Supreme Court dismisses appeal finding no binding agreement existed to release property interests due to lack of clear evidence.

THE SUPREME COURT

[Appeal No: 406/2011]

Murray J.

Fennelly J.

Clarke J.

In the matter of Ellen Construction Limited (In Receivership)

and

In the matter of Section 316 of the Companies Act 1963

and

In the matter of the Companies Act 1963 to 2009

Between/

KIERAN WALLACE, RECEIVER OF ELLEN CONSTRUCTION LIMITED (IN RECEIVERSHIP)

Applicant/Respondent

and

MICHAEL FORTUNE AND CYRIL BARDEN

Respondents/Appellants

Judgment of Mr. Justice Clarke delivered on the 18th February, 2014.

1. Introduction

1.1. It has often been commented, frequently with some significant justification, that the legal measures normally required to be put

in place in the context of property and lending transactions were casualties of the boom associated with the Celtic Tiger. Sometimes

essential elements of the legal arrangements necessary were just not put in place. However, short of those extreme situations, there

were many more cases where arrangements were not specified with sufficient clarity. Those involved in business are wont to complain

when lawyers seek to have arrangements fully analysed and set out clearly in documentary form. When things go wrong, of course,

lack of clarity in the relevant arrangements makes it much easier for disputes to arise, thus leading to litigation.

1.2. This case is of that latter type. It is clear that some form of arrangement was entered into involving the respondents/appellants

(respectively “Mr. Fortune” and “Mr. Barden”) and Ulster Bank Ireland Limited (“Ulster Bank”), who was a lender both to a partnership

of which Mr. Fortune and Mr. Barden were part and to the company named in the title of these proceedings (“Ellen”) of which the

applicant/respondent (“the Receiver”) has been appointed as Receiver. There is, however, a significant dispute as to the precise

nature of the arrangements entered into. The principal issue of substance which arises on this appeal is as to the legal rights and

obligations of the parties arising out of the arrangements entered into. There is in addition a purely legal question concerning

jurisdiction. The dispute was resolved in the High Court in favour of the Receiver (Wallace v. Fortune & Another [2011] IEHC 430). Mr.

Fortune and Mr. Barden have appealed to this Court. In order to understand the precise issues which arise, it is necessary to say

something about the factual backdrop.

2. The Factual Background

2.1. Much of that factual background is not in significant dispute. The parties were involved in a development project at Clearwater

Cove, Rosslare, County Wexford (“Clearwater Cove”). Mr. Fortune and Mr. Barden were two members of a four person partnership who

bought the lands at Clearwater Cove with monies lent to that partnership by Ulster Bank. In the relevant documentation the

partnership was known as the Richmond Partnership (“Richmond”). The two other members of Richmond were Michael Doran and

Martin Doran. Michael and Martin Doran were also the principals of Ellen.

2.2. An arrangement was entered into between Richmond and Ellen which was of a type not untypical in the construction industry in

Ireland. Richmond, having bought the relevant lands, granted a licence to Ellen which enabled Ellen to go onto the lands at Clearwater

Cove to construct houses. When any particular house had been constructed and sold the arrangement provided that Richmond would

execute an appropriate form of deed to transfer ownership of the property to the purchaser. As part of the arrangement a “site fine”

of €162,000 was to be paid to Richmond (from the overall sale price) with the balance of whatever price could be secured from the

purchaser being paid to Ellen.

2.3. The building works carried out by Ellen were also the subject of finance from Ulster Bank. Ulster Bank was, therefore, a lender to

both Richmond and Ellen. However, Richmond and Ellen had their own separate banking arrangements although there was a

connection between those banking arrangements to which it will be necessary to refer in due course. Those separate arrangements

required certain monies to be repaid out of, so far as Richmond was concerned, the site fines, and so far as Ellen was concerned, the

remainder of the purchase price.

