Ferris v Meagher & Echoforde Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Birmingham |
| Judgment Date | 31 July 2013 |
| Neutral Citation | [2013] IEHC 380 |
| Court | High Court |
| Date | 31 July 2013 |
AND
AND
[2013] IEHC 380
THE HIGH COURT
Practice and procedure- Landlord and tenant law- Insolvency- Tenancy- Receiver- Restraint- Rely on lease against receiver- Conveyancing and Law of Property Act 1881
Facts: The plaintiff as receiver of certain assets sought orders restraining the defendants from preventing, impending or obstructing the taking of possession of property. The Court considered the implications and legal consequences of whether a tenant who had gone into occupation on foot a lease granted without the consent of a bank/ mortgagee could rely on the lease against the receiver.
Held by Birmingham J. that it would be inequitable to allow a party who had granted a lease without obtaining consent to benefit from his failure to point to the absence of consent in order to invalidate the lease. The second named defendant had not made out any arguable defence. It had no entitled to remain in occupation and was a trespasser. The plaintiff was entitled to the order it sought without the necessity of considering the balance of convenience, which in any event, favoured the plaintiff.
CONVEYANCING & LAW OF PROPERTY ACT 1881 S18(1)
FENNELL & ACC BANK PLC v N17 ELECTRICS LTD (IN LIQUIDATION) UNREP DUNNE 11.5.2012 2012/15/4218 2012 IEHC 228
WYLIE LANDLORD & TENANT LAW 2ED 1998 PARA 6.10
MEGARRY & WADE THE LAW OF REAL PROPERTY 7ED 2008 PARA 25.080
MORGAN & ORS FISHER & LIGHTWOODS LAW OF MORTGAGE 13ED 2010 PARA 29.18
WOODFALL WOODFALLS LAW OF LANDLORD & TENANT 27ED 1968 PARA 2.169
IRON TRADES EMPLOYERS INSURANCE ASSOCIATION LTD v UNION LAND & HOUSE INVESTORS LTD 1937 1 AER 481 1937 CH 313
O'ROURKES ESTATE, IN RE 1889 23 LRI 497
TAYLOR v ELLIS 1960 1 AER 549 1960 2 WLR 509 1960 CH 368
ICC BANK PLC v VERLING & ORS 1995 1 ILRM 123 1994/10/3083
CONVEYANCING & LAW OF PROPERTY ACT 1881 S18
KAVANAGH & LOWE v LYNCH & ST ANGELA'S STUDENT RESIDENCES LTD UNREP LAFFOY 31.8.2011 2011/29/8022 2011 IEHC 348
LAND & CONVEYANCING LAW REFORM ACT 2009 S8
START MORTGAGES LTD v GUNN & ORS UNREP DUNNE 25.7.2011 2011/46/13101 2011 IEHC 275
REGISTRATION OF TITLE ACT 1964 S62(7)
MCENERY v SHEAHAN UNREP FEENEY 30.7.2012 2012 IEHC 331
SILVEN PROPERTIES LTD & ANOR v ROYAL BANK OF SCOTLAND PLC & ORS 2004 4 AER 484 2004 1 WLR 997 2003 BCC 1002 2004 1 BCLC 359
LOWE v BURNS UNREP LAFFOY 17.4.2012 2012/23/6595 2012 IEHC 162
1. The matter before the Court sees the plaintiff, as receiver of certain assets of the first named defendant, John Meagher seeking orders restraining the defendants from preventing, impeding or obstructing him from taking possession of, getting in, collecting and accessing property at 4, 5, 6, 7 and 8 Charlemont Street (hereinafter "the Property"). The background to the application is that on the 20 th December, 2012, the plaintiff was appointed or perhaps at this stage it is better to say was purportedly appointed as receiver of the assets of Mr. Meagher comprised in two deeds of mortgage dated the 5 th January, 2000, and the 15 th July, 2003. Each of the deeds of mortgages contained a provision in the following terms:-
"That the mortgagor shall not except with the written consent of the Bank grant or agree to grant any lease or tenancy of the mortgaged property or any part or parts thereof or part with possession thereof or accept or agree to accept a surrender of any lease or tenancy thereof and sub-section (1) of Section 18 of the Conveyancing and Law of Property Act 1881 shall not apply to this security."
