THE SUPREME COURT
[Appeal No. 13/2014]
IN THE MATTER OF ELEKTRON HOLDINGS LIMITED (IN RECEIVERSHIP)
IN THE MATTER OF CROSSPLAN INVESTMENTS LIMITED (IN RECEIVERSHIP)
IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 316(1) OF THE COMPANIES ACT 1963
PATRICK HALPIN AND ANN KEANE
Judgment of Ms. Justice Laffoy delivered on the 11th day of March, 2016.
The application which gave rise to the order appealed against
1. The application in the High Court which has given rise to this appeal was initiated by an originating notice of motion filed on 13th July, 2012 in which the applicant/respondent, hereinafter referred to as “the Receiver”, invoking s. 316(1) of the Companies Act 1963 (the Act of 1963), sought certain directions in relation to the exercise of his powers as receiver over the property and assets of the companies named in the title hereof, hereinafter respectively referred to as “Elektron” and “Crossplan”. The respondents/appellants, hereinafter collectively referred to as “the Appellants”, were joined in the proceedings as directors of each of those companies. The issues which arose on the application were narrowed down considerably when the matter came before the trial judge, Peart J., in the High Court on 25th September, 2013. On the appeal from the judgment and order of Peart J., the terms of which will be outlined later, the issues have been narrowed down even further and, in reality, there is only one issue on the appeal, that is to say, whether the Receiver was validly appointed as receiver of Elektron and of Crossplan. The Appellants now argue that the Receiver was not validly appointed on one ground only, namely, that, on the basis of the relationship and interaction between Irish Bank Resolution Corporation Limited (IBRC), which appointed him, and Elektron and Crossplan and the Appellants, he could not have been validly appointed at the time the deeds relied on as appointing him were executed. In essence, the issue as to the validity of the appointment of the Receiver arises from the same factual circumstances in relation to each of the companies and, following the approach sensibly adopted on the hearing of the appeal by the parties, the factual background will be considered primarily by reference to Elektron.
The factual background to the application
2. The deed of appointment of the Receiver as receiver over the assets of Elektron was dated 17th February, 2012 (the Deed of Appointment). It was expressed to be made by IBRC pursuant to the powers contained in mortgages and charges listed in the first schedule thereto. There were six Deeds of Mortgage listed in the first schedule, all of them being in favour of Irish Nationwide Building Society (hereinafter referred to as “the Society”). It is sufficient for present purposes to record that, by February, 2012, IBRC was the successor in title of the Society as mortgagee under each of the said Deeds of Mortgage.
3. Chronologically the earliest in time of the Deeds of Mortgage listed in the first schedule was described as a Deed of Commercial Fixed Mortgage (with Floating Charge) dated 9th October, 1998 granted by Elektron to the Society (the 1998 Mortgage). The 1998 Mortgage was an “all sums” mortgage. Before considering its provisions which are relevant for present purposes, it is convenient to consider the facility letter, referred to in later documentation as an “Offer Letter”, which preceded the 1998 Mortgage, as counsel for the Receiver did on the hearing of the appeal.
4. The relevant Offer Letter was dated 30th September, 1998 and it issued from the Society to Elektron. It indicated that the Society was prepared to make available to Elektron a loan in the amount of IR£970,000. Clause 6 provided that the loan was to be repayable on demand, and that the demand might be served at any time by the Society at its sole discretion and without stating any reason for such demand. Clause 17 provided that the Society’s Standard Loan Conditions, as set out in the schedule enclosed with the Offer Letter, were attached to the facilities. Attention was drawn by counsel for the Receiver to Condition 8 which outlined events of default and stated that the Society reserved the right to terminate its commitment to lend thereunder and to call for immediate repayment of all monies outstanding, including accrued interest, should any of the specified events which were then outlined occur, the first event outlined being, if the borrower, in this case Elektron, should fail to pay on the due date any monies payable or due by it from time to time to the Society.
5. Of more significance for present purposes are the relevant terms of the 1998 Mortgage, which was the document which authorised the Society to appoint a receiver in certain circumstances.
6. The first relevant provision was Clause 1 thereof, which, as the heading over it indicated, was the covenant to pay principal or other monies. It provided that Elektron would pay to the Society in accordance with the provisions of Clause 8E thereof all such monies as were then or should from time to time thereafter become due or owing to the Society by Elektron on the balance of any account or accounts of Elektron.
