Everyday Finance Designated Activity Company v Flood
| Jurisdiction | Ireland |
| Judge | Ms. Justice Stack |
| Judgment Date | 26 April 2024 |
| Neutral Citation | [2024] IEHC 252 |
| Court | High Court |
| Docket Number | [Record No. 2014/1125S] |
[2024] IEHC 252
[Record No. 2014/1125S]
THE HIGH COURT
JUDGMENT of Ms. Justice Stack delivered on the 26 th day of April, 2024 .
. This is an application brought by the plaintiff (“Everyday”) for liberty to enter judgment against the defendant in the sum of €11,637,422.35. The sum is claimed on foot of two Guarantees executed on 25 May, 2007 by the late John Joseph (also known as “John J.” or “J.J.”) Flood, deceased (“the Deceased”). The first guarantee was in the sum of €1.5m and provided security for an Overdraft in the amount of €1.5m to be afforded to the Deceased's three sons, David, Tom and Alec (who engaged in property development as the Flood Partnership), and the second was in the sum of €10m and related to a loan in the amount of €12,715,000 in favour of Tom and Alec Flood.
. The Deceased had previously, on 2 May, 2007, executed an “all sums due” Deed of Charge in favour of Allied Irish Banks (“the Bank”) which is registered as a burden on Folio 5536F, County Meath. On 2 May, 2007, the Deceased had also executed a Letter of Guarantee in favour of the Bank, but this guarantee was, for reasons set out below, replaced by the two Guarantees dated 25 May, 2007, on which the plaintiff sues in these proceedings.
. The defendant is the widow of the Deceased and is sued in her capacity as his legal personal representative. The proceedings were originally issued on 24 April, 2014, against an administrator ad litem appointed for the purposes of allowing Everyday to sue the estate but, as a Grant of Probate had issued to the defendant on 29 October, 2014, by Order made 14 July, 2015, the widow of the Deceased was substituted as defendant. The defendant is the sole executrix and sole beneficiary named in the Will of the Deceased.
. The Deceased for many years, until his retirement in 1994, operated a successful quarrying business from lands at The Murrens, Oldcastle, County Meath. He lived with his wife, the defendant, for many years in their family home which was adjacent to the factory. The existing quarry consists of approximately 59 acres of quarry lands which have been exploited for their reserves for many years. However, there are a further 12 acres of agricultural lands containing unexploited reserves. All of these lands, together with a substantial dwelling house which was, up to the death of the Deceased, the family home of the Deceased and the defendant are comprised in Folio 5536F, County Meath.
. The family home lies to the north of the exploited lands and to the south of the unexploited lands and its entrance is obviously visible as one approaches the entrance to the existing quarry by means of the bye-road running off the R135 Oldcastle to Castlepollard Road.
. The Deceased became the sole registered owner of the lands comprised in the Folio in 1970, when he apparently inherited the lands from his father. As so frequently happens in that situation, the family home was not put into joint names with his wife. When the charge was executed on 2 May, 2007, it does not appear to have been appreciated by the Bank, the Deceased, or the solicitor whom the Deceased attended for the purposes of obtaining independent legal advice in connection with the execution of the Deed of Charge, that the family home was comprised in the lands registered in that Folio. There are references in the documentation emanating from the Bank in connection with the loans advanced to the Flood Partnership and to Tom and Alec Flood to “quarry lands” and it seems to have been assumed that the Folio did not include the dwelling house. I refer to this further below in the context of considering the adequacy of the legal advice furnished to the Deceased on 2 May, 2007.
. As a result, the Charge was executed and was registered as a burden on the Folio without ever obtaining the prior written consent of the Deceased's wife, the defendant herein, as required by s. 3 of the Family Home Protection Act, 1976. This will no doubt be a central issue in possession proceedings which are pending in Meath Circuit Court. Everyday has confirmed it is not seeking possession of the family home, to include one acre of curtilage thereof and any required access.
. While there is a Counterclaim seeking that the Charge would be declared void for failure to obtain the consent of the defendant to its creation, it was not disputed in oral submissions by counsel for the defendant that this was a matter for the Circuit Court. I will not therefore make any finding about the validity of the Charge.
