Fennell v Creedon

• Jurisdiction: Ireland
• Judge: Ms. Justice Murphy
• Judgment Date: 09 November 2015
• Neutral Citation: [2015] IEHC 711
• Court: High Court
• Date: 09 November 2015

[2015] IEHC 711

THE HIGH COURT

[No. 1663 P./2015]

Fennell v Creedon

BETWEEN

KEN FENNELL

PLAINTIFF

AND

CON CREEDON AND PAMELA CREEDON

DEFENDANTS

Banking & Finance – Deed of mortgage – Non-payment of loan – Demand for payment – Appointment of receiver – Code of Conduct on Mortgage Arrears – Interlocutory injunction

Facts: The plaintiff being the receiver sought an interlocutory injunction against the defendants from interfering with the exercise of his power as the receiver and an order directing the defendants to hand over the keys, the locks, and all the books and records pertaining to the relevant property. The plaintiff was appointed the receiver of the relevant property by the bank owing to the non-payment of loan by the defendants to the bank following the execution of deed of mortgage giving the first legal charge over certain properties including the relevant property by the defendants to the bank.

Ms. Justice Binchy granted interlocutory injunction to the plaintiff thereby restraining the defendants from interfering with the exercise of powers by the plaintiff as the receiver over relevant property and directed the defendants to hand over all the books and records, and keys, locks and all the other security devices to the plaintiff in relation to that property. The Court found that every application under Code of Conduct on Mortgage Arrears need not be for the possession of the family home and the underlying transaction must be scrutinized before granting a relief under the said Code. The Court found that the contract between the defendants and the bank was commercial in nature and the loan was not secured by the defendants' primary residence. The Court found that the defendants did not make the relevant property as their primary residence for four years and validly executed a deed of mortgage/charge in favour of the bank.

1 JUDGMENT of Ms. Justice Murphy delivered the 9th day of November, 2015

2 1. These proceedings relate to a property which is the subject of a commercial mortgage between the defendants and EBS Limited. The plaintiff seeks an interlocutory injunction against the defendants restraining them, whether by themselves, collectively or individually, their respective servants or agents or anyone acting in concert with them or anyone having notice of the said order from:

3 2 "(1.) …interfering with, obstructing, or in any other way preventing the Plaintiff from exercising his powers and functions as Receiver over the property identified in the Schedule hereto ("the Property");

4 (2.) …interfering with, obstructing or in any other way preventing the Plaintiff from exercising his lawful power to enter upon and take possession of the Property."

5 The plaintiff also seeks:

6 2 "(3.) An Order directing that the Defendants, their servants or agents, or any person having notice of the said Order to provide to the Plaintiff forthwith the keys, alarm codes, locks and all other security and access devices and equipment or information necessary to gain possession of the Property;

7 (4.) An Order directing the Defendants, their servants or agents, to deliver forthwith to the Plaintiff all books and records held by them in relation to the Property to include, without prejudice to the generality of the foregoing, copies of all leases and licence agreements in respect of the Property;

8 (5.) Such further or other Orders as this Honourable Court should deem appropriate in all the circumstances; and

9 (6.) An Order providing for the costs of this application."

Factual Background

10 2. EBS Limited advanced a loan to the defendants of €4,510,000 by way of letter of amended loan offer of the 26 ^th July, 2004. This replaced a prior letter of loan offer of 8 ^th July, 2004. The loan was a two year interest only loan, granted for the purpose of applying it towards (i) the purchase of properties at 129 and 131 and at the rear of 127 Tritonville Road, Sandymount, Dublin 4, at a cost of €3,000,000; (ii) to carry out refurbishments thereto, (iii) to construct three apartments at the rear of 127-131 Tritonville Road at a cost of €790,000; and (iv) to grant an interest roll up facility of €240,000. The rate of interest applicable to the loan was a variable rate based on one month Euribor plus 2% per annum. The defendants were required to make monthly repayments comprising interest only which were to be based on this variable interest rate. The security for the loan was to comprise: (i) a first legal mortgage over the property at 129 Tritonville Road, Sandymount, Dublin 4; (ii) a first legal mortgage over the property 131 Tritonville Road, Sandymount, Dublin 4; and (iii) a first legal mortgage over the property at the site and rear of 127, 129 and 131 Tritonville Road, Sandymount, Dublin 4. The terms of the loan offer letter were accepted in writing and signed by the defendants' attorney on or about the 27 ^th July, 2004.

