McCarthy v Langan

• Jurisdiction: Ireland
• Judge: Mr. Justice Allen
• Judgment Date: 01 October 2019
• Neutral Citation: [2019] IEHC 651
• Court: High Court
• Docket Number: [2018 No. 5913 P.]
• Date: 01 October 2019

BETWEEN

SHANE MCCARTHY

PLAINTIFF

AND

GREGORY (ALSO KNOWN AS GREG) LANGAN, DAVID LANGAN

AND

BEN GILROY

DEFENDANTS

[2019] IEHC 651

Allen

[2018 No. 5913 P.]

THE HIGH COURT

Injunctive relief – Property – Receiver – Plaintiff seeking injunctions restraining the defendants from impeding or obstructing the plaintiff in his efforts to sell two properties of which he had been purportedly appointed as receiver – Whether the plaintiff’s appointment as receiver was valid

Facts: The plaintiff, Mr McCarthy, claimed a number of injunctions restraining the defendants, Mr Langan and Mr Gilroy, from impeding or obstructing the plaintiff in his efforts to sell two properties of which he had been appointed, or purportedly appointed, as receiver: the first defendant’s property at Rush, Co. Dublin, and the first and second defendants’ property at Dromod, Co. Leitrim. The defendants contested the validity of the charges over the properties and the validity of Mr McCarthy’s appointment as receiver.

Held by the High Court (Allen J) that the only substantive issue in this case was the validity of the appointment of the plaintiff as receiver of the properties. Allen J held that the appointment was valid; although he was described in the deeds of appointment as “Receiver”, he was appointed by the valid exercise of a power to appoint a receiver and manager and was invested with the powers of a receiver and manager. Allen J held that the crucial question was not how he was described, but what he was; the omission from the deeds of appointment of the words “and manager” was not fatal.

Allen J held that, there being no evidence of loss and the plaintiff having no further interest in the properties, he would hear the parties as to what orders ought to be made.

Judgment for plaintiff.

JUDGMENT of Mr. Justice Allen delivered on the 1st day of October, 2019

Introduction

1 This action was commenced by plenary summons issued on 29th June, 2018 by which the plaintiff claimed a number of injunctions restraining Mr. David Langan and Mr. Ben Gilroy from impeding or obstructing the plaintiff in his efforts to sell two properties of which he had been appointed, or purportedly appointed, as receiver. It was not suggested that Mr. Gregory Langan had been party to any of the activity complained of, but he was joined in case he might later be.

2 Having issued his summons, the plaintiff moved immediately for interlocutory relief. Messrs. David Langan and Gilroy contested the validity of the charges over the properties and the validity of Mr. McCarthy's appointment as receiver but acquiesced in the making of interlocutory orders on the basis that the action would be brought swiftly to trial.

3 A statement of claim was delivered on 29th July, 2018; the defence of all three defendants on 15th August, 2018; and a reply on 31st August, 2018. The defence admitted the addresses and descriptions of the first and second defendants and that the defendants had tried to stop the sale of the properties (which was said to have been unlawful) but otherwise traversed.

4 The action was tried on 28th, 29th and 31st May, 2019 in the presence of counsel for the plaintiff and the second and third defendants, personally. The first defendant did not appear and was not represented.

5 On the first day of the trial Mr. Gary McCarthy S.C. (having previously given notice of his intention to do so) applied for an order pursuant to O. 26, r. 1 of the Rules of the Superior Courts giving liberty to the plaintiff to discontinue. The two properties, it was said, had been sold; the action, it was said, was moot; and the plaintiff was willing to pay the defendant's expenses. That application was resisted by the second and third defendants and I refused it on the grounds that the effect of the order sought would have been to dissolve the plaintiff's undertaking as to damages - which had been given as a condition of the making of the interlocutory orders - without a final determination of the issue as to the validity of the plaintiff's appointment. While it was by no means clear to me what loss either the second or third defendants, and especially the third defendant, might have suffered by reason of the making of the interlocutory orders, I was not persuaded that leave to discontinue could safely be granted without a risk of injustice to them. See Joint Stock Company Togliattiazot v. Eurotaz Limited (Unreported, High Court, 3rd May, 2019, Noonan J.) [2019] IEHC 342.

The evidence

6 On 23rd March, 2006 Mr. David Langan borrowed from ACC Bank plc the sum of €671,675 on the terms and conditions set out in a facility letter dated 8th February, 2006 on which Mr. Langan had endorsed his acceptance on 17th February, 2006. The purpose of the loan was to assist in the purchase of residential investment property at “The Cedars”, Channel Road, Rush, Co. Dublin over which ACC bank plc was to have a first legal mortgage and charge.

