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Cite as: [2014] 1 IR 749, [2014] IESC 44
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Judgment Title: Irish Bank Resolution Corporation v McCaughey Neutral Citation: [2014] IESC 44 Supreme Court Record Number: 70/14 High Court Record Number: 2013 2346 S & 2013 163 COM Date of Delivery: 11/07/2014 Court: Supreme Court Composition of Court: Clarke J., Laffoy J., Dunne J. Judgment by: Clarke J. Status of Judgment: Approved |
THE SUPREME COURT [Appeal No: 70/2014] Clarke J. Laffoy J. Dunne J.
Irish Bank Resolution Corporation (in special liquidation) Plaintiff/Respondent and
Gerard McCaughey Defendant/Appellant Judgment of Mr. Justice Clarke delivered the 11th July, 2014. 1. Introduction 1.2 The plaintiff/respondent is, of course, now in special liquidation. As the events which give rise to the issues on this appeal occurred before its name change, I will, in this judgment, refer to the plaintiff/respondent as "Anglo". There is no dispute but that Anglo lent significant sums of money to the defendant/appellant ("Mr. McCaughey"). Neither is there any dispute that the relevant sums have not been repaid and that interest also falls to be charged in respect of the accounts concerned. 1.3 However, when Anglo sued for the sums said to be due and, an appearance having been entered, brought a motion for summary judgment in accordance with the rules, Mr. McCaughey suggested that he had an arguable defence based, in very general terms, on two propositions. Some of the relevant monies had been advanced for the purposes of investments made by Mr. McCaughey in various projects which had been put together and promoted by Anglo. The relevant loan agreements provided that the sums advanced were to be repayable on demand and in any event by, at the very latest, March 2008, a date which had long since passed before any demand was made or any proceedings issued. On that basis, Anglo asserted that the monies were due. Mr. McCaughey's case on the summary judgment motion suggested that there was a collateral agreement entered into between him and Anglo at the time of the advance of each of the relevant loans, which was to the effect that the monies would not be repayable until the investment project for which the relevant monies were advanced came to an end, or, until the relevant funds into which the monies were placed were liquidated. Other legal defences were proposed based on the same facts as were said to give rise to such collateral contracts. In addition, Mr. McCaughey asserted that he had a counter claim arising essentially out of an allegation of the mis-selling of the various investment projects. 1.4 In a detailed judgment (Irish Bank Resolution Corporation Limited v. McCaughey, [2014] IEHC 230) Kelly J. held that Mr. McCaughey had established an arguable defence in relation to some but not all of the loans. Insofar as the claims referable to those loans were concerned, the proceedings were remitted to plenary hearing. This Court was told that the pleadings in that regard have now closed and discovery is under consideration. However, Kelly J. was not satisfied, for reasons which it will be necessary to address in due course, that an arguable case had been made out in respect of the remaining loans. In respect of those parts of the claim final judgment was granted. As will appear later it is against certain aspects only of the order of Kelly J. that Mr. McCaughey has appealed to this Court. In order to understand the precise issues which fell for this Court to decide on this appeal it is necessary to start by considering the background facts and, thereafter, the ruling made in the High Court. 2. Background Facts and Issues
6. The third facility was dated 17th November, 2006, and was broken down into three different elements. They were described as Facility A, B and C. Facility A was to increase the defendant's investment in the Woolgate Exchange Geared Property Fund. Facility B was to part fund the defendant's investment in the AIAC European Geared Property Fund (E.G.P.F.). Facility C was to fully fund the defendant's investment in Riverdeep. The fourth facility was dated 2nd January, 2007 and was used to provide the defendant with a €5m investment line of which €1,737,000 was drawn down. 7. The fifth facility was dated 28th March, 2007 and was to part fund the purchase of two units at the Rockefeller Plaza in New York."