7. In general, Clause 8, as the heading over it indicated, contained provisions relating to crystallisation of the security and events of default. Clause 8E, which was specifically referred to in Clause 1, commenced as follows:
Clause 8E then outlined no less than twenty events on the happening of which all the monies secured should “become immediately payable”, whether notice in writing of demand had been made by the Society or not. The first of the broad range of default events was the following:
“Notwithstanding anything hereinbefore contained, all monies hereby secured shall become immediately payable or shall be deemed to become immediately payable as the case may be and the security shall be enforceable if the Society shall by Notice in writing make a demand on [Elektron] for payment of the monies hereby secured . . .”
8. Clause 9A of the 1998 Mortgage, as the heading over it indicated, provided for the appointment of a receiver in the following circumstances:
“If the Company shall fail to repay any monies due to the Society on demand or on the date on which the same ought to be paid in accordance with the provisions of this Debenture or in accordance with the terms and conditions upon which the same may have been advanced or be payable.”
The expression “the Charged Properties and Assets” was defined earlier at the end of Clause 4, in which clause the security in favour of the Society was created, and it included, inter alia, the property specified in the schedule. The schedule to the 1998 Mortgage refers to only one property, which was described as “the premises known as and situate at nos. 53 and 55, Park Avenue, Sandymount in the City of Dublin”.
“The Society may at any time after the monies hereby secured have become payable and the security hereby constituted has become enforceable appoint by writing . . . any person or persons to be a Receiver . . . of the Charged Properties and Assets . . .”
9. Prior to the appointment of the Receiver by the Deed of Appointment, IBRC issued a letter of demand dated 15th February, 2012 to the directors of Elektron (the Demand Letter). In its first paragraph, the Demand Letter referred to facilities referred to in the schedule thereto “advanced pursuant to offer letters dated 30 September 1998 and 5 March 2010 (the ‘Offer Letters’) issued by [the Society] to [Crossplan]”. On the same day, 15th February, 2012, a similar type Demand Letter issued to the directors of Crossplan. Although, apparently, up to now nobody has noticed the mistake in the first paragraph of the Demand Letter under consideration, it is clear that it did contain a mistake and that it should have referred to Offer Letters issued by the Society to Elektron, the Demand Letter having been headed “Facilities to Elektron . . .”. It is also clear that, notwithstanding the mistake, the directors of Elektron understood that the letter under consideration related to facilities made available to Elektron. It is common case that the Appellants received the Demand Letter, which had been sent by post, on 16th February, 2012.
10. In the Demand Letter –
it was stated as follows:
(a) having referred to the obligation of Elektron to repay the facilities on demand and, notwithstanding the demand nature of the facilities, to repay the facilities on or before an accrual of any of the events listed in Condition 8 as incorporated in the Offer Letters, and
(b) having recorded the fact that Elektron had failed to pay on the due date monies payable and due by it pursuant to the terms of the Offer Letters, and
(c) having set out the amount of the principal and interest which, as of 15th February, 2012, remained outstanding under the Offer Letters,
The Demand Letter then went on to state that payment could be effected –
The aggregate of the amounts demanded in the corresponding letter to Crossplan was €25,170,660.24 as of the date of the letter to Crossplan, that is to say, 15th February, 2012.
“We hereby demand payment forthwith of all amounts of principal, interest, costs and expenses outstanding under the Offer Letters, being an aggregate amount of €986,397.90 as of the date of the letter.”
11. The seventh paragraph in the Demand Letter, which has given rise to the remaining issue which the Court has to determine on this appeal, stated as follows:
The Demand Letter then ended with a statement that nothing in it constituted, or should be deemed to constitute, a waiver of any rights or remedies of IBRC under the Offer Letters or any security documents entered into or otherwise available as security for the facilities made available under the Offer Letters or otherwise.
“In the event that payment is not received by close of business on 17 February 2012, we are entitled to and reserve the right to enforce any security given to us to secure the facilities made available under the Offer Letters, to take all such actions as are permitted under the said security (including, without limitation, the appointment of a receiver) and to take such steps, as we are lawfully entitled to, to recover all monies due by you to us.”
