Patrick Munnelly and Anne McGlynn v Start Mortgages Designated Activity Company, Ken Fennell and James Anderson

CourtHigh Court
JudgeMr. Justice Allen
Judgment Date05 October 2021
Neutral Citation[2021] IEHC 627
Docket Number[2021 No. 3730P.]
Patrick Munnelly and Anne McGlynn
Start Mortgages Designated Activity Company, Ken Fennell and James Anderson

[2021] IEHC 627

[2021 No. 3730P.]


JUDGMENT of Mr. Justice Allen delivered on the 5 th day of October, 2021


. By notice of motion issued on 20 th May, 2021 and initially returnable for 4 th June, 2021 the plaintiffs applied for an interlocutory order requiring the second and third defendants (who are receivers appointed by the first defendant) to deliver up possession of a property at 12 Marine Lighthouse, Enniscrone, County Sligo, and an injunction retraining each of the defendants from marketing for sale, selling, entering any further contract for sale or completing any sale of that property.


. To the knowledge of the plaintiffs, the property had been put on the market for sale in November, 2020; contracts had been exchanged in March, 2021; and the sale had been due to be completed on 14 th May, 2021. In the event the sale was completed on 21 st May, 2021 and the plaintiffs' solicitors were so advised by letter dated 2 nd June, 2021. In the meantime, this action was commenced by plenary summons issued on 17 th May, 2021 and on the same day the plaintiffs applied ex parte for an interim injunction restraining the completion of the sale. That application was refused but leave was granted for short service of a motion for interlocutory orders.


. On the return date the plaintiffs' solicitors were provided with an unsworn final draft replying affidavit and the motion was adjourned by consent to allow them to consider the defendants' response to the motion. When the motion came back into the list on 1 st July, 2021 counsel for the plaintiffs indicated that as the sale of the property had completed, the motion would not be proceeding. This judgment is concerned with the question of where responsibility for the costs of the motion should lie.

The evidence

. The affidavit of the first plaintiff, sworn on 17 th May, 2021, on which the motion was grounded, presented a reasonably straightforward issue.


. The apartment at Enniscrone the subject of these proceedings was bought by the plaintiffs on 29 th December, 1999 with the assistance of a loan of IR£120,000 from Irish Life and Permanent plc. I will refer to this as the Enniscrone loan. On 29 th February, 2000 the plaintiffs executed a charge over the property in favour of the lender. I will refer to this as the Enniscrone charge. The charge, which was in a standard printed form, identified the loan then made as “the sum initially advanced on foot of this security” and provided that the property was charged with payment to Irish Life and Permanent plc of “all present and future advances payable by the Mortgagor.”


. In April, 2007 the first plaintiff, only, borrowed €750,000 from Irish Life and Permanent plc to part fund the purchase by him of two apartments at 31 and 32 Rockbrook Court, Athlone, County Westmeath. I will refer to this as the Rockbrook loan. The letter of loan approval stipulated for a first charge over those two apartments and the apartment at 12 Marine Lighthouse, Enniscrone.


. The premise of the action and motion is that the Rockbrook borrowings are not secured by the charge over the Enniscrone property. The stipulation in the Rockbrook loan approval for a charge over the Enniscrone property is said to show that the Enniscrone charge was solely intended to cover the Enniscrone borrowings.


. The plaintiffs' borrowings from Irish Life and Permanent plc were the subject of a form of transfer dated 1 st February, 2019 made between Irish Life and Permanent plc and the first defendant. By letters dated 7 th February, 2019 the plaintiffs were notified of the transfer to the first defendant of the Enniscrone loan.


. The plaintiffs' position in relation to the assignment of their loans and security is rather ambivalent. On the one hand the first plaintiff has sworn that neither he nor the second plaintiff has seen “any meaningful proof of this purported assignment or evidence that [they] were given ‘express notice’ of such an assignment as required by law.” On the other hand, the premise of the action is that the first defendant is bound by the terms of the charge and that the plaintiffs agreed to pay to the first defendant the full amount outstanding of the Enniscrone loan.


