Murphy v McKeown

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray
• Judgment Date: 26 March 2020
• Neutral Citation: [2020] IECA 75
• Court: Court of Appeal (Ireland)
• Docket Number: Record No. 2017 539
• Date: 26 March 2020

BETWEEN/

NED MURPHY

PLAINTIFF/RESPONDENT

- AND -

PADDY MCKEOWN

AND

ADELAIDE MCCARTHY

DEFENDANTS/APPELLANTS

[2020] IECA 75

Baker J.

Ni Raifeartaigh J.

Murray J.

Record No. 2017 539

THE COURT OF APPEAL

CIVIL

Interlocutory orders – Receiver – Properties – Appellants seeking to appeal against interlocutory orders – Whether the High Court fell into error in granting the relief sought by the plaintiff

Facts: The defendants/appellants, Mr McKeown and Ms McCarthy, appealed to the Court of Appeal against interlocutory orders of Gilligan J of 15 November 2017. The overall effect of the orders was to restrain the defendants from interfering with the plaintiff/respondent, Mr Murphy, in the exercise of his functions as receiver over certain properties owned by them. Cross applications by the defendants for injunctive relief restraining the plaintiff from disposing of those properties was refused. The defendants advanced twelve grounds of appeal. Grounds one, two, six and eight related directly or indirectly to the proper description of “the Bank” and the defendants’ contention that the trial Judge erred in holding that two companies, Allied Irish Banks PLC and Allied Irish Banks, plc, were one and the same company and that he was mistaken in the related conclusion that what the defendants describe as a ‘third entity’ ALLIED IRISH BANKS P.L.C, actually existed and could appoint the plaintiff. Grounds three, four, and ten raised complaints as to the conduct by the trial judge of both the substantive hearing of the application for an injunction, and of some earlier procedural hearings. Ground five related to a direction issued by the trial judge on 31 October requiring the defendants to submit valuations on the properties. Ground seven posited that the trial Judge erred “regarding irrefutable evidence ... that the Plaintiff had attempted to sell the properties illegally and contrary to the Judge’s own directions of 26th day of July when the matter first came before him”. The defendants also complained (ground nine) that (a) the plaintiff asserted that no challenge to the appointment of the receiver had taken place and (b) that the trial judge showed bias by not challenging counsel in respect of this. Ground eleven arose from the defendants’ argument that the plaintiff in these proceedings sued under an alias, and that this vitiated both his appointment, and the proceedings. In ground twelve of their appeal, the defendants said that the trial Judge erred in disregarding evidence that the appointment of the plaintiff was “part of an attempt by Allied Irish Banks Financial Solutions Group and their agents to asset strip the Defendants by the use of unlawful contracts and false instruments which were presented to the Court”.

Held by Murray J that the balance was correctly struck by Gilligan J, and that this appeal should be dismissed. Murray J held that the defendants had failed to establish any basis on which he could conclude that the High Court fell into error in granting the relief sought by the plaintiff, and refusing that claimed by the defendants.

Murray J held that this appeal should be dismissed, and the order of Gilligan J affirmed.

Appeal dismissed.

JUDGMENT of Mr. Justice Murray delivered on the 26th day of March 2020

Background.

1 This is an appeal by the defendants against interlocutory Orders of Gilligan J. of 15 November 2017. The overall effect of the Orders was to restrain the defendants from interfering with the plaintiff in the exercise of his functions as receiver over certain properties owned by them. Cross applications by the defendants for injunctive relief restraining the plaintiff from disposing of those properties was refused.

2 The defendants are described in the Statement of Claim in these proceedings as professional landlords who own and operate a mixed portfolio of buy to let and commercial real estate. Included in that portfolio are four properties in Cork at 24 Patrick's Hill (owned by the second defendant), 4 South Terrace (owned by the defendants), Apartment 74 Block C Parchment Square, Model Farm Road (owned by the first defendant), and 1 Camden Quay (owned by the first defendant) (“the properties”). The plaintiff claims that between March 2009 and May 2013 the defendants entered into loan facilities with Allied Irish Banks plc (as the Statement of Claim describes it) evidenced by two letters of sanction dated 20 May 2013 between that entity and the first and second named defendant respectively, together with two guarantees of the second named defendant dated 2 March 2009 and 1 December 2009. As explained shortly, the defendants contend that a significant issue arises in these proceedings around the proper identity and description of the entity with which they had dealings, which they say (noting the absence of any comma in the description used by the plaintiff) was Allied Irish Banks, plc. Nonetheless, for ease of reference, I will refer throughout this judgment to “the Bank” as denoting this entity while noting that in relation to some of the transactions and actions relevant to the proceedings the defendants contend that it was not the Bank so described, but another entity which undertook same.