2.4 As already noted it was also asserted on behalf of Mr. McCaughey that, in substance, various of the facilities were mis-sold in the sense that statements were made concerning the investments to which the facilities related which were incorrect. A number of different legal bases for suggesting that Mr. McCaughey was entitled to defend these proceedings by asserting a cross claim in that regard were put forward. As against that background it is next necessary to turn to the approach of the trial judge. 3. The High Court Judgment 3.2 Having concluded that there was a triable issue on the collateral contract argument, Kelly J. went on to consider the consequences of that conclusion. It should be noted that the collateral contract defence only applied to those loan agreements which were for the purpose of investing in funds offered by Anglo as was accepted by Mr. McCaughey in his replying affidavit of 26th November, 2013. It was, therefore, accepted that the collateral contract argument only applied to the first facility, the second facility, the third facility, (facility A and facility B) and what was referred to as the M & A part of the fourth facility. 3.3 In any event the term of the alleged collateral contract was said to preclude those loans to which it was said to apply from being called in, “for the duration of the funds” or “the duration of the investment”. Taking this into consideration, Kelly J. came to the conclusion that it was clear that the duration of some of the relevant funds and investments had come to an end, and thus, even on the terms of the alleged collateral contract, Mr. McCaughey was found not to have raised arguable grounds of defence in respect of those loans so far as a defence was suggested on the basis of the alleged collateral agreement. 3.4 Next, the trial judge considered the second argument of Mr. McCaughey, which took the form of a counterclaim. Mr. McCaughey asserted negligence, misrepresentation, negligent misstatement, breach of duty and breach of contract against Anglo. Kelly J. concluded that any such claims were statute barred, but nonetheless, considered their merits. The trial judge concluded that Mr. McCaughey “had not demonstrated, even on the low threshold of proof required, the basis for a counterclaim in respect of the various complaints” (para.50). Kelly J. found no evidence pointing to the assertions made and in some respects noted that the issues had been dealt with comprehensively in previous litigation. It will be necessary to refer to that litigation in due course. 3.5 Kelly J. determined the effect of these findings was that judgment should be given on facility C of the third agreement and the Riverdeep part of the fourth agreement and the fifth agreement in full (being those aspects of the facilities to which the collateral agreement did not, even on the basis of Mr. McCaughey’s case, apply). 3.6 Due to fact that the collateral contract defence could not apply once the duration of any relevant investment has expired, Kelly J. determined that judgment should be given in respect of the first agreement and facility A of the third agreement (“the Woolgate loan” and where relevant the “Woolgate Fund”) and on the second facility (“the New York Hotels loan” and where relevant “the New York Hotels Fund”) and also in respect of the M & A part of the fourth agreement. He also determined that the balance of Mr McCaughey’s defence should go to plenary hearing. 3.7 Having delivered his judgment, Kelly J. adjourned the matter to the following day, 30th January, 2014 when he made the order which is the subject of this appeal. In the order, having recited the judgment delivered on 29th January, 2014 and that the Court had indicated that it was prepared to grant judgment in favour of Anglo against Mr. McCaughey in the sum of €5,205,175.90 and that on 30th January, 2014 the Court was told the parties had agreed that the judgment sum should be reduced to €2,516,590.45 and had agreed terms for the discharge of the balance, namely, €2,723,612.93, with liberty to Anglo to apply in the event of that agreement not being complied with by Mr. McCaughey for the purpose of obtaining judgment in the event of such default, it was ordered that:-
(b) the balance of Mr. McCaughey’s claim be adjourned to plenary hearing. 4. The Appeal 4.2 It follows that the two loans with which this appeal is concerned are those described by the High Court, and in this judgment, as the Woolgate loan and the New York Hotels loan. It is also of some importance to mention that the matter first came before this Court on an application for a stay. In all the circumstances of the case, it appeared to the formation of the Court which was dealing with the stay application that it would be both in the interests of the parties and in the interests of the allocation of scarce court time if the substantive appeal could be readied for hearing as a matter of urgency. In substance the Court would have been required to consider, at least to some material extent, the merits of the appeal itself in order to apply the well established jurisprudence in respect of the grant or refusal of a stay. For that reason, in the circumstances of this case, it seemed unlikely that the hearing of the appeal itself would take much longer than the hearing of the stay application. It will be necessary to make reference in due course to some additional facts which had been placed before the Court, on affidavit, in the context of the stay application. 