The Court of Appeal has upheld a High Court finding that Breccia was estopped from claiming surcharge interest on loans owed by Benray Limited up to and including June 19, 2015. The appeal judgment, delivered by Mr Justice Gerard Hogan, concerned the estoppel issue only.
The dispute arose after National Asset Loan Management Limited (NALM), which had acquired the loans, supplied redemption figures to Benray and its associated interests in March and April 2014. The figures did not include surcharge interest. The Court of Appeal agreed with the High Court that NALM had represented that payment of the quoted amount would redeem the loans, and that the representation was intended to be acted on.
The borrowers were seeking funding from Talos LLC to refinance loans connected with their shareholdings in Blackrock Hospital Limited. John Flynn signed a term sheet on March 2, 2014, before NALM supplied the figures. But the High Court found that the financing was not finalised until after the figures were received. Flynn later guaranteed repayment of a Talos deposit, which was drawn down and paid to the Irish Bank Resolution Corporation. The proposed transaction did not complete, and Talos obtained judgment against Flynn on his guarantee.
Breccia argued that the Talos arrangements predated the NALM figures and that refinancing would have been necessary regardless. The Court of Appeal found there was evidence to support the High Court’s conclusion that both Flynn and Benray relied on the figures to their detriment. It said Benray would have ceased to be a defaulting borrower if refinancing had succeeded, while Flynn’s guarantee exposed him personally after the transaction failed.
Breccia had acquired Benray’s loans from NALM in May 2014. The Court of Appeal held that, as NALM’s assignee, Breccia was bound by the representations. It affirmed the High Court decision on estoppel.
The ruling’s scope was limited: it bars surcharge interest purportedly charged by Breccia up to and including June 19, 2015, the date of a fresh demand. The judgment did not decide other issues in the appeal, including whether surcharge interest was enforceable as a penalty clause; a separate judgment addressed surcharge interest.