ACC Loan Management Ltd v Barry

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 21 October 2015
• Neutral Citation: [2015] IECA 224
• Docket Number: [C.A. No. 1324 of 2014]
• Court: Court of Appeal (Ireland)
• Date: 21 October 2015

ACC Loan Management Ltd v Anthony Barry & Ors.

[Article 64 transfer]

BETWEEN/

ACC LOAN MANAGEMENT LIMITED

APPELLANT

- AND -

ANTHONY BARRY, ORLA CUMMINS AND JULIE SHANLEY

RESPONDENTS

[2015] IECA 224

Finlay Geoghegan J.

Peart J.

Hogan J.

Record No. 1324/2014

THE COURT OF APPEAL

Solicitor - Misconduct - Breach of undertaking - Appellant seeking a declaration that the respondents were guilty of misconduct - Whether the High Court has a jurisdiction formally to declare that a solicitor is guilty of misconduct by reason of the failure to comply with an undertaking

Facts: The respondents, Mr Barry, Ms Cummins and Ms Shanley, are solicitors who have been in partnership with each other. In 2005, Mr Barry was the principal of the firm of Anthony Barry & Co., solicitors, in Athlone. He acted on behalf of Mr Doyle of Kenagh, Co. Longford, who borrowed monies from the appellant Bank, ACC Loan Management Ltd, for the purposes of developing land at Glack, Lackagh, Co. Longford. Mr Barry gave certain undertakings to the Bank for this purpose at that time. Mr Barry subsequently sold his practice in December 2005 to Ms Cummins and Ms Shanley. The first undertaking was to stamp and lodge for registration in the Land Registry the Bank's deed of charge and mortgage within one month from the date of the initial loan cheque issuing in respect of the Glack property. The second undertaking was to furnish to the Bank the sale proceeds of seven apartment units being developed at Glack in permanent reduction of the Bank's debt. There was a third undertaking given by Ms Cummins and Ms Shanley in 2007 in respect of the putting in place security in favour of the Bank in respect of further development by Mr Doyle at Newtowncashel, Co. Longford. This undertaking entailed, inter alia, the extension of the first legal mortgage and charge over the Glack site. Anthony Barry & Co. signed an extension of the original first undertaking in respect of the Glack property qua solicitors for Mr Doyle. This extension undertaking was expressed to be in consideration for the Bank agreeing to extend and vary certain loan facilities. The extension undertaking required Mr Doyle's solicitors to arrange for the stamping and lodging of the various mortgages and charges in order that the Bank obtain a valid first legal mortgage or charge over the Glack property. In 2008, Anthony Barry & Co. wrote to the Bank informing it that Mr Doyle had sold units 1, 2, 3, 5 and 6 at Glack and that two units remained outstanding. The form of the mortgage charge over the Glack property which was put in place in 2008 was expressed in a manner which drew an unwarranted distinction between the apartment units and the actual property. The appellant made a complaint of misconduct to the Law Society in 2012 to the effect that the title deeds had not been returned on foot of the first undertaking to register the mortgage. In 2013, the appellant applied to the High Court seeking a declaration that the defendants were guilty of misconduct by failing to comply with the undertakings given to the Bank in 2005 and 2007. The Bank also sought an order directing the defendants to comply with their undertakings in this regard. The High Court held that the Bank had established at most that there had been some breaches of undertakings of the most technical nature but which, in reality, had no adverse consequences for it. The High Court refused to grant the Bank the relief it sought ([2014] IEHC 322). The Bank appealed to the Court of Appeal against that decision.

Held by Hogan J that, applying Corbally v Medical Council [2015] IESC 9, the Court does not have is a jurisdiction to grant a declaration that the respondents are guilty of misconduct by reason of a failure to honour an undertaking as distinct from granting an order declaring that they failed to comply with an undertaking. Considering whether the Court should grant the alternative relief sought by the Bank, namely, an order directing the defendant to comply with their undertakings to the Bank, Hogan J affirmed the decision of the High Court and declined to grant the relief. Hogan J noted that there was no evidence of any actual loss which the Bank has as yet suffered.

Hogan J held that he would dismiss the appeal and affirm the decision of the High Court.

Appeal dismissed.

1 1. Does this Court have a jurisdiction to grant a declaration that a solicitor has been guilty of misconduct by failing to comply with the terms of an undertaking? Alternatively, what is the jurisdiction of this Court to direct compliance with the terms of a solicitor's undertaking? These are the important questions relating to the enforcement of solicitors' undertakings which arise on this appeal.

