Dormer and Anor v Allied Irish Bank PLC and Ors

THE HIGH COURT [2026] IEHC 82 RECORD NO. 2014/10198P BETWEEN PAUL DORMER AND GERARD DORMER PLAINTIFFS AND ALLIED IRISH BANKS PLC AND LUKE CHARLETON AND MARCUS PURCELL AND BY ORDER OF THE COURT, EVERYDAY FINANCE DAC AND KEN FENNELL AND MARK DEGNAN DEFENDANTS JUDGMENT of Mr. Justice Michael Quinn delivered on the 13th day of February 2026 2 Table of Contents PART ONE: INTRODUCTION ............................................................................................................. 3 PART TWO: BACKGROUND ............................................................................................................ 11 The 2012 Facility Letter........................................................................................................... 12 2013 ......................................................................................................................................... 14 15 May 2013 BOS Letter ......................................................................................................... 16 The BOS Statement of Affairs ................................................................................................. 19 The 2013 Facility Letter........................................................................................................... 20 AIB Statement of Affairs ......................................................................................................... 23 PART THREE: THE REFINANCE AND RESTRUCTURING.......................................................... 26 8 October 2013 Heads of Terms .............................................................................................. 27 PART FOUR: DECEMBER 2013 ........................................................................................................ 32 5 December 2013 - Telephone call between Mr. Roddy, Ms Bowen and Mr. Conneely ........ 35 6 December 2013 ..................................................................................................................... 39 The BOS emails ....................................................................................................................... 41 Absence of a deadline for Condition 5..................................................................................... 45 The payment demands ............................................................................................................. 46 Events after issue of Summary Summons................................................................................ 47 PART FIVE: JANUARY 2014 ............................................................................................................. 52 14 January 2014 - Team paper to Area Credit Committee (“the January Paper”) ................... 53 17 January 2014: Decision of the Area Credit Committee (“the January Decision”).............. 53 After 17 January 2014.............................................................................................................. 63 PART SIX: THE SUMMARY PROCEEDINGS ................................................................................. 64 9 December 2013 Affidavit of Eamonn Conneely................................................................... 65 13 December 2013 replying affidavit of Paul Dormer............................................................. 65 15 December 2013 second affidavit of Eamonn Conneely ...................................................... 66 9 January 2014 Second affidavit of Paul Dormer .................................................................... 67 9 January 2014 Replying affidavit of Aidan Roddy ................................................................ 69 16 January 2014 Third affidavit of Eamonn Conneely ............................................................ 70 27 January 2014 Second Replying Affidavit of Aidan Roddy ................................................ 71 20 January 2014 Affidavit of Sarah Bowen ............................................................................. 72 PART SEVEN: 30 JANUARY 2014 .................................................................................................... 73 Evidence of Paul Dormer ......................................................................................................... 74 Aidan Roddy evidence ............................................................................................................. 82 Evidence of Eamonn Conneely ................................................................................................ 84 Evidence of Sarah Bowen ........................................................................................................ 90 Evidence of Michael Morris .................................................................................................... 92 3 PART EIGHT: EVENTS AFTER 30 JANUARY 2014 ....................................................................... 94 7 February 2014 Recommendation to Credit Committee ........................................................ 95 7 February 2014: Decision of the Area Credit Committee .................................................... 101 New proposals........................................................................................................................ 103 Events after judgment ............................................................................................................ 105 The core of the claim ............................................................................................................. 110 Discussion .............................................................................................................................. 112 Did the Plainiffs have a choice?............................................................................................. 115 Express representation ........................................................................................................... 117 McCaughey v. Irish Bank Resolution Corporation Limited and Others [2013] IESC 17 ..... 117 PART NINE: MISREPRESENTATION BY OMISSION OR CONCEALMENT ........................... 119 Non-Disclosure of the fact of the January Paper and Decision ............................................. 121 Would disclosure of the January Paper and Decision have made a difference? .................... 122 PART TEN: OTHER ISSUES ............................................................................................................ 124 Requirement to return to Credit Committee .......................................................................... 124 Was the proposal bound to fail?............................................................................................. 124 Specific performance of the Heads of Terms......................................................................... 125 PART ELEVEN: SUMMARY OF CONCLUSIONS ........................................................................ 128 Note: This judgment contains redactions. PART ONE: INTRODUCTION 1. The Plaintiffs seek to set aside a judgment which was entered by this Court (Kelly J.) in summary proceedings on 4 March 2014. By that judgment it was ordered that the Plaintiffs Paul Dormer and Gerard Dormer pay to the Defendant Allied Irish Banks plc the sum of €17,663,876 and costs. The claim was for repayment of two loans and an overdraft balance. 2. The summary proceedings were issued by Allied Irish Banks plc against Paul Dormer and Gerard Dormer on 9 December 2013. In this judgment numerous references are made to those proceedings, in which the Plaintiffs in this action were Defendants and the first named Defendant Allied Irish Banks plc was the Plaintiff. To avoid confusion I shall refer in parts in this judgment to the Plaintiffs as “the Dormers”, and to the first Defendant as the Bank, or AIB. 4 3. The summary proceedings were entered in the Commercial List of this Court on 16 December 2013. Directions were made for the exchange of affidavits and the application for summary judgment was adjourned for hearing to 30 January 2014. 4. On 30 January 2014 the parties entered into a Settlement Agreement which was reduced to writing and signed at the Four Courts. 5. The content and the circumstances in which the Settlement Agreement were entered into are central to this judgment. Therefore it is appropriate at the outset to quote in full the terms of the Settlement Agreement. 6. The Agreement is dated 30 January 2014. It bears the title of the summary proceedings: Allied Irish Banks plc, Plaintiff v. Paul Dormer and Gerard Dormer, Defendants, the High Court 2013/4139S. The Agreement provides as follows: “The parties have agreed the following terms in settlement of the above entitled proceedings: – 1. The proceedings to be adjourned to the sitting of the Commercial Court on 4 March 2014 at 11 o'clock with liberty to apply in the interim. 2. If the steps set out in paragraph 5 (1), (2) and (4) below are fully complied with by the Defendants to the satisfaction of the Plaintiff and if the Deed of Settlement with Bank of Scotland has taken effect by no later than 5p.m. on 3 March 2014, then the proceedings shall be struck out with no Order as to costs. 3. If the steps set out at paragraphs 5 (1), (2) and (4) below are not fully complied with by the Defendants to the satisfaction of the Plaintiff and/or the Deed of Settlement with Bank of Scotland has not taken effect by 5p.m. on 3 March 2014, then the Defendants irrevocably consent to judgment being entered against them on 4 March 2014, for the full amount of the Plaintiffs claim herein together with accrued interest thereon and the costs of the proceedings without any stay. 5 4. The Defendants further irrevocably agree to consent to judgment as aforesaid in the event that the Plaintiff has not agreed, on or before 28 February 2014, to provide facilities on foot of the recommendation referred to at paragraph 5 (3) of the steps below. 