Allied Irish Banks Plc v Fitzgerald
| Jurisdiction | Ireland |
| Judge | Mr. Justice Garrett Simons |
| Judgment Date | 27 April 2020 |
| Neutral Citation | [2020] IEHC 197 |
| Docket Number | 2019 No. 232 SP |
| Court | High Court |
| Date | 27 April 2020 |
[2020] IEHC 197
Garrett Simons J.
2019 No. 232 SP
THE HIGH COURT
Order for possession – Mortgage – Lease – Plaintiff seeking an order for possession in respect of premises pursuant to a mortgage entered into between the plaintiff and the defendant – Whether the lease between the defendant and a third party was void as against the plaintiff
Facts: The plaintiff, Allied Irish Banks PLC, applied to the High Court seeking an order for possession in respect of premises known as Flat No. 9, Baruva House, 57 Pembroke Road, Dublin 4, pursuant to a mortgage entered into between the plaintiff and the defendant, Mr Fitzgerald. The title to the relevant lands was unregistered. Consequently, the application was made pursuant to Order 54 of the Rules of the Superior Courts 1986. A specific question which arose in this case was whether the lease between the defendant and a third party, Ms Daly, was void as against the plaintiff bank. The leading authority was the judgment of the High Court (Dunne J) in Fennell v N17 Electrics Ltd [2012] IEHC 228.
Held by Simons J that the plaintiff bank was entitled to an order for possession. Simons J held that the uncontested evidence before the court indicated that the principal moneys secured on the mortgage were due for payment; as appeared from the extract of the facility letter of 28 August 2015, the loans were repayable by the defendant on demand by the plaintiff bank at any time at its absolute discretion and an alternative timeline for the repayment was then set out “without prejudice” to the bank’s right to exercise its right of demand. Simons J held that there was nothing in the papers before the court to suggest that the plaintiff bank had consented to the lease. The judgment in N17 Electrics Ltd indicated that the onus of proving that a mortgagee had consented to a lease which contravened a mortgage lies with the party seeking to rely upon the terms of the lease and Simons J held that this onus had not been discharged; the lease was, therefore, void as against the plaintiff bank.
Simons J held that the plaintiff bank was entitled to an order for possession in respect of the property the subject of the mortgage of 1 June 1995, namely Apartment 9 Baruva House, 57 Pembroke Road, Dublin 4. Simons J held that an order would be made in the terms of paragraph 1 of the special endorsement of claim in the Special Summons.
Order granted.
These proceedings seek to recover the possession of land pursuant to a mortgage entered into between the plaintiff bank and the defendant. The title to the relevant lands is unregistered. Consequently, the application is made pursuant to Order 54 of the Rules of the Superior Courts 1986. (The mortgage predates the enactment of the Conveyancing and Land Law Reform Act 2009).
One of the issues to be addressed in this judgment is the status of a lease entered into between the defendant and a third party. In particular, it is necessary to consider whether this lease is valid as against the plaintiff bank.
The plaintiff bank seeks an order for possession in respect of premises known as Flat No. 9, Baruva House, 57 Pembroke Road. Dublin 4 (“ the Premises“). The defendant granted a mortgage over the Premises in favour of the plaintiff bank on 1 June 1995. The indenture of mortgage has been exhibited as part of the grounding affidavit of Orlaith Tierney. The mortgage is stated to secure all moneys for which the defendant may be in any way liable to the plaintiff bank, either as principal or surety. The indenture of mortgage had been registered in the Registry of Deeds on 1 August 1995.
The following provisions of the mortgage are relevant to the issue which has arisen in respect of the lease of the Premises.
“IT IS HEREBY AGREED AND DECLARED that the provisions of the Conveyancing Act 1881, as amended by the Conveyancing Act 1911 shall in their application to this security be modified as follows
(1) The power of sale conferred upon mortgagees by the Conveyancing Act 1881 shall apply to this present security without the restrictions therein contained as to the giving notice or otherwise and for the purpose of any sale under such power the moneys hereby secured shall be deemed to have become due immediately after the execution of these presents although no demand of payment shall have been made.
(2) The Mortgagor shall not be entitled without the consent in writing of the Bank to exercise the powers vested in him by section 18 of the said Conveyancing Act of 1881 so long as any moneys shall remain unpaid on this present security.