. While it is true that the Family Home Protection Act, 1976, is not material to these proceedings as the application before this Court does not depend on the validity of any “conveyance” of the family home, the question of how the Deceased came to consent to the charging of the entire of the lands in the Folio is bound up, as a matter of fact, with his consent to give the Guarantees upon which the plaintiff relies in these proceedings and therefore the circumstances surrounding the signing of the Deed of Charge dated 2 May, 2007, are considered in some detail in this judgment.
. The quarry was originally run by the Deceased but he retired in 1994 and the quarry was taken over by his son, David Flood, who incorporated JJ Flood & Sons (Manufacturing) Ltd. (“the Company”), of which he is 99% shareholder. By Lease made 8 November, 1996, between the Deceased of the one part and the Company of the other part (“the Lease”), the Deceased demised that part of the lands comprised in Folio 5536 as are outlined in red on the map attached to the Lease for the term of 7 years from 1 November, 1996. It appears that the Company overheld and thereafter held as monthly tenant pursuant to Clause 3 (c).
. The evidence was that the Company paid rent to the Deceased and this appears to have been his and his wife's principal source of income. While the lands were never signed over by the Deceased to David Flood, David Flood apparently still runs the Company on the working quarry lands comprised in the Folio and presumably his income is dependent on the plaintiff failing to obtain possession of those lands or to register judgment against the estate on foot of any judgment obtained in these proceedings.
. It is not clear from the black and white copy furnished to me which part of the Folio is outlined in red and, specifically, whether it applies to the 59 acres currently being worked as a quarry or to the entire 71 acres excluding the Deceased's family home, though David Flood suggested in his evidence that it was the existing quarry of 59 acres. In any event, the Lease is very explicit that only part of the Folio is being leased. Unfortunately, however, he seems to have equated the leased lands with the entire Folio, and this resulted in the Bank being told that the entire Folio could be offered as security. This is not entirely clear from the evidence but this seems to have been the reason that the “quarry lands” were equated from the beginning with the entire Folio.
. The background to the provision of the Guarantees is that David, Tom and Alec had formed the Flood Partnership in or about 2002 and initially conducted a successful business in the course of which they bought, refurbished, and sold on several “pre-'63s” (that is, older houses divided into flats and bedsits) in Dublin 6. These investments had been financed by Bank of Scotland Ireland (“BOSI”).
. In early 2007, they spotted what they believed to be a good investment opportunity in the form of a development site for sale on Railway Avenue, Sutton (“the Sutton Site”), which was being sold by Dublin City Council and which comprised 1.97 acres of development lands.
. David and Alec viewed the Site on 9 February, 2007. In order to finance the acquisition of the Sutton Site, the Flood Partnership had to borrow all of the purchase price, together with the funds required for stamp duty and legal fees. BOSI were willing to advance the necessary loan but, while David and Alec were inspecting the Sutton Site, they got an unsolicited call from Ms. Christine Meade, the Relationship Manager at the Navan Branch of the Bank, and who had dealt with the Company and David Flood from about 2002 or 2003.
. Ms. Meade was keen to procure the business on behalf of the Bank and offered a preferential lending rate and a substantially reduced arrangement fee. However, she did not have authority herself to offer a loan of this size. In a conversation with Ms. Meade on 23 February, 2007, David Flood suggested to Ms. Meade that the quarry lands leased by the Company from his father could be offered as security.
. A sum of €250,000 was advanced by the Company on 28 February, 2007, for the purposes of paying a deposit on the Sutton Site, the Flood Partnership submitted final tender documents on 1 March 2007 and a draft of a further sum of €500,000 was drawn from the Partnership Account held with the Bank in its Navan Branch on the same date, again for the purpose of covering the “preliminary deposit” on the Sutton Site. The Flood Partnership's bid of €11,600,000 was accepted by the Vendor, Dublin City Council on 7 March, 2007.
. In the interim, the Bank issued Heads of Terms on 28 February, 2008, in favour of the Flood Partnership. This indicated that two loan facilities would be made available. The first was a prime rate loan for €13,700,000 for the purpose of assisting with the purchase of the Sutton Site, and the second was an overdraft facility in the amount of €1,500,000 for the purpose of working capital. It also indicated that the following securities were to be provided prior to or in tandem with drawdown:
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a. An all sums charge to be executed by David Flood of lands comprising 11 acres, 0 roods...
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