5. The Steps: – (1) On or before 10 February 2014, the Defendants shall produce evidence satisfactory to the Plaintiff of an agreement, the terms of which are satisfactory to the Plaintiff, providing for the full and final settlement of all and any claims AB may have as against any property in which Mr. Paul Dormer has or claims any right, title or interest. (2) The Defendants shall produce evidence satisfactory to the Bank on or before 14 February 2014 that Bank of Scotland has been informed of the said settlement with AB and is prepared nonetheless to execute the Deed of Settlement, a copy of which is exhibited at “SB3” to the affidavit of Sarah Bowen sworn on 28 January 2014 (3) Eamon Conneely, Sarah Bowen and Michael Morris1 will, subject to satisfaction of the matters referred to in (1) and (2) above, recommend to the Area Credit Committee of the Plaintiff a proposal for credit facilities on the terms of the Heads of Terms as issued on 8 October 2013, as may require to be varied or amended on such terms as Mr. Conneely, Ms. Bowen and Mr. Morris believe to be necessary insofar as is required to take account of valuations received by the Plaintiff pursuant to Special Condition 1 of the Heads of Terms and to take account of the terms of the settlement with AB referred to at (1) above. 1 Employees of the Bank. 6 (4) The Defendants must produce evidence satisfactory to the Plaintiff not later than 14 days from the date thereof that the Deed of Settlement with Bank of Scotland has been executed by both parties. 6. Without prejudice to paragraphs 3 and 4 above the parties agree that in the event the Plaintiff agrees to provide facilities referred to above, the parties will, insofar as it is in their respective power to do so, use their respective endeavours to ensure the Deed of Settlement with Bank of Scotland takes effect on or before 28 February 2014, or such extended time as may be agreed by Bank of Scotland, and to that end the Defendants agree to provide to the Plaintiff’s solicitors on or before 4 February 2014, the title deeds and documents relating to the security to be granted or proposed to be granted in respect of the said facilities. Further, the Defendants shall furnish all information reasonably required to enable their solicitors to reply to all requisitions on title and any further rejoinders raised by the Plaintiff’s solicitors in relation to their investigation of the title to the properties, to include, without prejudice to the generality of the foregoing, evidence of compliance with planning, building regulations and all services. 7. Without prejudice to the terms of this agreement, the Plaintiff may in its absolute discretion extend the time for the taking of any steps hereunder. 8. In the event that proceedings for an amount in excess of €25,000 are taken against the Defendants or either of them by any party or in the event that the Defendants bring any proceedings themselves under the Bankruptcy Acts, the Defendants irrevocably agree that judgment be entered against them forthwith in respect of the sums claimed in these proceedings together with accrued interest and costs, without any stay, at any time prior to 4 March 2014. 7 9. These terms shall be kept confidential as between the parties save as may be required for the purpose of ruling of the same, enforcement or otherwise where disclosure is required by law.” 7. The agreement was signed by each of the Dormer brothers and witnessed by Mr. Aidan Roddy, their long time financial adviser who assisted in and participated in the negotiation of the agreement. For the Bank the agreement was signed by Mr. Eamonn Conneely and witnessed by the Bank's Solicitor Ms. Katharine Forde of AC Forde & Co. Solicitors. 8. I shall refer to Mr. Conneely, Ms. Bowen and Mr. Morris, collectively as the “Team”, being the personnel within the Bank principally responsible for engagement with the Dormers. 9. On 7 February 2014 the Team made a recommendation to the Area Credit Committee of the Bank which they say, and the Dormers dispute, was in accordance with the recommendation which they agreed to make pursuant to paragraph 5 (3) of the Settlement Agreement. On 7 February 2014 the Area Credit Committee met and decided to reject the recommendation. 10. On 12 February 2014 the Bank informed the Dormers that the proposal had been declined by the Area Credit Committee and that the Bank would now proceed with its application for judgment. The matter came before the court on 4 March 2014 and the Dormers counsel applied for an adjournment to enable them to deliver a further affidavit. 11. The court refused the adjournment. The court was satisfied that the terms of the Settlement Agreement were clear and determined that since the Area Credit Committee had decided to reject the recommendation the Bank was entitled to judgment for the full amount claimed and costs. 12. The Dormers claim that they later discovered, by requests made pursuant to the Data Protection Acts 1988 and 2003, and ultimately by discovery of documents in these proceedings, 8 that they were deceived into entering the Settlement Agreement by misrepresentations on the part of the Bank. In short they claim the following: (a) That there were concealed from them certain reports and decisions made within the Defendant before 30 January 2014, notably a Report of 14 January 2014 and a Decision of the Area Credit Committee made on 17 January 2014, and which were adverse to and critical of them and that the effect of these reports and decisions was that the recommendation made by the Team to the Area Credit Committee pursuant to the Settlement Agreement was bound to fail. (b) That on 30 January 2014 it was represented to them that a recommendation to the Area Credit Committee pursuant to the Settlement Agreement was “otherwise than bound to fail”. (c) That they were by these representations induced into entering into the Settlement Agreement. (d) That if they had known of the January report and decision made within the Bank they would not have entered into an agreement by which they waived any defence to the summary proceedings and that this brought about the entry of the summary judgment on 4 March 2014. (e) That they have suffered loss and damage including “catastrophic, damaging and perhaps irreversible consequences which flowed from the judgment procured from the court on 4 March 2014”. This is stated to include references to the registration of judgment mortgages against their properties and the appointment of receivers by the Bank, namely the Second and Third Defendants in these proceedings, and by the Bank's successor as an assignee of the loans, Everyday Finance DAC which in turn appointed the Fifth and Sixth Defendants receivers 13. The claim in these proceedings is for declarations:- 9 (1) That in procuring that the Dormers enter into an agreement by which they conditionally consented to judgment the Dormers were induced by representations that the Bank would advance and lend funds to the Dormers pursuant to the Heads of Terms dated 8 October 2013 referenced in the Settlement Agreement and are bound by that representation. (2) That the Bank breached the Heads of Terms “by misrepresentation and breach of contract” (3) A declaration that the Bank has wrongfully refused to advance and lend funds. (4) That the Judgment of 4 March 2014 was obtained unlawfully and in breach of the Heads of Terms and the Settlement Agreement. (5) That a failure of the Bank to disclose during the summary proceedings that there had been a new proposal to issue Facility Letters on revised terms, approved in January 2014 by the Area Credit Committee, was a misrepresentation such as to vitiate its pursuit of summary judgment. (6) That the Bank acted in breach of the Settlement Agreement. (7) In the alternative a declaration that the Judgment was obtained in consequence of misrepresentation and fraudulent misrepresentation and/or deceit on the part of the Bank such as to vitiate the Settlement Agreement “rendering same susceptible to rescission at the election of the Dormers”. (8) An order that all acts of enforcement of the Judgment, including the registration of judgment mortgages, taken by the Bank, including the appointment of receivers, be vacated and/or discharged and that such acts are null and void. (9) An order for specific performance of the Heads of Terms 14. The Plaintiffs claim damages for:- 10 (1) Misrepresentation and/or negligent misrepresentation and/or fraudulent representation (2) Misrepresentation and breach of the contract of the Heads of Terms and of the Settlement Agreement (3) Breach of duty, including statutory duty (4) Deceit (5) Damages in lieu of recission (6) Damages arising from the sale of loans by the Bank to the Fourth Defendant. 15. The Bank denies the allegations. It denies that it failed to share relevant information with the Dormers. It denies that the Heads of Terms were a binding and enforceable agreement and it denies any breach of the Heads of Terms or the Settlement Agreement. It denies that the Dormers were led into entering the Settlement Agreement on foot of any representations 16. The Bank say that the Dormers were legally represented and took legal advice at all material times, including the negotiation and conclusion of the Settlement Agreement signed at the Four Courts on 30 January 2014. It is said that the Settlement Agreement was entered into following discussions between the parties’ legal representatives. 17. The Bank denies that the recommendation made by the Team to the Area Credit Committee was bound to fail. 18. The Bank deny that a representation was made that the proposal to be put to the Area Credit Committee was “otherwise than bound to fail” or that any representation was made as to the prospect of success of the recommendation. 