Pepper Finance Corporation (Ireland) DAC v Persons Unknown

JurisdictionIreland
CourtCourt of Appeal (Ireland)
JudgeMs. Justice Máire Whelan
Judgment Date28 July 2022
Neutral Citation[2022] IECA 170
Docket NumberAppeal Number: 2021/268
Between/
Pepper Finance Corporation (Ireland) DAC
Respondent
and
Persons Unknown in Occupation of the Property Known as 21 Little Mary Street Dublin 1
Appellants
Pepper Finance Corporation (Ireland) DAC
Respondent
and
Persons Unknown in Occupation of the Property Known as 31 Richmond Avenue Fairview Dublin 3
Appellants

[2022] IECA 170

Whelan J.

Collins J.

Pilkington J.

Appeal Number: 2021/268

2021/270

THE COURT OF APPEAL

JUDGMENT of Ms. Justice Máire Whelan delivered on the 28th day of July 2022

Introduction
1

. This is an appeal against a judgment delivered on 13 August 2021 and subsequent orders made by Sanfey J. in attachment and committal motions in the High Court on 1 st October 2021 in each of the above-entitled proceedings.

2

. The first Order under appeal was made in proceedings 2020/6888 between Pepper Finance Corporation (Ireland) DAC v. Persons Unknown in Occupation of the Property Known As 21 Little Mary Street, Dublin 7, ordering; “Margaret Hanrahan and Augustin Gabor with any other adult person who is in possession and/or occupation of the said property to have them before this Court … on Friday the 8 th day of October 2021 … to answer for the contempt which by reason of such default it is alleged they have committed against this Court and to show cause why they should not be committed to prison for such contempt”.

3

. The second Order under appeal was made in proceedings 2020/6889P Pepper Finance Corporation (Ireland) DAC v Persons Unknown in Occupation of the Property Known As 31 Richmond Avenue, Fairview, Dublin 3. It provides; “…IT IS ORDERED that the Plaintiff be and it is hereby at liberty to issue an Order of Attachment directed to the Commissioner and Members of An Garda Síochána against each of the said Firuca Puscas and Gavrila Puscas and Doina Bortas and Vasile Circu and Mihai Bataraga and Danut Vlad and Irina Ucaciu and Ion Mihali and any other adult person who is in possession and/or occupation of the said Property to have them before this Court (Mr. Justice Sanfey) on Friday the 8 th day of October 2021 at the hour of 2.00 o'clock in the afternoon (or the first opportunity thereafter) to answer for the contempt which by reason of such default it is alleged they have committed against this Court and to show cause why they should not be committed to prison for such contempt”.

4

. 31 Richmond Avenue and 21 Little Mary Street (“the properties”) were at all material times sub divided into separate dwelling units. In the case of 31 Richmond Avenue it was sub-divided into 7 separate units, and 21 Mary Street was sub-divided into 5 separate dwelling units. They had been so sub-divided since at least 2006/2007. The appellants were occupiers of dwelling units in one or other of the premises. The mortgagor, Mr. Jerry Beades, a defaulting mortgagee against whom orders for possession had been obtained in respect of the properties, was the landlord and the occupiers in each case paid rent to him. The relationship of landlord and tenant never subsisted between Pepper and the appellants.

5

. To more fully understand the genesis of the orders under appeal it is necessary to briefly consider the key relevant events in the litigation history as between Pepper's predecessors in title and the mortgagor.

Background
6

. On the 23 rd June, 2008 IIB Homeloans Limited (formerly Irish Life Homeloans Limited) (“IIB”) obtained an order for possession against Mr. Beades in respect of the properties arising from a default under the terms of mortgages secured over them. The said order for possession of the properties was the subject of an unsuccessful appeal by Mr. Beades to the Supreme Court which was ultimately dismissed by that court in 2014.

7

. Over the years, title to the mortgagee's interest in the security changed hands from time to time. Ultimately in 2020 Beltany Property Finance DAC disposed of the mortgagee's interest in the security to Pepper Finance Corporation (Ireland) DAC (“Pepper”).

8

. By order made on the 18 th November, 2020 by Mr. Justice Twomey in the High Court, Pepper was substituted as plaintiff in the substantive proceedings and secured an order pursuant to O. 42, r. 24(a) of the Rules of the Superior Courts and/or the inherent jurisdiction of the High Court granting liberty to issue execution on foot of the possession order of the 23 rd June 2008. Other consequential orders were also made on that date.

