The High Court has rejected Michael and Mary Hoare’s claims against Allied Irish Banks and receiver James Luby, finding no breach of duty by the receivers and no contract requiring the bank to forbear from enforcing its loans. But the court dismissed the bank’s claim under a €1.844 million guarantee, ruling it had been extinguished when the loan it supported was repaid.
Mr Justice Peter Charleton’s judgment, delivered on 28 April 2014, leaves standing a €7,453,556.76 summary judgment entered against the Hoares on the bank’s counterclaim in November 2012. The judge lifted a stay on that judgment. The bank’s costs were limited to 75% because the Hoares succeeded on the guarantee issue.
The Hoares, who had built a property rental business in Galway, sued the bank over its appointment of a receiver to their properties. They alleged the bank had broken an agreement to show forbearance and that the receiver’s actions harmed their business. The bank denied the claims and sought repayment of lending, as well as enforcement of the guarantee given in connection with Dangan Homes Limited.
The judge found the receivers had acted reasonably in the circumstances. They were appointed in August 2012 but did not take possession of the properties while an injunction was in place. The injunction was discharged in November, after the student letting season had passed. The receivers later entered possession of 19 properties, including several multiple units; 11 were let and eight vacant. They spent about €9,000 to help prepare some properties for letting. The court found their performance reasonable given the condition of the properties, the litigation and the available rental income.
The Hoares argued that a July 2011 email from the bank created a contract to provide forbearance. The judge held that it offered only “a level of forbearance” subject to conditions and was too imprecise to be a contract. He found the bank was entitled to demand repayment after concluding that the conditions had not been met, including requirements concerning rental income and properties to be marketed for sale.
On the guarantee, the judge accepted Mary Hoare’s evidence that it covered a specific Dangan Homes project. Although its written terms referred to future liabilities, the court found the guarantee had ended when the supported loan was repaid. The bank’s claim against the Hoares under that guarantee was therefore dismissed.