4.3 Before going on to analyse the grounds of the appeal in respect of the Woolgate and New York Hotels loans it is, as I indicated earlier, appropriate to say just a little about the proper approach of the courts in summary judgment applications. 5. Summary Judgment Applications
5.3 Denham J., speaking for this Court in Danske Bank v. Durkan New Homes [2010] IESC 22, also approved a passage from a judgment which I delivered in the High Court in McGrath v. O'Driscoll [2007] I.L.R.M. 203, where, at p. 210, I said the following:-
5.4 It is important, therefore, to reemphasise what is meant by the credibility of a defence. A defence is not incredible simply because the judge is not inclined to believe the defendant. It must, as Hardiman J. pointed out in Aer Rianta, be clear that the defendant has no defence. If issues of law or construction are put forward as providing an arguable defence, then the Court can assess those issues to determine whether the propositions advanced are stateable as a matter of law and that it is arguable that, if determined in favour of the defendant, they would provide for a defence. In that context, and subject to the inherent limitations on the summary judgment jurisdiction identified in McGrath, the Court may come to a final resolution of such issues. That the Court is not obliged to resolve such issues is also clear from Danske Bank v. Durkan New Homes. 5.5 Insofar as facts are put forward, then, subject to a very narrow limitation, the Court will be required, for the purposes of the summary judgment application, to accept that facts of which the defendant gives evidence, or facts in respect of which the defendant puts forward a credible basis for believing that evidence may be forthcoming, are as the defendant asserts them to be. The sort of factual assertions, which may not provide an arguable defence, are facts which amount to a mere assertion unsupported either by evidence or by any realistic suggestion that evidence might be available, or, facts which are in themselves contradictory and inconsistent with uncontested documentation or other similar circumstances such as those analysed by Hardiman J. in Aer Rianta. It needs to be emphasised again that it is no function of the Court on a summary judgment motion to form any general view as to the credibility of the evidence put forward by the defendant. 5.6 Finally, I should touch on one matter which turned out to be of some specific relevance in the circumstances of this case. As was pointed out by this Court in Lopes v. Minister for Justice, Equality and Law Reform [2014] IESC 21, in the context of an application to dismiss as being bound to fail under the inherent power of the Court first identified in Barry v. Buckley [1981] 1 I.R. 306, the courts, in hearing such applications, must be mindful of the fact that a party may, by a successful application, be shut out from having their claim determined at full trial, be required to be more flexible in relation to the consideration of arguments or materials brought forward on appeal (see para 9.1 of the judgment). It seems to me that like considerations potentially arise in the context of a summary judgment motion for precisely the same reason in that, if successful, the defendant will be shut out from having a full trial of the issues raised by his defence. While it remains important that a defendant put forward his full case on the summary judgment motion, and while it follows, therefore, that the courts will be reluctant to allow a different or additional case (backed up by evidence) to be run on appeal, nonetheless, some proportionality between the consequences of granting summary judgment and the rigour with which the rules applicable to new evidence on appeal ought be enforced, needs to be achieved. Counsel for Anglo quite properly accepted in that context that it was appropriate for this Court, in reaching its overall conclusions on this appeal, to have regard to additional affidavit evidence which had been filed by the parties in the context of a motion which had been brought before this Court on behalf of Mr. McCaughey seeking a stay. 5.7. Against the background of that jurisprudence, I propose to deal separately with the case made in relation to, respectively, the Woolgate and the New York Hotels loans. I will deal first with the issues concerning the New York Hotels loan. 6. The New York Hotels 6.2 Therefore, one of the issues which arises both in respect of the New York