2.4. The lands had been purchased by Richmond in 2003 and the building licence agreement was entered into by Richmond and Ellen

on the 19th May, 2005. That agreement provided for the construction of a residential development consisting of 45 units. It appears

that by the end of March, 2009, 33 of the units had been sold.

2.5. The arrangements had worked sufficiently well so that the entirety of Richmond’s indebtedness to Ulster Bank had been

discharged before any difficulty was encountered. It should, however, also be noted that Richmond had agreed to guarantee Ellen’s

debts as part of the arrangements whereby Ellen borrowed funding for the construction. Thus while, by January 2009, Richmond did

not owe anything to Ulster Bank in its own right, it did have a contingent liability to the bank in the event that Ellen proved unable to

finally repay its liabilities.

2.6. It is also of some relevance to note that there was a separate, and larger, development in which all of the players had an

interest taking place at a location called East Wall. The broad scheme of arrangement involving Richmond, Ellen and Ulster Bank was

the same although the details were different.

2.7. However, as the property market began first to weaken and then suffer a disastrous reversal, the prospects for the development

at Clearwater Cove became less clear. Discussions took place between some of the interested parties as to whether there might be

any alteration in the precise terms of their arrangements. It will be necessary, in due course, to return to the precise state of play

immediately before any discussions took place. However, one important aspect of the backdrop is, of course, that there was no exact

community of interest between Richmond and Ellen, for while Michael and Martin Doran were both partners in Richmond and principals

of Ellen, Mr. Fortune and Mr. Barden did not have any direct interest in Ellen itself. It was also, of course, the case that Mr. Fortune

and Mr. Barden had an indirect interest in seeking to ensure that Ellen did not run into insurmountable difficulties for their own

position, as the part owners of lands in respect of which Ellen had a licence and had engaged in building works with some properties

remaining unsold, had the potential to be significantly complicated if Ellen ran into such insurmountable difficulties. On the other hand,

Mr. Fortune and Mr. Barden had a much more direct interest in ensuring that Richmond got everything it was entitled to, for they, as

two of the partners, would benefit from any payments made to Richmond.

2.8. It is against that backdrop that discussions which took place in the early part of 2009 need to be assessed. In that context it is

important to note that the relevant discussions were conducted on behalf of Ulster Bank by a Mr. P. J. McIntyre with a Mr. David

Sheeran, the financial controller of Ellen. It is common case that no discussions took place directly between either Mr. Fortune or Mr.

Barden, on the one hand, and anyone from Ulster Bank on the other. A meeting took place between Mr. McIntyre and Mr. Sheeran on

the 20th January, 2009. In late March, in circumstances which it will be necessary to analyse in more detail, an email exchange

followed by hardcopy correspondence occurred. At the end of that correspondence, a letter, of the 7th April, 2009, was written by

Mr. McIntyre to Mr. Barden and Mr. Fortune which is very short and which I will quote in full:-

“Dear Sir,

Re: Ellen Construction Ltd Debt €2.585m on Clearwater Cove Development

I confirm the Bank will release its charge over house numbers 10, 20 & 41 in the above development provided our

debt is reduced to €2m.

I further confirm that the liability of Cyril Barden & Michael Fortune on foot of their existing guarantees in favour of

Ellen Construction Ltd, in respect of the above development, is limited to their interest in the Clearwater Cove

site.”

It is the legal effect on the rights and obligations of the various parties arising out of both those discussions and that correspondence

which lies at the heart of these proceedings.

2.9. However, it is also important to note one aspect of what happened subsequently. Ulster Bank arranged for the Receiver to be

appointed. The Receiver ultimately brought an application under s. 316(1) of the Companies Act 1963, as amended, seeking a

direction to the effect that Ulster Bank had not released its security in respect of some of the properties at Clearwater Cove, being

specifically house numbers 10, 20 and 41 (the houses mentioned in Mr. McIntyre’s letter). It was that application which was

successful before Murphy J. in the High Court and against which Mr. Fortune and Mr. Barden appeal to this Court. Against that

backdrop, it is necessary to identify the precise issues which arise on this appeal.

