The Court of Appeal has dismissed Tifco Limited’s appeal against a High Court decision refusing to strike out a €3.5 million claim brought by five property companies over the financing of a hotel in Dundalk.
The judgment, delivered on 24 June 2021, leaves the claim to proceed. The appeal court did not decide whether Tifco is liable for the loss, or whether settlement documents released it from any liability.
The companies say Tifco breached a 2007 sinking fund agreement by failing to make scheduled payments intended to secure its obligations under an option agreement relating to the hotel. The bank later enforced a charge over a €3.5 million deposit provided by Downby Developments Limited and applied the money against the borrowers’ loan. The borrowers claim they became liable to reimburse Downby and seek indemnity or damages from Tifco. These are allegations, not findings on the underlying claim.
Tifco denies liability. It argued that a 2014 settlement agreement and a deed of release discharged any relevant obligations and made the claim bound to fail. The property companies disputed that interpretation, arguing that the documents did not clearly release a claim arising from Tifco’s alleged earlier breach. The Court of Appeal said Tifco’s interpretation might succeed at trial, but was not the only plausible reading. It pointed to the documents’ wording and the possibility that further transaction documents could inform their interpretation.
The court also identified a separate question: whether the receiver had authority to settle or release this particular claim under the security arrangements. It said that issue warranted fuller argument and could not be said to be bound to fail on the limited argument before it. The court found the issue was not properly pleaded, and did not amend the pleadings itself. The companies may apply under the ordinary court rules to amend them if they wish to pursue it.
The High Court had refused Tifco’s strike-out application in May 2020. The appeal court stressed that this procedure is reserved for clear cases and cannot be used to determine complex contractual interpretation issues where doing so risks injustice. Its decision was limited to whether the case should be struck out at this stage; it expressed no definite view on the merits.
The court’s provisional view was that the companies, having succeeded on appeal, should receive their appeal costs, subject to a stay on adjudication and execution until the underlying proceedings are determined. Either side could object within 14 days of electronic delivery, in which case a short costs hearing would be arranged.