IEHC 82 — IEHC 82 — High Court

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, Ms. Bowen said in her evidence that although her email at 16:48p.m. appears,

in the chain of emails to be a reply only to Mr. Kelly's email of 16:09p.m., she had in the

meantime seen Mr. Kelly's email of 16:39p.m. She does not expressly refer to the second of

Mr. Kelly's emails.

146. Secondly, no reply was sent to Ms Bowen's email of 16:48p.m.

147. Thirdly, Mr. Kelly's second email was prompted by Mr. Roddy’s email of 16:32.

148. Fourthly, Mr. Roddy himself was not satisfied on the day that these emails were

sufficiently clear in their confirmation. By his email of 17:00 to Mr. Kelly he asked him to

explain what other conditions or queries were outstanding.

149. The Plaintiffs submit that although Mr. Kelly's email of 16:09p.m. referred to a number

of conditions remaining to be satisfied and which are being worked on, his second email stating

“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” constitutes the clear and unequivocal confirmation

required by Condition 5 of the Heads of Terms.

150. There was much exchange and submissions as to the adequacy or otherwise of Mr.

Kelly's emails. The Plaintiffs focus on the second email “I have been asked to reaffirm”.

151. Condition 5 of the Heads of Terms required BOS 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”. Neither of Mr. Kelly’s emails is such a confirmation. The first, 44

whilst positive in its expression that it remains agreeable to the settlement, refers to agreement

“in principle” and the approval being “predicated upon satisfaction of a number of conditions”,

which are not described. It continues by referring to delays regarding title documents. The

second, contains the statement by Mr. Kelly. “I have been asked to reaffirm….”. That statement

is a statement that he has been asked to confirm. It is not a confirmation in the terms required

by Precondition 5.

152. It is clear from the BOS letter of 15 May 2013, and becomes even clearer when one

looks at the draft BOS Deed of Settlement which first became available to the Defendant on 9

January 2014 that BOS at all times was reserving its position as to potential further recourse if

conditions were not satisfied and depending on how unencumbered assets were being treated.

153. This conclusion derives not only from the plain wording of Mr. Kelly's emails to the

Defendant on 6 December 2013. On that same day at 17:31p.m. Mr. Kelly emailed Mr. Roddy

and Mr. O'Connor, copying his own colleague Mr. McKiernan in which he expressed

disappointment that the process had been “fragmented and drawn out”. He referred to delays

in relation to the production of title deeds by solicitors and he stated:

“I want to go through each issue again to make sure that everything is ticked off to our

satisfaction as I am not entirely comfortable that that is yet the case.

I have been very disappointed that getting clarity on how AIB is intending to structure

its offer has taken so long to clarify and at no stage have I felt that we have been

presented with the full picture.

Frankly I still consider this to be the case and cannot understand why we cannot be

told exactly what AIB is being provided with to secure its facilities.”

154. This email was issued by Mr. Kelly after he had sent his two emails to Ms.

Bowen. These were not the words of a person who believed he had given the unconditional 45

confirmation Condition Five required. It goes some way to explaining why his earlier emails

to the Defendant were not in unconditional terms.

155. Mr. Roddy's description of the exchanges and his intention to convey that the BOS

refinance was being secured only by the BOSI existing security is revealed by an email which

he sent to Mr. Kelly at 18:28p.m. that same evening where he stated “I fully understand your

points raised and accept that things could and should be clearer. Even today with the threat of

withdrawal of facilities from AIB we still had not received AIB's restructuring facility details5,

only today did they confirm the security being sought for the BOSI refinance, which clearly

only extends to the BOSI existing security. The issue of restructuring facility seems to be were

(sic) the confusion is and if both are linked. We are also being subject to NDA’s with AIB and

BOSI and this has not helped.”

156. In fact in the Heads of Terms the refinance and the restructure are entirely interlinked,

because Loan 1 for €13.415m was for both. This may have caused, or been used, to generate

confusion, which could have been avoided if each bank had been shown the others terms. The

consequence of all this is that the confirmation required by Condition 5 was not forthcoming.

157. In the same email Mr. Roddy stated to Mr. Kelly “I have advised them of the issues,

High Court Order and other banks exposures etc. and they have been slow to put us in the full

picture is how it affects them”. The evidence is that while the Defendant was aware of the first

Plaintiff’s obligations pursuant to a Settlement no reference had by that time been made to a

court order, much less one which could, as portrayed to BOS, limit the Dormers’ capacity to

grant charges over unencumbered assets.

Absence of a deadline for Condition 5

158. When the Area Credit Committee approved the issue of the Heads of Terms on 7

October 2013 it did so on the basis that the Heads of Terms would outline that the BOS

5 He makes no mention here of the Heads of Terms document. 46

confirmation would be required to be given within one month of the approval. That deadline

was never conveyed to the Plaintiffs. Therefore, when the Defendant, having pressed

repeatedly for the BOS Letter, heightened the pressure for it in the week commencing 2

December 2013, and on 5 December 2013 warned the Plaintiffs that in the absence of receiving

the required confirmation it would withdraw its proposal and take action to protect its position,

this ultimatum came suddenly. But the Condition remained unsatisfied, two months after the

Heads of Terms, and the Defendant had become concerned that the BOS confirmation was not

forthcoming, all of which prompted the ultimatum, in response to which the required

confirmation was still not provided.

159. Later in this judgment (Part Ten) I consider the claim for specific performance of the

Heads of Terms. My conclusion on that subject is that the Heads of Terms were not a binding

and enforceable agreement on the part of the Defendant susceptible to enforcement by the

remedy of specific performance. It was a statement of the commercial terms on which the

Defendant stated its willingness to refinance and restructure, and of the conditions precedent

to any Offer Letter. When the Defendant found that after numerous requests, both before and

after 8 October 2013, it had still not received the required confirmation of settlement from

BOS, the Defendant was entitled to withdraw the proposal. The failure to notify a one month

deadline did not cure the Plaintiffs’ failure to comply with Condition Five as it was stated to

them and in the events which occurred the one month deadline was not invoked or applied.

The payment demands

160. In the afternoon of 6 December 2013 the Defendant served demands on the Plaintiffs

for repayment of the full amount stated to be due, being a total of €17,663,876.36.

161. The demand letters referenced the Facility Letters of 1 October 2012, which provided

for repayment on demand, and without prejudice to the right of demand, for review by 31

March 2013. 47

162. The demand notified the Plaintiffs that payment should be made by 2p.m. on the

following Monday, 9 December 2013 (erroneously referred to as 2103), and warned that in the

event that the balance was not discharged within that time the Defendant would have no option

but to take steps to secure the amounts owing to it.

163. The letter referred also to the discussions between the Defendant and Mr. Roddy in

relation to the review of the facility including the discussions for a refinance and

restructuring. The letter referred to the Heads of Terms and Condition 5 specifying the

requirement that BOS provide written confirmation of the terms of settlement entered into and

noted that this confirmation had not been forthcoming. Reference is also made to the

“continued absence of receiving the letter of confirmation from Bank of Scotland” and stated

that “the Bank is now obliged to formally withdraw its offer to refinance and restructure your

existing facilities”.

164. On the morning of 9 December 2013 Mr. Conneely sent an email to Mr. Kelly, copied

to Mr. Roddy and others, by way of follow-up to Ms. Bowen’s email of Friday evening 6

December 2013 at 16.47 informing him that Ms. Bowen was out of the office on that day and

that if he was replying he should do so to Mr. Conneely’s address. Mr. Kelly did not reply. Mr

Roddy replied enquiring if Mr. Conneely had seen Mr. Kelly’s second email of 6 December,

which he had.

165. On 9 December 2013, the Defendant issued the Summary Summons claiming the

amount demanded namely €17.6 million.

Events after issue of Summary Summons

166. Following the issue of and service of the Summary Summons two streams of activity

continued. The summary proceedings were advanced and entered into the Commercial List of

this court. Affidavits were exchanged and the application for summary judgment was listed for

hearing on 30 January 2014. The parties continued to engage, principally through solicitors, as 48

to the refinance and restructuring. I shall return later to the substance of the summary

proceedings and affidavits exchanged. Although there was undoubtedly a new “tension” in the

relationship the parties continued to work towards a consensual restructuring.

167. On 9 December 2013 Messrs Forde wrote to Messrs O'Connor referring again to

Condition 5 of the Heads of Terms and the requirement for written confirmation from BOS

that the refinance would be in full and final settlement of all liabilities of BOS and that BOS

would have no further recourse to their clients. They invited production of such a letter as a

matter of urgency. They also informed Messrs O'Connor that the Defendant had issued formal

demands for repayment of the loan facilities and reserved its position.

168. On 10 December 2013 Messrs Forde wrote again to Messrs O'Connor informing them

as a matter of courtesy that in the absence of having received the required confirmation from

Bank of Scotland proceedings had been issued “to secure your client's outstanding liabilities to

AIB” and that those proceedings were listed before the Commercial Court on Monday, 16

December 2013. Messrs. Forde concluded by stating “we confirm that our clients remain open

to resolving the matters before next Monday and have no difficulty in meeting with your client

and their advisers with a view to resolving the outstanding issues”.

169. Later on 9 December 2013 Mr. Roddy emailed Mr. Kelly and copied Mr. Conneely

referring to various matters and the status of the BOS “sanctioned offer” and he stated “finally

I am advising that my clients have complied as of Friday, 6 December 2013 with all conditions

precedent for the sanctioned offer of facilities from AIB for the refinance of BOSI €3.25 million

and the restructure of AIB loan facilities”

170. In a further email on 10 December 2013 Mr. Roddy emailed Mr. McKiernan and Mr.

Kelly of BOS seeking to move matters forward and stating among other things:

“AIB are anxious to conclude sign off on formalised Offer Letters with their reporting

deadlines by next week. Prior to this they require to know if settlement is ‘only an 49

agreement in principle’ or a sanction letter and that all outstanding items save only for

the payment of €3.25 million has been finalised by us.

I apologise for the urgency but AIB have been putting us under severe pressure due to

their own committee reporting deadlines and if we miss the opportunity it may be lost”.

171. Mr. Roddy did not inform BOS that the Defendant had by this time issued and served

proceedings in the High Court for recovery of €17.6 million. In reply Mr. Kelly stated that he

was out of his office in that week and stated, “there may not be much left to do but I just need

to go through it all one last time with Declan”.

172. On 10 December 2013 Messrs John B O'Connor wrote to BOS in the following terms:

“We append to this letter a schedule of various properties which our mutual clients own.

Following the refinance with Allied Irish Banks, we confirm that all of the properties

will be subject to mortgages in favour of the following financial institutions: –

• Allied Irish Banks

• KBC Ireland

• Permanent TSB.

We understand that you are aware of the liability in the sum of €X to AB pursuant to

the terms of the relevant court orders. Insofar as AIB are taking further security, they're

doing so on notice, and subject at all times to the relevant court orders.”

173. Mr. O'Connor requested again a letter from BOS containing confirmation of its terms.

174. Attached to this letter was a schedule of the properties owned by the Plaintiffs. 22

separate properties are referred to in that schedule. Against each of them a lender is named and

referenced as the “lender post finance and restructure”. The schedule describes all of the assets,

including previously unencumbered assets showing that they will be charged in favour of AIB,

PTSB and KBC. Reference is made to seven houses at Parson Street, Maynooth, which

according to this schedule were previously charged in favour of PTSB and post restructure 50

would still be charged in favour of PTSB. In fact the Heads of Terms required that the six

houses at Parson Street would be charged to AIB.

175. A second noteworthy feature of this letter is the statement that the Defendant in taking

security were doing so “on notice, and subject at all times to the relevant court orders” being

orders relating to the Settlement. At the time of this letter the Defendant was not aware of the

existence of any such orders, and these only came to its attention in January 2014.

176. On 13 December 2013 Mr. Kelly replied to Mr. O'Connor's letter. He confirmed that

he was “pleased to receive your confirmation regarding the unencumbered assets that will form

part of AIB's proposed package of facilities covering not only the refinance of the BOS/BOSI

debts but also the broader AIB position.”

177. He continued:

“You will appreciate that the scale of the loss envisaged by BOS in agreeing to the

settlement of this debt is material and that our diligence requirements have had to be

satisfied accordingly.

The deal as structured envisages full and final settlement of the debt at €3.25 million

and that remains the case. We now wish to proceed to completion of this matter”.

178. This was the first occasion on which confirmation was obtained of BOS being aware

that unencumbered assets were being charged in favour of the Defendant, although insofar as

this awareness derives from Mr. O'Connor's letter of 12 December 2013 the schedule to that

letter envisages the six houses at Parson Street all being charged in favour of PTSB and not

AIB.

179. On 13 December 2013 Mr. O'Connor wrote to Messrs Forde enclosing an Appearance

and a replying affidavit sworn by Mr. Dormer. Mr. O'Connor called on AIB to discontinue the

proceedings, a request which was declined. 51

180. Mr. Kelly's email of 13 December 2013 was forwarded to AC Forde that evening who

replied as follows:

“We confirm that our client has reviewed the email. We have been instructed to advise

you that the Bank is of the view that the email which is marked 'without prejudice' does

not advance matters in that:

(i) it simply envisages a full and final settlement of the Bank of Scotland debt.

(ii) it fails to confirm that the settlement is agreed.

(iii) it does not confirm that the conditions attaching to the settlement have been met.

(iv) it seeks to reserve the Bank’s rights regarding the proposed settlement.

As you will be aware from our letter dated 9 December 2013 our client required a letter

of confirmation from Bank of Scotland that it will accept €3.25 million in full and final

settlement of your client's liabilities and all conditions attaching to this agreement have

been satisfied.

As this confirmation has not been provided we have been instructed to proceed with the

Bank’s application listed for hearing in the Commercial Court on Monday next.”

181. The contents of this letter were the subject of great controversy. Mr. Roddy said in his

evidence that he believed that this letter contained a series of conditions which were entirely

new to the requirements of AIB. In particular he said that the requirement for confirmation that

all conditions attaching to the agreement with BOS had been satisfied was new. He was unable

in his evidence to address the points (ii), (iii) and (iv) identified above, other than to state his

belief that the emails of 6 December 2013 contained the necessary confirmation.

182. On 16 December 2013 at 9:16a.m. Mr. Roddy acknowledged Mr. Fraser's email of

Friday, 13 December 2013. He stated “thanks for letter to John O'Connor, hopefully this will

keep AIB happy”. It is unclear whether Mr. Roddy at that point had seen the letter from Messrs 52

AC Forde written on the evening of 13 December 2013 stating that they were not satisfied with

the terms of Mr Kelly's email. He continued “I am going into a meeting this morning to move

things forward, i.e. to get formal letters of offer out from AIB”. Mr. Roddy did not state that

the “meeting” he was attending was at the Four Courts when the Bank’s application for

summary judgment was listed for hearing.

PART FIVE: JANUARY 2014

183. Throughout January the engagement between the parties continued, largely in this

phase between solicitors.

184. On 9 January 2014 John B. O'Connor & Company sent to AC Forde & Company a

copy of a draft Settlement Agreement, described as a Deed of Settlement, which he had

received that day from McCann FitzGerald Solicitors acting for BOS. I refer to this document

as the “BOS Deed”, or “the Deed”.

185. By the Deed the Dormers would acknowledge liability to BOS for a total sum of

€12,115,297.47. The Deed provided that payment of an amount of €3.25 million and

compliance with all the terms of the Deed would constitute full and final settlement of the

Dormers’ obligations to BOS.

186. Messrs AC Forde replied the next day with a number of queries, including an enquiry

as to how it was intended to address a representation contained in Clause 5 of the Deed to the

effect that there were no legal proceedings or other step in being by way of enforcement of

security, having regard to the pending proceedings before this Court. AC Forde also requested

a copy of the Statement of Affairs provided to BOS, and referenced in Clause 6. Clause 6

contained a covenant to the effect that if BOS became aware of any material errors in the

Statement of Affairs or omissions the settlement would not apply and BOS would be permitted

to pursue the Dormers in respect of any omitted assets. 53

187. Messrs O'Connor replied to the effect that the representation relating to litigation could

be dealt with once the matter was resolved and the pending litigation would be discontinued,

and stated that the matter of furnishing a copy of the BOS Statement of Affairs was a matter

“to be decided on by BOS”. The Statement of Affairs was provided on 23 January 2014.

188. On 16 January 2014 Messrs AC Forde replied, noting with surprise the reference by

him to court orders, of which it had been said by Mr. O'Connor that the Defendant was on

notice. They also stated that the Bank was not in a position to discontinue the proceedings.

189. Following several further exchanges between Messrs John B O'Connor & Company

and AC Forde no conclusion was achieved in advance of the hearing of the application for

summary judgment listed for 30 January 2014.

