The High Court granted Danske Bank A/S trading as National Irish Bank judgment jointly and severally against four defendants over two loans totalling €37.1 million, plus interest to be determined if the parties cannot agree. Mr Justice Charleton ruled on 26 June 2009 that the borrowers’ limited-recourse protection did not prevent the bank from pursuing them after the secured properties fell below the contractual value threshold.
The loans, made under facility letters dated 22 February 2006, were €29.46 million and €7.64 million. They financed refinancing and the purchase of additional houses for an intended development site at Beech Park, Cabinteely, County Dublin. Guarantees and charges over specified properties supported the lending.
The defendants argued that the bank’s recourse was limited to those properties once they had paid interest due through the repayment date, 30 September 2008. They said the bank’s demand to restore the required debt-to-security ratio arrived after business hours on that date, too late to affect their limited-recourse position. The properties were valued at €45 million, below the €53 million needed to keep combined indebtedness within 70% of their value.
The facility terms required the borrowers to keep indebtedness within that 70% limit throughout the loan term. If the limit was breached, they had four weeks after a bank request to reduce the debt or provide acceptable additional security. The limited-recourse clause applied only if the borrowers met those obligations and paid interest.
The judge rejected the defendants’ interpretation. He held that the covenant continued through the loan term and that the contractual date ran until midnight, rather than ending at close of business. He found no factual dispute requiring a plenary hearing and decided the contract-construction issue on the affidavit evidence before him.
The court ordered judgment jointly and severally for the amounts claimed in the summary summons. It did not settle the interest figure from 30 September 2008 onward; the judge said he would hear the parties further if they could not agree on it.