Vieira Ltd v Ulster Bank Ireland Ltd and Others
| Jurisdiction | Ireland |
| Judge | Mr Justice David Keane |
| Judgment Date | 09 December 2014 |
| Neutral Citation | [2014] IEHC 591 |
| Court | High Court |
| Date | 09 December 2014 |
BETWEEN
AND
AND
[2014] IEHC 591
THE HIGH COURT
Loans- Business and investments- Related sets of proceedings- Interlocutory injunctive relief sought- Orders restraining the assignment to a third party of loans made by the defendant to the plaintiff- “Positive carry swap”- Failure to provide explanation for failure to disclose to the Court the existence and contents of the relevant contractual documentation- Whether serious issue to be tried- Balance of convenience
Facts Viera pleaded that the positive carry swap that it entered into with the bank was entirely inappropriate and unsuitable for its financial objectives. It was further pleaded that the bank misrepresented the nature of the positive interest swap to Vieira, concealing its true nature and that in doing so the bank concealed its own duties and responsibilities. It was pleaded that, in consequence, Vieira”s liabilities under the positive carry swap were wrongly secured against its property assets. It was further alleged that the bank owed a fiduciary duty to Vieira and that it breached that duty. Vieira alleged the bank was liable for misrepresentation, negligence, breach of duty and negligent misstatement. Finally, Vieira claimed damages in respect, not only of the various kinds of tortious conduct described, but also for deceit, coercion, duress and intimidation. It was pleaded the claims made on behalf of Laurelmore and EPF closely mirrored those advanced on behalf of Vieira in respect of the positive carry swap: - that certain transactions involved misrepresentation, negligence, breach of duty and negligent misstatement on the part of the bank; that the bank concealed its duties and obligations and concealed the rights and entitlements of the plaintiffs under the Code of Conduct for Credit Institutions. It was submitted the bank deliberately deceived EPF concerning the financing costs of loan facilities made available to it; that the bank coerced EPF into the sale of certain properties; and that the plaintiffs were entitled to damages under each of the foregoing heads of claim, and in addition, were entitled to damages for breach of contract, deceit, intimidation and coercion. On the 8th October 2014, the plaintiffs in each set of proceedings applied for, and were granted, an interim ex parte injunction restraining the defendant from the divestment or transfer of the plaintiffs” loans pending further order. The bank complained that, by making the case that they had raised a bona fide, fair or serious question to be tried concerning whether they were mis-sold the derivative instruments at issue, the plaintiffs entirely failed to disclose to the Court both the bank”s terms of business and the contractual relationship between the parties governing the transactions. No explanation was provided for the plaintiffs” failure to disclose to the Court the existence and contents of the relevant contractual documentation in seeking and obtaining interim ex parte relief. Instead, the plaintiffs confined themselves to the question of whether the existence of that documentation was fatal to its contention that their proceedings raised a bona fide, real or serious issue to be tried.
Held The Court was unable to obtain any explanation for the plaintiffs” failure to make full and frank disclosure of the existence of the documentation. The judge considered Bambrick v Cobley [2005] IEHC 43. He was satisfied that, in applying for, and obtaining, an interim injunction ex parte, the plaintiffs failed to disclose both the existence of the contractual documentation that governed the derivatives transactions and the relevant contents. The judge considered whether the undisclosed facts were material to the application for interim ex parte relief made by the plaintiff. He was satisfied that the relevant contractual documentation and the contents thereof were directly and reasonably material to the plaintiffs” various assertions. He concluded that there was a significant and material failure to disclose matters which should have been disclosed. The judge decided to exercise his discretion by acceding to the application to discharge the interim injunction and refused the application for interlocutory relief.