11 3. By Deed of Mortgage/Charge for Private Borrower dated 9 ^th August, 2004, between the defendants and EBS, the defendants as beneficial owners granted and conveyed unto EBS all the property of freehold tenure specified in the First Schedule to the Mortgage, to hold the same unto EBS in fee simple subject to the proviso for redemption thereafter contained.

12 4. The First Schedule to the Mortgage, which was expressly commercial in nature, referred to the properties secured under the mortgage including the property the subject of this application:

"ALL THAT AND THOSE the premises known as 131 Tritonville Road, Ballsbridge in the City of Dublin being the premises more particularly described in a Deed of Conveyance dated the 9 ^th August, 2004 and made between Loughran Investments Limited of the one part and Con Creedon and Pamela Creedon of the other part."

13 The mortgage was entered into as a requirement for a loan which EBS advanced to the defendants by way of the letter of amended loan offer of the 26 ^th July, 2004.

14 5. The defendants moved into 131 Tritonville Road with their two daughters, four years later, in 2008, and have resided there since, although their eldest daughter has now left the home. The first defendant informed the bank of this fact by letter dated 24 ^th September, 2008.

15 6. The terms of the loan were amended by way of letter on 18 ^th March, 2009, such that the term and interest only period was extended by twelve months, with the loan balance becoming payable in full on 10 ^th April, 2010.

16 7. In 2010 when the facility expired, discussions took place between the defendants and EBS. These continued throughout 2011. An amended loan offer letter dated 7 ^th November, 2012, extended the term of the loan to 10 ^th December, 2013, on the conditions, inter alia, that EBS would be provided with a sworn statement of affairs and that the properties at 129 Tritonvillle Road and Oasis Club, Casa 10, 29602, Marbella would be sold. The revised loan balance was stated as being €4,686,346.81 and monthly repayments were adjusted to be interest only.

17 8. By letter dated 29 ^th June, 2011, EBS wrote to the defendants under the MARP process and enclosed a copy of the MARP information booklet, periodically issuing letters thereafter. By letter dated 24 ^th September, 2013, EBS explained to the defendants that they would be deemed to be a "non co-operating borrower" unless they co-operated with EBS and provided information as set out in the letter within 20 business days. A further letter dated 6 ^th November, 2013, stated that the defendants had then been classified to be non co-operating borrowers and that the protections of MARP no longer applied. A right of appeal against this decision was set out at the end of that letter.

18 9. By letter dated 11th November, 2013, the first named defendant contacted Philip Butler of EBS, expressing surprise at being classified as a non co-operating borrower given that the defendants had made "immediate contact and inside the 20 days prior to and following the letter of the 24 ^th of Sept and are still in meaningful discussions with your good self." Mr. Butler averred, at para. 20 of his affidavit, that this letter was not received by EBS and no copy can be found in EBS's records. Mr. Butler averred that no appeal was received and in fact no further communication was received from the defendants regarding MARP.

19 10. By letter of demand dated 10 ^th December, 2013, EBS demanded that the defendants pay the sum of €4,782,262.58, being the amount due in respect of the loan including interest and arrears. The loan was not repaid and no amounts in respect of it. were discharged. By letter dated the 6 ^th February, 2014, EBS demanded payment of the sum of €4,797,472.56 - the amount due in respect of the loan at the time, inclusive of interest and arrears.

20 11. The plaintiff is a partner in the firm of Deloitte. He was appointed receiver over the properties referred to in the First Schedule to the Mortgage, by Deed of Appointment of Receiver dated 14 ^th February, 2014. Clause 8.01 of the Deed of Mortgage expressly conferred upon EBS the right to appoint a receiver over the mortgaged property in the event that the defendants defaulted upon the repayment of the loan.

21 12. The property the subject of these proceedings ("the Property") was excluded from his original appointment, although it was in itself a part of the mortgaged property, and it is described as follows:

"ALL THAT AND THOSE that portion of 131 Tritonville Road, Ballsbridge, Dublin 4, being part of the lands and premises comprised in the Deed of Mortgage dated the 9 ^th August, 2004 issued by Con Creedon and Pamela Creedon to EBS as is outlined on the maps annexed to the Plenary Summons and thereon surrounded by red verge line and marked 'extent of family home at ground level' and 'extent of family home at basement...