English v Promontoria (Aran) Ltd (No.2)

• Jurisdiction: Ireland
• Judge: Ms. Justice Murphy
• Judgment Date: 17 May 2017
• Neutral Citation: [2017] IEHC 322
• Docket Number: [2015 No. 9196 P]
• Court: High Court
• Date: 17 May 2017

BETWEEN

DENIS ENGLISH

PLAINTIFF/RESPONDENT

AND

PROMONTORIA (ARAN) LIMITED (NO. 2)

DEFENDANT/APPLICANT

[2017] IEHC 322

Murphy Deirdre J.

[2015 No. 9196 P]

THE HIGH COURT

Land & Conveyancing – Assignment of deed of mortgage – Non-payment of loan – Appointment of receiver – Right to view assignment and novation deed – Interlocutory injunction

Facts: The defendant, in the present application, sought an order for the vacation of stay on the appointment of a receiver to the plaintiff's lands. The plaintiff objected to the validity of the deed of assignment and contended that the said deed contained certain redacted portions, which should be disclosed to the plaintiff. The defendant was assigned the plaintiff's loans from the predecessor-in-title. The defendant asserted that since the previous judgment of the High Court in which the stay was granted, the defendant had presented all the relevant deeds and power of attorney showing that a valid and legal assignment had taken place between the parties.

Ms. Justice Murphy granted an order for vacating the stay on the appointment of the receiver to the plaintiff's lands. The Court held that the defendant had discharged the burden of probabilities of showing that it had duly acquired the right, title and interest in the plaintiff's loans by way of conveyance and assignment deed. The Court observed that the alleged redactions in the deeds were made to preserve the identity of the third parties with which the plaintiff had no concern and thus, no prejudice was caused to the plaintiff by such redactions.

EX TEMPORE JUDGMENT of Ms. Justice Murphy delivered on the 17 ^th day of May, 2017.

1 This is the defendant/applicant's application by way of notice of motion issued on 17 ^th January, 2017 for an order vacating the stay on the appointment of a receiver to the plaintiff's lands at Knocklofty, County Tipperary. The circumstances in which the stay was granted and the circumstances in which this application comes before the Court are of significance.

Background

2 On 8 ^th November, 2007, the plaintiff entered into a mortgage agreement with Ulster Bank Ireland Limited in respect of unregistered land at Knocklofty House, Knocklofty, Clonmel, County Tipperary.

3 Between the years 2008 to 2011 the plaintiff entered into a series of facility agreements with Ulster Bank Ireland Limited. By letter dated 5 ^th January, 2015, Ulster Bank Ireland Limited wrote to the plaintiff to inform him that it had agreed to transfer his loans to an affiliate of Cerberus Global Investors pursuant to the terms of the facility letters. It further informed the plaintiff that it would contact him immediately after the date of transfer of legal ownership to provide him with contact details for the purchaser.

4 Prior to the date of the letter of notification of 5 ^th January, 2015, Ulster Bank Ireland Limited had executed a mortgage sale deed in respect of the plaintiff's lands, inter alia, to Promontoria Holding 128 B.V. The deed is dated 16 ^th December, 2014. This mortgage sale agreement was the subject of a deed of novation dated 12 ^th February, 2015. On the same date, 12 ^th February, 2015, a global deed of transfer and a deed of conveyance and assignment were executed by Ulster Bank Ireland Limited and three related entities, UB SIG (ROI) Limited, Ulster Bank Limited and UB SIG (NI) Limited, transferring all rights, title, interest and benefits in the plaintiff's facility letters and the plaintiff's mortgage to the defendant Promontoria (Aran) Limited.

5 On 22 ^nd September, 2015 and on 16 ^th October, 2015, the defendant issued letters of demand in accordance with the terms of the facility letters agreed by the plaintiff with Ulster Bank Ireland Limited. On 6 ^th November, 2015, the defendant appointed Mr. Ken Fennell of Deloitte as fixed charge receiver pursuant to the mortgage of the plaintiff's lands by way of instrument of appointment. The basis of the defendant's entitlement to appoint a receiver is expressed in the instrument of appointment to be a transfer from Promontoria Holding 128 B.V. to Promontoria (Aran) Limited by way of deed of novation, global deed of transfer and deed of conveyance and assignment.

6 On 10 ^th November, 2015, the plaintiff issued a plenary summons claiming declaratory and injunctive reliefs arising from his contention that Promontoria (Aran) Limited was neither validly nor legally entitled to hold itself out as being entitled to Ulster Bank Ireland Limited's interest in the facility letters nor the securities, being the mortgage referred to. In his plenary summons, the plaintiff sought various declaratory reliefs to this effect and further sought an injunction preventing the defendant appointing a receiver pursuant to the facilities and security underpinning them.

