The Supreme Court has dismissed an appeal by Michael Fortune and Cyril Barden over security held on three houses at the Clearwater Cove development in Rosslare, Co Wexford. It affirmed a High Court order made on an application by the receiver of Ellen Construction Limited, which was in receivership.
The case concerned houses numbered 10, 20 and 41. Ulster Bank had written to Fortune and Barden in April 2009 saying it would release its charge over the houses if its debt was reduced to €2 million. The bank also said their liability under existing guarantees for Ellen’s debts was limited to their interest in the Clearwater Cove site.
Fortune and Barden argued that the letter reflected an arrangement under which Richmond Partnership would give up site fines on nine unsold properties, in exchange for the release of the three houses for their benefit. The bank’s position, supported by evidence from its representative, was that the €2 million debt was to remain secured on the nine other properties.
The receiver sought a direction under section 316 of the Companies Act 1963 that the bank had not released its security over the relevant interests in the properties. The Supreme Court rejected Fortune and Barden’s argument that the matter fell outside the court’s jurisdiction. It said Ellen had an interest in the lands through its building licence, and the dispute necessarily concerned whether that interest had been released.
On the merits, the Court said the April letter did not set out the complete terms of the arrangements asserted by either side. It therefore could not, by itself, establish the agreement claimed by Fortune and Barden. The Court considered the unchallenged evidence about discussions between the bank’s representative and Ellen’s financial controller. That evidence supported the bank’s account that the debt had to be reduced to €2 million while remaining secured on the nine properties.
The Court concluded there was no established agreement binding Ellen or Ulster Bank to release their interests in the three houses. It dismissed the appeal and affirmed the High Court order. The ruling addressed the receiver’s application for directions; it did not find that the claimed release had occurred.