Gerard O'Malley v Kay Breen

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 18 May 2021
• Neutral Citation: [2021] IECA 148
• Date: 18 May 2021
• Court: Court of Appeal (Ireland)
• Docket Number: High Court Record Number: 2018/515SP

Between

Gerard O'Malley

Plaintiff/First Named Respondent

and

Kay Breen

First Named Defendant/Appellant

and

Mary Breen

Second Named Defendant/Second Named Respondent

[2021] IECA 148

Costello J.

Haughton J.

Murray J.

High Court Record Number: 2018/515SP

Court of Appeal Record Number: 2019/533

THE COURT OF APPEAL

Probate – Estate – Property – Appellant appealing from the finding that she held 58% of the property in trust for the deceased’s estate – Whether, if there was a joint tenancy, it was severed by events in 2008

Facts: The first defendant/appellant, Ms K Breen, appealed to the Court of Appeal from the judgment of O’Connor J delivered on 13 September 2019, and his supplemental judgment delivered ex tempore on 7 November 2019, arising from which orders were perfected on 3 December 2019. The proceedings were commenced by Special Summons issued on 25 October 2018. The plaintiff/first respondent, Mr O’Malley, brought the action as the executor of Mr Breen who died on 22 February 2017 (the deceased), probate of whose estate was granted to the executor on 21 June 2018. Ms K Breen was the divorced former wife of the deceased. The second defendant/second respondent, Ms M Breen, was the widow of the deceased and joined with the executor in seeking to uphold the decision of the High Court. The Special Endorsement of Claim raised questions arising in the course of administration of the deceased’s estate as to the legal and beneficial ownership of 6 Distillery Mews, Distillery Lane, Dundalk, County Louth (the first property), which the executor was desirous of selling in order to reduce the liabilities of the deceased. The first property was acquired in the joint names of the deceased and Ms K Breen in December 2000. The appeal was from the finding that Ms K Breen held 58% of the first property in trust for the deceased’s estate, and involved consideration of the competing equitable presumptions of advancement and of a resulting trust, and whether, if there was a joint tenancy, it was severed by events in 2008.

Held by Haughton J that he would allow the appeal in part and vary the decision of the High Court to reflect the fact that the re-mortgage in 2008 effected a severance of the joint tenancy, and that at the date of the deceased’s death the deceased and Ms K Breen held the legal estate as tenants in common in equal shares, and held the beneficial interest in equal shares. Haughton J proposed that the following orders and declarations should be made in substitution for the answers given in the High Court to the questions (i)-(v) posed in the amended Special Summons: “It is hereby ordered that the appeal herein be allowed in part and that the order and answers of the High Court be hereby vacated and in lieu thereof and in answer to the questions posed in the amended Special Summons (but not adopting the same numbering) it is hereby declared that - (a) in the year 2000 [Mr Breen] (now deceased) and the first named defendant [Ms K Breen] acquired the legal and beneficial interest in the property 6 Distillery Mews, Distillery Lane, Dundalk, County Louth as joint tenants in equal shares; (b) the said joint tenancy was severed by operation of law when the said [Mr Breen] executed a re-mortgage of his interest in the said property to Bank of Ireland Mortgage Bank in 2008; (c) following the death of [Mr Breen] the legal and beneficial interests in the said property are held by the plaintiff as Executor of the estate of [Mr Breen] and the first named defendant [Ms K Breen] as tenants in common in equal shares. (d) [Ms K Breen] does not hold her legal or beneficial interest in the said property subject to the re-mortgage with the Bank of Ireland Mortgage Bank in 2008. And it is further ordered that the Executor and [Ms K Breen] be granted liberty to apply.”

Haughton J held that the trial judge’s order that the costs of all parties be paid out of the estate of the deceased was a proper order to make in circumstances where the executor justifiably required the High Court’s directions as to the legal and beneficial ownership of the first property. Haughton J found that it could not be said that any party had been entirely successful in the appeal. Haughton J proposed that both the executor and Ms K Breen be entitled to their costs of the appeal out of the estate, such costs to be adjudicated by a legal costs adjudicator in default of agreement.

Appeal allowed in part.

JUDGMENT of Mr. Justice Robert Haughton delivered on the 18th day of May 2021

1 This is an appeal from the judgment of O'Connor J. delivered on 13 September 2019, and his supplemental judgment delivered ex tempore on 7 November 2019, arising from which orders were perfected on 3 December 2019.

