Crowley v Kapstone Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Allen
• Judgment Date: 11 July 2022
• Neutral Citation: [2022] IECA 157
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2021/213

Between

Rosemary Crowley

Plaintiff/Appellant

and

Kapstone Limited (In Receivership)

Defendant/Respondent

and

Ken Fennell

Notice Party/Respondent

[2022] IECA 157

Haughton J.

Binchy J.

Allen J.

Appeal Number: 2021/213

THE COURT OF APPEAL

CIVIL

Plenary summons – Service – Leave to renew – Plaintiff seeking an order deeming the service of the plenary summons actually effected on the defendant to be sufficient – Whether the defendant had been adequately informed of the matters sought to be litigated against it

Facts: The plaintiff/appellant, Ms Crowley, sought specific performance of each of two agreements made on 10 July 2017 for the sale to her by the defendant/respondent, Kapstone Ltd (Kapstone), of two adjoining properties located on Ballymoneen Road, Knocknacarra, County Galway and, in addition or instead, damages for breach of those agreements. The plaintiff applied to the High Court, first, to join the notice party/respondent, Mr Fennell, as a defendant to the proceedings and, second, to injunct Kapstone and Mr Fennell from taking any step to sell the properties to any other purchaser(s) pending the trial of her action (the first motion). In the second motion, the plaintiff sought one of two reliefs in the alternative: first, an order pursuant to O. 9, r. 15 of the RSC deeming the service of the plenary summons actually effected on Kapstone to be sufficient; or second, an order pursuant to O. 8, r. 1 of the RSC, granting leave to renew the plenary summons. The judgment of the High Court on the substantive applications was delivered on 2nd June, 2021 ([2021] IEHC 384) and a separate written judgment in relation to costs was delivered on 30th July, 2021 ([2021] IEHC 557). The High Court (Keane J) refused to deem good what was relied on by the plaintiff as service of the plenary summons, refused to renew the summons, dismissed the action and ordered the plaintiff to pay to Mr Fennell his costs of the motion to join him as a defendant to the proceedings. The plaintiff appealed to the Court of Appeal against the judgment and order of the High Court. The grounds of appeal were that the High Court judge: (i) erred in law or in fact in distinguishing Fox v Taher (Unreported, High Court, 24th January, 1996); (ii) erred in law and in fact in concluding that Mr Fennell was not the agent of Kapstone “for the specific purpose of the sale of both properties, and all title or litigation issues arising”; (iii) erred in law or fact in disregarding the explicit authorisation of Mr Fennell as agent of Kapstone; (iv) erred in law or fact in “ignoring the authority to accept service of proceedings expressly professed by [Mr] Fennell’s solicitors on 21 October, 2019 and service accordingly on 22nd October, 2019”; (v) erred in law or fact in ignoring the fact that Mr Fennell’s solicitors wrongly retained and withheld the return of the summons. The plaintiff contended that the judge erred in fact or in law in awarding Mr Fennell his costs of the motion to join him as a defendant in circumstances in which he had not entered an appearance and so was not a party to the proceedings.

Held by Allen J that the summons was sent to a firm of solicitors who did not act for the defendant, who the plaintiff’s solicitors had no good reason to believe acted for the defendant, and who plainly and unequivocally said that they did not act for the defendant. Allen J held that the judgment of the High Court was properly reasoned, founded on principle and unquestionably correct. Regarding the award of costs to Mr Fennell, Allen J noted that, on the appeal, counsel relied on the written submissions filed in the High Court but did not identify any error in the judgment. Allen J found no such error.

Allen J found that the appeal failed on all grounds. Provisionally, it seemed to Allen J that Mr Fennell had been entirely successful on the appeal and was entitled to his costs of the appeal.

Appeal dismissed.

JUDGMENT of Mr. Justice Allen delivered on the 11 ^th day of July, 2022

Introduction

1 . This is an appeal against the judgment and order of the High Court (Keane J.) refusing to deem good what was relied on by the plaintiff as service of the plenary summons; refusing to renew the summons; dismissing the action; and ordering the plaintiff to pay to Mr. Ken Fennell his costs of a motion to join him as a defendant to the proceedings.

2 . The judgment of the High Court on the substantive applications was delivered on 2 ^nd June, 2021 [2021] IEHC 384 and a separate written judgment in relation to costs was delivered on 30 ^th July, 2021 [2021] IEHC 557.

