Barry v Ennis Property Finance Dac
| Jurisdiction | Ireland |
| Judge | Ms. Justice Stewart |
| Judgment Date | 21 December 2018 |
| Neutral Citation | [2018] IEHC 766 |
| Court | High Court |
| Docket Number | [2018 No. 5224 P.] |
| Date | 21 December 2018 |
[2018] IEHC 766
THE HIGH COURT
CHANCERY
Stewart J.
[2018 No. 5224 P.]
and
Guarantees – Interlocutory injunction – Secured property – Plaintiff seeking an interlocutory injunction restraining the defendants from selling, possessing, trespassing upon or otherwise dealing with the secured property – Whether an application of the Campus Oil principles to the facts of this case resolved itself in favour of the plaintiff
Facts: The plaintiff, Ms Barry, applied to the High Court seeking a number of reliefs related to guarantees executed by her over the debt of her son’s company, Niall Barry Plant Services Ltd (NBPSL). The guarantees were executed for the benefit of Bank of Scotland (Ireland) Ltd (BOSI). They impacted upon a number of the plaintiff’s assets, including the property formerly known as Kilmacthomas Workhouse, Kilmacthomas, Co. Waterford (the secured property). The defendant, Ennis Property Finance Dac, purchased the plaintiff’s loan from BOSI. Ennis appointed the second and third defendants, Mr Anderson and Mr Allen, to act as receivers for the secured property. By notice of motion dated 8th June, 2018, the plaintiff sought an interlocutory injunction restraining the defendants from selling, possessing, trespassing upon or otherwise dealing with the secured property.
Held by Stewart J that there were two serious questions to be tried in this case: 1) Were the mortgage and the guarantees appended to the first financial transaction, a €50,500 loan between BOSI and NBPSL, and the second financial transaction, involved BOSI opening a Business Current Account in the name of NBPSL with an overdraft facility limited to €200,000, arranged by facility letters dated 3rd November, 2006, tainted by undue influence? 2) Where a party is unduly influenced into executing a security document, and that same document is also used by that party as security for a loan that they freely and consensually drew down for the use of an entirely separate commercial venture, is that security document also stripped of its validity in respect of that other loan? Stewart J held that if both of the questions were to be answered in the affirmative, then Ennis’ claim to the property and its power to appoint the receivers would be seriously undermined; this would also severely impede the ability to alienate any further interest in the property and realise its value. While the Court was not directly addressed on the value of the secured property, at no point was it suggested that the property was in negative equity; thus, it could be assumed that the sale of the property would cover the plaintiff’s debts and any damages flowing from this action, should the defendants be successful at plenary hearing. In all the circumstances, and bearing in mind the review of the authorities carried out by Haughton J. in Langan v Promontoria (Aran) Ltd [2017] IEHC 309, Stewart J was satisfied that an application of the Campus Oil principles to the facts of this case resolved itself in favour of the plaintiff.
Stewart J held that she would grant the injunctive relief sought.
Relief granted.
The plaintiff in these proceedings seeks a number of reliefs related to guarantees executed by her over the debt of her son's company, Niall Barry Plant Services Ltd (‘NBPSL’). The plaintiff has five sons: Eugene, Niall, Paul, Leo and Greg. The guarantees were executed for the benefit of Bank of Scotland (Ireland) Ltd. (‘BOSI’). They impact upon a number of the plaintiff's assets, including the property formerly known as Kilmacthomas Workhouse, Kilmacthomas, Co. Waterford. In the facility letters, the property is referred to as the Kilmacthomas Business Centre, Kilmacthomas, Co. Waterford. I am satisfied that these two descriptors refer to the same property, hereafter referred to as ‘the secured property’. The first-named defendant (‘Ennis’) purchased the plaintiff's loan from BOSI. Ennis appointed the second and third-named defendants to act as receivers for the secured property. By notice of motion dated 8th June, 2018, the plaintiff seeks an interlocutory injunction restraining the defendants from selling, possessing, trespassing upon or otherwise dealing with the secured property. This is the application that is currently before this Court for determination.
