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Court of Appeal dismisses appeal of High Court orders that surcharge interest on a redemption figure was unenforceable as a penalty, on the grounds that the appellant, as assignee, is bound by the representations as to the redemption figure given by its assignor to the plaintiffs, and that the plaintiffs acted on those representations to their detriment; and it follows in turn that the appellant is estopped by reason of the conduct of its assignor from asserting that surcharge interest is now due on loans up to and including 19th June 2015.
Finlay Geoghegan J (nem diss): Contract law – shareholder dispute – whether a surcharge or default interest provision in a bank’s loan agreement is enforceable or a penalty and hence unenforceable – whether Breccia is entitled to include default surcharge interests and costs of enforcement in the redemption figure – whether Breccia are estopped from applying surcharge interest between certain dates – inclusion of enforcement costs incurred prior to the date of proposed redemption – appeal dismissed.
"I would accordingly dismiss the appeal of Breccia against the determination of the High Court that clause 5 of the general conditions is a penalty clause and hence unenforceable. If it were necessary I would dismiss the appeal against the estoppel decision. I would vary the High Court order to permit the inclusion of enforcement costs incurred prior to the date of proposed redemption in accordance with this judgment. The Court will hear the parties in relation to the precise variations required in the High Court order by reason of the judgments being delivered today."
Hogan J: Contract law – shareholder dispute – whether even if Breccia was entitled in principle to charge surcharge interest, it is, in any event, estopped from doing so – NALM fully understood and accepted that the redemption figure would not include a figure for surcharge interest – whether there was a representation by NALM – whether the correspondence and emails from NALM amounted to a representation affecting legal relations between the parties which was intended to be acted on – whether Mr. Flynn and Benray acted to their detriment – appeal dismissed.
"Summing up, therefore, I am of the view that Breccia as assignee is bound by the representations as to the redemption figure given by its assignor, NALM, to the plaintiffs in March/April 2014 and that the plaintiffs acted on those representation to their detriment. It follows in turn that Breccia is estopped by reason of the conduct of its assignor, NALM, from asserting that surcharge interest is now due on these loans up to and including 19th June 2015."
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