14 January 2014 - Team paper to Area Credit Committee (“the January Paper”)

17 January 2014: Decision of the Area Credit Committee (“the January Decision”)

190. A central ground of the claim in these proceedings is that, in the course of the settlement

discussions on 30 January 2014 the Dormers were not informed that on 14 January 2014 the

Team had made a report and recommendation to the Area Credit Committee of the Bank or

that on 17 January 2014, the Area Credit Committee had made a decision approving the

recommendation.

191. By its decision on 17 January 2014 the Area Credit Committee granted an approval “as

sought” subject to four particular matters to which I refer later. It also decided that “failing a

satisfactory conclusion of the above, the committee agree to progress with summary judgment

proceedings currently scheduled for the 30th January”.

192. The Team paper to the Credit Committee dated 14 January 2014 is described as follows

“Credit Committee ACC – Date of Paper: 14 January 2014 – Addendum to Markup 7 October

2013”. In the introduction the paper is described as “Addendum to seek approval to issue Offer

Letters and update ACC on Special Conditions Precedent to Offer Letters including”. 54

Reference is made to the original five requirements which were identified in the October Heads

of Terms as Conditions Precedent, namely the provision of professional valuations,

confirmations relating to tax confirmation of agreement as to the asset disposal strategy, copies

of PTSB and KBC Facility Letters and the Condition Five which had become so important in

December namely “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.”

193. Under the heading “Sought" seven bullet points are made, some of which are significant

in the context of issues now in the case.

“1. Approval of up-to-date professional valuations on existing security and proposed

new security.

2. Amendments to proposed loan notes, as detailed below, based on professional

valuations.

3. Noting the clients have not provided BOSI confirmation that refinance will be in

full and final settlement of their outstanding debt and they will have no further

recourse to clients within stipulated one month timeframe. Due to clients inability

to fulfil this condition team commenced summary judgment

proceedings. (Emphasis added).

4. Permission to issue Facility Letters subject to receipt of completed capital

Settlement Deed signed by Bank of Scotland and client, substantially in the terms

of the draft document provided (attached).

5. Approval to write back provision of €2.744 million (Capital 2.734 million)

following drawdown of fundamental restructure of AIB facilities and refinance of

BOSI.

6. New Special Condition to stipulate ‘Bank to engage asset manager to oversee the

rent and sale of all assets’. New condition as recommended following recent 55

Commercial Court interaction with clients whereby they have misrepresented

dealings with AIB on a number of occasions. (Emphasis added).

7. New Special Condition to stipulate ‘Client to appoint alternative financial adviser

to the satisfaction of the Bank’ as we are not prepared to deal further with Aidan

Roddy.” (Emphasis added).

194. A number of features of these seven points are significant.

195. Firstly, in para. no. 3 reference is made to a requirement for the BOS confirmation letter

“within stipulated one month timeframe”. Although the Area Credit Committee had stipulated

a time limit when authorising the issue of the Heads of Terms, no one month time limit was

communicated to the Dormers. The condition had not been fulfilled when the Bank withdrew

the Heads of Terms in December, or at the time of this Paper. Nonetheless the Team were not

recommending that the failure to deliver the BOS confirmation letter within such a one month

timeframe would preclude the resolution of the matter on a consensual basis. That is evident

from Point No. 4.

196. Point No. 5 five relates to “write back provisions” and was an internal Bank matter.

197. Secondly, two “New Special Conditions”, which relate to the requirement to appoint

an asset manager and a stipulation that an alternative financial adviser satisfactory to the Bank,

to replace Mr. Roddy, be appointed, are said by the Plaintiffs to be significant in that they

conveyed to the Area Credit Committee a negative view on the part of the Team of the Plaintiffs

and Mr. Roddy. This is one of the reasons why it is said by the Plaintiffs that the proposal

ultimately put to the Committee in February, pursuant to Clause 5(3) of the Settlement

Agreement of 30 January 2014, was “bound to fail” and therefore that the Clause 5(3)

commitment to recommend a proposal was ‘hollow’.

198. The Team members Mr. Conneely and Mr. Bowen each gave evidence that the paper

to the Area Credit Committee on 14 January 2014 was an update on the case, having regard to 56

developments since the issue of the October Heads of Terms. They said that insofar as they

were continuing their engagement with the Plaintiffs after the withdrawal of the Heads of

Terms and the issue and service of High Court proceedings, they were anxious to ensure that

they had continuing authority to do so. They said, and the record verifies this, that the matter

was still evolving, and there was still an opportunity before the next court date, to achieve a

consensual solution which would generate a return for the Bank better than through the court

route.

199. Mr. Conneely and Ms. Bowen explained that by the time the parties were negotiating

at the Four Courts on 30 January 2014, neither of these two “New Special Conditions” were

being regarded as preconditions to the issue of facilities. They said that the requirement for

the appointment of an asset manager may have formed a stipulation or condition in a new

facility letter if such a letter ever issued. They said that the stipulation regarding the

appointment of an alternate financial adviser in replacement of Mr. Roddy was not a stipulation

which would have found itself into a facility letter as a condition. Instead the Team would

have called the Plaintiffs to a meeting and explained their difficulty in dealing with Mr.

Roddy. They added that any restriction on dealing with Mr. Roddy would not have prohibited

the Plaintiffs from retaining him as their consultant. It would mean only that the Defendant

was not willing to communicate or negotiate through him.

200. The two “New Special Conditions" are not in the Paper recommend as intended

“Conditions Precedent” to the issue of facility letters. This is consistent with the Team

members’ explanations in their evidence that these were matters which could later be addressed

to the extent necessary if new facility letters were ever issued.

201. The Plaintiffs’ complaint is that whatever their status, these references and others, were

communications of such negativity that the application to the Credit Committee after the

Settlement of 30 January 2014 was ‘bound to fail’. 57

202. The core of the complaint made by the Plaintiffs is that if they had known on 30 January

2014 that such negative comments were being made in such a report they would have been in

a position to make an informed decision as to whether to enter into a settlement agreement

which left them exposed to the “whim” of an Area Credit Committee which was already in

receipt of such negative reporting.

203. In a later paragraph 5 of the paper reference is made to the absence of a satisfactory

confirmation letter from BOS. The report continues:

“Given clients’ inability to fulfil this condition precedent and following a request from

their accountant, Aidan Roddy, to provide written confirmation to BOSI confirming

AIB's refinance of the BOSI facilities would be secured by BOSI security only, team

commenced enforcement proceedings. Basis of strategy to enforce was team believed

clients did not have the full BOSI approval which they had advised, and team are

cognisant that BOSI could commence enforcement and obtain first judgment mortgage

over and encumbered property portfolio. Case has been accepted by the Commercial

Court however due to responding affidavits, the hearing date was deferred to 30

January 2014.

Whilst enforcement proceedings have commenced team are endeavouring to complete

the refinance consensually if clients can fulfil terms of sanction. Clients appear to be

working towards a consensual solution, however have sworn two affidavits that are not

true, including confirming 2013 Offer Letters were accepted and returned to the Bank

and advising the court that Aidan Roddy's request that AIB misrepresent our approval

to BOSI was never made. Team will continue to progress legal proceedings until

clients satisfy all conditions precedent in full. Given clients willingness to misrepresent

themselves under affidavit team are conscious that any consensual refinance and

restructure will need to be tightly managed and are now recommending the engagement 58

of an asset manager to oversee the letting and selling of properties. Our overall

recommendation to proceed in these difficult circumstances is based on the significant

commercial benefit to AIB of completing the refinance outweighing the return from

enforcement action. A comparison of AIB's position by completing the consensual

workout to continuing enforcement is as follows”. (Emphasis added).

204. There then follows an analysis of the refinance and restructuring and description of the

potential outcome by contrast to continuing only with enforcement proceedings. The report

then contains a “Conclusion/Recommendation” as follows:

• The series of events over the past number of weeks is disconcerting in many ways

and it is unusual in the extreme for team to recommend additional funding being

made available to any clients in these circumstances. However the financial benefit

in concluding the refinance and restructure substantially reduces our provision

across the connection. (Emphasis added).

• In supporting such a recommendation, team are fully aware that a high degree of

monitoring will be required in light of clients ability to submit inaccurate

information by affidavit. As a result in part, we are recommending that an asset

manager be appointed to oversee collection of rents and payment of expenses with

tight timelines to be put in place with regard to the provision of monthly information

in this regard.

• In addition given client adviser has also submitted inaccurate information through

affidavit, we are not prepared to deal with him in the future and require an

alternative financial adviser to be appointed by client.

• Team are recommending pursuing consensual workout and are seeking permission

to issue Facility Letters subject to satisfactory confirmation of €3.25 million BOSI

refinance being in full and final settlement of clients liabilities to them. 59

• Team are recommending amendment of loan notes to reflect professional valuations

of related properties as follows: A Note – to reduce from €13.415 million to €12.601

million reflecting professional valuations, B Note to increase from €3 million to

€3.35 million and C Note [the part of the facility which would ultimately be forgiven

if all other terms and conditions were complied with] to increase from €4.512 million

to €4.976.

• Given satisfactory progress with conditions precedent and satisfactory valuation

reports team are recommending provision write back of €2.744 million (capital

€2.734 million) be booked following drawdown of restructured facilities.

• New Special Condition to stipulate bank to engage asset manager to oversee the rent

and sale of all assets. New condition is recommended following recent Commercial

Court interaction with clients whereby they have misrepresented dealings with AIB

on a number of occasions”.

205. The decision of the Area Credit Committee on 17 January 2014 is concise and provides

as follows:

“Decision

Approve as sought, subject to the below matters being addressed in the Settlement Deed

to be entered into by the Borrowers and Bank of Scotland, as follows:

• The Statement of Affairs dated 3 July 2013 referred to in clause 6.1 of the draft

Deed should be set out in an attaching Schedule to the Deed to ensure there is

full transparency and clear understanding between all parties.

• The Termination Date referred to in clause 2.2 of the draft Deed should be

extended to a future date which will enable AIB to conclude its preconditions

and therefore enable the drawdown of the Settlement Amount. 60

• The Borrowers will need to disclose the current litigation between themselves

and AIB so as they don't invalidate the representation and warranties required

under clause 5.1.

• The Borrowers to evidence that they are in funds to satisfy the second and third

Conditions Precedent as set out in the First Schedule of the draft Deed (those

conditions relate to the conduct of searches, payment of legal and other

professional fees, payments of interest and receipt of the settlement amount

itself in fully cleared funds).

Failing a satisfactory conclusion of the above, Committee agreed to progress with

summary judgment proceedings currently scheduled for the 30th January.”

206. Before moving to the next stage in the chronology the following important points arise

in relation to the recommendation to the Area Credit Committee of 14 January and its decision

of 17 January.

207. Firstly, the Report is made at a moment in time, when the two streams of litigation and

negotiation are active and many matters were developing at the same time as the report, and

after it.

208. Secondly, there can be no doubt on any reading of the recommendation that a reader

would form a negative opinion of the conduct of the Plaintiffs and of Mr. Roddy. That of itself

is unsurprising since the parties were now in full ‘combat’ in the summary proceedings.

209. Thirdly, the recommendation is clearly and strongly to proceed if possible with the

refinancing and restructuring.

210. Fourthly, the amounts of the loan notes envisaged under the Heads of Terms were in

need of updating to reflect professional valuations which had been obtained in the

meantime. This in turn led to an increase in the potential write-off of Facility 3 in the Heads

of Terms. 61

211. Fifthly, the Area Credit Committee approved the recommendation, with its own four

stipulations specific to the terms of the BOS Deed of Settlement and the related information

and schedules to that Deed.

212. Sixthly, the Plaintiffs say two things about this recommendation and decision. (A)

They say that the fact of a recommendation being made to the ACC in January and a decision

in January approving that recommendation was material, in an adverse way, to any prospect of

a favourable decision by the Area Credit Committee when it came to the application for

approval pursuant to Clauses 4 and 5(3) of the Settlement Agreement of 30 January 2014. They

say that these references were so negative as to render any recommendation pursuant to Clause

5(3) of the Settlement agreement “bound to fail”. (B) They say that since the recommendation

was to authorise the issue of facility letters, albeit facility letters which would be modified from

those originally contemplated by the October Heads of Terms, and since this recommendation

was accepted and approved, there was there and then, and without a requirement for any further

decisions, an authority for the issue of a facility letter for the refinance and restructuring and

therefore no necessity for Clause 4 or Clause 5(3)to be inserted in the Settlement Agreement.

213. A careful reading of the Team Paper shows that there was still much to be done before

a new facility letter would issue. New features of the transaction were being introduced as

matters evolved, which formed part of the Settlement Agreement formulated on 20 January

2014. I do not find that the Team can be faulted for requiring that on 30 January 2014 that the

Settlement Agreement include a provision requiring Bank agreement, as provided in Clause 4.

214. Seventhly, the Plaintiffs say that the concealment of the facts of this Recommendation

and Decision amounted to a misrepresentation and that they were deceived and induced by this

concealment to sign the Settlement Agreement, a fatal term of which from their perspective

transpired to be Clause 4. 62

215. The evidence of Mr. Conneely, Ms. Bowen and Mr. Morris was that before and after

17 January 2014 they all believed that it was possible to secure the agreement and

implementation of a consensual restructuring. They say that the context of the application to

the Area Credit Committee in the middle of January was to ensure, having regard to issues and

difficulties which had arisen from 5 December 2013 onwards, including of course the

commencement of summary proceedings which were being fully defended by the Plaintiffs,

was to ensure that the Team still had the authority to continue to pursue settlement

negotiations. They say that they at all times believed that it was still possible to achieve a

consensual outcome and that that in turn would deliver a better return for the Bank.

216. The Bank's witnesses say that any reading of the paper 14 January 2014 taken in its

entirety shows that the Team were determined to achieve a consensual restructuring if

possible. They refer in particular to the extensive analysis in that paper and comparison of the

potential outcomes contrasting the return for the Bank in a refinance and restructuring with the

potential return through enforcement proceedings, and the clear and strong recommendation

they made.

217. The parties, and their legal and other advisors, continued to work hard to achieve a

consensual transaction. This is evidenced by all of the communications which took place

between the Bank and the Dormers and their respective solicitors and financial advisers. New

information was being provided in January in relation to the first Plaintiff’s Settlement with

AB and in relation to the existence of extant charges of the Parson Street property. In the days

before, and after 30 January 2014, new proposals were being put by Mr. O’Connor to Messrs.

Forde regarding potential settlement with AB.

218. The Plaintiffs’ case on this subject however is that it does not matter what view is

objectively taken as to whether the paper of 14 January 2014 was negative or positive or what 63

ambitions the members of the Team had to implement the refinance and restructuring. They

say that the omission or ‘concealment’ of this internal Bank report and Decision was deceitful.

219. In all the controversy which followed later about the non disclosure of the January

Paper and Decision, sight should not be lost of the fact that the Paper was unequivocally

supportive of the refinance and restructuring and the Decision was positive and favourable to

the Plaintiffs. There is no reason to believe that if the Committee had on 17 January 2014

rejected the Team’s recommendation, the Bank would thereafter have followed any course

other than to pursue its application for judgment for the full amount of €17.6m claimed in the

summary proceedings.

After 17 January 2014

220. On 23 January 2014 Mr. O'Connor wrote to Messrs AC Forde enclosing a copy of the

BOS Deed of Settlement signed only by the Dormers.

221. Mr. O'Connor enclosed also copies of certain court orders relating to the first Plaintiff's

Settlement and a copy of the Statement of Affairs which had been provided to BOS on 3 July

2013.

222. It is said that this was the first occasion on which AIB were provided with a copy of

that Statement of Affairs, hence the Bank's complaint that it only at this very late stage

discovered a discrepancy between the Statement of Affairs provided to AIB and that provided

to BOS with reference in particular to the description of the houses at Parson Street as un-

encumbered in the AIB statement but encumbered in the BOS statement.

223. A number of further queries were raised by Messrs Forde relation to these documents.

224. On 29 January 2014 Mr. O'Connor wrote to Messrs Forde, this time in a letter stated to

be written without prejudice, updating AIB on a new proposal which was being formulated to

settle matters with AB. He informed the Bank that it was proposed that AB would waive any 64

further claims in return for either a transfer of a certain asset, or in lieu thereof a payment of

€X.

225. Mr. O'Connor stated that this proposal would require the Bank’s consent to the transfer

of the property or in the alternative that the Bank would finance the facility to make the

necessary cash payment.

PART SIX: THE SUMMARY PROCEEDINGS

226. The Summary Summons was issued on 9 December 2013 in which the Bank claimed

for judgment in a sum of €17,663,876.

227. The application for entry of the proceedings and for summary judgment was listed

before this court on 16 December 2013. On that day the proceedings were entered in the

Commercial List. The application for summary judgment was adjourned for hearing to 30

January 2014.

