Kenmare Property Finance Ltd v McGuinness

• Jurisdiction: Ireland
• Judge: Ms. Justice Faherty
• Judgment Date: 15 September 2015
• Neutral Citation: [2015] IEHC 576
• Court: High Court
• Date: 15 September 2015

[2015] IEHC 576

THE HIGH COURT

[No. 35SP/2015]

Kenmare Property Finance Ltd v McGuinness

BETWEEN

KENMARE PROPERTY FINANCE LIMITED

PLAINTIFF

AND

MARK MCGUINNESS

DEFENDANT

Property and Conveyancing – Land and Conveyancing Law Reform Act 2009 – Vacation of lis pendens – Issues of facts – Bona fide proceedings

Facts: The defendant sought an order for the vacation of lis pendens registered by the plaintiff against relevant lands by institution of special summons proceedings on foot of a guarantee given by the defendant in respect of credit facilities provided to his parents. The plaintiff, while admitting that it did not hold a legal mortgage over the relevant properties as the mortgage deed contained a forged signature of the defendant, contended that the defendant had pledged the properties for securing and guaranteeing the performance of the contract.

Ms. Justice Faherty refused to grant an order for the vacation of lis pendens to the defendant. The Court held that in order to grant or vacate a lis pendens, pending plenary proceedings, the test was to see whether those proceedings were being prosecuted bona fide with no issues of facts remaining between the parties. The Court observed that a lis pendens was designed to give notice to an individual that proceedings in relation to land were pending before the court concerning ownership or an interest in property. The Court found that the present case involved a factual matrix that could only be decided through plenary hearing and therefore, the grant of an order for the vacation of lis pendens would not be appropriate.

1 JUDGMENT of Ms. Justice Faherty delivered on the 15th day of September 2015

2 1. This is an application by the defendant, brought by notice of motion dated 18 ^th August 2015, for an order directing that a lis pendens registered by the plaintiff against lands registered on Folio 2664L Co. Westmeath be vacated. The lis pendens was registered in the context of the plaintiff's Special Summons proceedings.

Background

3 2. The Special Summons proceedings are asserted to arise on foot of a guarantee given by the defendant in respect of credit facilities provided to his parents. The affidavit of Jonathan Hanly, a director of the plaintiff company, grounding the Special Summons and sworn on 25 ^th February, 2015, avers that by a letter of offer dated 1 ^st January, 2009 (the facility letter), Anglo Irish Bank Cooperation Plc. (Anglo) offered the defendant's parents loan facilities in excess of €1.7m. It is asserted that the said offer was made subject to the terms and conditions set out in the facility letter, including clause 3 (iii) thereof regarding the security to be given by the defendant. Mr. Hanly asserts that the facility letter was accepted and signed by the defendant's parents as borrowers and by the defendant as guarantor. In paragraph 3 (iii) of the letter, the security was expressed to include the "guarantee of Mark McGuinnesssupported by and limited to a first legal charge over his interest in apartments 33 & 35 at Marlinstown Park, Mullingar, Co. Westmeath It is further asserted that the defendant, when he signed the "Guarantor's Acceptance" in the facility letter, had the benefit of legal advice. Mr. Hanly asserts that the Guarantee Acceptance provided as follows, including alterations in pen made by the defendant and/or his solicitor: "I have read the Facility Letter of 1 ^st January 2009 to Aidan and Eileen McGuinness and the Bank's General Conditions which form part of the Agreement between the borrower and the Bank ("the Agreement") and I confirm that I fully understand the terms of the Agreement and acknowledge that I am guaranteeing the performance of the Borrower of its obligations under the Agreement to the Bank limited to my interest and value in apartments 33 & 35 Marlinstown Park, Mullingar and solely confined to same. I acknowledge that I have been given due opportunity to take independent legal advice on the effect of the Agreement and have taken/waived (delete one) the opportunity to take such legal advice."

4 3. Mr. Hanly avers that on 17 ^th October, 2011, Anglo changed its name to Irish Bank Resolution Corporation Limited (IBRC). It is further averred that on 7 ^th February 2003, the Minister for Finance ordered the winding up of IBRC pursuant to section 4 of the Irish Bank Resolution Corporation Act, 2013 and appointed two joint Special Liquidators of IBRC. Mr. Hanly avers that on 28 ^th March, 2014, IBRC agreed to assign, and did assign, the benefit of the loan and the facility letter of 1 ^st January 2009 to the plaintiff. It is asserted that arising from the assignment of the benefit of the loan and the facility letter, the plaintiff became entitled to the amounts owing to IBRC on foot of the facility letter. A copy of the Deed of Assignment by IBRC to the plaintiff is exhibited in Mr. Hanly's affidavit, most of which has been redacted.

