Cabot Financial (Ireland) Ltd (Formerly ACC Bank Plc) v Joyce and Others

JurisdictionIreland
JudgeMs. Justice Butler,Donnelly J
Judgment Date15 November 2023
Neutral Citation[2023] IECA 281
CourtCourt of Appeal (Ireland)
Docket NumberAppeal Number: 2022/97
Between/
Cabot Financial (Ireland) Limited Substituted for ACC Bank Plc by Order Dated 20/10/2021
Appellant
and
Thomas Joyce, Patricia Joyce, Niall O'Meachair and Valwick Properties Limited
Respondents

[2023] IECA 281

Donnelly J

Faherty J

Butler J.

Appeal Number: 2022/97

High Court Record Number: 2010/9146P

THE COURT OF APPEAL

CIVIL

UNAPPROVED

JUDGMENT of Ms. Justice Butler delivered on the 15 th day of November 2023

Introduction:
1

. In circumstances where I find myself unable to agree with the conclusions reached by my colleagues, it is appropriate that I set out my reasons for such disagreement in this judgment. I will attempt to do so concisely in circumstances where the factual background to the case, the rationale of the High Court judgment and the relevant authorities are set out in some detail in the judgment of Donnelly J.

2

. In brief, the application before the High Court was one brought on 12 May 2021 by Cabot Financial Ireland Limited (“the appellant”) under O.42, r.24 of the Rules of the Superior Courts seeking leave to issue execution of a judgment obtained by ACC Bank plc (“ACC”) on 15 November 2010 against the third defendant (“the respondent”). Cabot was the ultimate assignee of the judgment debt on foot of a transfer dated 5 July 2019 and obtained an order in October 2021 substituting itself for ACC in the title to the proceedings. The application for leave to execute the judgment was made some ten years and six months after the judgment had been granted.

3

. The background facts to the initial proceedings are now of only peripheral relevance. In 2005 the sum of €300,000 was lent by ACC to the first and third defendants to fund the purchase of residential investment property in County Mayo. This loan was secured by a first legal mortgage and charge on the investment property and that charge was registered by ACC on the folio in March 2006. Additional and indeed larger sums were subsequently lent by ACC in 2007 and 2008 to the first and second defendant (a married couple) secured on different property owned by them and to the fourth defendant (a company controlled by the first and second defendants). The latter loans were secured on commercial property owned by the fourth defendant together with a personal guarantee provided by the first and second defendants.

4

. The timing of the loans was inauspicious given the severe economic recession and subsequent depression which commenced in 2008. By mid-2009 the parties were experiencing difficulties in making the scheduled repayments on the loans. Proceedings were instituted by ACC on 5 October 2010 against all four defendants in respect of all four loans of which the respondent was party to only one. On 10 November 2010 ACC issued a motion seeking to transfer the proceedings to the Commercial List and to enter judgments against the various defendants. The application made against the respondent was for liberty to enter final judgment in the sum of €271,637.31 being the outstanding amount due on foot of the 2005 loan. Judgment was sought against the first defendant for a larger sum which included the amount outstanding on the 2005 loan for which the first and third defendants (i.e. the respondent) were jointly and severally liable. On 15 November 2010 the High Court (Kelly J.) made an order granting judgment to ACC against the respondent, there being no attendance in court by him or on his behalf. Orders were made against the first, second and fourth defendants some days later on 18 November 2010. The respondent did not appeal the order made against him.

5

. After obtaining judgment in April 2011, ACC appointed a receiver over the investment property which it was entitled to do pursuant to the terms of the mortgage. It is worth bearing in mind that at the time judgment was granted Ireland was in the throes of a deep recession which had particularly severe effects on the property market. Unsurprisingly, in light of this economic situation and the collapse of the property market, the receivership progressed slowly and, after a number of failed attempts, the investment property was ultimately sold by the receiver in February 2015. Unfortunately, the amount paid by the purchasers for the investment property was very low, €50,000. In effect, the sale of the property recovered only about one-sixth of the amount borrowed to fund its purchase a decade earlier. By the time the costs of the receivership were deducted, the residual amount of less than €8,000, did not have a meaningful impact in reducing the total due on foot of the 2005 loan.

