Liam Dowdall and Another v Pat O'Connor and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice McDermott
• Judgment Date: 11 September 2013
• Neutral Citation: [2013] IEHC 423
• Court: High Court
• Date: 11 September 2013

[2013] IEHC 423

THE HIGH COURT

[No. 7806 P/2013]

Dowdall & McNamara v O'Connor

BETWEEN

LIAM DOWDALL AND SEAN MCNAMARA

PLAINTIFFS

AND

PAT O'CONNOR AND JOAN O'CONNOR

DEFENDANTS

LAND & CONVEYANCING LAW REFORM ACT 2009 S64(2)(B)(ii)

LAND & CONVEYANCING LAW REFORM ACT 2009 S64

SAFEERA LTD v WALLIS & O'REGAN UNREP MORRIS 12.7.1994 1994/13/3991

LAND & CONVEYANCING LAW REFORM ACT 2009 S64(2)(B)(i)(I)

LAND & CONVEYANCING LAW REFORM ACT 2009 S64(3)

POWERS OF ATTORNEY ACT 1996 S17(1)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S19

LAND & CONVEYANCING LAW REFORM ACT 2009 S8

CONVEYANCING & LAW OF PROPERTY ACT 1881 S19(1)(iii)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S17

CONVEYANCING & LAW OF PROPERTY ACT 1881 S18

CONVEYANCING & LAW OF PROPERTY ACT 1881 S20

KAVANAGH & LOWE v LYNCH & ST ANGELAS STUDENT RESIDENCES LTD UNREP LAFFOY 31.8.2011 2011/29/8022 2011 IEHC 348

STATUTE OF FRAUDS 1695 S2

CAMPUS OIL LTD & ORS v MIN FOR INDUSTRY & ORS (NO 2) 1983 IR 88 1984 ILRM 45

Litigation - Loan facility - Repayment - Mortgage - Interlocutory relief - Letter of Demand - Deed of Appointment - Validity - Seal - Power of attorney - Rent - Possession - Fair issue to be tried - Balance of convenience - Articles of Association - Land and Conveyancing Law Reform Act 2009 - Powers of Attorney Act 1996

Facts: The defendants were husband and wife, and customers of Ulster Bank Ireland Limited (the ‘Bank’), who were granted two separate loan facilities by the latter in 2006 and 2007, which made a total of €2,680,000 available. The loans were used for the purchase and development of a property in Dublin, the development of a property in Galway, and to clear an existing mortgage they had. The Dublin property was developed into two new dwellings, which were known as ‘The Laurels’ and ‘Pinehaven’. The loan facilities were secured by mortgages over the properties. The defendants encountered financial difficulties, and by the 8th November 2012, the repayment arrears totalled €2,075,221.27. The Bank made a demand for full repayment from the defendants on this date, and when this was not forthcoming, the plaintiffs were appointed by the Bank as receivers over the ‘The Laurels’, pursuant to a Deed of Appointment.

It was the plaintiffs claim that the second named defendant had failed to cooperate with them and was actively obstructing the receivership by taking possession of ‘The Laurels’, and intimidating the tenants that lived there. A letter was sent to the second named defendant by the plaintiffs on the 22 ^nd July 2013 demanding that she vacate the premises. She refused to do so. The plaintiffs issued proceedings on the 26 ^th July 2013 for possession of the premise and other relief. On the same day, a notice of motion was issued by the plaintiffs seeking interlocutory relief including an order restraining the defendants from obstructing the receivership, an order restraining them from entering ‘The Laurels’ without the plaintiffs” permission, an order restraining them from harassing or intimidating the tenants of ‘The Laurels’, and an order for possession of ‘The Laurels’ pending a further order of the court at the determination of he substantive proceedings.

The defendants argued that the interlocutory relief sought should be refused because the plaintiffs had been invalidly appointed as receivers. It was said that the Bank had not sent the Letter of Demand for arrears to their home address as required by the provisions of the loan facility agreement. The defendants also argued that the Bank had acted in contravention of Article 31 of the Articles of Association of Ulster Bank Ireland Ltd. by purporting to appoint receivers pursuant to a Deed which had not been sealed properly. It was said that Article 31 required the seal to be signed ‘by any two Directors or Director and Secretary or any two members of such Sealing Committee or any two members from a combination of the foregoing . . .’ The seal had been signed by Mr Sean Cotter under a power of attorney on behalf of Ulster Bank Ireland Ltd., and witnessed by Mr. Ted Mahon, a Bank official.