228. The Dormers resisted the application for summary judgment and sought leave to

defend. The principal issues raised by them are as follows. Firstly, that the Facility Letter of 1

October 2012 recited in the Bank’s demands had expired and been replaced by the Facility

Letter dated 11 June 2013. Secondly, that the amounts advanced by the June 2013 Facility were

not overdue for payment, and that the principal amount under Facility 2, being €17.49m, was

due only on 30 March 2014, when all the facilities were due for annual review. Thirdly, that

the Dormers had complied with all the Conditions Precedent in the October Heads of Terms,

and that the Heads of Terms were “a specifically enforceable agreement for the refinancing

and restructuring of our borrowings”.

229. The Bank rejected these assertions and claimed that there was no bona fide defence to

the claim. I am not deciding that case in this judgment. But the contents of the affidavits 65

exchanged before 30 January 2014 are important in the context of what occurred on 30 January

2014.

9 December 2013 Affidavit of Eamonn Conneely

230. The application was grounded on an affidavit sworn by Mr. Conneely on 9 December

2013. Mr. Conneely referred to the amounts advanced and to the Facility Letter of 1 October

2012.

231. Mr. Conneely referred also to the refinance and restructuring discussions and the

conditions identified in the October Heads of Terms. He said that the Heads of Terms were no

more than a statement of the basis upon which the Bank was prepared to enter into the refinance

and restructuring and issue, if the Conditions Precedent were met, to Offer Letters. No Offer

Letters ever issued. He referred to the events of December 2013 and stated that the Bank had

not received written confirmation from BOS of its willingness to accept €3.25 million in full

and final settlement of the Dormers’ liabilities to it. He said that the Bank had received from

BOS emails stating that BOS was prepared in principle to settle on the basis of a payment of

€3.25 million but that conditions applied the nature of which he said were not stated.

232. Mr. Conneely referred to the demands served on 6 December 2013 and confirmed his

belief that the sum of €17.6 billion remained due and owing to the Bank.

233. Mr. Conneely exhibited the Facility Letter of 1 October 2012 and the relevant

statements of the loan accounts.

13 December 2013 replying affidavit of Paul Dormer

234. Mr. Dormer accepted that sums totalling €17.6 million had been advanced to the

Dormers’ but he did not believe that the Bank was entitled to the relief claimed. He claimed

that when the loan facilities pursuant to the 1 October 2012 Facility Letter had expired three 66

further loan facilities were advanced pursuant to the Bank’s Facility Letter of 11 June 2013. He

said that this was the Facility Letter governing any amounts claimed, and stated that these

amounts were not overdue. He referred only in passing to the fact that the Facility Letters of

11 June 2013 themselves referred to any amounts advanced being repayable on demand.

235. Mr. Dormer referred to the Heads of Terms and said that “we have done everything in

our power to comply with the conditions set out therein”. He accepted there had been “some

delay” in procuring compliance with the Heads of Terms but claimed that “the preponderance

of this delay was caused by ‘delay in obtaining relevant title deeds’”.

236. Mr. Dormer claimed that on 6 December 2013 BOS had given the confirmation

required by the Bank and therefore that the Dormers had complied with all Five Preconditions

identified in the Heads of Terms.

15 December 2013 second affidavit of Eamonn Conneely

237. Mr. Conneely said that although the Bank had issued a Facility Letter on 11 June 2013

it had never been accepted. He swore that the Bank had no record of having received a signed

acceptance.

238. Mr. Conneely also swore in a third affidavit on 16 January 2014 that on 3 July 2013 the

Bank had received an email from Mr. Roddy, addressed to Ms. Bowen, attaching soft copies

of Statements of Affairs and Standard Financial Statements and confirming that originals of

these would be delivered to the Bank. No reference was made in that email to delivery of a

signed Facility Letter.

239. Mr. Conneely stated that even if the Dormers had signed and returned the 2013 Facility

Letter no money was ever advanced pursuant to it. He said that the preconditions to that facility

coming into effect had not been complied with, most notably the grant and perfection of certain 67

securities. This was a reference in particular to fresh mortgages of a number of assets,

including assets which had been the subject of prior security to the Bank.

240. Mr. Conneely repeated his view that the two emails from Mr. Kelly of BOS on 6

December 2013 were not the unconditional confirmation of the position of BOS required to

meet Condition 5 of the Heads of Terms. He referred to further emails on 13 December 2013

exchanged between BOS and the Dormers solicitor Mr. O'Connor which referred to progress,

and that “the deed as structured envisages full and final settlement of the debt at €3.25m and

that remains the case. We now wish to proceed to completion of this matter”. Mr. Conneely

stated that he regarded this description of progress of the discussions with BOS as being “at

odds with the position as represented by the Dormers to the Bank over a prolonged period of

time – namely that the deal had already been done”.

241. In relation to the telephone call of 5 December 2013 Mr. Conneely stated the following:

“On 5 December 2013, the Defendants’ accountant Mr. Roddy requested the Bank to

issue correspondence advising that refinance of the Bank of Scotland loan of € 3.25

million would be secured only by the assets currently securing the Bank of Scotland

loan. As this was not true, Mr. Roddy was advised that the Bank would not under any

circumstances issue a letter that would mislead another organisation in this manner.”.

9 January 2014 Second affidavit of Paul Dormer

242. Mr. Dormer swore a second affidavit on 9 January 2014 disputing the contents of Mr.

Conneely’s affidavits.

243. He swore that he and his brother signed the June 2013 Facility Letter on 25 June 2013.

He said that they gave the executed copy of the letter to Mr. Roddy and instructed him to deliver

it to the Bank.

244. Mr. Dormer also asserted that they had done everything in their power to comply with

the conditions of the June 2013 Facility Letter. He said that the Bank never protested that the 68

Dormers’ had failed to comply with the preconditions of the June 2013 Facility Letter. He

cited a number of acts of compliance being the signing of the Facility Letter, the placing of

insurance, new mortgage documentation and negative pledges and references to the

employment of a property manager. He said that at no time did the Bank object that these

conditions had not been complied with.

245. Mr. Dormer referred again to the Heads of Terms of 8 October 2013. He stated that the

Dormers had informed the Bank that they were willing to reach agreement on the basis set out

in the terms. He continued “pursuant to the Heads of Terms, we agreed to borrow money from

the Plaintiff so that we could discharge our liabilities to Bank of Scotland plc and we also

agreed to restructure and refinance borrowings from the Plaintiff”. He insisted that the

Dormers had complied with the conditions of the Heads of Terms and had incurred expenditure

such as the procurement of valuations and obtaining tax clearances and that they had confirmed

their agreement to commence an asset disposal strategy designed by the Bank.

246. Mr. Dormer referred to the Deed of Settlement which he had “recently” been furnished

by BOS. The Deed of Settlement from BOS had in fact only been transmitted by the BOS

solicitors McCann FitzGerald the same day.

247. Mr. Dormer stated:

“The parties have entered into a specifically enforceable agreement for the refinancing

and restructuring of our borrowings from the Plaintiff. I cannot accept that Mr.

Conneely is correct when he says that this document was not intended to have legal

effect. Indeed he never expressed such an opinion prior to the commencement of these

proceedings.” 69

9 January 2014 Replying affidavit of Aidan Roddy

248. Mr. Roddy swore that on 4 July 2013 he personally delivered an executed copy of the

June 2013 Facility Letter which had been signed by the Dormers on 25 June 2013. He said

that he delivered a letter on 4 July 2013 enclosing that signed Facility Letter together with

statements of the Dormers’ affairs and standard financial statements. He did not exhibit such a

letter. He referred to the fact that the Bank had acknowledged receipt of the statements of

affairs and standard financial statements, and that he was therefore “quite certain that the

Plaintiff also received the signed loan Facility Letter”.

249. Mr. Roddy said that he was most anxious to ensure that the signed 2013 Facility Letter

was delivered because there were “pressing commercial reasons to do so”. He elaborated on

this to explain that it was in the context of the ongoing negotiations about a more fundamental

refinance and restructuring that he was anxious to ensure that the existing facilities were

regularised. He anticipated that otherwise a credit committee of the Bank would not sanction

the new refinance and restructuring.

250. Mr. Roddy referred to prior dealings and said that on previous occasions the Bank

always insisted on the return of signed Facility Letters. He considered it notable that Mr.

Conneely had not followed up seeking the return of the June 2013 Facility Letter and his view

was that this was consistent with his assertion that he had returned the letter duly signed.

251. Mr. Roddy referred to the telephone call of 5 December 2013. He referred to Mr.

Conneely’s statements that Mr. Roddy had requested the Bank to issue a letter stating that the

refinancing of the Dormers’ borrowings with BOS would be secured only by the assets which

had previously been charged to BOS. He said that this was not an accurate description of the

telephone call. 70

252. Mr. Roddy stated that the letter which the Bank issued on 6 December 2013 was in

accordance with what he had requested and he insisted that he had not requested a letter which

would in any way mislead BOS.

16 January 2014 Third affidavit of Eamonn Conneely

253. Mr. Conneely again stated that the Bank had never received the signed acceptance of

the June 2013 Facility Letter. He continues by stating the following. He says firstly that the

June 2013 facility even if effective did not offer any new facilities but instead a “continuation

of the existing facilities originally sanctioned”. Secondly he stated that the conditions

precedent for the June 2013 facility were never complied with, notably by execution of the

mortgages required prior to any drawdown of the facility. He said that monthly payments of

€30,000 which continued through 2013 had been set up pursuant to the 2012 Facility Letter

and therefore independent of any purported acceptance of the 2013 Facility Letter.

254. Again Mr. Conneely refers to correspondence between Mr. Roddy and Ms. Bowen on

3 July 2013.

255. On 3 July 2013 Mr. Roddy had emailed Ms. Bowen and Mr. Conneely attaching copies

of the Statements of Affairs. He stated that they would be sworn and that originals would be

delivered together with standard financial statements. In his further email of 4 July 2013 Mr.

Roddy confirmed to Ms. Bowen that he had “delivered the above today”, the “above” being

the sworn statements of affairs and standard financial statements. Mr. Conneely drew attention

to the fact that no reference was made in that email correspondence to the return of the June

2013 Facility Letter.

256. Mr. Conneely referred then to the telephone call of 5 December 2013. He repeated his

prior statements that: 71

“Mr. Roddy telephoned Sarah Bowen on 5 December 2013 and requested that the Bank issue

a letter stating that the refinance of the BOS loan facilities would be secured only by the assets

currently securing the Bank of Scotland. As such a statement is not correct, Ms. Bowen

transferred the call to a conference call between Mr. Roddy, herself and myself. Mr. Roddy

was asked to clarify the position and he reiterated that a letter was required stating that the

refinance of the BOS loan facilities would be secured only by the assets currently securing the

Bank of Scotland. He was advised by me in no uncertain terms that the Bank was very

concerned that such a request was being made not only because of its inaccuracy but because

Mr. Roddy had led the Bank to believe that the Bank of Scotland had agreed to accept the sum

of €3.25 million in full and final settlement of clients liabilities. I therefore questioned why

such a letter was required.”

257. Mr. Conneely then referred to the letter issued by him on 6 December 2013 “outlining

the [Bank’s] position”.

258. Mr. Conneely then turned to the Heads of Terms and stated that he did not believe that

there was any basis for the claim that the Heads of Terms was intended to or did have any legal

effect. He says that he believes it is clear from the Heads of Terms that they “did no more than

identify a number of conditions, on the fulfilment of which to the satisfaction of the Bank

would be prepared in principle to issue Offer Letters. Acceptance and satisfaction of any Offer

Letters with a view to facilities being made available to the Defendants thereafter was also

identified in the Heads of Terms as being subject to a number of conditions. In the event,

however, the Defendants were unable to progress matters to the point of the issue of any Offer

Letter and demands were made…”.

27 January 2014 Second Replying Affidavit of Aidan Roddy

259. Mr. Roddy repeated in this affidavit that he is “certain that the Plaintiff did in fact

receive a signed copy of the said letter of loan sanction on 4 July 2013”, and that this letter 72

replaced the expired letter of 1 October 2012. He repeated also his account of the phone call of

5 December 2013, stating that the Bank’s letter of the next day was all he had requested in the

phone call.

260. Mr. Roddy stated that Bank of Scotland “has confirmed that is willing to accept the sum

of €3.25 million in settlement of the Dormers liabilities to it”. He then refers to the fact of the

Defendants having signed the Deed of Settlement with BOS and returned same to the Bank.

261. These of course are references to the Deed of Settlement and signature thereof by the

Dormers in January 2014, and do not add anything to the factual matrix which prevailed in

December 2013 when the Bank notified the Dormers that it was withdrawing the the Heads of

Terms.

20 January 2014 Affidavit of Sarah Bowen

262. Referring to the 2013 Facility Letter Ms. Bowen stated:

“The Bank has no record of receiving a signed, accepted copy of the letter. On 4 July

2013 the Bank received a copy of statements of affairs and completed standard financial

statements for both Paul and Gerard Dormer. These documents were delivered by Mr.

Roddy to Bankcentre and are referred to in emails between Mr. Roddy and your

deponent, but there is no reference in the emails to the letter of sanction and no signed

letter was delivered to the Bank.”

263. Referring to the telephone call 5 December 2013. Ms. Bowen confirmed that her

recollection is that Mr. Roddy “requested that the Bank issue a letter stating that the refinance

of the Bank of Scotland loan facilities would be secured only by the assets currently securing

the Bank of Scotland. As such a statement was not factually correct, I transferred the call to a

conference call between Mr. Roddy, myself and Mr. Conneely. Mr. Roddy was asked to clarify

the position and he reiterated that a letter was required stating that this was the case. He was

advised that the Bank was very concerned that such a request was being made not only because 73

of its inaccuracy but because Mr. Roddy had led the Bank to believe that the Bank of Scotland

had agreed to accept the sum of €3.25 million in full and final settlement of the borrower

liabilities. The Bank therefore questioned why such a letter was required. Having discussed

the matter in considerable detail and to seek to assist in obtaining the unequivocal confirmation

from BOS that they were agreeable to accepting the sum in full and final settlement, the Bank

issued a letter on 6 December outlining the position as best it could – this was not the letter

requested by Mr. Roddy but given our refusal to provide a letter that would misinterpret the

Bank's approval Mr. Roddy accepted this letter”.

264. With regard to the Deed of Settlement with BOS Ms. Bowen states that the Deed signed

by the Dormers only and presented to the Bank in January 2014 does not constitute verification

of a full and final settlement with BOS and “no further recourse to the clients”. She referred

to the provisions of the BOS Deed and reservations contained therein in favour of BOS and the

Bank’s continuing concerns as to what had been represented by the Dormers to BOS regarding

their assets.

265. The Team Paper to the Area Credit Committee on 14 January 2014 refers to the

Dormers having “misrepresented dealings with AIB on a number of occasions”, to the Dormers

having “sworn two affidavits that are not true”, to the Dormers’ “willingness to misinterpret

themselves under affidavit” and to the Dormers’ “ability to submit inaccurate information by

affidavit”. These are references to the evidence tendered by the first plaintiff Paul Dormer in

the affidavits quoted above, which the Bank contradicted in its replying affidavits.

266. References to “inaccurate information in sworn net worth statements” appear again in

the Team Paper and the Area Credit Committee Decision of 7 February 2014.

PART SEVEN: 30 JANUARY 2014

267. The application for summary judgment was listed for hearing on 30 January 2014. The

first plaintiff Mr. Paul Dormer attended at the Four Courts with Mr. Roddy, with his solicitor 74

John O'Connor and counsel Michael Cush S.C. and Frank Crean B.L. In attendance on behalf

of the Bank on that day were Eamonn Conneely and Sarah Bowen, their solicitor Katharine

Forde of AC Forde & Co and their counsel team Denis McDonald S.C. and James Doherty

B.L.

268. Mr. Dormer’s evidence to this court was that when attending court on 30 January 2014

his instructions to his legal team were to defend the application for summary judgment. Before

going into the courtroom he met with his legal team in the Round Hall of the Four Courts.

269. During the morning discussions took place between the respective senior counsel. Mr.

Dormer was informed that a suggestion had been made that the case may be settled if terms

could be agreed that day. Mr. Dormer's evidence was that he believed that this meant that there

was an opportunity finally for the Bank to honour its commitments, as he described them, in

the 8 October Heads of Terms and on that basis he authorised counsel to have such discussions.

270. When the matter was called it was left over until later in the day to enable discussions

take place.

Evidence of Paul Dormer

271. Mr. Dormer stated that in the course of discussions the question of the Settlement arose

and mention was made of the possibility of a payment to AB of €X. Mr. Roddy suggested that

this was an unwise approach and that instead provision should be made for a property. Mr.