3 The plaintiff claims that by various instruments executed between 9 January 1998 and 8 November 2007 the defendants mortgaged these properties in favour of the Bank or (in the case of the property at 1 Camden Quay), the Bank and AIB Mortgage Bank, the latter of which in turn he pleads - by Deed of Transfer and Assignment dated 17 January 2017 - transferred its interest to the Bank.

4 The plaintiff pleads at para. 9 of his statement of claim that these various securities became enforceable and the power to appoint a receiver arose in respect of each of the four properties in circumstances where the defendants and each of them are substantially indebted to the Bank. He says that by four instruments of appointment dated 13 January 2017 (in the case of the first three properties) and 23 January 2017 (in the case of the fourth), the Bank appointed him as receiver over those properties. The Statement of Claim refers to the entering of judgment on 12 May 2017 against the defendants by the Bank in High Court proceedings bearing the Record Number 2017/42S in the amounts of €1,469,251.43 as against the first named defendant, and €1,467,102.96, against the second. Since the hearing of this appeal, this Court has dismissed the defendants' appeal against that order ( [2019] IECA 296).

5 In these proceedings, the plaintiff seeks possession of the properties. Injunctions are sought restraining the defendants from interfering with the functions of the plaintiff as receiver of those properties including orders preventing them from impeding him in changing the locks on the properties or taking steps to secure them, from trespassing on the properties, and requiring the delivery of keys and alarm codes, an account of rents and books and records relating to the properties. Damages are sought for trespass and conversion, and relief consequent upon the alleged unjust enrichment of the defendants is also claimed. The proceedings having been issued on 3 July 2017, and the summons being subsequently amended by order of 17 July 2017, a defence and counterclaim was delivered on 17 August 2017. This preceded delivery of the Statement of Claim, which is dated 11 September 2017.

6 That defence and counterclaim presents six substantive pleas:

(i) Issue is taken with the plaintiff's use of the name ‘Ned Murphy’. This, the Defendants say is an ‘alias’ of Edmund John Murphy. An alias, they say, cannot be appointed a receiver and cannot sue in a court of law as such. Reference is made in this regard to Article 34 of the Constitution.

(ii) The defendants complain that the instruments of appointment of the plaintiff and the demands preceding the appointment of the plaintiff were made by an entity which is not a ‘legal company’ in Ireland, namely ‘Allied Irish Banks plc’. The defendants, it is said, have a legal relationship with a different entity, ‘Allied Irish Banks, plc’. The omission of the comma in the description of the appointor is said by the defendants to afford them a basis on which the instruments of appointment and demands made for monies, are and can be ‘impugned’. They specifically plead that the omission of the comma in the name of the appointor ‘is not a typo as it is systematically done throughout all of the Instruments’.

(iii) It is said that the plaintiff was appointed over properties with a certified valuation of €2,734,000 from May 2016, as against what is described as a ‘cumulative valuation for the values used by him to justify his appointment of €1,640,000 from 2014’. It is said that this is the subject of separate court proceedings taken by the defendants, and that the plaintiff is in unlawful control of properties far in excess of any outstanding liabilities of the defendants.

(iv) It is claimed that the plaintiff was allegedly appointed over four properties, three of which had zero balance mortgages since 2005. They say that the Bank had repeatedly refused to return the title deeds to those properties or to release the security on them despite numerous requests from the defendants. They say that the securities created by the documents were and are ‘ fully spent as all covenants regarding monies owed by the defendants were satisfied on 11th July 2005. They plead that those security documents could not thereafter be used in any way to appoint the plaintiff notwithstanding their inclusion in a much later facility from 2013 as alleged security. That which is spent, they say, cannot be used for further security.

(v) Issue is taken with the appointment of the plaintiff over the property at 1 Camden Quay. The Deed of Transfer of Assignment from AIB Mortgage Bank to the Bank of 17 January 2017 is stated to be ‘impugned by the Defendants’. The...