Bank of Ireland v O'Donnell

JudgeFinlay Geoghegan J.,Peart J.,Irvine J.
Judgment Date15 April 2015
Neutral Citation[2015] IECA 73
Docket NumberAPPEAL NO. 123/2015,[C.A. No. 123 of 2015]
CourtCourt of Appeal (Ireland)
Date15 April 2015
The Governor and Company of the Bank of Ireland and Tom Kavanagh
Brian O'Donnell and Mary Patricia O'Donnell

[2015] IECA 73

Finlay Geoghegan J.

Peart J.

Irvine J.

APPEAL NO. 123/2015


Bank – Loans – Security over home in relation to borrowings – Default in payments – Appeal against order granting interlocutory injunction – Receivership – Vacant possession – Recusal of judge-Adjournment application – Whether damages adequate remedy – Balance of convenience

Facts The appellants are husband and wife. They sought to appeal an order of the High Court granting an interlocutory injunction restraining them, their servants and/or agents from trespassing, interfering with, entering upon or otherwise attending the property known as ‘Gorse Hill’; an order directing they vacate Gorse Hill and other interlocutory orders restraining them from impeding or obstructing the Receiver and directing they deliver up to the Receiver any keys, alarm codes and/or other security and access devices. Mr O'Donnell and Mrs O'Donnell jointly decided that their family home would be acquired by them through the medium of an Isle of Man company, Vico Limited, which would be indebted to them for the acquisition and re-development costs, but would allow them to reside there with their children. The appellants subsequently defaulted in relation to their liabilities and the Bank issued summary proceedings against them. A settlement agreement was entered into. It set out the indebtedness of the appellants to the Bank and provided staged payments to be made. It stated that, in default of the payments, the Bank had liberty to re-enter proceedings and seek judgment against them. The appellants were adjudicated bankrupt in Ireland on petition by the Bank. The debt was not discharged and the Bank appointed a Receiver. The High Court made an order that the O’Donnell children vacate the premises. The appellants requested the High Court judge recuse himself on grounds of objective bias. This was rejected. Applying the appropriate test, it was concluded that a reasonable person would not have had a reasonable apprehension that the appellants would not have had a fair hearing from an impartial judge. The appellants further argued that the refusal of their adjournment application was in breach of their constitutional rights to fair procedures and Article 6.1 of the European Convention on Human Rights. This, too, was rejected.

Held The judge was satisfied that the respondents had made out a strong case that they would succeed at hearing in obtaining substantive relief, namely that the appellants vacate Gorse Hill. The Court agreed with the High Court judge that damages would not be an adequate alternative remedy for the respondents. The judge considered the balance of convenience. He favoured upholding the order of the High Court in granting the interlocutory injunctions sought, including that the appellants vacate Gorse Hill. The judge indicated the appellants would not be without a home if the relief was granted as they had a home in England. The judge stated if the Receiver was to take possession of the property, the property would be available for rent and said rental income could be applied towards the monies owed to the Bank.

Appeal dismissed

JUDGMENT of the Court delivered on the 15th day of April 2015

This appeal demonstrates, once again, the very difficult situation in which a family may find itself where a decision was made to give security over their home to a bank in relation to significant borrowings. Such situations are understandably a cause of great emotional upset and distress for the families concerned.


The appellants, Mr. and Mrs. O'Donnell, appeared in person. Mr. O'Donnell, a former experienced commercial solicitor, made oral submissions in addition to the written submissions filed on behalf of the appellants. Mrs. O'Donnell appeared and informed the Court that she wished to pursue the appeal and rely upon the submissions made by her husband.


The respondents, to whom the Court will refer individually as ‘the Bank’ and ‘the Receiver’ respectively, were jointly represented by solicitor and counsel.


The appeal is against an order made on 12th March 2015, by the High Court (McGovern J.) granting an interlocutory injunction restraining the appellants, their servants and/or agents or any other person acting on their behalf, or having notice of the making of the order from trespassing, interfering with, entering upon or otherwise attending at the property known as “Gorse Hill”; an order directing the appellants and others to vacate Gorse Hill and other interlocutory orders restraining the same persons from impeding or obstructing the Receiver, and directing the appellants and others deliver up to the Receiver any keys, alarm codes and/or other security and access devices. The appellants also appeal against prior rulings of the High Court judge in relation to the same motion.