The plaintiff's application is grounded upon her affidavit sworn on 7th June, 2018, in which she sets out her understanding of the background facts. She refers to the difficult circumstances in which she found herself following her husband's sudden death from an undiagnosed cancer in October, 2000. These circumstances include the inheritance of her husband's struggling business, as well as the care required by her eldest son and an aging relative. Given her lack of business acumen, she began to place increasing reliance on her son, Niall Barry, in the running of her deceased husband's business. Niall Barry had worked in his father's business for the two years prior to his death. Allegedly, Niall was angry that his father's will had not properly provided for him and he therefore took advantage of the dependency his mother had placed upon him. He allegedly threatened to leave the family business if the plaintiff did not act as guarantor for loans that were to be made available to NBPSL. The plaintiff states that she had significant reservations about her son borrowing such large amounts of money, given his lack of experience. Nevertheless, she executed the guarantees under the duress and undue influence placed upon her by her son because she relied on her late husband's business for the family's livelihood and there would be no one available to run it if her son left. She states that she received no independent legal advice before executing the guarantees. BOSI allegedly did not meet with the plaintiff and did not seek to engage with her in any meaningful way regarding legal advice.
The plaintiff states that she was neither a director nor a shareholder in her son's company. She did not receive any income from its activities, nor did she receive any consideration under the loan agreements. She argues that these were non-commercial guarantees and she was acting in her capacity as a consumer, within the meaning of the Consumer Credit Act 1995, when she executed them. She has also exhibited a copy of the Consumer Protection Code 2006 to her affidavit. In her view, the guarantees contain a number of terms that breach the European Communities ( Unfair Terms in Consumer Contracts) Regulations 1995. The plaintiff argues that BOSI had constructive notice of her position. She states that there was another loan taken out with BOSI by the Barry Property Group (the ‘BPG’), which is also secured by the secured property. The plaintiff states that she is making repayments on this loan herself and that she has kept same fully up to date. It is alleged that, due to her son's default on the other two loans and the consequent realisation of her guarantees, Ennis has also called in this third loan. She highlights that, along with her tenants, she resides at the secured property and it serves as her constitutionally-protected family home. She makes the case that the rent paid to her by her tenants serves as her only source of income. If the receivers continue to interfere with her tenancy arrangements, she will have no source of income for daily living and the continued repayment of her own loan to Ennis. She makes a number of allegations regarding Ennis” continued operation in this jurisdiction and the impediments it could cause to recovering damages following the conclusion of this action.
Donal O'Sullivan, a company director of Ennis, swore an affidavit on 25th June, 2018. A booklet of documents is exhibited thereto. By reference to this documentation, Mr. O'Sullivan seeks to counter the plaintiff's self-characterisation as a housewife with no business acumen. He makes the case that the plaintiff was actually a driving force within the family business, both before and after her husband's death. This business would include a company previously operated by the Barry family, Mahon Valley Investments Limited (‘MVIL’), which the plaintiff became involved with in 1993. He also directly challenges her suggestions that she received no benefit/consideration for her guarantees and that she was acting in her capacity as a consumer at the relevant time. He highlights that the mortgage and charge dated 28th March, 2007 (‘the mortgage’), which the plaintiff executed over the secured property, is an ‘all-sums’ mortgage. As for the issue of independent legal advice, Mr. O'Sullivan directs the Court's attention to the declarations contained in the security documentation, which the plaintiff signed to affirm that she had ‘been advised to take, and [had] been given a due opportunity to take, independent legal advice in respect of [her] obligations’. It is averred that the plaintiff's solicitor, Joseph Nolan of Joseph Nolan & Co., witnessed these signatures personally. These same solicitors act for the plaintiff in these proceedings and were the authors of correspondence in which the issue of duress/undue influence was first raised.
Mr. O'Sullivan also exhibits a settlement agreement between the Ennis, NBPSL and the members of the BPG, in which the plaintiff acknowledges her indebtedness to Ennis. This agreement includes a waiver of independent legal advice, which the plaintiff executed on the same date she executed the settlement agreement. The agreement sets out a new system of repayments, which has also not been adhered to. Under the terms of this agreement, default on repayment results in all monies owed to Ennis becoming due and owing, including the loan that the plaintiff states...
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KBC Bank Ireland Plc v Blake
...issue on multiple occasions, including my decisions in Hogan v. Deloitte [2017] IEHC 673 and Barry v. Ennis Property Finance DAC [2018] IEHC 766. My findings in those cases cohere precisely with the findings of Kelly P. in Higgins and Ryan P. in Smith. The concept of a consumer is to be con......