ACC Bank v Declan Fagan (a bankrupt) and Another

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 23 July 2013
• Neutral Citation: [2013] IEHC 346
• Court: High Court
• Date: 23 July 2013

[2013] IEHC 346

THE HIGH COURT

[No. 64 S.P./2013]

[No. 19 COM/2013]

ACC Bank v Fagan (A Bankruptcy) & Ors

COMMERCIAL

BETWEEN

ACC BANK

PLAINTIFF

AND

DECLAN FAGAN (A BANKRUPT) AND BERNADETTE FAGAN (A BANKRUPT)

DEFENDANTS

REGISTRATION OF TITLE ACT 1964 S62(7)

BANKRUPTCY ACT 1988 S44

QUINN v IRISH BANK RESOLUTION CORPORATION LTD & ORS UNREP KELLY 4.7.2012 2012 IEHC 261

LAND & CONVEYANCING LAW REFORM ACT 2009 S8

LAND & CONVEYANCING LAW REFORM ACT 2009 SCHED 2 PART 5

LAND & CONVEYANCING LAW REFORM ACT 2009 PART 10 CH3

START MORTGAGES LTD v GUNN & ORS UNREP DUNNE 25.7.2011 2011/46/13101 2011 IEHC 275

ESB LTD v GILLESPIE UNREP LAFFOY 21.6.2012 2012/13/3829 2012 IEHC 243

GE CAPITAL WOODCHESTER HOME LOANS LTD v READE & ANOR (NO.1) UNREP LAFFOY 22.8.2012 2012/16/4552 2012 IEHC 363

CONVEYANCING & LAW OF PROPERTY ACT 1881 S19

CONVEYANCING & LAW OF PROPERTY ACT 1881 S19(1)(I)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S19(3)

INTERPRETATION ACT 2005 S27

Land law- Contract law- Possession- Charge- Private Dwelling- Monies due- Registration of Title Act 1964- Conveyancing and Law of Property Act 1881

Facts: ACC sought possession of premises pursuant to s. 6(7) Registration of Title Act 1964 and a letter of demand had been issued. The Act of 1964 had been repealed with effect from 1 December 2009. The claim for possession was for a private dwelling. The Court considered when the charge was registered and whether ACC was the registered owner. ACC relied on the terms of the charge to contend when the monies were due. The Court also considered whether the principal monies secured by the Charge were due and payable prior to 2009 notwithstanding arrears.

Held by Finlay Geoghegan J. that ACC was not now entitled to an order for possession. The power of sale conferred only arose whether the mortgage money had become due. In the absence of a demand the payments had not become due.

1 1. ACC Bank plc ("ACC") in these proceedings seeks possession pursuant to s. 62(7) of the Registration of Title Act 1964, of the property comprised in Folio 7758 County Westmeath. Whilst that is the claim made on the special summons and is the order sought, it appears that the defendants ("Mr. and Mrs. Fagan") are only in possession of a part of the property comprised in Folio 7758 County Westmeath, which has been referred to as Temple House (their private dwelling house) and approximately 14.5 acres at Temple, Horseleap, County Westmeath.

Background

2 2. Mr. and Mrs. Fagan are the registered owners of the property in Folio 7758 County Westmeath. They are or were directors and shareholders of the company Temple Spa Limited ("the Company"). Folio 7758 County Westmeath records the grant of a lease for 21 years by Mr. and Mrs. Fagan to the Company over a portion of the property comprised in the folio on 12 ^th March, 2003.

3 3. In 2004, ACC granted facilities to the Company to part fund the construction and fit out of a new extension to Temple House Spa. The initial facility was a 12 month bridging loan, followed by a term loan of €4,825,000 for a period of 192 months. The security required included a personal guarantee given by the Company directors, Mr. and Mrs. Fagan, supported by a first legal charge on what is referred to in the facility letter of 13 ^th July, 2004 as "Temple House & 20 acres" and "70 acres of land at Temple, Horseleap, Co. Westmeath".

4 4. ACC relies upon a deed of charge dated 19 ^th November, 2004, ("the Charge"), made between the Company, Mr. and Mrs. Fagan as guarantor and ACC. The copy of Folio 7758 produced in these proceedings records the registration on 17 ^th May, 2006, of a "charge for present and future advances repayable with interest" and ACC is recorded as the owner of the charge. It is not in dispute that the deed of charge registered in 2006 is the Charge of 19 ^th November, 2004.

5 5. In February, 2007, ACC granted an additional loan facility of €307,500 to the Company, guaranteed by Mr. and Mrs. Fagan and a home loan of €250,000 to Mr. and Mrs. Fagan. ACC contends that the security relied upon for the guarantee by Mr. and Mrs. Fagan of 23 ^rd April, 2007, given for the loan to the Company and their personal liability for the home loan, included the existing Charge registered over their private dwelling house, Temple House and 14.5 acres in Folio 7758 County Westmeath.