Dormer agreed with his team that a proposal should be put that a certain property be released

to AB. By this time he had not made an agreement with AB. He intended to meet AB over the

following weekend and was confident that an agreement could be concluded. This was the

reason for paragraph 5 (1) of the Settlement Agreement, which required that on before 10

February 2014 evidence would be produced of an agreement for full and final settlement of

any claims of AB against any property in which the first plaintiff had any claim right title or

interest, and for paragraph 5(2) which required the production by 14 February 2014 of evidence 75

that BOS had been informed of the settlement with AB and was prepared nonetheless to execute

the Deed of Settlement, and for the reference in paragraph 5(3) to any variation of the Heads

of Terms required to take account of the terms of settlement with AB.

272. Under cross-examination Mr. Dormer confirmed that the subject of AB’s potential

entitlements and claims was first raised with the Bank not at the Four Courts on that day but in

a letter written the previous day 29 January 2014 from Mr. O'Connor to AC Forde.

273. In the afternoon Senior Counsel Mr. Cush reverted with a handwritten document

outlining certain terms. Discussions were ongoing and the matter was adjourned again until

3:30p.m. Mr. Dormer says that he was then given a typed draft of the Settlement Agreement. It

seemed to him to be in order because “I was not giving AIB judgment that is all I cared

about”. He knew that he would need to urgently speak to AB but intended to do so at the

following weekend with a view to finalising a settlement with AB.

274. Mr. Dormer said that he was aware that a number of steps had to be carried out to

implement the settlement. He said that the Bank had insisted on Clause 4, and this led to the

commitment in Clause 5(3) that the Team, being three named bank representatives would make

a recommendation to the Area Credit Committee.

275. Mr. Dormer confirmed that all of the discussions on the day took place between the

lawyers.

276. Mr. Dormer confirmed that insofar as reference was made to the position of AB the

proposal which his lawyers put to the Bank’s lawyers was that either more money would have

to be made available to settle with AB or one of the properties which would otherwise have

been the subject of the security for the refinance and restructuring would have to be released

from the structure.

277. Mr. Dormer confirmed under cross-examination that he understood that the final

decision as to whether or not to approve of the proposal would be for the Credit Committee in 76

the Bank and it alone. Only the Credit Committee could approve the giving of the agreement

referred to in Clause 4 of the Settlement. He confirmed that he had agreed by the Settlement

Agreement that if the Credit Committee said no he would consent to judgment.

278. Mr. Dormer also confirmed that he understood that because the Bank was insisting on

Clause 4 it was his and Mr. Roddy's instruction to the lawyers to require also that there be a

provision in the Settlement Agreement to the effect that the Team would recommend the

proposal to the Area Credit Committee.

279. Mr. Dormer agreed under cross-examination that the Settlement Agreement said

nothing about the prospects of persuading the Area Credit Committee to grant the facilities and

approve the refinance and restructuring.

280. In cross examination counsel for the Bank put it to Mr. Dormer that clause 5.3, which

incorporated the obligation on the part of the team to make a recommendation to the Area

Credit Committee, and clause 4 contain nothing about whether the proposal would be accepted

by the Area Credit Committee. Counsel put to Mr. Dormer the following:

“Q. And actually it's consistent with clause 4 above, that Area Credit Committee can

just say no?

A. Yes.”

281. In further exchanges between Mr. Doherty and Mr. Dormer, Mr. Dormer stated that it

was his belief on 30 January 2014 that the October Heads of Terms were still in place. It was

put to him that they were not still in place because his solicitors letter on 29 January 2014, the

day before the settlement discussions at court, had the effect that variations had to be

introduced, firstly in relation to AB and secondly in relation to the amounts of the loan notes

themselves, having regard to updated valuations. Mr. Dormer’s response was that the Bank

were to come back to him and did not do so. 77

282. Mr. Dormer was pressed by counsel as to how or why he was now making the case that

the recommendation to the Area Credit Committee was “bound to fail”. He referred to the

contents of the Team’s paper of 14 January 2014 and said that the Clause 5 recommendation

was bound to fail because of the contents of passages within that paper including such matters

as the reference to the Bank's desire to appoint an asset manager and the reference to the

requirement that the Dormers appoint an alternative financial adviser “to the satisfaction of the

Bank as we are not prepared to deal further with Aidan Roddy”.

283. The following exchange took place between counsel for the Bank and Mr. Dormer:

Q. (quoting from the paper of 14 January 2014) … “While enforcement proceedings

have commenced, team are endeavouring to complete the refinance consensually if

client can fulfil terms of sanction. The clients appear to be working toward a

consensual resolution; however, have sworn two affidavits that are not true,

including confirming 2013 Offer Letters were accepted and returned to the Bank

and advising the court that Aidan Roddy's request that AIB represent our approval

to BOSI was never made”.

I am just going to stop there for a moment and I want to bring your attention to one

other feature. If you turn over the page, under the heading

‘Conclusion/Recommendation’ do you see that? It says ‘the series of events over

the past number of weeks is disconcerting in many ways and it is unusual in the

extreme for team to recommend additional funding to be made available to any

clients in these circumstances. However, the financial benefit of concluding the

refinance and restructure substantially reduces our provision across the

connection”.

And they go on to make recommendations. 78

So two things are identified which, in the teeth of my objection this morning, Mr.

Roddy was upset about. The first was the idea that he had sworn evidence, or sworn

affidavits that weren’t true about the acceptance of the 2013 Offer Letter, okay?”

A. Mmm

Q. And the second was the idea that he had asked AIB to misrepresent the position to

Bank of Scotland, isn't that right those are the two issues of the negative comments

he mentioned earlier today, isn't that right?

A. Yes

Q. Okay. But you knew all along and certainly knew on the 30th January 2014 that that

was the Bank's view, isn't that right?

A. No

Q. Well can I suggest to you you did, because it had been sworn to by Mr. Conneely

in two affidavits before the High Court, which you had had sight of, and had been

sworn to by Ms. Bowen in an affidavit before the High Court. So you knew this on

the 30th January, you knew that they thought that Mr. Roddy had misled them, you

knew that the Bank thought that the averments that you had accepted the 2013 Offer

Letters were wrong, you knew all of that on the 30th January, isn't that right?

A. Well, I didn't think so now at the time now, you know

Q. You didn't think so at the time, but do you accept that you did know about it because

of those affidavits on the 30th January 2014?

A. No, would be the answer, I think no

Q. You didn't know

A. On 30th January, that didn't come to my…

Q. Sorry you didn't know on 30th January that the Bank had sworn affidavits saying

that Mr. Roddy had misrepresented the – had asked them to misrepresent the 79

position to Bank of Scotland and that the Bank had sworn affidavits saying that you

hadn't accepted the 2013 letters, you didn't know either of those things?

A. Just, basically, I never thought of them on 30th January, is what I'm saying to you.

Q. You never thought of them, okay, so that's different okay. So in January, those

issues are brought to credit committee, and can I ask you to turn to page 158…”

284. Mr. Dormer was pressed by counsel as to what was the basis of his allegations of fraud

and dishonesty against the officials of the Bank. He stated that the evidence was the papers of

14, 17, 30 January 2014.

285. When pressed for evidence to supporting such allegations against officials of the Bank

Mr. Dormer stated “I just said I have given you the evidence there, right. Read the 30th January,

14th, 17th January, right, 30th January Settlement Agreement.”

286. Mr. Dormer’s evidence was that when he saw the Settlement Agreement as signed by

the Bank he was happy, but he said “I didn't know at the time that they had already

predetermined my fate. AIB were never going to implement Settlement Agreement. I know

now that the actions of AIB on the 14th to 17th January 2014 and their subsequent silence and

manipulation on 30th January 2014 had put an end to the Settlement Agreement for me”.

287. In relation to the Heads of Terms Mr. Dormer made the observation (day 4 page 78),

that the Heads of Terms “are the Bank’s terms, they are not mine”.

288. In relation to the role of the credit committee Mr. Dormer stated that he understood that

the Bank representatives were insisting on reverting to their credit committee for final approval

of the settlement on 30 January 2014 and “that they wanted to tie in getting judgment if our

steps weren’t completed”. Counsel for the Bank questioned Mr. Dormer as follows:

“Q. Your lawyers came to you and said AIB say this has to go back to the credit

committee; you agreed to that?

A. Yes 80

Q. Okay and I had this with Mr. Roddy yesterday, and I suspect you also agree, I put

it to Mr. Roddy that, in terms of Mr. Conneely, Ms. Bowen and Mr. Morris, those

people, they were involved in the context of any particular application, in gathering

information, running the figures, making a proposal to credit committee, but

ultimately the decision as to whether or not to say yes or no or yes with conditions

or whatever it happened to be was for credit committee and credit committee alone;

you knew that, didn't you?

A. Yes

Q. Okay so that's what you agreed to. You also agreed that if credit committee said

no, you would consent to judgment, isn't that right?

A. Yes”

289. Mr. Dormer confirmed that since the Bank had introduced the requirement to return to

the credit committee for approval, it was Mr. Roddy's suggestion that the Settlement

Agreement should also contain a clause containing a commitment that Messrs. Connelly

Bowen and a third person, which became Mr. Morris, would recommend the settlement to

the credit committee.

290. Counsel for the Bank quoted clause 4 of the Settlement Agreement to Mr. Dormer

which states “The Defendants further irrevocably agree to consent to judgment as aforesaid in

the event that the Plaintiff has not agreed on or before the 28 February 2014 to provide facilities

on foot of the recommendation referred to at paragraph 5.3 of the steps below”.

“Q. So that's – if the Area Credit Committee says no judgment is to be entered, isn't

that right?

A. That's what it's saying yes 81

Q. Okay. And it says nothing, does it, clause 4, about what your prospects of

persuading the Area Credit Committee to grant those facilities would be, does it,

this clause 4?

A. No.”

291. Later counsel for the Bank questioned Mr. Dormer further on this subject as follows:

“Q. So what I suggested to Mr. Roddy then yesterday was that the entire basis for your

case here is to say that what happened on the 14th and 17th January is the evidence

of an underhanded ploy to entrap, a charade, an agreement that was bound to fail,

AIB weaving a web, AIB predetermining your fate, that's the basis for all of those

extraordinarily serious allegations, is that correct?

A. And telling me that the Heads of Terms were still in place on the 30th January,

Q. Okay.

A. Yeah, sorry, 30th January the Settlement Agreement.

Q. We have just been through the Settlement Agreement

A. Yes.

Q. Clause by clause.

A. Hmm.

Q. It doesn't say that the October Heads of Terms are still in place.

A. I understood on the 30th January that the Heads of Terms were still in place.

Q. You understand Mr. Dormer that if that is your understanding that your subjective

view of what the agreement means is not evidence, you understand that?

A. Okay.

Q. And you knew that the October Heads of Terms weren't in place because it was

your offer of the 29th January that meant that the October Heads of Terms had to be

varied, isn't that right? 82

A. The loan notes yes.

Q. Not just the loan notes. The whole thing had to be reconsidered because either €X

additional cash or a certain property were going to have to be considered in the

equation as well as the fact that this whole impact of the settlement had been come

out into the open for the first time?”

A. Sorry, again, just to say Mr. Doherty, the bank were to come back to me and they

didn’t.”

292. Mr. Dormer was questioned as to what he meant by the allegation that the

recommendation to be made pursuant to the Settlement Agreement was “bound to fail” he

referred repeatedly to the events of 14 and 17 January and said “they had no intentions of

doing the deal with me”.

293. Finally counsel for the Bank put it to Mr. Dormer that the Bank witnesses Mr.

Conneely, Ms. Bowen and Mr. Morris would all give evidence, as they later did, that the

recommendation they made on foot of the 30th January 2014 Settlement Agreement was a bona

fide recommendation in respect of a proposal that could succeed but had no guarantee of

succeeding. Mr. Dormer replied stating “well it was never going to succeed”.

294. When pressed as to whether Mr. Dormer was continuing or maintaining his allegation

that these witnesses were lying if they believed it had a prospect of succeeding he stated “I am

saying that it was never going to succeed”. Ultimately when pressed on this matter Mr. Dormer

said that he believed “they are lying”.

Aidan Roddy evidence

295. Mr. Roddy gave his account of the events at the Four Courts on 30 January 2014. He

said that the Bank had informed Mr. Dormer's legal advisers that the settlement being

negotiated on that day would have to go back for approval to the Area Credit

Committee. He was initially surprised at this but said “I rationalised this on the basis that 83

AIB had effectively torn up the Heads of Terms on 9 December 2013, by calling in the loan

and issuing judgment proceedings so yes there was some logic to them saying they had to

go back to credit committee but I wasn't sure this was ultimately necessary. I kept thinking

of all the credit committees that were in play previously and this could take forever.”

296. Mr. Roddy said that in light of the requirement to return to a credit committee “with

cap in hand” it would be necessary to ensure that a recommendation was being made. He knew

the recommendation should be made by Mr. Conneely and Ms. Bowen and in the course of the

discussions the Bank indicated that Mr. Morris could be the third person making the

recommendation.

297. Mr. Roddy said that he had not realised that the matter had been before the Credit

Committee on 17 January 2014 and he said that “there was no way anyone would have advised

the Dormers to sign the Settlement Agreement on those terms if at all, had this knowledge,

which should have been disclosed been made available. For us Eamonn Conneely and Sarah

Bowen had made the credit committee a central condition to the agreement so its terms and

conditions were relevant”.

298. When the provision relating to a variation to take account of updated valuations arose,

Mr. Roddy's initial impression was that this was sufficiently covered by the Heads of Terms

from October. But he considered it appropriate that this should be mentioned separately in the

Settlement Agreement so that there would be no confusion. This was not objected to by the

Bank, hence the reference to updated valuations in clause 5(3) of the agreement.

299. Mr. Roddy confirmed that it was the Dormer side who proposed an amendment to the

effect that the settlement with AB would have to be satisfactory to the Bank before it was

presented to the committee. 84

Evidence of Eamonn Conneely

295. Addressing the relevance of the credit committee decision of 17 January 2014 Mr.

Conneely gave the following evidence “it is absolutely the case that I believed the terms of the

Settlement Agreement could have been achieved, and I think they were supported by the credit

decision of 17 January. I think had it not been the case that we had that affirmation from the

credit committee on the 30th January, I wouldn't have been at all sure that we could actually

deliver on what was being – what was to be recommended. But the fact that we had had

discussions with the credit committee prior to that, I think was of benefit to us in considering

whether to enter the Settlement Agreement or not and considering what the chances of success

were at that time, being the 30th January, as regards fulfilling, broadly, the terms of the Heads

of Terms from October and allowing for the funds that were to be – or the asset that was to be

released to AB to settle that claim.”

296. Under cross-examination, with reference to the proceedings before the credit committee

in January, Mr. Conneely continued “it was part of the strategy that the team were trying to

deal with, which was ever moving and ever shifting, and our purpose in bringing that credit

paper to the credit committee was to update them on where we’re at, be satisfied that should a

circumstance come about where the conditions of 7 October were fulfilled, that the Bank would

be happy to continue to provide the facilities, with the knowledge of all the events that had

happened to that time.”

297. Questioned by counsel for the Dormers as to the impact of the credit committee decision

of 17 January on the strategy, the following exchange took place:

“A. We are the implementors so we draw the information together, put it to the credit

committee, it makes the decision and we implement.

Q Implement the decision, okay.

A. Our strategy. 85

Q. And do I take it you must implement the decision if it requires implementation?

A. No not necessarily the case, because, as we would all know, in any situation things

change, so, strategy – the terms that may be considered at a given time may prove

– it may prove that an alternative strategy needs to be pursued because of some

other event subsequent to the credit committee and that is –

Q. Can I take it that it's the credit committee again that makes that decision, is that

correct?

A. Well it is up to the team, as I was just going on to say it is up to the team to then

round back to the credit committee with the change in circumstances and to seek an

alternative decision as to what was decided prior to whatever circumstances came

about.”

292. Counsel for the Dormers questioned Mr. Conneely as to the materiality of the contents

of the paper of 14 January 2014 when it came to the settlement at court on 30 January 2014.

Referring to the question of the Bank’s concerns about Mr. Roddy and other negative

observations contained in the paper 14 January 2014 counsel for the Dormers questioned Mr.

Conneely follows:

“Q. Did you change your mind on that issue, as to the materiality of the information on

before the 30th?

A. What I have told you already is that on the 30th my opinion of the borrowers and

Mr. Roddy hadn't changed. But what I had decided was, if we wish to progress with

the proposal, which we most certainly did, as evidenced through signing up to the

Settlement Agreement, then we would have to deal with the position as I saw it to

include Mr. Roddy in it, because I believed on the 30th, down in the High Court,

that the imposition of that condition was likely to scupper everything. 86

Q. And doesn't it follow that Mr. Conneely, and you can agree or disagree, that there

was material information with regard to the credit application that was going to be

made on foot of the Settlement Agreement which you didn't disclose to the

Dormers?

