Bank entitled to judgment having acquired security over property on foot of cross-border merger

Clarke J (nem diss): Defendants/appellants borrowed significant sums of money from the Irish subsidiary of Bank of Scotland (BOS) - BOS appointed first named plaintiff/respondent as receiver over some of the properties which were subject of the relevant loans - receiver sought declaratory relief that he was validly appointed, and bank sought judgment over monies which were said to be owing - both claims successful in the High Court - bank entitled to recover a sum of €4,064,138.01 from the defendants - defendants appealed to Supreme Court - alleged that cross-border merger of second named plaintiff/respondent and former Irish entity did not transfer the benefit of any security from the Irish entity to BOS - defendants/appellants argued that there had been arrangements between the bank by which a loan over a certain property could not be called in until the property had been sold - allege that BOS was never made registered owner over specific lands - five facility letters totalling over €3 million furnished to defendants/appellants in April 2008 - later letters in July and August of 2008 were alleged by defendants/appellants to have extended the terms of the earlier facilities - court said these letters were no more than extensions of existing loans and not subject to any new or varied conditions - purpose of pleadings to define the parameters of the case before the trial starts - nothing in pre-trial process which could be reasonably expected to have alerted BOS to the fact that a claim was being advanced about an understanding or collateral agreement - counsel for defendants/appellants made no mention in closing submissions to High Court that loans could not be called in until loan over specific property had been sold - argument made that bank did not properly issue demand notice - counsel for the receiver and BOS stated that counsel for the defendant/appellant did not mention that the bank could not move until the specific property was sold - trial judge only mentioned this specific property point very briefly - facility letters were valid for specified time period only of eight months and contained nothing to suggest that only method of repayment would be from a sale of the specific property - nothing in original facility to suggest that Irish entity of financial institution had to wait until specified property was sold - financial entity was entitled to call in loan at the end of any periods specified in the various facility letters - the fact that a lending institution may renew lending facilities does not create any legal obligation on them to renew those facilities - height of evidence was that there might have been a vague understanding on the part that some latitude would be given to the defendants/appellants in the event there was difficulty selling the specified property - however this cannot displace the effect of written terms signed up to by the parties - no evidence to suggest there was any sort of legally binding collateral agreement in place that would have prevented the lending institution from enforcing their entitlements under the terms of the facility letters - lending institution would have always been entitled to recover any shortfall - lender was not legally obliged to wait for sale of property - cross-border merger made under European Communities (Cross-Border Mergers) Regulations 2008 (S.I. No. 157 of 2008) ("the Irish Regulations") in Ireland and the Companies (Cross-Border Mergers) Regulations 2007 in the United Kingdom - overrding purpose of Council Directive 2005/56/EC is to facilitate cross-border mergers of limited liability companies governed by laws of different member states - defendants/appellants claimed that a security was not an asset - examination of transferor lending institution did not disclose any securities as assets - normal accounting practice requires accounts of lending institutions to reflect the value of that loan by calculating the value of anticpated receipts to be derived from the repayment of the loan - lending institutions have much chance of getting back some of the money they have advanced on loans when the borrower has provided security - security puts the security holder at the head of the queue as far as the relevant asset is concerned - statutory purpose for including information such as the balance sheet in common draft terms is to provide an evaluation of the assets and liabilities of the relevant companies rather than to provide a list of those assets - failure to refer to security in common draft terms does not affect the transfer of securities as an asset on the completion of the merger - asset in the context of a company refers to any element of the business which has the potential to confer value - whatever security that the Irish entity of the bank had at the time in respect of loans was transferred to BOS - authorised signatory of bank was properly appointed to be agent of the bank - receiver in this case was permitted to be appointed by deed or by an authorised officer - trial judge correctly concluded that the receiver was correctly appointed - solicitors for BOS were acting on the instructions of BOS in calling in the loan - security held by Irish entity of the financial institution was an asset of that institution within the meaning of the Directive and passed on the coming into effect of the merger onto BOS - appeal dismissed.

Laffoy J (concurring): addressing only one issue raised on appeal - agree with Clarke J on all issues, apart from one of BOS not being registered as the owner of a charge over registered land created by the defendants/appellants in favour of the Irish entity - defendants/appellants' argument extends to properties to which the title is unregistered and over which the Irish entity also obtained security from the defendants/appellants - Property Registration Authority had written to the solicitors on record for the receiver and BOS saying that all mortgages registered with the Property Registration Authority to which the Irish entity was a party could be construed as if BOS had been a party of them - securities held by Irish entity over defendants/appellants property passed to BOS, after which the Irish entity ceased to exist - BOS had a contractual entitlement to appoint a receiver independently of the provisions of the Registration of Title Act of 1964 - the fact that BOS is not registered on the folio of a 2006 charge did not prevent it appointing the receiver - receiver validly appointed by BOS - s.62 of the Registration of Title Act 1964 confers certain statutory benefits on a transferee of charges, however a transferee has to properly registered as the owner of those charges to gain the benefits - BOS did not register as the owner of those charges and must do so in order to avail of these benefits.