The Court of Appeal has affirmed a High Court decision that Breccia could not claim surcharge interest from consultant surgeon Joseph Sheehan up to 19 June 2015. The appeal judgment concerned estoppel by conduct; a separate Court of Appeal judgment dealt with whether the interest was enforceable as a penalty.
The dispute arose from loans Sheehan took out from Anglo Irish Bank to buy shares in Blackrock Hospital Ltd. The loans fell due in December 2010. After the bank entered special liquidation, the loans were assigned to Breccia on 10 December 2014. Breccia later sought payment, including interest charged at a 4 per cent surcharge rate under the loan terms.
The Court of Appeal agreed with the High Court that the bank’s conduct and communications implied that the loans could be redeemed without surcharge interest. Loan statements had shown ordinary interest but no surcharge. In November 2013, the special liquidators told Sheehan he could redeem at “par”. During the 2014 sale process, the loan documentation gave a gross balance of €16,144,572 and did not indicate that surcharge interest was included or should be added to bids.
The court accepted the finding that Sheehan relied on those representations when arranging finance and bidding for the loans. It held that he had changed his position to his detriment. As assignee, Breccia was bound by the representations made by IBRC, and could not claim surcharge interest for the period up to the assignment on 10 December 2014.
The court also considered Breccia’s demand letter of 18 December 2014, which sought €16,144,572 under the facility letters. The letter reserved other rights, including the right to make further demands. The Court of Appeal agreed that the demand nevertheless implied no surcharge interest was payable. It found that the reservation did not clearly tell Sheehan surcharge interest would be claimed, and that he relied on the stated figure while trying to arrange funding.
The court therefore affirmed the High Court’s estoppel decision, barring Breccia from claiming surcharge interest for the period from 10 December 2014 until the Matheson letter of 19 June 2015 set out the basis for the surcharge claim. The judgment addressed that defined period and issue; it did not decide other challenges to Breccia’s purchase of the loans, which were not before the Court of Appeal.