McCann v A and Others

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Donnelly
• Judgment Date: 27 April 2015
• Neutral Citation: [2015] IEHC 366
• Date: 27 April 2015

[2015] IEHC 366

HIGH COURT

[Record Number redacted]

McCann v A & Ors

Approved Judgment

No further Redaction Needed

BETWEEN

PAUL McCANN

PLAINTIFF

AND

A, B AND C

DEFENDANTS

Banking & Finance – Default in repayment of loan – Possession of properties – Privity of Contract – Res judicata

Facts: The plaintiff sought various orders against the first and second named defendants for vacation and possession of relevant properties, restraining them from dealing with the relevant properties, restraining them from interfering with the sale of relevant properties and directing them to account for rent collected for those relevant properties as well as a declaration that the appointment of the plaintiff as the receiver of said properties was valid. The second named defendant being the former partner of the first named defendant sought an order setting aside the appointment of the plaintiff as the receiver and challenged the validity of mortgage deeds entered into by the first named defendant and EBS. The first named defendant showed no interest in the proceedings and the second named defendant contended the she had a right to claim the legal charge first on the relevant properties that formed part of the loan transactions between the first defendant and EBS, by virtue of Family Court Orders.

Ms. Justice Donnelly dismissed the counter claims made by the second named defendant. The Court held that even if the first named defendant showed no interest in the proceedings, still he would be bound by the orders of the Court as any order made against the second named defendant would be executed in the name of the first named defendant. The Court held that the decision of the court that the relevant mortgages between the first named defendant and EBS were valid and binding and hence, EBS would be liable for the possession of the properties operated as res judicata against the second named defendant being the privy of the first named defendant.

1 JUDGMENT of Ms. Justice Donnelly delivered the 27th day of April, 2015

2 1. The plaintiff is the receiver purportedly appointed by EBS Limited ("the EBS") over various properties of the first defendant. The second defendant is the former domestic partner of the first defendant.

3 2. The present proceedings were instituted by the plaintiff on 29 ^th April, 2014. In the plenary summons and by way of notice of motion, the plaintiff sought the following reliefs:

4 2 "(1) an order requiring the defendants, their servants or agents to vacate the first premises and the second premises [as set out in a schedule to the plenary summons and identified in paragraph 8 of this judgment] and to deliver possession thereof to the plaintiff;

5 (2) an order requiring the defendants, their servants or agents to cease to hold themselves out as being the parties entitled to deal with, manage or collect the rents in respect of the third, fourth, fifth, sixth, seventh and eighth premises [as set out in the schedule and this judgment] and to cease demanding rent of the tenants in occupation of the said premises;

6 (3) an order restraining the defendants, their servants or agents from entering or attending at any of the eight premises [as set out in the aforementioned schedule and this judgment] or dealing with the said premises in any manner whatsoever or purporting to deal with the said premises in any manner whatsoever;

7 (4) an order restraining the defendants, their servants or agents from interfering with the sale of the first premises or the second premises by the plaintiff or otherwise interfering with the receivership of the plaintiff in respect of any of the premises;

8 (5) where necessary, a declaration that the appointment of plaintiff as receiver of the eight premises is… valid;

9 (6) an order requiring the defendants to account to the plaintiff for all monies received by the defendants their servants or agents by way of purported collection of rent in respect of any of the eight premises…"

10 3. The plaintiff no longer seeks these orders against the third defendants. As the plaintiff now wishes to put the first and second premises on the market, he seeks final orders from this court. The second defendant seeks an order, inter alia, setting aside the plaintiff as receiver and preventing the EBS appointing further receivers as she contends that the mortgage deeds are void and untenable and are insufficient to support the deed of appointment of the plaintiff.

11 4. The plaintiff issued proceedings on 7 ^th May, 2014. The plaintiff sought the above reliefs by way of notice of motion. Those reliefs are now sought as final orders of this court. The attitude of the first defendant to these proceedings is that they are of no interest to him. He did not enter an appearance in answer to service of the proceedings. Instead, he sent e-mails to the plaintiff indicating a firm desire not to be brought into these legal proceedings. Further reference to these e-mails will be made at the conclusion of this judgment.