3. The Issues

3.1. As indicated earlier, there is a specific legal issue which concerns the jurisdiction of the courts generally to decide, in the context

of an application under s. 316(1) of the 1963 Act, the questions of release of security which arise on the facts of this case. The

basic point made on behalf of Mr. Fortune and Mr. Barden is that the issue does not arise out of any interest asserted by the

company, being Ellen, but rather involves questions arising between third parties, being themselves and Ulster Bank and does not,

therefore, come within the scope of s. 316. In response, the Receiver argues that Ellen, as a licensee in respect of all of the

properties (including the three specific houses which are at the centre of the dispute), had an interest in those properties so that, it

is said, the Receiver is entitled to seek the relevant directions under s. 316. I will shortly turn to that question.

3.2. In the context of that issue, it should also be noted that there was correspondence from solicitors for Mr. Fortune and Mr.

Barden in the run up to the hearing in the High Court which, it is accepted, amounted to an agreement that the vehicle of a s. 316

application could be used to resolve these issues. Counsel for Mr. Fortune and Mr. Barden argued in the High Court, and argued again

in this Court, that, notwithstanding such an agreement, the court nonetheless did not have jurisdiction for, it is said, a jurisdiction

which does not exist cannot be conferred by agreement. While not putting it quite in this way, counsel fairly conceded that, if the

jurisdiction was one which was capable of being conferred by agreement, then there was a sufficient agreement on the facts of this

case to confer jurisdiction.

3.3. Assuming that there be jurisdiction, the remaining and substantive issue is as to whether the arrangements, however

characterised, that occurred between January and April, 2009, amounted to a release of any security which Ulster Bank had over the

three houses in question. The starting point, of course, is that, taking the letter of the 7th April on its own, Ulster Bank had confirmed

that it would release its charge in respect of those houses provided that their debt “is reduced to €2m”. It is common case that the

debt was at some stage reduced to €2m. On that basis, and taking the letter by itself, it would seem clear that the security should

be taken to be released.

3.4. However, Ulster Bank argues that the evidence demonstrated (as the trial judge accepted) that the arrangement entered into

between Mr. McIntyre and Mr. Sheeran was more complex. At the time of those arrangements there were twelve houses in the

development which remained unsold. Mr. McIntyre said in affidavit evidence that he agreed with Mr. Sheeran that, provided the debt

was reduced to €2m (by whatever means) and provided that Ulster Bank retained its security over the remaining nine properties (that

is the twelve properties less the three which were to be released) the terms of the letter were to apply. On that basis it is said that

it was not permissible to reduce the debt to €2m simply by selling some of the nine properties which, on Ulster Bank’s case, were

meant to remain as security for the continuing bank debt of €2m. In essence, those are the competing positions. It is argued on

behalf of Mr. Fortune and Mr. Barden that the letter of the 7th April does, as it were, what it says on the tin. It is argued on behalf of

Ulster Bank that the true agreement is, as the trial judge found on the evidence it to be, the one as asserted on behalf of Ulster

Bank.

3.5. In that context it is important to note that the proceedings were, in the main, heard on affidavit with Mr. Barden being subjected

to cross-examination on behalf of Ulster Bank on his affidavit evidence. Mr. McIntyre was not cross-examined. No evidence, whether

affidavit or otherwise, was tendered by either party from Mr. Sheeran. On that basis the only evidence as to what happened at the

meeting between Mr. McIntyre and Mr. Sheeran was the affidavit evidence of Mr. McIntyre which went unchallenged.

3.6. However, it seems clear that the substantive issue should only be addressed by this Court if there is jurisdiction to entertain

these issues at all in the context of a s. 316 application. I, therefore, turn first to that question.