19. The Bank deny that the Settlement Agreement and the “consent judgment” was procured by misrepresentation or deceit. They say that the Judgment was regularly and lawfully obtained and is not the subject of any appeal. The Bank also deny that the Plaintiffs have suffered the loss and damage claimed. 11 20. At the commencement of the hearing the court was informed that the second Plaintiff Gerard Dormer had decided not to proceed with the case and counsel for the Second Plaintiff was permitted to withdraw from the hearing. The Second Plaintiff had engaged separate solicitors and counsel, who informed the court that he was not proceeding with his case. The Bank informed the court that it intended to apply for an order for costs against the second Plaintiff. It was agreed that matter would be stood over until after the delivery of judgment. Where I refer to Mr. Dormer hereafter I am referring only to the first plaintiff Paul Dormer. 21. This judgment relates to the module of the case in which the Dormers seek to set aside the judgment of 4 March 2014. If they succeed in having that judgment set aside further questions would need to be determined as to the consequences of such a finding. 22. To understand the claims made and the defence it is necessary to recount the long history of the relationship between the parties and in detail the events which led to a refinance and restructuring proposal to be found in the Heads of Terms of 8 October 2013 referenced in the Settlement Agreement of 30 January 2014. In doing so I describe in detail a number of documents which became important to the issues to be decided. PART TWO: BACKGROUND 23. The Plaintiffs had a family engineering business called Concord Boiler Engineering Limited which was commenced by their father in 1960. The Plaintiffs came into the business in or around 1972. In or around 1991 they expanded into the business of property development. Their first project was the construction of four townhouses at Forbes Lane, Dublin 8. 24. Over a long number of years the Plaintiffs expanded the business of acquisition and development of properties funded, inter alia, by loans from a number of lenders including the Bank. 12 25. The Plaintiffs were customers of the First Defendant for in excess of 20 years before the events which immediately gave rise to these proceedings. They had a good relationship with various managers in the Rathmines and Rathgar branch. Some tension entered into the relationship in or around 2010 when the parties were in disagreement arising from a belief on the part of the Plaintiffs that the Defendant had agreed to advance a particular overdraft facility of €2 million, and a complaint of overcharging. The Plaintiffs accused the Defendant of reneging on the overdraft commitment. 26. Prior to 2010, management of the Plaintiffs’ loans had been moved from their local branch to a specialist property team in the Head Office of the Bank. The property group within the Defendant was wound down in early 2010 following the unfolding of the banking crisis. Management of the loans in the “Dormer connection” was transferred to the Defendant’s newly formed Financial Solutions Group, (“FSG”). The Financial Solutions Group had been established within the Defendant to manage and restructure loans which had become distressed. 27. Later in 2010 and in the course of 2011 active discussions took place regarding a full restructure of the Plaintiffs’ facilities. These discussions led to agreement whereby various loans and overdrafts, both of the Plaintiffs and of Concord Boiler Engineering Limited would be amalgamated and restructured and terms were agreed for the servicing of those loans. These discussions culminated in the issue of a Facility Letter on 1 October 2012, which was accepted by the Plaintiffs on 10 October 2012. The 2012 Facility Letter 28. This Facility Letter followed a form which had become common in structures designed by lenders in or about this time. It provided for the grant of three separate facilities totalling €17,830,000. 13 29. Facility No. 1 was an overdraft of €50,000 for working capital. This amount was stated to be repayable “on demand and, without prejudice to or affecting the rights of the Bank to demand repayment thereof at any time, subject to review by 31 March 2013”. 30. Facility No. 2 was a loan, referred to confusingly as Loan Account No. 1, for an amount of €17,580,000. The stated purpose of this loan was “part amalgamation of all existing borrowings on current and loan accounts along with overdrawn balance at foot of Concord Boiler Engineering Limited current account”. The repayment provision in respect of this loan was as follows: “On demand and, without prejudice to or affecting the right of the Bank to demand repayment thereof at any time, subject to review by 31 March 2013 or at any time at the Bank's discretion”. 31. The letter provided also for the payment of interest on Facility No. 2 in the specific amount of “€30,000 per month”. 32. Facility No. 3 was referred to as “Loan Account No. 2” and was for an amount of €200,000. This was stated to be for the purpose of “part amalgamation of all existing borrowings on current and loan accounts along with overdrawn balance at foot of Concord Boiler Engineering Limited current account”. The repayment provision for this loan was “on demand, and without prejudice to or affecting the right of the Bank to demand repayment thereof at any time, subject to clearance in full by 31 March 2013 from rents by Health Service Executive and Dublin City Council. In the interim interest is to be provided for as it becomes due on a quarterly basis”. 33. The Facility Letter provided for charges over six separate assets. In respect of four of them the security referenced was existing legal charges over (1) 54/55 Marrowbone Lane Dublin 8, (2) a property formerly known as “The Cottage” on the old Bangor Road, Clondalkin comprising three apartments and retail unit, (3) a house on a 0.6 acre site at Crinstown 14 Maynooth, County Kildare and (4) properties at 56 Upper Clanbrassil Street, Dublin 8 comprising a Georgian house, townhouse and apartment. 34. New legal charges were to be granted over a residential unit at 33A Tymon Crescent Old Bawn, and over 7 x 2 bedroom apartments at “Aileach”, Blakestown, Mulhuddart, Dublin 15. 35. The Facility Letter was signed on behalf of the Bank, by Mr. Conneely and Ms. Bowen on 1 October 2012 and accepted by the Dormers on 10 October 2012. 36. It is said by the Defendant that insofar as this facility provided for a review by 31 March 2013 of Loan Number 1 namely the amount of €17.580 million, while reserving the right to demand payment at any time, the real purpose was to enable a continuance of discussions as to a more fundamental restructuring with targeted paydown dates referable to asset disposals. 2013 37. Following the execution of this letter the parties continued to engage with a view to developing a longer term plan for the loan servicing and paydown. A number of meetings were held in April 2013 which were attended by the First Plaintiff and his financial adviser Mr. Aidan Roddy, and by Eamon Conneely and Robert Griffin representing the Defendant. Sarah Bowen was said to have attended also the second of the April meetings. 38. During the course of these discussions the Defendant indicated a willingness to renew existing facilities, again pending a longer term plan. In return the Plaintiffs agreed to grant a negative pledge over a number of assets which they held and in respect of which the Defendant at that time held no security. 39. The Defendant indicated also during the course of the discussions a desire to appoint a property consultant to evaluate the portfolio held by the Plaintiffs and to examine disposal options. There was a measure of agreement as to the appointment of such a property consultant 15 but disagreement as to the identity of the person to be appointed. In fact no such appointment was ultimately made. 40. In the course of these discussions the Plaintiffs informed the Defendant that they were also in discussions with Bank of Scotland plc about a restructure of their loans with that bank. The Plaintiffs owed €12.1 million to BOS. They informed the Defendant that they had reached an agreement with BOS that it would accept a payment of €3.25 million in full and final settlement of its loan provided it receive that payment within three months of its agreement, which agreement had been given on 15 May 2013. The discussions then turned to a proposal whereby the Defendant would agree a long-term restructuring of its debt, then standing at circa €17 million, which restructure would include potential write-offs if certain milestones were met and payments made and would also advance the sum of €3.25 million required to settle with BOS. In return for such facilities, which would then total €20.25m, the total indebtedness of the Plaintiffs as so restructured would be secured on (a) the existing assets charged in favour of AIB, (b) the security previously held by BOS and (c) unencumbered assets then held by the Plaintiffs. 41. I refer to this restructuring as the Refinance and Restructuring (the Refinance being the funding of the settlement with BOS and the Restructuring being the restructuring of the Bank’s loans, including the execution of new security over all assets and a potential write down, which became known as Loan Note 3). 42. At the time of these negotiations it was unusual for the Defendant to advance additional funding to an already distressed borrower, particularly where the purpose was to redeem loans at another bank. In gross monetary terms its exposure to the Plaintiffs would increase. However, the overall effect and attraction of such a transaction was to confer on the Defendant more security than it presently held, even in respect of its existing debt. Without such a transaction the Defendant’s recourse to the unencumbered of the assets of the Plaintiffs 16 would potentially be in competition with any right of recourse BOS would have as against the Plaintiffs. By this structure, if the sum of €3.25 million was accepted in full and final settlement by BOS, the risk of enforcement action and execution against otherwise unencumbered assets would be removed and the Defendant would take direct first ranking security over those assets. 