D.L. -v- M.L., [2013] IEHC 441 (2013)

Docket Number:2013 74 CAF
Party Name:D.L., M.L.
Judge:McDermott J.
 
FREE EXCERPT

THE HIGH COURT

CORK CIRCUIT COUNTY OF CORK[2013 No. 74 CAF]

BETWEEN

D.L.APPELLANTAND

M.L.RESPONDENT

JUDGMENT of Mr. Justice McDermott delivered on the 27th day of September, 2013

  1. This is an appeal against the order of the Circuit Court (His Honour Judge Fulham) made 26th July, 2013, whereby the court ordered that a sum of €81,500.00, the proceeds of a redundancy payment to the appellant be paid to Allied Irish Banks Plc in respect of the partial discharge of the joint liability of the applicant and the respondent to the Bank in respect of 19 Lancaster Quay, Cork.

    Background

  2. On 14th July, 2009, an order was made by the Cork Circuit Court (His Honour Judge J. O’Donohoe) who granted a decree of divorce to the applicant and made the following order:-

    “And the Court Doth make Ancillary Orders as set out in the Consent terms filed, a copy of which is attached hereto and is set out as a schedule to this order.

    And the Court Doth make them a Rule of Court.

    Liberty to Apply

    No Order as to Costs.”

  3. The consent set out the schedule to the order contained agreed terms of settlement. The relevant terms for the purposes of these proceedings are clauses 3 and 4 of the consent which state as follows:-

    “3. Henceforth the respondent (wife) shall be solely entitled to:-

    (a) 41 Lakelawn, Douglas, Cork, subject to existing mortgages…however, with the benefit of the endowment policy with Scottish Provident…

    (b) Bella vista, College Road, Cork (joint with a third party) subject to liabilities thereon.

    (c) 33⅓% of the applicant’s First Active pension (retirement) together with 50% of the spousal element attached thereto.

  4. Henceforth the applicant shall be solely entitled to:-

    (a) Lancaster Quay (subject to the indemnity hereinafter contained).

    (b) Millard Hall.

    (c) Property at Blackpool.

    (d) Lands at Lisavaird.

    All of the above being subject to interest of third parties and liabilities thereon. Each party to execute/secure a release of the other as appropriate in respect of all mortgages re (3) and (4) herein.”

  5. The property at Lancaster Quay was an investment property in the joint names of the parties and comprised a downstairs commercial premises rented out on a short term lease as a café, yielding a rent of €18,000.00 per annum as of 24th July, 2009. The residential part of Lancaster Quay consisted of four bedrooms, rented out during the college year at an average rent of €800.00 per month, giving a total rental income of €7,200.00 per annum. Shortly after the resolution of the matrimonial proceedings, the appellant/husband who had management and control of the rents received in respect of the Lancaster Quay property allowed the mortgage account with Allied Irish Banks Plc in respect of the property to fall into arrears from 21st October, 2009, as evidenced by a notification to that effect issued to the parties on 3rd March, 2010, indicating an arrears of €7,517.47. The appellant/husband allowed these arrears to grow to €47,378.43 as evidenced by a letter from the Bank to the respondent (wife)’s solicitors of 16th April, 2013, during the period up to 19th July, 2012.

  6. In the meantime the respondent/wife in order to fulfil her obligations under clause 3 of the consent obtained a release of the husband from all mortgages secured on the family home, and a discharge of a mortgage in respect of Lancaster Quay in respect of which she reduced the liabilities attaching to the property by €90,083.18 by re-mortgaging the family home. As a result the mortgage which she is obliged to discharge on the family home amounts to approximately €160,000.00 as opposed to the €33,000.00 that remained outstanding at the time of the divorce.

  7. It is clear that the respondent/wife complied with all of her obligations in respect of clause 3 of the consent. However, the appellant/husband has failed to execute or secure a release of the respondent in respect of the mortgage account on 19 Lancaster Quay and, of course, it is acknowledged in clause 4 that it is subject to the interest of third parties, in this case Allied Irish Banks Plc, and the outstanding mortgage liability on the premises which was €391,441.73 as of 15th July, 2013.

  8. The respondent, in accordance with a clause permitting liberty to apply, re-entered the matter before the Cork Circuit Court by way of notice of motion dated 6th July, 2011, grounded on her affidavit sworn 1st July. This followed requests by the respondent’s solicitors to the appellant during 2010 to take the necessary steps to have the property at Lancaster Quay transferred into his sole name and to procure her release from the liabilities secured on the property. The appellant’s solicitors replied by letter dated 12th March, 2010, indicating that they found it impossible to get instructions from the appellant in the recent past and that he had not responded to their letters.

  9. Meanwhile on 11th March, 2010, the respondent’s solicitors wrote to the Bank expressing concern that correspondence still indicated her liability in respect of the mortgage account. By letter of 17th May, the Bank sought an update of the net worth profile of the respondent outlining her assets and liabilities certified by an accountant in order to make a final decision on her request to be relieved of liability. These details were sought by the Bank again on 15th July, 2010, and 14th January, 2011. The respondent states that she was reluctant at that time to furnish information to the Bank. This documentation was ultimately furnished but in February, 2012, the Bank indicated that it was refusing to release the respondent from the loan.

  10. The respondent’s motion was adjourned on a number of occasions to allow the Bank to come to a decision in respect of the matter. Ultimately, the Cork Circuit Court (His Honour Judge O’Donnobhain) adjourned the proceedings generally with liberty to re-enter on 6th February, 2012, because the parties had no notice of any decision by the Bank at that stage.

  11. For his part, the appellant claims that he instructed his financial advisers to write to the Bank to take the necessary steps in order to fulfil his obligations under clause 4. By letter of 24th July, 2009, his accountants put a proposal to the Bank whereby the appellant would take over in full the borrowings on Lancaster Quay, but an issue arose as to the failure on the part of the respondent to supply the financial details requested by the Bank and which was resolved by October, 2011. The Bank advised that a decision was under consideration by letter of 19th October, 2011, and in February, 2012, indicated that it was not in a position to release either borrower from the debt and was not agreeable to the ownership of the property at Lancaster Quay being amended.

  12. The respondent applied to re-enter the proceedings by notice of re-entry dated 1st May, 2012, by which time the Bank had confirmed that they were unwilling to release the respondent from the mortgage. The intention of re-entering the matter was clearly to procure a court order compelling compliance by the respondent with clause 4 of the consent which had already been made a rule of court.

  13. On 19th July, 2012, this second motion to re-enter the proceedings was adjourned on terms to 11th October. It was agreed between the parties that 19 Lancaster Quay would be placed on the market for sale forthwith, and the usual ancillary terms in respect of auctioneers and conveyancing fees were included. The appellant agreed to apply to the Bank to place the mortgage on an interest only basis forthwith. It was also agreed that the rents from the property would be applied to the mortgage account subject to the discharge of justifiable necessary expenses arising from the letting of the premises. It was also agreed that, in order to ensure that the rental income would be applied appropriately, the property would be managed by the parties’ son, pending sale.

  14. The motion to re-enter was thereafter adjourned to 4th March, 13th March, 29th May and 17th July, 2013. The appellant claims that this was done to facilitate his discussions with the Bank in relation to final settlement of liability and the respondent claims that these adjournments occurred while awaiting a decision of the Bank. In any event, it was agreed by the parties that the matter could not be progressed before the Circuit...

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