4. Is There Jurisdiction?

4.1. It is important to start by setting out precisely the issue of substance which arises for it is the question as to whether that issue

comes within the permitted scope of an application under s. 316 that must be answered. In that context it is appropriate to look at

the set of legal relationships which existed immediately before any possible release of the security interest of Ulster Bank might have

occurred. There does not seem to be any material dispute between the parties as to what that situation was. Richmond had granted

Ulster Bank security over the lands which it owned at Clearwater Cove. That security was partly for the purposes of securing

Richmond’s own indebtedness but also partly to support the guarantee which Richmond had given over the indebtedness of Ellen.

While, as has been pointed out, Richmond’s own indebtedness had been cleared, the possibility of Richmond being called on to meet

its guarantee in respect of the debts of Ellen remained. It is not suggested that there is any basis for arguing that Ulster Bank did not

retain its security over the lands at Clearwater Cove immediately prior to the arrangements entered into in early 2009. But, of course,

that security arose out of a guarantee given by Richmond to Ulster Bank and did not, directly at least, arise out of any interest in the

lands at Clearwater Cove attributable to Ellen.

4.2. That leads to an analysis of the relationship between Richmond and Ellen deriving from the licence agreement to which reference

has already been made. As pointed out, that arrangement permitted Ellen not only to go onto the lands at Clearwater Cove and

construct houses on those lands but also to sell the houses concerned provided that a site fine in the agreed sum was paid to

Richmond. By the time the discussions in 2009 occurred, it would appear that all of the houses had, in fact, been constructed. The

position was, therefore, that the legal ownership of those houses remained in Richmond but that Ellen had an entitlement, by virtue of

the licence, to sell those houses and procure that, subject to paying the site fine, the entire purchase price should be paid to Ellen.

Reliance is placed by the Receiver on the judgment of Blayney J. in the Supreme Court in Naughton v Naughton (Unreported, Supreme

Court, 9th November 1993) to support the proposition that a licensee, in an arrangement such as that, has an interest in the lands.

At pp. 10-11 of that judgment, Blayney J. cited the following passage from the Modern Law of Real Property (10th edition) by

Cheshire as correctly setting out the relevant legal principle:

“If the licensee expends money on the land under an expectation, induced or encouraged by the licensor, that if he

does he would be allowed to remain in possession, a court of equity will not allow his expectation to be defeated. A

supervening equity to be protected vests in him, though the exact nature and extent of the protection will vary

with the circumstances….”

4.3. That, immediately before the arrangements entered into in early 2009 (whatever their effect), Ellen had an interest in all the

unsold lands at Clearwater Cove (including the three houses in dispute) cannot, on the basis of this authority, be doubted. The

dispute between the parties is as to whether Ulster Bank’s security over the three specified houses was released as a result of the

relevant arrangements. The jurisdictional question which arises is as to whether that dispute, in the context of the interest which

Ellen had in the lands, can be said to come within the scope of the type of application which is capable of being determined in a

directions motion under s. 316.

4.4. It should be noted that, as part of its own security arrangements with Ulster Bank, Ellen assigned to Ulster Bank its interest in

the licence which it held over the lands at Clearwater Cove. It follows that the property over which the Receiver was appointed

included the interest of Ellen in that licence for that licence was part of the property of Ellen which had been secured in favour of

Ulster Bank. In that context, it is important to note the precise relief sought on behalf of the Receiver.

4.5. The principal direction sought is that set out at paragraph 1 of the Notice of Motion which is in the following terms:-

“A direction pursuant to Section 316(1) of the Companies Act 1963, as amended, that Ulster Bank Ireland (the

“Bank”) has not released its security in respect of any interest in or over the lands and premises referred to in the

schedule of lands scheduled to the present notice (the “Property”) whether arising pursuant to a:

A. security assignment dated 30 May 2005 between (1) the Company and (2) the Bank of a building

licence agreement granted by the Richmond Partnership to the Company dated 19 May, 2005; and/or

B. debenture dated 8 February 1999 (the “Debenture”) and made between (1) the Company and (2)

Ulster Bank Limited (which Debenture was transferred to the Bank pursuant to the provisions of

