Title:	Hoare -v- Allied Irish Banks Plc & anor
Neutral Citation:	[2014] IESC 73
Supreme Court Record Number:	325/14
High Court Record Number:	2012 No. 8998P - 2012 No. 168 COM
Date of Delivery:	12/17/2014
Court:	Supreme Court
Composition of Court:	Denham C.J., McKechnie J., Dunne J.
Judgment by:	Denham C.J.
Status:	Approved
Result:	Dismiss
Judgments by Link to Judgment Concurring Denham C.J. Link McKechnie J., Dunne J.

THE SUPREME COURT

Between/

1. This is an appeal by Michael Hoare and Mary Hoare, the plaintiffs/appellants, referred to as “the appellants”, from the judgment of the High Court (Kelly J.), dated the 28th November, 2012, and perfected on the 30th November, 2012, and the judgment of the High Court (Charleton J.), dated the 1st May, 2014, and perfected on the 6th May, 2014, and the order of the High Court (Charleton J.), dated the 27th May, 2014, and perfected on the 17th June, 2014, whereby it was ordered that the appellants claim as against Allied Irish Banks Plc and James Luby, the defendants/respondents, referred to collectively as “the respondents”, be dismissed, and that Allied Irish Banks Plc, the first named respondent, referred to as “the bank”, recover the sum of €5,609,556.76 together with 75% of their costs as against the appellants.

Reliefs Sought
2. The appellants applied to this Court seeking a stay on the High Court orders pending the determination of this appeal, which was granted on the 31st July, 2014, and perfected on the 20th August, 2014.

3. The appellants seek an order granting an injunction restraining the respondents, their servants or agents or anyone on their behalf, from acting as receivers in respect of fifteen properties in Galway, and in particular the bank from instructing the second named respondent, or any other person, to act as receiver.

4. The appellants also seek an order revoking the orders of the High Court of the 28th November, 2012, 1st May, 2014, and 27th May, 2014; and for an order returning the proceedings to the High Court for a re-trial.

Grounds of Appeal
5. The following were the grounds of appeal:-

(i) That the learned trial judge erred in law and in fact in failing to pay sufficient regard to the circumstances that the appellants and the bank enjoyed a long course of dealing and had built up an agreed business practice and custom of the trade between them, whereby the appellants would borrow and buy properties which they would develop and, in accordance with the agreed course of action would sell the properties at the right time at a significant profit and discharge to the bank the borrowings and interest due reserving the net profit for themselves.

(ii) That the learned trial judge erred in law and in fact in failing to take into account the duties of the bank as bankers to the appellants, particularly where supplying products to the appellants which it, their servants or agents alleged, were suitable for the appellants’ borrowing needs.

(iii) That the learned trial judge erred in law and in fact in ignoring and/or failing to take sufficient account of the evidence of Graham Kelly, the agent of the bank herein where the said Graham Kelly gave evidence that the appellants and the bank had entered into the agreement, the terms of which were set out in an email dated 18th day of July 2011.

(iv) That the learned trial judge erred in law and in fact in failing to take sufficient account of the evidence of Graham Kelly, the agent of the bank where the said Graham Kelly agreed and acknowledged that when the appellants and the bank entered into the agreement, as set out in the email of 18th day of July 2011, the bank agreed to continue to support the appellants well knowing that there would be a “bumpy ride” ahead for the parties, given the economic environment then prevailing.

Without prejudice to the foregoing

(v) The learned trial judge erred in law and in fact in finding there was no agreement made between the appellants and the bank in and about the 18th day of July 2011.

(vi) The learned trial judge erred in law and in fact in finding that the appellants had no claim for damages, which might be set off against the judgment of Kelly J. made in favour of the bank.

Background
7. The bank had many dealings with the appellants’ business which consisted of the purchase, renovation and letting of student accommodation in Galway. These proceedings relate to fifteen properties owned by the appellants, which were subject to mortgages in favour of the bank.

8. Also, the appellants ran a construction company called Dangan Homes Limited, which built homes in Galway.

9. Due to the economic downturn in 2008 financial difficulties arose in both businesses.

10. The appellants submitted that on or about the 18th July, 2011, the appellants entered into an agreement with the bank whereby the bank would exercise forbearance in respect of breaches of the appellants’ repayment obligations in return for the appellants taking steps in respect of the properties, said to have a market value of €1 million. The appellants submitted that the agreement was evidenced in an email of that date.

11. The appellants submitted that the bank, in breach of the agreement, appointed James Luby, the second named defendant/respondent, referred to as “Mr. Luby”, as receiver, on the 20th August, 2012. The appellants submitted that the appointment of the receiver at that time was a grave interference with their business, with the new intake of students coming to Galway at that time. Also, the appellants feared the purpose of the appointment of the receiver was to carry out improper sales of the properties. Therefore, the appellants commenced these proceedings.

12. There were a series of orders made, including that on the 28th November, 2012, when the High Court lifted the injunction originally granted in September, 2012, and granted judgment to the bank in the sum of €7,435,556.76, against the appellants, but stayed execution and registration of the judgment pending determination of the appellants claim against the respondents.

