ADM Londis Company Ltd v Flynn

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 29 September 2020
• Neutral Citation: [2020] IECA 260
• Date: 29 September 2020
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2012 375SP

BETWEEN/

ADM MERSEY PLC

FIRST NAMED RESPONDENT

-AND -

AIDAN FLYNN

SECOND NAMED RESPONDENT

-AND -

ALLIED IRISH BANKS PLC

CLAIMANT/APPELLANT

[2020] IECA 260

Haughton J.

Power J.

Murray J.

Record Number: 2012 375SP

Court of Appeal Record Number: 2019/27

THE COURT OF APPEAL

Mortgage – Examiner’s certificate – Special circumstances – Appellant seeking to vary or discharge an Examiner’s Certificate – Whether the Examiner’s Certificate was free of error

Facts: The appellant, Allied Irish Banks p.l.c. (AIB), appealed to the Court of Appeal on the basis that the High Court erred in fact and in law in refusing to vary or discharge an Assistant Examiner of the High Court’s Certificate, in refusing to admit the first legal charge of AIB dated 21 October 2009 over the interest of the first respondent, ADM Mersey p.l.c., in Folio 684 of the Register of Ownership of Freehold Land County Waterford, and in permitting the Examiner’s Certificate to reflect that ADM Mersey’s judgment mortgage should rank with priority. The notice of opposition joined issue with the grounds of appeal and in addition pleaded that the Examiner’s Certificate was “in all respects correct and free of error”.

Held by Haughton J that, having considered the functions and powers of the Examiner when undertaking accounts and enquiries pursuant to a primary well-charging order, what is meant by the phrase “special circumstances” in O. 55 r. 50 of the Rules of the Superior Courts such that the court may vary or discharge an Examiner’s certificate, the relevance of s. 31 of the Registration of Title Act 1964 in proceedings before the Examiner and its application to the facts in this appeal, the issue of execution of the Deed of Mortgage dated 18 January 2007, and certain consequential issues that arose, he would allow this appeal. Subject to hearing from counsel, rather that remitting the matter to the High Court, he held that he would vary the Assistant Examiner’s Certificate dated 3 October 2018 by the substitution of paragraph (2) in the Schedule thereto by the following: “(2) the Charge appearing by entry no. 2b of Part 3 of the said copy Folio in this Certificate mentioned to have been registered by Allied Irish Banks p.l.c. against the interest of the Defendant in that part of the said Folio shown in Plan 684 in the Land Registry on the 21st day of October 2009 on foot of which there is due to Allied Irish Banks p.l.c. the sum of €550,853.14 for Principal together with the amount of €315.98 making together €551,169.12 together with interest at 8% per annum from the 20th day of April 2011 up to the 31st day of December 2016 and thereafter at the rate of 2% per annum on foot of which a claim has been entered and proved.” Haughton J held that the revised wording was intended to reflect the judgment obtained by AIB against the second respondent, Mr Flynn, on 20 April 2011, in respect of which no payments were made by the debtors, and the variation of the interest accruing on judgments that rested at 8% per annum in 2011 up to 31 December 2016 but was varied to 2% by virtue of the Courts Act 1981 (Interest on Judgments) Order 2016 with effect from 1 January 2017.

Haughton J held that he would further: vary the Certificate to include certification of all the reasonable costs and expenses incurred by ADM Mersey under the primary order, including attending before the Assistant Examiner, seeking possession and arranging the sale, such costs and expenses to be determined in default of agreement by the Assistant Examiner; make an order for distribution to ADM Mersey’s solicitors Michael Nugent & Co. from the monies held to the credit of these proceedings to discharge/reimburse such costs and expenses; propose to vary the order of the High Court and order that ADM Mersey and AIB be entitled to their costs of the motion to be agreed or in default of agreement to be adjudicated by the Legal Costs Adjudicator, such costs to be paid out of the monies lodged in Court standing to the credit of this action; (d) propose to make no order as to costs of this appeal; subject to the parties’ agreement on the issue of distribution of the net proceeds of sale, direct payment out as to 4/5ths to AIB and as to 1/5th to ADM Mersey.

Appeal allowed.

JUDGMENT of Mr. Justice Robert Haughton delivered on the 29th day of September 2020

Introduction

1 This appeal concerns the extent of the functions and powers of the Examiner of the High Court (or, in this case, the Assistant Examiner, and references to Examiner may be taken to include an Assistant Examiner) in taking accounts and pursuing enquiries as to encumbrances in a mortgage suit and filing a Certificate accordingly; the jurisdiction of the High Court under 0. 55, r. 50 of the Rules of the Superior Courts in hearing an application to vary or discharge an Examiner's Certificate in “special circumstances”; and the effect in both processes of s. 31 of the Registration of Title Act, 1964 which provides for the registers kept in the Land Registry to be conclusive evidence of the ownership of an interest in land.

