Wingview Ltd v Ennis Property Finance DAC

• Jurisdiction: Ireland
• Judge: Mr Justice Robert Haughton
• Judgment Date: 10 November 2017
• Neutral Citation: [2017] IEHC 674
• Docket Number: Record No. 2017/5073P
• Court: High Court
• Date: 10 November 2017

Between

WINGVIEW LIMITED T/A THE ELPHIN PUBLIC HOUSE

Plaintiff

and

ENNIS PROPERTY FINANCE DESIGNATED ACTIVITY COMPANY

Defendant

[2017] IEHC 674

Haughton Robert J.

Record No. 2017/5073P

THE HIGH COURT

COMMERCIAL COURT

Banking & Finance – Non-payment of loan – Interlocutory injunction – Bona fide defence – Balance of convenience

Facts: The plaintiff sought an order for interlocutory injunction for restraining the defendant from taking over the disputed premises. The defendant contended that the plaintiff had failed to comply with his payment obligations as agreed between the parties in lieu of the settlement agreement. The plaintiff claimed that it was ready to make the payment subject to the fulfilment of certain conditions by the defendant.

Mr. Justice Robert Haughton granted interlocutory injunction thereby prohibiting the defendant from appointing the receiver over the subject to the fact that the plaintiff would give an undertaking as to the damages and as per the relevant clauses of internal agreement entered into between the parties. The Court noted that there were fair issues to be tried between the parties as there was no real declaration of demand by the defendant until it had sent a letter to the plaintiff.

Judgment of Mr Justice Robert Haughton delivered this 10th day of November 2017

1 In this application the plaintiff seeks an interlocutory injunction prohibiting the defendant from appointing a receiver over premises known as the Elphin Public House (‘the premises’), which includes a site (‘the Site’) at the rear of the premises.

2 The background facts are, at least for the purposes of this application, largely uncontested. Anglo Irish Bank Corporation plc, pursuant to a Facility Letter dated 12 May, 2009, made certain facilities available to the plaintiff, secured by a mortgage of the premises, a general floating charge and personal guarantees. The defendant acquired all the facilities and related security and guarantees in 2015.

3 The plaintiff was in default of its obligations under the facilities. A Deed of Settlement dated 25 November, 2016, (‘the Settlement’) was entered into between the plaintiff and defendant. The plaintiff acknowledged that it was indebted to the defendant as of 24 November, 2016, in the sum of €2,527,354.06. The plaintiff agreed to make the following ‘Settlement Payment’: –

• €100,000 on or before 25 November, 2016

• €400,000 on or before 31 December, 2016

• €1 million on or before 31 March, 2017.

‘31 March 2017 or such later date as the Lender in its sole discretion may notify to the Debtor’ was defined as the ‘Long Stop Date’. The Settlement then provided: –

‘2.3.3 Following receipt by the Lender of the Settlement Payment:

(i) the lender shall execute and deliver the Deed of Release together with releases of all personal guarantees (including without limitation the personal suretyships of Leo and Marie Fitzgerald) given in connection with the Debtor's Obligations; and

(ii) recourse to the Debtor in respect of [the balance of indebtedness] shall be deemed to be limited to the Site only. In this regard, the Lender agrees that… its sole recourse to the Debtor in respect of [the balance of indebtedness] shall be limited to the Site and to the proceeds of sale or other realisation thereof… So that the Lender shall not be entitled to issue proceedings against the Debtor or any surety for judgment for any sum under the Debtor's Obligations or [the balance of indebtedness] save to the extent necessary to enable the realisation of by any receiver and/or the Lender of the Site’.

Other provisions of the Settlement will be referred to later in this judgement.

4 The plaintiff made the first two payments. In order to fund the third payment of €1 million the plaintiff sought funding, and on 14 March, 2017, obtained a loan offer from AIB of €800,000 to which it was intended to add €200,000 of shareholder monies. AIB also offered an overdraft facility of €30,000 ‘to fund working capital requirements’. One of the ‘Conditions Precedent’ to drawdown was the following: –

‘3.1.16 Settlement Agreement: evidence, to the satisfaction of the Bank from Ennis Property Finance DAC and that the settlement of EUR 1,500,000 plus the transfer of the [Site]… Is in full and final settlement of all amounts due by the Borrower to Ennis Property Finance DAC’.

