Mardon Property Developments Ltd v Companies Acts

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Conor Dignam
• Judgment Date: 18 July 2024
• Neutral Citation: [2024] IEHC 462
• Docket Number: Record No. 2021 288COS

In the matter of the Companies Act 2014 to 2020

And in the matter of Mardon Property Developments Limited

Between

Noel Martin

Applicant

and

Brendan O'Donoghue

Respondent

[2024] IEHC 462

Record No. 2021 288COS

THE HIGH COURT

Judgment of Mr. Justice Conor Dignam delivered on the 18 ^th day of July 2024

INTRODUCTION

1 The respondent was appointed as receiver to property of Mardon Property Developments Limited (“Mardon”) by National Asset Management Agency (“NAMA”) pursuant to section 147 of the National Asset Management Agency Act 2009 by several deeds of appointment in April and May 2015.

2 The applicant, a director and member of Mardon, now seeks the following reliefs:

“(1) An Order for directions, pursuant to s.438 of the Companies Acts 2014–2020, regarding the continuance of the Defendant's Receivership of the Company;

(2) An Order directing the Defendant to lodge a Form E11 with the Companies Registration Office, discharging him as Receiver over the Company, within such time as this Honourable Court deems meet;

(3) In the alternative, an Order discharging the Defendant as Receiver over the Company.”

3 He does so on the basis that the respondent was appointed as receiver over certain specified real property of Mardon and all of that property has been sold and therefore the receivership is exhausted, he has requested the respondent to discharge himself, and the respondent has declined to do so on a basis which the applicant says is not valid.

4 The background to the appointment of the receiver and to this application involves several loan facility agreements between Bank of Ireland and Mardon and the security therefor which consisted of several mortgages or debentures and a guarantee agreement between Bank of Ireland and the applicant and a Mr. Patrick Martin, another director of Mardon. The picture which is given in the affidavits about the details of these loans and the security is somewhat unclear because the applicant and the respondent refer to different facilities and instruments. However, neither party contradicts what the other party says about these matters and the lack of clarity is not material to the current discussion, particularly in light of the basis upon which I have determined the matter. It should also be noted that the security documents in respect of these facilities are not all exhibited to the affidavits. The applicant simply refers to the filing of C1 Forms in the Companies Registration Office in respect of various Deeds of Mortgage and Charge and exhibits those forms rather than the deeds. He does so because, as he states in some instances, he “ cannot locate copies of the relevant Mortgage Deeds”. However he does not dispute that he or Mardon did indeed enter these instruments. In all of those circumstances, I am drawing the background from a combination of the affidavits.

5 It is not necessary to recite all of the details of the background. In summary:

• (a) By debenture dated the 21 ^st May 2007, Mardon charged, inter alia, various lands owned by Mardon at Clanbrassil Street, Dundalk. The precise terms of this debenture and precisely what was charged by it are central to some of the arguments made in this application. At the hearing, a copy of the debenture of the 21 ^st May 2007 was handed in by the respondent. The applicant made the point that it had been stated by Mr. Martin in his grounding affidavit that he did not have a copy of this Deed and yet the respondent only handed in at the hearing. However, he did not have an objection to it being admitted or to the Court having regard to its contents.

• (b) By Deed of Mortgage and Charge dated the 2 ^nd October 2007, Mardon charged its property at 8 Batchelors Walk, Dundalk.

• (c) By facility letter of the 14 ^th January 2008 (accepted by Mardon on the 18 ^th January 2008), Mardon borrowed €8.8 million towards the renewal of existing facilities to be secured by first legal charges over the same lands at Clanbrassil Street, a residential property at Batchelors Walk and a debenture over the assets of Mardon, and a guarantee and indemnity to be entered by the applicant and Mr. Patrick Martin (this was entered into on the 3 ^rd April 2008).

• (d) By Deed of Mortgage and Charge dated the 6 ^th or 12 ^th April 2011, Mardon charged its property at some of the same addresses and other lands either at Clanbrassil Street or at the rear of addresses on that street.

6 The 2008 loan and the security for it was acquired by National Asset Loan Management Limited pursuant to section 90 of the National Asset Management Agency Act 2009.

