Moorview Developments Ltd and Others v First Active Plc and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 17 July 2009
• Neutral Citation: [2009] IEHC 367
• Judgment citation (vLex): [2009] 7 JIC 1715
• Court: High Court
• Date: 17 July 2009

[2009] IEHC 367

THE HIGH COURT

[No. 9018 P/2003]

Moorview Developments Limited & Ors v First Active Plc & Ors

BETWEEN

MOORVIEW DEVELOPMENTS LIMITED, SALTHILL PROPERTIES LIMITED, VALEBROOK DEVELOPMENTS LIMITED, SPRINGSIDE PROPERTIES LIMITED, DRAKE S.C. LIMITED, MALLDRO S.C. LIMITED, THE POPPINTREE MALL LIMITED AND BLONDON PROPERTIES LIMITED

PLAINTIFFS

AND

FIRST ACTIVE PLC AND RAY JACKSON

AND BY ORDER

BERNARD DUFFY

DEFENDANTS

AND LINKED PROCEEDINGS

HOLIDAIR LTD, IN RE 1994 1 IR 416

KEENEN BROTHERS LTD, IN RE 1985 IR 401

COMPANY LAW

Charge

Debenture - Nature of charge - Whether fixed or floating charge created - Construction of debenture - Description and characterisation of charge - Whether words conclusive - Intention of instrument as whole - Intention of parties - Extent of security - Whether first fixed charge on property created - Re Holidair Ltd [1994] 1 IR 416 and In Re Keenan Brothers Ltd [1985] IR 401 considered - Application for well charging order dismissed (2003/9018P - Clarke J - 17/7/2009) [2009] IEHC 367

Moorview Developments Ltd v First Active plc

1. Introduction

2 2 1.1 This is yet another judgment in the long running litigation between these parties. On the 6 ^th March, 2009, I delivered a judgment ("the main judgment") in which I set out the reasons for having allowed a non-suit application on the part of the defendants in respect of what might reasonably be called the main hearing of the issues which arose in these linked proceedings. For the reasons set out in the main judgment I did not feel it appropriate, at that time, to rule on what were, in that judgment, described as the crystallisation and scope of debenture issues. Those issues had, in fact, been before the court. Those issues were, however, postponed for a further hearing which, again for the reasons set out in the main judgment, I determined should be a full plenary hearing.

3 3 1.2 The full list of the separate proceedings between these parties which have been linked was set out in Schedule 1 to the main judgment. One of those linked proceedings is case "H" being a case in which Kanwell Developments Limited ("Kanwell") brings a well charging application arising out of a judgment obtained by it against Salthill Properties Limited ("Salthill"), the second named plaintiff coupled with the subsequent registration of judgment mortgage affidavits against assets of Salthill. On foot of those judgment mortgages Kanwell seeks a well charging order against the assets of Salthill.

4 4 1.3 The questions held over from the main proceedings and the Kanwell well charging proceedings are very closely linked and, to a large extent, turn on the same issues. Indeed, on one view and dependant on the questions which might be said to be decisive in the respective proceedings, both proceedings might turn on the same issues.

5 5 1.4 In general terms the issues held over from the main proceedings concern the extent of the security which the first named defendant ("First Active") held over the assets of Salthill. Various points were put forward from which it was suggested that First Active did not, in fact, have security over certain aspects of the property (or relevant interests in the property) which was generally believed to form part of the development site on which Salthill was conducting a significant residential and commercial development project in Galway. In that aspect of the main proceedings, declaratory relief was sought to the effect that First Active did not have security over the relevant aspects of the development property so that, it was said, First Active had no entitlement to seek or purport to sell the relevant interests in the property to any third party and in particular, to the third named defendant Mr. Duffy. Likewise it was said that, for the same reasons, the second named defendant, ("Mr. Jackson") was not validly appointed as receiver in respect of those interests in the Salthill development property. As part of the argument concerning the scope of First Active's charge over the assets of Salthill it is argued that, insofar as First Active had a floating charge over the assets of Salthill, such floating charge had crystallised so that, it is said, no assets acquired after the date of crystallisation could be said to be caught by the charge.

