The High Court has ruled that Danske Bank, trading as National Irish Bank, is entitled to limited recourse against Durkan New Homes, Don Casey, Marian Casey and Tullycross Developments in a dispute over property loans. The court confined the bank’s security for the outstanding debt to the properties and other matters specified in the loan agreements.
The judgment, delivered by Mr Justice Brian J. McGovern on 29 July 2011, concerned two sets of proceedings. The bank sought judgment for sums it said were due under loan agreements and related guarantees. The defendants did not contest the claims for the sums due; the issue argued was whether the bank could pursue them beyond the agreed security.
The agreements provided for a capital “bullet repayment” on 30 September 2008, after a two-year-and-six-month term. They also limited the bank’s recourse to specified property, provided the borrowers paid interest and met obligations under a loan-to-value covenant. If the covenant was breached, the borrowers had four weeks after being called on by the bank either to reduce the debt or provide acceptable additional security.
The bank relied on a valuation of €45 million and said the combined indebtedness exceeded the covenant’s 70 per cent limit. It argued that it had notified the borrowers on 30 September 2008 to reduce the debt, and that they failed to make the bullet repayments or remedy the covenant breach. The defendants said they paid all interest due by the repayment date and that the bank’s notice arrived after the loan term had ended.
The judge found that the interest had been paid and that the bank’s letters were not delivered during normal business hours and were not received until the following day. He accepted evidence that the defendants could have remedied the covenant breach if called on during the loan term, but found they were not called on in time. The bank’s security therefore remained confined to the specified properties and other matters under clause 6.
The court decided the limited-recourse issue in the defendants’ favour. It did not determine the form of the final order; the judge said he would hear counsel on that. The judgment does not say that the outstanding debt was discharged.