Charles Mcguinness and Another v Ulster Bank of Ireland Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Hogan |
| Judgment Date | 27 May 2014 |
| Neutral Citation | [2014] IEHC 281 |
| Court | High Court |
| Date | 27 May 2014 |
[2014] IEHC 281
THE HIGH COURT
BETWEEN
AND
MERROW LTD v BANK OF SCOTLAND PLC & O'CONNOR (BELOHN, IN RE) 2013 2 ILRM 388 2013/31/9341 2013 IEHC 130
LAND & CONVEYANCING LAW REFORM ACT 2009 S64(2)(B)(IV)
POWERS OF ATTORNEY ACT 1996 S17
GALLAGHER & LAMBERT POWERS OF ATTORNEY ACT 1996 (AS AMENDED) 3ED 2010 25
POWERS OF ATTORNEY ACT 1996 S17(1)(A)
POWERS OF ATTORNEY ACT 1996 S17(1)(B)
ERIN EXECUTOR & TRUSTEE CO LTD v REVENUE COMMISSIONERS 1998 2 IR 287 1995 1 ILRM 289 1995/2/663
O HAONGHUSA v DCC PLC & ORS 2011 3 IR 348 2011/41/11888 2011 IEHC 300
LAND & CONVEYANCING LAW REFORM ACT 2009 S64(2)(C)
LAND & CONVEYANCING LAW REFORM ACT 2009 S64(1)(A)
Bank – Loan – Businessmen – Property Value – Receiver – Validity of Appointment – Practice and Procedures - Powers of Attorney Act 1996 – Judicial Judgement – Authorised Attorney
Facts: The plaintiffs availed of a facility offered to them by the defendant, Ulster Bank, in the sum of €12m and the purpose of the facility was to assist them with the purchase of a 50 acre site at Farnham Road, Cavan, Co. Cavan. Due to the recession the value of the property had fallen and the plaintiff”s venture did not prove successful. The loan was called in and judgement was given on 1 st November against the plaintiffs in the sum of €12m. A further judgment was given on 22nd November, 2010, against the second plaintiff (and another person) in the sum of €1.652m. These judgements were not discharged and in January, 2012, the defendant purported to appoint a receiver, a Mr. David O”Connor, pursuant to the terms of the relevant mortgage deed of 14th August 2006. The appointment of the receiver was not under seal, but appointed by means of a supplementary deed dated 27th January, 2012. It was signed and delivered by a Michael McNaughton ‘for and on behalf of and as the Deed of Ulster Bank Ireland Ltd.’ under a power of attorney dated 13th April, 2011, which had not been revoked. In the case at hand it was said that where there is a contractual requirement that the appointment of a receiver be done by a deed under seal, then the appointment of a receiver other than in that fashion is fatal to the validity of that appointment. It was submitted that through a combination of the provisions of s.17 of the Powers of Attorney Act 1996 (‘the 1996 Act’) and the other provisions of s. 64 of the 2009 Act, the receiver had in fact been lawfully appointed.
Held by Justice Hogan that in order to determine the validity of the appointment of the receiver an examination of the applicable legislation was required. Having examined section 17 of the 1996 Act it was reaffirmed that s.17(1) extended the range of legal instruments which could be executed by the duly authorised attorney. As a donee of the power of attorney Mr. McNaughton, it was reasoned that he never executed the supplementary deed with his own seal, so that s. 17(1)(a) did not apply. So far as s.17(1)(b) was concerned, Justice Hogan, further reasoned that, Mr. McNaughton executed the deed ‘in his… own name by the authority of the donor of the power’, Ulster Bank of Ireland Ltd. In such circumstances, it was clear that the deed ‘shall be as effective as if executed by the donee with the signature and seal’ of the donor of the power. Having reached this conclusion, Justice Hogan, in determining the effectiveness of s.17(1)(b), reasoned that the use of deeming clauses by the Oireachtas in legislation was an established drafting technique, but where such clauses where utilised, then the question became whether the deeming clause operated for all purposes, or just for some specific purposes. Adopting the approach in O hAonghusa v. DCC plc [2011] IEHC 300, Justice Hogan stated that the deeming clause contained in s. 17(1) of the 1991 Act seemed to be a perfectly general one. It deemed a deed executed in that fashion to be generally ‘as effective as if executed or done by the donee with the signature and seal…of the donor of the power’ and, unlike the statutory provisions at issue in Ó hAonghusa, it did so without limitation and it is not confined in its purpose or scope. Thus, the effect, therefore, of the deeming provision was reasoned to deem the appointment by deed of the receiver by the duly authorised attorney to be the same in law as if the receiver had been appointed by the donor of the power by deed under seal, even if there was no such appointment in actual fact. Thus, it was determined that the court should treat the deed executed by the attorney, Mr. McNaughton, as having the same legal purpose and effect as if it were a deed under seal. Consequently, the appointment of Mr. O”Connor in this fashion was not deemed to be unlawful. A consideration of s. 64(2)(c) of the 2009 Act lead precisely to the same result. The supplementary deed of January 2012 was effective in law so far as the sealing requirements of Clause 9(1) of the debenture deed where concerned. It followed in turn that the appointment of Mr. David O”Connor as receiver was deemed valid.
JUDGMENT of Mr. Justice Hogan delivered on the 27th day of May, 2014
1. The plaintiffs in these proceedings are two businessmen who in July, 2006 availed of a facility letter offered to them by the defendant, Ulster Bank of Ireland Ltd. The facility amount was by of loan in the sum of €12m. and the purpose of the facility was to assist them with the purchase of a 50 acre site at Famham Road, Cavan, Co. Cavan.
2. This acquisition was made as the property market peaked. Since then there have been been calamitous falls in the value of property, albeit, perhaps, with some modest improvement in the past year. It is not altogether surprising in the light of these developments that the plaintiffs' venture did not prove to be a success. The loan was called in and judgment was given in this Court on 1 st November 2010 against the plaintiffs (along with two others) in the sum of €12m. A further judgment was given on 22 nd November, 2010, against the second plaintiff (and another person) in the sum of €1.652m.
3. These judgments were not discharged and in January, 2012 the defendant Bank purported to appoint a receiver, a Mr. David O'Connor, pursuant to the terms of the relevant mortgage deed of 14 th August 2006. Clause 9 of the mortgage deed provides in relevant part:
"At any time after the chargor so requests or the security thereby constituted becomes enforceable, the Bank may from time to time appoint under seal or under the hand of a duly authorised officer of the Bank any person or persons to be receiver and manager or receivers and managers...."
4. There is no doubt but that the appointment of the receiver was not under seal. The receiver was, in fact, appointed by means of a supplementary deed dated 27 th January, 2012. It was signed and delivered by a Michael McNaughton ...
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