6 6 1.5 It is not in dispute but that Kanwell has lodged judgment mortgage affidavits in respect of assets of Salthill. However, if First Active has full security over all of the property owned by Salthill then there are, in practice, no assets available for Kanwell so that the judgment mortgages are, in practice, worthless. On the other hand to the extent that it might be said that First Active does not have proper security over some of the assets in question, (or interests in those assets) then it follows that those assets or interests may well be available to Kanwell. Additional questions, therefore, arise in relation to the Kanwell well charging proceedings which are dependent on the status, so far as First Active's security is concerned, of the Salthill property as of the time when the relevant Kanwell judgment mortgage affidavits were filed. Clearly the relevant time for considering Kanwell's position is what the state of play was as of those times.

7 7 1.6 Against that background, it seems to me that the most relevant starting point must be a consideration of the debentures by which Salthill charged its assets in favour of First Active, for those debentures define and govern the security which First Active can be said to hold or, at any material time, to have held. I, therefore, turn to an analysis of the debentures.

2. The Debentures

2 2 2.1 Salthill and First Active entered into a series of debentures (which related to different parcels of land) on respectively, the 21 ^st October, 1999, the 29 ^th October 1999, the 12 ^th November 1999 and the 20 ^th December 2001.

3 3 2.2 So far as material to the issues which I have to consider, each of the debentures were in the same form and purport to create comprehensive fixed and floating charges.

4 4 2.3 The charging clauses of the debenture which are of particular relevance to the issues which I have to decide appear to be clauses 4.1.5, 4.1.6 and 4.1.14, which provide as follows:-

2 "4.1.5 CHARGES unto the Bank by way of first fixed charge any future estate or interest which the Company may from time to time hereafter acquire in the Secured Property;

3 4.1.6 CHARGES unto the bank by way of first fixed charge, all other freehold, leasehold and other removable property now or at any time hereafter belonging to or for any estate or interest vested in the company together with all rights, liberties, powers easements, quasi easements and appurtenances (in each case of whatever nature) attached or appurtenant thereto and all buildings, erections, fixtures, fittings (including trade fixtures and fittings) and fixed plant and machinery from time to time there on thereon;

4 4.1.14 CHARGES unto the Bank by way of first floating charge all the undertaking property, rights and assets of the Company whatsoever and wheresoever both present and future, including but not limited to the stock-in-trade of the Company wheresoever not effectually subject to any fixed security hereby created;"

5 5 2.4 Those clauses are preceded by clauses which convey to First Active so much of the secured property (as defined) as is freehold unregistered land subject to the usual proviso for redemption and which sub-demises to First Active so much of that secured property as is of unregistered leasehold tenure again subject to a proviso for redemption. In addition there is a specific charge on so much of the secured property as is either registered freehold or registered leasehold land.

6 6 2.5 The term secured property is defined as the property set out in the first schedule to the debenture, together with various rights attached to same and "buildings, erections, fixtures, fittings etc." as might be on the lands concerned.

7 7 2.6 Thus, the general structure of each of the debentures concerned is relatively straightforward. The property which is specifically mortgaged is set out in the first schedule and thus, becomes part of the secured property. That property is specifically mortgaged to First Active, either by means of a conveyance subject to an equity of redemption (in the case of unregistered freehold land), a subdemise, again subject to the equity of redemption, in respect of unregistered leasehold land and in the form of a charge in respect of registered freehold or registered leasehold land.

8 8 2.7 The additional charging provisions which I have specifically quoted above are in addition to those which create specific legal mortgages and charges referable to defined lands.

9 9 2.8 I should not leave the provisions of the debentures concerned without also setting out the terms of clause 19 which provides for the conversion of a floating charge in the following terms:-

"19 The Bank may at any time from time to time by notice to the Company convert the floating charge hereby created into specific charge as regards such of the secured assets specified (whether generally or specifically) in that notice if the Bank considers it would desirable to do so in order to protect, preserve or supplement the security hereby created over those Secured Assets or the priority of such security. If, without the prior consent in writing of the Bank, the Company creates any Encumbrance over any of the Secured Assets not expressed to be subject to a fixed Charge under this Debenture, or attempts to do so, or if any person levies or attempts to levy any distress, attachment, execution or other legal process against any such Secured Assets, the floating charge created by this debenture over those Secured...