2 2. In the High Court McGovern J. took the view that the plaintiff Bank had established at most that there had been "some breaches of undertakings of the most technical nature but which, in reality, had no adverse consequences" for it. It was for essentially for this reason that McGovern J. refused to grant the Bank the relief in relation to a solicitor's undertaking which it sought: see ACC Bank plc v. Barry [2014] IEHC 322. The Bank now appeals against this decision.

3 3. The Bank had originally appealed to the Supreme Court, but following the establishment of this Court on 28 ^th October 2014, this appeal was transferred to this Court by the decision of the Chief Justice (with the concurrence of the other members of the Supreme Court) on 29 ^th October 2014 pursuant to Article 64 of the Constitution.

4 4. The defendants to these proceedings are solicitors who at various times and at various stages have been in partnership with each other. In 2005 the first defendant, Anthony Barry, was the principal of the firm of Anthony Barry & Co., solicitors, in Athlone. He acted on behalf of a Mr. Brian Doyle of Kenagh, Co. Longford. On 31 ^st October 2005 Mr. Doyle borrowed monies from the plaintiff Bank for the purposes of developing land at Glack, Lackagh, Co. Longford ("the Glack property") and Mr. Barry gave certain undertakings to the Bank for this purpose at that time.

5 5. I should pause briefly at this point to say that Mr. Barry subsequently sold his practice on 1 ^st December 2005 to the second defendant, Ms. Cummins, and the third defendant, Ms. Shanley. There is, in fact, an issue between the various defendants as to who assumed responsibility for this undertaking, but, for the reasons I am about to set out, it is not necessary to address this question. I will assume simply for the purposes of this appeal (and for no other purpose) that Ms. Cummins was the person on whom this responsibility for ensuring compliance with that undertaking actually devolved. It is also important to note that at the hearing in the High Court the Bank simply elected not to pursue the proceedings against the third defendant, Ms. Shanley. While it would appear that, by consent, those proceedings were formally adjourned, at the hearing of this appeal it was agreed that this Court could assume that the Bank was not now pursuing the matter as against Ms. Shanley.

6 6. The first undertaking was itself in standard form. The undertaking was to stamp and lodge for registration in the Land Registry the Bank's deed of charge and mortgage within one month from the date of the initial loan cheque issuing in respect of the Glack property. Mr. Barry gave a second undertaking on 21 ^st October 2005 to furnish to the Bank the sale proceeds of seven apartment units being developed at Glack in permanent reduction of the Bank's debt. It is accepted that the proceeds of sale of the Glack properties have been transferred to the Bank.

7 7. There was indeed a third undertaking given by Ms. Cummins and Ms. Shanley on 9 ^th February 2007 in respect of the putting in place security in favour of the Bank in respect of further development by Mr. Doyle at Newtowncashel, Co. Longford. This undertaking entailed, inter alia, the extension of the first legal mortgage and charge over the Glack site. There is no dispute that in time the Glack loan facility was paid off and a sum of €150,000 was paid in reduction of the Newtowncashel facility.

8 8. On 19 ^th February 2007 Anthony Barry & Co. signed an extension of the original first undertaking in respect of the Glack property qua solicitors for Mr. Doyle ("the extension undertaking"). This extension undertaking was expressed to be in consideration for the Bank agreeing to extend and vary certain loan facilities. The extension undertaking required Mr. Doyle's solicitors to arrange for the stamping and lodging of the various mortgages and charges in order that the Bank obtain a valid first legal mortgage or charge over the Glack property. Some time later, on 24 ^th April 2008, Anthony Barry & Co. wrote to the Bank informing it that Mr. Doyle has sold units, 1, 2, 3, 5 and 6 at Glack and that two units remained outstanding.

The Bank's mortgage and charge

9 9. The issue which gave rise to the present proceedings arises from the manner in which the mortgage charge over the Glack property was actually put in place on 12 ^th December 2008. The deed of charge was executed by Mr. Doyle over three years after the date of the first undertaking and over a year and a half since the date of the extension undertaking. While this delay was regrettable and itself amounted to a breach of the undertaking, nothing turns on this since it has not been suggested that the Bank suffered any financial or other loss as a result of this delay.

10 10. The difficulty which arises instead relates to the form of the charge which was actually put in place. The schedule to the charge (with a description of the property) was written in hand and stated:

"ALL THAT AND THOSE being part of the property comprised in Folios 5819F and 4447 of the Register County Longford being apartments 4, 7 and 8 as per Land...