Bank of Ireland Finance v Daly Ltd

• Jurisdiction: Ireland
• Judgment Date: 01 January 1978
• Neutral Citation: 1975 WJSC-HC 124
• Date: 01 January 1978
• Docket Number: [1975 No. 3812 P.],No. 3812P/1975
• Court: High Court

1975 WJSC-HC 124

The High Court

McMahon J.

No. 3812P/1975

BANK OF IRELAND FINANCE v. DALY

Between:

BANK OF IRELAND FINANCE LIMITED

Plaintiff

and

NOREEN DALY, JAMES HURLEY, CHRISTOPHER MCCARTHY, DENIS O'CONNOR, D. J. DALY LIMITED AND WILLIAM F. O'DRISCOLL

Defendants

1 12 December 1977 This Action has been discontinued against all the Defendants except D. J. Daly Limited which I shall refer to as the Company. The only issue in the case now is the claim of the Plaintiff which I shall refer to as the Bank to be entitled to an equitable charge of a sum of £55,000 on certain lands at Mountfieldstown County Cork by subrogation to the vendors lien of the Borrowdale Property Company Limited.

2 The claim arises in the following manner. In September 1969 the Bank agreed to make a loan of £60,000 to the Company to enable it to purchase 42 acres of land at Mountfieldstown in the County of Cork and it was agreed that in consideration of the advance the Company's Solicitors would lodge the Title Deeds of the property with the Bank on the completion of the transaction and would hold the Title Deeds in trust to the Bank pending such completion. In implementation of the agreement the Company's Solicitors Messrs. P. J. O'Driscoll and Son wrote to the Bank a letter dated 10th October 1969 in the following terms.

"Re D. J. Daly Limited. Lands at Mountfieldstown. Further to our recent telephone conversation with you in accordance with our client's instructions we hereby undertake that in consideration of an advance of £60,000 we will lodge the Title Deeds of the above property containing approximately 42 acres with you on the completion of this transaction and pending its completion we will hold the title documents in trust for you. We further undertake to lodge with you the amount of your advance on the completion of the re-sale of this property which we anticipate to be within six months."

3 The Bank advanced the sum of £60,000 to the Company by cheque dated 10th October 1969. The unpaid balance of the purchase money amounting to £54,000 was paid by the Company out of the sum of £60,000 advanced by the Bank.

4 The vendors were the Borrowdale Property Company Limited and it duly conveyed the lands to the Company but the Title Deeds were not lodged with the Bank on the completion of the purchase. The Title Deeds subsequently came into the possession of the Bank about the month of February 1974 in circumstances which were the subject matter of oral evidence by the only two witnesses called in the Action namely Mr. James Pile a Bank Official and Mr. Barry O'Driscoll the Solicitor for the Company. The remaining facts in the case were admitted in an agreed Statement of Facts. The issue between the Bank and the Company arose because under Section 99 of the Companies Act 1963an equitable mortgage by deposit of Title Deeds created by the Company would have been void for want of registration.

5 The Company was in liquidation and the Liquidator on behalf of the creditors contested the Bank's claim on two grounds namely;

6 (1) That the Bank in the contract for the loan to the Company having stipulated for security by way of an equitable charge was precluded from claiming to be subrogated to the vendors lien and

7 (2) If the Bank was entitled to be subrogated to the vendors lien that lien constituted a charge created by the Company which was void for want of registration under Section 99 Companies Act 1963.

8 So far as concerns the matters which were in controversy on the oral evidence given in this Action it is sufficient to say that I am not satisfied that Mr. Barry O'Driscoll gave the title deeds to Mr. James Pile with the intention of depositing them as security for the advance. It is not sufficient that after an agreement to give security title deeds come into the hands of the creditor for another purpose ( Re Beetham ex parte Broderick 18 Q.B.D. at 380 and 766).

9 The deposit of title deeds by a debtor is prima facie evidence of an agreement for a mortgage of the estate. The Company submitted that the Solicitor's letter of the 10th October 1969 was a written memorandum of an agreement by the...