Morrissey v Allied Irish Bank Pls and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 19 April 2023
• Neutral Citation: [2023] IECA 89
• Docket Number: Appeal Number: 2022/148
• Court: Court of Appeal (Ireland)

In the Matter of the Companies Act 2014

And in the Matter of Section 438 of the Companies Act 2014

And in the Matter of Dan Morrissey (IRL) Limited

[2023] IECA 89

Whelan J.

Noonan J.

Haughton J.

Appeal Number: 2022/148

THE COURT OF APPEAL

Civil

Lease – Rent – Duration – Applicants seeking an order compelling the receivers to grant him a lease – Whether the appellant was entitled to bring and pursue the application

Facts: The appellant, Mr Morrissey, appealed to the Court of Appeal against the judgment and order of Twomey J made on 20th May, 2022 determining a discrete preliminary issue as to whether the appellant was entitled to bring and pursue an application seeking to compel Allied Irish Bank plc (AIB) and/or Mr Tennant and Mr McCann (the receivers) to grant to him an agricultural lease over certain agricultural lands situate at Powerstown, County Carlow comprising approximately 110 acres, the property of an insolvent company Dan Morrissey (Irl) Ltd (DMIL). The appellant contended that the trial judge erred in ruling that: (1) the case raised the proposition “that a borrower or a shareholder in a corporate borrower may compel a receiver to lease secured property to that borrower”; (2) “there was an obligation on the Applicant to provide authority to support the view that a borrower (or connected third party) has a right to be granted a lease of the secured property by the receiver when no such proposition was advanced by the Applicant and was moot”; (3) “the High Court does not have jurisdiction to make an order obliging the Receiver to grant the Applicant agricultural lease of the lands in question” (4) “the Applicant was a borrower and that the High Court would, if it made the Order sought, in effect be implying that there, was a right on the part of a borrower who has defaulted on his loan to dictate how the receiver manages the assets to pay off the secured debts, a proposition that was not advanced by the Applicant and was moot”; (5) “there is nothing in the section which would entitle the Court to order a Receiver to make an order to lease the lands to the Applicant”; and (6) “the company owned the quarry lands and that his father was the original owner of the quarry lands when in fact (sic) the applicant is 95% owner of all the lands including the discrete portion on which the quarry is located”. The appellant contended that the ruling of the High Court “was against the evidence, the weight of the evidence and was perverse”.

Held by Whelan J that whereas the judgment of the High Court alluded to the appellant as a “borrower” rather than an officer of the company and/or a member of the company and/or a guarantor nothing material turned on that point. She held that the issue in the case and the proposition to be determined was clear to all parties and to the judge. She held that given the nature of the propositions advanced by the appellant there was nothing untoward in the trial judge’s observation that no authority had been identified for the proposition in question; it was a statement of fact. She was satisfied that the trial judge was entirely correct in his assessment that the High Court did not have jurisdiction to unilaterally make an order of the kind sought by the appellant against the wishes of the receivers and in respect of which they were clearly and unequivocally opposed, compelling them to grant to him an agricultural lease of the lands identified by him at the rent suggested by him and for the duration and terms proposed by him. She was satisfied that the trial judge was entirely correct, both in fact and law in determining that nothing contained within s. 438 of the Companies Act 2014 conferred an entitlement on the High Court to make the order compelling the receivers to grant a lease of the lands to the appellant as sought. Whilst the appellant contended that he was in fact a 95% owner of “all the lands including the discrete portion on which the quarry is located”, she held that it was DMIL in receivership that was the owner of five of the six folios identified in the appellant’s notice of motion filed on the 29th March, 2022; in the case of the sixth folio, DML was the registered owner.

Whelan J dismissed the appeal on all grounds. Her preliminary view was that in light of O. 99 of the Rules of the Superior Courts and s. 169 of the Legal Services Regulation Act 2015, the respondents, being entirely successful in the proceedings, were entitled to an award of their costs against the appellant.

Appeal dismissed.

UNAPPROVED

Judgment of Ms. Justice Máire Whelan delivered on the 19 ^th day of April, 2023

1 . This is an appeal against the judgment and order of Mr. Justice Twomey made on 20 ^th May, 2022 determining a discrete preliminary issue as to whether the appellant Philip Morrissey (Mr. Morrissey) was entitled to bring and pursue an application seeking to compel Allied Irish Bank plc (AIB) and/or Stephen Tennant and Paul McCann (the Receivers) to grant to him an agricultural lease over certain agricultural lands situate at Powerstown, County Carlow comprising approximately 110 acres, the property of an insolvent company Dan Morrissey (Irl) Limited (DMIL).

