Donlon v Burns

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 12 July 2022
• Neutral Citation: [2022] IECA 159
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2019/72

Between/

Oliver Donlon

Appellant

and

Aengus Burns, Michael McAteer, Grant Thornton and O'Brien Lynam Solicitors

Respondents

[2022] IECA 159

Edwards J.

Whelan J.

Faherty J.

Appeal Number: 2019/72

COURT OF APPEAL

Appointment of receivers – Validity – Security instruments – Appellant contesting the validity of a deed of appointment – Whether the appointment of the first and second respondents as receivers was void ab initio

Facts: The appellant, Mr Donlon, contested the validity of a deed of appointment dated 6 February 2013 whereby the first and second respondents, Mr Burns and Mr McAteer (the receivers) were so appointed by Ulster Bank Ireland Ltd (Ulster Bank) pursuant to powers contained in three separate security instruments each made between the appellant of the one part and Ulster Bank of the other part: a deed of mortgage dated 12 October, 2004 and two deeds of mortgage both dated 12 March, 2009. O’Regan J in an ex tempore judgment delivered on 15 January 2019, held that the purported appointment of the receivers on 6 February 2013 pursuant to the 2004 instrument was invalid and same could not be relied upon by the respondents for the purpose of exercising powers vested in receivers under the latter instrument. She rejected his arguments that the appointment of the receivers under the 2009 instruments was invalid. The appellant appealed to the Court of Appeal against parts only of the orders made by the trial judge including the order granting him and the solicitor for the respondents, Mr Collins, liberty “to view the original property registration instrument no. D2009LR054229U in relation to the first and second mortgage deeds dated 12 March 2009” and inter alia, her refusal to award him any damages in respect of the wrongful appointment of the first and second respondents as receivers under the 2004 instrument. He further appealed the order as to costs.

Held by Whelan J that in the circumstances it was appropriate to grant a declaration that the appointment of the first and second respondents as receivers on the 6 February 2013 pursuant to a deed of appointment and in purported pursuance of powers contained in a deed of mortgage dated the 12 October 2004 made between Mr Donlon of the one part and Ulster Bank of the other part was void ab initio. Whelan J awarded the appellant €30,000 against the receivers and the third respondent, Mr Thornton, for wrongful interference with his exclusive possession and beneficial occupation of the lands in the Schedule to a Mortgage dated the 12 October 2004 made between Mr Donlon of the one part and Ulster Bank of the other part. Whelan J struck out the proceedings as against the fourth respondent, O’Brien Lynam Solicitors, with no order.

Whelan J held that the trial judge erred in making the order for costs as she did and same required to be set aside. Whelan J held that the appellant was not legally represented before the High Court and was, accordingly, entitled to his expenses only in relation to same as against the first, second and third respondents. Whelan J held that the appellant was entitled to his costs of this appeal; the same were recoverable as against the first, second and third respondents on the basis of joint and several liability. Whelan J held that the respondents were not entitled to any order in respect of costs, having due regard to ss. 168 and 169 of the Legal Services Regulation Act 2015, as amended, and O. 99 of the Rules of the Superior Courts. Given that there were costs in favour of the appellant in three motions and of the respondents in one, and the appellant succeeded in obtaining inspection of the two instruments on the 15 January 2019 as sought in the motion filed on 11 December 2018 it appeared to Whelan J on balance that the fairest course of action was that there be no costs payable to or by either side in respect of the various motions.

Appeal allowed.

UNAPPROVED

NO REDACTION NECESSARY

JUDGMENT of Ms. Justice Máire Whelan delivered on the 12th day of July 2022

Introduction

1 . By the within proceedings the appellant contested the validity of a deed of appointment dated 6 February 2013 whereby the first and second named respondents (“the receivers”) were so appointed by Ulster Bank Ireland Limited (“Ulster Bank”) pursuant to powers contained in three separate security instruments each made between the appellant of the one part and Ulster Bank of the other part: a deed of mortgage dated 12 October, 2004 (the 2004 mortgage) and two deeds of mortgage both dated 12 March, 2009. O'Regan J. in an ex tempore judgment delivered on 15 January 2019, held that the purported appointment of the receivers on 6 February 2013 pursuant to the 2004 instrument was invalid and same could not be relied upon by the respondents for the purpose of exercising powers vested in receivers under the latter instrument. She rejected his arguments that the appointment of the receivers under the 2009 instruments was invalid.

