The High Court has declined to make an interlocutory order requiring Ulster Bank Ireland Limited to resume paying cheques signed by one director on accounts held by Sherlock Brothers Limited and Beechmount Furniture Limited. The court adjourned the matter for mention until 19 July 2007, while an application to the Commercial Court was planned.
John Sherlock sought an order restoring the position before a 14 May 2007 letter from solicitors for his brother, Patrick Sherlock. The letter told the bank of a dispute between the brothers and requested that withdrawals require both directors’ signatures. The bank, after taking internal legal advice, treated the request as a variation of the companies’ mandates. It returned later cheques signed by John Sherlock as not drawn in accordance with the mandate.
One returned cheque, for €180,000, was payable to the Revenue Commissioners for corporation tax. John Sherlock said the company was unable to pay its bills and that he had been meeting them from his own funds. He argued that the mandate had not been varied by the company in the manner it prescribed, and offered an undertaking as to damages if required.
The bank opposed interim relief. Its submissions included that there was a dispute between directors, the company’s claimed financial difficulty had not been established, the application was delayed, and a forthcoming Commercial Court application could address the dispute. It also argued that the plaintiff had brought the matter in the wrong capacity, that Patrick Sherlock and the companies should be involved, and that damages were an adequate remedy.
Justice Hedigan said he had doubts about the procedure, including whether there was an issue between John Sherlock and the bank, and noted Patrick Sherlock’s interests in the dispute. The judge also observed that the company had continued operating with John Sherlock’s support and that the need for immediate intervention was doubtful. He was concerned that an interim order could complicate efforts to resolve the situation through the planned Commercial Court proceedings.
The court made no order on the interlocutory application at that stage. It considered it desirable that an application be made forthwith to the Commercial Court and adjourned the case for mention on 19 July. The judgment does not decide whether the bank’s treatment of the mandates was valid.