The members of the Court are in agreement on all issues in the appeal and have determined to deliver a single judgment of the Court.

Background and Prior Proceedings

The proceedings in which this appeal arises commenced only on 3rd March, 2015. However, there are a significant number of prior sets of related proceedings between the Bank, its subsidiary Bank of Ireland Private Banking Limited (‘BOIPB’) and the Receiver and members of the O'Donnell family and companies controlled by them. The issues in this appeal must be considered in the context of those prior proceedings. On an appeal such as this against the granting of an interlocutory injunction, the Court is not concerned to decide any disputed fact. It is, however, relevant to identify those facts which may be considered to represent the status quo at the time of the Bank's application for the interlocutory injunction. Insofar as the Court refers to facts in this judgment, it is only on that basis. For the most part, the relevant facts to be taken into account in identifying the factual status quo are derived from orders made and judgments delivered in the prior proceedings.


Similarly the Court is not concerned to decide any legal issue in dispute in the proceedings. In the course of the appeal, the appellants submitted that certain prior determinations made by the High Court and the Supreme Court in the related proceedings, to which they were not parties, are not binding on them. Insofar as the Court refers to those determinations in the course of this judgment, the Court is not making any decision on that objection. That will be a matter for the full hearing of the proceedings. The facts or legal issues as determined in those proceedings, where relevant to issues in this appeal do, however, represent the current status quo.


The principal relevant judgment is the single judgment delivered by Laffoy J. in the Supreme Court, 19th December, 2014 (with which all other members of the Court agreed) in proceedings between Alexandra O'Donnell, Blaise O'Donnell, Blake O'Donnell and Bruce O'Donnell (‘the O'Donnell Children’) and the Bank, BOIPB and the Receiver [2012 No. 7554P] (‘Gorse Hill proceedings’). As appears therefrom, commencing about 1997, the appellants put in place a complex legal structure for the purchase and development of two separate parcels of land which together became known as Gorse Hill and its use as a home for their family. They used, for that purpose, an Isle of Man company, Vico Ltd.


In about 2000, the appellants demolished the original house on Gorse Hill and redeveloped it as a residential property. The appellants and their four children lived there until December 2011, when the appellants moved to England and the children remained living in the house. The property at Gorse Hill was acquired in two tranches; one a purchase of unregistered land and one of registered land.


It was held by Laffoy J., that by 2006, Vico Ltd. was the legal and beneficial owner of all the property comprised in Gorse Hill which was its only asset.


It further appears from the judgment of Laffoy J. that in June 2006, Vico Ltd. gave a guarantee and indemnity to the Bank in relation to liabilities of the appellants to the Bank and a separate guarantee and indemnity in relation to liabilities of Hibernia, a company incorporated by the appellants. The maximum then liability of Vico Ltd. to the Bank was €17 million. In June 2006, Vico Ltd. executed a Deed of Mortgage (‘the Mortgage’) in favour of the Bank over the unregistered portion of Gorse Hill in respect of its liabilities to the Bank. Also, in June 2006, it executed a Deed of Charge (‘the Charge’) in favour of the Bank, charging the registered lands in Gorse Hill with its liabilities to the Bank. There were subsequent guarantees given by Vico Ltd. to the Bank in respect of liabilities of the appellants and companies incorporated by them. It is not necessary to refer to these in detail.


The appellants had also, in 1997, as settlors, established a discretionary trust, the proper law of which was to be the Isle of Man and the beneficiaries included their children. There was a corporate trustee, the identity of which changed from time to time. The shares in Vico Ltd. were accepted by the trustee as an addition to the trust fund. The appellants advanced monies to Vico Ltd. in relation to the cost of acquisition and redevelopment of Gorse Hill. Laffoy J., at para. 108 of her judgment, summarised the relationship of the appellants with Vico Ltd. in relation to Gorse Hill as follows:-

‘Moreover, the documentary evidence also establishes aspects of the relationship of Mr. O'Donnell and Mrs. O'Donnell with Vico Limited in relation to Gorse Hill, which are material to the determination of where the beneficial ownership of Gorse Hill lies, namely:

(a) that a...

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