High Court of Ireland Decisions

 


THE HIGH COURT

Record No. 2022

BANKRUPTCY

In THE MATTER OF

JOHN LOWE

A BANKRUPT

AND

IN THE MATTER OF

NORA LOWE

A BANKRUPT

Judgment of the President of the High Court delivered on the 21^ST DAY OF September 1988

John Lowe formerly of 27 Lower Baggot Street in the City of Dublin and his wife, Nara, were adjudicated bankrupts on the 11th day of July 1986.

On the 28th day of November 1986, the Bankrupt, Nora Lowe, caused to be issued a charge in which she claimed

(1) A declaration that all the interests of the bankrupt, John Lowe, in all the contents of 27 Lower Baggot Street, that is, pictures, furniture, jewellery, silver, china, plate and all other goods were transferred to her on the 15th day of March 1982 and that they arc the sole property of the said Nora Lowe and her estate.

(2) That the said John Lowe, a Bankrupt, and the Official Assignee as the Official Assignee in bankruptcy of the estate of the said John Lowe have no estate or interest in the said contents or any of them.

In the said charge she alleges that:

On the 15th clay of March 1982 in consideration of her agreeing to join with John Lowe in pledging the deeds of their then family home at No. 27 Loxer Baggot Street in the City of Dublin to Allied Irish Finance Ltd. as part security of their loan on the Viking Public House, the said John Lowe thereby conveyed to Nora Lowe all his interests in all the contents of 27 Lower Baggot Street.

On the 15th clay of March 1982, the said John Lowe was solvent and able to pay his debts as they fell due without recourse to the said contents of the said premises.

That the consideration for the said transfer of the said contents aforesaid was good and for the charges that the said transfer of the interest of the said John Lowe in the said contents to her was valid and effective.

In the discharge filed on behalf of the Official Assignee, it was denied that the Bankrupt John Lowe conveyed or purported to convey to the bankrupt Nora Love all or any of his interests in all or any of the contents of 27 Lower Baggot Street in the City of Dublin and alleged that there was no consideration to support the alleged or any conveyance of the said John Lowe's interest in the contents to the said Nora Lowe and alleged, that the said John Lowe was not solvent on the 15th day of March 1982 and able to pay his debts as they fell due without recourse to the said contents of the said premises.

The letter referred to in the said charge and discharge is written by John Lowe and addressed to his wife Nora Lowe and is in the following terms.

"In consideration of you agreeing to join with me in pledging the deeds of Baggot Street to A.I.F. as part security of their loan on the Viking, I hereby convey to you all my interest in all contents of 27, Lower Baggot Street, i.e. pictures, furniture, jewellery, silver, china, plate and all other goods."

The circumstances in which this letter came to be written were as follows:-

(1) John and Nora Lowe were joint owners of premises situate at 27 Lower Ban-got Street in the City of Dublin.

(2) The said premises were subject to an indenture of mortgage made between the Irish Permanent Building Society of the one part and the Bankrupts of the other part.

(3) At the relevant time, namely, November/ December 1981 there was due and owing on foot of the said indenture of mortgage to the Irish Permanent Building Society a sum of approximately £45,000.

(4) During the month of November 1981, John Lowe negotiated loan facilities with the Allied Irish Finance Co. Ltd. whereby the Allied Irish Finance Co. Ltd. sanctioned facilities to John Lowe jointly with his wife Nora in the sum of £135,000, £90,000 of which was designated as "working capital" and the balance to be used for the purpose of discharging the amount due on foot of the hereinbefore referred to mortgage.

As appears from the letter dated the 30th day of November 1981, the security to be offered by John and Nora Lowe was, in addition to securities already held, an equitable mortgage by deposit of the title deeds of the premises situate at 27 Lower Baggot Street in accordance with the terms of the Family Home Protection Act, 1976.

Nora Lowe, agreed to this arrangement and on the 4th day of December 1981 executed a consent for the purpose of Section 3 of the Family Home Protection Act, 1976 to the proposed mortgage of the said family home to Allied Irish Finance Co. Ltd. as security for the sums then due or which might thereafter become due to Allied Irish Finance Co. Ltd.