Dwellings
9

. Before considering the grounds of appeal it is necessary to have regard to the nature and usage of the two properties at the date the High Court granted the original order for possession on the 23 rd June, 2008. This is so because it appears to have been variously contended on behalf of Pepper that all lettings of the properties by the mortgagor were prohibited under the terms of the mortgage itself and further that neither Pepper nor its predecessors in title had knowledge of the tenancies. The validity or otherwise of any negative pledge to be found in the mortgage instruments is not centrally relevant to this appeal and for that reason I shall express no concluded view on that issue. In any event, as a matter of fact it appears that under a mortgage dated the 12 th June, 2003 created over both properties, IIB Homeloans Limited (“IIB”) consented to the borrower creating tenancies in respect of the premises subject to various conditions specified in Clause 34 of the Special Condition attaching to the loan offer. There does not appear to be any evidence of any objection on the part of IIB to the creation of any tenancies by the mortgagor up to or including the date of the order for possession made on 23 rd June, 2008 in the High Court.

10

. The level of knowledge on the part of IIB as to the existence of tenancies and the identity of the tenants in the properties at the date the order for possession was granted by Dunne J. on the 23 rd June, 2008 in respect of both properties is a question of fact which I will now consider.

The 2008 Affidavit of Service
11

. In an affidavit of service sworn in the possession proceedings in January 2008 by Maria Kavanagh, a legal secretary, supporting the application for the order for possession, copies of the summons were deposed to have been served on individuals in occupation of Flats A to G, inclusive, at 31 Richmond Avenue in December 2007.

12

. In relation to 21 Little Mary Street, the affidavit of service deposes to service of copies of the summons on the 19 th December 2007 on named occupiers of Apartments 1 to 5 (inclusive) thereof.

13

. Service of the original possession proceedings was thus effected on named occupiers in December 2007, (apart from one exception where it was served on the “occupier”) at the specific dwelling unit occupied by each within the respective properties. It seems reasonable to infer that, when in 2006 possession proceedings were instituted by IIB against the borrower, Mr. Beades, seeking possession of the properties, if it had been the case that IIB considered that the tenancies created by Mr. Beades were in breach of the Mortgage or facility terms it would have specifically raised this point. IIB appears not to have done so. Pepper cannot, in the context of committal proceedings seek to characterise those individuals as never having been in lawful occupation where its predecessor in title appears to have actively acquiesced in at least two such tenancies.

14

. I pause to observe that at the date of the institution of the plenary proceedings for possession on the 8 th October, 2020, within which the orders the subject of this appeal were made, Ioan Brat had been in occupation and possession of a dwelling unit at 31 Richmond Avenue for upwards of 17 years together with his wife. Likewise, Augustin Gabor had been in occupation and possession of an apartment within 21 Little Mary Street for upwards of 15 years. The relationship of landlord and tenant had subsisted at all material times between each of them and the mortgagor. Such tenancies were registrable with the Private Rental Tenancies Board (“PRTB”). Two of occupiers are named in the 2008 Affidavit of Service and their names together with the specific addresses of all individual dwelling units were ascertainable from documentation either in the possession or otherwise in the procurement of Pepper.

15

. In light of this affidavit, Pepper must be taken to have known the exact address of each unit or certainly could have ascertained same with reasonable diligence. Pepper, as successor in title to IIB, was thus fixed with notice that the two premises had been subdivided into seven self-contained dwelling units in the case of 31 Richmond Avenue and five self-contained dwelling units in the case of 21 Little Mary Street. There was no evidence that Pepper sought to engage with the PRTB or ever took any formal step to identify the individuals who had held each unit as tenant(s) of the defaulting mortgagor.

The Plenary Summonses
16

. Substantially identical plenary summonses were issued in respect of each property on the 8 th October, 2020 seeking, inter alia, an order requiring “the Defendants their servants and/or agents and all other persons having notice of the said order immediately to surrender possession and control of the property described in the Schedule hereto (the “Property”) to the Plaintiff”. An extensive range of prohibitory and mandatory orders were sought. Five different categories of damages were sought together with accounts, enquiries and costs. Each property is identified in the schedule to the respective writ.

The Defendants
17

. No individual was named as defendant in either proceedings. Rather the defendants were described as “Persons Unknown in Occupation of the Property known as 21 Little Mary Street…” and “Persons Unknown in Occupation of the Property known as 31 Richmond Avenue…”, respectively. For the most part the defendants were...

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