Judgment Title: Jennings & Anor -v- Bank of Scotland & Ors
Neutral Citation: 2012 IEHC 515
High Court Record Number: 2012 408 COS
Date of Delivery: 12/05/2012
Court: High Court
Composition of Court:
Judgment by: McGovern J.
Status of Judgment: Approved
Neutral Citation Number:  IEHC 515
THE HIGH COURT
[2012 No. 408 COS]
IN THE MATTER OF DIORAMA LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2009
PATRICK JENNINGS AND MARY JENNINGS
BANK OF SCOTLAND PLC., KIERAN WALLACE AND BARRY DONOHUE
JUDGMENT of Mr. Brian J, McGovern delivered on the 5th day of December 2012
1. This is an application brought by the applicants for an order pursuant to the provisions of s. 316 of the Companies Act 1963, declaring that Mr. Kieran Wallace and Mr. Barry Donohue (“the Receivers”) do not stand validly appointed as joint receivers and managers over the assets and undertaking of Diorama Limited. The motion was heard on affidavit and a number of deponents were also cross-examined on their affidavits by leave of the court.
2. The applicants claim that the appointment of the Receivers is invalid on two grounds, namely:-
(b) the appointment of the Receivers was defective and is therefore invalid.
4. I am quite satisfied on the evidence that the Company was in arrears at the time of appointment of the Receivers. On 16th December, 2010, the Company’s arrears on three loans (101, 106 and 107) amounted to €883,436.47. No instalment was paid by the Company under the terms of the loan agreements between December 2010 and May 2012. A large volume of correspondence from the Bank to the Company between 24th February, 2009, and 10th January, 2012, was exhibited. This correspondence clearly shows that the Company’s attention was regularly drawn to the fact that there were arrears on the Loan Accounts 101, 106 and 107, and that they were not being dealt with by the Company. In the circumstances, the Bank was prima facie entitled to appoint receivers under the terms of a Debenture dated 15th December, 2005.
5. The court heard evidence as to the manner in which monies were taken from the accounts of Harlequin Developments Ltd. and Harlequin Hotels Ltd. to be set off against the loans of the Company under Loan 107. Although the applicants complain that this was not permissible, I am quite satisfied, on the evidence, that the Bank was entitled to do so on the basis of the Terms and Conditions of the loan facilities and the Bank’s General Terms and Conditions which were incorporated into the terms of the loans. While the applicants state that they did not receive the Terms and Conditions in respect of one of the loans, they accept that they acknowledged by their signature that they did receive the Terms and Conditions. I accept the evidence of Mr. Pyers O’Connor Nash who was cross-examined on his affidavit and set out in detail the basis on which the Bank conducted its business with the applicants and the documents and information furnished to them. It is clear that the applicants agreed that funds on deposit in accounts held by Harlequin Hotels Ltd. and Harlequin Developments Ltd. were to form part of the security for loans advanced in respect of the Company and the right of set off existed between the accounts of these companies. For some considerable period of time, Mr. O’Connor Nash had been the relationship manager between the Bank and the applicants and was well placed to give the court a full account of the Bank’s dealings with the applicants. Furthermore, the applicants were legally represented at the time when they entered into these agreements with the Bank. In those circumstances, I reject the claim by the applicants that any arrears in the Company’s account at the time of the appointment of the Receivers was due to wrongful actions on the part of the Bank.
6. Clause 7.1 of the Debenture provides, inter alia:
8. Affidavits of laws were sworn by Scottish lawyers, Mr. Gordon Deane and Ms. Fiona McKerrell. Ms. McKerrell was cross-examined by counsel for the applicants. However, Mr. Deane was not cross-examined. The evidence of Ms. McKerrell was to the effect that Mr. Alexander Wolfe Murray Bruce was properly authorised under Scottish law to make the appointment of the Receivers. Mr. Deane, in his affidavit, only went so far as to state that if the Bank had documentary evidence to demonstrate Mr. Bruce was duly authorised, then it should be asked to produce the evidence. When the Bank did produce the evidence, Mr. Deane did not put in a further affidavit disputing the nature of the evidence produced by the Bank. I prefer the evidence of Ms. McKerrell on this issue and hold that Mr. Bruce was properly authorised to make the appointment of the Receivers.
9. When the Receivers were appointed by Mr. Bruce on 25th May, 2012, a six-page document was signed in Scotland by Mr. Bruce and he e-mailed a copy of the document to each of the Receivers. Each of the Receivers then copied and signed one page each which they sent back to Scotland. On 28th May, 2012, the original document which was signed by Mr. Bruce was sent to Ireland and signed by each of the Receivers and was backdated to 25th May, 2012. The applicants rely on the case of R (On the Application of Mercury Tax Group and Another) v. Revenue and Customs Commissioners and Others  STC 743. In that case, Underhill J. said that if the parties to relevant documents expressed to be deeds intended them to be deeds, then their validity should be judged on that basis. At para. 43, he said:
11. In this case, the signature of the Receivers was merely to confirm their acceptance of their appointment. There were no formal requirements necessary. What they did on 25th May, 2012, was sufficient to signify their acceptance of their appointment. This was expressed in a more formal way when they signed the original deed which was sent over from Scotland. But I cannot see how these steps would in any way call into question the validity of their appointment. Support for this view is to be found in the judgment of Lord Evershed M.R. in Windsor Refrigerator Co. Limited and Another v. Branch Nominees Limited and Others  1 ALL E.R. 277, where at p. 281, he said: