The recent decision of the High Court in Luxor Investments Limited & Ors v Beltany Property Finance Limited considered the circumstances in which a court will refuse to enforce the terms of an agreement, and instead seek to ascertain the true intention of the parties to the agreement.

The Court held that an agreement dated 25 October 2011 and made between the first two Plaintiffs and UBSIG (ROI) Limited, which obliged the Plaintiffs to make certain payments to UBSIG, either in October 2018, or on the sale of certain properties, was not enforceable, where the Plaintiffs proposed to redeem their loans with the Defendant at par.

Factual Background

The Plaintiffs, Luxor Investments Ltd & Ors, had been clients of Ulster Bank Ireland Limited (the "Bank") for over 17 years. As part of a restructuring of certain facilities of the Plaintiffs in 2013, the first two Plaintiffs entered into a Fee Agreement dated 25 October 2011 (the “Agreement”) with UBSIG (ROI) Limited (“UBSIG”), a subsidiary of the Bank.

Under the terms of the Agreement, UBSIG were entitled to a fee on the disposal by the Plaintiffs of the Radisson Blu Royal Hotel, Dublin 8 (the "Hotel"). If the Hotel was not disposed of, then the fee automatically became payable in October 2018.

The Agreement was clear, in that it provided for payment of the fee independently of the repayment of the Plaintiffs’ loans.

As part of its deleveraging programme, the Bank sold the Plaintiffs' loans to the Defendant, Beltany Property Finance Ltd. The Plaintiffs had secured the assistance of a financier, who was prepared to restructure their loans in such a way as to enable them to redeem their loans at par, to include all interest due.

Having purchased the Plaintiffs’ loans and the Agreement, the Defendant refused to consent to the redemption, maintaining that it was entitled to a fee calculated on the basis of the Agreement.

Despite it not being explicitly stated in the Agreement, the Plaintiff contended that the Agreement was not applicable if there was redemption at par.


The High Court summarised the issues to be determined as follows: 

(i) whether the Agreement applied in the event of a redemption of the loans at par; and
(ii) whether the Agreement was void as a cog on the Plaintiffs' equity of redemption.


Despite there being no ambiguity in the language of the Agreement, the Court was comfortable that it could apply rules of construction in order to give effect to the Agreement in such a way as to reflect the intention of the parties.

The Court decided that to make a ruling to the effect that the Defendant would recover all monies owing under the loans, plus interest and still be entitled to an additional sizeable fee, this would run counter to the true nature of the Agreement and would impose an undue burden on the Plaintiffs. The Court laid particular emphasis on the fact that, at the time the Agreement was entered into, it was not anticipated that the loans would be redeemed at par.

Having decided that the Agreement was not enforceable in circumstances where the Plaintiffs proposed to redeem their loans at par, the Court did not find it necessary to consider whether the Agreement was void as a cog on the Plaintiffs’ equity of redemption.


Given the large number of asset portfolio trades in Ireland in recent years, this judgment will be of interest to purchasers of Irish loan books. While it is well established that such purchasers are bound by the original terms and conditions as entered into between the borrower and seller of the loans, the judgment makes it clear that the Court will not always enforce a literal interpretation of these terms.

Where circumstances require it to do so, the Court will seek to ascertain the commercial reality of the transaction at hand. This causes an obvious difficulty to parties who acquire interests in such agreements, and who will not have been privy to the commercial circumstances which will have led to these agreements being entered into.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.