Ulster Investment Bank Ltd -v- Rockrohan Estate Ltd,  IEHC 4 (2009)
|Docket Number:||1986 1055 SP|
|Party Name:||Ulster Investment Bank Ltd, Rockrohan Estate Ltd|
THE HIGH COURT 1986 1055 SP
ULSTER INVESTMENT BANK LIMITEDPLAINTIFFROCKROHAN ESTATE LIMITEDDEFENDANTJUDGMENT of Ms. Justice Irvine delivered on the 14th day of January 2009
This judgment relates to two notices of motion which are before the Court in the within proceedings. The first of these in time is a notice of motion dated 17th July, 2008 wherein the plaintiff, Ulster Investment Bank Ireland Limited ("UIB") seeks (inter alia) an order granting UIB possession of the lands and premises scheduled to the notice of motion and described as ALL THAT part of the lands of Inchigaggin, in the Barony and County of Cork containing 119.588 acres being the lands comprised in Folio 28285 of the Register of Freeholders, Co. Cork. The second motion is that brought by the defendant, Rockrohan Estate Limited ("Rockrohan") dated 28th July, 2008 wherein it seeks a number of reliefs including orders by way of declaration as to the interest if any had by UIB in the said lands, its rights to possession and/or sale thereof and/or the extent of the liabilities secured against the defendant's interest in such lands.
The Nature of the within Proceedings
The within proceedings were commenced by special summons dated 19th November, 1986. The grounding affidavit was sworn by Brian McConnell on 4th December, 1986. In that affidavit he records the fact that UIB advanced a loan to Bula Limited ("Bula") for the purpose of enabling that company finance the development of a lead and zinc mine at certain lands in Navan Co. Meath. Rockrohan, pursuant to a guarantee debenture dated 22nd September, 1981 guaranteed the repayment of the said loan to UIB on terms that the maximum recoverable by UIB from Rockrohan in the event of Bula's default would be £1m together with interest as provided for there under. The loan to Bula was also supported by personal joint and several guarantees executed by Mr. Richard Wood, Mr. Michael Wymes, Mr. Thomas Roche Senior and Mr. Thomas Roche Junior, all of whom were Directors of Bula. Rockrohan is a company which is wholly owned and controlled by Mr. Wood.
In July 1982, Bula defaulted in its obligations to UIB and in 1985, Mr. Laurence Crowley was appointed Receiver over its assets. Subsequently, by letter of 17th July, 1986, Rockrohan was called upon to meet its obligations under the guarantee debenture. The letter of demand provided full details of the default made by Bula and further set out how the sum demanded under the guarantee debenture had been calculated. In addition, the said letter enclosed a schedule specifying the rates of interest applicable to Rockrohan's liabilities from the date the monies fell due under the demand. The schedule also particularised the manner in which UIB had dealt with other securities realised, namely, the proceeds of sale of certain Cement Roadstone Holding ("CRH") shares and dividends.
A replying affidavit was sworn by Mr. Wood on behalf of Rockrohan on 16th January, 1987. That affidavit did not raise any defence to the lawfulness of the guarantee debenture. Neither did Mr. Wood challenge the extent of the liability of Rockrohan under the guarantee debenture. At no stage was it suggested that the terms of the guarantee debenture did not reflect the true intention of the parties in terms of the nature of the security furnished by Rockrohan. Rockrohan made no challenge to the sum sought to be declared well charged on foot of the security. It raised no issue regarding the sums claimed for principal or interest. Neither did it contest the banks right to continuing interest nor the manner in which UIB had dealt with monies realised on the sale of the CRH shares and CRH dividends.
The affidavit of Mr. Wood sworn on behalf of Rockrohan can realistically be categorised as something close to an ad misericordiam plea. The Court was asked to exercise its discretion generously to postpone the proceedings to await the outcome of litigation which had been commenced earlier in the year and to which Rockrohan was not a party. In those proceedings ("the Tara proceedings"), Bula (in receivership) and Messrs. Wood, Wymes, Roche Sr. and Roche Jr. sought damages against the adjacent enterprise Tara Mines Limited and a number of other parties whom they alleged had engaged in various tactics with a view to preventing Bula from exploiting its own mine. The Minister for Energy was also joined as a defendant to those proceedings for allegedly failing to enforce certain obligations on the part of Tara Mines Limited under a lease agreement between that company and the Minister. Mr. Wood averred that the damages that would be recovered by the plaintiffs in the Tara proceedings would exceed the debt due by Bula to all of the banks who had financed its mining operations including UIB and that consequently the Bank's proceedings should be postponed to await the outcome of that action.