2. Each mortgage granted the plaintiff upon appointment power, to, inter alia enter upon and take possession of the property, grant or accept surrenders of leases of tenancies affecting the property upon such terms and conditions as he thinks fit, and to sell the property and on behalf of the mortgagor. On appointment the plaintiff learnt from Mr. Donai Scully, property credit manager, in the SME property section of Danske Bank that Citi Hostels and/or Echoforde Limited, the second named defendant may have been in occupation of a portion of the property. Accordingly, he wrote to Echoforde and Citi Hostels advising them of his appointment, enclosing copies of his Deed of Appointment and inquiring as to the legal basis, if any, for their occupation of the property. He also requested copies of any lease in existence. Initially no response was received and in these circumstances the plaintiff wrote again.
3. Searches were conducted at the Companies Registration Office. These indicated that Echoforde was incorporated on the 11 th March, 2009, and filed annual returns in the CRO up to the 1 st March, 2012, and recorded that the first named defendant was the sole shareholder of Echoforde. However, more recently on the 26 th March, 2013, a further annual return was filed in relation to Echoforde up to the l st March, 2013, which on this occasion showed that Mr. Alin Christian Tarcau was now the sole shareholder.
4. There followed correspondence between the plaintiff on the one hand and Mr. Liam Kilkenny, who emerged as an advisor to Echoforde and then between Mr. Tarcau and the plaintiff and his advisors.
5. Eventually, by letter dated the 21 st March, 2013, from solicitors acting on behalf of Echoforde, details in relation to the lease between Mr. Meagher and Echoforde Limited were furnished in that reference was made to a lease for a period of ten years from the l st May, 2012, reserving a full rent of €687,500 per annum. After some further delay a copy of the lease between Mr. Meagher, the first named defendant as landlord and Echoforde Limited, the second named defendant as tenant was furnished by letter dated the 12 th April, 2013.
6. It is not in dispute that the lease between Mr. Meagher and Echoforde Limited was entered into without the written consent of Danske Bank or National Irish Bank Limited as it was previously known.
7. So far as the lease is concerned there are some noteworthy features. These include the fact that while the purported lease is dated the 30 th April, 2012, it was not stamped until the 28 th January, 2013, some five or six weeks after the appointment of a receiver. In addition while the lease provides for a rent of €87,500 per annum to be paid a special condition provides that Echoforde will continue to pay "the current rent level" as per another memorandum of agreement dated the 28 th October, 2010, "until such time as the refurbishment works of 7/8 Charlemont Street are completed and the building is fit for its intended purposes". A further condition of the lease is that the landlord agrees to refund to the tenant any vouched expenses relating to the refurbishment works at 7/8 Charlement Street.
8. Under cover of a letter dated the 3 rd May, 2013, a cheque in the sum of €9,375 was furnished in respect of a quarter's rent. To state the obvious payment of €9,375 per quarter does not reflect an annual rent of €87,500.
9. The implications and legal consequences of a lease granted without the consent of a bank/mortgagee has been considered in a number of cases. In that regard in in The Matter of N17 Electrics Limited (in liquidation) and in The Matter of the Companies Acts 19633 to 2009 Kenneth Fennell and ACC Bank Plc. v. Nl7 Electrics Limited (in liquidation) [2012] IEHC 228 (Unreported, High Court, Dunne J., 11 th May, 2012) the law in this area was the subject of a detailed review by Dunne J. She referred to extracts from leading text books in the area such as Wiley on Law of Landlord and Tenant, 2 nd Ed., paragraph 6.10, Megarry and Wade, Law of Real Property 7 th Ed., paragraph 25-080, Fisher and Lightwoods, Law of Mortgage para. 29.18, and Woodfall, Landlord and Tenant Act, para. 2.169. She also referred to and analysed in some detail a number of decision including Iron Trades Employers Assurance Association Limited v. Union Land and House Investors Limited [1937] Ch. 313, In Re O'Rourke's Estate [1889] 23 L.R.I.R. 497 and Taylor v. Ellis [1960] 1...
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