12. Returning to the Deed of Appointment, as has been recorded earlier, it was expressed to be made in pursuance of the powers contained in the mortgages and charges listed in the first schedule, including the 1998 Mortgage, and it was expressly stated that those “Security Documents” contained mortgages and fixed charges granted by Elektron to IBRC over the property described in the second schedule thereto as “the premises known as Aberdeen Lodge, 53/55 Park Avenue, Sandymount in the City of Dublin . . .”.
Separate proceedings by way of special summons for possession of those premises by the Receiver against the Appellants are the subject of Appeal No. 40/2014, which was heard in conjunction with this appeal. Judgment on that appeal will be delivered following delivery of this judgment. In addition to appointing the Receiver to be receiver of all the assets referred to, comprised in and charged by those “Security Documents”, the Deed of Appointment expressed that the Receiver should have power to enter upon and take possession of those assets and should be entitled to exercise the powers conferred on him by the Security Documents and by law. It was stated that the Deed of Appointment would be governed by and construed in accordance with the law of Ireland. The Deed of Appointment was then expressed to be:
No issue arises in relation to the execution of the Deed of Appointment, which was under the common seal of IBRC. Endorsed on the Deed of Appointment was a form of confirmation by the Receiver of acceptance of his appointment as receiver, which the evidence before the High Court suggests was endorsed by him around 4.15pm on 17th February, 2012.
“DATED 17 February 2012 at 4pm.”
13. As is usual, the application under s. 316 had initially been grounded on the affidavit evidence of the Receiver. In the process, replying affidavits sworn by the Appellants were filed and further affidavits were filed on behalf of the Receiver, including two affidavits sworn by Ian Wigglesworth, a senior manager with IBRC. In paragraph 23 of his second affidavit sworn on 7th February, 2013, to which this Court was referred by counsel for the Receiver, Mr. Wigglesworth addressed an argument made on behalf of the Appellants in supplemental legal submissions in the High Court that –
While Mr. Wigglesworth averred that the issue would be dealt with in more detail in the written legal submissions, he went on to make certain fact based observations, having referred to the provisions of the Demand Letter, which have been outlined earlier. He averred:
“. . . the appointment of the Receiver is invalid on the basis that the Demand served on 15th February, 2012 provided that the company repay the sums due and owing before ‘close of business’ on 17th February, 2012. They say that no event of default occurred because the Receiver was allegedly appointed prior to the ‘close of business’ on 17th February, 2012, in circumstances where the Receiver was appointed just after 4pm on that date.”
14. The Receiver’s application under s. 316 was admitted into the Commercial Court. Thereafter witness statements were filed on behalf of the respective parties, including a witness statement of Mary Kelly (Ms. Kelly), who was a Case Manager working with IBRC and was referred to in Mr. Wigglesworth’s affidavit. When the matter was before the trial judge in the High Court, there was consensus among the parties that the witness statement of Ms. Kelly represented evidence before the High Court (Transcript, pp. 89 and 90). In para. 66 of Ms. Kelly’s witness statement it is stated as follows:
“In order for payment to have been received by [IBRC] on 17 February 2012, any payment would have to have been made by 4pm. This was at all times made clear to the borrower. I beg to refer to an attendance note made by my colleague Mary Kelly on 17th February 2012, the date that the receivers were appointed, in respect of a meeting she and our former colleague Mr. Buckley had with [the first named appellant] . . .. The attendance notes that [the first named appellant] was informed that the next steps would be taken after 4pm that day. In any event, it was made clear to [IBRC] following the issue of the Demand Letters and before the appointment of the Receiver, that there was no possibility of the borrower being able to meet the demand for repayment. The unfortunate reality, as conceded by [the first named appellant], was that the best that could be achieved was the maximisation of the value to be achieved on the realisation of the assets of Crossplan and Elektron with a view to mitigating [IBRC’s] exposure.”
