Lombard Ulster Banking Ltd v Murray

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 01 January 1987
• Neutral Citation: 1986 WJSC-HC 1031
• Docket Number: No. 880sp/1985
• Court: High Court
• Date: 01 January 1987

1986 WJSC-HC 1031

THE HIGH COURT

No. 880sp/1985

No. 820sp/1985

LOMBARD AND ULSTER BANKING LTD v. MURRAY

BETWEEN:

LOMBARD AND ULSTER BANKING LIMITED

PLAINTIFFS

AND

WILLIAM MURRAY AND MAIRE MURRAY

DEFENDANTS

Citations:

HALSBURY'S LAWS 4ED VOL 20 PARA 186

IRISH PERMANENT BUILDING SOCIETY V RYAN 1950 IR 12

LEE V LINDELL 1913 2 CH 62

MARLEY 1976 2 AER 1010

MCCARTHY V MCCARTIE 1904 1 IR 100

PITTORTOU, IN RE 1985 1 AER 285

RSC 0.9 r14

Synopsis:

GUARANTEE

Guarantor

Liability - Co-sureties - Repayment of debt incurred by principal debtor - Repayment guaranteed by defendant and by his co-surety - Plaintiff creditor had obtained order for possession of co- surety's mortgaged land - Held that defendant guarantor was not entitled to resist plaintiff creditor's action to enforce his remedies on ground that plaintiff should have first exhausted his remedies against defendant's co-surety and his lands - (1985/820 & 880 Sp. - Costello J. - 7/5/86) - [1987] ILRM 522

|Lombard & Ulster Banking v. Murray|

REAL PROPERTY

Incumbrance

Mortgagee - Right to possession - Equitable mortgage by deposit of title deeds - Defendant mortgagor guaranteed repayment of debt incurred by principal debtor - Equitable mortgage of defendant's lands to secure his guarantee - Repayment of debt also secured by guarantee of defendant's co-surety and by mortgage of co-surety's lands - Creditor obtained order for possession against lands of co-surety - Defendant mortgagor not entitled to resist plaintiff creditor's action to enforce his remedies against defendant's lands on ground that plaintiff should have first exhausted his remedies against defendant's co-surety and his lands - (1985/820 & 880 Sp. - Costello J. - 7/5/86) - [1987] ILRM 522

|Lombard & Ulster Banking v. Murray|

1 Judgment of Mr. Justice Costello delivered on the 7th day of May 1986Mary P. O'Donoghue Registrar

2 The plaintiffs in 1981 lent a company called Verona Investments a sum of £250,000 in accordance with the terms of a facility letter of the 10th August,1981. Verona were the registered owner of a plot of land near Bullock Harbour, Dunlaoghaire,contained in Folio No. 14 601 of the County of Dublin. Two apartment blocks had been built on the land and Verona were planning to build two more through the agency of an associated company called Aegis Investments Ltd. The money was lent to assist Verona to purchase four freehold penthouse apartments in the existing blocks. Naturally the plaintiffs required security for their loan. They sought and obtained a legal mortgage of the four penthouses, and required the defendants herein (who were directors of Verona) jointly and severally to guarantee the repayment of the debt and to support this guarantee with a mortgage of a house in Dargle Road, Kilcroney,and another in Whitworth Road, Drumcondra.

3 The plaintiffs at the same time also lent a further substantial sum to Aegis. Mr. William Murray (the first named defendant) was a director and secretary of this company and it was granted a licence by Verona to develop the Bullock Harbour site by building a third block of twelve luxury apartments on it. A facility letter of the 24th August, 1981 stated that £500,000 was to be lent for the purpose of this development and required that as a security for its loan, (a) a first legal mortgage over the building licence be granted by Verona to the company, and (b) in addition that the repayment of the debt would be guaranteed in the manner set out in the letter. The first of these was a guarantee by Verona who were required to support it by a mortgage of the four freehold penthouse apartments and also of the freehold site contained in Folio 14601. The second was a joint and several guarantee of the defendants (and a third party, a Mr. Tom Farrington) to be supported by charges on the Dargle Road property and the Whitworth Road property referred to in the earlier facility letter.

4 Both companies defaulted in their repayments. On the 14th March of this year Aegis owed the plaintiffs £682,908.62p whilst Verona owed them £320,714.88p.

5 Arising out of Aegis" debt the plaintiffs instituted two sets of proceedings. They did not sue Aegis for the debt (presumably because of its lack of assets) but instead brought proceedings against the first surety, Verona, and Aegis jointly for possession of the lands in Folio 14601, basing their claim on their rights as mortgagees of the respective interests of the defendants in the lands. A decree for possession was made on 25th July, 1985. Both defendants appealed and the matter is pending before the Supreme Court.

6 The second set of proceedings are the ones with which I am concerned. In an action (Record Number 1985 No. 820) the plaintiffs sued two of the other sureties of the Aegis debt, Mr. and Mrs. Murray, claiming, as mortgagees, possession of the defendants" lands at Dargle Road. The Deed of Mortgage on which they rely was entered into on the 9th November, 1981 between the plaintiffs, Aegis, and the defendants. In it the defendants and Aegis jointly and severally covenanted to pay on demand all monies which Aegis might owe the plaintiffs, and the defendants, as beneficial owners, conveyed the fee simple interest in the lands at Dargle Road(which are more particularly described in the endorsement of claim on the summons herein) to the plaintiffs. Clause 5(f) of the Deed provided that the plaintiffs could at any time enter into possession of the mortgaged...