Statutory Instrument 365/2001); and/or

C. deed of mortgage and charge dated 12 September 2003 between (1) Michael Fortune, Cyril Barden,

Michael Doran and Martin Doran and (2) the Bank in respect of Folio 21830 Co. Wexford and Folio 759F

Co. Wexford together with ALL THAT AND THOSE the part of the lands at Mauritius Town, contained

two roves and fourteen purches or thereabouts, statute measure, situate in the town land of Mauritius

Town, part of Rosslare, Co. Wexford as more particularly delineated and described on the plan or map

attached to indenture of conveyance dated 29th day of February 1988 made between the Fishguard

and Rosslare Railways and Harbours Commission on the one part and John E. Synnott of the other

part.”

4.6. It is clear that what is sought is a direction to the effect that Ulster Bank has not released its security over the lands at

Clearwater Cove arising under a number of documents but including the assignment of the building licence to which reference has just

been made.

4.7. The substance of the position maintained on behalf of Mr. Fortune and Mr. Barden, both in correspondence prior to the Receiver

seeking a direction in that form, and at the hearing both before the High Court and on appeal in this Court, is that, as a result of the

arrangements entered into in the earlier part of 2009, Mr. Barden and Mr. Fortune are entitled to sell the three specified houses for

their own benefit. In order for that to be so, it would follow that, not only would Ulster Bank’s security over those lands, held as a

result of the Deed of Mortgage and Charge between Richmond and Ulster Bank, require to have been released, but the interest of

Ulster Bank in the licence given to Ellen by Richmond would also have to have been released. If that latter interest were not released

then, of course, Ellen would be entitled to all of the sale price other than the site fine. It follows that, in order for the position

asserted by Mr. Fortune and Mr. Barden to be correct, a court would have to be satisfied, amongst other things, that the interest of

Ellen in the three specified houses had also been released through an agreement on the part of Ulster Bank and Ellen, for, in the

absence of such an arrangement, Mr. Fortune and Mr. Barden would not be able to sell the houses for their own benefit.

4.8. It follows that an essential issue arising on the specific dispute between the parties is as to whether Ellen’s interest under the

licence in the three specified houses was released as part of the arrangements entered into, for in the absence of such a release the

position asserted on behalf of Mr. Fortune and Mr. Barden could not be correct. It follows, in turn, that the directions sought by the

Receiver concern the interests of Ellen in the lands and not just the interest of Ulster Bank, for Ulster Bank’s interest in the licence

agreement could only subsist as long as Ellen’s interest in that licence agreement also continued to subsist. Likewise, clearing Ulster

Bank’s direct mortgage over the lands would not be sufficient to establish the entitlement which Mr. Fortune and Mr. Barden asserted,

for there would remain Ellen’s interest on foot of the licence agreement and Ulster Bank’s security, by way of assignment, over that

interest of Ellen. A central feature in the position which had to be adopted on behalf of Mr. Fortune and Mr. Barden was, therefore,

that Ellen’s interest, by way of the licence agreement, in the three specified houses, had disappeared. That assertion clearly involves

a direct question concerning the property interests of Ellen and is, on that basis, in my view, clearly within the scope of the type of

application which can properly be brought under s. 316.

4.9. I would, therefore, reject the assertion made on behalf of Mr. Fortune and Mr. Barden that the directions sought on behalf of the

Receiver are outside the scope of the type of application properly brought under s. 316. It follows that it is necessary to turn to the

substantive issue.

5. The Substantive Issue

5.1. As already indicated, there was, immediately before any discussions took place in the early part of 2009, a series of interlocking

relationships between the parties. Richmond and Ellen had their own relationship principally governed by the licence agreement. Both

parties had a separate lending relationship with Ulster Bank. As already noted, Ulster Bank had security for those lending relationships

including, in particular, a mortgage over the lands at Clearwater Cove from Richmond and an assignment by way of security from Ellen

of its interest in those lands by way of the licence. Furthermore, Richmond had guaranteed Ellen’s liabilities.