15. On the appeal, counsel for the Receiver relied, in particular, on paras. 68 to 71 inclusive of Ms. Kelly’s witness statement. In those paragraphs, she outlines facts in relation to a meeting, which had taken place on 17th February, 2012 at 8.30am, at which the Bank was represented by her and by her then line manager, Declan Buckley, and at which the first named appellant was accompanied by an adviser, Mr. Aiden Murphy. Ms. Kelly refers to her attendance note of the meeting of 17th February, 2012, which bears that date, which was also exhibited by Mr. Wigglesworth. The attendance note records that the officials of IBRC advised the first named appellant that the “next steps will be after 4pm today”, and, when asked by him could he expect a knock on his door from the Receiver that day, the officials of IBRC advised that they could not confirm the next steps until after close of business. This is elaborated on in para. 69 of the witness statement as follows:
“The Deeds appointing the Receiver were executed with effect from 4pm on the 17th February 2012 in circumstances where no payment whatsoever and no offer to pay or proposal regarding the liability had been received. Normal banking hours end at 4pm. This means that if a customer is trying to get an electronic lodgement to the Bank, he would have to give instructions prior to 4pm. The Receiver was appointed with effect from 4pm but I would emphasise that at no stage that evening or in the weeks and months since the demands were served has there been any payment whatsoever.”
At para. 70 it is stated:
“The word Receiver was used and at no stage did we deny that a Receiver was going to be appointed. We made it clear that it was one of the options and that we would telephone at four o’clock the same evening to confirm the final situation.”
In the witness statement, Ms. Kelly states that she remembers telephoning the first named appellant that evening at about 4.15pm, and that during the call she referred to that morning’s meeting and that the decision had been taken to appoint a receiver.
“At the meeting we made it very clear that the matter was now actively in a recovery process and that the next step would be advised to them as of 4pm that evening Friday 17th. I gave this clarity because I expected that the Receivers would be appointed shortly after 4pm and, out of courtesy, I agreed to phone as of 4pm.”
Judgment and order of the High Court
16. In his judgment, the trial judge succinctly outlined the submissions made on behalf of the Appellants in the High Court on the point in issue on this appeal as follows (at para. 17):
The trial judge also recorded that the Appellants submitted that a court should be vigilant to ensure that there is scrupulous compliance with legal requirements for the appointment of a receiver, given the serious consequences for any company by such appointment, citing the decision of the High Court (Gilligan J.) in The Merrow Limited v. Bank of Scotland Plc  IEHC 130.
“The [Appellants] have rested their arguments firmly upon the contention that the Receiver was not appointed in conformity with the letters of demand, as he was appointed at 4pm, which they contend is not ‘close of business’. Ross Maguire SC submits that there can be no question but that the doors of IBRC remain open beyond 4pm. They do not contend that if the bank had waited another hour or even an hour and a half the money could have been repaid. It is contended that since no event of default was committed by the [Appellants] until after the expiration of the deadline, namely until after ‘close of business’ the bank was not entitled to appoint the receiver and his appointment is therefore invalid. It is submitted in other words that the demand made is faulty and of no lawful effect because the bank failed to comply with the terms of the demand i.e. wait until close of business before taking any enforcement step.”
17. The trial judge made some general observations on the phrase “close of business”, stating (at paras. 23 and 24):
The phrase covers a range of different contexts depending on the nature of the business in question. Close of business for a pub or a restaurant might be midnight or even later, just to take a very simple example. Nevertheless one thinks of so-called normal business hours as being 9am to 5pm, but businesses vary in nature, and for some businesses normal business hours are different, and therefore ‘close of business’ will not necessarily be 5pm or 5.30pm. What is ‘close of business’ in any particular case will depend upon the nature of the business in question. It is a flexible phrase to be seen in any particular context.”
“The phrase ‘close of business’ is not a term of art, and is not defined in the debenture deed. Neither is it a phrase for which a definition is provided in the Schedule to the Interpretation Act, 2005, or even in any of the standard texts on statutory interpretation, or the meaning of words and phrases. It is simply a phrase commonly used in everyday language to describe a time at which a business might reasonably be expected to close its doors to the public or to clients. It does not mean that thereafter no personnel may remain on the premises. . . .
18. The particular context in which he was addressing the meaning of “close of business”, was then considered by the trial judge and he stated (at para. 25):
The trial judge then made it clear that he considered that his finding that “close of business” in the context of the dispute between the Appellants and the Receiver meant “the end of the banking business day”, and that the requirement that payment was to be made to IBRC by close of business meant “by not later than 4pm”, was sufficient to determine the issue which had been raised by the Appellants.
