In The Governor & Company of the Bank of Ireland v Rogerson & ors [2015] IEHC 560 High Court, Keane J, 14 August 2015 the Bank sought summary judgment from the defendants in the amount of €1 million. The facility letter specifically provided that the Bank’s recourse to each of the defendants in respect of monies due and owing was to be limited to, and satisfied from, the secured assets only. However, it also contained a proviso whereby the Bank was entitled to have recourse to the defendants and their assets in respect of any claim made under the indemnity clause of the agreement and, in addition, in respect of a joint and several liability of the defendants for a further sum of up to €1 million.

The defendants put forward three lines of defence:

  1. That on a proper construction of the loan agreement, the Bank’s recourse to the defendants personally for a sum of up to €1 million related solely to the specific potential liability in respect of which they had indemnified the Bank, which liability was, in fact, addressed prior to the execution of the loan agreement, so that no such recourse was now available;
  2. Further or in the alternative, that on a proper construction of the loan agreement, as evidenced by the facility letter, the Bank’s recourse to the defendants personally for a sum of up to €1 million could arise only in the event of a remaining indebtedness on the part of the defendants after the realisation of the secured property by the Bank, which had not occurred when the proceedings issued, so that the Bank’s claim was premature; and
  3. In the event that the loan agreement, properly construed, did not limit the Bank’s recourse to the defendants personally for a sum of €1 million solely to any liability arising under the indemnity provided to the Bank by the defendants (and which liability was, in fact, discharged prior to the execution of the contract), then the facility letter was drawn up and executed under a mutual mistake of fact and the defendants were entitled to rectification of the loan agreement to the extent necessary to include such a term.

The defendants argued that the personal recourse was designed to cover the potential liability to stamp duty on the acquisition of the secured property. The Bank argued that it was the intention of the parties at all times that the Bank’s limited recourse to the defendants would be in addition to, rather than simply in respect of, the indemnity that they were required to provide in relation to the potential liability to stamp duty.

Keane J concluded that the issues of construction raised were not sufficiently straightforward to be resolved in a summary manner or in the absence of fuller argument and he refused the application for summary judgment and remitted the matter for plenary hearing.