5.2. The case made in evidence before the High Court on behalf of Mr. Fortune and Mr. Barden suggested that they had become

involved in discussions with Ellen with a view to seeking the complete release of three houses (then not, perhaps, particularly

specified) in return for which, it was said, Mr. Fortune and Mr. Barden would agree that Richmond would not be any longer entitled to

receive site fines in respect of the sale of any of the remaining properties. The underlying commercial arrangement, on the case made

by Mr. Fortune and Mr. Barden, was that the ability of Ellen to obtain the full purchase price from the remaining nine properties was

seen to be of considerable assistance to Ellen in putting forward a viable survival scenario. Clearly both Michael and Martin Doran had

a significant interest in securing Ellen’s survival and might well, in that context, have been happy to waive their portion of any site

fine in their capacity as partners in Richmond. However, as already noted, Mr. Fortune and Mr. Barden only had an indirect interest in

the survival of Ellen and, from their perspective, getting three houses clear for their own benefit was seen as the quid pro quo for

waiving Richmond’s entitlement to a site fine. It is, perhaps, worthy of some note that the value of the site fines on the twelve

houses which remained unsold at the time in question would appear to have been of the order of €1.944 million, so that Mr. Fortune

and Mr. Barden’s interest in those site fines would appear to have had a value of €972,000. On the other hand, it would seem that

the perceived value of the houses around that time was something of the order of €300,000 or a little less so that three houses would

be likely to have had a value somewhat under €900,000.

5.3. There is a further complication which needs to be noted which concerns the banking arrangements entered into between Ellen

and Ulster Bank. Those arrangements required that Ellen repay the monies borrowed for Clearwater Cove by way of site fine to Ulster

Bank. This arrangement was varied from time to time in respect of the fine amount and the number of sites to which it was applicable.

The site fine appears to have varied between €135,000 and €274,105 per unit. However, given that a site fine of €162,000 also

needed to be paid to Richmond by Ellen, it is hard to see how all of the legal obligations of the parties could have been met by a sale

at the sort of prices likely to be secured at that time. A sale at or around €300,000 would be likely to produce net proceeds of

somewhat less which just is not enough to meet the Richmond site fine (without which Richmond could, strictly speaking, refuse to

close the sale) and Ellen’s obligations to Ulster Bank.

5.4. Be all that as it may, Mr. Barden’s evidence was that he entered into an arrangement with Mr. Sheeran to the effect that the

site fines would be waived in respect of nine properties provided that a release could be secured in respect of the remaining three. It

was accepted that such an arrangement would necessarily require the agreement of Ulster Bank for, for the reasons already analysed,

the properties could not be released in such a way that Mr. Fortune and Mr. Barden could sell them for their own benefit without

Ulster Bank’s agreement.

5.5. Thereafter, there were discussions between Mr. Sheeran and Mr. McIntyre which, according to the evidence, took place on the

20th January. There was no evidence to suggest that the question of the release of the site fines was discussed at that meeting less

still was the subject of any agreement. Mr. McIntyre gave affidavit evidence that, while he was aware that there were discussions

between Richmond and Ellen, he was unaware of the precise details. Mr. McIntyre also gave affidavit evidence that it was understood

between Mr. Sheeran and himself that the sum of €2 million (to which the indebtedness of Ellen was to be reduced) was to be

secured on the nine remaining units. As pointed out earlier, Mr. McIntyre was not cross-examined and thus his evidence was not in

any way challenged. Nor did Mr. McIntyre suggest in a second and replying affidavit that there was any discussion beyond the issues

identified in his first affidavit.

5.6. On that basis it seems to me that the trial judge had no option but to conclude that, on the facts, the arrangements entered

into between Mr. Sheeran and Mr. McIntyre were as asserted by Mr. McIntyre.

