EBS Ltd v Gillespie

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 21 June 2012
• Neutral Citation: [2012] IEHC 243
• Court: High Court
• Date: 21 June 2012

[2012] IEHC 243

THE HIGH COURT

[No. 38 SP/2011]

EBS Ltd v Gillespie

IN THE MATTER OF THE REGISTRATION OF TITLE ACT, 1964

BETWEEN

EBS LIMITED

PLAINTIFF

AND

EAMONN GILLESPIE

DEFENDANT

LAND & CONVEYANCING LAW REFORM ACT 2009 S97(2)

REGISTRATION OF TITLE ACT 1964 S62(7)

PAGET'S LAW OF BANKING 13ED PARA 13.3

COLONIAL FINANCE MORTGAGE INVESTMENT & GUARANTEE CORPORATION LTD 1905 6 SR NSW 6

START MORTGAGES LTD v GUNN & SECURED PROPERTY LOANS LTD v CLAIR & GE CAPITAL WOODCHESTER HOMELOANS LTD v MULKERRINS & GROGAN UNREP DUNNE 25.7.2011 2011/46/13101 2011 IEHC 275

LAND & CONVEYANCING LAW REFORM ACT 2009 CH3 PART10

LAND & CONVEYANCING LAW REFORM ACT 2009 S97(2)

REGISTRATION OF TITLE ACT 1964 S62(1)

REGISTRATION OF TITLE ACT 1964 S62(2)

REGISTRATION OF TITLE ACT 1964 S62(6)

BANK OF IRELAND v SMYTH 1993 2 IR 102

INTERPRETATION ACT 2005 S27

INTERPRETATION ACT 2005 S27(1)

RSC O.9 r14

LAND LAW

Security

Claim for possession - Charge - Validity of process - Letter of demand - Whether entitled to order for possession - Whether letter constituted valid demand - Whether arrangement undid demand - Whether application bona fide - Whether principle monies due - Whether registered owner of charge - Whether security enforceable - Whether power of sale arose - Start Mortgages v Gunn [2011] IEHC 275, (Unrep, Dunne J, 25/7/2011); Bank of Ireland v Smyth [1993] 2 IR 102 and Northern Banking Company Ltd v Devlin [1924] 1 IR 90 considered - Land and Conveyancing Law Reform Act 2009 (No 27), s 97(2) - Registration of Title Act 1964 (No 16), s 62(7) - Interpretation Act 2005 (No 23), s 27 - Rules of the Superior Courts 1986 (SI15/1986), O 9, r 14- Order for possession granted (2011/38 - Laffoy J - 21/6/2012) [2012] IEHC 243

EBS Ltd v Gillespie

Facts An order of possession was sought against the defendant in relation to commercial premises. Proceedings had originally been initiated by the plaintiff pursuant to the Land and Conveyancing Law Reform Act, 2009 but the plaintiff was thereafter given liberty to amend the proceedings and invoke the Registration of Title Act, 1964. It was submitted by the defendant that the plaintiff's letter of demand was not a valid one and thus they could not enforce their security. In addition if the letter of demand was valid, it was vitiated by the subsequent arrangements which the defendant had entered into. If the plaintiff was to rely on a subsequent letter of demand this had not been followed by a fresh request for possession. It was submitted that the effect of the new arrangement was to undo the original demand and take away its unconditionality.

Held by Laffoy J in granting the order of possession: The plaintiff was attempting to invoke the statutory jurisdiction conferred by s.62(7) of the 1964 Act. The crucial question was whether the plaintiff could establish that it had acquired the right as against the defendant to seek the statutory remedy of an order for possession against the premises. The plaintiff had to show that repayment of the principal monies secured by the charge had become due and that the plaintiff was the registered owner of the charge. The court was satisfied that, at the relevant date, the repayment of the principal money secured by the charge had become due and the plaintiff was entitled to enforce its security by obtaining possession and exercising its power of sale, before the repeal of s.62(7) had occurred, by reference to the terms of the charge on its own.

1 Judgment of Ms. Justice Laffoy delivered on 21st day of June, 2012.

The proceedings

2 1. These proceedings were initiated by a special summons which issued on 18 ^th January, 2011. As originally constituted, the proceedings invoked the Land and Conveyancing Law Reform Act 2009 (the Act of 2009) and, in particular, s. 97(2) of the Act of 2009. By order of this Court (Dunne J.) made on 27 ^th February, 2012 the plaintiff was given liberty to amend the special summons. In accordance with the amendment, the plaintiff (formerly EBS Building Society) now invokes the Registration of Title Act 1964 (the Act of 1964) and, in particular, s. 62(7) of the Act of 1964.

