McDermott v Ennis Property Finance DAC; Bank of Scotland Plc v McDermott

• Jurisdiction: Ireland
• Judge: MR. JUSTICE MICHAEL PEART
• Judgment Date: 17 May 2019
• Neutral Citation: [2019] IECA 142
• Date: 17 May 2019
• Court: Court of Appeal (Ireland)
• Docket Number: APPEAL NUMBER: 2018/127

BETWEEN:

BANK OF SCOTLAND PLC

PLAINTIFF/RESPONDENT

- AND -

EUGENE MCDERMOTT

DEFENDANT/APPELLANT

BETWEEN:

EUGENE MCDERMOTT

PLAINTIFF/APPELLANT

- AND -

ENNIS PROPERTY FINANCE DAC

DEFENDANT/RESPONDENT

[2019] IECA 142

Peart J.

Peart J.

Whelan J.

Costello J.

APPEAL NUMBER: 2018/127

APPEAL NUMBER: 2017/512

THE COURT OF APPEAL

Dismissal of proceedings – Abuse of process – Reasonable cause of action – Appellant seeking to appeal against an order of the High Court dismissing the appellant’s proceedings against the respondent – Whether the proceedings were an abuse of process and vexatious

Facts: The first appeal before the Court of Appeal (the substitution appeal) was brought by the appellant, Mr McDermott, against an order of the High Court (McGovern J) dated 5th February 2018 whereby it was ordered that the respondent, Ennis Property Finance DAC, be substituted as plaintiff in place of Bank of Scotland plc, in summary summons proceedings (2013/1833S) brought by the bank against him, and wherein by order dated 29th July 2013 judgment was already granted against him in a sum of €6,971,856.49, and further that the said order be amended so that Ennis be substituted for Bank of Scotland Plc as the party entitled to enforce same. The second appeal before the Court of Appeal (the dismissal appeal) was brought by the appellant against an order of the High Court (McGovern J) dated 18th July 2017 whereby it was ordered that the appellant’s proceedings against Ennis commenced by way of plenary summons on the 4th October 2016 (2016/8810P) be dismissed (a) pursuant to O. 19, r. 28 of the Rules of the Superior Courts (RSC) on the basis that they disclosed no reasonable cause of action, and (b) pursuant to the inherent jurisdiction of the Court on the basis that they were an abuse of process and vexatious.

Held by Peart J that, concerning the dismissal appeal, the trial judge was correct to strike out the proceedings as being an abuse of process, and also to dismiss them under O. 19. r. 28 RSC on the basis that they disclosed no reasonable cause of action and/or were frivolous and vexatious. Concerning the substitution appeal, Peart J held that there was ample evidence adduced to justify the conclusion that the transfer of the loan has been established.

Peart J held that, concerning the dismissal appeal, he found no error on the part of the trial judge, and that he would dismiss that appeal. Peart J held that he would also dismiss the appeal against the making of the substitution order.

Appeal dismissed.

JUDGMENT OF MR. JUSTICE MICHAEL PEART DELIVERED ON THE 17TH DAY OF MAY 2019

1 There are two appeals before the Court. The first appeal (‘the substitution appeal’) is by Mr McDermott (‘the appellant’) against an order of the High Court (McGovern J.) dated 5th February 2018 whereby it was ordered that the respondent (‘Ennis’) be substituted as plaintiff in place of Bank of Scotland Plc, in summary summons proceedings (2013/1833S) brought by the bank against him, and wherein by order dated 29th July 2013 judgment was already granted against him in a sum of €6,971,856.49, and further that the said order be amended so that Ennis be substituted for Bank of Scotland Plc as the party entitled to enforce same.

2 The second appeal (‘the dismissal appeal’) is brought by the appellant against an order of the High Court (McGovern J.) dated 18th July 2017 whereby it was ordered that the appellant's proceedings against Ennis commenced by way of plenary summons on the 4th October 2016 (2016/8810P) be dismissed (a) pursuant to O. 19, r. 28 of the Rules of the Superior Courts on the basis that they disclose no reasonable cause of action, and (b) pursuant to the inherent jurisdiction of the Court on the basis that they are an abuse of process and vexatious.

3 I propose addressing the second appeal (‘the dismissal appeal’) in the first instance.

The dismissal appeal

4 The factual background to the appellant's plenary proceedings commences in 1995/1996 when he drew down a loan from a bank then called Equity Bank Limited (‘Equity’)(company number 16551). That loan was secured on the appellant's lands comprised in folios 17644F and 17159F of the Register of Freeholders County Kildare by deed of mortgage and charge dated 3rd October 1996 which was registered as a burden on the said folios on the 9th December 1996.

