Kehoe v Promontoria (Aran) Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Butler
• Judgment Date: 30 March 2023
• Neutral Citation: [2023] IECA 72
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record Numbers: 2022/7 & 2021/181

Between/

Declan Kehoe and Una Kehoe

Plaintiffs/Appellants

and

Promontoria (Aran) Limited and Ken Fennell

Defendants/Respondents

[2023] IECA 72

Costello J.

Faherty J.

Butler J.

Appeal Number: 2021/181 & 2022/7

High Court Record Number: 2018/2431P

THE COURT OF APPEAL

NO REDACTION NEEDED

JUDGMENT of Ms. Justice Butler delivered on the 30 ^th day of March, 2023

Introduction

1 . This is the plaintiffs' appeal against a decision of the High Court (Twomey J. [2021] IEHC 573) vacating a lis pendens under s.123 of the Land and Conveyancing Law Reform Act 2009 and striking out the plaintiffs' proceedings for delay and want of prosecution. In consequence of making these orders Twomey J also dismissed the plaintiffs' application under O.8, r. 3 for leave to renew an expired plenary summons for the purpose of service on the defendants. There is a related appeal against a decision made by Allen J. on 15 July 2021 in the course of managing the Chancery list refusing to adjourn the hearing date for the applications in order to allow the plaintiffs file further affidavits.

2 . The plenary summons in the proceedings was issued on 20 March 2018 but never served. The lis pendens was registered six days later on 26 March 2018 in the Central Office of the High Court. It was registered in the PRA on the relevant folio on 10 May 2018. The defendants entered an appearance and issued this motion on 5 February 2021. The plaintiffs did not take a further step until 7 May 2021 when they filed an ex parte docket seeking to renew the plenary summons. There is some dispute as to whether the relevant period of delay runs from the issuing of the plenary summons to the next formal step – which was that taken by the defendants in February 2021 (34 months) — or to the next formal step taken by the plaintiffs in May 2021 (37 months). In my view nothing material turns on this difference of 3 months and for ease of reference I will simply refer to the period as a three-year delay.

3 . This appeal took some unexpected turns in the course of the hearing before this Court in that the main argument advanced, a lack of fair procedures in the High Court hearing, was not readily evident as the focus of the appeal in the Notice of Appeal. This may be because the Notice of Appeal was an unwieldy document advancing some 55 grounds of appeal in respect of a High Court judgment running to just under 18 pages. Pleading of this type is generally unhelpful to the court. The respondent invariably feels obliged to respond to each ground of appeal and consequently the entire of the case before the High Court is canvassed extensively in written submissions. Most of the grounds of appeal are then not pursued at the hearing. It would greatly assist this Court if an intending appellant could, in advance of drafting a Notice of Appeal, focus on the issues of real concern and the areas in which the trial judge might plausibly be said to have erred. Simply going through the judgment and asserting that the trial judge erred in law and/or in fact in respect of every finding made rarely enhances the court's understanding of what is really in issue on the appeal. Needless to say, the same considerations apply to a respondent in framing a Respondent's Notice, albeit that the shape and length of such notice may often be dictated by that of the Notice of Appeal.

4 . That said, in order to examine the issues on this appeal I propose to outline the factual and procedural history between the parties; to look at the respective applications brought by them and how they were treated by the trial judge and then to consider the issues actually canvassed on the appeal. Much of the law to be applied both as regards delay and the vacation of the lis pendens is well established and the parties did not suggest that the trial judge had erred either in identifying the relevant law or in his summary of it (between paras. 27 and 35 of his judgment).

Factual Background

5 . The issues between the parties have their origin in loans taken out by the plaintiffs from Ulster Bank between 2008 and 2011. The various loans were secured by an ‘ all sums due’ mortgage/charge which the first plaintiff had executed in favour of Ulster Bank on 22 February 2008 in respect of a property in County Kerry (“ the secured property”) of which he is the registered owner. Ulster Bank registered this charge on the folio in October 2008. Additional security over other property was also provided. As the scheduled repayments were not made by the plaintiffs, under the terms of the loan the entire amount borrowed became repayable on demand.