Held by McDermott J that in regards to the defendants” argument that the Bank had contravened the loan facility agreement by not sending the Letter of Demand to their home address, it was clear that the letter was sent to the defendants” prior address because this was the one outlined in the loan facility agreement. This had not been modified because the defendants had not advised the Bank of their change of address. The Bank had therefore acted in accordance with the loan facility agreement in this respect. In regards to the argument that the receivers were appointed pursuant to a Deed which had not been sealed properly, it was held that pursuant to s. 64(2)(b)(i)(I) Land and Conveyancing Law Reform Act 2009, an instrument such as the Deed could be signed by an individual as long as it was in the presence of a witness. It was also noted that s. 17(1) of the Powers of Attorney Act 1996 allowed the donee of a power of attorney to act as if he was the donor himself. The Deed of Appointment had therefore been properly sealed.

In determining whether to grant injunctive relief, it was held that the test to applied was that which was laid down in Campus Oil Ltd. v. Minister for Industry and Energy (No. 2) [1983] I.R. 88. The first element to be determined was whether there was a fair issue to be tried. It was said that this was satisfied by the plaintiffs claim for entitlement to possession of the premises. Secondly, the Court had to determine whether damages would be an adequate for the plaintiffs if relief was refused but they were ultimately successful. It was held that if the relief was refused, the defendants would prevent the plaintiffs gathering rental income from ‘The Laurels’, which would probably not be recoverable given the defendants” financial situation. It was therefore determined that damages would not be an adequate remedy if relief was refused but they were successful in the substantive proceedings. On the other hand, the defendants had an undertaking from plaintiffs to pay damages if interlocutory relief was granted but the defendants were ultimately successful. The third consideration was where the balance of convenience lay. It was held that this was in favour of the plaintiffs because the second named defendant”s continued occupation of ‘the Laurels’ was denying the plaintiffs rental income.

Relief was therefore granted in the form of an order restraining the defendants from obstructing the receivership, an order restraining them from entering ‘The Laurels’ without the plaintiffs” permission, an order restraining them from harassing or intimidating the tenants of ‘The Laurels’

1 1. In May 2006, the defendants, a married couple, purchased 9, Dalkey Avenue, Dalkey, County Dublin. In order to finance its purchase and development, Ulster Bank Ireland Ltd. provided a loan facility whereby the Bank made available a total of €2,680,000. Facility A of the loan was in the amount of €2,055,000 for the purpose of purchasing a site at 9, Dalkey Avenue for €1.3m and building two three-bedroomed houses on it at a cost of €600,000 each, to provide for the refinancing of a site deposit and to allow for interest rollup for one year. A moratorium on capital repayments was agreed and applied for two years. The second loan, Facility B, was for €625,000, the purpose of which was to clear an existing mortgage on a property in Monkstown, Dublin.

2 2. The terms of the loan facility were signed on behalf of the Bank by two of its managers and each of the defendants signed an acceptance of the offer and the terms upon which it was made on 17 ^th July, 2006.

3 3. An additional loan facility was provided to the defendants by the Bank on 12 ^th February, 2007, for €300,000 which was made available for the purpose of developing a site at Craughwell, County Galway.

4 4. By mortgage made on 19 ^th May, 2006, between the defendants and the Bank, both of the loan facilities originally entered into were secured by way of a continuing security to the Bank for the discharge on demand of all present and/or future indebtedness of the defendants to the Bank. A further mortgage dated 19 ^th April, 2007 over the Craughwell property provided added security.

5 5. The defendants constructed two separate dwellings on the site at 9, Dalkey Avenue known as 'The Laurels' and 'Pinehaven'. Mrs. O'Connor, the second named defendant, resides at 'Pinehaven' and Mr. O'Connor resides at Craughwell. 'The Laurels' was, for a time, leased to tenants (Mr. and Mrs. Glavin) by the defendants and that premises was not at any stage a family home of either of the defendants within the meaning of the provisions of the Family Home Protection Act 1976.

6 6. By letter dated 8 ^th November, 2012, the Bank demanded payment of the total sum then due by the defendants on foot of the loan facilities which was claimed to be €2,075,221.27 due to accumulated arrears in respect of the first and second loan facilities since April 2010.

7 7. The plaintiffs claim that by Deed of Appointment dated 29 ^th November, 2012, they were appointed as joint receivers by the Bank over 'The Laurels', 9, Dalkey Avenue, County Dublin. The court was informed that though receivers had been appointed over the Craughwell property, no order is currently being sought in respect of that property nor is any relief sought in respect of the adjacent property 'Pinehaven'.

8 8. By letter dated 29 ^th November, 2012, the plaintiffs wrote to the defendants notifying them of their appointment as receivers in respect of 'The Laurels' enclosing a copy of the Deed of Appointment and seeking certain information to assist them in the receivership. The correspondence was directed to 'Pinehaven'. A further letter was sent on 21 ^st December, 2012, seeking a...