisfied there was an issue for determination in relation to the construction and true meaning of certain terms and conditions, that there was an issue as to whether or not the demand made on behalf of the plaintiff by the plaintiff”s solicitors complied with the express provisions in that regard and the facility letter, that there was a conflict of evidence as to whether a default schedule relied upon by the plaintiff referred to this facility and that the matter would be better dealt with by plenary hearing.

Plaintiffs claim granted

1

1. This is an action brought by the plaintiff bank against the defendants by way of summary summons to recover the sum of €1,130,652.99, on foot of two joint and several mortgage loan accounts and a joint and several current account. The plaintiff seeks liberty to enter summary judgment for this sum together with costs.

2

2. The plaintiff claims to be entitled to judgment against the defendants on the basis that money was lent by it to the defendants by way of two term loan facilities and also on foot of a joint and several current account.

3

3. By a facility letter dated 27 th April, 2004, the plaintiff bank offered to advance to the defendants the sum of €190,000 subject to the bank's usual terms and conditions and which were summarised and stated to be enclosed with that letter together with a default schedule. The purpose of the loan was to enable the defendants to purchase and renovate property at Rathdowney at an interest rate of 3.9percnt; per annum variable over a term of 24 months with repayments commencing on 30 th May, 2004, in the sum of €609.04 per month and with a review date of 10 th March, 2005.

4

4. There were a number of special conditions set out in the letter of offer including a provision that in the first year repayments to the plaintiff bank would be by way of interest only with a further year of interest only payments subject to satisfactory review at the end of the first year and that thereafter, repayments would be of capital and interest over a term of 15 years. The loan was to be secured in the manner set out in that letter.

5

5. The summary of the terms and conditions enclosed with the letter of offer provided, by clause 3, that the plaintiff reserved the right to require repayment on demand in the event of the occurrence of any of the events specified in an accompanying schedule, described as a default schedule, and which included the following:-

2

2 "1. If any of the repayment instalments are not provided for by the due date;

2

2. If any interest is not provided for by the due date;

3

3. If the borrower dies;

4

4. If the borrower shall default in the performance of any term, condition, covenant or agreement contained in the letter of sanction and such default shall continue un-remedied after written notice thereof shall have been given by the bank to the borrower."

6

6. In all there were fourteen events set out in the schedule.

7

7. It is not in dispute in these proceedings that the defendants availed of the facilities offered to them by the plaintiff bank by the facilities letter of 27 th April, 2004 and that they drew down the loan amount of €190,000.

8

8. By a further facility letter dated 4 th April, 2006, the plaintiff bank offered to make available to the defendants a term loan in the sum of €912,000 repayable on demand for a term of one year together with a variable rate of interest which, at the time of the letter of offer, was 4,550percnt; and otherwise subject to the terms and conditions set out in that letter and in documentation accompanying that letter.

9

9. Although the term of the loan was specified to be one year, the interest provisions of the letter of offer provided for the interest only period of the loan to be extended to two years with an annual review after year one and that in the absence of demand, the defendants would repay the loan in full within the term. As to the repayment of capital it was specified that the bank had agreed to a 24 month capital moratorium on the loan which was to be secured in the manner set out in the letter. It was a further term of the repayment provisions that:-

"Loan is to be repaid within one year from sale of serviced sites or suitable repayment schedule put in place."

10

10. The facility letter further provided that any demand or notice was required to be made in writing, signed by an officer of the bank and that that was to be served on the borrowers either by personal delivery or by post to the borrowers at the address last known to the bank.

11

11. The letter also contained general conditions applicable to all facilities and these included the following:-

2

2 "4. The above facilities and the terms and conditions attaching thereto are subject to annual review with the first review to be conducted no later than 31 st August, 2006."

5

5. In the event that this facility or any or all of these facilities shall become due and payable to the bank, whether following formal demand by the bank or otherwise, interest shall accrue and be payable on such facilities on a compound basis until its/their discharge.

6

6. Notwithstanding anything heretofore contained in this letter, the facility/ies with interest accrued thereon shall become immediately due and payable on demand being made by the...

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