43. Discussions on these proposals continued over a number of months through 2013 and I shall return to these discussions which culminated in the issue by the Bank of Heads of Terms on 8 October 2013. 15 May 2013 BOS Letter 44. At this time the Defendant was not given sight of the agreement made between the Plaintiffs and BOS. The terms of that agreement were recorded in a letter issued by BOS on 15 May 2013 which ultimately was disclosed in the course of these proceedings. Although the Defendant did not see the letter in the course of the negotiations during 2013 and only obtained sight of it in the course of discovery in these proceedings made in October 2020, the terms of that letter are significant. 45. The Letter was issued on 15 May 2013 and signed by Mr. Fraser Kelly, Senior Credit Risk Manager on behalf of Bank of Scotland plc. The relevant extracts are as follows:- “The Bank has considered the settlement proposal which is summarised below: The Bank to agree to settle the balance on the Loan Accounts following the receipt of €3.25 million (the “Settlement Figure”) in one payment within three months from the date of this letter. The Borrowers to meet the Bank's legal and other professional fees that arise. The Bank is willing to agree in principle to a settlement strictly subject to, but not necessarily limited to the conditions set out in this letter. 17 For the avoidance of doubt this correspondence is not exhaustive and is not intended to be legally binding and nor shall it be construed as such between the Borrowers and the Bank. A detailed Deed of Settlement may be prepared by the Bank once you confirm that you will comply with the conditions in this letter and provided they are met to the satisfaction of the Bank.2 1. Subject to the other conditions in this letter, the Bank agrees in principle to accept the Settlement Figure in full and final settlement of the Loan Accounts. The Settlement figure is offered on the basis of combined balances outstanding at the date of this letter on the loan accounts of €3.25 million.3 2. The cleared funds required to settle the Loan Accounts must be received by us no later than three months from the date of this letter. In addition the conditions in this letter must also be met to the satisfaction of the Bank and a Deed of Settlement must be entered into by all parties by that date. 3. The Bank to receive and be satisfied with the confirmation from Savills and the Bank’s solicitors that VAT at 13.5% would be payable on the sale proceeds in the event of a sale of the development at Pim Street, Dublin 8. 4. The Bank to receive and be satisfied with detailed Statements of Affairs for the Borrowers, to include all personal assets and liabilities (a Bank standard template will be emailed to your accountants). 5. We understand that the Borrowers own a number of assets that are not held as security by other lenders. However it has been explained to the Bank that a number of these assets are held in support of a Settlement (the Settlement) entered into by Mr. Paul Dormer. For the avoidance of doubt and without prejudice to any other 2 A draft detailed Deed of Settlement was furnished by BOS to the Dormers on 9 January 2014 3 The total debt due to BOS at this time was €12.1m 18 conditions in this letter, before any settlement is agreed the Bank will require that it solicitors review the Settlement and the assets that are covered by it. In the event that any of these unsecured assets are not included within the Settlement, then the Bank reserves the right to consider whether or not it is appropriate to seek a further payment over and above the Settlement Figure detailed above. Furthermore if assets of the Borrowers have been or are intended to be provided as part of the Settlement which the Bank considers should not have been or if the Bank considers that any assets provided as part of the Settlement go beyond what would reasonably be required by a court, then the Bank may at its sole discretion withdraw from this process regarding reaching a settlement and the existing loan balances plus accrued interest on the Loan Accounts will remain outstanding and payable. (Emphasis added) 6. (Provision for desktop valuations) 7. The Bank to receive and be satisfied with evidence of all borrowings of the Borrowers. 8. The Bank to receive and be satisfied with full details of the investment of €1 million being made in the borrowers by the client of Roddy Mooney McCarthy Accountants. This includes but is not limited to, full disclosure of the names of all the parties, both personal and/or corporate, making the investment and the source of the money being invested. 9. The Bank to receive evidence of the willingness of AIB to provide part funding for the refinancing.4 (Emphasis added) 4 Paragraphs 8 and 9 carry the inference that BOS were not aware of the prospect that AIB would fund the entire settlement figure of €3.25m. 19 10. (Provisions for payment of legal and other fees, general reservation of rights by reference to existing finance documents, and a confidentiality clause).” 46. The letter confirmed that following the conditions being met to the satisfaction of the BOS and on completion of the Deed of Settlement BOS would release its charges over the three assets held by it namely the Village House, Dolphin’s Barn, Dublin 8, 7/8 Pim Street, Dublin 8 and 1/4 Forbes Lane, Dublin 8. 47. The Plaintiffs provided a Statement of Affairs to BOS as required by this letter. A copy of this was not seen by the Defendant during the course of the 2013 negotiations. An unsigned version of it was provided to the Defendant on 23 January 2014. The BOS Statement of Affairs 48. The BOS Statement of Affairs was in a form apparently provided by BOS. It provided for descriptions of all of their assets and liabilities. In one section there was a description of the assets which were already charged to BOS. In a next section was a description of other assets held and charged to other banks. This included a description of assets charged in favour of AIB, KBC and PTSB (Irish Permanent Trustee Savings Bank). This section of the statement included a reference to seven terraced houses at Parsons Street, Maynooth, having an estimated value of €1.25 million and charged in favour of PTSB, with debt of €601,351. 49. A third section referred to “unencumbered assets, including pension funds”. Further sections of the statement included references to income of the Plaintiffs, and to contingent liabilities, which included personal and corporate guarantees given in respect of mortgages held by family members. 50. Under “Other Liabilities” reference was made to a “Settlement – High Court Order – AB – EX [date revoked].” 20 51. Although the Settlement Letter and the Statement of Affairs were not at the time shown to the Defendant, the Dormers informed the Defendant that they had reached an agreement in these terms with BOS. One of the contentious issues in this case is that the Defendant says that on numerous occasions in the course of the negotiations of the restructuring it requested a copy of this letter but it was never provided and only seen by the Defendant when produced in discovery in these proceedings. 52. In the course of the engagement Mr. Roddy stated on number of occasions that he was precluded by the confidentiality clause in the letter from sharing it with the Defendant. 53. On 3 September 2013 Mr. Conneely stated to Mr. Roddy that “if we are successful in putting together an offer of facilities to you for refinance of the BOS facilities, a condition will be that we review the offer of full and final settlement from BOS and be satisfied with same.” 54. The BOS Letter also stated that it would require evidence of the willingness of the Defendant to provide “part funding” for the refinancing. 55. The subject of what each of the Defendant and BOS respectively knew of the detail of the other’s proposals became highly contentious as events later evolved. 56. The three month time limit contained in the BOS Letter passed without the Defendant approving the refinance. The Plaintiffs were pressing the Defendant for agreement during the course of that three-month period. Ultimately BOS confirmed to the Plaintiffs that they did not intend to withdraw their proposal by reason of the expiry of the three months, although the application would have to be renewed. The 2013 Facility Letter 57. Discussions concerning the restructuring continued and the review date in the 2012 Facility Letter of end of April 2013 passed without a conclusion of those discussions. Since negotiations were ongoing the Defendant agreed to issue another letter extending the review date. This letter was issued on 11 June 2013. The Plaintiffs say that they signed and returned 21 the June 2013 Facility Letter duly signed on 4 July 2013. The Defendant says that it has no record of receiving that letter duly signed and accepted. 58. Mr. Roddy gave evidence that on 4 July 2013 he returned the signed copy of this Facility Letter by hand to the Defendant, when returning signed copies as requested of the Statements of Affairs of the Plaintiffs. The Defendant’s evidence is that it received the Statements of Affairs but not the signed 2013 Facility Letter. Evidence was given of an email from Mr. Roddy to the Defendant referring to the enclosure of the Statement of Affairs, but with no reference to returning the June Facility Letter. The only communication addressed to the Defendant returning documents on 4 July 2013 was an email enclosing the sworn Statements of Affairs which according to Mr. Roddy, “we delivered the above today”. That communication made no reference to an enclosure of the signed Facility Letter. 