5 Equity changed its name by a special resolution to Bank of Scotland (Ireland) Limited (‘BOSI’) following the acquisition of Equity by Scotland International B.V., as evidenced by certificate of change of name dated 25th April 2000.

6 On the 23rd January 2002 the Minister for Finance signed S.I. No. 27/2002 – Central Bank Act 1971 (Approval of Scheme of Bank of Scotland (Ireland) Limited and ICC Bank Plc) Order 2002. By that statutory instrument the Minister approved a scheme whereby BOSI (formerly Equity) would transfer its banking business to ICC Bank Plc (‘ICC’)(company number 8545).

7 On 2nd February 2002, BOSI (formerly Equity) transferred its business, including the said loans and the said mortgage and charge, to ICC pursuant to that approved scheme. After the transfer occurred and ICC became the owner of the appellant's loans and mortgage and charge, each company changed its name. On 12th February, 2002 BOSI resolved to change its name to BOS (Ireland) Financial Enterprises Ltd. and this occurred on 25th February, 2002. According to Mr McDermott ICC changed its name to BOSI on 14th February, 2002, though he does not exhibit this certificate of change of name.

8 In his submissions to this court the appellant argued that the mortgage and charge was not transferred to ICC under the approved Scheme and that it remained in the ownership of the financial institution which originally advanced him the loans which was renamed Bank of Scotland (Ireland) Financial Enterprises Limited. He does not in terms argue that the loan was not transferred under the approved scheme to ICC. He says that the original loan from equity which was secured by the mortgage and charge was refinanced in 2005 with a new loan advanced by BOSI (formerly ICC). This meant that the loans secured by the charge were repaid and therefore the charge ought to have been released. He further argues that the loans advanced by BOSI from 2005 onwards were unsecured loans, notwithstanding the terms of the loan agreements as BOSI (formerly ICC) never acquired the 1996 mortgage and charge. He argues that due to the alleged break in the chain of title in respect of the 1996 mortgage and charge, Ennis is not now entitled to take any enforcement action on foot of that mortgage and charge because it is not the successor in title to the original 1996 mortgage and charge. In that regard he states:

‘8. It is by no means clear that my loans and related securities formed part of that agreement [i.e. the transfer from BOSI to ICC]. Mr Hanly's bland averments at paragraphs 14 and 36 of his affidavit that Equity Bank Ltd changed its name to Bank of Scotland (Ireland) Ltd do not in any way fully describe the complexities of the arrangements relating to the ownership of Equity Bank Ltd, the takeover of ICC Bank plc and two different entities taking on the name Bank of Scotland Ireland Ltd or the transfer of assets to ICC Bank shortly to be named Bank of Scotland Ireland Ltd by agreement dated 23rd November 2001.’

9 In his grounds of appeal, the appellant states that as a consequence the loans made to him between 2005 and 2008 were not secured by the 1996 mortgage.

10 The respondent has submitted that in so far as the appellant seeks to make the argument that there are two different companies or entities named BOSI, and that it is unclear therefore that his loans were part of what was transferred eventually to Ennis, that is not the case pleaded in the statement of claim.

11 At any rate, in 2005 and again in 2008, the appellant applied for and was granted a further four loan facilities by BOSI which Ennis claims were also secured upon the existing 1996 mortgage and charge. Recital C set forth in that deed of mortgage and charge stated that it was in respect of ‘monies now owing or which shall hereafter become owing on a general balance of account or otherwise from the borrower to the lender’ [emphasis provided].

12 Three of the four facility letters in respect of the loans just referred to describe the security for same as ‘an extension of the bank's specific charge over the freehold land of the borrower consisting of 258 acres of land at Kennycourt, Brannockstown, Naas, Co. Kildare’. These are the lands comprised in the two folios referred to above. The remaining facility letter refers to the security as being ‘a first specific charge over the borrower's 258 acres of land at Kennycourt, Brannockstown, Co. Kildare’.

13 However, one of the appellant's contentions in his plenary proceedings is that because one of the purposes of these later facilities was to refinance the 1996 loan, the 1996 mortgage and charge ought properly to have been ‘released or vacated’, and that since no new mortgage or charge was entered into by the appellant following that refinancing of the 1996 loan, the later borrowings were not secured on the lands. In such circumstances, his contention is that Ennis, claiming to be the successor in title to the 1996 mortgage, is not entitled to rely on the 1996 mortgage and charge for the purpose of seeking to recover the amount claimed to be owing by the appellant, including by the appointment of a receiver over the lands.

14 Further background to these proceedings is that as of the 31st December 2010 BOSI merged with Bank of Scotland Plc (‘BOS’). This was as a result of a cross-border merger of the two entities which received the approval of both the High Court in this jurisdiction, and the Scottish Court of Session. Thereafter BOS was registered on the two folios as the registered owners...