3 2. The relief which the plaintiff now seeks is an order for possession pursuant to the provisions of s. 62(7) of commercial premises consisting of a shop and filling station being the property comprised in Folio 38596 of the Register of Freeholders, County Donegal and part of the property comprised in Folio 36513 of the Register of Freeholders, County Donegal, the identification of which part I will deal with later. The claim for possession is founded on the fact that the property in question was charged by the defendant in favour of the plaintiff under an indenture of charge dated 16 ^th April, 2002, which was made between the defendant of the one part and the plaintiff of the other part (the Charge).

4 3. There was also a claim for judgment in a sum of money in the special endorsement of claim on the special summons. However, that was not pursued and, obviously, it could not have been pursued in proceedings commenced by special summons.

5 4. The proceedings were grounded on the affidavit of Caroline Belton, the Commercial Credit Control Manager of the plaintiff, which was sworn on 28 ^th February, 2011. Initially, the defendant's defence to the proceedings, as set out in his first replying affidavit sworn on 18 ^th July, 2011, was that the plaintiff had a duty of care to him and failed in that duty of care in that, inter alia, it was reckless in its lending to him. That line of defence was not pursued at the hearing of the proceedings. Instead, the defendant pursued a challenge to the validity of the process on the basis of which the plaintiff contends it is entitled to possession, the factual basis of which was averred to in affidavits sworn by him on 21 ^st March, 2012, 26 ^th April, 2012 and 18 ^th May, 2012, Accordingly, it is only necessary to outline the facts relevant to the line of defence pursued by the defendant.

The relevant facts.

6 5. By the Charge the defendant charged by way of first fixed charge in favour of the plaintiff with payment of all monies thereby secured, or intended to be thereby secured, all of the property registered on Folio 38596 and part of the property registered on Folio 36513 of the Register of Freeholders, County Donegal. On 17 ^th May, 2002 the defendant was registered as full owner with absolute title on both folios. On the same day there was registered a charge for present and future advances repayable with interest as burdens on both folios and the plaintiff was registered as owner of the Charge on each folio. However, in the case of Folio 36513 it was provided that the Charge applied to "Plan 18 JG of this Folio". It is that entry on Folio 36513 which identifies the part of the lands registered on the folio which is the subject of the Charge and the claim for possession in these proceedings.

7 6. In the grounding affidavit, Ms. Belton averred that by letters of loan offer dated 17 ^th December, 2001 and 24 ^th September, 2002 the plaintiff agreed to provide the defendant with "20 year repayment loans in the sum of €393,618.80 and €70,000 respectively", which loans were given account numbers 59164985 and 59393969 respectively. It was further averred that the said loans were subject to a variable interest rate, which at the date of the issue of the loan offers was 5.50%, and that the "said loan was repayable on demand but until demand was made in monthly instalments over the term of 20 years". Neither of the letters of loan offer has been exhibited in the proceedings. Ms. Belton averred that the defendant had defaulted under account 59164985 since February 2003 and in respect of account 59393969 since April 2003 and particularised that averment.

8 7. The provisions of the Charge, apart from the charging clause (Clause 3.01 A(iii)) the effect of which I have already outlined, which are of relevance are the following:

9 (a) The expression "Offer Letter" is defined in the definitions clause (Clause 1.01) as meaning any offer letter from the plaintiff to the defendant offering loan facilities to the defendant.

10 (b) The covenant to pay is contained in Clause 2.01 which provides:

"The [defendant] shall pay to the [plaintiff] on demand or on the happening of any of the events specified in Section 5.01 all monies now owing or which may from time to time be or become due and owing or payable by the [defendant] to the [plaintiff] in any manner whatsoever …".

11 That provision then elaborates on what may be subsumed in "all monies", including, advances to, or charges or liabilities incurred on behalf of, the borrower, including, inter alia, legal charges occasioned by enforcement of the Charge, and so forth. It is provided in Clause 2.01(b) that the monies thereby secured shall bear interest at such rate or rates at such times and subject to such terms as shall have been agreed in writing between the defendant and the plaintiff as well after as before any demand or judgment. Clause 2.03 provides that all interest shall accrue "in accordance with the terms of the Offer Letter".

12 (c) Section 5 deals with enforcement of the security. Clause 5.01 provides, insofar as is relevant for present purposes, as follows:

"All monies (including accrued interest) hereby secured shall become immediately payable and this security immediately enforceable … on demand by the [plaintiff] for repayment of the monies secured hereunder OR upon the happening of the following events (whatever the reason for such event): -"

(a) If the Borrower fails to pay on the due date any money payable or interest due by it from time to time to the [plaintiff].

13 …".

14 (d) The powers of the plaintiff are set out in Section 9. Clause 9.01, which deals with entry into...