JUDGE FINDS IN FAVOUR OF BANK ON ALL POINTS
By judgment of 19th June 2014, Ms. Justice O’Malley found in favour of the Bank of Ireland (“the Bank”) and the Receiver (Michael McAteer) in their action against Mr Joseph Sheahan and Mr Frank Sheahan (Junior) after lengthy deliberation.
The various proceedings related to borrowings of Mr. Joseph Sheahan and Mr. Frank Sheahan (Junior) between 2005 and 2008. There were five separate proceedings to be determined, although the fifth set of proceedings, The Guarantor Proceedings, has been held over to be determined at a later date. The issues determined related to:
1) Whether the Bank’s demands for the repayment of loans were validly made;
2) Whether the Deeds of Appointment of Receiver (Michael McAteer) had been validly executed;
3) Whether promises had been made by the Bank to extend the interest only terms of loans, giving rise to a collateral contract of an estoppel;
4) Whether an alleged “Loan Pool Agreement” between Mr. Joseph Sheahan and Mr. Frank Sheahan (Junior) and the Bank existed;
5) The effect of the cashing of cheques offered by the Sheahan’s to the Bank in response to letters of demand for payment of arrears on specific accounts, referred to as the “Recent Agreements” in the judgment;
6) The extent of the arrears at the time of issuing of the letters of demand for repayment of the loans.
The Court upheld the validity of the Letters of Demand, relying on the oral evidence submitted by Bank officials. It accepted the position of the Bank, that once a recommendation was made to call in the repayment of loans from the personnel with authority to do so, the case manager of the Bank would have authority to implement the terms of that position. Furthermore, it was held that the validity of the demand made does not depend on the exact statement of the sums due, as in this case, it was clear from other evidence that all accounts were in difficulty for some time.
In relation to the Beechgrove property which Mr. Joseph Sheahan asserted was his family home, Ms. Justice O’Malley was satisfied that Mr. Joseph Sheahan was aware that the persons with authority to approve the loan did not approve it on the basis that it would be his family home.
Furthermore, she also determined that the subsequent offer of interest free period reflected a successful negotiation by Mr. Joseph Sheahan rather than an acceptance of the proposition that he had a contractual right to interest free terms.
The Court held that the decision to call in the loans and to appoint a receiver in the event of non-payment was made by an appropriately authorised person. To give effect to this decision, it then became necessary to validly execute a Deed of Appointment of Receiver (“DOA”), and the Court was satisfied that the appropriate procedure was followed in this regard. The Court also found that there was no requirement for further authorisation to be given to the Case Manager to empower him to furnish the DOA to the Receiver. Ms. Justice O’Malley held that there was no doubt of the Bank’s intention to treat the DOA as legally effective at the time of delivery and that this was all that was required to evidence proof of “delivery” of the DOA to the Receiver.
In relation to the alleged “loan pool agreement”, the Court held that in light of the surrounding circumstances, it was considered possible the Sheahans’ had to some extent persuaded themselves that the guarantee provided by Mr Frank Sheahan Senior would not be relied upon. The court did not find it possible to accept this position.
The assertion of an agreed variation of interest only repayment periods was held to be inconsistent with each of the individual written terms signed by the borrowers in relation to each of the 20 loans. Ms. Justice O’Malley held the fact that the decision makers would not agree to terms in writing could not be seen as indicating anything other than the Bank’s refusal to contract to new terms for repayments and be legally bound by them.
Finally, in rejection the Sheahans’ claim that there were (alleged) “Recent Agreements”, she noted that there was no consensus ad idem between the parties with respect to the lodgement of cheques. Ms Justice O’Malley stated that in her view, the cheques were accepted by the Bank on the basis of the banks’ demand for arrears owing to them, and not in settlement of the litigation.
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