5.7. In any event, nothing further occurred of any materiality until Mr. Sheeran sent an email on the 27th March to Mr. McIntyre

asking for confirmation that Ulster Bank was “willing to release units numbers 10, 20 and 41 subject to our reducing the current work

in progress loan down to €2,100,000”. In a replying email of the 31st March, Mr. McIntyre referred to the fact that he had found his

notes of the earlier meeting. He said that the agreement was “to release three units if debt reduced to €2 million”. On the same day,

a hardcopy letter, in similar form, was written to Mr. Sheeran.

5.8. Mr. Barden gave evidence that he was not satisfied with that letter for two reasons. First, it was not a letter addressed to him

or Mr. Fortune. Second, it made reference to a telephone conversation and he was, he said, anxious that there be no element of

potential conditionality. Thereafter, a second letter was sent directly to Mr. Barden and to Mr. Fortune, on the 7th April, in the form

already referred to.

5.9. The High Court was, therefore, faced with a difficult situation. On the only available evidence, the actual agreement entered into

between Mr. Sheeran and Mr. McIntyre on behalf of Ulster Bank was the agreement now asserted by Ulster Bank. On the other hand,

Ulster Bank did write a letter to Mr. Barden which specifies arrangements which are consistent with the agreement which Mr. Fortune

and Mr. Barden now allege governed the legal relationships between the parties. As a result of those conflicting elements, it is

necessary to analyse with some precision the legal consequences.

5.10. There are two possible ways of looking at any potential legally binding arrangements that may have been entered into at that

time. First, it might be considered that there could have been a three way agreement whereby Richmond, Ellen and Ulster Bank all

agreed to vary their legal arrangements in some specified way. Alternatively, it might be possible to view the situation as one in which

there was an agreement between Richmond and Ellen to the effect that, if Ellen could procure the release of any security interest

held by Ulster Bank on three properties, Richmond would cede its entitlement to a site fine in respect of the remaining nine properties

in return for Mr. Fortune and Mr. Barden obtaining a release of any interest which either Ellen or Ulster Bank might have in the three

properties.

5.11. Against that background, it is necessary to look at the letter of the 7th April. The case made on behalf of Mr. Fortune and Mr.

Barden is, as has been pointed out, straightforward. It is noted that the letter does not suggest that there is any condition attaching

to the reduction of the indebtedness of Ellen to €2 million which required that reduction not to arise out of the sale of the nine

remaining properties. The argument presented on behalf of Mr. Fortune and Mr. Barden was that that letter represented a clear and

unambiguous agreement which should be interpreted as binding the parties to its terms. However, it seems to me that the problem

with that argument is that, on any view, the letter does not encompass all of the terms agreed. Unless Ulster Bank was getting

something in return, then there was no consideration for Ulster Bank’s release of security. It was for that reason that it was essential,

from the point of view of Mr. Fortune and Mr. Barden, that the overall agreement involved a release by Richmond of its entitlement to

obtain a site fine on the sale of the remaining nine properties because that release would operate both for the benefit of Ellen (who

would get the full purchase price) and Ulster Bank (who would have a much better chance of having Ellen’s indebtedness cleared). But

there is no mention of any arrangement concerning the release of site fines in the letter of the 7th April or, indeed, in any other

contemporaneous documentation whether emanating from Ulster Bank, Ellen or, most importantly, Richmond or Mr. Fortune and Mr.

Barden.

5.12. It is clear, therefore, that the letter of the 7th April cannot, on any view, encompass the entire arrangements between the

parties, whether they are viewed as tripartite or interlocking two party arrangements. The letter does not specify the agreement

which Mr. Fortune and Mr. Barden assert was in place. Neither does the letter specify fully the agreement which Ulster Bank says was

in place. Both sides are required to go behind the terms of the letter in order to specify the full extent of the arrangements which

they assert were in place.

