Woodstock Golf and Country Club Ltd v Pepper Finance Corporation Ltd

JudgeMr. Justice Dignam
Judgment Date16 February 2023
Neutral Citation[2023] IEHC 85
CourtHigh Court
Docket NumberRecord No. [2022] 1192 P
Woodstock Golf and Country Club Limited
Pepper Finance Corporation Limited and Ken Tyrrell

[2023] IEHC 85

Record No. [2022] 1192 P


Security for costs – Prima facie defence – Surcharge interest – Defendants seeking security for costs – Whether the defendants had established a prima facie defence

Facts: The plaintiff, Woodstock Golf and Country Club Ltd, issued plenary proceedings on the 28th March 2022, seeking: (1) an order providing for Redemption of Folio CE21169 Co. Clare upon tender of the principal or proper sum in fact due; (2) an order directing the defendants, Pepper Finance Corporation Ltd and Mr Tyrrell, to specify the reckonable computation date from which the defendants asserted that the principal had become due and owing; (3) an order discharging and/or cancelling the registered charge in accordance with s. 65 of the Registration of Title Act 1964 (as amended); (4) in default of proper accounts being rendered immediately or in early course by the defendants as mortgagee to the plaintiff as mortgagor or as in such time as may be limited by the High Court, liberty for further relief by way of interim or interlocutory injunction to prevent an unnecessary sale and all the costs and expenses thereby incurred; (5) in the alternative, upon the continuing wrongful failure to render proper accounts and breakdowns (the proper obligation for which had been absolutely disavowed by the defendants from the 17 December 2021) an order that upon any sale unnecessarily incurred that its costs be subtracted from the sum due by the plaintiff; (6) if necessary a declaration that from the 17 December 2021 the defendants, their servants or agents had wilfully and wrongfully fettered the plaintiff’s equity of redemption of Folio CE21169F Co. Clare; and (7) an order providing for all necessary accounts and enquiries. By ex parte docket, the plaintiff applied on the 28th March 2022 for short service of a motion seeking the following relief: (1) an order restraining the defendants from taking any further steps in the marketing, sale or disposal of Folio CE21169F; (2) an order for redemption of mortgage by legal charge of Folio CE21169F upon tender or payment by or on behalf of the plaintiff of the sums actually due and owing for principal, interest and eligible costs only; (3) an order restraining the defendants, their servants or agents from repeatedly failing to specify the proper redemption sum for principal, interest and eligible costs only, upon the mortgage by way of legal charge upon Folio CE21169F; and (4) an order restraining the defendants or agents from repeatedly failing to render proper accounts as mortgagee or legal charge holder to the plaintiff as mortgagor. The application for an interlocutory inunction came before Meenan J on 6th July 2022 and he granted an order restraining the defendants from taking any further steps in the marketing, sale or disposal of the lands. The plaintiff delivered an amended statement of claim on the 8th July 2022 and the defendants delivered their defence and counterclaim on 29th August 2022. The defendants issued their motion for security for costs on the 14th June 2022.

Held by Dignam J that the test was set down in Usk and District Residents Association Ltd v Environmental Protection Agency [2006] IESC 1 (in the context of s. 390 of the Companies Act 1963, the predecessor to s. 52 of the Companies Act 2014). He held that the burden of adducing the necessary evidence to establish a prima facie defence was on the defendants. In his view, they had not adduced any evidence as to what amount would be owing if 6% surcharge interest was stripped out and in those circumstances he was not satisfied that they had established a prima facie defence. In the circumstances, he held that it was not necessary to consider the second and third limbs of the test, i.e. whether it appeared by credible testimony that there was reason to believe that the plaintiff would be unable to pay the costs of the defendant and whether there were specific circumstances in the case which meant that the court should exercise its discretion not to make the order sought.

Dignam J declined the relief sought.

Relief refused.

Judgment of Mr. Justice Dignam delivered on the 16th day of February 2023 .


The defendants seek an Order pursuant to section 52 of the Companies Act 2014 directing the plaintiff to provide security for the costs of the defendants and ancillary reliefs.


Section 52 of the Companies Act 2014 provides:

“Where a company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter, may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his or her defence, require security for those costs and must stay all proceedings until the security is given.”