2 . In his judgment delivered on the 13 ^th May, 2022 Twomey J. held on the evidence before him that the High Court had no jurisdiction to make the order sought by Mr. Morrissey and dismissed his motion. He further ordered that the costs of the receivers and AIB be borne by Mr. Morrissey, such costs to be adjudicated by the Office of the Legal Costs Adjudicator in default of agreement.

Background and context

3 . To more fully understand the real issues of principle arising in this appeal it is necessary to briefly outline some key aspects of the history of Mr. Morrisey's dealings with and claims against DMIL and related companies and the receivers. In addition to a brief consideration of relevant litigation it is also necessary to consider in particular litigation between Mr. Morrissey, the receivers and AIB and also the current stated aims and objectives of the receivers vis á vis the DMIL lands.

4 . Mr. Morrisey contends that he is entitled to seek from the High Court an order pursuant to s. 438 of the Companies Act, 2014 compelling the receivers/AIB to grant an agricultural lease over part of DMIL's land holding comprised in folios CW6160F, CW6161F, CW20894F, CW3349F, CW7387F and CW7388F comprising approximately 110 acres on terms proposed by him. The receivers are wholly opposed to the request for an agricultural lease and are desirous effecting a sale and disposition of the lands for the purposes of reducing the indebtedness of DMIL. They contend that the High Court has no jurisdiction under s. 438 to compel them to grant such a lease.

Loans and receivership of DMIL

5 . DMIL was in receipt of loans of approximately €28m from AIB. Philip Morrissey had been an officer and member of DMIL and had guaranteed its indebtedness. Following default by DMIL in respect of the discharge of its indebtedness, on or about the 18 ^th June, 2014 AIB appointed Stephen Tennant and Paul McCann as receivers over the assets and undertaking of DMIL which included the lands the subject of Mr. Morrissey's application. The receivers were appointed out of court on foot of AIB's security instruments which had been registered as burdens on Part 3 of each of the relevant folios. Subsequent to the appointment of the receivers, entries were made on Part 3 of the respective folios to the effect “.. Crystallised charge arising on the appointment of STEPHEN TENNANT and PAUL MCCANN as receivers of DAN MORRISSEY (Irl) LIMITED by Deed of Appointment dated 18th June 2014 made between DAN MORRISSEY (Irl) LIMITED of the one part and ALLIED IRISH BANKS plc of the other part.”

6 . Subsequently in 2019 AIB disposed of its interest in the relevant charges to Everyday Finance DAC (Everyday) which came to be registered as owner of same on the relevant folios. Thereupon AIB ceased to have any interest in the said securities.

2015 proceedings – on foot of the guarantee

7 . As of 2015 the level of indebtedness of DMIL to AIB stood in the region of €24,970,000. Mr. Morrissey was a 33% shareholder and director of DMIL. The judgment in proceedings 2015/2044S was obtained by AIB against Mr. Morrissey on a consent basis on the 17 ^th December, 2015. On foot of that judgment AIB registered judgment mortgages against certain other folios in the beneficial ownership of Mr. Morrissey.

8 . Thereafter an application was brought in the Commercial Court record no. 2015/2044S by AIB against Philip Morrissey for consequential orders. On the 13 ^th April, 2016 McGovern J. made an order in the High Court pursuant to O. 45, r. 9 of the Rules of the Superior Courts appointing Stephen Tennant to be receiver over the interests of Philip Morrissey in 10,714 ordinary shares in a related company Dan Morrissey Limited and entitling the receiver to receive the interest of Philip Morrissey in one ordinary share in a company Dan Morrissey (UK) Limited. The receiver was authorised by direction of the High Court to use the powers set forth in the Schedule of receiver's powers exhibited to the grounding affidavit of Conal Regan sworn on the 23 ^rd February, 2016 in the said proceedings. It appears that Mr. Morrissey had issued a petition on the 5 ^th April, 2016 seeking to have himself adjudicated a bankrupt.

9 . McGovern J. in the Commercial Court was also satisfied that Mr. Morrissey had, as the Order of 13 April 2016 recites, “… failed to show cause why the Conditional Order made herein on the 25 ^th day of February 2016 should not be confirmed and made absolute”. An absolute order was made pursuant to O. 46, r. 1 RSC and s. 23 of the Debtors (Ireland) Act, 1840 and s. 132 of the Common Law Procedure (Amendment) Act Ireland, 1853 that Mr. Morrissey's “… beneficial and legal interest in the DML Shares shall stand charged...