6 6. ACC contends that the facilities were in arrears by September, 2009, and have exhibited two letters dated 16 ^th September, 2009, to the Company specifying the amount of the arrears at that date. The letters do not, however, demand repayment. ACC in the letters indicate that they will discuss the position at the next review.

7 7. It is common case that no demand was made by ACC on the Company or Mr. and Mrs. Fagan for repayment of facilities prior to 1 ^st December, 2009.

8 8. A letter of demand dated 28 ^th October, 2010, was issued to the Company and a letter of demand dated 1 ^st November, 2010, issued to Mr. and Mrs. Fagan.

9 9. On 16 ^th November, 2010, ACC appointed Mr. Simon Coyle as receiver and manager over the properties comprised in the Charge, and a subsequent debenture of 20 ^th April, 2007, stated to have been granted to ACC by the Company. It appears that the receiver went into possession of the properties then occupied by the Company which comprised the Spa and adjoining lands. He has not gone into possession of Temple House and the adjoining 14.5 acres. He did request that Mr. and Mrs. Fagan deliver up vacant possession of the private dwelling house and 14.5 acres in March, 2011. Possession was refused and at the time solicitors on behalf of the Mr. and Mrs. Fagan contended that the charge on the private dwelling house and 14.5 acres was only security for the home loan mortgage of €250,000 granted in February, 2007, in respect of which repayments were being made by Mr. and Mrs. Fagan.

10 10. In 2011, ACC commenced summary proceedings against Mr. and Mrs. Fagan in respect of all their liabilities to it, and on 9 ^th May, 2011, judgment was given against Mr. and Mrs. Fagan in the sum of €5,780,460.28.

11 11. The amount of the judgment was not discharged and ACC issued a bankruptcy petition against Mr. and Mrs. Fagan. Orders of adjudication of bankruptcy were made by the High Court on 21 ^st May, 2012.

12 12. Mr. Fagan had applied to the Property Registration Authority for cancellation of the charge registered in favour of ACC over Folio 7758 County Westmeath. That application was refused on 19 ^th June, 2012.

13 13. Subsequent to judgment and prior to adjudication on the bankruptcy petition, there were significant negations between ACC and Mr. and Mrs. Fagan, some of which were on an open basis and have been disclosed in this application. Notwithstanding agreement was not reached.

14 14. The special summons seeking possession was issued on 7 ^th February, 2013 against Mr. and Mrs. Fagan. It was also served on their daughter Ciara, who was 18 years of age, due to sit her Leaving Certificate in June, 2013 and living in the home.

15 15. In advance of the commencement of the present possession proceedings, the solicitors for ACC had been informed by the Official Assignee, as he had informed Mr. and Mrs. Fagan that, having taken Senior Counsel's opinion, he had determined not to challenge the security relied upon by ACC against Mr. and Mrs. Fagan. He also indicated that he would not therefore be opposing any possession proceedings to be taken by ACC for the purpose of enforcing its security. The Official Assignee is not joined in the proceeding and did not appear at the hearing before me.

Issues

16 16. In advance of the hearing, Mr. and Mrs. Fagan had been permitted pursuant to directions given in the Commercial list to file affidavits in response to ACC's claim for possession. In those affidavits, they seek to raise a number of defences which go to the validity of ACC's charge over the property and ACC's entitlement to an order for possession of Temple House and that part of Folio 7758 County Westmeath which they continue to occupy. At the hearing of ACC's claim for possession, Mr. and Mrs. Fagan appeared and represented themselves. The first issue which arose was their entitlement to oppose the application for possession and make submissions in relation thereto having regard to their adjudication as bankrupts and the attitude of the Official Assignee to ACC's claim

17 17. Having heard submissions from counsel for ACC and Mr. and Mrs. Fagan in relation to their entitlement to appear and oppose ACC's application for possession, I ruled in the course of the hearing that:

(a) Mr. and Mrs. Fagan, by reason of their adjudication as bankrupts, were not entitled to challenge the validity of the charge registered on Folio 7758 County Westmeath in favour of ACC as the ownership of the said Folio now vests in the Official Assignee; and

(b) As Mr. and Mrs. Fagan were in possession of their private dwelling house, Temple House as their family home and the adjoining 14.5 acres and the proceedings for possession are against them I would permit them to make submissions in opposition to the application for possession, but only upon the basis that ACC is the registered owner of a charge over the property in Folio 7758 County Westmeath pursuant to the Charge.

18 18. The reasons for which I reached that decision are the following. Upon adjudication as bankrupts all property of Mr. and Mrs. Fagan including their interests in Folio 7758 County Westmeath vested in the Official Assignee pursuant to s. 44 of the Bankruptcy Act 1988. Hence they have no standing to defend any claim in relation to property now vested in the Official Assignee. See inter alia Quinn v Irish Bank Resolution Corporation limited and Ors [2012] IEHC 261. This precludes them...