59. The question of whether the 2013 Facility Letter was ever signed and received by the Defendant became an issue in the summary proceedings, going to the validity of demands made by the Defendant on 6 December 2013. 60. The Defendant also says that the conditions which were required to be complied with before the June 2013 Facility would come into effect were not complied with. The most notable among these was the execution of fresh security required under that letter. 61. The Plaintiffs say that the Defendant never followed up on the security or other requirements. In response to this the Defendant says that whether or not it followed up on those requirements, if the Plaintiffs were relying on the June 2013 Facility it was incumbent on them to ensure that they had implemented the steps required for that facility to come into effect. 62. This issue also became important in the summary proceedings. In particular a question arose as to whether the demands made by the Defendant on 6 December 2013, which referenced the 2012 Facility Letter, were valid. 22 63. The June 2013 Letter, like the October 2012 Facility Letter, had nothing to do with and contained no reference to the refinance of the BOS loan which was only agreed later by the Defendant. It was, like the October 2012 Facility, intended to be a short-term extension of the existing loans totalling €17,742,517. It contained provision for three facilities. The first was an overdraft in an amount of €50,000, stated to be repayable on demand. The second was a loan in the sum of €17,492,517. The repayment provision was as follows: “all amounts due in respect of this facility are repayable by you on demand to the Bank at any time at its absolute discretion. However without prejudice to the Bank’s right to exercise this right of demand, and subject to the interest rate change clause below”, it contained a provision for a bullet repayment of all amounts due on 30 March 2014 and the payment of monthly instalments of €30,000 commencing on 15 June 2013. 64. In the summary proceedings the evidence was that the Plaintiffs continued to pay monthly instalments of €30,000 per month. The Defendant says be those payments had been set up and were being made pursuant to the October 2012 Facility. 65. The third facility was an amount of €200,000, the purpose of which was to be a continuation of existing facilities sanctioned “for part amalgamation of borrowings on current and loan accounts”. Again this loan was stated to be “repayable by you on demand by the Bank at any time at its absolute discretion”. Provision was made for the payment of interest quarterly and for a bullet repayment of the entire amount on 30 March 2014 “without prejudice to the Bank’s right to exercise this right of demand and subject to the interest rate change clause below”. 66. The facility was stated to have an Effective Date as follows: “For the avoidance of doubt: Prior to the Effective Date of this facility (as defined in section 2.3 below); this facility is governed by the terms of the letter of sanction from the Bank to you dated 1 October 23 2012 and from the effective date of this facility this facility will be governed by the terms of this letter of sanction.” 67. Clause 2.3 defined the Effective Date as being the earlier of the following: “2.3.1 When all of the Conditions Precedent for the facility are satisfied 2.3.2 At the Bank's absolute discretion the first date that the Bank permits drawdown or utilisation of the facility, or 2.3.3 At the Bank’s absolute discretion such date as the Bank may agree.” 68. The Defendant says that none of the conditions were met. They say that the Defendant never permitted drawdown or utilisation of the facility. 69. Fourteen Conditions Precedent are identified in clause 3.1. They include at 3.1.6 a precondition that “security documents to be duly executed/completed to the Bank’s satisfaction”. The security to be provided was stipulated in Clause 4. That clause provided that the obligations under the facility be secured by existing security comprising six new identified legal mortgages and a further six mortgages over named properties to “be put in place”. The Defendant says that these further securities were never put in place. 70. It was part of the Bank’s case in the summary proceedings that since the 2013 Facility had not become effective all loans were overdue and capable of being demanded in accordance with the terms of the October 2012 Facility. AIB Statement of Affairs 71. On 4 July 2013 the Plaintiffs furnished sworn Statements of Affairs to the Defendant. 72. The Paul Dormer statement referred firstly to a principal private residence in Templeogue, Dublin. Reference was then made to “investment properties”. 24 73. Most of the investment properties are described as owned by “P & G Dormer”. 74. Twenty three lines identify numerous properties some of which are multiple properties including the following:- • Parsons Street, Maynooth, six terrace houses • Marrowbone Rear, 27 small studio apartments • Hillview, Seafield, three detached houses • 18 Pim Street, 27 apartments and offices • 20 Forbes Lane, four terraced houses. 75. Opposite each asset information is provided as to the estimated value, debt attaching, net value, rental income, related expenses, estimated surplus/deficit, and the name of the relevant financial institutions where applicable. 76. Three of the properties are described as charged to BOS namely 18 Pim Street, 19 Dolphins Barn and 24 Forbes Lane. The aggregate debt due to BOS in respect of these facilities was stated at €12.1 million. 77. Properties charged in favour of PTSB include the residential property at Templeogue, one house at Parsons Street, Maynooth, namely No. 11 Parson Street, and a two-bedroom hotel suite, being a tax investment. 78. The properties described as being subject to the charge in favour of AIB were the following:- • Clanbrassil Street, two one-bedroom apartments and three-bedroom house • Blakestown Road, 7 Apartments • Tymon Crescent, 4 bedroom house • Nangor Road, 3 apartments • Rathcoffey, 3 bedroom bungalow 25 • The Maltings, commercial building • Marrowbone, 27 studio apartments. 79. The total AIB debt stated to be due in respect of these charged assets is €17.69 million. 80. One of the assets, namely three detached houses at Hillview, Seafield were stated to be charged in favour of KBC. 81. A number of the assets referred to in the schedule are described as “unencumbered” in that no financial institution was named and no corresponding debt. They comprise six houses at Parson Street, Maynooth, one house at Clonsilla Road, one house at Edenmore Park, 3 cottages at Nugget Cottages, and a three-bedroom terrace house at Our Lady's Road, a yard, a site with no planning permission at Pim Street, a three-bedroom semi-detached house at 14 Glenfield Avenue, a derelict cottage at Bruff, and a house at Deerpark Walk. 82. The value the unencumbered assets was estimated at €2,765,000. 83. Also referenced are shares in Concord Boilers having a nil value, bank deposits in an aggregate of €11,000 and miscellaneous bank accounts and motor vehicles owned by Paul Dormer. 84. Unrelated to property assets there is a section of the Statement of Affairs headed “Other Liabilities”. This includes a line for “Settlement – Paul - AB – €X, due [date redacted].” 85. Reference is made to certain personal guarantees and contingent guarantees in respect of mortgages of family members. 86. One of the contentious issues in the case is that the Defendant says that there are discrepancies between the Statement of Affairs presented to it on 4 July 2013 and the Statement of Affairs presented to BOS. In the Statement of Affairs presented to the Defendant the six terraced houses at Parson Street, Maynooth, estimated as having a value of €1,050,000 are stated to be unencumbered in that no debt is stated to attach to them and no financial institution is named. By contrast the Statement of Assets and Liabilities presented to BOS contains a 26 reference to seven terraced houses at Parson Street, including the 6 referenced in the Statement of Affairs presented to the Defendant, valued at €1.250 million, and which are stated to be charged in favour of PTSB, which is owed a sum of €601,351. 87. It later emerged that one of the houses at Parson Street was excluded from those which the Plaintiffs had represented to the Defendant as being uncharged, namely No. 11 Parson Street. The Statement of Affairs presented to BOS did not make this distinction and described all seven houses at Parson Street as being subject to PTSB debt. 88. A second discrepancy is that in the AIB Statement of Affairs of Mr. Dormer reference was made to a “Settlement” in favour of AB for a sum of €X. The same settlement is referenced in the statement provided to BOS, but additional information is provided to the effect that that there was a “High Court Order” in respect of these amounts. This is consistent with the reference in the BOS Letter of Settlement dated 15 May 2013. In that letter at para. 5 reference is made to an explanation having been given to BOS that a number of the assets, otherwise described as unencumbered, were “held in support of a settlement entered into by Mr. Paul Dormer”, whereas the statement to the Defendant did not state or imply that the settlement effected any burden or encumbrance on otherwise unencumbered assets. 89. The fact of the court order does not of itself necessarily mean that the property was subject to any mortgage or other charge in favour of AB. However it is clear from the terms of the BOS Settlement Letter that they were given to understand that the settlement constituted a form of burden on properties which would otherwise have been unencumbered, and which were described to the Defendant as unencumbered. PART THREE: THE REFINANCE AND RESTRUCTURING 90. Discussions continued through August and September 2013. On 22 August 2013 Mr. Conneely emailed Mr. Roddy confirming that a paper was currently in circulation within the 27 Bank which “recommends that we refinance the BOS facilities of €3.25 million subject obtaining legal charges over the security held by them, obtaining legal charges over the unencumbered assets and various other conditions”. 