Background Facts

2 By Deed of Mortgage dated 18 January 2007 (“the Mortgage”) made between the second named respondent (“Mr. Flynn”) and AIB Mortgage Bank (“AIBM”) and Allied Irish Banks plc (“AIB”/the appellant) Mr. Flynn mortgaged to AIBM and AIB as security for the total debt owing to each of them as lenders -

“ALL THAT AND THOSE that piece or plot of ground containing approximately 10.7 acres, (43,300 square meters) being part of the townland of Leckaum, Barony of Gaultiere in the Electoral Division of Killea Dunmore East in the County of Waterford and being part of the lands comprised in Folio 684 of the Register of Ownership of Freehold Land County Waterford and more particularly delineated on the Land Registry Map attached hereto and thereon outlined in red EXCLUDING the area outlined in green comprising 2.24 acres (9065 square meters).”

(“The mortgaged land”).

3 Mr. Flynn was not then registered as owner of the mortgaged land, but was entitled to be so registered. “Part 2 Ownership” in Folio 684 shows that Mr. Flynn became registered as “full owner” of the property described in that Folio on 21 October 2009.

4 It is important to note that Folio 684 relates to more property than just the mortgaged land. Part 1(a) describes the property as follows -

“The property shown coloured Red as Plan(s) 684, C13TH on the Registry Map, containing 5.2179 hectares, situate in the townland of LECKAUN, in the barony of GAULTIERE, in the Electoral Division of Killea.”

The mortgaged land does not extend to the entirety of the property described in Folio 684, leaving the area outlined in green on the map attached to the Mortgage, representing something less than one fifth of the entire of the property comprised in the Folio, not encumbered by the Mortgage.

5 The Mortgage refers to both AIBM and AIB as “lenders” and “lender” means either of them, and expressly provides that it is “security for the total debt owing to each Lender, whether or not a Lender holds other security” (Clause 2.1). The “total debt” means all amounts payable by Mr. Flynn in respect of any loans or credits granted by either lender. Clause 5, headed “Ranking of Security” provides -

“5.1 The Lenders hereby agree and the Mortgagor hereby acknowledges that regardless of anything else to the contrary in this Mortgage:

(a) until AIB Mortgage Bank has granted a full release or discharge of this Mortgage (the “AIB Mortgage Bank Release Date”):

(i) this Mortgage shall rank first as security for the Total Debt owing to AIB Mortgage Bank in priority in all respects to the security held under this Mortgage by AIB;

(ii) thereafter shall rank next as security for the Total Debt owing to AIB;

and

(b) after the AIB Mortgage Bank Release Date, for so long as any Total Debt remains owing to AIB, this Mortgage shall rank as security for the Total Debt owing to AIB, regardless of:

(i) the order, registration, notice, execution or date of any of the security contained in this Mortgage; or

(ii) the creation in favour of either of the Lenders of any further or additional security over the undertaking properties or assets of the Mortgagor; or

(iii) any fluctuation in any Total Debt from time to time owing to either of the Lenders or the date in which any Total Debt is incurred; or

(iv) any contrary provision in any agreement between the Mortgagor and any Lender.

5.2 Until the AIB Mortgage Bank Release Date, this Mortgage may be enforced only by AIB Mortgage Bank and AIB shall not take any steps to enforce this Mortgage, appoint any receiver or take possession of the Mortgaged Property without the prior written consent of AIB Mortgage Bank.”

6 From the copies of the Mortgage exhibited it appears to have been executed by Mr. Flynn, and his signature to have been witnessed by William M. Cullen solicitor, although this was in controversy before the Assistant Examiner. It does not appear to have been executed by or on behalf of either AIBM or AIB. It bears a stamp “Land Registry registered as a burden in Folio 684 of the Register, County Waterford Inst. No. D2009LR192582”.

7 Part 3 of Folio 684 details “Burdens and Notices of Burdens, and records that also on 21 October 2009 the charges in favour of AIBM and AIB under the Mortgage were separately entered and recorded as Burdens in the following terms: -

“2a 21 - Oct – 2009

D2009LR192582J Charge for present and future advances repayable with interest. AIB Mortgage Bank is owner of this charge as tenant in common in undivided shares, the owner's share at any time being the proportion that the debt owing to the owner secured by the charge bears to the total debt owing to the owners in common secured by the charge.

This Charge (Entry 2a & 2b) affects plan 684 only (See D2009LR192582J)

2b 21 - Oct – 2009

D2009LR192582J Charge for present and future advances...