6

. Whilst the receivership was progressing ACC also took steps to protect its interest on foot of the judgment and in March 2012 registered the judgment as a judgment mortgage on the folio of the investment property which was the security for the loan. In January 2013 it registered the judgment on the folios of two additional properties owned by the respondent. The respondent's family home is located on one of these folios and there was some dispute, which could not be resolved on the papers before the court, as to whether the second property was part of the overall holding on which the family home is situated. Nothing turns on this for present purposes. What is potentially relevant is that the respondent's family home was subject to a first charge registered in favour of First Active plc which was, presumably, the mortgage lender which had advanced monies to the respondent for the purchase of that property. That charge ranked in priority to ACC's judgment mortgage.

7

. This sequence of events is, to my mind, significant. ACC did not sit on its hands having obtained judgment. It took steps to realise the security provided for the underlying loan and also registered its judgment as a judgment mortgage over the secured property and over the respondent's other property. ACC can hardly be faulted for allowing the receivership to proceed and seeking to realise the sums due from the secured property prior to seeking to execute the judgment. If the secured property had been sufficient to discharge the loan, no recourse would have been required to the judgment mortgage registered over what appears (and at least in large part) to be the respondent's family home. The difficulties it faced, and indeed which also faced the respondent, are evident from both the lengthy period of time taken to sell the secured property and the low price recovered. Notwithstanding the gradual improvement in the economic situation, it is evident that a forced sale of the respondent's remaining property in 2015 would have been unlikely to have benefited either party.

8

. At this point, according to an affidavit sworn by Mr. Webb, director of the appellant, following discussions with “the ACC legacy team”, “ACC considered its alternative enforcement and recovery options” but that “it appeared that the Respondent was insolvent and there was a legal charge in favour of First Active plc registered in priority to ACC on the Respondent's principal private residence”. The belief that the respondent was insolvent transpired to be correct as in 2017 he petitioned the High Court for his own bankruptcy and was ultimately adjudicated a bankrupt in October 2017. In October 2018 the properties contained in the two remaining folios over which ACC had registered judgment mortgages vested in the official assignee in bankruptcy. It appears from correspondence that Link Asset Services, who acted as service provider for ACC, submitted a proof of debt to the Insolvency Service of Ireland (ISI) but did not receive any further correspondence in the matter. The respondent was discharged from bankruptcy in 2020 and the two properties were re-vested in him in October 2020.

9

. Whilst the respondent was in bankruptcy ACC sold its interest in a portfolio of debt, including the respondent's debt, to Rabobank on 17 December 2018. The following year on 5 July 2019 Rabobank in turn assigned the debt to the appellant. On 12 July 2019 a “hello letter” was sent by the appellant to the respondent advising him of the transfer of ACC's loan to it, of the obligation to make loan repayments to it and asking him to contact it in respect of proposals for the discharge of the loan.

10

. In one of three affidavits sworn by Mr. Webb to ground the application under O.42, r.24 he avers to his belief (based on advice) that “ACC was, inter alia, stayed from executing its judgment for a period by reason of the Respondent's bankruptcy”. The time during which the properties were vested in the official assignee coupled with the various transfers of the judgment debt referred to in the preceding paragraph are offered as an explanation for the delay in executing the judgment in more recent years. As it happens the belief that the respondent's bankruptcy precluded steps been taken on foot of the judgment mortgages to execute the judgment is legally incorrect and this legal error was at the centre of much of the argument on this appeal.

11

. Needless to say, the respondent opposed the granting of leave to execute the judgment against him. Some of his complaints relate to the conduct of the receivership, the lack of information provided to him by ACC and a perceived unfairness that action was not taken against his co-defendants. Of more direct relevance to the issues on the appeal, the respondent disputes the appellant's original averment that it believed a property over which it had the benefit of a judgment mortgage had been kept out of the bankruptcy (i.e. the respondent's principal private residence). Whilst it seems the respondent is correct in that no property was kept out of the bankruptcy, Mr Webb's apparent belief that property would have to be kept outside the bankruptcy for the appellant to proceed to execute a judgment mortgage registered over it, is consistent with the mistaken belief that the bankruptcy...

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  • Pepper Finance Corporation (Ireland) DAC v Doyle and Others
    • Ireland
    • High Court
    • 4 December 2023
    ...grant or refuse leave to execute. As explained in the majority judgment of the Court of Appeal in Cabot Financial (Ireland) Ltd v. Joyce [2023] IECA 281 (at paragraphs 76 to 78), the equivalent rule under the Rules of the Superior Courts fulfils twin objectives as follows. The first objecti......

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