91. On 26 August 2013 the Area Credit Committee declined to approve the proposal. Although this was met with understandable disappointment by Mr. Roddy and the Plaintiff, the parties continued to engage. On 10 September 2013 Mr. Conneely informed Mr. Roddy that he had received positive support from the Head of the Financial Solutions Group and confirmed that he would again progress the credit application recommending the transaction. After further meetings and exchanges, on 7 October 2013 the Area Credit Committee authorised the issue of a Term Sheet. On 8 October 2013 Ms. Bowen wrote to Mr. Roddy enclosing what she described as “Heads of Terms in relation to the refinance of Bank of Scotland Ireland facilities and restructuring of AIB debt”. 8 October 2013 Heads of Terms 92. The document which is referred to as the Heads of Terms was a “Term Sheet” referencing as the borrowers Paul and Gerard Dormer. It referred to three facilities which would total a sum of €20,927,000. 93. The first facility, described as “Loan 1” was for €13,415,000. Its stated purpose was “refinance of Bank of Scotland Ireland and restructure of existing borrowings”. 94. It provided for the repayment of the sum of €13,415,000 as follows: • On closing, €80,000 “from current and deposit account funds”. • By 31 December 2013 €200,000, from rental income • By 31 December 2014 €267,000, by the sale of dwelling houses • By 31 December 2015 €4.8 million, by the sale of 15 named properties, being “non- core”. • By 31 December 2018 €7.268 million, by the sale or refinance of certain core assets. 28 95. The core assets were described as follows: (1) Office and industrial premises at the Maltings Business Park, 54/55 Marrowbone Lane. (2) 27 apartments and office space at Pim Street, Dublin 8. (3) Six houses numbered 12 to 15 and 17 and 18 Parson Street Maynooth, and circa 2 acres to the rear. 96. The terms therefore envisaged that core assets could be retained in the short term, but that a plan for their sale or refinance would need to be put in place at the outside by 31 December 2018. 97. A balance of €800,000 under the facility would be amortised over a five-year period from 1 January 2014 onwards. 98. The second facility is described as “Loan 2” was for €3 million. It stated purpose was “restructure of existing facilities”. Its repayment provisions require that it be cleared by 31 December 2018. 99. A third facility known as “Loan 3” was for €4,512,000. The stated purpose of this was “restructure of existing facilities”. This was the amount which would be written off if all other payments and terms and conditions were complied. Its repayment provisions were stated as follows: “upon clearance of Loan 1 and Loan 2 and on the basis that all other conditions of sanction for the restructure have been complied with in full, the borrower's obligations at foot of Loan 3 will be considered to have been discharged in full.” 100. In later references those three loans are sometimes referred to as the A, B and C Loan Notes, the C Note being the potential write off. 101. The Heads of Terms stipulate 16 “Special Conditions”. The first five were stated to be “Conditions Precedent to Offer Letters”. The remaining 11 were stated to be “Conditions Subsequent to Offer Letters”. 29 102. The Conditions Precedent were five: “1. Professional valuations on all assets, instructed by AIB and addressed to AIB, to be completed to the satisfaction of the Bank. 2. Confirmation of clients tax position to be provided to include evidence of remaining capital allowances. 3. Clients to confirm agreement to commence asset disposal strategy immediately with Power of Attorney to be provided to the Bank to ensure timely disposal of assets. 4. Copies of PTSB and KBC Facility Letters to be provided to the Bank together with confirmation clients are performing to agreed terms. 5. BOSI to provide written confirmation that refinance will be in full and final settlement of their outstanding debt and they will have no further recourse to clients.” 103. The Plaintiffs claim that they complied with all of these conditions precedent. The Defendant says that the Plaintiffs failed to comply with Condition Five, namely confirmation from BOS that the refinance would be in full and final settlement of their outstanding debt and that BOS would have no further recourse to the Plaintiffs. 104. Of the 11 conditions subsequent the following are relevant: “1. Refinance and restructure to be strictly subject of 1st Legal Charge being provided over BOSI and unencumbered assets and full security remediation of AIB security to be facilitated. 2. Full review of title to be completed on all new security prior to drawdown. 3. Rental income to be mandated to AIB accounts, with income expenditure statement to be provided on a quarterly basis.” 30 105. Further conditions related to the application of cash sweeps, assignments of rental income and directors loans, provision of quarterly income and expenditure schedules, agreement on the asset disposal programme for non-core assets and annual provision of audited accounts of Concord. 106. On 7 October 2013 the Defendant called Mr. Roddy to a meeting at which he was informed that approval had been granted by the Area Credit Committee to proceed with the refinance and restructuring. In their evidence Mr. Conneely and Ms. Bowen each say that they had informed Mr. Roddy that the authorisation was an authorisation to proceed in principle. They said at that meeting they would send out Heads of Terms now that they had been authorised to do so. Mr. Conneely characterised the Heads of Terms as an outline of the terms on which the Defendant would be willing, subject to the fulfilment of certain conditions, to progress to the issue of an Offer Letter. 107. On the morning of 8 October 2013, before receiving the Heads of Terms, Mr. Roddy emailed BOS stating that he was “pleased to confirm that AIB Credit Committee have sanctioned facilities to complete the refinance of Bank of Scotland loans of 3.25 million”. In response BOS welcomed this news and requested written evidence of the agreement of AIB. Although a letter was later provided by the Defendant on 6 December 2013, the evidence was that for the intervening two months, as will be seen in the context of the events of early December, BOS were still looking for this written evidence. 108. The Heads of Terms were issued on 8 October 2013 and the parties set about addressing its requirements. Ongoing communications took place between the parties and their solicitors and DNG, the firm of valuers retained by the Defendant, regarding the detail of the individual properties and valuations. 109. In the immediate aftermath of issue of the Heads of Terms Mr. Roddy reverted to the Defendant with a number of queries regarding such matters as the valuations being used in 31 respect of assets to be charged, provisions for capital expenditure, interest rates to be applied, and provisions in respect of maintenance and management costs. 110. One of the emails on 22 October 2013 reveals that Mr. Roddy was looking to “push back” on certain of the terms in the Heads of Terms. He stated that he “needs some movement with evidence of flexibility, so suggest we meet up, however wait until the valuations exercise is complete”. In response Ms. Bowen stated on 22 October 2013 that a meeting could be arranged to progress matters but she made it clear that “in regard to the issue you raised with the Term Sheet, Credit Committee have dictated the terms of sanction and is very unlikely we would be able to successfully appeal these”. 111. On 15 October 2013 Mr. Roddy pressed BOS for their written confirmation that the refinance of €3.25 million would be in full and final settlement of their outstanding debt with no further recourse to the Plaintiffs. In response to this request BOS, through a Mr. McKiernan, stated “surely the settlement letter sent to you by Bank of Scotland clearly covers these points”. In the context of later, contentious, exchanges Mr. Roddy told the Defendant that he did not have the permission of BOS to share the contents of the BOS Settlement Letter due to its confidentiality clause. This email from Mr. McKiernan evidenced that BOS had envisaged that that letter would be shared with the Defendant, which did not occur. 112. On 11 November 2013 Mr. Roddy stated to Mr. McKiernan that the Defendant was still looking for written confirmation that the BOS refinance will be in full and final settlement. He stated that the “first settlement letter would be sufficient but they need a letter”. A curious feature of this exchange is that the BOS Settlement Letter of 15 May 2013 was never presented to the Defendant yet Mr. Roddy was implying to BOS itself that he thought that letter ought to have been good enough for the Defendant. 113. In the course of the various exchanges queries were raised by the Defendant as to precisely how many of the houses at Parson Street, Maynooth were the subject of mortgages. 32 PART FOUR: DECEMBER 2013 114. In the engagement between Mr. Roddy and BOS queries were raised by BOS regarding the effect of a High Court Order in favour of AB in certain proceedings. In addressing this query Mr. Roddy explained to BOS that because the High Court proceedings were in camera he believed he would be in contempt of court if he discussed or used any information in relation to those proceedings with any bank. Mr. Roddy continued “the High Court Order is a serious matter and no unencumbered assets can be encumbered as a result of this High Court Order.” Mr. Roddy, on behalf of the Plaintiffs, was telling BOS that this order limited the capacity of the Plaintiffs to create charges or encumbrances over any of the previously unencumbered assets. 