O'Keeffe v O'Flynn Exhams; and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice Costello |
| Judgment Date | 31 July 1992 |
| Neutral Citation | 1992 WJSC-HC 3937 |
| Court | High Court |
| Date | 31 July 1992 |
1992 WJSC-HC 3937
THE HIGH COURT
BETWEEN:
and
Citations:
BANK OF IRELAND FINANCE LTD V DALY LTD 1978 IR 79
CROSSFIELD, EX PARTE 1840 3 IR EQ R 67
BANK OF IRELAND V FEENEY 1930 IR 457
NATIONAL BANK OF GREECE SA V PINIOS SHIPPING CO 1989 1 AER 213
TRUSTEE SAVINGS BANK V MAUGHAN UNREP COSTELLO 8.10.91 1991/13/3449
Synopsis:
BANKER
Customer
Loan - Repayment - Terms - Security - Title deeds - Deposit - Borrower - Identity - Whether wife liable for repayment of loan to husband - Joint tenancy in lands - Title deeds deposited with bank - Whether equitable mortgage of wife's estate created - Estoppel - (1984/2225 P - Costello J. - 31/7/92) - [1992] DULJ 172
|O'Keeffe v. O'Flynn Exhams & Partners|
EQUITY
Mortgage
Creation - Lands - Title deeds - Deposit - Prior undertaking to effect deposit - Parties - Intention - Husband and wife being joint tenants - Security for husband's bank loan - Whether wife's moiety captured by deposit - (1984/2225 P - Costello J. - 31/7/92)
|O'Keeffe v. O'Flynn Exhams & Partners|
EVIDENCE
Estoppel
Complaint - Bank account - Dealings - Loan - Repayment - Title deeds - Deposit - Parties - Intention - Husband and wife being joint tenants - Security for husband's bank loan - Whether wife's moiety captured by deposit - (1984/2225 P - Costello J. - 31/7/92) - [1992] DULJ 172
|O'Keeffe v. O'Flynn Exhams & Partners|
REAL PROPERTY
Incumbrance
Lands - Title deeds - Deposit - Parties - Intention - Husband and wife being joint tenants - Security for husband's bank loan - Whether wife's moiety captured by deposit - (1984/2225 P - Costello J. - 31/7/92) - [1992] DULJ 172
|O'Keeffe v. O'Flynn Exhams & Partners|
Judgment of Mr. Justice Costello Delivered the 31 July 1992
When Mr. and Mrs. O'Keeffe married in 1972 Mr. O'Keeffe's father gave them a valuable farm just north of Cork city. Later they purchased in their joint names a further 28 acre holding nearby so that in 1978 when the events began to unfold which have given rise to these proceedings they were joint tenants of a house and ill acres. These lands, the "Rathcooney lands" were intensively farmed by Mr. O'Keeffe who engaged in dairy farming and pig rearing. In 1978 Mr. and Mrs. O'Keeffe decided to buy a larger farm. With the help of an agricultural adviser, Mr. Martin, different submissions were prepared for the South Mall branch of Allied Irish Banks for loan accommodation to finance the contemplated acquisition, submissions based on an estimate of the proceeds of sale of the Rathcooney lands and the estimated cost of acquisition. Several farms were seriously considered by the O'Keeffe's in 1978 but they were unsuccessful in acquiring any of them. At the end of the year however Mr. O'Keeffe successfully negotiated an agreement for sale with the owner of a fine Georgian house standing on 206 acres of farm land, known as Kilpeacon House, in the County of Limerick. Mr. and Mrs. O'Keeffe agreed between themselves that the lands would be taken in their joint names.
The agreed price for Kilpeacon House and lands was £700,000. Having orally agreed this price Mr. O'Keeffe and Mr. Martin went to see Mr. Horgan the assistant manager of the Cork branch of AIB with whom Mr. O'Keeffe had discussed his previous unsuccessful deals. Agreement to lend him the deposit was forthcoming and the contract for sale was signed on the 24 November 1978, a contract which provided for a sale to Mr. and Mrs. O'Keeffe jointly and for a closing date in April 1979. Mr. and Mrs. O'Keeffe had an interview with their solicitor, Mr. O'Flynn, a partner in the firm practising under the name O'Flynn Exhams and Partners on the 29 November 1978 following which Mr. O'Flynn wrote to Mr. Horgan informing him that Mr. and Mrs. O'Keeffe were purchasing Kilpeacon and undertaking to deposit with the bank the title deeds as security for the loan which was required to complete the purchase. The loan to finance the purchase was ultimately made to Mr. O'Keeffe alone and not to Mr. and Mrs. O'Keeffe jointly and a loan account was opened in his name and not in the joint names. The sale was closed in April 1979. The Land Certificate in the O'Keeffe's names was not available until April 1980. The Bank realised in March 1980 that the loan was in Mr. O'Keeffe's sole name and wrote to obtain Mrs. O'Keeffe's agreement to open joint accounts in the name of her husband and herself and accept liability for the large debts then due to the bank. She refused, and she also instructed her solicitor Mr. O'Flynn not to lodge the Land Certificate. Mr. O'Flynn explained that both she and he were bound by the undertaking of the 29 November 1978 and he lodged the Land Certificate with the bank on the 8 July 1980. The bank has maintained it obtained an equitable charge over the Interests of both the O'Keeffe's in the lands.