EEC DIR 39/2004
BAMBRICK v COBLEY UNREP CLARKE 25.5.2005 2006 1 ILRM 81 2005/3/573 2005 IEHC 43
TATE ACCESS FLOORS INC v BOSWELL 1991 CH 512
ATKIN v MORAN 1871 IR 6 EQ 79
LLOYDS BOWMAKER LTD v BRITANNIA ARROW HOLDINGS LTD 1988 1 WLR 1337
PARSLEY PROPERTIES LTD & ORS v BANK OF SCOTLAND PLC & MCATEER UNREP MCGOVERN 20.12.2013 2013/42/12323 2013 IEHC 624
MCCAUGHEY v ANGLO IRISH BANK CORPORATION LTD & ORS 2012 4 IR 417
MCCAUGHEY v ANGLO IRISH BANK CORPORATION LTD UNREP SUPREME 13.3.2013 2013/37/10850 2013 IESC 17
ANGLO IRISH BANK CORPORATION PLC v MCGRATH UNREP KELLY 21.12.2005 2006 IEHC 78 2006/2/387
STATUTE OF LIMITATIONS ACT 1957
KOMADY LTD & O'REILLY v ULSTER BANK LTD UNREP PEART 26.6.2014 2014 IEHC 325
STATUTE OF LIMITATIONS ACT 1957 S71
STATUTE OF LIMITATIONS ACT 1957 S1
STATUTE OF LIMITATIONS ACT 1957 S71(1)(B)
KEANEY v SULLIVAN & ORS UNREP FINLAY GEOGHEGAN 16.1.2007 2007 IEHC 8 2007/32/6500
BULLEN & LEAKE & JACOBS PRECEDENTS OF PLEADING 12ED 1975 P452-453
PJ HEGARTY & SONS LTD v ROYAL LIVER FRIENDLY SOCIETY 1985 1 IR 524
MODERN ENGINEERING v GILBERT-ASH 1974 AC 689
COCA-COLA FINANCIAL CORPORATION v FINSAT INTERNATIONAL LTD 1998 QB 43
CATERPILLAR (NI) LTD v JOHN HOLT & CO (LIVERPOOL) LTD 2013 EWCA CIV 1232 2014 1 AER (COMM) 393
KAUPTHING SINGER & FRIEDLANDER LTD (IN ADMINISTRATION), IN RE 2009 EWHC 740 (CH) 2009 2 BCLC 137
SKIPSKREDITTFORENINGEN v EMPEROR NAVIGATION 1977 CLC 1151
SUPERGRACE LTD & ANOR v IRISH BANK RESOLUTION LTD & ORS (EX-TEMPORE) UNREP 22.1.2013 TRANSCRIPT NOT AVAILABLE
DUNNE v DUN LAOGHAIRE RATHDOWN CO COUNCIL 2003 1 IR 567
The plaintiffs in these two related sets of proceedings seek interlocutory injunctive relief against the same defendant in each, comprising, in essence, orders restraining the assignment to a third party of loans made by the defendant to the plaintiffs.
From the affidavit evidence submitted on behalf of the plaintiff companies, it appears that each of them is, or has been, a vehicle for the business and investment activities of Mr Eugene Larkin and his sons, Messrs Richard and Michael Larkin.
Each of the plaintiffs is, or has been, in receipt of one or more loan facilities from the defendant Ulster Bank Ireland Limited ("the bank"). In particular, it is deposed on behalf of the bank that Vieira Limited ("Vieira") obtained a loan governed by a facility letter dated the 23 rd April 2008 upon which €7,414,882 was outstanding as of the 13 th October 2014, including interest arrears of €417,732.29. It is further deposed that the bank advanced various different loan facilities to European Property Fund plc ("EPF") in February and March 2008, in respect of which the sum of €19.5 million relates to residential and commercial units in Tyrellstown Town Centre; €5.5 million relates to the acquisition of listed equities; and stg£18.45 million relates to the acquisition of certain properties in the U.K. (described in greater detail below), Each of those loans was outstanding on the 13 th October 2014.
It is further deposed that, earlier this year, as part of a process of deleveraging its loan portfolio, the bank pooled the plaintiffs' loans (together with other loans associated with the Larkins' business activities) into one tranche - Tranche E - of several loan tranches offered for sale at the same time under the designation "Project Achill". It is deposed on behalf of the bank that the total indebtedness of the Larkin interests is circa€89 million.
Prior to the commencement of "Project Achill", the Larkin interests made a bid of €44 million for the purchase of the Tranche E loans by letter dated the 14 th July 2014. The bank declined that bid by letter dated the 16 th July 2014; Project Achill was launched on the same day. A company named Eastdil Secured managed the loan sale process on behalf of the bank. The Larkin interests made two further offers, in Phase 1 and Phase 2 of that process respectively. The bank did not choose the Larkin interests as the preferred bidder and it is deposed on the bank's behalf that its decision was made on an assessment of price only and that the Larkin interests' Phase 2 bid of €57 million was lower than all of the other bids received. It is further deposed that all of the bids received were materially below the par value of the outstanding debt in Tranche E and that, as of the 13 th October 2014, the bank was in negotiations with its preferred bidder.
The plaintiffs have exhibited the loan agreements that they say currently evidence their indebtedness to the bank. Those agreements comprise: a facility letter dated the 21 st January 2008 in respect of Laurelmore Limited ("Laurelmore") in the amount of stg£48 million; a facility letter dated the 27 th February 2008 in respect of EPF (then Davy European Property Fund plc) in the total amount of stg£79 million; two facility letters of the same date in respect of the same entity for sums of €19.5 million and €5 million respectively; and a facility letter of the 23 rd April 2008 in respect of Vieira in the sum of €17 million.
Each of the relevant loan facility letters states on its face that the loan agreement is subject to the bank's "Standard Terms & Conditions Governing Business Lending to Companies -...
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