Governor & Company of the Bank of Ireland & Kavanagh v O'Donnell

 
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[2015] IEHC 640

THE HIGH COURT

[No. 1736 P./2015]
Governor & Company of the Bank of Ireland & Kavanagh v O'Donnell
No Redaction Needed
Approved Judgment
COMMERCIAL

BETWEEN

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND AND TOM KAVANAGH
PLAINTIFFS

AND

BRIAN O'DONNELL AND MARY PATRICIA O'DONNELL
DEFENDANTS

2015/1736P - Costello - High - 22/10/2015 - 2015 IEHC 640

Bankruptcy – The Bankruptcy Act 1988 – Land & Conveyancing – Indebtedness – Possession of property – Right of residence – Family Home Protection Act 1976

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JUDGMENT of Ms. Justice Costello delivered on 22nd day of October, 2015.

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1. There have been a number of cases involving the parties to these proceedings and related parties which have been the subject of written judgments of the High Court, the Court of Appeal and the Supreme Court. The facts have been set out in detail in those decisions and I propose only to set out an outline of the relevant facts in this judgment.

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2. In this case the plaintiffs seek injunctions restraining the defendants, their servants and/or agents or any other person acting on their behalf, or having notice of the making of the Order from trespassing, interfering with, entering upon or otherwise attending at the property known as Gorse Hill, Vico Road, Killiney, Co. Dublin ("Gorse Hill"); an order directing the defendants and others to vacate Gorse Hill and other interlocutory orders restraining the same persons from impeding or obstructing the second named plaintiff ("the Receiver"), and directing the defendants and others to deliver up to the Receiver any keys, alarm codes and/or other security and access devices; and damages for trespass and breach of contract and other related reliefs.

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3. The defendants are a husband and wife and they were each adjudicated bankrupt on 3 rd September, 2013, pursuant to a judgment obtained by the first named plaintiff ("the Bank") in the High Court on 12 th December, 2011, in the sum €71,575,991.29.

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4. On 1 st June, 2006, a company known as Vico Limited (which is registered in the Isle of Man) ("Vico") mortgaged and charged to the the Bank its interest in the property known as Gorse Hill by two separate Deeds of Mortgage and Charge. They were to provide security in relation to guarantees which Vico had provided to the Bank in respect of borrowings of the defendants and related companies from the Bank.

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5. The judgment of 12 th December, 2011, remained unsatisfied and the Bank called in the indebtedness of Vico to the Bank pursuant to its guarantees by letters dated 18 th May, 2012. As the debt was not discharged, the Bank appointed the Receiver as receiver and manager over the assets of Vico on 7 th June, 2012. Following his appointment, solicitors acting for the Bank and the Receiver wrote to the secretary of Vico informing it of the appointment of the Receiver and informing it that the Receiver intended to take possession of Gorse Hill on 1 st August, 2012.

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6. Gorse Hill had for many years been occupied by the defendants and their four children. As of the date of the appointment of the Receiver the defendants were resident in London and Gorse Hill was occupied by their four adult children. The children instituted proceedings bearing High Court Record Number 2012/7554 P. challenging the Bank's security and seeking to restrain the Receiver from taking possession of the property. They were unsuccessful in both the High Court and the Supreme Court and ultimately the defendants' children were directed to vacate Gorse Hill by 2 nd March, 2015.

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7. The defendants state that they have a right of residence in Gorse Hill. This is based on a letter written on 20 th October, 2000, to the trustees of a trust company which holds the shares in Vico on trust for the children of the defendants. The handwritten letter provides as follows:-

"Re: Settlement 16 th December, 1997."

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Dear Sirs,

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Following due consideration we the undersigned confirm and assure you the trustees that we shall at all times care and support the beneficiaries of the settlement namely Blake, Bruce, Blaise and Alix [Alexandra] O'Donnell. We confirm that we shall use the residence Gorse Hill, Vico Road as a residence of ourselves and the beneficiaries for as long as the trustees on behalf of the beneficiaries shall permit. It is acknowledged by the trustees + the beneficiaries that any notice given to us to vacate the residence shall be in writing + shall in the absence of our consent be at least 2 calendar years prior to the vacation date to allow sufficient time for alternative arrangements to be made".

