Allied Irish Banks Plc, AIB Mortgage Bank and Everyday Finance DAC v Tim Sheahan
| Jurisdiction | Ireland |
| Judge | Ms. Justice Costello |
| Judgment Date | 29 June 2021 |
| Neutral Citation | [2021] IECA 183 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Court of Appeal Record Number 2018/221 |
[2021] IECA 183
Costello J.
Collins J.
Binchy J.
Court of Appeal Record Number 2018/221
THE COURT OF APPEAL
Appointment of receiver – Stay – Private contract – Appellant appealing from the judgment and order of the High Court appointing a receiver – Whether the trial judge erred in refusing to grant a stay on her order and in refusing to recognise and uphold a private contract
Facts: The defendant/appellant, Mr Sheahan, appealed to the Court of Appeal from the judgment and order of the High Court (O’Regan J) of 18 April 2018 appointing a receiver by way of equitable execution over all sums due to the appellant by the Minister for Agriculture, Food and the Marine such as would satisfy a judgment debt due by the appellant to the plaintiffs/respondents, Allied Irish Banks plc, AIB Mortgage Bank and Everyday Finance DAC, together with an order of costs in favour of the respondents against the appellant and Sheahan Farming Ltd. The appellant filed his notice of appeal as a litigant in person. He argued that the trial judge erred in refusing to grant a stay on her order and in refusing to recognise and uphold a private contract, i.e. the lease agreement entered into between the appellant and Sheahan Farming Ltd. He referred to the fact that the respondents had denied that they consented to the lease and referred to a letter of February 2008. He pleaded that the court was obliged to uphold the agreement in circumstances where, according to the appellant, the respondents later admitted that the consent necessary for the appellant to lease the lands to Sheahan Farming Ltd had been granted by the respondents. He argued that in those circumstances the court should have been aware that the monies were not those of the appellant but the monies of Sheahan Farming Ltd, and the court could not make the order appointing a receiver by way of equitable execution in those circumstances. He argued that, as a result of the order, he had been placed in breach of his lease agreement with Sheahan Farming Ltd. He pleaded that the company were “the contractual and beneficial owners of the monies...and the Court did not protect the beneficiary’s legal rights in this regard”.
Held by Costello J that, in 2017, in his personal capacity, the appellant applied to the Department of Agriculture, Food and the Marine for payment under the Basic Payment Scheme (BPS) in respect of the lands. Costello J noted that the Department confirmed that it intended to make the payment to the appellant; it clearly took the view that the appellant was the person entitled to the BPS payments in respect of the lands for 2017. Costello J held that, as a matter of principle, it was and is open to the court to appoint a receiver by way of equitable execution over the BPS payments where it is just or convenient so to do. Costello J held that the onus lies on a judgment debtor to establish, by reference to evidence, that it would not be just or convenient to appoint a receiver. Costello J noted that the appellant did not do so. Costello J held that the fact that the appellant had leased his lands and leased the BPS payment to his company, Sheahan Farming Ltd, did not mean that he had no interest in the BPS payment, nor that a receiver could not be appointed in respect of the payment; his contractual obligation under the lease was no bar to such an appointment. Costello J held that the court was not required to refrain from appointing a receiver over the monies in order to allow the appellant to fulfil his contractual obligations to Sheahan Farming Ltd, or to avoid unsubstantiated prejudice to third parties. For those reasons, Costello J dismissed the appeal.
Costello J’s provisional view was that the costs of the appeal should follow the event and that the appellant should pay the costs of the respondents, to be adjudicated in default of agreement.
Appeal dismissed.
JUDGMENT of Ms. Justice Costello delivered on the 29th day of June 2021
This is an appeal from the judgment and order of the High Court (O'Regan J.) of 18 April 2018 appointing a receiver by way of equitable execution over all sums due to the appellant by the Minister for Agriculture, Food and the Marine such as would satisfy a judgment debt due by the appellant to the respondents together with an order of costs in favour of the respondents against the appellant and Sheahan Farming Limited.
The appellant is the owner of agricultural lands in County Cork comprised in Folios 6388, comprising 116.43 acres, and 12916, comprising 9.98 acres of land (together “the lands”). At various times between 2005 and 2013, the appellant borrowed monies from the respondents pursuant to commercial loan facilities. In addition, the appellant guaranteed certain facilities advanced by the respondents to a company of which he is a director, Farmco Agri Trading Limited.