5 4. Mr. Hanly asserts that on 9 ^th June, 2014 and 26 ^th June, 2014 respectively the defendant's parents and the defendant were duly informed in writing of the assignment of the benefit of the loan and the facility letter.

6 5. It is further averred on the part of the plaintiff, that by letter dated 12 ^th December, 2014, the plaintiff demanded that the defendant's parents, and or the defendan,t pay all amounts due and owing in foot of the loan and facility letter on or before 17 ^th December, 2014. It is averred that despite the demand, monies were not repaid and the sum of €1.7m odd remained due and owing from the defendant' parents on a joint and several basis to the plaintiff. Mr. Hanly goes on to aver that on foot of alleged default on the part of the defendant's parents, the plaintiff is entitled to rely on the guarantee given by the defendant and on an asserted equitable mortgage over the defendant's properties in favour of Anglo by virtue of the defendant's agreement to create a first legal charge over his properties in favour of Anglo.

7 6. It is not disputed that prior to the institution of the Special Summons proceedings, the plaintiff was under the impression that the defendant had created a first legal charge over his properties by way of a Deed of Mortgage dated 13 ^th of January, 2006 in favour of Anglo, the purpose of which was to secure his parents' borrowings.

8 7. The demand for payment which was made on 12 ^th December, 2014 not being met, on 19 ^th December, 2014, the plaintiff, in purported reliance on the Mortgage Deed, duly appointed a Receiver over the defendant's properties.

9 8. The defendant challenged the validity of the appointment of the Receiver on the basis that he did not execute the mortgage and he instituted proceedings in the High Court, seeking a number of reliefs, including an order discharging the Receiver. The defendant claimed that his signature had been forged. Handwriting experts were retained by the defendant and the plaintiff respectively and both expert reports duly confirmed that it was not the defendant's signature on the mortgage documents. The plaintiff's handwriting expert, in her report, found "strong positive evidence" to support the view that the questionable signatures of the defendant connected to the Mortgage Deed were written by his father, a matter disputed by the defendant's father. As a consequence of the reports' findings and before the injunction application came on for hearing, the Receiver who had been appointed to the defendant's properties was discharged on 11 ^th March 2015, and the burden which had been registered on the defendant's properties on foot of the fraudulent mortgage was vacated on 10 ^th April, 2015.

10 9. On 17 ^th February, 2015, the plaintiff issued the Special Summons which was ultimately served on the defendant in late February 2015. The plaintiff seeks, inter alia:-

11 i i. An order that the total of €1,736,713.26 stand well charged on the defendant's interest in the properties described in Folio WH2664L;

12 ii ii. If necessary, a declaration by virtue of a contract formed between Anglo and the defendant, the benefit of which was assigned to the plaintiff, the plaintiff is entitled to and holds a mortgage and charge over the defendants properties described in Folio WH 2664L; and

13 iii iii. In default of payment of the sum claimed, an order for sale and, if necessary, an order for possession of the said property.

14 The lis pendens, the subject of the within application, was registered on 4 ^th March, 2015 on Folio WH2664L as a burden in the context of proceedings affecting the interest of the defendant "pending in the High Court".

15 In his grounding affidavit of 25 ^th February, 2015, Mr. Hanly avers as follows:-

16 2 "15. The Plaintiff accepts that it does not hold a legal mortgage over the Properties as the Mortgage Deed contains a forged signature of the Defendant. However, I say and believe that the 2007 Facility Letter and the Facility Letter are both signed by the Defendant and there appears to be no dispute on that central issue. It is absolutely clear from the terms of the two relevant facility Letters that the Defendant pledges the properties in order to secure and guarantee the performance of the obligations of the Borrowers to Anglo. It is also clear that the facilities were continued and extended based on the security which the Defendant contracted to provide. The said Facility Letters constitute a contract by virtue of which the Defendant contracted with the Plaintiff to provide the Properties as security for his parent's (sic) borrowing. The Defendant's parents have defaulted on the loans. The Defendant is now liable to pay the plaintiff the sums due and owing in accordance with the Facility Letter, but the plaintiff's ability to recover the sums due and owing from him is limited to his interest and value in the Properties. It...