The High Court ruled that ACC Bank plc was entitled to call in a €2.105 million loan to Frank Kelly and Ann Kelly after finding there was no binding agreement to prevent enforcement while the couple tried to address mounting arrears.
In a judgment delivered on 10 January 2011, Mr Justice Clarke said the loan was repayable on demand. He found that discussions in 2008 gave the Kellys an opportunity to try to improve their position, but did not amount to an agreement that ACC would refrain from enforcing its rights if they took specified steps.
The case concerned a loan advanced in October 2006 to finance investment properties and refinance other borrowings. The judgment said the Kellys had accumulated a portfolio of more than 30 rental properties, with total borrowing that appeared to exceed €7 million. Arrears on the ACC facility had passed €80,000 by August 2008, while rent from the eight properties securing that loan was below the monthly interest due.
The couple argued that ACC had agreed to allow property sales and other measures to remedy the position without calling in the loan. Mrs Kelly also maintained that proceeds from two property sales were to be held in a contingency fund to cover any future shortfall between rent and interest. The judge found that ACC had refused that proposal and that the sale proceeds were applied to arrears and then principal.
The court found no enforceable August agreement and no arrangement capable of supporting Mrs Kelly’s promissory estoppel argument. The judgment cited continuing arrears, delays and problems with financial information, a continuing gap between rent and interest, and the worsening cover provided by the properties as reasons ACC had ample grounds to call in the loan in April 2009.
The judge also rejected challenges to the 6 per cent surcharge interest and the appointment of a receiver. He found the mortgage deed enforceable against the Kellys because both had signed it, and said the 2009 Land and Conveyancing Law Reform Act did not apply retrospectively to the earlier mortgage. There was no evidence before the court of improper conduct by the receiver after appointment.
The proceedings had moved from an application for summary judgment to a plenary hearing. The judge did not allow Mr Kelly to give evidence after he failed to comply with an order to deliver a witness statement. He allowed Mrs Kelly’s defence to include promissory estoppel and considered supplementary factual material from her.
The court concluded that ACC was entitled to judgment for the full sum claimed. It invited counsel to provide an up-to-date figure for inclusion in the order; the judgment did not state that final figure.