The High Court has refused an application by Pepper Finance Corporation Limited and receiver Ken Tyrrell for security for costs from Woodstock Golf and Country Club Limited in a dispute over the amount needed to redeem a charge over golf course lands in County Clare.
Mr Justice Dignam ruled on 16 February 2023 that the defendants had not established a prima facie defence to the club’s claim concerning surcharge interest. He emphasised that this was a decision on the security application, not a final finding that the interest was an unenforceable penalty. That question remains for trial on the evidence presented there.
The dispute concerns a loan originally advanced by ACC Bank to Duneside Services Limited in 2004 and guaranteed by Woodstock. The guarantee was secured by a charge over 45 hectares of the club’s lands. Pepper later acquired the loan and security, and appointed Tyrrell receiver in February 2021. The club’s proceedings seek redemption of the charge upon payment of the principal or the proper amount due.
The club contends that the amount claimed includes about €646,335 in surcharge interest, charged at 0.5 per cent a month, or 6 per cent a year, under ACC’s general conditions. It says the surcharge is an unenforceable penalty. The defendants deny that the interest is penal and maintain that money remains due. The court noted that the club accepted liability for ordinary interest under the facility.
In considering the application, the judge examined earlier Irish decisions concerning similar surcharge provisions. He said the defendants had not put forward evidence showing how the amount due would be calculated if the 6 per cent surcharge were removed, or evidence supporting an alternative calculation based on 4 per cent interest under the guarantee. The defendants’ denial of the club’s claim and the possibility of producing different calculations at trial were not enough to establish a prima facie defence at this stage.
The judge also rejected the argument that the club’s admitted liability for €309,089, which it had not paid, by itself established a defence to its redemption claim. The defendants did not accept that this figure was sufficient to redeem the charge; the proper redemption sum must first be determined.
Because the defendants had not met the initial requirement of establishing a prima facie defence, the court did not consider whether the club could pay the defendants’ costs if they succeeded, or whether other circumstances weighed against security. The application was refused. The judge said the defendants could renew it if the club pursued claims about the provision of a breakdown or the scope of its liability under the guarantee.