“The context for the present case is a banking context where the relationship is that of bank and bank customer. Each party signed up to the terms of the debenture. Any letter of demand is in the context of monies owing to the bank and secured by the debenture on the companies’ assets. Where a letter of demand requires repayment forthwith, and threatens that if the funds are not received on a particular day by ‘close of business’, that must be interpreted as meaning the end of the banking business day. I do not require expert evidence to know that traditional banking hours have for many years been 10 am to 4pm. There have been instances where a particular bank might advertise itself as staying open until 5pm on a particular day of the week in order to convenience its customers, or be open at 9.30am instead of the normal 10am, or perhaps even open on Saturday mornings. But it is reasonable to interpret and understand the phrase ‘close of business’ in the banking context as being the time at which banks have traditionally and normally closed their doors to customers. If money is to reach the bank by close of business, that can be fairly and reasonably interpreted as meaning by not later than 4pm, in the absence of any other specific arrangement made. It is not reasonable to interpret it as meaning 5pm or 5.30pm simply because there may be bank staff working away inside the bank up to either of those times or later, or because other types of business might regard ‘close of business’ as meaning some time later than 4pm.”
(Emphasis in original).
19. It is of significance that the trial judge specifically recorded that he considered that it was not necessary to reach any conclusion as to whether IBRC was entitled to appoint the Receiver at any time after demand was made and before 4pm on 17th February, 2012. On the basis of his findings as outlined, the trial judge concluded that the Receiver had been validly appointed over the assets of each of the companies, that is to say, of Elektron and of Crossplan.
20. Those findings and his conclusion were reflected in the order of the High Court made by the trial judge on 17th December, 2013, wherein the Court made a declaration in the following terms:
Ground of appeal pursued
21. As stated at the outset, on the hearing of the appeal, the Appellants pursued only one ground of appeal. As counsel for the Receiver expressed concern that there was a shift in approach by counsel for the Appellants on the hearing of the appeal, resulting in a new point being argued on the appeal, I consider it prudent to record how that ground of appeal is reflected in the notice of appeal. In the notice of appeal it is contended that the trial judge erred in law and in fact –
There follows a fourth ground formulated as follows:
“. . . that the [Receiver] has been validly appointed as Receiver over both Crossplan . . . and Elektron . . . and by virtue of same is entitled to take possession of the properties in the ownership of each of the said Company . . .”
Although not so framed, I read that as being the contention of the Appellants that the power of IBRC to appoint a receiver only arose after “close of business” on 17th February, 2012.
“That no power to appoint a receiver to [Elektron and Crossplan] arose or existed until after close of business on the day of the purported appointment.”
Submissions on behalf of the Appellants
22. As stated at the outset, on the hearing of the appeal the issues to be addressed were narrowed down considerably. In fact, there was only one issue in relation to each of the companies and that was whether the Receiver was validly appointed by the Deed of Appointment. The Appellants’ case was based entirely on the proposition that the Receiver was not validly appointed because, it was contended, at the time the Deed of Appointment was executed by IBRC, the power to appoint a receiver was not exercisable by IBRC, because, as the first named appellant asserted in his witness statement (at para. 13), “the demand made upon the Companies to repay the monies had not expired”. It was submitted that the trial judge, in his judgment, appears to have accepted that the power was not exercisable before the “close of business” on 17th February, 2012, because he addressed the proper meaning of the expression “close of business”. However, it was submitted that the trial judge erred in concluding that the power of appointment was exercisable by IBRC when it was exercised on two bases.
23. First, it was submitted that the trial judge was incorrect in concluding that close of business meant close of banking hours and also that banking hours were from 10am to 4pm. The issue, it was suggested, related to close of business, not of banking hours. The evidence, it was submitted, was that the office of IBRC was alive beyond the period from 10am to 4pm, reference being made to telephone communications between officials of IBRC and the first named appellant and also to the meeting at 8.30am on 17th February, 2012.
24. Secondly, an alternative argument advanced was that, even if the trial judge was correct and close of business meant close of banking hours and that it occurred at 4pm, the power to appoint the Receiver was not exercisable at 4pm on 17th February, 2012 because the Demand Letter stipulated that IBRC was entitled to appoint a receiver if payment was not received “by close of business”, which it was suggested meant at or before 4pm. Therefore, it was suggested that the power was not exercisable until after 4pm, 4.01pm being suggested as an example of a point in time after 4pm. It was this alternative argument which counsel for the Receiver contended was a shift in approach by counsel for the Appellants, in that it was contended that the meaning of the preposition “by” in the phrase “by close of business” was not raised as an issue or addressed in the High Court. I am satisfied that the grounds of appeal can be read as including this argument and that it is appropriate to consider it.