12 5. The second defendant stated to the court that she consents to the application before the court being an application which will lead to a final order. She has expressly waived any entitlement to seek a statement of claim. I am quite satisfied in all the circumstances, including the fact that discovery was made by the plaintiff, to proceed to deal with the case on the basis that final orders are being sought. Therefore, the plaintiff must satisfy me on the balance of probabilities that he is entitled to the orders sought.

Factual background

13 6. In order to understand the nature of the case and in particular the nature of the submissions made by the second defendant, it is necessary to set out in some detail the factual background. I will attempt at this juncture to set out such facts as appear undisputed and where disputed, I will avert to same.

14 7. The first defendant and the EBS were involved in a series of financial transactions involving various loans and security to be provided over same. I will set out the transactions that I believe are relevant to the issues between these parties.

15 8. By letter of loan offer dated 20 ^th October, 2005, the lender, namely the EBS (known at the time as EBS Building Society), offered to advance to the first defendant a loan of up to €8,318,000 for a term of 25 years approximately at an interest rate of 3.12% variable as set out therein, repayable in accordance with the terms of the letter of loan offer and secured, inter alia, by means of a first legal mortgage and charge over the following properties of the first defendant:

16 (i) the property at [redacted] ("the first premises");

17 (ii) the property at [redacted] ("the second premises");

18 (iii) the property at [redacted] ("the third premises");

19 (iv) the property at [redacted] ("the fourth premises");

20 (v) the property at [redacted] ("the fifth premises");

21 (vi) the property at [redacted] ("the sixth premises");

22 (vii) the property at [redacted] ("the seventh premises");

23 (viii) the property at [redacted] ("the eighth premises").

24 9. The first defendant accepted the loan offer on or about the 16 ^th November, 2005. The purpose of the loan was to refinance the first defendant's eight residential investment properties. On 13 ^th December, 2005, the EBS advanced to the first defendant the sum of €8,318,000.

25 10. An indenture of mortgage and charge was made on or about the 6 ^th January, 2006, between the first defendant and the EBS ("the first mortgage"). The first defendant created a mortgage in favour of the EBS over eight properties consisting of the second, third, fourth, fifth, sixth, seventh and eighth premises and including a property at [redacted] ("the ninth premises") which is not the subject of these proceedings but is relevant to certain of the submissions of the second defendant.

26 11. By a further indenture of mortgage and charge made on or about the 10 ^th January, 2006, ("the second mortgage") between the first defendant and the EBS, the first defendant created a mortgage in favour of the EBS over the first premises.

27 12. On or about the 10 ^th May, 2006, the first respondent, in a series of further letters of loan offer, restructured his loans with the lender. These are known collectively as the 2006 loan offers.

28 13. By virtue of the 2005 loan offer, the 2006 loan offers, the first mortgage and the second mortgage, the following, inter alia, was agreed between the parties:

29 (i) The first defendant covenanted to pay to the EBS on demand (or on the happening of any event of default) all monies then owing or which may from time to time be or become due and owing or payable by the first defendant to the EBS in any manner whatsoever;

30 (ii) In order to secure the repayment of the secured monies to the EBS, the first defendant charged unto the EBS his interest in the eight premises;

31 (iii) The secured monies would immediately become payable by the first defendant to the EBS and the security would become immediately enforceable and all the borrower's rights to deal for any purpose with the mortgaged property or any part thereof would cease immediately on demand by the EBS for repayment of the monies or upon the happening of certain events including:- the failure of the first defendant to pay on the due date any money payable or interest due to the EBS; the failure of the first defendant to comply with any term or condition of any offer letter or facility from the EBS; and/or the default by the first defendant in observing or fulfilling any of his obligations or material covenants or conditions under the indenture of mortgage or under the loan offer;

32 (iv) The EBS could at any time after the secured monies had become payable and the security had become enforceable appoint...