7 By a supplemental facility agreement dated the 23 ^rd April 2013 between National Asset Loan Management Limited and Mardon and the applicant and Mr. Patrick Martin, the terms of the 2008 loan were amended so as to provide for further security over a company bank account which the respondent says was established to receive rental income of various properties of the company.

8 It is claimed that Mardon defaulted on its repayment obligations and by several Deeds of Appointment dated the 24 ^th April 2015 and the 6 ^th May 2015 the respondent was appointed as statutory receiver pursuant to section 147 of the 2009 Act over various properties belonging to Mardon. He was also appointed as statutory receiver over properties which had been mortgaged between the applicant and Mr. Patrick Martin and Bank of Ireland.

9 It appears that following his appointment, the respondent instituted two separate sets of proceedings ( Brendan O'Donoghue v Patrick Martin and Noel Martin High Court Record Number 2016/9712P and Brendan O'Donoghue v Patrick Martin, Noel Martin and Ben Gilroy High Court Record Number 2016/1115P) in which injunctive relief was sought and obtained against the defendants to prevent them trespassing on certain properties over which he had been appointed receiver. Those two sets of proceedings were consolidated. Ultimately a Second Amended Defence and Counterclaim was delivered by the applicant and Mr. Patrick Martin in which it is claimed that the respondent reduced rental income, incurred unnecessary and/or uneconomical expenditure, conducted sales or disposals for less than full value, and failed to discharge monies to a company named Drumgoan Developments Limited. In general it is claimed that “ the purported appointment of the Receiver over the Properties [which definition includes the Mardon Properties], and the subsequent [in]action on the part of the Receiver, has caused and continues to cause significant loss, damage and expense to the Borrowers and Mardon, including but not limited to the reduction in the annual rent roll and destruction of a number of buildings comprised within the properties, together with the resulting loss in value of the Properties, as more fully particularised and set out below.”

10 National Asset Loan Management Limited issued a bankruptcy petition against the applicant and Mr. Patrick Martin and I understand that application is still ongoing.

11 In a further set of proceedings, another company of which the applicant and Mr. Patrick Martin are shareholders and former directors, Drumgoan Developments Limited (which is referred to above), is suing the respondent, claiming that Drumgoan was engaged in the managing, maintenance, repair and letting of properties on behalf of the applicant and Mr. Patrick Martin, Mardon and, on rare occasions, other parties. It is claimed that Drumgoan provided these services in respect of 83 properties owned by Mardon and the Martins and that 67 of those properties contained goods and chattels belonging to Drumgoan. That company sues the receiver for the delivery up of those goods and chattels and damages for trespass to goods or for conversion or negligence and breach of duty.

12 These details of these proceedings are set out in the respondent's replying affidavit. The pleadings themselves are not exhibited but the applicant did not take issue with the description of the claims in those sets of proceedings given by the respondent.

13 Ultimately, on the 19 ^th April 2018, the respondent sold the real properties over which he had been appointed as statutory receiver.

14 There then followed correspondence between solicitors for the applicant and the respondent or solicitor for the respondent. This commenced in 2021 after the respondent lodged Form E9 Extracts in the Companies Registration Office. A number of issues were addressed in this correspondence, including, insofar as relevant to the current application, whether the respondent should discharge himself as receiver over the assets of Mardon. In a letter of the 28 ^th January 2021, the applicant's solicitor wrote, inter alia:

“For what reason will you not discharge yourself as receiver of the assets of Mardon as set out in the Debenture of the 21 ^st May 2007 – are there outstanding book debts, uncalled shares, was the debenture a charge created that would require registration as a bill of sale or are there any Patents, Trade Marks or Copyright vested in Mardon? If not with the greatest of respect to your legal advice you have no entitlement to remain registered as a receiver to assets of Mardon. Further the floating charge crystallised on your appointment nearly six years ago so there can hardly be any other assets secured by a fixed charge on the event of crystallisation which have not been disposed of to date; if there are please identify what those assets are in your response to this correspondence and what their market value is and what steps have been taken to realise the proceeds of sale for the benefit of Mardon.”

15 By reply of the 16 ^th February 2021, the respondent's solicitor stated, inter alia:

“The Receiver is a party to litigation with Patrick and Noel Martin as you are aware, and the Clanbrassil Street properties including the interest held by Mardon Property Developments Limited, form part of the subject...