Re Ocean Point Development Company Ltd

JurisdictionIreland
JudgeMs. Justice Laffoy
Judgment Date12 October 2012
Neutral Citation[2012] IEHC 420
CourtHigh Court
Date12 October 2012

[2012] IEHC 420

THE HIGH COURT

[No. 85 COS/2012]
Ocean Point Development Co Ltd (In Receivership) & Dooley, In Re
IN THE MATTER OF OCEAN POINT DEVELOPMENT COMPANY LIMITED (IN RECEIVERSHIP)

AND

IN THE MATTER OF THE ASSETS OF MR. FRANCIS DOOLEY

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 - 2009

AND

IN THE MATTER OF SECTION 316(1) OF THE COMPANIES ACT 1963 (AS AMENDED)

COMPANIES ACT 1963 S316(1)

WYLIE IRISH CONVEYANCING LAW 2ED 1996 PARA 10.25

WHITBREAD & CO LTD v WATT 1902 1 CH 835

BARRETT APARTMENTS LTD, IN RE 1985 IR 350

ROSE v WATSON 11 ER 1187 1864 10 HL CAS 672

TEMPANY v HYNES 1976 IR 101

TULLOW ENGINEERING (HOLDINGS) LTD (IN RECEIVERSHIP), IN RE; GRACE v TULLOW INVESTMENTS LTD 1990 1 IR 452 1988/8/2266

ROBSON v SMITH 1895 2 CH 118

COMPANIES ACT 1963 S316

WYLIE IRISH CONVEYANCING LAW 2ED 1996 PARA 11.17

DESMOND & BOYLE v BROPHY & ORS 1985 IR 449 1986 ILRM 547 1985/7/1959

COMPANY LAW

Receivership

Application for directions in connection with performance of functions of receiver - Mortgage - Contract for sale of land - Contract for development of land - Deposit - Lien - Floating charge - Whether receiver entitled to treat deposit monies as security for secured liabilities - Whitbread & Co Ltd v Watt [1902] 1 Ch 835; In Re Barrett Apartments Ltd [1985] IR 350; Rose v Watson (1864) 10 HL Cas 672; Tempany v Hynes [1976] IR 101; Re Tullow Engineering (Holdings) Ltd (In Receivership) [1990] 1 IR 142 and Robson v Smith [1895] 2 Ch 118 considered - Companies Act 1963 (No 33), s 316 - Directions made regarding treatment of deposits (2012/85COS - Laffoy J - 12/10/2012) [2012] IEHC 420

In re Ocean Point Development Company Ltd

Facts: The application was made by a receiver appointed by the bank of a landowner and a development company who had entered into two agreements with purchasers in respect of two units of a development. The receiver sought the directions of the Court under s. 316 (1) Companies Act 1963 as to the claim by the notice parties for the return of their deposits. Directions were sought due to the 'serendipitous factor' that the deposits were never released to the vendors.

The court first considered whether as a matter of contract the notice parties had a right of action for the return of the deposits. The second consideration was then whether the deposits were included under the mortgage as security.

Laffoy J considered the contractual terms governing payment and held the Bank's charge would have priority over the purchaser's lien, In Re Barrett Apartments Ltd [1985] IR 350 considered. The fact the deposits were not released by the solicitors was immaterial in considering the notice parties entitlement.

In relation to the securities, the mortgage captures every right and benefit in relation to the property specifically charged in establishing the mortgage and therefore the deposit should be treated by the receiver as assets assigned to the bank pursuant to the mortgage.

The deposits were securities for the secured liabilities and should therefore be treated as assets assigned to the bank.

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Judgment of Ms. Justice Laffoy delivered on 12th day of October, 2012.

The application and the parties thereto
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1. On this application the applicant, Martin V. Ferris (the Receiver), who is the Receiver appointed by ACC Bank Plc (the Bank) of Ocean Point Development Company Limited (the Company) and of certain assets of Mr. Francis Dooley (Mr. Dooley) seeks the directions of the Court pursuant to s. 316(1) of the Companies Act 1963 (the Act of 1963), as amended, and under its inherent jurisdiction. The directions sought relate to the treatment of deposits paid by purchasers in respect of two units in the development known as Ocean Point, Courtown Harbour, County Wexford, which was intended to be a mixed retail and apartment development and which was constructed on land owned by Mr. Dooley and developed by the Company. In the case of each of the units there were two agreements: an agreement for sale between Mr. Dooley and the purchaser in respect of the site; and a development/building agreement between the Company and the purchaser in relation to the development which was to take place on the site.