A. I think the Dormer’s were aware of my opinion of them through the affidavits. I

think I had noted in my affidavit that I believed they were misrepresenting the

position, so had they read my affidavits in the course of the High Court proceedings,

or the Commercial Court proceedings, I think that they would have been well aware

that I was not happy with what they were saying under affidavit. And clearly, you

know, there are key issues in their affidavit that we disagree with, events that did

not happen, there is disagreement, but you know, I think we have been consistent

in all of what we have said, all of what we have written, all supports the views that

we have expressed in those affidavits. So you are talking about materiality. The

materiality is here. When it came to the 30th January, I had decided that, while it

was material, it would sufficient – there was sufficient benefit still, at that late stage

in the day, for us to contemplate doing the deal, in the knowledge and on the

understanding that we knew of the type of people that we were dealing with at that

stage, or we believed, and that me and my team, we could manage the situation, and

it was on that basis that I entered into the Settlement Agreement on behalf of the

Bank.

Q. Okay. So I think you have conceded in that answer that the information was

material and you already answered that.”

293. On Day Eight Mr. Conneely was questioned further as to the materiality to the

settlement of 30 January 2014 of the decision of the credit committee made on 17 January 2014. 87

“Q. Now did you that day take into account, in your considerations on behalf of the

Bank with regard to entry into this agreement, the terms of the decision or, for that

matter, the terms of the application for a decision to the Area Credit Committee in

January?

A. Yes I did.

Q. Okay. And why did you take those terms into account?

A. Because they are the last credit committee by which I was being guided by and, as

I said yesterday, this allowed me to have reasonable confidence that the terms of

the Settlement Agreement could be fulfilled, because the Bank had confirmed to a

large degree, that the Heads of Terms from back in October could largely be met,

allowing for various different things that had happened throughout that time. So I

was happy that we could enter into the terms of the settlement agreement. In terms

of the specific conditions, they weren't fresh in my mind on the 30th January, and I

believe I asked a colleague, Conor Leydon in – who was back in Bankcentre, to

send me a copy of those.

Q. Okay so can I take it from that answer, Mr. Conneely that, in general, you

considered the terms of the ACC decision of the 17th January to be a material

consideration when it came to the Bank's entry into this agreement?

A. What I've explained to Mr. McEntaggart is that they weren't fresh in my

mind. There were sent to me, I considered them, and I was satisfied that they could

be met.”

294. Mr. McEntaggart continued:

“Q. I was asking the witness to confirm whether or not his reference to the ACC

decision of the 17th January, on the 30th January, arose because he considered those 88

– that decision to be material to the considerations applied on the day with regard

to entry into this agreement?

A. When you just interrupted I was simply finishing off that, if you consider all of what

I had said up to that point as material, then perhaps it's material.

Q. Thank you. Now, insofar as it was material, you have already confirmed that the

decision itself, which I'm taking it was a material consideration wasn't indicated to

the Dormers. And my question arising from that is: insofar as this information was

not given to the Dormers, was that in consequence, first of all, of a mistake on your

part?

A. Mr. McEntaggart I have said over the past two days or so that this information was

not passed onto the client, okay. So to repeat it persistently, as you have done,

serves no purpose, as far as I can see. In terms of my consideration on the day as

to whether or not those conditions were met, I felt that they could be addressed

satisfactorily to the credit committee's point of view and we could meet those

requirements, and it was important to me, important enough that I got my colleague

to send me a copy of them onto my phone so that I could be happy in reverting to

the credit committee, yet again, with yet another change of structure, that the

conditions that they had set out, which would still be pertinent to any subsequent

credit application, could be met without any further reference to the Dormer’s.”

295. Mr. McEntaggart put it to Mr. Conneely that the decision not to make any reference to

the January decision of the ACC, in the course of the negotiation was deliberate. Mr. Conneely

said the following:

“A. Clearly, it was not a mistake. It was considered by me and considered not

necessary to be conveyed to the Dormer’s. 89

Q. I understand. Can I take it from that answer that the decision not to convey that

information to the Dormer’s on the day before they entered into the Settlement

Agreement was a deliberate decision on your part, a considered decision?

A. Considered, I think is a better word than deliberate because in my mind deliberate

suggests some wrongdoing on my part which clearly there wasn't. It was considered

as I have said a number of times already this morning, after receipt of the email

from my colleague, which attached, I think the credit minute, it was considered by

me and I considered that we could meet those conditions satisfactorily...”

296. Mr. Conneely further described this exchange as follows:

“I had been in contact with our colleague Conor Leydon during the course of the day

of the 30th, and he provided – because, as I said, it wasn't fresh in my mind what exactly

the terms as set out by the credit committee were on the 17th, he sent me a copy of these,

which I reviewed on my phone, and I became quite satisfied that these terms could be

met without further reference to the Dormers or their advisers, in that they had either

largely been completed or they were going to be completed in the course of the

fulfilment of the anticipated restructure and refinance of the facilities”.

297. No evidence was given, understandably, as to whether Mr. Conneely even discussed

with the Bank’s counsel on 30 January 2014, the relevance or otherwise of the January Paper

and Decision. It is common case that in the discussions between counsel at the Four Courts this

Paper and Decision were not drawn to the Dormers’ counsels attention.

298. The significance of this evidence is that there is no doubt Mr. Conneely and the team

members at the Four Courts considered it relevant or material to refer back to the Area Credit

Committee decision of 17 January. But they did so to ensure that the settlement which they

were embarking on that day fell within their authority. The Dormers’ case now is that this

decision, whether it can be characterised as “deliberate” or “considered”, had the effect of 90

depriving the Dormers of a key piece of information which would have informed their decision

to enter into the Settlement Agreement.

Evidence of Sarah Bowen

299. On day eight Ms. Bowen was cross-examined by Mr. McEntaggart about the

nondisclosure to the Dormers of the credit committee decision of 17 January.

“Q. Okay. Do you think it might have been relevant to the Dormers to form a view,

perhaps on your view of Mr. Roddy, before they entered into the Settlement

Agreement of the 30th January?

A. Well, no, because they had the basic facts. They had the fact that Aidan Roddy –

from the phone call, so they knew what evidence our opinion could be based on and

they could form their opinion on what our opinion would be. We didn't – I mean

we didn't really need to – it would be very rare for any bank officials to say this is

my opinion on this person; it just wouldn't happen, you know. We are there to

protect the Bank’s money, normally make money for the Bank, in this case prevent

a seismic loss for the Bank. So our opinion of any of the customers isn't quite as

important as the protection of the losses, or making money.

Q. So would it be fair to say that while you viewed it as being a relevant issue for the

Dormers, you felt that they would have been in a position to form – or arrive at their

own conclusions as to your conclusions?

A. I think it's fair to say they had the same basic information that we were forming our

opinions from. They couldn't have been surprised that we had an issue with Aidan

Roddy given what had happened.

Q. Okay. But wouldn't the easiest way, Ms. Bowen to know what your view was,

wouldn’t the easiest way have been to tell them? 91

A. No, you couldn't. I mean that would be like me saying to you no to James or to Mr.

Doherty I don't really like the solicitor, I don't want to deal with her. It's not

professional, we don't give our opinions on people. It wouldn’t make sense in any

connection, it certainly wouldn't make any sense when you are in a legal process

trying to come out as best you can. You just don't tell people your opinions. I

mean, they had – they knew there was an issue with the relationship, they couldn't

but have known there was an issue. I don't think it would have been appropriate to

say by the way Mr. Dormer we don't like your accountant.”

299. Later Ms. Bowen continued, by reference to the events of January as follows:

“The reason we went in on the 14th January was to make sure, given that there had been

– as these problems, are we okay to still keep going? The committee could have said

at that stage, you are not okay, we are pulling back here, we don't want to support this

deal, we don't like it. Had that happened, we would not have entered the Settlement

Agreement. We would have gone to the Commercial Court. We would – I think it had

to go to full hearing at that stage because there was defending affidavits lodged, so we

would have gone through the normal summary judgment process – or full judgment

process.6 In this case, committee said, ‘no go-ahead due to work with these

people. There's a lot of money at stake here’. There was an additional I think €4.5

million in it for AIB and they said keep going if there is anyway you can see to a

successful conclusion of this, keep going.”

6 This was an interesting recognition of the prospect that the court would not grant summary judgment on 30 January 2014 having regard to affidavits exchanged. It does not necessarily reflect the considered view of the Bank’s team on the day or that of its solicitors or counsel of which there is, quite properly, no evidence. Nonetheless it recognises the reality that on 30 January 2014 the court could, if the matter had not been adjourned, have either granted summary judgment or remitted the case to plenary hearing. See also Parts Nine and Ten below. 92

Evidence of Michael Morris

300. Michael Morris became head of the Financial Solutions Group in August 2013 and Mr.

Conneely and Ms. Bowen reported to him. At the time when he was first involved he became

aware that active discussions were taking place between the Team and the Dormers regarding

a refinance and restructure.

301. Mr. Morris was a co-signature on the application to the Area Credit Committee made

on 7 October 2013 for approval of the Heads of Terms, and on the recommendations made on

14 January 2014 and 7 February 2014. He was also a member of the ACC which approved the

Team’s report on 17 January 2014.

302. Mr. Morris did not attend at the Four Courts on 30 January 2014. Mr. Conneely

telephoned him from the Four Courts to update him on the negotiations.

303. In that phone call Mr. Conneely informed Mr. Morris that one of the terms of the

settlement was that three named persons join in a recommendation to the Area Credit

Committee to approve the settlement. Mr. Conneely enquired if Mr. Morris was willing to be

one of the three, Mr. Morris agreed. He said that he had been assured by the Team that the

Bank were not being committed to provide the refinance in advance of approval from the Area

Credit Committee and therefore agreed to be one of the recommenders.

304. Under cross-examination by counsel for the Dormer’s Mr. Morris was asked what was

his attitude to the Dormers and to Mr. Roddy on 30 January 2014.

305. Mr. Morris said that he had never met Mr. Roddy but he was aware that Mr. Roddy had

asked the Bank to issue a letter which would have misrepresented the proposed transaction to

BOS. He said that his attitude, based on the reports he had received from Mr. Conneely and

Ms. Bowen was one of concern but “there was a deal to be done”.

306. When questioned further about his attitude to Mr. Roddy on the day he said the

following “my view was simple: it's – he had obviously asked the team to misrepresent 93

something to Bank of Scotland, so my view was not favourable. However there was a deal to

be done and on that basis we would move forward. There were a number of protections and

controls in the October Heads of Terms, it represented something that we could put forward

and we would manage it”.

307. Counsel questioned Mr. Morris as to whether he had changed his view of Mr. Roddy

between 17 January 2014 and 30 January 2014 and Mr. Morris replied as follows:

“A. I didn't change my view. From the 30th – on 30th – just to be clear – on the 30th

there was an agreement struck up in the Four Courts where we said that we would

recommend a case to credit committee on the 7th February incorporating 7th October

Heads of Terms or the 8th October Heads of Terms along with the conditions that were,

that were agreed which would close off that decision of the 17th January that was just

up on screen. So the October Heads of Terms, plus the €X for AB, plus the Bank of

Scotland issue getting resolved. And on that basis these two conditions would not form

part of our 7th February sanction. That does not mean that my view changed in relation

to Mr. Roddy. It meant there was a deal to be done we would move forward. Now had

we moved forward, it was very likely that Mr. Roddy would have had an invitation into

Bank centre to have a discussion about what had gone ahead and if we were going to

do a deal, that the relationship would need to be materially different but that didn't

happen because the decision got declined.”

308. The questioning continued:

“Q. And just last question, Mr. Morris. Knowing what you now know about this case,

do you think there should have been a conversation with regard to the decisions

made in January, including the decision with regard to Mr. Roddy? Since that

conversation was going to have to happen anyway, on your evidence, do you think 94

that there should have been some discussion with the Dormers about that issue on

30th January?

A. I don't think it's necessary, no. On the basis – on the basis that we had demanded,

they knew we had demanded, we were in the legal process and our – we were

discussing a way forward, and on the basis that we made a – we were going to have

to make a recommendation, that recommendation did not include Aidan Roddy

being withdrawn anymore, then there was no need to.”

309. After the Settlement was agreed the matter was adjourned by consent to 4 March 2014.

PART EIGHT: EVENTS AFTER 30 JANUARY 2014

310. On 31 January 2014 John B. O'Connor & Co wrote to AC Forde & Co. enclosing

documents of title in respect of nine separate properties “with a view to progressing matters”.

They stated that they would let the Bank solicitors have the balance of the title documents

under separate cover. The documents enclosed with this letter included the documents of title

relating to a certain property.

311. On 3 February 2014 John B. O'Connor & Co wrote to AC Forde enclosing documents

of title relating to a further nine properties, this time including six of the houses at Parson Street,

Maynooth namely numbers 12,13,14,15,17 and 18.

312. In relation to Parson Street they stated the following “for the avoidance of doubt, all of

the foregoing properties are subject to a charge in favour of permanent TSB. We hold the deeds

on ATR from that bank and we simply wish to make you aware of this fact”.

313. According to the Bank this was the first occasion on which it was confirmed to it that

there were extant charges in respect of these six houses. It was later explained by Mr. O'Connor

that although he had always held the deeds of these properties they were held on accountable

trust receipt for PTSB. On 16 December 2013, to honour an undertaking which he had

previously given to PTSB, he had completed the registration of charges in respect of those 95

properties. This explains why previous searches made by the Bank had not revealed the

charges.

314. On 4 February 2014 AC Forde replied to John B. O'Connor expressing their surprise at

the information now provided in relation to the houses at Parson Street stating the following:

“As you are fully aware our client entered into terms of settlement on the basis that it

would be granted a first legal charge over six houses at Parson Street being 12 to 15

and 17 and 18 Parson Street.

We refer you to the sworn statement of assets and liabilities sworn by Paul Dormer

dated 25 June 2013 wherein he confirms that ‘six terrace houses three and four bed’ at

Parson Street are unencumbered and also hold a value of €1.050 million. We attach a

copy of the sworn statement of assets and liabilities for your reference. It now appears

that the statement provided does not reflect the true financial position of your clients

and accordingly they are not able to provide first charges over the six terraced houses

at Parson Street, Maynooth.”

315. On 6 February 2014 Messrs O'Connor emailed Messrs Forde stating that they had

received confirmation that afternoon that AB had approved a draft and that AB’s preference

was to take a transfer of a certain property.

316. On 7 February 2014 Messrs Forde replied to Mr. O'Connor noting the proposal in

relation to AB and stated that this issue was being referred to the Bank's credit committee for

a decision.

7 February 2014 Recommendation to Credit Committee

317. On 7 February 2014 the Team, over the signatures of Michael Morris, Eamonn

Conneely and Sarah Bowen, submitted a paper to the credit committee entitled “Credit

Committee: ACC. Date of Paper 7 February 2014. Addendum to Markup 7 October 2013 and

Addendum of 14 January 2014.” 96

318. The introduction described the paper as “Addendum to seek approval to amend ABC

loan notes, update ACC on agreement reached with the clients in the Commercial High Court

on 30 January 2014 and seek approval to issue Offer Letters”. Under the heading “update” the

following points were made:

• “Following January ACC meeting clients were unable to fulfil all conditions precedent,

namely providing satisfactory confirmation from the BOSI that refinance would be in

full and final settlement of clients liability to same. Given their inability to satisfy this

condition bank progressed legal proceedings culminating in Commercial Court

appearance on 30 January 2014.

• Prior to commercial court date of 30 January 2014 AIB were inadvertently advised by

clients solicitor that AB had obtained court orders in the amount of €X. The liability of

€X to AB had been noted in previous assets/liabilities statements but on querying same,

team had been advised that AB was an unsecured creditor of Paul Dormer’s. On

reviewing the matter our solicitor has advised that whilst the matter does not constitute

a charge over the properties, it may rank ahead of any charge or judgment mortgage

obtained by the Bank over properties in Paul Dormer's name. It has subsequently

transpired that the court orders were disclosed to Bank of Scotland in the negotiations

for settlement of their debt.

• On 30 January 2014 at the Commercial High Court, Bank, Clients’ and Bank Counsel

agreed terms of agreement (see Appendix 2) under which parties could endeavour to

consensually restructure facilities and failing this, clients would consent to summary

judgment. Under the terms AIB would endeavour to work toward the consensual

restructure and refinance of BOSI facilities as detailed under the Bank's Heads of

Terms of 8 October, with amendments to reflect up-to-date professional valuations and

proposed settlement with AB.” 97

319. There then followed summary of the terms contained in the Settlement Agreement.

320. The paper continued by referring to the four special conditions which had been

stipulated by the ACC in their decision of 17 January and stated the following:

“The settlement did not specifically address special conditions stipulated by ACC in

January including:

(1) The Statement of Affairs dated 3 July 2013 to be attached to BOSI Settlement

Agreement. Prior to court date team received copy of statement of Affairs provided

to BOSI – team are satisfied correct statement was provided.