6 . On 12 February 2015 Ulster Bank executed a Global Deed of Transfer under which the plaintiffs' loans and related security were transferred (along with many others) to the first defendant. The transfer of Ulster Bank's interest in the charge over the secured property in favour of the first defendant was registered on the folio on 9 April 2015. The first defendant made a formal demand of each plaintiff by letters dated 8 October 2015 for repayment of the total sums due on foot of their respective loans. At that stage, on the first defendant's calculations, the amount outstanding was just under €5m. Proceedings were issued by the first defendant in March 2017 in respect of the sums then allegedly outstanding. No steps have been taken by the defendant to progress these proceedings, a fact upon which the plaintiffs place much reliance.

7 . As the loans were not repaid the first defendant then moved to appoint the second defendant as a receiver over the secured property and three other properties the subject of separate securities. This was done by an Instrument of Appointment dated 28 October 2015, accepted by the second defendant on the same date. The plaintiffs were notified of this appointment by letters the following day.

8 . By special summons proceedings issued against the second defendant on 8 December 2016, the first plaintiff challenged the validity of the second defendant's appointment as receiver over all four properties (the 2016 proceedings). A number of affidavits were sworn in those proceedings by both parties and also on behalf of the first defendant to these proceedings who was not a party to the 2016 proceedings. Although the 2016 proceedings were issued by the first plaintiff as a litigant-in-person, by the time the matter came into the Judges List on 29 May 2017 he had instructed a solicitor, albeit the solicitor was not formally on record. The court was advised by the solicitor in question (“ the plaintiffs' first solicitor”) that a Notice of Discontinuance had been filed and that the proceedings could be struck out which they duly were with an order for costs against the first plaintiff. Despite the transcript suggesting that the first plaintiff was physically present in court that day, he now maintains that the 2016 proceedings were withdrawn without his knowledge or consent.

9 . It appears that the first plaintiff also issued proceedings against Ulster Bank in 2016 and that these proceedings are still extant although at the time of engagement between these parties the plenary summons had not been served on Ulster Bank. It is not known whether an application has been made to renew that plenary summons and, if so, whether that application was successful.

10 . Subsequent to the 2016 proceeding being struck out, the receivership appears to have progressed and the other three secured properties were sold by the receiver. The plaintiffs contend that these sales were at an undervalue.

11 . On 20 March 2018 a further set of proceedings was issued on behalf of both plaintiffs against these defendants (“ the 2018 proceedings” or “ these proceedings”). Notably, these proceedings were issued by a different firm of solicitors on the plaintiffs' behalf (i.e. not the solicitor who had appeared in the 2016 proceedings) and the summons was drafted by a barrister. The plenary summons seeks various reliefs including orders restraining the defendants from enforcing the securities and from dealing with the properties, the subject of the securities, and a declaration to the effect that the appointment of the second defendant as receiver was invalid and of no legal effect. Despite the fact that the proceedings were, in effect, seeking orders restraining the conduct of an ongoing receivership, no steps were taken to secure interlocutory relief and indeed the proceedings were never served on the defendants. Instead, on 26 March 2018 a lis pendens was registered over the secured property. Although the proceedings refer to all four properties, it does not appear that a lis pendens was registered over the other three properties. The Court was informed that these three properties had been sold but, notwithstanding the fact that the proceedings refer to all four properties, it is not known if they were sold before or after the 20 March 2018.

12 . The basis of the defendants' application to strike out the proceedings is that the plenary summons of March 2018 had not been served on them by the time they issued their motion in February 2021 nearly three years later. The plaintiffs contend that during this period there was engagement by them with Ulster Bank in respect of their loans. This appears to have related primarily to an issue concerning the correct rate of interest applicable to the loans post-2012 when Ulster Bank changed the basis on which it calculated its interest rates (“ the tracker issue”). The plaintiffs received correspondence from Link Asset Management on behalf of the first defendant on 26 July 2019 stating that it had reviewed the plaintiffs' loans and identified that those loans were impacted by the interest overcharging during the period of the first defendant's ownership. Consequently, it recalculated the loan amounts using the correct interest rate and adjusted the plaintiffs' loan...