25. Counsel for the Appellants also submitted that, if there was an ambiguity in the Demand Letter, having regard to the contra proferentem rule of construction, the Demand Letter was to be construed against the Receiver.
26. In advancing those arguments, counsel for the Appellants relied on the observations of Gilligan J. in the Merrow Limited v. Bank of Scotland Plc  IEHC 130, where it was stated:
Indeed, counsel for the Receiver accepted that quotation as a correct summary of the law.
“Since a receiver's authority is derived from the instrument under which he is appointed, an appointment is not valid unless it is made in accordance with the terms of that instrument. This principle has been recognised by the leading commentators in this area and accepted and applied by the courts throughout the common law world.”
Submissions on behalf of the Receiver
27. Counsel for the Receiver submitted that the trial judge correctly rejected the Appellants’ contention that the Receiver had not been validly appointed as Receiver over the property of Elektron and Crossplan. The Receiver’s position was summarised as follows:
28. At the core of the assertions made in paragraphs (a) to (c) in para. 27 above is the contention that it was not necessary for IBRC to await any default in repayment of the monies demanded by the Demand Letter, but rather the legal entitlement to appoint a receiver under Clause 9A of the 1998 Mortgage arose as and when the sums became payable and the security was enforceable, which, it was contended arose on the service of the Demand Letter without anything further having to occur.
(a) the terms of the 1998 Mortgage entitled IBRC to appoint a receiver over the secured property on the service of a demand for payment of money secured, in addition to entitling IBRC to appoint a receiver in the event of such demand not being satisfied;
(b) valid demands (in the case of Elektron by the Demand Letter) were raised on 15th February, 2012, which were received by Elektron and the Appellants on 16th February, 2012, in which, inter alia, IBRC demanded payment of the secured sums “forthwith” but stated that, in any event, if the payments were not received by “close of business” on 17th February, 2012, IBRC was entitled to enforce its security, including the appointment of a receiver, and the Demand Letter made it clear that its contents did not constitute a waiver of any of the rights of IBRC;
(c) the power of IBRC to appoint a receiver derived from security documents, and it was validly exercised and was not compromised in any way by the contents of the Demand Letter;
(d) at the meeting on the morning of 17th February, 2012, the first named appellant made it clear that Elektron was not in a position to meet the demand and was told by the officials of IBRC that, given that position, a receiver would be appointed after 4pm that day and the first named appellant did not object to the entitlement of IBRC to so proceed; and
(e) IBRC did not receive payment from Elektron by 4pm (being the close of its banking business day) on 17th February, 2012 and, accordingly, in any event, acted in accordance with the terms of the Demand Letter construed in their commercial context.
29. The relevance of what is stated in paragraph (d) of the summary in para. 27 above was elaborated on by counsel for the Receiver by reference to a line of authorities of the courts of England and Wales in which the so-called “mechanics of payment test” has been applied as to when a receiver may be appointed following a demand for payment where the secured monies are contractually repayable on demand. In particular, counsel for the Receiver relied on the decision of the Chancery Division of the English High Court in Sheppard & Cooper Limited v. TSB Bank Plc  2 All ER 654. In that case, the plaintiff company was liable under a debenture to pay or discharge its indebtedness to the bank in whose favour the debenture was given on demand and the debenture further provided that the bank might appoint administrative receivers of the charged assets at any time after all or any of the indebtedness became immediately payable. On the facts, a period of approximately one hour passed between a written demand requiring repayment of the plaintiff company’s indebtedness and the appointment of administrative receivers. In his judgment Blackburne J. explained what he referred to as the so-called mechanics of payment test by reference to the following passage from the judgment of Walton J. in Bank of Baroda v. Panessar  3 All ER 751 at p. 759 – 760:
30. Blackburne J. elaborated on the last sentence in that passage later in his judgment, where he stated (at p. 660):
“Money payable ‘on demand’ is repayable immediately upon demand being made . . . Nevertheless, it is physically impossible in most cases for a person to keep the money required to discharge the debt about his person. He may in a simple case keep it in a box under his bed; it may be at the bank or with a bailee. The debtor is therefore not in default in making the payment demanded unless and until he has had a reasonable opportunity of implementing whatever reasonable mechanics of payment he may need to employ to discharge the debt. Of course, this is limited to the time necessary for the mechanics of payment. It does not extend to any time to raise the money if it is not there to be paid.”