115. On 3 December 2013 Ms. Bowen emailed Mr. Roddy stating inter alia “under the terms of our sanction we have to revert to credit committee by Friday 6 December. Could you advise BOS that we urgently need the letter as approval has been in place for two months and it may set alarm bells off it (sic) we are forced to revert to credit committee without BOS confirmation of full and final settlement”. Mr. Roddy forwarded this email to BOS and replied to Ms. Bowen on the same day stating: “I know… chasing them up, a letter is sitting in Lloyds [then owners of Bank of Scotland] awaiting a signature”. 116. Although the Defendant had been calling for the BOS letter repeatedly, this was the first occasion on which a specific deadline was mentioned by it for production of the letter. 117. On 5 December 2013 the Plaintiffs’ solicitor Mr. John O'Connor of John B O’Connor & Co. wrote to BOS, copying Mr. Roddy. This letter was not seen by the Defendant at this time, but was later produced. Mr. O'Connor stated the following: “We confirm we act on behalf of the above named borrowers. Our clients have put in place certain facilities with Allied Irish Banks, which include inter alia, our clients 33 drawing down sufficient funds so as to redeem the loans outstanding with your bank, as per the terms of your settlement letter of 15 May 2013. The specific facility which has been put in place by our clients with AIB involves not only funds being made available in the amount of €3.25 million, so as to facilitate the redemption of the facilities with your bank, but also involves a reorganisation of our clients other existing facilities with AIB. We understand a specific query has arisen as to whether or not our clients are making available any unencumbered assets to AIB, so as to secure the funds necessary to redeem the loan with your bank. Our clients are not granting security over unencumbered assets with specific reference to the figure of €3.25 million, being the redemption figure due to your bank, but rather are granting security over certain assets to AIB in the context of the overall facility being made available to them, which includes the redemption figure of €3.25 million. We should however point out to you in the context of unencumbered assets, and the settlement that Mr. Paul Dormer has reached with AB, that certain monies were due to AB. We understand your solicitors have already examined the relevant court orders in this regard, and confirmed the position to your bank. We are simply pointing this out to you, lest by not doing so, the impression might be created that our clients had substantial unencumbered assets, which is not in fact the case. We trust the foregoing will enable you issue the appropriate letter of confirmation to our clients for onwards transmission to the Bank. Yours faithfully” 118. Mr. O'Connor was careful in his letter to state that the Plaintiffs were not granting security over unencumbered assets “with specific reference to the figure of €3.25 million”. However, he went on to state that security was being granted over other assets to the Defendant “in the context of the overall facility being made available to them, which includes 34 the redemption figure of €3.25m”. These statements were accurate as far as they go, but in the next paragraph he states that the effect of the Settlement meant that the Plaintiffs did not have available to offer by way of security any substantial or significant unencumbered assets. By contrast, the refinance and restructuring envisaged by the Heads of Terms was premised inter alia, on the Defendant being granted charges over unencumbered assets, being all of the Plaintiffs’ then or previously unencumbered assets, said in the AIB Statement of Affairs to be worth €2.765m. 119. On 5 December 2013 Mr. Kelly of BOS emailed Mr. Roddy seeking information in relation to the facility being offered by AIB. He stated: “The main issue that remains unclear in our minds is exactly how AIB is structuring its debt given that the assets are valued at around €2.9 million, adjusted for VAT, yet the advance is €3.25 million also bearing in mind that AIB security falls well short of its existing debts. To the best of my knowledge we have not seen a Term Sheet that outlines how AIB is structuring this debt and our experience to date with the lenders is that they are typically only funding between 60% and 70% of security value. Therefore we have to ask you to explain what extra security is being given by the Dormers, if any, to make this deal work for AIB. A copy of the terms and conditions schedule or relevant extract from the Facility Letter would be ideal”. 120. It was clear from this communication that BOS were still seeking further information before they would issue a confirmation in the terms required by the Defendant pursuant to Condition Five in the Heads of Terms. This was not simple delay on their part. They had not received the information they required before giving the confirmation. 121. There was no evidence of Mr. Roddy seeking permission from the Defendant to share a copy of the Heads of Terms with BOS. 35 122. Earlier on 5 December 2013 Mr. Kelly while pressing for further information and having received the letter from Mr. O'Connor stated following: “I may be misreading the letter but interpret that added security is be given to AIB. Perhaps you could clarify. That in itself is no bad thing if it delivers the exit we are seeking”. 123. In a subsequent email, on 6 December 2013 Mr. Roddy clarified the position in relation to unencumbered assets to Mr. Kelly when he stated the following: “As part of the €3.25 million refinancing of BOSI facilities, AIB have confirmed to John O'Connor that they shall be provided with first legal charges over the properties currently held as security for the Bank of Scotland facilities. In addition to the refinance AIB will be restructuring all facilities and will be assuring that unencumbered assets will be provided as security. Finally AIB are seeking to finalise the offer of facilities and the only item outstanding is the confirmation from Bank of Scotland that the sum of €3.25 million will be accepted in full and final settlement of the Dormers liabilities to Bank of Scotland.” 5 December 2013 - Telephone call between Mr. Roddy, Ms. Bowen and Mr. Conneely 124. On 5 December 2013 Mr. Roddy telephoned Ms. Bowen to discuss the position in relation to letters of confirmation. He informed her that a letter in the terms required by the Defendant was awaiting signature at BOS. Mr. Roddy stated also that BOS were themselves awaiting a letter from the Defendant confirming how the restructuring was being implemented. 125. Mr. Roddy's evidence was that he had requested a letter from the Defendant simply confirming its intentions in relation to the refinance. He did not consider that to be unusual. During the call Ms. Bowen transferred the call to a conference call so that Mr. Conneely could participate. Mr. Roddy requested a letter which could be shown to BOS confirming their intention to agree the refinance and restructuring and stating what security 36 was being put in place. His evidence was that Mr. Conneely seemed uneasy with the request and that when he asked Mr. Conneely what was the difficulty he did not say or articulate the basis of his concern. 126. Ms. Bowen and Mr. Conneely each gave evidence that in this telephone call Mr. Roddy had requested that the Defendant provide a letter for the benefit of BOS stating that the refinance of the BOS facilities would be subject only to the additional security of the assets previously held by BOS prior to the refinance. Such a letter would contain no reference to the additional security over previously unencumbered assets being sought by the Defendant. 127. Mr. Conneely said that he was deeply uncomfortable with this request for two reasons. Firstly he said that this would be misleading because the Defendant’s requirements included the grant of additional security over unencumbered assets. Secondly, he was concerned that the request that the Defendant provide such a letter at this stage suggested that the Plaintiffs had not by that time reached a concluded agreement with BOS in the manner which the Defendant had been told by the Plaintiffs they had. Ms. Bowen stated that in this call she stated clearly to Mr. Roddy that such a letter would not be issued. 128. Mr. Roddy denies this version of the phone call. He says that he simply requested a letter for the benefit of BOS stating the Defendant’s intentions and requirements. He denies that he requested a letter which would in any way mislead BOS or exclude any reference to security being taken over unencumbered assets. 129. Following this phone call, a number of further things occurred. At 6:03p.m that evening Mr. Conneely emailed Mr. Roddy in the following terms: “As discussed earlier, the absence of the confirmation from Lloyds/Bank of Scotland has caused extreme concern at this office. In addition the title deeds to the Bank of Scotland secured properties and unencumbered assets have not been made available to our solicitors for review notwithstanding a number of requests and your confirmation 37 received on 18 November that John O'Connor was arranging transfer of the documents to our solicitors. The transfer of the deeds would in itself signal an intent to proceed. We are meeting in the morning to review the situation and anticipate that in the continued absence of receiving the letter of confirmation from Bank of Scotland that it will accept €3.25 million in full and final settlement of the liabilities we will have no option but to withdraw the Bank's proposal to refinance and restructure the facilities. Can you please furnish this written confirmation from Bank of Scotland by midday tomorrow. Please note that in the absence of receiving this confirmation, the Bank shall be obliged to take whatever action is necessary to protect its position.” (Emphasis added). 