Mr. Wood in the replying affidavit also relied upon a second set of proceedings which had been instituted by himself and others against the Receiver, Mr. Crowley, and a number of banks including UIB wherein allegations of negligence were made against all of the defendants in relation to their dealings with Bula. Mr. Wood, at para. 12 of his affidavit, deposed as follows:-
"12. In these circumstances I say and believe it would be inequitable if the plaintiff herein was allowed to proceed to execute against the lands in question as such relief may be entirely unnecessary. Accordingly, I pray this Honourable Court to adjourn the present application until such time as the other proceedings are determined."
In the face of the aforementioned affidavits Blayney J. proceeded to make what is commonly described as a well charging order on 16th February, 1987. The terms of that order are significant. The Court declared as follows:-
(a) That the sum of £1m for principal and a sum of £267,147.02 for interest up to 4th December, 1986 stood well charged on the defendant's interest in the lands earlier described.
(b) That the defendant would have a period of one month from the date of the service of the order to dispute the aforementioned sums.
(c) That in default of Rockrohan disputing or paying the relevant sum outstanding at the expiration of a further three months, the lands and premises would be sold subject to conditions of sale to be settled by the court.
(d) That the plaintiff would have the costs of the proceedings.
The order of the High Court is also significant in two other respects. Firstly, the Court did not direct that an account be taken of the monies declared well charged on Rockrohan's lands. The Court itself, based on the pleadings, affidavits and exhibits declared the sum referred to at para. (a) above well charged on the lands. Secondly, the Court did not grant UIB an order for possession as had been sought at para. 3 of the special endorsement of claim on the special summons. Counsel's note of the judgment, records that Blayney J. refused an order for possession. He concluded that there was no need for such an order as there was no evidence to suggest that the bank would be impeded in the sale of the Rockrohan lands.
By notice of appeal dated 3rd April, 1987 Rockrohan sought to appeal the order of Blayney J. to the Supreme Court. The affidavit grounding that appeal dated the 10th January, 1990 was once again sworn by Mr. Wood. In that 21 page affidavit, Mr. Wood made no challenge to the lawfulness of the order of the High Court and neither did he protest the amount of the principal and/or interest declared well charged on Rockrohan's lands. No complaint was made regarding how the Bank had dealt with the proceeds of sale of the CRH shares or dividends. The thrust of the appeal was that the well charging order should have been postponed to await the outcome of the Tara proceedings and the Bank proceedings. Mr. Wood contended that had it not been for the wrongdoing of the defendants in the aforementioned proceedings that "UIB would have been repaid long ago and that no question of realising security would ever have arisen". He further averred that:-
"It would be inequitable if UIB was allowed to proceed to execute against the lands in question pending the determination of the aforesaid extensive proceedings in which, inter alia, the security, the subject matter herein, and the underlying loan are being contested, and which proceedings are being vigorously prosecuted with good cause against UIB and the other defendants."
The Supreme Court accordingly by order dated 11th January, 1990 exercised its discretion and substituted the three month stay which had initially been granted by the High Court with a stay on the order for sale until 2nd October, 1990.
Brief History of the Proceedings Inter Partes since the Order of the Supreme Court of 11th January, 1990
As already stated, in 1986 the Bank proceedings were commenced by Bula and its directors against Bula's receiver, a number of banks including UIB and a firm of mining consultants who had advised the receiver. The pleadings in that action bearing Record Number 1986 No. 2264 P, when amended, not only sought damages but also certain declarations. The relief sought included a declaration that the plaintiffs had no liability to repay any of the loans outstanding to the banks, that consent judgments obtained against the guarantors be set aside and that all contracts secured by the plaintiffs or arranged by them as security be rescinded and declared unenforceable. The proceedings encompassed the guarantee debenture in this action and this was confirmed in the plaintiff's replies to particulars in the Bank proceedings by letter dated 4th July, 1989. The nature of the Bank proceedings appear to lend support to the averment made by Mr. John Anderson at para. 12 of his affidavit sworn on 10th November, 2006 in Rockrohan's judicial review proceedings, to which I will later refer, that it was the existence of these proceedings and the challenges to the underlying...
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