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The letter went on to state that they would keep the premises in good repair and pay all outgoings and was signed by the defendants.

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8. Since 2012, the defendants were living in London but when they returned to Dublin they resided at Gorse Hill with their children. The defendants returned to Gorse Hill at sometime in February, 2015 and continued to reside there after their four adult children vacated the property on 2 nd March, 2015, in accordance with an order of court. The defendants refused to vacate the property at the request of the plaintiffs and accordingly the plaintiffs instituted these proceedings on 3 rd March, 2015.

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9. The plaintiffs sought interlocutory injunctions against the defendants in the terms set out above. The injunctions were granted by the High Court on 12 th March, 2015, and the defendants appealed to the Court of Appeal. On 15 th April, 2015, the Court of Appeal dismissed the defendants' appeal.

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10. The plaintiffs delivered a statement of claim on 8 th May, 2015, and on 22 nd June, 2015, the defendants delivered a defence and counterclaim.

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11. In the Defence and Counterclaim the defendants plead that they are a married couple and they live at Gorse Hill and that their right of residence still subsists and has not been terminated. They also challenged the validity of the Deeds of Mortgage and Charge on the basis that the second named defendant did not consent to the granting of the mortgage and charge and that therefore the Deeds do not comply with the provisions of the Family Home Protection Act 1976. In the alternative they plead that, while she was represented in the transactions by her husband's firm of solicitors, Brian O'Donnell and Partners, she did not have the benefit of independent legal advice. It is also alleged that the judgment of 12 th December, 2011, was obtained by fraud, that the trial judge held undisclosed shares in the Bank and therefore was judge in his own cause and that the Motion for Judgment was never properly served upon them. They seek to appeal the judgment and there is a motion listed for hearing before the Supreme Court on 23 rd October, 2015, seeking leave to extend time in which to appeal the judgment of 12 th December, 2011, based on the grounds advanced in the Defence and Counterclaim.

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12. The defendants applied to annul the orders adjudicating them bankrupt. The grounds upon which they sought the annulment are set out in my judgment of 16 th April, 2015, where I refused to annul the bankruptcies pursuant to s. 85C of the Bankruptcy Act 1988. Without rehearsing what is set out in that judgment, part of the argument related to the fact that it was claimed that the judgment of 12 th December, 2011, was obtained by fraud and that the Motion for Judgment had not properly been served upon them. The defendants have appealed against the judgment and Order of 16 th April, 2015, and the appeal is listed for hearing in the Court of Appeal on 8 th December, 2015.

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13. In the Counterclaim delivered in these proceedings the defendants seek a declaration that the judgment of 12 th December, 2011, is a nullity and of no legal effect or in the alternative that the judgment be rescinded. They also seek damages for fraud and the second named defendant seeks a declaration that the following documents be declared void by reason of an alleged breach of s. 3 of the Act of 1976. The documents are:-

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(i) The Deeds of Mortgage and Charge dated 1 st June, 2006, between Vico Limited and the first named plaintiff in respect of Gorse Hill, Vico Road, Killiney, Co. Dublin and Folio 211;

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(ii) Guarantee and Indemnity dated l st June, 2006, executed by Vico Limited in favour of the first named plaintiff in respect of the liabilities of the defendants;

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(iii) Guarantee and Indemnity dated 1 st June, 2006, executed by Vico Limited in favour of the first named plaintiff in respect of the liabilities of Hibernia (2005) Limited;

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(iv) Guarantee and Indemnity dated 19 th October, 2006, executed by Vico Limited and the first named plaintiff in respect of the obligations of the defendants;

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(v) Deed of Confirmation dated 15 th June, 2007, executed by Vico Limited in favour of the first named plaintiff in respect of the Guarantee and Indemnity dated 19 th October, 2006;

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(vi) Guarantee and Indemnity dated 24 th March, 2011, executed by Vico Limited in favour of the first named plaintiff in respect of the liabilities of the defendants, Vico Swiss Holdings AG and Grey Stoke Societe Anonyme; and

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(vii) Any other deed or instrument which purports to create a charge or other security of any kind in favour...

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