31. Of course, when delivering judgment in the High Court, the trial judge, as has been recorded earlier, having regard to his conclusions on the meaning of “by close of business”, considered that it was not necessary to reach any conclusion as to whether IBRC was entitled to appoint the Receiver at any time after the demand was made and before 4pm on 17th February, 2012. Accordingly, he did not find it necessary to address the submissions made on behalf of the Receiver which are summarised at (a) to (d) at para.27 above.
“. . . the court must in all circumstances allow a minimum period to elapse before the debtor's default can be established. The requirement that sufficient time be permitted to elapse to enable the debtor to effect the mechanics of payment assumes that that is the period needed if the debtor has the necessary moneys available. If, however, he has made it clear to the creditor that the necessary moneys are not available, then, provided a proper demand has been made, I cannot see that the creditor need allow any time to elapse before being at liberty to treat the debtor as in default.”
32. Counsel for the Receiver, reflecting what is summarised in paragraph (e) at para. 27 above, submitted that the trial judge was correct in his findings as to the proper meaning, in the context of the Demand Letter and the interaction between the parties, of the term “close of business”. In short, the position of the Receiver is that, in any event, irrespective of its status, the prerequisite to the enforcement of the security stipulated in the seventh paragraph in the Demand Letter, that payment was not received by close of business on 17th February, 2012, was satisfied. However, it was emphasised that the prerequisite did not have contractual status, nor did it give rise to an estoppel.
Discussion and conclusions
33. The approach adopted by the trial judge in first addressing the meaning of the phrase “by close of business” in the seventh paragraph of the Demand Letter and in considering whether the prerequisite stipulated in that paragraph as to non-receipt by IBRC of the payment demanded had been satisfied by the time stipulated, so as to give rise to the entitlement of IBRC to enforce its security, in my view, was a logical approach to adopt. If that prerequisite had been satisfied, irrespective of the legal or equitable implications, if any, arising from what was stipulated in the seventh paragraph, the case made by the Appellants that the Receiver was not validly appointed would fall asunder and, accordingly, it would not be necessary to reach any conclusion on the argument advanced on behalf of the Receiver that IBRC was entitled to appoint the Receiver after the demand for payment was made and before the close of business on 17th February, 2012. As has been recorded earlier, the trial judge concluded that the Receiver had been validly appointed but did so without having to consider the argument advanced on behalf of the Receiver that IBRC was entitled to appoint the Receiver at any time after the demand was made and before 4pm on 17th February, 2012.
34. Adopting the same logical approach, the first question which this Court has to consider is whether the trial judge was correct in finding, in the context of the Demand Letter, that the expression “by close of business on 17 February 2012” in the seventh paragraph meant by 4pm on that day. In my view, he was correct and the reasoning underlying his conclusion wholly supports it.
35. On the hearing of the appeal, counsel for the Appellants could not identify any statutory provision (for example, any provision of the Interpretation Act 2005) or any authority which would be of assistance in the proper interpretation of the phrase “by close of business”. Moreover, as the trial judge stated, the phrase does not come within the category of “terms of art”, which were described in the enlightening observations of Diplock L.J. in Sydall v. Castings Limited  3 All ER 770 (at p. 774) as constituent words and phrases which “are more precise in their meaning than they are in the language of Shakespeare or of any of the passengers on the Clapham omnibus”, being part of an English language evolved by lawyers whose profession it is to draft and construe documents which are intended to give rise to legally enforceable rights and duties. That being the case, the phrase must be given its ordinary meaning, but what its ordinary meaning is must be interpreted in the particular context in which it is used, as the trial judge stated.