The appellant charged the lands in favour of the first named respondent by Deeds of Mortgage in Charge dated 13 May 1999 in respect of the lands comprised in Folio 6388, and 24 May 2005 in respect of the lands comprised in Folio 12916. Each mortgage contained a negative pledge on the part of the appellant not to convey, transfer, assign, demise or let or part with possession of the mortgaged property or any part thereof without the prior consent in writing of the bank.
On 13 February 2008, Mr. Sean Brennan, Relationship Manager of AIB, wrote to the appellant in relation to Folio 6388 as follows:-
“Further to our conversation, we do not envisage any difficulties in leasing the above land and hereby grant permission for you to do so, providing that it is for agricultural use only.”
The letter discloses no details of the intended lease referred to and it relates solely to the lands in Folio 6388. There was no evidence concerning the conversation referred to in the letter, nor that any lease of the lands was entered into by the appellant in 2008.
On 17 September 2010, the appellant and his brother, Mr. John Sheahan, incorporated a company, Sheahan Farming Limited. Mr. John Sheahan held 49 ordinary shares and the appellant held 51. They were each directors of the company and the appellant was the company secretary. The appellant and his brother entered into a shareholders agreement on 17 September 2010. At Clause 14, they agreed “[b]oth directors agreed to lease their lands and single farm payments to Sheahan Farming Limited.” On 8 March 2011, the appellant entered into two agreements with Sheahan Farming Limited. It is appropriate to quote them in full:-
“Land Leasing Agreement
8.03.2011
I, Tim Sheahan of … agree to lease lands at Cooldurgha, Annakisha, Mallow, Co. Cork to Sheahan Farming Limited of Annakisha, Mallow, Co. Cork lands totalling 136ac for the sum of €8,000 for the remainder of year 2011. The following years rent are listed below:
2012: €40,800
2013: €40,800
2014: €40,800
2015: €40,800
Single land payments are to be claimed by Sheahan Farming Limited. The lessee, Sheehan Farming Limited, is responsible for all activities on these lands for the purpose of growing crops on these lands.
Period of Lease: 1.03.2011 – 31.08.2031
Rent Review: 1.03.2016
Every five years from lease start date.
Lease can be extended if required by lessee.”
Thus, the appellant agreed to lease his lands to his company and the EU subsidies payable to certain farmers, referred to in the lease as “Single land payments”, were to be claimed by the company, not the appellant.
The second agreement related to the single farm payment and provided:-
“Single farm payments agreement:
8.03.2011
1. Sheahan Farming Limited will claim all single farm payments in the name of Tim Sheahan.
2. Sheahan Farming Limited will rent, lease and provide all lands so payments will be claimed.
3. Tim Sheahan agrees to change address of payments from his own address to that of the company registered address.
4. Sheahan Farming has the use of Tim Sheahan's crop number D344C518.
5. Sheahan Farming undertakes to make sure all single farm payments are used and not lost.
6. All payments are to be mandated to Sheahan Farming bank account.
7. Sheahan Farming accepts that in excess of 290 ha or 720 ac more than land leased from Tim Sheahan at Cooldurgha, Mount Nagle, Annakisha must be provided to claim these entitlements.
8. Tim Sheahan agrees to having no claim on the EU payments set out above for the duration of the lease.
9. Total entitlements: 320”. (emphasis added)
The document is signed by the appellant on his own behalf and John Sheahan on behalf of the company. Consistent with the lease, the company agrees that it will claim all single farm payments “ in the name of” the appellant.
Ultimately, the appellant defaulted on his obligations pursuant to both the facilities and the guarantee, and the respondents instituted proceedings for debt repayment against the appellant on 17 July 2015. On 11 January 2016, the High Court (Noonan J.) entered judgment by consent in favour of the respondents against the appellant in the sum of €2,606,806.15. There was no order as to costs. By consent, a stay was placed on execution until 1 February 2016.
On 1 March 2016, after judgment had been entered by consent, the appellant and the company entered into a land leasing review. The document said that the appellant agreed:-
“… to review lease (sic) lands at Cooldurgha, Annakisha, Mallow, Co. Cork to Sheahan Farming Limited … lands totalling 126 ac for the sum of €18,900 with single farm payments to be claimed by Sheahan Farming Limited. The lessee, Sheahan Farming Limited, is responsible for all activities on these lands for the purpose of growing crops on these lands.”
The agreement confirmed that the period...
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