(2) BOSI Settlement Agreement termination date of 28 February 2014 to be

extended. Under agreement clients to provide consent to judgment on 4 March

2014 if refinance is not completed by 28 February, therefore there is no requirement

to extend the date.

(3) The Borrowers to disclose current litigation to BOSI. Senior Counsel advised terms

of BOSI agreement only require them to notify in the event of enforcement

litigation. Summary judgment proceedings are not deemed to be enforcement.

(4) Borrowers to evidence that they are in funds to discharge BOSI legal fees and

interest. Refinance can only complete in the event legal fees and interest are

discharged – in the event that they are not refinance will not have been completed

and consent to judgment will be awarded.

Following agreement at the Commercial Court on 30 January 2014, clients advised AB

was agreeable to a lump sum payment of €X, or one particular asset with maximum

value of €X to settle the court orders and interest in the property portfolio. As part of

the agreement dated 30 January 2014, Team confirmed we will progress a credit paper

recommending that we fund the settlement up to €X as part of the restructure and

settlement agreement. In addition to AB Note amendments, team increased C Note by 98

€52,000 to reflect legal fees accrued which we have agreed not to make an order for in

the event of a consensual restructuring. The following recommended ABC loan

structure:”.

There is then provided details of the three facilities to be provided to effect the refinance and

restructuring, totalling €20,000,979, now including the €3.25m to redeem BOS.

“The above table reduces the return to the Bank by €X due to the settlement with AB

and legal fees incurred to date.”

321. The paper referred to the issue relating to the Parson Street houses and stated that it

came to light only during the course of reviews of title that PTSB hold a first legal charge

over the six houses and a site at Parson Street, Maynooth which had been offered to AIB

as security. Reference is made to prior information from Mr. Roddy given on 25 November

2013 to the effect that whilst those properties were quoted in the PTSB Facility Letter the

additional facility had not been drawn down and therefore a charge was not put over those

properties.

322. The paper continued:

• “Team continue to recommend restructure and refinance as outlined above

subject to first charge over these properties, as agreed under the original

proposal, sanction and Heads of Terms with clients to arrange for discharge of

the PTSB charges over 12 to 15 and 17 to 18 Parson Street.

• Team were provided a copy of the sworn statement provided to BOSI in June

2013 (appendix 5) on 29 January 2013 (sic – this should have read 29 January

2014). While both statements were sworn on 25 June 2013 they differ in that

BOSI statement confirms Parson Street properties were all pledged to PTSB

while AIB statement confirms only 11 Parson Street is pledged to BOSI with

remaining six properties confirmed as unencumbered. 99

• While it is not ideal to progress the fundamental restructure and refinance of

facilities in light of information that has recently come to light including that

inaccurate information was provided in sworn net statements and the clients

withheld information on court orders relating to the Settlement, the return to the

Bank is significantly greater if a consensual restructure can be completed. The

following table illustrates the cost to the Bank if a consensual arrangement

cannot be agreed and enforcement is progressed. The table assumes clients will

be able to provide a first legal charge over the Parson Street properties as agreed

under our heads of terms.”

323. There follows a table illustrating the projected outcome for the Bank in terms of

impairment and shortfall. The projected return for the Bank on the refinance and restructure

would generate a net “income” to the Bank of €14.2 million. The projected net “income” to

the Bank on enforcement was €6.168 million.

324. Finally the paper contained a “Conclusion/Summary” as follows:

• “The series of events over the past number of weeks is disconcerting in many ways

and Team are cognisant of the significant issues that have come to light over the past

two months including that inaccurate information was provided in sworn net worth

statements and the clients withheld information on court orders relating to the

settlement.

• However there continues to be considerable financial benefit in concluding the

refinance and restructure and we believe that any expected difficulties in dealing

with the relationship into the future can be managed through tightly implementing

the conditions stipulated in the original proposal agreed in October 2013 and outlined

in Heads of Terms to client on 8 October 2013. 100

• We continue to recommend pursuing consensual work out and are seeking

permission to issue Facility Letters with amendment of loan notes to reflect

additional €X to fund the settlement of Paul Dormer's obligations under his divorce

settlement and increase in C Note to account for legal costs as follows: A Note – to

reduce by €X to €12.351m reflecting the Settlement, B Note – to increase by €X to

€3.6m and C Note – to increase by €52k to €5.028m subject to:

(1) Evidence satisfactory to the Bank by 10 February 2014 of an agreement

providing full and final settlement of all claims by AB may have against any

property in which Paul Dormer has an interest, the agreement to provide for a

maximum sum of €X in settlement.

(2) Clients to provide confirmation, satisfactory to the Bank, that BOSI have been

fully advised of the above settlement with AB and is prepared nonetheless to

execute the Deed of Settlement in the draft terms provided to the Bank.

(3) Clients to provide confirmation satisfactory to the Bank that the Deed of

Settlement with Bank of Scotland has been executed by both parties by 13

February 2014.

the above conditions having been outlined in the Agreement dated 30 January 2014,

along with the original conditions as outlined in our presentation to ACC and advised

to clients in the Heads of Terms dated 8 October 2014:

325. The paper then recommended conditions 4 to 15, which correspond to conditions in the

October Heads of Terms. These relate to such matters as the provision of a power of attorney,

the grant of first legal charges over properties previously charged to BOSI, and assets

previously unencumbered together with “full security remediation of AIB security”. It

contains provisions also for full title reviews, rental income mandates, cash sweeps,

assignments of rental income, assignments of directors loans and further provisions relating to 101

income and expenditure information to be provided going forward and provisions in relation

to the asset disposal programme.

326. This recommendation is very clearly in its terms based on the October Heads of Terms,

modified by reference to the matters expressly envisaged by the 30 January 2014 Settlement

Agreement.

7 February 2014: Decision of the Area Credit Committee

327. On 7 February 2014 the Area Credit Committee met and rejected the proposal. The

minute records that the meeting was chaired by Niall Doran and the other committee members

were Donall O'Shea, Head of Corporate Financial Solutions Group at the Bank, and Sharon

Morley.

328. The Minute is signed by Mr. Doran and records the following:

• “The credit proposal as now recommended to Area Credit Committee is materially

different to that originally put forward as PTSB hold first legal charges over the

Maynooth properties and the Bank is required to fund settlement of €X in respect of

AB’s interest in the property portfolio.

• Team have been unable to provided (sic) ACC with any indication as to how first legal

charges would be provided over the six properties and site at Parson Street, Maynooth

properties.

• Clients have provided an inaccurate sworn asset liability statement which is

unacceptable.

• As a result the credit risk in relation to the proposal to extend additional funding is

now deemed to be unattractive and accordingly the proposal as outlined is declined.”

329. On 12 February 2014, AC Forde wrote to John B O'Connor informing them that, in

accordance with clause 5.3 of the settlement of 30 January 2014, the Team had recommended

to the Bank’s Area Credit Committee the proposal for facilities and that the proposal was 102

declined. Messrs. Forde informed Messrs. O'Connor that the Bank would now be proceeding

with its application for judgment.

330. On the same day, Messrs O'Connor replied stating their surprise and requesting an

outline of the reasons why the credit committee saw fit to decline the proposal.

331. Two further letters were written by Messrs O'Connor relating to implementation of

settlement on 14 February 2014, without reference to the letters of 12 February 2014.

332. On 14 February, Messrs O'Connor informed Messrs AC Forde that they had been in

error when informing the Bank on 3 February that 15 Parson Street was subject to a

charge. They continued “with regard to the facility in favour of PTSB whilst the loan approval

was in the amount of €1.2 million, only a sum of €600,000 had in fact been drawn down. We

understand the balance currently outstanding is approximately €565,000.” They then requested

a meeting to discuss any matters arising.

333. In a further letter dated 17 February 2014, Messrs O'Connor wrote to clarify that the

error in relation to the description of a charge on 15 Parson Street was that firm’s error and not

an error on the part of their client. In the same letter. Mr. O'Connor put a further proposal

linking the disposal of the property at Edenmore to the reduction of any balances due to PTSB

on Parson Street. He stated the following: “it has been suggested by our clients that in lieu of

a transfer of a certain asset AB would waive their entitlement to this property, and it would

immediately be disposed of, so as to reduce the monies outstanding on the property at Parson

Street. In addition thereto a further property would be sold so as to generate sufficient funds

to discharge the debt on the property at Parson Street in its entirety. The Bank would then be

in a position where not only would it have unencumbered title to the properties that 12, 13, 14,

15, 17 and 18 Parson Street, but in addition thereto 11 Parson Street.” 103

334. On 18 February 2014, Messrs AC Forde replied to the letter of Mr O'Connor’s letter of

12 February requesting the reasons for the credit committee's decision and stated that they were

instructed that the basis for the refusal was as follows:-

• “The proposal is materially different to that originally proposed in the Heads of Terms

dated the 8th October due to the fact that all Parson Street, Maynooth properties are

charged to Permanent TSB and therefore legal Charges over these properties cannot

be provided to AIB as set out in the Heads of Terms issued on the 8th October 2013.

• The requirement to provide additional funds of €X to AB.

• The Borrowers provided the Bank with an inaccurate sworn Asset/Liability Statement

which is unacceptable.

As a result of the above the credit risk attaching to the proposal to extend additional

funding was deemed by the Bank’s Credit Committee to be unattractive.”

New proposals

335. On 20 February 2014, Mr. Roddy wrote to Mr. Conneely in a letter headed “without

prejudice”. He expressed surprise that “an application had been made to Credit Committee

amending the terms and conditions sanctioned on the 8th October 2013, save only as agreed in

respect of AB”. He referred to the position in relation to the Parsons Street properties and the

position relating to AB. He put certain new proposals in relation to each of these, stating that

it would now be possible to address these aspects at no cost to the Bank.

336. On 24 February 2014, Messrs AC Forde wrote to Messrs John B O'Connor in the

following terms:-

“The proposal put forward on behalf of your client continues to require refinance of

Bank of Scotland facilities and in addition clearance of Permanent TSB facilities from

the sale of properties that formed part of the security proposed to be provided to AIB

pursuant to the Heads of Terms dated 8th October 2013. 104

The recent proposal is significantly different to the facilities outlined in the Heads of

Terms dated 8 October 2013 which form part of the Settlement Agreement dated 30th

January 2014.”

337. Messrs Forde referred also to further recent correspondence which they stated did not

provide any explanation regarding “what has now transpired to be misrepresentations made by

your client through conflicting and inaccurate Statements of Affairs provided to AIB and Bank

of Scotland”. Messrs Forde informed Messrs O'Connor that they had instructions to proceed

with the application for judgment pursuant to the Settlement Agreement.

338. On 24 February 2014, Messrs John B O'Connor wrote again, this time stating that a

family member was prepared to provide security, the net effect of which would be that the

properties at Parson Street would be freed and discharged from the terms of the charge in favour

of Permanent TSB. They stated also that AB had now agreed to waive the requirement seeking

payment in the sum of €X, and this would therefore no longer be an issue.

339. On 27 February 2014, Messrs AC Forde forwarded to Messrs O'Connor a letter of that

date written by Mr. Conneely confirming the Bank’s instructions to proceed with the

application for judgment on 4 March 2014.

340. In that letter, Mr Conneely restated the Bank’s dissatisfaction with the inaccuracies

between the statements of affairs provided to AIB and BOS respectively and stated that the

Bank was not in a position to reconsider its decision to decline the request for new loan facilities

and to provide a restructure by way of the refinance and restructuring.

341. In response to this correspondence, Messrs John B O'Connor replied requesting an

adjournment, which the Bank declined.

342. On 30 January 2014, Ms. Forde swore an affidavit exhibiting the settlement agreement

and stating that the Bank’s Area Credit Committee had declined the proposal for the refinance

and restructure. 105

343. When the matter was before the court on 4 March 2014, counsel for the Dormers applied

for an adjournment to enable the Dormers deliver a further affidavit. This was opposed by the

Bank. The court (Kelly J.) declared itself to be of the opinion that the terms of agreement are

clear and unequivocal and, having regard to the terms of the settlement, the court determined

that the Bank was entitled to judgment against the Dormers for the full amount of the claim

together with interest and costs.

Events after judgment

344. On 28 March 2014, newly appointed solicitors acting for the Dormers, Messrs Orpen

Franks, wrote to AC Forde & Co. requesting copies of security documents held by the Bank

and stating that they understand that their clients were still prepared and would still be in a

position to provide security to the Bank over unencumbered assets in the context of an overall

settlement agreement, notwithstanding the recent judgment.

345. Further correspondence ensued, which included the provision by Orpen Franks on 3

April 2014 of a list of the unencumbered assets which would be offered by way of security,

which included 15 Parson Street, Maynooth but no other properties at Maynooth.

346. On 15 October 2014 Orpen Franks stated their instructions that, having regard to

information obtained by their clients pursuant to the Data Protection Acts 1988 and 2003, it

appeared to their clients that servants or agents of the Bank did not comply with para. 5(3) of

the Settlement Agreement. They claimed that the recommendation made to the credit

committee on 7 February 2014 was different from the terms of the Settlement Agreement and

contained incorrect and irrelevant information and further information characterised as relevant

or new which was neither. They continued “as a result of this misleading and duplicitous

behaviour by the Plaintiff, approval for new facilities, the principal objective of the Settlement

Agreement, was not fulfilled as agreed and confirmed by the Bank pursuant to the terms

thereof.” 106

347. Orpen Franks called on the Bank to apply to the court to vacate the judgment of 4 March

2014, failing which they would make an application for vacation of the judgment and reversal

of enforcement steps taken. AC Forde replied disputing the allegations.

PART NINE: THESE PROCEEDINGS

348. On 3 December 2014, these proceedings were issued. On the same day, application

was made for an injunction. On that day, the court (Gilligan J.) made an interim order

restraining the second and third defendants (receivers) from taking any further steps to sell or

market or otherwise deal in the assets of the Dormers or other steps in the exercise of or

pursuant to their disputed appointment.

349. The interim injunction was continued pending the hearing of the interlocutory

application. On 26 February 2015, this Court (McGovern J.) delivered judgment refusing the

application for an interlocutory injunction and vacating the interim injunction granted on 3

December 2014. An appeal was lodged against the judgment of McGovern J., but ultimately

withdrawn by the Dormers.

350. Two separate further interlocutory applications came for hearing before McGovern

J. The Bank applied to strike out the proceedings and separately the Plaintiffs brought an

application to amend the statement of claim.

351. The court (McGovern J.) delivered judgment on these two applications. He refused the

Dormers’ application for leave to amend the statement of claim. He made an order striking out

the proceedings on the basis that they disclosed no reasonable cause of action, were vexatious,

and were an abuse of process. Those decisions were later reversed by the Court of Appeal.

352. The statement of claim before the court is the Third Amended Statement of Claim and

therefore the fourth iteration of the case. There is much overlap and repetition within the

surviving statement of claim. I distil it as follows: 107

(1) That the Bank was duplicitous in its dealings with the Dormers and their advisers

from the time it issued the Heads of Terms of 8 October 2013 (para. 18).

(2) That the Dormers were led to believe that the Bank initiated summary proceedings

because of the absence of receiving a letter of confirmation from Bank of Scotland

that it would accept €3.25 million in full and final settlement of its liabilities, when

in fact the Bank’s internal documentation supports satisfaction with progress by the

Dormers as to all the conditions precedent in the Heads of Terms (para.19).

(3) That the Bank relied on a “previous endorsement” of the Area Credit Committee on

7 October 2013 to initiate summary proceedings should BOSI not confirm in

writing full and final settlement of their outstanding debt within one month of that

date, yet that deadline had not been communicated to the Dormers (para. 22).

This complaint in para. 22 of the statement of claim relies on a fallacy that the Bank

was only entitled to initiate summary proceedings subject to limited conditions pre-

defined by the credit committee on 7 October 2013, which was not the case.

(4) That the failure of the Bank, to inform the Dormers of the deadline was a

misrepresentation by the Team of the scope and extent of its authority.

(5) That the Bank breached the Heads of Terms of 8 October 2013 and that this breach

caused the Dormers to suffer substantial loss and damage. It is claimed that this

breach was the catalyst to a spiral of events which led the Dormers to enter into “an

improvident Settlement Agreement on 30 January 2014”. (paras. 32 and 33).

The relief sought in the proceedings includes specific performance of the Heads of

Terms. I return later to the question of whether the Heads of Terms constituted an

agreement capable of being enforced whether by specific performance or otherwise.

