The High Court has rejected a challenge by the Birr Partnership to a loan term giving Ulster Bank full recourse against its partners for both capital and interest. Mr Justice Cooke held that the term in the 2008 facility was clear and that the partners had accepted the change when negotiating an extension of the loan’s interest roll-up period.
The partnership had sought declarations and other relief that would limit the bank’s ability to recover the debt from the partners personally. Ulster Bank counterclaimed for €3,494,636.86, which it said was due under a written agreement made on 18 June 2008. The partners accepted that there was a loan agreement but argued it was made on 22 May and that, properly interpreted, they were not personally liable for repayment of the capital.
The dispute concerned the recourse term in the 2008 facility. The original 2005 loan offer allowed full recourse for capital and interest until full planning permission was granted; after that, the bank’s recourse against the partners was for interest only. The 2008 offer instead stated that the bank would have “full recourse to all the Partners for Capital and interest”. The partners argued that the word “Held” beside the term carried forward the earlier limitation. They also claimed the written term reflected a mistake or a misrepresentation by the bank’s relationship manager, Rory Cogan.
The court found that the 2008 wording was unambiguous. It said “Held” indicated that the bank already had the documents needed for the security, and did not preserve the earlier limit on recourse. The court also rejected the argument that the term made no commercial sense in light of the planning permission and the property market conditions known at the time.
On the disputed discussions before the facility was signed, the court preferred Mr Cogan’s evidence to that of the partnership’s negotiating partner, solicitor Kevin O’Donoghue. It found, on the balance of probabilities, that they met once on 22 May 2008 at the solicitors’ offices, discussed the proposed changes, and that Mr Cogan explained full recourse for capital and interest was required for a further interest roll-up. The court found that Mr O’Donoghue understood and accepted the change.
The court concluded there was no prior oral agreement inconsistent with the written term, no mistake, and no misrepresentation. The partners were therefore not entitled to the relief they claimed. The judgment does not state the amount, if any, awarded on the bank’s counterclaim.