36. The context in which the phrase “by close of business” is used is that the seventh paragraph of the Demand Letter, in the case of both Elektron and Crossplan, is preceded by a demand by IBRC for payment by the addressees, Elektron and Crossplan, forthwith of very substantial sums of money, in the case of Crossplan, sums aggregating in excess of €25m. Those demands are succeeded by specific directions as to how payment of those very substantial sums of money could be effected – by electronic transfer to a specific account of IBRC, or by “delivery” to IBRC at a specific address. The reference in the seventh paragraph to the payment not being “received” by close of business must be interpreted by reference to the nature of the demand for payment and the manner in which payment could be made to IBRC. That the object of the demand is that IBRC will receive by electronic transfer or by “delivery” of a bank draft in the case of each company a substantial sum of money “by close of business”, must lead to the interpretation of the phrase “by close of business” as meaning the end of the business banking day, as the trial judge found. The reality is that beyond the end of the banking business day, the objective could not be achieved, in that, for example, there would be no way of delivering a bank draft to IBRC, as the doors would be closed to bank customers.
37. The end of the banking business day is the point in time when the relevant bank ceases to do banking business with its customers. As the trial judge found, in the case of IBRC, the end of banking business occurred at 4pm on Friday, 17th February, 2012. That is what any customer of IBRC would have understood to be the meaning of “close of business” used in a document, such as its use in the seventh paragraph of the Demand Letter. Moreover, in the light of what happened at the meeting on the morning of 17th February, 2012, as outlined by Ms. Kelly, it cannot be doubted that it must have been the understanding of the Appellants that “close of business” meant 4pm on that day.
38. As regards the Appellants’ alternative argument, the starting point is that the phrase in the seventh paragraph of the Demand Letter under consideration is properly interpreted as meaning by 4pm on 17th February, 2012. Applying its ordinary meaning to the preposition “by”, it indicates that 4pm is the deadline for receipt of the payment demanded. In accordance with the wording of the seventh paragraph, when that deadline was reached, IBRC was entitled to enforce its security. In particular, the Appellants’ argument that, when the deadline was reached at 4pm, IBRC had to wait for some period of time after 4pm to exercise its power to enforce the security does not stand up to scrutiny. If IBRC was in a position to move to make the appointment once the deadline was reached, applying the ordinary meaning of “by” 4pm, it must have been entitled to do so when the deadline was reached and the prerequisite of non-receipt by IBRC of the payment demanded was satisfied. Apart from that, one might ask why should IBRC have to wait a minute, as distinct, from, say, a nanosecond, which I understand means one thousand millionth of a second, before exercising its power? That rather facetious question does not have to be answered because once the deadline is reached and the prerequisite is satisfied by non-receipt by IBRC of the payment demanded, the power to enforce the security is exercisable.
39. No ambiguity, either internally within the seventh paragraph of the Demand Letter or between that paragraph and the remainder of the Demand Letter has been pointed to on behalf of the Appellants. There is no such ambiguity and, therefore, the contra proferentem rule of construction has no application.
40. Accordingly, the Appellants’ submission that the Receiver was not validly appointed must be rejected on both bases on which it was argued. In summary, the trial judge was correct in interpreting “by close of business” as meaning by 4pm. The proper interpretation of the preposition “by” in the phrase is that it indicates the deadline for receipt by IBRC of the payment demanded. The deadline occurred at 4pm, whereupon IBRC was entitled to enforce its security.
41. On the basis of the foregoing conclusions, as happened in the High Court, it has not been necessary to address the argument made on behalf of IBRC that it was entitled to appoint a receiver after the demand for payment was made and before the close of business on 17th February, 2012. While the submissions made on behalf of the Receiver have been outlined, no view is expressed as to the correctness or otherwise of any of the arguments advanced on behalf of the Receiver as to the effect or otherwise of the seventh paragraph of the Demand Letter. In particular, no view is expressed as to the application of the so-called “mechanics of payment test” to the circumstances which prevailed in relation to the banker/customer relationship of IBRC, on the one hand, and Elektron and Crossplan, on the other hand, between 15th February, 2012 and 4pm on 17th February, 2012. However, I feel constrained to observe that, if this Court had to consider that matter, it is difficult to see how the Court could ignore the seventh paragraph of the Demand Letter.
42. It follows from the conclusions outlined, that the Receiver was validly appointed receiver of the assets of Elektron and the assets of Crossplan on 17th February, 2012.
43. In the light of the conclusions reached that the trial judge was correct in determining that the Receiver was validly appointed by IBRC over the secured assets of Elektron and Crossplan, the order which I propose should be made is an order dismissing the Appellants’ appeal.