A bid by the cinema-owning Anderson family to block the Irish Bank Resolution Corporation’s decision to appoint a receiver to a stalled multimillion west London development has been rejected by the High Court in London.
Seven years ago, the Irish Nationwide Building Society, then headed by chief executive Michael Fingleton, lent £27 million to the Andersons’ Jersey-based family trust to buy seven cinemas in Britain that were then being sold by the Cineworld/UGC chain.
Moratorium
Under the contract, the money was repayable on demand, though a moratorium was placed on the repayment of interest until the end of the period of the 10-year loan, Nicholas Strauss QC, deputy judge of the High Court’s chancery division, noted.
The effect of the moratorium, Thomas Anderson had told the High Court hearing, was to make the Andersons’ trust company, Cinema Holdings 2 Ltd, and Irish Nationwide “effectively 50:50 partners”.
Late last year, IBRC – the successor bank to INBS – demanded the repayment of the loan, but nothing was repaid. Subsequently, IBRC in December gave notice that it intended to appoint a receiver to protect its security on a former cinema in Ealing in west London.
The cinema, which was demolished by Cinema Holdings in 2009, is to be redeveloped, but the project has stalled. Ealing Borough Council has complained about the length of time the project was taking.
Receiver
Before Mr Strauss, IBRC contended that it was entitled to appoint a receiver because the value of its security is in jeopardy, since the value of the land will fall if the borough council goes ahead with a threatened compulsory purchase order (CPO).
The Irish Government’s right to place a permanent stay on all legal actions against the IBRC following the decision to liquidate it was also challenged. Counsel for Cinema Holdings 2 Ltd (CH2), David Holland, argued Irish law should not apply.
However, Mr Strauss said the Irish legislation gave effect to European Union regulations governing the liquidation of banks, which made it clear that the legislation of the institution’s home state would apply.
'Ping-pong'
The company had argued that the case must be governed by English law, said Mr Strauss, but he said he did not accept the arguments because they would create a permanent “ping-pong” back and forth between courts in Dublin and London.
IBRC had an “unanswerable” case that Irish Nationwide had lent the money originally on the basis that it would have to be repaid on demand, said Mr Strauss, adding that he did not accept the contention that the terms of the deal were subsequently varied.
“There is, in my judgment, no evidence for that,” he said, adding that a number of legal authorities presented by Mr Holland on behalf of the Anderson-owned company dating back to Victorian times were not relevant.
Noting Ealing Borough Council’s unhappiness, he said it complains that the delays have “significantly undermined” its efforts to regenerate the Uxbridge Road. Cinema Holdings has given repeated assurances that it could finish the project.
In October, a senior Ealing official gave notice that the council would carry out a CPO, if necessary, while by December it had put together a shortlist of firms, led by the giant UK property firm Land Securities, ready to invest after compulsory purchase.
Noting that market value must be paid for lands acquired by CPO, Mr Strauss said it would have had a “significant” value on the price because the differences that can emerge over a CPO valuation “can be very wide”.
IBRC’s security, therefore, over the Ealing site is “in jeopardy”, he ruled, saying “there is no serious argument to the contrary”. Once jeopardy has been established, IBRC had “an absolute right” to call in payment of the loan. Cinema Holdings 2 Ltd gave notice of its intention to appeal.