Hotels loan and the Woolgate loan is as to whether Kelly J. was correct to conclude that there was no arguable basis for suggesting that the respective loans were not at an end. I will return to that question shortly in the context of the New York Hotels loan. 6.3 However, for completeness it is necessary to add that, in respect of both loans, additional arguments were put forward on behalf of Mr. McCaughey based on misrepresentation and estoppel. However, the factual basis for those assertions in each case was the same as the factual basis which had been put forward for the alleged collateral contract. On that basis counsel for Mr. McCaughey accepted, in the course of argument, that such additional potential defences did not, in the circumstances of this case, add anything to the collateral contract argument. If, in all the circumstances, the asserted collateral contract could not avail Mr. McCaughey of an arguable defence because the relevant fund must be said to be at an end, then equally any defence based on misrepresentation (or indeed any other variation of such a claim based on, for example, promissory estoppel) could not succeed on exactly the same basis. However advanced as a matter of law, the net effect of the contention argued on behalf of Mr. McCaughey under this heading was that there was a legal obligation on Anglo, which prevented the relevant loans from being called in until such time as the corresponding fund was at an end. That was so whether the legal obligation was couched as arising from a collateral contract, as a result of a misrepresentation, or, as a result of an estoppel. If there was no arguable basis for suggesting that either or both of the relevant loans were not at an end, then, however the matter was argued on the law, the factual basis for the defence could not be sustained. On that basis, it does not seem to me to be necessary to give separate consideration to the differing legal bases on which it was suggested that the statements attributed to Anglo might convert into a legal obligation on the part of Anglo not to enforce the loan until the relevant funds had come to an end. 6.4 The key question under this heading, to which I will shortly turn, is, therefore, as to whether Mr. McCaughey has established an arguable case that the New York Hotels Fund has not come to an end. If he has, then it follows that it is arguable that Anglo is not entitled to call in that loan on one or other of the legal bases put forward. It follows that the question of any liability of Mr. McCaughey in respect of the New York Hotels loan would, in those circumstances, have to be remitted to plenary hearing. 6.5 However, before going on to consider that aspect of the potential defence in relation to the New York Hotels loan, I propose to deal briefly with the alternative defence sought to be put forward in respect of those loans, which amounts to a counterclaim arising out of what was said to be a mis-selling of the New York Hotels loan and the project which underlay it. In that context, it is important to point out that Mr. McCaughey mounted previous proceedings in which he claimed relief in respect of the New York Hotels loan arising, in substance, out of an allegation of mis-selling. It is of some importance to note that these proceedings related only to the New York Hotels loan. Those proceedings were dismissed after a full trial by Birmingham J. (Gerard McCaughey v. Anglo Irish Bank Corporation Limited and Mainland Ventures Corp [2011] IEHC 546). An appeal to this Court was also dismissed (McCaughey v. Irish Bank Resolution Corp Ltd & Anor [2013] IESC 17). It, therefore, follows that allegations of mis-selling the New York Hotels investment to Mr. McCaughey have already been dismissed after a full hearing before the courts. In addition, as was accepted by counsel, any refinement of the argument or the evidence, which might now be sought to be put forward, would almost certainly amount to an abuse of process in the sense in which that term is used deriving from the jurisprudence following on from Henderson v. Henderson 3 Hare 100. No factual or legal basis was put forward as providing an arguable ground for suggesting that it would not be an abuse of process to seek to recast the mis-selling claim (which had failed in the previous proceedings) as a defence or counterclaim in respect of the New York Hotels loan aspect of these proceedings. In those circumstances it does not seem to me that, so far as the New York Hotels loan aspect of the claim is concerned, the counterclaim could provide either a defence or cross-claim which might properly be taken into account by the Court in deciding what to do with the substantive claim. On that basis, the question of whether the New York Hotels loan aspect of this case should be remitted to plenary hearing turns solely on the question of whether it can be said that the underlying fund is at an end. If it is at an end then the collateral contract, representation, or promise (even it be established) could not afford any defence. If it is arguable that it is not at an end, then, in the light of the finding by Kelly J. that there was an arguable basis for the proposition that Anglo's entitlement to call in the loan is postponed until after the fund is at an end, there is clearly an arguable case to defend the New York Hotel loan aspect of this claim. 