A Dublin-based mortgage lending company has taken legal proceedings against Credit Suisse bank's London branch alleging breach of an agreement to provide funding for the Irish company's activities.
The action by Fresh Mortgages Ltd against Credit Suisse, London branch, (CS), was entered into the list of the Commercial Court by Mr Justice Peter Kelly yesterday.
Fresh, with an address at Somerset House, Stradbrook Road, Blackrock, Co Dublin, was incorporated here in June 2006 and is involved in the business of originating and selling mortgage loans secured on residential properties here.
It claims it was involved in discussions with potential providers, including CS, of funding for its activities earlier this year.
During those discussions, it claims that CS, with a view to inducing Fresh to enter into an agreement with the London branch of the bank, indicated CS was prepared to enter an agreement with Fresh under which CS would be the exclusive provider of funding for the mortgage lending. Fresh would then provide that funding for sufficient time to permit it (Fresh) to become a substantial and sustainable business.
It claims that it was agreed CS and Fresh would operate as joint venture partners for their mutual benefit and that CS would provide funding for a period of up to five years, at least until Fresh had originated and sold to CS loans totalling €850m.
Fresh claims it had on May 11 last entered into a Mortgage Origination and Sale Agreement (MSA Agreement) with CS and Mint Funding Ltd, a Credit Suisse company, as parties, and Statefirst (Ireland) Ltd as guarantor.
Fresh says that, following execution of the MSA agreement, it began business operations. By last month, it had 23 direct employees and premises in Blackrock and had written some €9.1m in business.
It claims CS was aware of Fresh's plans and expectations and knew that Fresh was reliant on the funding to be provided. However, CS had on November 16 last purported to terminate the MSA agreement on grounds including that events had occurred which, in CS's opinion, would materially affect the ability of Credit Suisse to obtain its anticipated economic benefits from the MSA.
Fresh claims no such events had occurred and the purported termination of the MSA was invalid. It also says that circumstances arising from change in underlying capital markets were governed by a clause of the MSA agreement which permitted termination of that agreement only when €50m of mortgage loans had been sold by Fresh to Mint and only if other conditions were fulfilled.