13. The appellants claim against the respondents came on for hearing in the High Court on the 23rd March, 2014. It was at hearing for four days, concluding on the 28th March, 2014. Judgment was reserved to the 28th April, 2014.

14. The High Court (Charleton J.) on the 28th April, 2014, concluded:-

“In the result, judgment has already been entered on 28 November 2012 by Kelly J. as against the [appellants] on the counterclaim of the defendant bank in the sum of €7,453,556.76. There is nothing in the claim of the [appellants] against the defendant bank which would allow any contrary award of damages to be entered and consequently to be set off. That judgement therefore stands and the stay pending the trial herein is lifted. The claim on the guarantee by the defendant bank as against the [appellants] is dismissed for the reasons stated.”

16. The High Court on the 28th April, 2014, found that the email of the 18th July, 2012, was not a contract. The appellants contest this finding. Further, they submit that the learned trial judge erred in not finding it was contract of forbearance.

17. The respondents submitted that the appeal was out of time. The initial order was made on the 28th November, 2012, granting summary judgment to the respondents on their counterclaim for €7,435,556.76, which was granted, subject to a stay pending the appellants’ original claim for damages.

18. On the 1st May, 2014, the High Court (Charleton J.), after four days of an oral hearing, and a judgment given on the 28th April, 2014, made an order:-

(i) Dismissing the appellants original claim for damages and lifting the stay on the summary judgment, but

(ii) Holding that the guarantee (€1,844,000) was not enforceable, and awarding 75% of the costs to the respondents.

19. The respondents have not appealed the decision in relation to the guarantee. Nor have the appellants appealed this aspect of the judgment and order.

20. Thus, it was submitted, the appellants seek to disturb only the summary judgment, the part of the plenary judgment that dismissed the appellants’ original damages claim, and the costs order.

21. Initially, it had been submitted that the appeal was out of time for each of the orders sought to be vacated; that there had been no application to extend time. It was submitted that there was no appeal properly before the Court.

22. However, in oral submissions it was stated that the bank was not pursuing the out of time claim.

23. The respondents referred to the submission of the appellants that the learned High Court judge was at fault in giving insufficient weight to the evidence of Graham Kelly. It was submitted that Mr. Graham Kelly gave evidence that at a meeting on the 14th July, 2011, the bank agreed “to provide further forbearance”, and described the terms of that agreement as set out in the email of the 18th July, 2011, as “an honest offer”. The High Court (Charleton J.) held that it did not constitute a contract, and that in any case forbearance had been provided by the bank. It was submitted that there was no evidence before the High Court of “an agreement” to forbear either for a specific time or until the value of the securities would be sufficient to discharge the secured loans. It was submitted that it was held by the High Court that on the basis of the evidence, it would have been clear to everyone that a twelve month time scale of forbearance was envisaged.

Decision
24. The facts of this case mirror the position of many people who have suffered severe financial consequences in the economic crisis, in particular due to the fall in the price of houses.

25. One can only have sympathy for people such as the appellants who were caught with large loans when the economic crisis and the fall in house prices occurred.

26. However, while having sympathy for the appellants and their unfortunate predicament, the Court must apply the law to the facts of a case.

27. There was an arrangement between the appellants and the bank whereby the bank would give time to the appellants to sell the properties themselves if the properties reached a market value of €1m.

28. The time scale of the arrangement was twelve months.

29. However, no such sales occurred.

30. Thirteen months after the arrangement was entered into the bank appointed a receiver.

31. Further, there was nothing to show that the bank had dealt with the appellants on the basis of non recourse lending. It did not appear to arise.

32. In all the circumstances, the learned trial judge was entitled to rely on the evidence of Mr. Kelly and Ms. Olivia Tone, which was recorded on the transcripts.

33. This case was at hearing before the High Court (Charleton J.) who heard oral evidence. It is well established in law, as set out in Hay v. O’Grady [1992] 1 I.R. 210 by McCarthy J. at p. 217 that:-

“1. An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge who hears the substance of the evidence but, also, observes the manner in which it is given and the demeanour of those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial.

2. If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings, however voluminous and, apparently, weighty the testimony against them. The truth is not the monopoly of any majority.

…”

35. There was no evidence to disturb the primary finding of fact that a twelve month period for review by the bank was understood by all parties, and that it was not an unlimited period of forbearance, or forbearance until the securities reached a particular relative value.

36. Thus, after twelve months, in all the circumstances, the bank was entitled to enforce their securities.

37. The Court notes that the bank did not appeal against the finding of the learned trial judge as to the guarantee, or to his direction that as the claim on the guarantee by the bank had been dismissed the final figure of €7,453,556.76, be reduced by €1,844,00.00, and consequently an amendment of the order of the 28th November, 2012, by deleting the figure of €7,453,556.76, and inserting in its place the figure of €5,609,556.76.

Conclusion
38. In all the circumstances, the Court finds that there was no error by the High Court. Consequently, the Court would affirm the orders of the High Court and dismiss the appeal.