Ireland: Recent Interesting Decisions From The Irish Courts In A Number Of Banking Cases (February 2014)

Last Updated: 12 February 2014
Article by Andrew Lenny, Eve Mulconry, Gavin Woods and Susan O'Reilly


Bank of Ireland (the "Bank") took an action against the three Defendants and the estate of the Third Defendant's late husband (the "Deceased") for €5,358,026.12 on foot of a facility letter under which the three Defendants and the Deceased were jointly and severally liable.

The First and Second Defendants settled the Plaintiff's claim against all of the Defendants by paying the sum of €3,506,776.06 plus interest and costs to the Bank . The First and Second Defendants then pursued the Third Defendant and the estate of the Deceased by way of indemnity and contribution.

The Third Defendant argued, on behalf of the estate of the Deceased, that pursuant to the Civil Liability Act 1961 (the "Act"), the claim had to be brought within 2 years of the Deceased's death, being a claim that survived against the Deceased's estate.

Mr. Justice McGovern followed the case of Bank of Ireland –v- O'Keeffe1 in which Baron J held that the Plaintiff's claim on foot of a guarantee made against the estate of a deceased was not time barred since the demand was made after the death of the deceased and it was not a claim what survived against the deceased's estate therefore the two year limitation did not apply.

In the instant case the demand for repayment was made after the Deceased's death and was not a claim subsisting at his death or one that survived against the Deceased's estate within the meaning of the Act. The monies did not fall due and were not repayable at any time prior to the Deceased's death. Mr. Justice McGovern held that the claim for contribution or indemnity against the Deceased could only arise after the Plaintiff lawfully demanded repayment of the loan and therefore the claim was not time barred.


The National Asset Loan Management Limited ("NALM") applied for summary judgment on foot of facilities advanced by Anglo Irish Bank Corporation Limited ("Anglo") to Tom Coyle. This case is unusual in that Mr Justice McGovern granted NALM summary judgment but remitted the issue of what interest was applicable to the Defendant's loans to plenary hearing. The Defendant averred that the incorrect rate of interest had been applied to his loan accounts and this view was supported by an accountant who had sworn an affidavit to that affect. Although NALM disputed this claim, Mr Justice McGovern concluded that the Defendant had raised an arguable case which could not be determined by way of affidavit evidence.2


This case is noteworthy as Bank of Scotland plc (the "Bank") were successful in their application to wind up Fuerta Limited ("Fuerta") by relying on section 213 (f) of the Companies Act 1963 (as amended). Section 213 (f) provides that "the Court is of opinion that it is just and equitable that the company ............. should be wound up". This section is usually relied upon in cases of deadlock or oppression, however in this instance, the Bank relied on the fact that Fuerta had failed to file proper accounts in the Companies Registration Office.

In this case, the Bank had provided a facility to Fuerta of up to €15million in order that Fuerta could obtain a majority interest in a partnership which developed a nursing home in South Dublin. The enforcement of the Bank's security was mandated but a sale of the control of the facility was only possible with either the compliance of the company or through a liquidator controlling the company. Despite the Bank taking every step possible to engage with the directors of Fuerta, the attempt to sell the facility through engaging with the company had proved impossible.

Mr Justice Charleton held that where other avenues are available, winding up on the just and equitable ground due to non- compliance with company law (in this instance the failure to file annual accounts) should not be invoked.

Any reliance on section 213(f) for lack of corporate compliance should only be based on the most serious lack of compliance coupled with an absence of reasonably available alternative steps in the context of existing or impending prejudice. Mr Justice Charleton found that the requisite elements were present in this case and ordered that Fuerta be wound up on the basis that it was just and equitable to do so.

The appointment of a liquidator would allow the Bank to proceed with the sale through the liquidator.


In a recent decision of the High Court, Mr Justice Peart considered what constituted "close of business" in the context of determining the validity of the appointment of a receiver.

In the instant case a receiver was appointed at 4:00pm on a particular day to two companies which had facilities with Irish Nationwide Building Society (the "Bank"). The directors of the companies argued that the appointment of the receiver was invalid because the relevant letters of demand had stated that if the monies were not received by "close of business" the Bank would proceed to enforce its security. The directors argued that 4:00pm was not the normal understanding of "close of business" and that therefore the appointment of the receiver had been premature. No argument was made that the companies would have been in a position to discharge the monies owing had the Bank waited until 5:00pm or 5:30pm before appointing the receiver but it was argued that the Bank had to strictly comply with the terms of the letters of demand.

The Bank argued that it did not have to comply with the terms of the letters of demand as the relevant facilities were repayable "on demand" but that in any event, it did in fact so comply, as 4:00pm is "close of business" for the Bank because any transactions received after that time would not be processed until the following day. The directors of the company argued that 4:00pm could not be "close of business" as the doors of the Bank remained open after 4:00pm.

Mr Justice Peart concluded that the term "close of business" was not a term of art and that its meaning in any particular case will depend on the nature of the business in question. Mr Justice Peart noted that where "a letter of demand requires repayment forthwith, and threatens that if funds are not received on a particular day by "close of business" that must be interpreted as meaning the end of the banking business day" (emphasis added). Mr Justice Peart went on to conclude that "it is reasonable to interpret the phrase "close of business" in the banking context as being the time at which banks have traditionally and normally closed their doors to customers" i.e. 4:00 pm. On this basis, Mr Justice Peart directed that the receiver had been validly appointed.3


1. 1987 I.R. 47.

2. It is worth noting that the Defendant has appealed Mr. Justice McGovern's decision granting summary judgment to the Supreme Court.

3. It should be noted that this decision is currently under appeal to the Supreme Court.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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