2 . The appellant instituted the within proceedings as a litigant in person and maintained that status throughout the proceedings before the High Court. At the date of the hearing of this appeal he was legally represented.

Background

3 . The appellant is a farmer and was a shareholder and director of a limited liability company Oliver Donlon Developments Limited (“the company”), Clarehall, Ballymore, County Westmeath, which was engaged in construction and property development. At all material times the appellant and the company were customers of, inter alia, Ulster Bank.

2004 Instrument

4 . On 12 October 2004, the appellant executed a mortgage/charge in favour of the bank. A memorial of same was registered in the Registry of Deeds. Clause 8 of the 2004 mortgage provides:

“Section 17 and 20 of the Conveyancing Act 1881 shall not apply to this Mortgage and the statutory power of sale and other powers shall be exercisable at any time after demand.”

Clause 16 provides –

“A demand or notice hereunder shall be in writing signed by an officer or agent of the Bank and may be served on the Mortgagor either by hand or by post.”

5 . The properties secured by the 2004 instrument are identified in the Schedule and appear to be lands described in a deed of transfer and conveyance made on the 16 July 1998 made between Eileen Walsh and Richard Walsh of the one part and Oliver Donlon and Margaret Donlon of the other part and comprising three parcels:

The 2004 mortgage appears to have been executed by the appellant and duly witnessed.

• (1) All the lands comprised in Folio 11713F of the Register of Freeholders County Westmeath.

• (2) Part of the lands of Ballynagarbry (Pim) comprising 13.46 acres or thereabouts in the Barony of Clonlonan and County of Westmeath identified by reference to a map attached to a deed of transfer and conveyance dated 26 August 1993.

• (3) Part of the lands of Toorphelim comprising 7.686 acres or thereabouts in the Barony of Clonlonan, County Westmeath identified by reference to a map attached to the deed of 26 August 1993.

2009 Instruments

6 . On the 20 May 2008, Ulster Bank offered the appellant a facility in the amount of €600,580. The purpose of same was to restructure an existing loan of the company drawn in connection with a housing development at Moate and the restructuring of an existing overdraft facility.

7 . Ulster Bank offered the company overdraft facilities by virtue of a facility letter of the 26 February 2009 limited to €460,000 with the limit set to revert to €400,000 on the 31 March 2009. The purpose of same was expressed to be for “Working Capital”. Two mortgages were created on the 12 March 2009. Each identifies the appellant as mortgagor. The first identifies the mortgaged property thereunder in the Schedule as Folio 10611F comprising 53.35 acres at Clare Hill, Ballymore, Co. Westmeath. The second identifies the mortgaged property thereunder as part of Folio 7269F County Westmeath 28.5 comprising acres at Clare Hill, Ballymore, County Westmeath (Plan 10 thereof).

8 . Following the creation and registration of the 2009 securities a further overdraft facility was granted by Ulster Bank to the company by letter of the 21 August 2009. The overdraft limit was expressed to be €460,000 as “[c]ontinuation of temporary increase in overdraft facility to fund working capital requirements”. That limit was expressly stated to revert to €400,000 on the 30 November 2009. The said overdraft was granted in respect of working capital. On the 25 January 2011, the bank offered a further facility to the company in the sum of €380,000 subject to review on the 1 March 2011. Same was expressed to be for “Working Capital Expenses”. It is clear from the facility letters that the bank separately continued to hold an all monies debenture dated 22 February 2006 providing a floating charge over the assets of the company.

9 . On the 5 March 2009 the appellant granted a guarantee to the bank in respect of the debts of the company. Its terms included that Mr. Donlon:-

“… unconditionally and irrevocably guarantees to discharge on demand the Debtor's obligations with interest from the date of demand.” (Term 1.1)

The amount recoverable pursuant to the deed of guarantee was expressed thus: –

“… shall not exceed the total of [€1,948,100] together with interest on that sum since the date on which interest was last compounded in the books of the Bank and interest on that total from the date of demand and expenses.” (Term 1.2)

Demand letters

10 . The letters of demand are dated the 5 February 2013 and addressed to the appellant. The first invokes the 2004 mortgage. The others reference in the context of the 2009 charges, inter alia, the “[f]acility letter dated the 20th day of May 2008 made between Oliver Donlon and Ulster Bank Ireland Limited”. The first states that at close of business on the 5 February 2013, interest and principal in the...