6.6 It is in that context that the additional evidence put before the Court on the stay application (which updated the position in respect of the New York Hotels loan) is of potential relevance. 6.7 In order to understand the factual position, it is necessary to start by noting that the New York Hotels Fund invested, in substance, in two hotels. The investors (including Mr. McCaughey) became partners in a U.S. limited partnership called Peninsula Real Estate Fund LP ("Peninsula"). Peninsula in turn owned 100% of two further U.S. limited partnerships, which respectively directly owned the two hotels in question, being the Beekman Hotel and the Eastgate Hotel. Each of those later limited partnerships had significant borrowings from Anglo. As part of a larger sale of Anglo's loan book in the United States, Anglo's interest in those respective loans was sold to Lone Star. An agreement was reached between the specific partnership which owned the Beekman Hotel and Lone Star whereby, in 2012, the hotel was handed over to Lone Star in settlement of its liabilities. In substance, a significant balance (being the excess of the loan then owed to Lone Star over the value of the hotel at the relevant time) was written off. This would appear to have been of some relevance to Peninsula for there were cross guarantees between the loan owed in respect of the Beekman Hotel and that owed in respect of the Eastgate Hotel. As a result of that transaction the two hotels effectively became decoupled, with the Beekman Hotel disappearing out of the fund and the Eastgate Hotel remaining in the fund, burdened only with its own debt. 6.8 As a result of arrangements entered into in July 2012, a new venture was formed involving Peninsula and certain third parties with a view to converting the Eastgate Hotel into a residential property. The specific limited partnership which owned the Eastgate Hotel was then placed in bankruptcy and the hotel itself transferred to the new venture. It would appear that Peninsula, as one of the members of that new venture, has some possibility of achieving a return depending on the performance of the venture. 6.9 It is important to note that much of this information was not before Kelly J. It is true that the original structure of the New York Hotels investment is no longer in place. Both of the limited partnerships which owned the respective hotels are out of the picture. One of the hotels has been sold. However, it remains the case that Peninsula (which is, after all, the vehicle into which Mr. McCaughey placed his funds), still has a form of interest in the Eastgate Hotel through the new venture to which reference has been made. It appears that this venture carries with it the possibility of some return. 6.10 On that basis, it is argued on behalf of Mr. McCaughey that the New York Hotels Fund is not at an end. It seems to me that there is an arguable basis for that proposition based on the new information which is now available to this Court. It is important to emphasise that the case made on behalf of Mr. McCaughey is not to the effect that there is a real possibility that sufficient funds will be forthcoming from the new venture to clear his liabilities. Given the limited interest which Peninsula has in the new venture that would seem highly improbable. The point made, however, is different. It is argued that the legal consequences of what was said by Anglo at the relevant time is such that the loan in respect of the New York Hotels Fund does not become payable at all until the fund itself comes to an end. On that basis it is argued that it is really a question of timing. Once there remains some prospect that the fund will have some return (however minor) the fund cannot be said to be at an end, and therefore, the argument goes, whether as a matter of collateral contract or misrepresentation or promissory estoppel, Anglo is not yet entitled to call in the loan. 6.11 It seems to me that an arguable case has been put forward on behalf of Mr. McCaughey for that proposition. On the basis of the additional evidence now available I am not satisfied that it can be concluded that there are no arguable grounds for the proposition that the New York Hotels Fund is not at an end. It follows that, in my view, Mr. McCaughey should have leave to defend the claim in respect of the New York Hotels aspect of the loan on that basis, and that that matter should, therefore, be remitted to plenary hearing. I should emphasise that, for the reasons already analysed, I do not believe that it is legitimate for Mr. McCaughey to seek to defend or counterclaim in respect of the New York Hotels loan on the basis of mis-selling, for to do so would be an abuse of process in the light of the previous failed proceedings. So far as the New York Hotels loan are concerned, the matters which should, in my view, be remitted to plenary hearing are those concerning the question of whether the loan is now properly due in the light of the alleged statements made by Anglo and in the light of the argument as to whether it can properly be said that the New York Hotels Fund is at an end. As separate considerations apply in relation to the Woolgate loans I now turn to those questions. 