Vico Ltd and Others v Bank of Ireland and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian McGovern
• Judgment Date: 24 July 2015
• Neutral Citation: [2015] IEHC 525
• Court: High Court
• Docket Number: [2015 No. 1553 P.]
• Date: 24 July 2015

BETWEEN

VICO LIMITED, ALEXANDRA O'DONNELL, BLAISE O'DONNELL, BRUCE O'DONNELL AND BLAKE O'DONNELL

PLAINTIFFS

AND

GOVERNOR AND COMPANY OF THE BANK OF IRELAND,

BANK OF IRELAND PRIVATE BANKING LIMITED, TOM KAVANAGH, DAVID HARRIS, GERRY HEPBURN, DECLAN KENNY, KEVIN BROMLEY, KATHERINE GEORGINA HARDING, ELAINE HIGGINS,

GETHIN TAYLOR, LINDSEY LUDGATE, KEITH JONES,

FIRST NAMES TRUST CO (ISLE OF MAN) LIMITED AND CHANCERY TRUSTEES LIMITED

DEFENDANTS

[2015] IEHC 525

[2015 No. 1553 P.]

THE HIGH COURT

Landlord & Tenant – S. 123 of the Land and Conveyancing Law Reform Act 2009 – Consumer Credit Act 1995 – Family Home Protection Act 1976 – Locus standi – Non-execution of the security documents – Rem judicatam – Abuse of process of law – Whether new issues arising in the proceedings mandate fresh litigation – Whether the first named plaintiff was a party to the earlier proceedings.

Facts: The plaintiffs in the petition challenged the validity of the security given by the first named plaintiff in the case. The plaintiffs asserted that the second, third, fourth and fifth named plaintiffs were entitled to the legal possession of the premises. The first, second and third named defendants in the proceedings now brought an application to the court seeking to vacate the two pending proceedings in the case pursuant to s. 123 of the Land and Conveyancing Law Reform Act 2009. The defendants claimed that the matter would be an abuse of the process of law and therefore would be barred by the doctrine of Res Judicata. The plaintiffs claimed that the first named plaintiff was never a party to the earlier proceedings in the case and therefore would not be bound by the judgment in that proceeding.

Mr. Justice Brian McGovern held that the application for an order seeking to vacate the pending proceedings on the grounds of Res Judicata would be granted. Following the rule in Henderson v. Henderson (1843) 3 Hare 100, which had been approved by the Supreme Court in Re Vantive Holdings [2010] 2 I.R. 118, the Court held that, in essence, the proceedings before the Court constituted the grounds already determined in the previous proceedings. The first named plaintiff could have participated in the earlier proceedings. Therefore, the plaintiffs had no locus standi in the present proceedings. The Court held that the present proceedings constituted an abuse of the process of law.

JUDGMENT of Mr. Justice Brian McGovern delivered on the 24th day of July, 2015

1 The first, second and third named defendants in these proceedings have brought an application to the court to vacate two lis pendens registered on behalf of the first named plaintiff in respect of the lands and premises known as ' Gorse Hill' Vico Road, Killiney, Co. Dublin. The lis pendens were registered on 3rd March, 2015, following the vacating of the property by the second, third, fourth and fifth named plaintiffs who are the children of Brian O'Donnell and Mary Patricia O'Donnell. They vacated the premises on foot of a Supreme Court order requiring them to do so. The lis pendens were registered on the same day as this Court refused to grant the plaintiffs' interlocutory injunctions restraining the Bank from taking possession of Gorse Hill. In the motion before the court, the first, second and third named defendants seek an order vacating the lis pendens pursuant to s. 123 of the Land and Conveyancing Law Reform Act 2009, on the grounds that the claim constitutes an abuse of process and/or that the matters raised by the plaintiffs in these proceedings are res judicata and/or frivolous, vexatious, and ought to be struck out. The first, second and third named defendants also claim that the first named plaintiff has been guilty of manifest and unjustifiable delay in seeking to make its claims and to register the lis pendens.

2 When one reads the plenary summons in this case, it is clear that the plaintiffs are challenging the security documents on foot of which the third named defendant (as receiver) has taken control of the premises at Gorse Hill. The plaintiffs challenge the security documents whereby the first named plaintiff pledged the property as security for monies lent by the first named defendant to Brian O'Donnell and Mary Patricia O'Donnell, and the proceedings seek to restrain the first, second and third named defendants from taking any step in purported reliance on the security documents. The second, third, fourth and fifth named plaintiffs also seek orders restraining the third named defendant from interfering with their quiet possession, use, occupation and enjoyment of Gorse Hill. In essence, these proceedings amount to a challenge to the validity of the security given by Vico Limited and an assertion that the second, third, fourth and fifth named plaintiffs are entitled to possession, use, occupation, and quiet enjoyment of the premises. While there are other matters referred to in the plenary summons, the main and clear focus of the proceedings are the matters referred to above.