. By letter dated 8 th July, 2020 the first defendant demanded payment of the sum of €79,822.05, said to be the balance outstanding on the Enniscrone loan account as of 30 th June, 2020, and threatened the appointment of a receiver and the sale of the property in default of payment.


. By letter dated 31 st August, 2020 the plaintiffs were notified of the appointment that day of the second and third defendants as joint receivers over the property and were sent a copy of the deed of appointment.


. At some time after the assignment or purported assignment to the first defendant, and before the appointment or purported appointment of the second and third defendants, the plaintiffs engaged a firm called Negotiators and Mediators International to engage with the first defendant in relation to the Enniscrone property. A Mr. McGlynn of that firm is said to have been in communication with the first defendant for about twelve months prior to the appointment of the receivers, trying to negotiate a phased repayment.


. The plaintiffs' case is that in the course of those negotiations it was agreed that the Enniscrone property could be redeemed if the full amount of the Enniscrone loan was paid. It is not said when precisely that agreement is alleged to have been made but what is said is that in or around November, 2020 the plaintiffs agreed to pay the full amount and the first defendant agreed to remove the receivers. The plaintiffs' case is that very soon afterwards Mr. McGlynn was informed that the Enniscrone property was “cross-charged” and that it would be sold by the second and third defendants and the proceeds applied to other loans.


. Between December, 2020 and March, 2021 Mr. McGlynn and a solicitor retained by the plaintiffs sought from the first defendant evidence of the alleged “cross-charge”. Eventually, the first defendant's position was spelled out in a letter of 1 st April, 2021 from Fieldfisher LLP to Mr. McGlynn: which was that the charge over the Enniscrone property covered all present and future advances. Those advances, it was said, included the Enniscrone loan – on which the outstanding balance was by then said to be €80,303.62 – and the Rockbrook loan – on which the outstanding balance was said to be €736,899.73. The receivers, it was said, were contracted to sell the property to a third party and the proceeds would be used to discharge the outstanding debt, interest and costs. While Fieldfisher's letter identified their clients as the second and third defendants it expressly addressed Mr. McGlynn's recent correspondence with Start Mortgages DAC and the question of the security granted by the Enniscrone mortgage.


. By letter dated 6 th April, 2021 Mr. McGlynn took issue with Fieldfisher's argument as to the extent of the security. He also raised what he identified as a serious issue in relation to the price which had been achieved for the Enniscrone property. Precisely how or when Mr. McGlynn came to know it is unclear, but it was said that the property had been put on the market at €130,000 and that the auctioneers had immediately received an offer of €160,000, which was far short of the €200,000 plus which it was said to be worth.


. The correspondence went back and forth between Mr. McGlynn and Fieldfisher in April, 2021: Mr. McGlynn insisting that the mortgage did not secure anything other than the balance on the Enniscrone loan; and Fieldfisher insisting that it was security for all sums due. In a letter of 29 th April, 2021 Mr. McGlynn asserted that the plaintiffs had “validly executed their right to redeem this loan” in December, 2020.


. In early May, 2021 the plaintiffs instructed a new firm of solicitors, Messrs Paul A. Moore & Co., who wrote to Fieldfisher on 7 th May, 2021. Mr. Moore protested the manner in which previous correspondence had been dealt with and asserted that “when our clients indicated their desire and ability to redeem the outstanding mortgage on 12 Marine Lighthouse, your clients' power of sale ceased. Whether Start (which is denied) were still entitled to rely on the property as security for other advances is entirely a separate matter and our clients were entitled to prevent any immediate sale of the security by redeeming the loan on same.” Fieldfisher, in reply on 7 th May, 2021, contested the correctness of this assertion and said – as they had said to Mr. McGlynn on 1 st April, 2021 – that “Our clients are already contracted to sell the Property to a third party. The proceeds of sale will be used to discharge the outstanding debt (and interest and costs) in the normal way.”


. By letter dated 14 th May,...

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