Spain v McCann; Re Clarets Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 22 November 1978
• Neutral Citation: 1983 WJSC-HC 1644
• Docket Number: 1978 No. 292 Sp.
• Court: High Court
• Date: 22 November 1978

Spain v. McGann

IN THE MATTER OF THE COMPANIES ACT 1963 SECTION 316

-and-

IN THE MATTER OF CLARETS LIMITED (IN RECEIVERSHIP)

BETWEEN:

ALEX J. SPAIN

Plaintiff

-and-

THOMAS G. McGANN

and

STANCHART BANK (IRELAND) LIMITED

Defendants

1983 WJSC-HC 1644

1978 No. 292 Sp.

THE HIGH COURT

1 Judgment of Mr. Justice Costello delivered the 22nd day of November 1978

2 Stanchart Bank (Ireland) Limited ("the Bank") were granted a debenture by Clarets Limited ("the Company") on the 17th of January 1977 which contained the usual clauses relating to the security granted, rights of sale, and the appointment of a Receiver. In addition, it contained a special clause expressly making the Bank's security subject to the rights of a prior Mortgagee ("the Defendant"). The Bank has appointed a Receiver; the Company's property has been sold; but the Bank now says that it has priority over the Defendant in relation to the proceeds of sale - a claim which the Defendant, not surprisingly, strenuously opposes. I am now required (on an application by the Receiver under Section 316 of the Companies Act 1963) to determine the issue between the Bank and the Defendant. To do so, I must outline in some greater detail the course of events which has given rise to the present application.

3 The Company had purchased a premises in Kenilworth Square, Rathgar from the Defendant and carried on a hotel and restaurant business in it. The purchase price of the property was substantially unpaid and the purchase price was left outstanding and a Mortgage to secure its repayment was entered into between the Company and the Defendant. This was executed on the 28th of February 1975. The Mortgage debenture issued by the Company in favour of the Bank was dated the 17th of January 1977 but by Clause 8.12 thereof it expressly provided that the Mortgage debenture was subject to the Defendant's prior Mortgage of the 28th of February 1975 and to the principal interest and other monies thereby secured, special provision being made to safeguard the interests of the Defendant in the event of a sale by the Bank under its powers of sale. Particulars of the Bank's Mortgage debenture were registered on the 7th of February 1977 pursuant to the provisions of Section 99 of the 1963 Act. Particulars of the Defendant's earlier Mortgage had not, however, by then been registered. The Defendant became aware of the non-registration, and he applied to the High Court pursuant to Section 106 of the Act for an extension for the time for registration. By order of the High Court on the 29th of July 1977, in which it was recited that the Court was satisfied that the failure to register particulars of the Mortgage within the time required by the Section was "accidential", it was ordered as follows:-

"That the time for registration of such particulars be and the same is hereby extended for twenty-one days from the date of perfection of this Order (which date appears below) - but this Order to be without prejudice to the rights of parties acquired prior to the actual time of such registration and a copy of this Order...