5.13. It seems to me to follow that Mr. Fortune and Mr. Barden cannot simply rely on the terms of the letter as encompassing the

entirety of the arrangements between the parties for it does not encompass such full terms even on their own case. On their case

they have to go behind the letter.

5.14. Given that it is not possible, therefore, to rely on the letter as encompassing the full terms of the arrangements between the

parties, it is necessary to have regard to the discussions between Mr. McIntyre and Mr. Sheeran. On the basis of the only available

evidence as to those discussions (which went unchallenged), the only agreement which Ulster Bank entered into was one on the

terms it asserts. Given that it is necessary to go behind the letter, then, the Court is faced with one of two scenarios. On one view

there might be no true agreement in any event. That could be so either because, if viewed as a tripartite arrangement, the three

parties were never ad idem or, if viewed as a set of interlocking two party agreements, Ellen never secured the type of release which

it was required to secure in order to complete its specific arrangement with Mr. Fortune and Mr. Barden.

5.15. Alternatively, there might be an agreement between Ellen and Ulster Bank in the terms asserted by Mr. McIntyre but that

agreement never came into effect because a point was never reached where €2 million remained outstanding with the benefit of

security over nine properties.

5.16. None of those scenarios allows Mr. Fortune and Mr. Barden to assert that there was a legally binding arrangement which

required the release both of Ulster Bank’s security directly over the three relevant houses at Clearwater Cove and Ellen’s interest in

those lands through the licence arrangement coupled with Ulster Bank’s security over that licence arrangement. In order to achieve

that situation, it would be necessary for Mr. Fortune and Mr. Barden to establish that there was an agreement, whether tripartite or

arising out of a set of interlocking two party arrangements, which involved Ulster Bank releasing its two interests in the three

specified houses at Clearwater Cove and allowing Ellen to release its interest in the relevant properties, in return for a waiver of

Richmond’s entitlement to site fees on the remaining properties. There is no written agreement to that effect. There is no evidence of

any oral agreement by Ulster Bank to such an arrangement. There is, therefore, just no evidence on which the High Court could have

concluded that such an arrangement was put in place in a manner which bound Ulster Bank. For those reasons it seems to me that

the trial judge was correct in his conclusions.

5.17. It should, however, be noted that, as suggested at the very beginning of this judgment, much of the difficulty in this case

stems from the fact that a letter was written on behalf of Ulster Bank which, on Ulster Bank’s own case, does not represent a

complete account of the arrangements entered into. It is particularly unfortunate (but sadly far from unusual in recent times) that

this should be so. That this litigation has ensued is, in my view, in no small part due to the failure of Ulster Bank to clearly specify the

precise terms of any arrangement which, on its view, had been agreed. That is all the more important where the letter was addressed

to someone who was not present at the negotiations.

5.18. Indeed, I would go so far as to suggest that, if the letter of the 7th April had made reference to the fact that the benefit to

both Ellen and, in particular, Ulster Bank, from the arrangement was to be a waiver by Richmond of the site fines on the remaining

nine properties, the result of this case might well have been different. In those circumstances, the letter would encompass the entire

terms of the agreement said to have been entered into by Mr. Fortune and Mr. Barden. That would then have placed a heavy onus on

Ulster Bank in seeking to go behind an arrangement which it had, apparently, signed up to in the form of that letter.

5.18. Finally, it should be noted that the only case made on behalf of Mr. Fortune and Mr. Barden was one in contract. No suggestion

of promissory estoppel was sought to be relied on in argument.

6. Conclusions

6.1. For those reasons I am satisfied that the High Court had jurisdiction to entertain the issues which arise in these proceedings and

on this appeal in an application for directions under s. 316 of the Companies Act 1963.

6.2. I am also satisfied that the trial judge was correct in concluding that there was no established agreement such as bound either

Ellen or Ulster Bank to release their interest in the three houses, the subject matter of the application.

6.3. For those reasons I would dismiss the appeal and affirm the order of the trial judge.