7 On 11 ^th November, 2015, the plaintiff was given liberty to issue and serve short service of a notice of motion for an interlocutory injunction returnable to Tuesday, 17 ^th November, 2015. The relief sought by the plaintiff in his notice of motion was:-

' 1. An Order for an injunction preventing the Defendant herein appointing a Receiver in possession, or a Receiver of Rents or Income of the plaintiff pursuant to the Facilities and Security referred to herein.

2. An Order for an Injunction directing the Defendant to disclose all and any Instruments, Terms and Conditions, Deeds of Novation, Deeds of Assignment, Deeds of Conveyance and Assignment or any document or instrument on which they rely prior to the appointment of a Receiver over the properties herein.'

8 On 16 ^th November, 2015, the defendant provided the plaintiff with copies of the facility letters, the mortgage and a redacted copy of the global deed of transfer in which the recitals and clauses 4 and 5 were fully redacted, as were the signatories of all parties to the deed other than Promontoria (Aran) Limited. The deed of conveyance and assignment was also furnished. This deed had the background to the deed fully redacted and the signatories on behalf of all parties including Ulster Bank Ireland Limited were also fully redacted. Copies of the underlying mortgage sale deed of 16 ^th December, 2014 and the deed of novation of 12 ^th February, 2015 were not furnished to the plaintiff. This was despite the fact that the instrument of appointment of the receiver referred to his appointment being based on a transfer by Promontoria Holding 128 B.V. to Promontoria (Aran) Limited.

9 On 30 ^th November, 2015, the transfer of the plaintiff's mortgage was registered in the Registry of Deeds. The grantor is specified to be Ulster Bank Ireland Limited, UB SIG (ROI) Limited, Ulster Bank Limited and UB SIG (NI) Limited and evidence of the registration was produced in the course of the hearing of the interlocutory injunction.

10 Throughout the interlocutory hearing the defendant maintained that it had provided sufficient evidence of the transfer. This was exemplified by the statement in para. 11 of a replying affidavit of Lisa Burns wherein she stated:-

' I am advised that the redacted documents provided to the Plaintiff are more than adequate to evidence the Defendant's entitlement to the facilities granted pursuant to the Facility Letters and the Mortgage.'

Counsel for the plaintiff at that hearing maintained that by reason of the absence of the original mortgage sale deed of 16 ^th December, 2014 and the deed of novation of 12 ^th February, 2015 and the redaction of the execution clauses in the global deed of transfer and the deed of conveyance and assignment, the chain of title from Ulster Bank Ireland Limited to Promontoria (Aran) Limited was not clear.

11 In its judgment given on 16 ^th November, 2016, the Court noted that the plaintiff did not dispute the validity of the mortgage entered into by him with Ulster Bank Ireland Limited on 8 ^th November, 2007, nor did he challenge the series of facility agreements with Ulster Bank Ireland Limited between the years 2008 and 2011, nor did he challenge the entitlement of Ulster Bank Ireland Limited to transfer, assign or dispose of his loans together with the benefit of the first legal mortgage over his property, without notice to him. His issue was that he had a right and entitlement to see proof of the transfer of ownership to a third party before he could be compelled to cede control of his property to that third party. The Court found that he had such a right, pointing out at para. 23 of its judgment as follows:-

' As a condition of granting the plaintiff loan facilities Ulster Bank Ireland Limited required the plaintiff to agree that Ulster Bank Ireland Limited could transfer his loans and the security provided in respect thereof, to whoever it wished, whenever it wished, without his consent and without notice to him. This is a significant power contractually granted by the plaintiff to UBIL. If, as in this case, it purports to exercise that right of transfer, then a complete stranger with whom the plaintiff has no connection can come knocking on his door claiming an entitlement to possession of his property. It appears to the Court that before ceding possession of his property, the plaintiff is entitled to insist that the stranger prove its entitlement to possession by showing that it duly acquired the interest of the bank in his loans and the security underpinning those loans, in particular, the mortgage on the property.'

The issue the Court had to decide was whether on the basis of the documentation furnished at the date of the interlocutory hearing, the ownership of Promontoria (Aran) Limited of the plaintiff's mortgage was clearly established such as to entitle it to invoke the provisions of the mortgage for the purpose of appointing a receiver.

12 The Court was not satisfied on the basis of the documentation furnished that Promontoria (Aran) Limited had demonstrated that it had acquired the interest of Ulster Bank Ireland Limited...