There is little disagreement between the parties as to the legal principles which apply to such an application. I return to these below. First, I should refer to some of the key features of the background.


The plaintiff company owns and operates a golf club at Woodstock in County Clare.


By facility letter of the 3 rd June 2004 ACC Bank advanced a loan of €1,845,000 to a company, Duneside Services Limited, to refinance a prior debt in relation to the plaintiff company and to finance the costs of works in respect of the construction of twenty-four holiday homes at Woodstock.


That facility was in turn refinanced by a facility letter of the 14 th October 2004. The plaintiff company also entered into a contract of guarantee and indemnity dated the 10 th October 2004 pursuant to which the plaintiff agreed to pay to ACC Bank all monies and liabilities which had been advanced to, become due, owing or incurred by Duneside to or in favour of the Bank under or in connection with any of the facility documents. This guarantee was secured by a legal charge over a land folio which comprises of 45 hectares of the plaintiff's lands (approximately 70% of 12–13 holes of the golf course lands.


The interest rate provisions of the sanction letter and the associated guarantee, are at the centre of the dispute between the parties and I return to them in detail below


By letter of variation of the 13 th March 2006 the term of the facility was extended to the 1 st March 2007 but in all other respects the terms and condition of the facility letter of the 14 th October 2004 would continue to apply.


By further letter of variation of the 9 th June 2010 ACC Bank agreed to roll up the interest then due and to extend the term of the facility to the 31 st December 2010. The letter of variation of the 9 th June 2010 included a signed acceptance on behalf of the plaintiff, the guarantor, in the following terms:

“We Woodstock Golf and Country Club Limited acknowledge the within amendment of the existing facility and variation to the Sanction Letter and confirm that the Guarantee(s) dated 10 October 2004 provided by us pursuant to the Sanction Letter extend and are intended to extend to, and will constitute a continuing security for, all monies, liabilities and obligations owed by the Borrower [Duneside] to the Bank from time to time on foot of the Sanction Letter as varied by the within amendment of existing facility and variation to the Sanction Letter.”


Duneside fell into arrears in respect of the loan.


As noted above, the interest provisions in both the facility letter and the guarantee are of central importance.


The specified interest rate payable on the facility was 2% per annum over the EURIBOR rate by reference to one month interest periods and otherwise in accordance with ACC Bank's general conditions.


ACC Bank's general conditions provided at clause 4.6:

All interest and other payments of an annual nature under a Facility shall accrue from day to day and be calculated on the basis of the actual number of days elapsed and at 360-day year (or such other number of days in a year as the Bank uses as the basis of calculating interest on facilities of a similar type) and shall be due as well after judgement or demand as before.”


Clause 4.6.5 provides:

“Interest will be debited to the Borrower's loan account or at such other intervals as the Bank in its absolute discretion shall from time to time decide. This means that if the Borrower does not pay the instalments on time the unpaid interest will be capitalised and the Borrower will pay interest on interest.”


Clause 4.6.6 provides:

“Any sum payable by the Borrower under a Facility which is not paid on the due date shall bear interest at 0.5% per month above the rate otherwise applicable to the Facility from the due date to the date of actual payment.”


Clause 1.2 of the Guarantee defines “Interest Rate” for the purpose of the Guarantee as meaning:

“4 per cent per annum above the Bank's cost of funding the relevant amount from whatever source the Bank may select upon such days and terms as the Bank may from time to time determine.”


Clause 5 provides, inter alia:

“5.1 The Guarantor agrees to pay interest to the Bank at the Interest Rate on all sums demanded under this Guarantee from the date of the Bank's demand under this Guarantee or, if earlier, the date on which the relevant damages, losses, costs or expenses arose in respect of which such demand has been made, in each case until, but excluding, the date of actual payment.

5.2 The Guarantor agrees to pay interest to the Bank at the Interest Rate after as well as before judgment.

5.3 All such interest shall accrue on day to day basis and be calculated by the Bank on the basis of a 365-day year and interest shall be compounded in accordance with the usual practice of the Bank.

5.4 The Bank shall not be entitled to recover any amount in...

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