7 On 19th October, 2006 Mr. David Langan and Mr. Gregory Langan borrowed from ACC Bank plc the sum of €210,000 on the terms and conditions set out in a facility letter dated 18th September, 2006 on which the Messrs. Langan had endorsed their acceptance on 4th October, 2006. The purpose of that loan was to assist in the purchase of a residential investment property at Dromod, Co. Leitrim, over which ACC Bank plc was to have a first legal mortgage and charge.

8 Each of the loans was expressed to be payable on demand, but until demand might be made, by monthly instalments over 25 years, of interest only in the first five years, and thereafter of combined principal and interest.

9 On 13th April, 2006 Mr. David Langan executed a deed of charge over the Rush property and on 25th October, 2006 the Messrs. Langan executed a charge over the Leitrim property. The charge over the Rush property was duly registered on 17th May, 2006 on Folio 9071, Co. Dublin, and the charge over the Leitrim property was duly registered on 19th November, 2010 on Folio 14490F, Co. Leitrim.

10 The repayment instalments were not made in accordance with the loan agreements. On 24th February, 2014 the balance outstanding on the Rush loan was €743,543.65 and the balance outstanding on the Leitrim loan was €223,966.68. By separate letters dated 24th February, 2014 ACC Bank plc demanded payment of those outstanding balances.

11 The evidence of Mr. Paul Shaw, who had been a credit and commercial senior manager with ACC Bank, who gave evidence in respect of the loan, the security, the default, the balances and the demands was unchallenged.

12 The original facility letters were not produced but there was no objection taken in the course of the evidence to the proof of copies, and no issue was raised as to the fact, acceptance or terms of the loan offers, or of the default, the balances, or the demands.

13 Ms. Karen Pearson, who was employed as a solicitor by ACC, gave evidence that ACC Bank plc re-registered as a private limited company and changed its name to ACC Loan Management Limited ( “ACCLM”) on 27th June, 2014, and was converted to a designated activity company on 23rd August, 2016.

14 Ms. Pearson identified two deeds of appointment of receiver dated 23rd February, 2016 by which Mr. Shane McCarthy was appointed, or purportedly appointed, to be receiver over all of the assets of Mr. David Langan referred to and comprised in the deed of mortgage and charge dated 13th April, 2006 and of all the assets of Greg Langan and David Langan referred to and comprised in the deed of mortgage and charge dated 25th October, 2006.

15 The two deeds of appointment were each sealed with the embossing seal of ACCLM and were signed Josephine Fitzgerald, person authorised to authenticate the seal. Ms. Pearson gave evidence that Ms. Fitzgerald was one of four solicitors on her team in the legal department of ACCLM at the time, and she identified the signature on the deeds as that of Ms. Fitzgerald.

16 Ms. Pearson produced to the court an extract from the articles of association of ACCLM and drew attention in particular to Articles 97 and 98. These provided:-

“97. Use of Seal. The Directors shall ensure that the Seal (including any official securities seal kept pursuant to the Acts) shall only be used by the authority of the Directors or of a committee authorised by the Directors.

98. Signature of Sealed Instruments. Every instrument to which the Seal shall be affixed shall be signed by two Directors, or by a Director and the Secretary, or by any person appointed by the Directors for the purpose save that as regard any certificates for shares or debentures or other securities of the Company, the Directors may by resolution determine that any such signatures shall be dispensed with, printed thereon or affixed thereto by some method or system of mechanical signature.”

17 Ms. Pearson produced to the court an extract from the minutes of a meeting of the board of directors of ACCLM held on 17th December, 2014 when the board resolved that the seal of the company might be affixed to, inter alia, deeds of appointment of receivers by, inter alios, a solicitor in the legal department of the company.

18 The evidence of Ms. Pearson was unchallenged.

19 Ms. Tara Glynn, who was head of legal and company secretary of ACCLM at the time, confirmed that the extract from the articles of association was a true copy, and that the extract from the minutes of the board meeting of 17th December, 2014 was a true and accurate copy, and that the copy had been stamped and signed by her.

20 The evidence of Ms. Glynn was not challenged.

21 In cross-examination by Mr. Gilroy, Ms. Glynn confirmed that the resolution of the board had not been registered in the Companies Registration Office. Mr. Gilroy asked Ms. Glynn whether Table A (presumably Table A to the Companies Act, 1963) was optional: which it was.

22 Mr. Gilroy pointed out to Ms. Glynn that on the...