Factual Background

3 In order to put this application in context, it is necessary to set out some factual background. In December 2010, the first named defendant ('the Bank') instituted summary proceedings (record number 2010/6100S) against Brian O'Donnell and Mary Patricia O'Donnell seeking recovery of approximately €69m which had either been advanced to the O'Donnells personally, or had been guaranteed by them. In March 2011, in the course of the Bank's application to enter summary judgment, the Bank and the O'Donnells entered into a settlement agreement whereby the O'Donnells expressly acknowledged their indebtedness to the Bank. They also agreed to make a number of scheduled repayments to the Bank and that in the event of any default in making the scheduled repayments they would consent to judgment being entered against them in the sums sought by the Bank.

4 The O'Donnells defaulted on the payments required of them under the settlement agreement and on 12th December, 2011, judgment was entered against them and certain related companies in the sum of approximately €71m. In an attempt to enforce payment of the sums due, the Bank issued a letter of demand to the first named plaintiff (Vico Limited) in respect of its liabilities under guarantees it had executed. Vico Limited was a single purpose vehicle controlled by the O'Donnell family and existed solely for the purpose of owning the premises at Gorse Hill. As the demand was not satisfied by Vico Limited, the Bank appointed a receiver over Gorse Hill in June 2012.

5 On 18th July, 2012, the entire issued share capital in Vico Limited was transferred to the O'Donnell children in equal shares and thereafter they were in full control of the company. From July 2012, until December 2012, Brian O'Donnell and Mary Patricia O'Donnell were the sole directors of Vico. The current directors are two of their children, namely, Mr. Bruce O'Donnell and Mr. Blake O'Donnell (the fourth and fifth named plaintiffs). In July 2012, the O'Donnell children issued proceedings against the Governor and Company of the Bank of Ireland, Bank of Ireland Private Banking Limited and Tom Kavanagh (the receiver). These proceedings have record number 2012/7554P and will hereinafter be referred to as the ' Gorse Hill proceedings'.

6 In the course of those proceedings, the plaintiffs, at a very late stage, sought to join Vico Limited as a defendant. This was a tactical move on their part since it was not intended that the company would defend the proceedings and the plaintiffs would thereby obtain an order avoiding the security instruments created by the company. That application was refused. At no time did the O'Donnell children seek to join Vico Limited in those proceedings as a co-plaintiff. The plaintiffs argue that the reason for this was because the company had been struck off the register. It is clear that the O'Donnell family had control over the company and were able to have the company restored to the register for the purpose of maintaining these proceedings. There is no reason why they could not have done so in respect of the Gorse Hill proceedings. Indeed, the O'Donnell children made extensive arguments in the Gorse Hill proceedings challenging the validity of the security offered by Vico Limited to the Bank.

7 At the hearing of this motion, counsel for the first, second and third named defendants informed the court that yet another set of proceedings (record number 2015/4232P) were issued on 26th May, 2015, in which Vico Limited is named as plaintiff and the defendants are the Governor and Company of the Bank of Ireland and Tom Kavanagh (the receiver). In those proceedings, the plaintiff seeks an injunction compelling the defendants to vacate Gorse Hill and deliver up to the plaintiff the keys of the property. The plaintiff also seeks damages for trespass and other relief. The applicants in the motion only became aware of these proceedings on the afternoon before this hearing took place. Mr. Blake O'Donnell informed the court that these proceedings had issued because the receiver has taken possession of the company's property without its consent.

Res Judicata and the Rule in Henderson v. Henderson

8 The doctrine of res judicata has its origins in public policy considerations which require that there should be finality to litigation and parties should not be permitted to re-litigate matters which have already been determined by the courts. In Dublin Corporation v. Building and Allied Trade Union [1996] 1 I.R. 468, Keane C.J. at p. 481 said that the court recognised:-

'[T]he interest of all citizens who resort to litigation in obtaining a final and conclusive determination of their disputes. However severe the stresses of litigation may be for the parties involved - the anxiety, the delays, the costs, the public and painful nature of the process - there is at least the comfort that at...