(6) On 30 January 2014, the Bank led the Dormers to believe that reinstatement of the

October Heads of Terms was the basis upon which any settlement would be agreed 108

between the parties. Based on this inducement the parties agreed that the Heads of

Terms would be honoured and completed.

(7) That the terms of the Settlement Agreement were predicated on completion of the

Heads of Terms “as an express and/or implied representation on the part of the first

named defendant” (paras. 39 and 40).

(8) That “on the basis of representations and inducements of the first named defendant,

the October Heads of Terms formed a workable, applicable and operative basis of

the proposed Settlement Agreement and the enforcement of which formed an

express and/or implied term of the proposed Settlement Agreement pursuant to

which the liabilities of the Plaintiffs were to be refinanced so as to ensure inter alia

that the very advantageous debt reduction of circa €9 million on the part of Bank of

Scotland (Ireland) could be retained and the further write-down of AIB's debt of

circa €5 million following restructure would be equally achieved as agreed” (para.

41).

(9) The Bank and its representatives “failed to notify the Dormers during the summary

proceedings hearing on 30 January 2014 that revised terms had been approved to

issue Facility Letters on 17 January 2014 rendering the First Named Defendant's

legal entitlement to summary proceedings mute (sic) and at an end” (para 42).

(10) “The Plaintiffs entered into Settlement Agreement in good faith and they did so

predicated on an express and/or implied representation on the part of the Bank that

a recommendation to the Area Credit Committee of a proposal for credit facilities

on the Terms of the Heads of Terms, as issued on 8 October 2013, subject only to

the envisaged variations was other than an exercise that was bound to fail”.

(11) The Dormers claim that the identification of two New Special Conditions in the

paper to the Area Credit Committee of 14 January 2014, approved by the Area 109

Credit Committee on 17 January 2014 had the effect that the October Heads of

Terms no longer represented terms on which the Bank was prepared to refinance

their loan facilities. They claim that these newly referenced conditions were not

brought to their attention at any time prior to their entry into the agreement of 30

January 2014 and that they were material terms within the knowledge of the

Bank. It is claimed therefore that the October Heads of Terms had become

meaningless and irrelevant and by extension that the commitment on the part of the

Bank in the Settlement Agreement 30 January 2014 to recommend to the Area

Credit Committee a proposal for credit facilities on the terms of the Heads of Terms

“constituted a commitment without substance which engendered as an outcome the

inevitable refusal of the recommendation and, as the first defendant well knew, was

bound to fail”. (paras. 45 and 46)

The two “New Special Conditions” mentioned in the Team Paper of 14 January 2014

in fact never became preconditions of the January Decision or conditions at all in the

Team recommendation of 7 February 2014.

(12) That it was a misrepresentation for the Bank to “induce the Plaintiffs to enter

into a Settlement Agreement on the representation that the Plaintiffs’ loan facilities

could be refinanced on the terms of the October Heads of Terms whereas in fact the

First Named Defendant was at all material times aware that the Head of Terms were

no longer acceptable to the Bank and that the Bank had no intention of transacting

business with the Plaintiff on those terms. The Plaintiffs would never have entered

into the Settlement Agreement7, and thereby waived any Defence to the Summary

7 This claim is repeated numerously in the pleadings and submissions, and general assertions to the effect are made by implication. Mr. Dormer did not in his evidence say that he would never have entered the Settlement if he had known of the January recommendation and decision. (See Part Nine). 110

Claim, had they been made aware that the October Heads of Terms were no longer

acceptable to the Bank, since a Settlement Agreement predicated on a

recommendation to the Area Credit Committee based on those terms was bound to

fail with catastrophic consequences for the Plaintiffs”. (para. 47)

(13) An alternative claim is made that the decision of the Area Credit Committee of

17 January 2014 to approve the issue of Facility Letters was a significant

development and had the effect of moving matters past the stage of credit committee

approval. It is said that the Bank failed to inform the Dormers during the settlement

negotiations that approval had already been granted by the ACC to issue Facility

Letters, thereby rendering a reversion to that committee after 30 January 2014

redundant and unnecessary, and that non-disclosure of this fact amounted to a

misrepresentation on foot of which the Dormers were induced to entered into the

30th January settlement. (para. 48)

(14) That the Dormers’ entry into the Settlement was “procured and induced in

circumstances where the servants or agents of the Defendant knew or were reckless

in failing to disclose that a proposal in the terms of 8 October 2013 Heads of Terms

was bound to fail” (para. 52)

The core of the claim

353. In the statement of claim and in their evidence and submissions the Plaintiffs move

between allegations of fraudulent misrepresentation and negligent misrepresentation,

interwoven with allegations of deceit and duplicitous conduct. The core of the claim can in be

summarised as follows.

354. Firstly, that by misrepresentations made on 30 January 2014 the Plaintiffs were induced

to enter into the Settlement Agreement. 111

355. Secondly that the misrepresentation comprised the deliberate omission to inform the

Plaintiffs on 30 January 2014 of the 14 January Paper and the 17 January 2014 Area Credit

Committee Decision.

356. Thirdly that the January Team recommendation contained a description of the conduct

of the Plaintiffs and their adviser Mr. Roddy which was negative in at least two respects such

that when it came to the Team recommending on 7 February 2014 approval of the Area Credit

Committee of the Settlement Agreement of 30 January 2014 that recommendation was bound

to fail.

357. Fourthly, that it was an implied representation by the Bank on 30 January 2014 that the

proposal and recommendation to the Area Credit Committee to approve the Settlement was

otherwise than bound to fail.

358. Fifthly, that if the Plaintiffs had known of these facts they would not have entered into

a Settlement Agreement by which they, inter alia, waived their defence to the summary

proceedings.

359. Some of the more far-reaching allegations made in the Statement of Claim and repeated

in evidence and submissions and which were not withdrawn included the following:

(a) That the misrepresentation was fraudulent and deceitful.

(b) That the Defendant perpetrated a scheme of manoeuvres in which, all along, their

objective was to achieve judgment as quickly as possible and stand ahead of BOS

in any competition for enforcement against unencumbered assets and that this

strategy and scheme informed the negotiations on 30 January 2014, if not before

then, and the Settlement Agreement itself.

360. The Defendant acknowledges that after the events of December 2013, securing

judgment, if necessary from its perspective, had become an objective. They say however that 112

their preferred outcome was a consensual restructuring and that their actions and negotiations

on 30 January 2014 were dedicated to that preferred objective.

Discussion

361. There is no doubt that from an early stage the Bank gave consideration to all of its

options, including pursuing summary proceedings for the outstanding debt which, if successful,

would culminate in the registration of judgment mortgages against previously unencumbered

assets. In the Team’s reports and recommendations throughout the process this route is

mentioned as becoming necessary if a satisfactory restructuring is not agreed and

implemented. At the same time, it is also clear from the internal reports that the refinance and

restructuring, which provided for not only the refinance of the BOS debt but also the

restructuring of the Plaintiffs’ debt to the Defendant, was seen as a preferred outcome by virtue

of its provision for the granting of new security on previously unencumbered assets.

362. When the Plaintiffs failed to comply with Condition 5, as I have found they did (see

Part Four) the Defendant decided to commence summary proceedings. There was much debate

and controversy in the evidence as to whether this decision was motivated by (a) a failure of

the Plaintiffs to provide the confirmation by BOS in terms unconditional and satisfactory to the

Defendant or (b) by the Team’s view that the request by Mr. Roddy for a letter to BOS which

the Team perceived would mislead BOS resulting in a view that Mr. Roddy, if not the Plaintiffs

themselves or both could not be trusted.

363. The reports show that summary proceedings were always in the “armory” contemplated

by the Defendant if required. The motivation of the Defendant which informed the timing of

the commencement of summary proceedings is not a determining factor in this case. The

question which would have fallen for decision in the summary proceedings had they gone to 113

hearing, was whether the Bank was entitled to demand and pursue recovery of the loans, when

it did, by those proceedings.

364. Once the decision had been made to issue and serve summary proceedings and apply

to enter them in the Commercial List of the High Court the Plaintiffs were then aware they

were facing the prospect of judgment, summary or otherwise, for €17.6 million.

365. After the service of the summary proceedings the parties exchanged affidavits and the

application for summary judgment was listed for hearing on 30 January 2014. During the

currency of those proceedings there were two streams of activity ongoing, both of which were

pursued by the parties at pace namely, (a) the exchange of affidavits in preparation for the

hearing on 30 January 2014 and (b) the continuing efforts to agree and finalise the refinance

and restructuring. All of the evidence is that the parties were busily engaged in both of those

‘streams’ from 9 December 2013 onwards. I can find nothing in the evidence to suggest that

whilst working on the restructuring and engaging through solicitors the Bank were acting

improperly in pursuing the summary proceedings, a course well known to the Dormers and

their advisers.

366. When it came to 30 January 2014 the matter was listed not only for mention but for

hearing. The parties entered negotiations, which were conducted between counsel for the

parties.

367. The effect of Clause 2 of the Settlement Agreement was that if the refinance and

restructuring could be agreed and implemented still between that date and 28 February 2014

the proceedings would be at an end.

368. Clause 4 of the Settlement states that if the Bank had not, on or before 28 February

2014, agreed to provide facilities on foot of the recommendation referred to in Clause 5(3) the

Dormers would consent to judgment. That clause, taken together with Clause 5(3) is the

clearest possible statement that the Settlement remained subject to a decision by the Bank, 114

outside the control of the Team, to approve this latest iteration, for that is what it was, of the

refinance and restructure. That this decision still had to be made by the Bank, following its

internal process of Credit Committee approval, is the only interpretation of Clauses 4 and 5(3)

open. Mr. Dormer in his evidence confirmed that he knew this and understood the process. The

Settlement therefore carried for the Dormers the risk, not concealed, of a negative decision

pursuant to Clause 4.

369. Much was made in the Plaintiffs’ submissions of the fact that there is only one legal

incarnation of the Defendant, and that the Defendant cannot be permitted to shelter behind a

distinction between its separate internal entities, such as a Credit Committee, or the Team, and

the Bank itself. That is correct, and on 30 January 2014 the Team and counsel and solicitors

represented the Bank itself. But it is common case that all attendees on 30 January 2014 knew

that the Settlement Agreement, representing as it did, yet another opportunity for a consensual

transaction, was conditional on a final decision still to be made by the Bank. Not only is this

plain from the text of the Settlement, but the evidence Mr. Dormer and Mr. Roddy is that they

knew of the process to be followed, without which there was no agreement as required by

Clause 4.

370. The Plaintiffs submit that this meant they were being subjected to the “whim” of an

Area Credit Committee, without knowing what information or commentary that Committee

had previously received in relation to them. That colourful description carries the necessary

implication that the Bank had an obligation to place before the Plaintiffs all of its internally

documented analysis. How far this would go was not articulated, although attempts were made

in the submissions to advance the proposition that even disclosure of the fact of the January

Paper and Decision would have led to a different result, namely that the Settlement would not

have been signed, a proposition unsupported by evidence. 115

371. In summary, the refinance and restructuring agreement could succeed or fail for any

number of reasons including failure or refusal of the Area Credit Committee to approve the

Settlement Agreement for any reason, which is what occurred.

372. The most the Team in attendance at the Four Courts were in a position to do on that day

was to commit to recommending the Settlement, the final decision being for the Area Credit

Committee.

Did the Plaintiffs have a choice?

373. The Plaintiffs say that they believed that they had a good defence to the summary

proceedings. Even if they held that belief they were on 30 January 2014 facing at least the

possibility of judgment being entered against them on that day. A number of outcomes were

possible that day.

374. Firstly, the court could grant summary judgment for the entire sum of €17.6 million.

375. Secondly, the court could be persuaded that there was a fair issue to be tried and that

the affidavits of Mr. Dormer and Mr. Roddy disclosed an arguable defence, in which case the

action would be remitted to plenary hearing. (See Aer Rianta v. Ryanair [2001] IESC 94).

376. The third possible outcome was that the matter would be settled finally that day and the

proceedings disposed of by a final order or struck out.

377. A fourth possible outcome was that terms would be agreed and the case adjourned to

implement those terms or address any conditions stipulated in a settlement, which is what

occurred.

378. The agreement made was that the proceedings would be adjourned to 4 March 2014,

on the terms stipulated. Those terms included the fundamental and simple Clause 4 to the effect

that the Bank still had to agree with the refinance and restructuring, and if it did not do so the

Dormers would consent to judgment for the full amount claimed. 116

379. One way or the other, the Plaintiffs were faced with the possibility of summary

judgment on 30 January 2014 as one of the possible outcomes. It was in those circumstances

that, with the benefit of legal advice, they agreed to and submitted to the conditions of the

adjournment which included the conditionality of final agreement by the Bank.

380. Whilst the Plaintiffs make frequent valid references to the “underlying Heads of

Terms”, the agreement of 30 January 2014 was a new agreement, which referenced and was

based on the Heads of Terms but contained other conditions, including the requirement for

Bank approval.

381. If the proceedings had not been settled or adjourned the best the Dormers could have

achieved on that day was to have the matter remitted to plenary hearing. The Settlement

Agreement “bought off” for them the risk of a judgment on that day and afforded a final

opportunity to resolve the matter which ultimately failed.

382. The court heard no evidence as to the content of legal advice the Dormers obtained

during the course of the day on 30 January 2014. Therefore the court does not know whether

that advice included advise that, however positive the progress of discussions and negotiations,

there remained, on the face of the Settlement Agreement the possible outcome that the Area

Credit Committee would not approve the Settlement Agreement. The court does not fault Mr.

Dormer for not adducing evidence of this privileged advice. I must however assume that the

advice was taken on the final form of the Settlement before it was signed. Against that

background I do not accept that by including the condition reserving a final decision for the

Bank to be made on or before 28 February 2014 and committing to the recommendation in

Clause 5(3), the Bank or its Team was acting perniciously or deceptively. 117

Express representation

383. No evidence was adduced of any express representation that the proposed

recommendation to the ACC was otherwise than bound to fail. The evidence of the Team

members, who were cross-examined carefully on this issue, was that, however strongly they

believed that the proposal would be approved by the ACC, that was a matter outside their

control. They say that they made the recommendation in the strongest of terms supporting the

restructuring. That they did so is evidenced by the Paper of 7 February 2014.

384. The discussions took place between counsel. The admitted witness statements of Mr.

Cush, S.C. and Mr. Crean B.L. were to the effect that nothing was said on the day of the

settlement about additional conditions or a further decision of the Area Credit Committee made

in January 2014. Neither of those witnesses referred to any express representation having been

made as to the prospects of the recommendation to the Area Credit Committee succeeding.

McCaughey v. Irish Bank Resolution Corporation Limited and Others [2013] IESC 17

385. A case of deceit, falsehood or misrepresentation can be made by reference to an

omission or concealment of facts. In McCaughey v. Irish Bank Resolution Corporation

Limited and Others [2013] IESC 17 Hardiman J. put it thus:

“78. The learned trial judge then went on to consider what was required in order to

establish fraud. He followed the decision of Shanley J. in Forshall v. Walsh and Bank

of Ireland and others (High Court, unreported 18th June, 1997). This case listed the

elements which a plaintiff seeking to establish fraud or deceit must show:

‘(i) The making of a representation as to a past or existing fact by the Defendant,

(ii) That the representation was made knowingly or without belief in its truth, or

recklessly, careless of whether it is true or false, 118

(iii) That it was intended by the Defendant that the representation should be acted

upon by the Plaintiff,

(iv) That the Plaintiff did act on foot of the representation and

(v) That the Plaintiff suffered loss as a result.’

79. These elements of actionable deceit have been well established in the case law

for well over a century. Since that line of authority is aptly epitomised in a modern Irish

case, there is no need to review the authorities generally. But the present case is based

very largely on concealment, and it is obvious that to suppress a material fact may give

a false impression even though no positive falsehood is spoken or written. (Emphasis

added).

80. This state of affairs has been recognised by the law for centuries. It was

strikingly expressed almost one hundred and fifty years ago in another case to do with

a company seeking investors, Oakes v. Turquand and Harding [1867] LR 2 HL

325 when Lord Chelmsford said:

‘It is said that everything which is stated in the prospectus is literally true, and so

it is, but the objection to it is not that it does not state the truth as far as it goes, but

that it conceals most material facts with which the public ought have to been made

acquainted, the very concealment of which gives to the truth which is told the

character of falsehood’.

81 The fourth and fifth constituents of a claim for fraud and deceit, as set out by

Shanley J., must be read in a slightly altered way when applied to a fraud or

misrepresentation by concealment. The Plaintiff cannot have acted on what was

concealed, although he may be said to have acted on the balance of the representation

which (unknown to him) is qualified or falsified in its effect by the

omission. Furthermore, to show that he has ‘suffered damage as a result’ of the 119

omission seems necessarily to involve the negative proposition that he would not have

acted in the manner that resulted in the loss, absent the omission.”