5 It is apparent from emails that are exhibited that in February/March 2017 the plaintiff's solicitors Kane Tuohy (Mr Hand) were endeavouring to satisfy the defendant's agent Mr McIntyre of ‘Pepper Group’ in relation to various matters connected with a planning application in respect of the Site. On 16 March, 2017, Mr Hand informed Mr McIntyre that the AIB facility letter had been signed. Thereafter it is clear that efforts were being made by the plaintiff's solicitors to satisfy the drawdown requirements. It appears from an email from Mr Hand to Mr McIntyre on 27 March, 2017, that AIB had new and somewhat complex requirements in relation to the treatment of the Site that went beyond a simple transfer to the defendant. In the email Mr Hand ends by asking ‘… Perhaps you could consider very urgently and let us know ASAP that this is in order.’ On 31 March, 2017, at 17:22 the plaintiff's solicitors sent by email a letter to Mr McIntyre noting that the €1 million was due to be paid on that day and bringing to his attention the drawdown requirements of clause 3.1.16. The author, Mr Hugh Kane, then stated: –

‘Unfortunately, despite the absence of an obvious legal reason, AIB is insisting on the transfer of the site to Ennis or some other legal entity (i.e. a non—Ennis entity).

Pursuant to the terms of the Settlement [Under clause 10.2 the plaintiff agreed to invite the defendant to appoint a receiver "to facilitate the development, management, sale and realisation of the Site."], our client has consented to the [appointment] of the Receiver, which appointment our client thought would have been effected by now, but even if it had, it is not clear that AIB would deem the clause satisfied.

Within the time permitted, our client will not be able to secure an alternative facility from AIB. Therefore, while we do not believe that there is a legal issue for insisting on the interpretation which AIB is putting on the clause, as AIB is unwilling to accept our client's position, we would like to arrange a meeting with you to find a practical solution to the issue.

You will appreciate that our client has worked well with Pepper over the last several months to seek to ensure planning permission is likely. As you may be aware, planning permission is due imminently, and perhaps would have issued before now but the reply to the request for further information was slightly delayed to take into account all the parties' inputs.

With a planning decision imminent, it may introduce additional matters to discuss.

In any event, our client is keen that we meet as quickly to discuss how best to address these issues in order to secure the release of €1 million from AIB to satisfy our client's liability to the secured charge holder.

You might revert with the suggested time and date, at your earliest convenience.’

6 By email of 3 April, 2017, headed ‘without prejudice’ Mr McIntyre wrote to the plaintiff's solicitors noting non-compliance with clause 3.2 of the Settlement ‘being a failure to make the payment of €1,000,000 by 31 March 2017 as required by that clause.’ The email continued: –

‘As a result of the Non-Compliance, a Settlement Default has occurred, the provisions of clause 3.3 of the Settlement Agreement apply and you are obliged (as provided in the final paragraph of clause 3.2 of the Settlement Agreement) to continue to make monthly payments under the Finance Documents.

Notwithstanding that no action has been taken by us in respect of the Non-Compliance or any resulting Settlement Default, neither that matter nor the passing of time, nor any other inaction, nor any action, statement or discussion by or on our part is to be construed as constituting a waiver of, or as prejudicing, any of our rights under the Settlement Agreement and the Finance Documents (including, without limitation, the right to demand repayment in full of the Debtor's Obligations and the appointment of a receiver and enforcement of any security created by the debenture), all of which rights, and all remedies in respect of which, are hereby expressly reserved.’ [Emphasis added].

This is repeated in an open letter dated 10 April 2017 sent by email by Mr McIntyre ‘for and on behalf of Ennis Property Finance Limited’.

7 On 11 April, 2017, AIB issued a revised loan offer which no longer required a transfer of the site to the defendant. Clause 3.1.16 then read: –

‘3.1.16 Settlement Confirmation: Evidence to the satisfaction of the Bank from Ennis Property Finance DAC (‘Ennis’) confirming that on receipt of payment of €1,500,000… (i) Ennis will execute a full date of release in respect of all assets mortgaged and charged by the Borrower to Ennis (save for a fixed charge over the [Site]) and (ii) Ennis has no recourse to the Borrower and/or the directors of the Borrower save that limited to the Site’.

8 By email dated 12 April 2017 Mr Hand brought this to the attention of Mr McIntyre, indicating that Pepper would only be required (1) to confirm that their fixed charge security (only) remained in relation to the Site with the general floating charge of the defendant being released in its entirety, and (2) ‘letter/satisfactory confirmation from Pepper on closing that on completion, they are limited to site only and nonrecourse to client and other assets.’ By a further email on 13 April 2017 Mr Hand confirmed that the new facility letter had been issued and signed and stated:

‘I shall revert as soon as possible next week with the timeframe for completion.

...