The High Court has dismissed a claim by Komady Limited and businessman Michael O’Reilly against Ulster Bank Ireland Limited and two receivers appointed over Belgard Retail Park in Tallaght, County Dublin.
Mr Justice Fullam delivered the judgment on January 29, 2016. He granted the bank’s motion to dismiss the proceedings, finding that the plaintiffs had not established a prima facie case that the bank acted in bad faith or engineered a loan default. The court decided the issues should not proceed to a plenary hearing.
The dispute followed loan repayment demands made in October 2014. The bank had lent the plaintiffs €24.25 million each in 2005 to refinance existing facilities, then a further €190,000 each for a garden site. In 2006, it lent each plaintiff €2.5 million, repayable by June 1, 2010. The loans and security documents included provisions for repayment on demand, payment of rents into a designated account, and the bank’s right to apply those funds against secured liabilities.
The plaintiffs argued that they had not defaulted, that a course of dealing prevented the bank from relying on strict contractual rights, and that the receivers’ appointment served an ulterior purpose: increasing the value of an adjoining site in which the bank had an interest. They also challenged the bank’s appropriation of rental income.
The bank sought dismissal on the basis that the claim was vexatious, factually unsustainable and bound to fail, and alleged abuse of process and inadequate particulars. It said the contractual terms were clear, the loans were in default, and it had reserved its rights while engaging in restructuring discussions.
The judgment distinguished this application from the earlier application for an interlocutory injunction, which had been refused by Mr Justice McGovern in January 2015. The dismissal test was more demanding: the court had to be confident the claims would inevitably fail, considering the pleadings, affidavits and any issues that might emerge through trial or pre-trial procedures.
On the contractual terms, Mr Justice Fullam adopted Mr Justice McGovern’s earlier analysis that there was no issue to be tried. On estoppel, he found that the plaintiffs had produced no new evidence of a bank agreement to waive its contractual rights. He also noted that the earlier judgment had treated as untrue the claim that the bank never warned that the rental arrangements could constitute a breach, citing its letter of August 12, 2014.
The plaintiffs relied on documents and allegations about restructuring practices, including a report concerning RBS. The bank disputed their relevance and said there was no evidence those practices occurred in this case. The judge found no prima facie case of bad faith and no evidence that the bank engineered a default. He therefore exercised the court’s discretion against allowing the dispute to proceed to a plenary hearing.