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2. The notices parties on the application were the purchasers under the agreements, namely:

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(a) Mr. John Boyle (Mr. Boyle), the purchaser of a retail unit, Unit 11, who was represented by solicitor and counsel at the hearing of the application; and

5

(b) Mr. Sean Roche (Mr. Roche) and Mr. Michael Carroll (Mr. Carroll), the joint purchasers of an apartment unit, Unit 17.

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Mr. Carroll appeared in person at the hearing. However, he did not make any legal submissions.

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3. For the record I should also record that Mr. Dooley appeared at the hearing. However, I ruled that he had no standing in the matter and could not be heard by the Court.

8

4. Although, as I understand the position, the sales of some of the units in Ocean Point were completed by the Receiver, the sale of Unit 11 and the sale of Unit 17 have not been, and apparently will not be, completed. The reason it has been necessary for the Receiver to seek the directions of the Court is due to what counsel for the Receiver realistically characterised as a "serendipitous" factor. Notwithstanding the provisions of the agreements entered into between the parties, which I will outline later, at the time the Receiver was appointed by the Bank the solicitors who acted for Mr. Dooley and the Company in relation to the sales of Unit 11 and Unit 17 held the deposits paid by those purchasers under both the agreements for sale of the sites and the development/building agreements. In the case of Unit 11 the deposits paid aggregated €119,900 and in the case of Unit 17 they aggregated €33,000. Following the appointment of the Receiver, by letter dated 25 th March, 2009, the Solicitors for Mr. Dooley and the Company, Denis McSweeney, sent those deposits to the solicitors acting for the Receiver. In broad terms, the position adopted on behalf of the Receiver on the hearing of the application was that the money representing the deposits is captured by the security documents held by the Bank from Mr. Dooley and the Company, in consequence of which the Receiver, on behalf of the Bank, is entitled in priority to Mr. Boyle in relation to the deposits paid in respect of Unit 11 and to Mr. Roche and Mr. Carroll in relation to the deposits paid in respect of Unit 17.

The Bank's securities and the appointment of the Receiver
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5. By virtue of an indenture of mortgage/charge (the Mortgage) dated 3 rd August, 2006 made between Mr. Dooley of the one part and the Bank of the other part, Mr. Dooley mortgaged and charged the "Secured Property", as defined, in favour of the Bank as continuing security for payment and discharge of the "Secured Liabilities", as defined. The Secured Property was defined as meaning certain registered and unregistered land set out in the schedule to the Mortgage. For present purposes I am assuming that the site of Ocean Point came within the property described in the schedule, although I cannot identify it as such. Moreover, as continuing security, in Clause 4.1.7 Mr. Dooley assigned unto the Bank -

"… the full benefit of all covenants, agreements, charges, indentures, acknowledgements and undertakings in favour of the Borrower as are contained in the title deeds and other documents of title relating to the Secured Assets together with and without prejudice to the generality of the foregoing the full benefit of:-

(a) any covenant, agreement or undertaking for road making or the provision of services or for the payment of road charges or expenses incurred with or in connection with the provision of services or the like in respect of the Secured Assets and any indemnity against payment of any such charges or expenses;

(b) any other covenants, agreement, undertaking, charge, right, remedy or indemnity in relation to the Secured Assets and any rent or payment in the nature of a rent payable thereout or charged thereon and any service charges, management charges, fines, insurance and other premiums and other monies payable out of any lease, tenancy or licence of any part of the Secured Assets, whether such lease, tenancy or licence is created prior to or subsequent to this Mortgage/Charge;

(c) all rights of the Borrower to be paid or receive compensation under any statute or enactment by reason of any compulsory acquisition or other exercise of compulsory or similar powers in relation to the Secured Assets by any local or other authority or government agency or body or any refusal, withdrawal or modification of any planning permission or approval relative thereto or any control or limitation imposed upon or affecting the use of the Secured Assets and so that the production of this Mortgage/Charge to the authority, body or person liable to pay such compensation or other payment shall be a sufficient authority to it or him to pay such compensation and/or other monies to the Bank."

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The position of the Receiver is that the deposits paid in respect of Unit 11 and Unit 17 under the respective agreements for sale were captured by Clause 4.1.7 and, in particular, by reference to the assignment to the Bank of "agreements" relating to the Secured Assets in that provision. The expression "Secured Assets" was defined as meaning all assets, rights and property the subject of the security created, expressed or intended to be created by the Mortgage.

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6. By deed dated 5 th March, 2009 the Bank, in pursuance of the powers contained in the Mortgage, appointed the Receiver to be receiver and manager of all the property of Mr. Dooley referred to, comprised in and charged by the Mortgage and to enter upon and take possession of same. No issue as to the validity of the appointment of the...

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