High Court: Businessmen entitled to defend vulture fund’s claim for €9.4m loan

Three businessmen who were granted a €9.4 million loan from EBS Building Society in 2009 have successfully argued that they are entitled to defend Promontoria’s claim for the €9.7 million now owed.

Refusing to grant summary judgment to Promontoria, Mr Justice David Barniville was satisfied that an arguable defence had been made under the Statute of Limitations 1957, and that the matter should proceed to a plenary hearing.


In February 2009, EBS Building Society advanced a loan facility of €9,400,000 to Pat Burke, John Donnelly and John Fleming (trading as Bridgeford Partnership). As security for the facility, EBS was entitled to rely on its existing mortgage dated 5 January 2007 over the defendants’ property, known as the Bridgeford Bar and Restaurant in Drogheda, County Louth, and the adjoining land and site.

In 2015, Promontoria (Arrow) Limited acquired the loan facility and all connected rights, entitlements and interests from National Asset Loan Management Limited.

In January 2017, Promontoria sent a letter of demand to the defendants, demanding payment of the total sum of €9,687,433.70, however no payment was made by the defendants.

Application for summary judgment

In April 2017, Promontoria appointed a receiver over certain of the defendants’ assets under the mortgage, and in May 2017, Promontoria commenced the present proceedings seeking summary judgment against the defendants pursuant to O. 37 RSC in the sum of €9,687,433.70 together with further sums by way of interest.

The summons pleaded that the facility was repayable on or before 17 February 2011.

The defendants resisted Promontoria’s application and sought to have the proceedings adjourned to plenary hearing, raising four defences and an issue as to Promontoria’s entitlement to maintain these proceedings against them. 

Mr Justice Barniville was not satisfied that the defendants raised an arguable defence under the headings of inadmissible evidence, inadequate proof of transfer, or joint venture/non-recourse. However, Mr Justice Barniville said that the defendants had raised an arguable defence to the effect that Promontoria’s claim was statute barred.

The statute of limitations defence

The defendants contended that the loan advanced on foot of the February 2009 facility letter fell due when the facility expired on 18 February 2011, and that the failure to commence proceedings within a period of six years from that date meant that, having regard to s. 11(1)(a) of the Statute of Limitations 1957, Promontoria’s claim was statute-barred by 18 February 2017.

The defendants submitted that it was clear from the facility letter that the term of the loan was two years from 17 February, 2009 – and therefore expired on 17 February 2011. The defendants contended that in circumstances where the loan was not repaid on 17 February 2011, Promontoria’s cause of action accrued the following day, on 18 February 2011. They claim that Promontoria’s proceedings would have had to have been issued on or before 17 February 2017, in order to comply with the six year period contained in s. 11(1)(a) of the Statute of Limitations 1957.

Initially, Promontoria asserted that the cause of action only accrued on 25 January 2017, when the defendants failed to pay the amount requested in the letter of demand of 18 January 2017. To support that assertion, Promontoria relied on Clauses 13.1 and 13.2 of the February 2009 facility letter and para. 12 of the standard conditions.

However, Mr Justice Barniville said that this issue was not pursued in written or oral submissions at the hearing, and that for the purposes of its application for summary judgment in this case only, it was accepting that the cause of action accrued when the period of the loan expired and was not repaid.

Promontoria had three answers to the defendants’ contention that the proceedings were statute barred:

  1. That the defendants had acknowledged the debt on a number of occasions in the course of their contacts and communications with Promontoria’s agents in 2016–2017 (notably, this was not pursued at the hearing).
  2. That the defendants had made certain payments towards the debt after it fell due and that the effect of those payments was, by virtue of s. 65(1) of the Statute of Limitations 1957, to provide for a fresh accrual of the right of action to recover the debt as of the date of the payment.
  3. That it was entitled to the benefit of the provisions of s. 36(1)(a) of the Statute of Limitations 1957. Promontoria contended that a twelve year period arose in respect of its claim to recover the principal sum due under the facility having regard to the provisions of s. 36(1)(a) of the Statute of Limitations 1957.

Mr Justice Barniville said that, bearing in mind the relatively low threshold to satisfied in order to demonstrate an arguable defence, and having regard to the question of whether it was “very clear” that the defendants had no arguable defence – he was satisfied that the defendants demonstrated an arguable defence in relation to their contention that Promontoria’s claim was statute barred.

As such, Mr Justice Barniville said that the defendants were entitled to have the issue of the Statute of Limitations 1957 dealt with at trial. Justice Barniville concluded that this was the only use which would proceed to plenary hearing.

  • by Seosamh Gráinséir for Irish Legal News
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