386. When Hardiman J. refers to “the balance of the representation” being “qualified or

falsified in its effect by the omission”, he was referring to cases where representations, express

or implied, are made, but relevant facts are omitted which distort the representations made. In

this case no express representation or statement of any kind was made as to the prospect of the

Team’s recommendation succeeding at the Area Credit Committee.

387. Nor does clause 5(3) of the Settlement or any other of its terms carry any implication

as to the prospect of success, or that the recommendation was not “bound to fail”.

PART NINE: MISREPRESENTATION BY OMISSION OR CONCEALMENT

388. Mr. Dormer claims that if he had known of the January Paper and Decision (14 and 17

January 2014) he would not have taken the risk of signing an agreement which, on his

description, placed him at the “whim” of the ACC. He refers to the 14 January report which

included references inter alia, to the Bank’s perception that the Plaintiffs had misled it

regarding matters such as the availability of unencumbered assets, and its view that Mr. Roddy

had on 5 December 2013 made a request for a letter of which the Team disapproved.

389. The paper of 14 January 2014 refers to these issues and I have quoted them earlier. It

refers also made to the affidavits exchanged in the summary proceedings which, in the Team’s

view were untrue. I have quoted these extensively in Part Six above.

390. Mr. Dormer knew that the Bank was dissatisfied with the failure, as the Team saw it, to

comply with Condition 5 of the Heads of Terms and with Mr. Roddy's conduct in requesting a

certain letter for Bank of Scotland. Even though there is strong disagreement between the

parties as to whether these events actually occurred the fact remains that these issues were

canvassed at length in the affidavits exchanged in the summary proceedings in December 2013 120

and January 2014 and had emerged “front and centre” as issues in dispute. Therefore, Mr.

Dormer had knowledge of the Bank's position on these issues.

391. This matter was put to Mr. Dormer in his cross-examination. Initially he indicated that

he was not aware of the Bank's position on these issues. When pressed further he

acknowledged that he was aware that these points were made in affidavits exchanged before

30 January 2014, but he said that he had “not thought about the point” when at the Four Courts

on 30 January. (See Part Seven above).

392. Mr. Dormer cannot escape the fact that these issues were identified in the affidavits

which had been exchanged and which were before the court for the hearing on 30 January 2014.

393. The limited evidence of the substance of the inter party discussions on 30 January 2014,

including the admitted Witness Statements of Mr. Cush and of Mr. Crean is that these matters

were not expressly referred to in those discussions. Nor is there evidence that Mr. Dormer

instructed his counsel to ask questions about the prospect of the Bank giving the agreement

required by Clause 4. There is no evidence that such a question was asked. But this does not

mean that the Bank was obliged to embark on a disclosure in the course of negotiations between

counsel at the Four Courts of each and every step and record of internal deliberations made and

written in the weeks or months leading up to the hearing date. Still less were the Bank obliged

to remind the Dormers of the contentious issues which preceded the Settlement, and of its views

of their conduct, all of which had been articulated in the Bank’s affidavits. Failure to do so

does not constitute concealment or deceit amounting to a “McCaughey” misrepresentation. To

hold otherwise would be to find that the Bank was obliged, through its counsel, to say “don't

forget what we have said about you in the affidavits”. 121

Non-Disclosure of the fact of the January Paper and Decision

394. Is it sufficient for the Bank to simply say that the Plaintiffs were aware of the substance

of the contentious issues and of the Bank’s negative views on aspects of their conduct, merely

because these had been canvassed in affidavits?

395. Mr. Dormer knew of these issues. But he was not informed that they had featured

negatively in an internal report of 14 January 2014 which gave rise to a decision on 17 January

2014. On 30 January 2014 the Team were committing to make a recommendation to the Area

Credit Committee without disclosing that they had already made reports to the Committee

which contained negative descriptions as to the trustworthiness of the Dormers and their

adviser.

396. The 14 January Paper contained much more than this “negative commentary”. It

recommended the refinance and restructure and that recommendation was accepted, resulting

in an authorisation for the Team to proceed with the negotiations. If the team were to have

disclosed even the fact of this internal exchange a separate question would remain as to how

much if any of the paper of 14 January would they have been obliged to disclose or show.

397. The Dormers submit that it does not matter what this Court or the Bank now think of

the January Paper. There is some force in this submission, and the kernel of their complaint is

that they did not know of its existence or content when entering the Settlement Agreement.

They also point to the acknowledgement in Mr. Conneely’s evidence that he considered the

January Decision to be material, albeit from the perspective of taking assurance that he was

acting within authority.

398. It is clear also that the Team was giving the Plaintiffs every opportunity to implement

the refinance and restructuring. The Plaintiffs had failed to comply with Condition 5 of the

Heads of Terms and this triggered the Bank's decision to move to enforcement. The Settlement 122

Agreement did not “cure” that failure. Instead it opened yet another opportunity to implement

the refinance and restructuring and avoid the possibility of judgment.

399. The January Paper was of course not legally privileged and ultimately was discovered

in these proceedings. But that does not mean that during the course of the negotiations on 30

January 2014, which were being undertaken against the background of contentious proceedings

listed for hearing that day, the Bank was under an obligation firstly, to remind the Dormers of

the issues recently ventilated in affidavits before the court for that same day’s hearing and

secondly, to describe either its process for or the contents of the internal analysis undertaken

by the Team of the merits and demerits of the refinance and restructuring and the Team's

ongoing exchanges with the Committee, including the fact of a Report and Decision in January

2014, all of which resulted in a positive authority to progress the refinance and restructuring.

Would disclosure of the January Paper and Decision have made a difference?

400. Mr. Dormer gave the following evidence:

“Not once did Eamonn or Sarah or anyone from AIB mention anything to me or my

legal team that they had been in the credit committee on the 14th/ 17th January 2014.

Now I know this was an underhanded ploy to entrap us, I have no doubt, unfortunately

it backed fire. They were weaving a web all along. AIB wanted judgment nothing else,

it was a charade and we all bought it even my legal team. They wanted us to give up

the Heads of Terms in return for a settlement agreement, which was bound to fail.”

401. Mr. Dormer continued: “I didn't know at the time they had already predetermined my

faith (sic – meaning fate). AIB were never going to implement the Settlement Agreement. I

know now that the actions of AIB on the 14th to 17th January and their subsequent silence and

manipulation on 30th January 2014 had put an end to the Settlement Agreement for me”. 123

402. Later Mr. Dormer said “I was misled on the 30th January, that’s the best way of putting

it”

403. In cross-examination, the Bank’s counsel put the matter as follows:

Q. And can I take it, then, that insofar as anybody said anything to you on that day

about what the Settlement Agreement meant, what obligations it imposed on you or

the Bank, that came from your own side, your lawyers, with your counsel, your

solicitor or Mr. Roddy?

A. Yes

Q. Okay. Any I’m not going to ask you what they told you. That’s a good enough

answer for me. Thank you Mr. Dormer.

404. As I have described earlier the Settlement Agreement represented a negotiated outcome

on a day in the High Court when the Dormers would otherwise have been facing either

summary judgment there and then, or at best for them, the case being remitted to plenary

hearing. If the court had determined that the matter should be remitted to plenary hearing, that

course would have taken significant further time to reach conclusion. There was no evidence

that the settlement with Bank of Scotland would have been still available to the Dormers by

the time such a proceeding would conclude.

405. For all the criticism made by Mr. Dormer of the conduct of the Bank, no evidence was

given as to whether if he had known of the January Paper and Decision, which were positive

in endorsing the Team’s recommendation to proceed with the transaction, he would have

refused to sign on 30 January 2014 a Settlement Agreement which secured for him an

adjournment of the summary judgment application to enable the refinance and restructuring to

be finalised and implemented taking into account variations which had arisen in the days and

weeks beforehand and were now sought by him. 124

406. This court should be reluctant to speculate as to what would have transpired if more

had been said between the parties on the day. Nonetheless I have no evidence, other than

submissions and Mr. Dormer's broad allegations of manoeuvring and a “charade”, that if he

had known of the January Paper and Decision - and not only of the negative extracts therefrom

selected by his counsel in support of the submission - he would not have signed the Settlement

Agreement.

PART TEN: OTHER ISSUES

Requirement to return to Credit Committee

407. It was submitted that the 17 January decision had the effect that there was no

requirement for the Settlement Agreement to include a condition of ACC approval. It is clear

from the content of the January paper and the Decision, and from all the other communications

between the parties throughout January 2014, that more work was required and new variations

of the proposal were being introduced by the Plaintiffs in January 2014, culminating in the fact

that the Settlement Agreement itself contained new provisions, relating both to the position of

AB and variations for updated valuations of assets. Therefore the Defendant cannot be faulted

for the introduction of Clause 4 which required the Team to revert to the Credit Committee.

Was the proposal bound to fail?

408. Leaving aside the absence of a representation that the proposal was otherwise than

bound to fail, the underlying proposition that it was “bound to fail” is unsupported by

evidence. This allegation is founded on a theory that the Team were manoeuvring to secure a

consent judgment all along and that this was their only goal. This is an allegation that when

the Team updated the Area Credit Committee on 14 January 2014, continued to engage through

solicitors and valuers relating to title and valuation matters respectively, attended at court on 125

30 January 2014 and continued their engagement throughout up to and including the

submission of a recommendation on 7 February 2014 that this was all pursuant to a “hollow”

process and therefore that the final recommendation made to the Area Credit Committee on 7

February 2014 was bound to fail. The allegation of such a scheme is not borne out by the

evidence. The evidence of the Team members, which in my view remained reliable under

cross-examination, was that they truly believed that the outcome for all parties on a consensual

refinance and restructuring would be more favourable than the pursuit of a judgment. Critically,

this is borne out by the detail of the Team Papers and recommendations described extensively

in this judgment (Parts Five and Eight).

Specific performance of the Heads of Terms

409. One of the reliefs sought in the Plenary Summons is an order for specific performance

of the October Heads of Terms. The Statement of Claim characterises the Heads of Terms and

the covering letter of 8 October 2013 as setting out “the culmination of the agreement between

the first named defendant and the Plaintiffs, which was sanctioned and approved at Area Credit

Committee of the first named defendant on 7 October 2013, to replace the then existing

facilities in existence between them” (Para. 12)

410. Having recited the principal terms of the Heads of Terms the Statement of Claim

continues:

“these were the three component loans making up the October Heads of Terms agreed

between the first named defendant and the Plaintiffs in October 2013. The proposed

financing was predicated on certain security, which is also set out and described in the

Heads of Terms. Furthermore the aforementioned Loans were to be adjusted

accordingly following completion and review of the valuations”. (Para. 14)

411. Paragraph 23 of the Statement of Claim pleads: 126

“The Decision of the Area Credit Committee dated 7 October 2013 was a unanimous

decision to approve the Restructuring of the Plaintiffs borrowings and Refinance of

BOSI facilities. The Decision paper specifically noted:

“Written confirmation to be received from BOSI within one month from now

confirming our proposed refinance will be in full and final settlement of their

outstanding debt, including extended expiry date of same. This timing will be

outlined in the Heads of Terms. Team to have instructed legal advisors to have

the necessary documentation prepared to demand loans and seek judgments on

unencumbered assets without delay should BOSI not co-operate within this time

frame.””

412. The quoted text, including the reference to a one month deadline, was from the internal

minute of the Credit Committee decision, and not communicated to the Dormers at the time.

413. Having made those references to the Heads of Terms and the covering letter of 8

October 2013, the Statement of Claim then moves to allege breach of contract and

misrepresentations and refers to the events of December 2013 and the commencement of

proceedings.

414. None of the elements of a binding and enforceable contract capable of specific

performance were pleaded or put in evidence.

415. The Heads of Terms reflected a proposal which had been the subject of ongoing

discussions between the Dormers and the Bank for many months during 2013, and which

continued after they were issued.

416. The covering letter enclosing the Heads of Terms states “you will note professional

valuations are a condition precedent to offer letters. Following completion and review of these

valuations the Bank will adjust loan facilities accordingly”. 127

417. The Heads of Terms does not contain an offer. In its terms it was a precursor to the

issue of offer letters if all the preconditions were fulfilled.

418. There was therefore no offer and no acceptance. Undoubtedly the Dormers embarked

on a busy process of endeavouring to comply with the conditions, failing ultimately to comply

with Condition 5.

419. Inconsistent with the submission that the Heads of Terms were of themselves a binding

contract, is the significant resistance on the part of Mr. Roddy to central commercial terms,

notably his queries relating to valuations, provision for capital expenditure which according to

Mr. Roddy had been “dropped”, and provisions in relation to the timing of capital and interest

payments. Mr. Roddy queried the level of interest repayments which would be expected or

allowed for in years 1 to 5. This was not the response of a party who regarded the Heads of

Terms as a binding and enforceable contract.

420. The Heads of Terms were a statement issued unilaterally by the Defendant, albeit

reflecting ongoing discussions, and of the terms and conditions on which, if fulfilled, the

Defendant would issue offer letters. Only if offer letters were issued and accepted would a

binding agreement for the refinance and restructuring come into existence.

421. The Plaintiffs relied on the decision of this Court (Finlay Geoghegan J.) in Allied Irish

Banks Plc v. Galvin and Others [2011] IEHC 314. In that case the court found that a set of

Heads of Terms which was a precursor to Facility Letters which were signed and drawn down

amounted to a collateral contract “in the sense of a prior representation by AIB intended to

have contractual effect that it would limit its recourse to the Galvin Brothers (and by

subsequent agreed inclusion GDK) to 50% of the drawn debt of agreed facilities, which became

a binding collateral contract when those parties entered into the agreements in March 2007 in

relation to the facilities referred to in the letters of loan sanction and continue to subsist when 128

the parties entered into the further agreements in September 2008 to extend the facilities

already drawn down and make certain further borrowings”.

422. The court found in that case that the Heads of Terms were a statement intended to have

contractual effect and that the Bank were aware of the purpose for which the Heads of Terms

were being sought, namely to enable the borrowers to enter into certain co-ownership

agreement with third parties. Facility Letters were later issued and signed. The court was

willing to interpret the transaction as a whole by reference, inter alia, to the Heads of Terms.

It found the existence of a collateral contract or, as it was put by the Supreme Court of New

Zealand in Industrial Steel Plant Limited v. Smith [1980] 1 NZLR 545, in a passage approved

by Finlay Geoghegan J. as follows “The name is not perhaps altogether fortunate. The word

‘collateral’ suggests something that stands side-by-side with the main contract, springing out

of it and fortifying it. But as will be seen from the examples that follow the purpose of the

device usually is to enforce a promise given prior to the main contract and but for which this

main contract would not have been made. It is rather a preliminary than a collateral

contract.”

423. The critical difference between AIB v. Galvin and this case is that the Heads of Terms

in that case, which contained provisions limiting the recourse of the Bank against the

borrowers, were a precursor to issued, accepted and drawn down facilities and the Heads

informed the construction of those facilities and the transaction as a whole. In this case the

transaction never proceeded to the issue of signed and accepted facility letters.

PART ELEVEN: SUMMARY OF CONCLUSIONS

424. Firstly, the Heads of Terms and covering letter of 8 October 2013 did not constitute a

binding and enforceable agreement to fund the refinance and restructuring. It was a statement 129

of the Defendant’s willingness, if certain conditions were fulfilled, and if offer letters were

later issued and accepted, to effect the transaction.

425. Secondly, Condition Number 5 of the Heads of Terms, namely the condition precedent

requiring that BOS provide written confirmation that the refinance would be in full and final

settlement of their outstanding debt and that it will have no further recourse to the Plaintiffs

was not complied with before the Defendant informed the Plaintiffs that it was revoking the

Heads of Terms and demanded repayment.

426. Thirdly, the omission of the Defendant to inform Mr. Dormer of the Team Paper of 14

January 2014 and of the ACC Decision of 17 January 2014 was not a misrepresentation.

427. Fourthly, no representation was made as to the prospects of success of the

recommendation to be made by the Team pursuant to Clause 5(3) of the Settlement Agreement.

428. Fifthly, the Defendant complied with clause 5(3) of the Settlement Agreement.

429. Sixthly, the recommendation made by the Team to the Area Credit Committee on 7

February 2014 was not bound to fail.

430. Seventhly, I am not persuaded, having regard to all of the evidence and the

circumstances in which the Settlement Agreement was entered into, that if the Defendant had

informed the Plaintiffs of the Paper of 14 January 2014 and the Decision of 17 January 2014

or of their contents the Plaintiffs would not have signed the Settlement Agreement.

431. The claim will be dismissed. 130