2 The proceedings were commenced by Special Summons issued on 25 October 2018. The plaintiff/first named respondent brings this action as the executor of Conor Breen who died on 22 February 2017 (“the deceased”), probate of whose estate was granted to the first named respondent (“the Executor”) on 21 June 2018. The first named defendant/appellant, (“Kay Breen”), is the divorced former wife of the deceased. The second named defendant/second named respondent, Mary Breen (née O'Malley) (“Mary Breen”) is the widow of the deceased and joins with the Executor in seeking to uphold the decision of the High Court.

3 The Special Endorsement of Claim raises questions arising in the course of administration of the deceased's estate as to the legal and beneficial ownership of 6 Distillery Mews, Distillery Lane, Dundalk, County Louth (“the First Property”), which the Executor is desirous of selling in order to reduce the liabilities of the deceased. The first property was acquired in the joint names of the deceased and Kay Breen in December 2000. The appeal is from the finding that Kay Breen holds 58% of the First Property in trust for the deceased's estate, and involves consideration of the competing equitable presumptions of advancement and of a resulting trust, and whether, if there was a joint tenancy, it was severed by events in 2008.

The Affidavit Evidence

(i) The Executor' first affidavit

4 The background is set out in the grounding affidavit sworn by the Executor on 26 October 2018. The deceased died on 22 February 2017 aged 56 as a result of oesophageal cancer. At the date of his death he was resident at 12a Carn Road, Killeavy, County Down, Northern Ireland. He was sole partner at McDonough and Breen Solicitors in Dundalk. The deceased and Kay Breen married on 10 July 1986 and they had two children, Niall Breen, now a practicing solicitor, and Cliodhna Breen, now a practicing barrister, who were no longer dependant when the deceased died. The deceased and Kay Breen became estranged, and separated and lived apart in or about 1994, but their relationship remained cordial even after separation. They divorced by order of the High Court of Northern Ireland dated 6 January 2017.

5 The deceased and Mary Breen had been in a long term relationship, cohabiting since 1995, and they had four dependent children aged 16, 15, 13 and 8 when the deceased died. The deceased and Mary Breen married on 24 January 2017, shortly before the death of the deceased.

6 By his last Will dated 27 January 2017 the deceased appointed the respondent, and another as the executors of his estate. The Executor, who is a brother of Mary Breen, initially renounced his entitlement to administer the Estate but later with leave of the court revoked that renunciation and thereafter with the leave of the Court obtained the Grant of Probate, the other named executor having renounced.

7 Having examined the affairs of the estate the Executor came to the view that “the estate is in all likelihood insolvent”, and he is seeking to realise the assets to meet liabilities. He states that issues have arisen in relation to the First Property, which he avers was bought as a “residential investment property”. The First Property is devised by the deceased's Will to Kay Breen; the relevant clause reads:

“I give devise and bequeath my dwellings at The Wood, Ravensdale, Dundalk, County Louth and 6 Distillery Mews, Dundalk to Kay Breen”.

8 In December 2000, the deceased negotiated and arranged the purchase of The First Property/Property for IR£190,000 (€205,000). The property was placed in the joint names of the deceased and Kay Breen. The deceased arranged a loan in the joint names of himself and Kay Breen with AIB Bank Plc in the sum of IR£160,000, the balance was paid from his own funds. The deceased also fitted out and furnished the property from his own funds, and rented it out to third parties as a residential investment property from 2000 up until his death in 2017. From his consideration of the McDonough & Breen conveyancing file the Executor avers that the appellant did not contribute financially or at all to the purchase of the First Property. He avers:

“9. It is my understanding that the purpose of the Deceased in acquiring the property was to provide an income from the property to fund the education of the two children from the marriage with the First Defendant. He duly did fund the education of the two children from the first marriage both of whom became legally qualified and paid for their private college education at Griffith College, Dublin.”

9 In passing certain details of the exhibited Contract for the purchase of the First Property should be noted. First, it confirms that it was purchased for IR£190,000, which means that the deceased's financial contribution from his own funds was IR£30,000 plus whatever he expended on fitting out/furnishing. Secondly there is a handwritten Special Condition 16 that makes the purchase conditional on “the purchaser having an unconditional contract for the sale of No.4 Sutton Court within 12 weeks of the date hereof”. This suggests that the deceased was dependent on the sale of No. 4 Sutton Court to...