Kearney v Bank of Scotland

• Jurisdiction: Ireland
• Judge: Ms Justice Maire Whelan
• Judgment Date: 08 April 2020
• Neutral Citation: [2020] IECA 92
• Docket Number: Appeal No: 2018/371
• Court: Court of Appeal (Ireland)
• Date: 08 April 2020

BETWEEN/

THOMAS KEARNEY

APPELLANT

AND

BANK OF SCOTLAND PLC

AND

PATRICK HORKAN

RESPONDENTS

[2020] IECA 92

Baker J.

Whelan J.

Collins J.

Appeal No: 2018/371

THE COURT OF APPEAL

Isaac Wunder order – Lites pendentes – Appointment of receiver – Applicant seeking from the judgment and orders of the High Court – Whether the trial judge erred in making an Isaac Wunder order against the appellant

Facts: The appellant, Mr Kearney, issued proceedings by way of plenary summons on 13th December, 2017. Subsequently, the respondents, Bank of Scotland PLC (BOS) and Mr Horkan, issued motions seeking the dismissal of the appellant’s claim. The appellant’s statement of claim encompassed the following claims: (i) that a charge was not registered in the name of Bank of Scotland (Ireland) Ltd (BOSI) in the Land Registry, and such registration was required before the charge could be transferred to BOS; (ii) that the sums claimed on foot of a mortgage were not lawfully due and owing to any person or entity; and (iii) the appointment of the receiver was invalid due to BOS not having registered itself as the owner of the charge. On 4th May, 2018, the High Court (McGovern J) dismissed the appellant’s proceedings, made an order pursuant to s. 123(b)(i) of the Land and Conveyancing Law Reform Act 2009 that lites pendentes registered by the appellant against two folios be vacated and further imposed an Isaac Wunder order against him. The appellant appealed to the Court of Appeal from the judgment and orders of the High Court. The notice of appeal advanced three key grounds: (i) the trial judge erred in his application of the principles in Kavanagh v McLaughlin [2015] IESC 27; (ii) a subsequent High Court decision of McDonald J in McCarthy v Moroney [2018] IEHC 379 confirmed that the deed of appointment ought to have referred to the receiver as a “receiver and manager”; and (iii) the trial judge erred in making an Isaac Wunder order against the appellant where he had raised a legitimate cause in relation to the receivership and that same lacked “proportionality and fair balance” and therefore breached his rights pursuant to Article 1 of the First Protocol to the European Convention on Human Rights.

Held by Whelan J that, insofar as the claims were based on the cross-border merger and sought to impugn same or to assert that the security never vested in BOS, the proceedings constituted an abuse of process, were doomed to failure, and the appellant had no reasonable prospect of obtaining relief in regard to same. Turning to the issue of the validity of the second respondent’s appointment, Whelan J was not satisfied that it could fairly be asserted that the claim sought to be advanced in the proceedings by the appellant concerning the validity of the deed could be dismissed on the basis that to do so gave rise to “no real risk of injustice”. Whelan J held that there was an appeal pending to the court against the decision of the High Court in McCarthy v Langan [2019] IEHC 651 regarding the validity of the deed of appointment of a receiver and manager and in such circumstances, it would not be appropriate to express any concluded view on the issue in question which required to be fully argued. Whelan J held that this issue, in the circumstances, was at least arguable and the interests of justice warranted that the appellant’s appeal be allowed on that narrow ground so that he was permitted to continue to pursue the proceedings solely for the purposes of challenging the validity of the appointment of the receiver on that ground. In Whelan J’s view, in its iteration the Isaac Wunder order was arguably somewhat excessive. Whelan J held that the order restraining the institution of proceedings as specified at paras. 5 and 6 in the curial part of the order was disproportionate. Whelan J held that the said orders needed to be varied. In lieu thereof, Whelan J held that an order was required restraining the appellant, his servants, agents or proxies, from instituting any proceedings, which sought to impugn the validity of the cross-border merger; the title of BOS to the said charges registered on Part 3 of the said Folios; the validity of the disposition of the said charges by BOS or any successor in title including, but not limited to, Pentire Property Finance Ltd; the right of BOS to appoint the receiver, without the prior leave of the President of the High Court, or some other judge nominated by him, such leave to be sought by an application in writing addressed to the Chief Registrar for the time being of the High Court. Whelan J held that an order was properly made by the High Court pursuant to s. 123(b)(i) of the 2009 Act vacating the lites pendentes registered against the folios.

Whelan J held that the appeal would otherwise be dismissed.