Background

3 . By two agreements in writing dated 10 ^th July, 2017 the plaintiff agreed to purchase the properties comprised in Folios 6124F and 41530F, County Galway for €300,000 and €90,000 respectively. The vendor in each case was described as “Kapstone Limited (In receivership) acting by and at the direction of Ken Fennell”. The contracts provided for the payment of a deposit of 10% of the purchase price and for completion in fourteen days.

4 . The contracts were in the Law Society of Ireland printed form (2017 edition) subject to 42 special conditions which greatly diluted the rights of a purchaser on foot of the general conditions of sale.

5 . The documents schedule listed in one case eighteen and in the other nineteen documents under four headings.

6 . The title in each case was to be the folio. The folios showed the registration of Kapstone Limited (“Kapstone”) as the owner of the lands; the registration at the same time of a charge for present and future advances in favour of Allied Irish Banks plc (“AIB”); and the later transfer of that charge to Promontoria (Arrow) Limited.

7 . Miscellaneous documents were provided in relation to building energy rating and roads and services: without any warranty as to the contents of those documents.

8 . A number of planning documents were provided in respect of each of the properties: without any warranty as to development or use.

9 . In each case, under the heading “Security documents” the documents schedule listed:-

• 1. The counterpart original mortgage and charge between Kapstone and AIB;

• 2. Copy redacted deed of transfer from National Asset Loan Management Limited and Promontoria (Arrow) Limited;

• 3. Copy deed of appointment of receiver;

• 4. Copy deed of novation of receiver.

10 . The special conditions, in each case, stipulated that Mr. Ken Fennell had been appointed as receiver over Kapstone Limited (In receivership) pursuant to the deed of appointment listed in the documents schedule and that the purchaser should accept the appointment as valid and subsisting and make no objection nor raise any requisition in relation to same. It was agreed that the contract would “… be executed by the vendor acting by the receivers (sic.) as the duly appointed agent of the borrower” and that no objection, requisition or enquiry would be made or raised by the purchaser in that regard.

11 . It was agreed in each case that, on the closing date, the purchaser would accept an assurance of the property executed by Promontoria (Arrow) Limited, in which event the purchaser would conclusively acknowledge and accept that Promontoria (Arrow) Limited had a power of sale as mortgagee as more particularly set out in the mortgage and charge.

12 . Each of the contracts provided that completion of the sale to the purchaser was conditional on completion of the other.

13 . The sale and purchase was not completed as provided and completion notices were served by the vendor's solicitors on 11 ^th August, 2017. The completion notices referred to the vendor as “Kapstone Limited (In receivership) acting by and at the direction of Ken Fennell”. The purchases were not completed within the time stipulated and on 13 ^th September, 2017 the plaintiff was told that her deposits had been forfeited.

14 . After the completion notices were served, it came to the plaintiff's attention that boulders had been placed at the entrance to one of the properties and a security fence removed from the perimeter. The plaintiff, by her solicitors, relied on this as having invalidated the completion notices. The vendor's solicitors insisted that the completion notices had been validly served and the contracts validly rescinded. There followed a protracted if desultory correspondence as to what might be done to get the sales completed. The vendor's position was that terms might be agreed on which the contracts might be reinstated. The purchaser's position was that she was insisting that the vendor take such steps as were necessary to allow completion in accordance with the terms of the contracts. However, the rights or wrongs of the parties' respective positions are immaterial for present purposes.

15 . When, by letter dated 7 ^th September, 2017 the purchaser's solicitors first raised the issue of the boulders and fence, they identified the vendor as “Kapstone Limited (In receivership) acting by and at the direction of Ken Fennell, receiver, of Deloitte, Earlsfort Terrace, Dublin 2”. In their letter of 27 ^th October, 2017, and thereafter in the correspondence, the vendor's solicitors identified their client as “Ken Fennell, receiver appointed over certain assets of Kapstone Limited”. From 8 ^th March, 2018 (which appears to have been the letter next following the vendor's solicitors' letter of 27 ^th October, 2017) the purchaser's solicitors identified the vendor's solicitors' client variously as “Ken Fennell Receiver, Kapstone Limited” and “Ken Fennell Receiver”.

16 . Under cover of their letter of 8 ^th March, 2018 – which identified the vendor's solicitors' client as “Ken Fennell Receiver, Kapstone Limited” – the purchaser's solicitors served completion notices (or purported completion notices) addressed to “Kapstone Limited (In receivership) acting by and at the direction of Ken Fennell” and the...