[…]”
The plaintiff bank now seeks to enforce the mortgage in circumstances where it is said that there is a debt outstanding to it under the terms of loan facilities accepted by the defendant on 13 September 2015. The terms of the loan facilities are set out in a letter of 28 August 2015. The transaction is a complicated one, and involved the restructuring of existing debt owed to the plaintiff bank by the defendant. As part of the restructuring, it was intended that the defendant would dispose of certain lands including, relevantly, the Premises. It seems that if the proceeds of sale met certain “asset disposal targets” and certain other conditions were met, then the outstanding balance would be written off.
The facility letter of 28 August 2015 provided for five individual loan facilities. These proceedings are concerned with the fourth and fifth of these.
The obligations of the defendant in terms of the repayment of these two facilities are dealt with as follows.
“All amounts due in respect of this Facility are repayable by you on demand by the Bank at any time at its absolute discretion. However, without prejudice to the Bank’s right to exercise this right of demand, you shall repay this Facility in the following manner:
You will pay the interest accrued on this Facility for a period of 18 month(s) from the date of your first drawdown/deemed drawdown under this Facility on a quarterly basis in arrears in each March, June, September and December that it falls due, which the Bank will debit to your account number […] and you hereby authorise the Bank to debit the interest in this manner.
AND
You agree that during the Relevant Period of this Facility (defined below), at the earliest opportunity, but in any event on or before the expiry of the period(s) set out against the Property (defined below), you will make repayments against the amounts due under this Facility from the sales proceeds of the Property.”
There are then detailed provisions explaining what is to happen in respect of any surplus sale proceeds. The “Relevant Property” is defined as Apartment 9, No. 57 Pembroke Road. Ballsbridge, Dublin 4, i.e. the Premises the subject-matter of these proceedings.
“All amounts due in respect of this Facility are repayable by you on demand by the Bank at any time at its absolute discretion. However, without prejudice to the Bank’s right to exercise this right of demand, during the period of 60 months from the Effective Date of this Facility (the “Relevant Period”), you will repay this Facility in the following manner:
Subject to the “Incentive Arrangement” sub-clause below no repayments of principal will be payable on this Facility (unless the provisions of the paragraphs headed “Out of Course Repayment” below apply” SAVE THAT Surplus Sale Proceeds and/or Excess (as defined in the Repayment clause of Facility 1 (Loan Account (Demand Facility) – A Note), Facility 2 (Loan Account (Demand Facility) – A Note), Facility 3 (Loan Account (Demand Facility) – A Note) and Facility 4 (Loan Account (Demand Facility) – A Note) above) may be applied by the Bank from time to time to reduce the balance outstanding on this Facility.”
It is averred in the grounding affidavit that the defendant failed to sell the Premises within the period of eighteen months as required by the terms of the fourth facility.
The grounding affidavit also exhibits letters of demand dated 28 November 2017 (in respect of the fourth facility), and a letter dated 26 April 2018 (in respect of both the fourth and fifth facility). A letter from the plaintiff bank’s solicitors, A.C. Forde & Co., dated 8 October 2018 calling upon the defendant to deliver up vacant possession of the Premises has also been exhibited.
It appears that a lease has been entered into between the defendant and a third party, Ms Eileen Daly. A copy of a document entitled “Memorandum of Agreement” entered into between the defendant and Ms Daly has been exhibited on behalf of the plaintiff bank. This document is dated 3 April 2002. The second schedule of this agreement indicates that the term of the lease is to be 35 years, commencing on 3 April 2002. The rent payable is €800 per month, which is to be paid by set-off of a sum of €800,000 said to be due by the landlord to the tenant, i.e. due by the defendant to Ms Daly.
The defendant was declared a bankrupt on 27 January 2020. An affidavit has been sworn by Mr Ciaran Sheridan, who is a legal executive in the firm of solicitors acting on behalf of the plaintiff bank, which exhibits the relevant correspondence between the solicitors and the Official Assignee.
The Official Assignee’s position is set out as follows in an email dated 7 February 2020.
“Re: Apartment 9 Baruva House, 57 Pembroke Rd. Dublin 4
Where a creditor is seeking a Court order for possession, the Official Assignee’s (OA) position is that he can confirm that he offers no objection to the application and will of course abide by any order made on the basis that no cost order is sought...
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