Appeal dismissed in part.

Judgment of Ms Justice Maire Whelan delivered the 8th day of April 2020

Introduction

1 This is an appeal from the judgment and orders of the High Court (McGovern J.) of 4th May, 2018 wherein the High Court judge dismissed the appellant's proceedings, made an order pursuant to s. 123(b)(i) of the Land and Conveyancing Law Reform Act 2009 (“the 2009 Act”) that lites pendentes registered by the appellant against two folios be vacated and further imposed an Isaac Wunder order against him.

Background and procedural history

2 The appellant, who is a litigant in person, was advanced several loan facilities by Bank of Scotland (Ireland) Ltd (“BOSI”) on various dates between June 2003 and November 2006. The loan facilities were secured by way of a deed of mortgage and charge dated 14th January, 2004 (“the mortgage”) over a commercial property the title to which was partly registered and partly unregistered, (“the secured property”). The appellant repaid certain of these loans and defaulted in relation to others.

3 On 31st December. 2010, all of the assets and liabilities of BOSI, including the mortgage and charge over the appellant's property, transferred to the first named respondent (“BOS”) following a cross-border merger pursuant to the European Communities (Cross-Border Mergers) Regulations 2008 (S.I. No. 157/2008) (the “2008 Regulations”). BOSI then stood dissolved without going into liquidation.

4 In 2005, an application was made by BOSI to register the charge in the Land Registry under dealing number D2005GY000994W, which was completed on 20th August, 2013. By that date BOS stood in the shoes of BOSI and registration of the charge was effected in its name in part 3 of each Folio.

5 On 5th July, 2012, by deed of appointment, the second named respondent (“the receiver”) was appointed by BOS.

2012 proceedings

6 In proceedings entitled High Court [2012 No. 8712 P] between Thomas Kearney, plaintiff and Bank of Scotland plc and Patrick Horkan, defendants (the “2012 proceedings”), the appellant challenged the validity of the charges registered against the secured property and the validity of the appointment of the receiver. The respondents issued a motion in 2013 to dismiss his claim on the grounds that same was frivolous, vexatious, disclosed no cause of action or was otherwise bound to fail. The appellant failed to appear at the hearing. By order made on 18th November. 2014 Kearns P. dismissed the 2012 proceedings.

7 On 29th November, 2014 BOS assigned a portfolio of loan facilities and associated securities, including the mortgage, to Carval Investors UK Limited, which subsequently novated same to Pentire Property Finance Limited (“Pentire”). On 20th April. 2015 all of BOS's right, title and interest in the appellant's loan facilities and in the security interest over the secured property were assigned, conveyed and transferred to Pentire.

8 Meanwhile, the appellant's application for an extension of time within which to lodge an appeal against the High Court President's order dismissing the 2012 proceedings was refused by the Court of Appeal on 23rd February, 2015. It was found that he had not established any arguable grounds of appeal. The appellant's application to the Supreme Court for leave to appeal against that refusal was refused on 3rd November. 2015.

Wife's proceedings

9 On 7th September, 2017 the receiver placed the secured property for sale on the open market. On 15th September, 2017, the appellant's wife. Mrs. Fidelma Kearney, issued proceedings against the appellant and the receiver and. by order, Pentire. in which she asserted, as against the appellant, an interest in the secured property. After failing to deliver a statement of claim, she filed a notice of discontinuance on 16th November. 2017. There was no evidence that she acted as agent or proxy for the appellant in this regard.

First 2017 proceedings

10 Shortly after the discontinuance of his wife's proceedings, on 29th November, 2017 the appellant instituted proceedings entitled High Court [2017 No. 10822 P] between Thomas Kearney, plaintiff and Patrick Horkan. defendant, relating to the secured property. The said proceedings were subsequently discontinued.

Current proceedings

11 The appellant issued the proceedings the subject of this appeal by way of plenary summons on 13th December. 2017. Subsequently, the respondents issued motions seeking the dismissal of the appellant's claim.

12 The appellant's statement of claim, analysed in greater detail below, encompassed the following claims:

i. The Registration Claim – that the charge was not registered in the name of BOSI in the Land Registry. and such registration was required before the charge could be transferred to BOS (paras. 5, 6. 8 and 10 of the statement of claim).

ii. The Indebtedness Claim – that the sums claimed on foot of the mortgage are not lawfully due and owing to any person or entity (para. 16 of the statement of claim).

iii. The Receiver Claim – the appointment of the receiver was invalid due to BOS not having registered itself as the owner of the charge. The deed of...