At a very substantial loss the Kilpeacon House was sold. The money due to the bank in the accounts in Mr. O'Keeffe's name rose eventually to over £400,000 and this was discharged out of net proceeds of sale in 1982.
Subsequently, these proceedings were instituted by Mrs. O'Keeffe. She has claimed that Mr. O'Flynn was negligent in failing to carry out the instructions given prior to the letter of undertaking of the 29 November 1978. She also claims that the Bank was negligent in not making a joint loan in April 1979 to herself and her husband for the purchase of Kilpeacon lands. She claims damages against both. In addition she claims a declaration that there never was a valid equitable mortgage or charge of her moiety in the lands of Kilpeacon. If she is entitled to that declaration then it would follow that the equitable interest which the bank enjoyed in the lands was limited to Mr. O'Keeffe's undivided moiety. It would also follow that it was only entitled to a sum equal to one half of the net proceeds of sale of Kilpeacon to satisfy the debt due to it, and that Mrs. O'Keeffe is entitled to be repaid by the bank the sums it received in excess of its interest in Mr. O'Keeffe's half share in the lands (less a deduction for a small sum due personally by her to the bank).
There are four main issues in this case.
The first relates to loan contracts entered at the end of 1978 and the early part of 1979. Mrs. O'Keeffe's case is that these contracts were entered into between the bank and her husband and that the debts arising under them were due by her husband alone and were not joint debts. This is the vital issue in the case because its resolution will determine the second issue namely whether or not Mrs. O'Keeffe created an equitable charge over her half interest in the Kilpeacon lands. Mrs. O'Keeffe admits that she agreed to give security to the bank for a loan to purchase the Kilpeacon lands but she says that security was for a loan to herself and her husband jointly and that she did not agree to give security for a loan granted to her husband which, she claims, was what in fact the bank did. The third issue is whether or not Mrs. O'Keeffe is estopped from maintaining her present claims against the bank. And the fourthis her claim for damages for negligence and breach of contract against her former solicitors.
After Mr. O'Keeffe started farming at Rathcooney he became well known to the staff in the South Mall, Cork branch of the AIB and particularly to its deputy manager, Mr. Horgan. He maintained a current account in his own name in the bank on which he had overdraft facilities and when he and his wife bought the neighbouring 28 acres (the "Forde lands") he obtained a loan from the bank to enable this sale to be completed in his own home. In 1978, therefore, although Mr. and Mrs. O'Keeffe were joint owners of the farm at Rathcooney, money due to the bank on the current account which was in Mr. O'Keeffe's sole name were due by Mr. O'Keeffe alone and monies due on the loan account which was in Mr. O'Keeffe's sole name were due by Mr. O'Keeffe alone.
Mr. and Mrs. O'Keeffe decided in 1978 to buy a larger farm and they agreed that it would be purchased in their own names. Mrs. O'Keeffe left all the purchase negotiation to her husband and all the financial negotiations with the bank to finance the purchase. Initially she did not think that she would be a party to the loan. Later, she assumed that what she agreed with her solicitor and her husband would be carried out by him and the bank.
On the 28 April 1978 Mr. Martin prepared a detailed submission for the Bank. Its title page explained that it was a submission "on behalf of Mr. and Mrs. Arthur O'Keeffe". It gave particulars of the present holdings, of the land proposed to be purchased at Waterford and requested bridging loan finance for £300,000 and a long term loan of £50,000. The O'Keeffe's failed to buy the Waterford farm. Mr. Martin prepared a second submission in May 1978. Again this submission was stated to be on behalf of "Mr. and Mrs. O'Keeffe" and it related to the proposed purchase of a farm in Kildare of 304 acres. This proposal was for bridging finance of £750,000 and a term loan of £20,000. On the 31 May 1978 the Assistant Manager of the South Mall branch of AIB sent a memorandum to the Area Advances Manager at Head Office in Dublin. It was headed "Application for Advance" and the name of the client to whom the loan was to be made was stated to be Arthur B. O'Keeffe. The memorandum was based on the financial proposals contained in Mr. Martin's submission and it ended with a strong recommendation that they be accepted. Sanction was obtained but the O'Keeffe's again failed to purchase the Kildare lands. A similar application for sanction to finance the purchase of lands at Patrickswell, Co. Limerick was made to Head Office on the 12 July 1978. Again...
To continue reading
Request your trial