The Supreme Court has allowed an appeal by four borrowers against summary judgment in favour of Danske Bank trading as National Irish Bank, sending the case back to the High Court for a plenary hearing. The court found the borrowers had an arguable defence but made no finding on the underlying contractual dispute.
The High Court had ordered three of the appellants to pay the bank €29,460,000.99 under a facility letter and €7,572,387.81 under a guarantee and indemnity, plus interest. It ordered Tullycross Developments Limited to pay €7,572,387.81 under its facility letter and €29,460,000.99 under a guarantee and indemnity, plus interest.
The loans were offered in February 2006. The first three appellants received a €29.46 million facility, while Tullycross Developments received a €7.64 million facility. The loans were cross-guaranteed and supported by legal charges over properties specified in the loan documents.
The agreements included limited-recourse terms. The borrowers argued that, after paying interest due by the repayment date of 30 September 2008, the bank’s recourse was limited to the secured properties. They said the bank’s valuation and demand to reduce the debt arrived after close of business on that date, too late to trigger the contractual process for addressing a breach of the loan-to-property-value limit.
The bank relied on a valuation putting the secured property’s market value at €45 million and sought to reduce aggregate indebtedness to €31.5 million. It later sought repayment of the loans in full. The bank submitted that the contract was clear and the appellants had no defence to the claims based on the facilities and guarantees.
The Supreme Court said the appeal raised questions about construction of the loan documents and the extent and effect of banking hours. It held that there was no obligation to resolve legal questions on a summary judgment motion where the defendants had established an arguable defence. The court considered the issues not simple and clear enough for summary determination and concluded that justice required a full hearing.
The appeal was allowed and the matter remitted to the High Court for a plenary hearing. The Supreme Court expressly made no observations on the substantive issue and its decision did not resolve whether the bank could recover the sums claimed under the disputed terms.