7. The Woolgate Loans 7.2 On the other hand, it is important to emphasise that some care should be taken, in the context of a summary judgment motion, in over-analysing the precise wording used in affidavits and in ensuring that affidavits are not treated as if they were contractual documents which required to be very finely analysed. Experience has shown that the precise state of the evidence at the end of a plenary trial often shows at least some nuanced differences from the evidence put forward on affidavit. That is hardly surprising. Affidavits are drafted by lawyers on the basis of instructions and at an early stage of the proceedings. While it is, of course, essential that the true basis of any defence sought to be put forward is accurately reflected in any affidavits filed for the purposes of opposing a summary judgment motion, nonetheless it is not, in my view, appropriate to engage in an excessive parsing and analysing of the contents of affidavits at that stage. Rather, the issue is as to whether, in substance, facts have been deposed to which might arguably provide a defence. If it is possible that a clearer view of the precise and detailed facts may emerge at a plenary trial, then the Court, on a summary judgment motion, should, as it were, give the benefit of the doubt to the defendant. Different considerations would, of course, clearly apply where the legal rights and obligations of relevant parties are defined by documents which have been placed before the Court. In such circumstances the Court can, provided that to do so would not run the risk of injustice, interpret the documents, which task may well involve a careful analysis of the precise wording. 7.3 Against that background it should be emphasised that, in the event that a court of trial is ultimately satisfied that there was either a collateral contract or an operative representation or promise made affecting Anglo's entitlement to call in its loans from Mr. McCaughey, it will be for the Court, in the light of all the evidence, to come to a conclusion as to the precise event or events which would trigger such entitlement. Against that background, it seems to me that this Court needs to consider whether there is any realistic basis for asserting that, in the light of any possible conclusion as to the events that would trigger the entitlement of Anglo to call in the loan, the Woolgate Fund could be said not to be at an end. 7.4 The facts in respect of Woolgate seem clear. The investment structure was complex in that investors, such as Mr. McCaughey, took out unit linked policies with an Anglo associated assurance company. That company in turn subscribed for shares in a Luxembourg company called Woolgate Exchange SA, which in turn subscribed equity to a German limited partnership which owned the property in question. The uncontested evidence was that a liquidator had been appointed to the Luxembourg company which was insolvent and that there was no prospect of any monies being paid by that Luxembourg company into the unit linked fund. On that basis, I am not satisfied that any arguable grounds have been made out for the suggestion that the Woolgate Fund is not at an end however that term might ultimately be defined or considered in the light of whatever evidence might be tendered at trial. Investors hold unit linked policies in an assurance company where the value of the policy is dependent on the value of the insurance company's investment in a company which has now been liquidated without any prospect of any monies being available to the fund. On any, even generous, interpretation of the relevant criteria for treating the fund as being at an end, the Woolgate Fund meets that requirement. 7.5 On that basis I am satisfied that Kelly J. was correct to conclude that the Woolgate Fund was clearly at an end and that, even if a collateral contract, representation or promise existed or was made, which would have precluded Anglo from calling its loans until the fund was at an end, same would not avail Mr. McCaughey so far as the Woolgate Fund is concerned, for that point in time has undoubtedly already been reached. 