130. Later that evening, at 9:01p.m. Mr. Roddy replied in the following terms “Eamon Only receiving your email now. I will forward a copy of Lloyds bank supportive email. Firstly I am very disappointed by the tone and content of your email. Only this week did I receive notice from AIB that you require by this Friday 6th BOSI confirmation for committee “update”. Only this morning following my telephone call did you indicate you had an additional reporting deadline. Now this evening after close of business you put additional conditionality. This is hardly appropriate time consideration. The title deeds are all available in John O'Connor's office and have been for weeks. At no stage have your solicitors AC Forde made any contact with John's office to inspect the deeds. Your solicitors are at liberty to make immediate contact. Please confirm that they have now made contact with John's office. You also as promised have not sent us revised terms and conditions following your valuation review, which was complete some time weeks ago. Despite my request for 38 details of any loan note changes, this information has also not been forthcoming from AIB. The diligence and speed at which we have performed on matters within our control is beyond question and is evidenced. I indicated to you that I received an extension to the 15th August settlement offer closing date to 30th November and your response was that the Bank would try to complete by 31st or maybe 20th December. I don't consider in these circumstances that you should be putting unnecessary pressure on ourselves or BOSI, when we have been working through the agreed settlement terms with BOSI following your confirmation of refinancing and restructuring approval facilities which were communicated to BOSI. My clients are working in the interests of AIB with the BOSI debt settlement and that is a position that AIB should be mindful of. Finally I am confident of a satisfactory outcome and will keep you further informed throughout Friday, regards Aidan.” 131. These exchanges of emails and the telephone call during the day on 5th December represented a turning point in terms of the relations between the parties. The evidence of Mr. Conneely and Ms. Bowen was that the combination of the delay in the production of the BOS confirmation letter and the request by Mr. Roddy for a letter from the Defendant in terms which according to Mr. Conneely and Ms. Bowen would have misrepresented the Defendant’s position and misled BOS, all led to a decision to insist that unless the BOS confirmation letter was produced immediately, the proposal for the refinance and restructuring would be withdrawn. 132. When one looks at the letter which the Defendant issued for the benefit of the BOS the next day (see paragraph 134 below) it is itself carefully worded and does not mislead BOS in 39 any respect. Mr. Roddy in his evidence stated that he was content with the letter of 6 December 2013 and insists that he never asked for any different letter which would have misled the BOS. 133. No record or transcript of the phone call of 5 December was put in evidence and all three of the participants in the call were cross-examined during the course of the hearing. Mr. Roddy simply denied having requested a letter in the terms which the Defendant’s representatives perceived he had requested. Mr. Conneely and Mr. Bowen both believed that he had requested a letter which would have misled BOS. Whatever words were actually used, it is clear that on the Defendant’s side, and this is later confirmed by Mr. Conneely and Ms. Bowen in their evidence, they were so concerned and unhappy about the telephone call that a decision was then made within the Defendant to insist that unless the BOS letter of confirmation was produced immediately, the proposal would be withdrawn and the Defendant would move instead for enforcement and recovery of its loans by legal proceedings. 6 December 2013 134. A number of key events occurred on 6 December. Firstly Mr. Conneely wrote a letter to Mr. Roddy in the following terms: “Re: Paul and Gerard Dormer We refer to our ongoing discussions in the above regard. We note from our telephone conversation yesterday that Bank of Scotland have sought confirmation of the details of the proposed refinance of their facilities by AIB Bank. As you are aware we have provided outline terms to refinance Bank of Scotland facilities in the sum of €3.25 million. As part of the refinance we shall be provided with first legal charges over the properties currently held as security for the Bank of Scotland facilities. In addition to the refinance proposal, AIB has provided outline terms of the restructure of all facilities in the name of Paul and Gerard Dormer. 40 As you are aware we are seeking to finalise the offer of facilities and the only item outstanding is a written confirmation from Bank of Scotland that the sum of €3.25 million will be accepted in full and final settlement of all the Dormers liabilities to Bank of Scotland. We would suggest that in order to expedite matters that we would speak directly with the BOS regarding the proposed settlement which may allay the concerns of all with regard to the restructure”. (Emphasis added) 135. In the second paragraph of this letter Mr. Conneely gave the confirmation that “as part of the refinance” the Defendant would be provided with first legal charges over the properties previously held as security by BOS. He goes on to state that “in addition to the refinance proposal AIB has provided outline terms of the restructure of all facilities in the name of Paul and Gerard Dormer”. In that additional piece he provides no detail of the security being requested by the Defendant. He does not expand on the fact that the new security to be provided was a condition not only of the restructuring of AIB loans but was a condition also of the refinance of BOS, these being the combined purpose of Loan 1 in the Heads of Terms. Nonetheless, Mr. Conneely satisfied himself that this was not a letter which would mislead BOS. 136. Mr. Conneely and the Defendant were of course at that time not on notice of the terms of the BOS letter dated 15 May 2013 which had raised concerns and reserved BOS’s position in respect of unencumbered assets. It is clear from Mr. Roddy's email to Mr. Kelly on 6 December that he pointed out to BOS that the Defendant would be taking security over unencumbered assets. 41 The BOS emails 137. There then followed a series of emails on 6 December 2013 which the Plaintiffs say constituted the confirmation requested by the Defendant and which, on the Plaintiffs’ view, met PreCondition 5 in the Heads of Terms. 138. On that day at 16:09 p.m. Mr. Kelly emailed Ms. Bowen ‘Without Prejudice’ stating the following: “Good afternoon Sarah, I am the Credit Sanctioner in Lloyds who has been working alongside Certus and the Customer on the proposed refinance by AIB of the Dormers debt with Bank of Scotland plc. The Bank remains agreeable in principle to settling this refinance in the sum of €3.25 million and I confirm that our offer to the Customer remains live. Our approval was predicated upon satisfaction of a number of conditions and we have been working towards resolution of these. One or two points remain to be closed off to our full satisfaction but we are not far from achieving that and we hope to conclude these in the coming days. We have been frustrated in part in this process by the delay in obtaining the release of our security and title documentation by O'Rourke Reid Solicitors despite repeated requests. This matter has been reported to senior colleagues in LBG (Lloyds Bank Group) and we are endeavouring to find a solution as we speak. I trust that this will allow you to keep this transaction moving forward but will be happy to discuss those matters with you this evening if need be.” 139. At 16:32 p.m. Mr. Roddy emailed Mr. Kelly thanking him for sending this email and stating: 42 “Thanks for this, however could you send follow-on that the €3.25 million is in fully (sic) and final settlement. AIB original offer expired this evening close of business the 6th so I would not wish for it to be withdrawn". 140. At 16:39p.m. Mr. Kelly sent a second email to Ms. Bowen in the following terms “Sarah I have been asked to reaffirm that the €3.25 million sum is in full and final settlement of the Dormers obligations with the Bank. I trust that will assist you. Kind regards.” 141. At 16:48p.m. Ms. Bowen emailed Mr. Kelly, copying Mr. Roddy, Mr. McKiernan, Mr. Conneely and AIB solicitor Ms. Forde in the following terms: “Dear Fraser thank you for your email. We note that you are agreeable in principle to settling the refinance in the sum of €3.25 million and the offer remains in place. Could you please confirm the refinance of €3.25 million will be in full and final settlement of Paul and Gerard Dormer’s liabilities to Bank of Scotland. AIB approval is subject to a number of terms and conditions including that the repayment of €3.25 million will be in full and final settlement. AIB were not aware there were conditions outstanding attaching to your settlement agreement, could you please advise of these conditions.” 142. That concluded the communications between the Defendant and BOS on that day. 143. At 5p.m. on the same day Mr. Roddy emailed Mr. Kelly again stating: “Fraser, you mention one or two conditions remaining so thought all cover (sic) or addressed? 43 I informed AIB yesterday of your query regarding the unencumbered assets, but was not aware of any other issue? Appreciate all this running around.” 144. Because the Plaintiffs assert that Mr. Kelly's emails constituted compliance with Precondition 5 of the Heads of Terms these exchanges require careful analysis. The following can be said. 145. Firstly,