7.6 In relation to Woolgate loan, it remains to consider whether the mis-selling argument put forward could give rise either to a defence in the sense of providing a claim which would amount to a set off in equity, or alternatively to a counterclaim in the shape of a cross claim, which would require the Court to consider the proper course of action to adopt in the light of the principles identified by this Court in Prendergast v. Biddle (Unreported, Supreme Court, 31st July 1957). 7.7 There was some debate between counsel at the hearing of this appeal as to the proper application of the principles, building on Prendergast v. Biddle, which I identified in Moohan v. S. & R. Motors (Donegal) Ltd. [2008] 3 IR 650. I see no reason to depart from those principles. However, in order for those issues to have any application it would be necessary that an arguable case had been made out for a claim of mis-selling in the first place. In that context, it is necessary to identify the allegation of mis-selling which was first put forward by Mr. McCaughey in his replying affidavit to the summary judgment motion. 7.8 In the written submissions filed on behalf of Mr. McCaughey before this Court, two allegations of mis-selling concerning the Woolgate fund are referred to. The first, which is referred to at para. 22 of Mr. McCaughey's replying affidavit, concerns a suggestion that, as a result of a mis-statement of the recourse element of the relevant loan, the debt level associated with the property was actually 87.5% instead of 83.6%, as said to have been represented at the time of the investment. The loan covenants specified a loan to value ratio of 84% so that the lenders were entitled to call in the loan if the loan to value ratio exceeded that percentage and if remedial action to reduce it to that percentage were not taken. A second allegation is made to the effect that the senior financiers to the fund, Credit Suisse, provided funding of approximately five years, where the fund was described to be for a term of between five and seven years. 7.9 What is particularly striking about Mr. McCaughey's replying affidavit is that there is no statement made by him at all as to what the consequences would have been had, accepting his case on mis-selling, the true position been pointed out. This is of particular importance in the context of this case. If it were asserted that Mr. McCaughey would not have entered into the investment at all in the absence of those representations, then one would have thought that he would have said so. Doubtless, if such an assertion were made and the matter went to plenary hearing, then the same issues of reliance which arose in the context of the proceedings brought by Mr. McCaughey in respect of the New York Hotels Fund would have arisen again, not least because of the highly marginal extent to which it is said that the true position deviated from that represented. But Mr. McCaughey has made no such contention in his affidavits. 7.10 Insofar as it might be contended that Mr. McCaughey would have gone ahead with the investment but has now suffered loss because the true position was less advantageous than was represented, the truly disastrous performance of the investment makes it clear that the loans would have been called in in any event, whichever loan to value ratio was initially specified and however long the loan from Credit Suisse was provided for. In other circumstances, if the investment did not perform disastrously but nonetheless did not perform as well as expected, then the differences between a loan to value ratio of 87% and 83% and senior finance of 5, as opposed to 5 to 7, years might conceivably have made a difference. In the circumstances of this case they could have made no conceivable difference. There is, therefore, just no factual basis put forward for asserting that the performance of the investment, in the events that happened, was in any way, let alone a significant way, affected by the issues raised. The only basis on which a defence or counterclaim could be mounted in those circumstances was if there was an assertion that, despite the highly marginal nature of what are said to be inaccurate representations, Mr. McCaughey would just not have invested at all. As noted earlier, no such contention is made in the affidavits. 7.11 In those circumstances, I am satisfied that Kelly J. was correct in determining that no arguable basis had been put forward for a claim of mis-selling in respect of the Woolgate at all. It follows that the question of whether such a claim could properly be characterised as a defence or a counterclaim does not arise. Likewise, it is unnecessary to consider the issues relating to the statute of limitations which were addressed in the High Court judgment. 7.12 For those reasons, it seems to me that Kelly J. was correct to permit judgment to be entered in respect of that aspect of the claim which related to the Woolgate loans. 8. Conclusions 8.2 So far as the Woolgate loan is concerned the appeal will be dismissed. 8.3 The Court proposes to hear counsel further on the precise form of order which should follow in the light of those findings.
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