(5) The said sum agreed to be advanced by Allied Irish Finance Co. Ltd was so advanced on the 7th clay of December 1981 by two cheques, namely, one of £46,887.45 which was utilised for the purpose of discharging the aforesaid mortgage and a further cheque in respect of the sum of £90,000.

(6) It appears from the evidence of the said John Lowe that the major portion, at least, of the said £90,000 was utilised by him to pay off debts which had accumulated over a period of time.

(7) The premises, 27 Lover Baggot Street in the City of Dublin were valuable premises which were likely to be made more valuable if planning permission for a change of user was granted.

( 8) The application for planning permission in this regard had been refused by the local authority but, on appeal, planning permission was granted by the Minister for the Environment on the 9th day of March 1932.

(9) In or about the months of February/March 1982, the Bankrupt, John Love was negotiating for the purchase of licensed premises known as "The Viking" and situate in Dame Street in the City of Dublin and for the provision of additional facilities from the Allied Irish Finance Co. Ltd. to enable him to purchase same for the sum of approximately £300,000.

(10) By letter dated the 10th day of 'March, 1982 from the Allied Irish Finance Co. Ltd. he was informed that additional facilities had been sanctioned in the sum of £320,000.

The security sought in connection with this facility was

( 1 ) equitable mortgage by deposit of title deeds of 27 Lower Baggot Street, Dublin in accordance with the terms of the Family Home Protection Act, 1976 together with supporting policy of fire insurance.

(2) equitable mortgage by deposit of title deeds of licensed premises now being purchased and situate at Dame Street

in the City of Dublin together with supporting policy of insurance.

(11) By 1etter dated the 19th. day of March 1982, he was informed that additional security would be required, that is, joint and several guarantees to be executed by John Lowe, Nora Lowe and Noel Palmer.

(12) Nora Lowe was reluctant to have her equity in the premises situate at 27 Lower Baggot Street further diluted, it being required to be placed as security for the purchase of the licensed premises known as "The Viking". As her agreement was essential before the additional facilities could be obtained, John Lowe offered to assign to her the contents of the house if she agreed to this course.

(13) She agreed to this course and executed the necessary documents including the guarantee on the 19th day of March 1982 whereby she agreed to guarantee a sum not in excess of £320,000.

(14) On the 15th clay of March 1982, John Lowe wrote the letter hereinbefore referred to. Nora Lowe relies on this letter as confirming the agreement made between herself and her husband whereby in consideration of the assignment to her of his interest in the contents of the: house, she agreed to execute the guarantee hereinbefore referred to and to the lodgment of the title deeds to the property by way of equitable mortgage as security for the said loan.

Section 52 of the Bankruptcy (Ireland) Amendment Act, 1872 provides that:

"Any settlement of property made by a trader after the commencement of this Act, not being a settlement before and in consideration of marriage, or made in favour of a purchaser or encumbrancer^- in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within taro years after the date of such settlement, be void as against the assignees or trustee of such bankrupt under them said Act or this Act, and shall, if the settlor becomes bankrupt at any subsequent time within ten years after the date of such settlement, unless the parties claiming under such settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in such settlement, be void against such assignees or trustee."

"Settlement" shall for the purpose of this Section include any conveyance or transfer of property.

In order to have the settlement of the property made by John Lowe in favour of his wife be declared void, it must be established

(a) That at the time of the settlement, he was not able to pay all his debts without the aid of the property comprised in such settlement , or

(b) The settlement was not made in good faith and for valuable consideration .

I have carefully considered the evidence of John Lowe with regard to his financial position at the time of making the settlement on his wife, Nora Lowe, namely, the 15th day of March 1982, and the documents adduced in evidence.

Having regard to the fact that planning permission for the change of user of premises situate at Baggot Street had been obtained on the 9th day of March 1982 and the various valuations of the property which had been obtained, I am satisfied that at the date of the execution of the document hereinbefore referred to the said John Lowe was solvent and in a position to pay his debts without recourse to the contents of the house. Though not without recourse to the premises themselves.

I am also satisfied that the parties to the transaction acted in good faith and that there: was no intention by either of the parties to delay, hinder or defraud creditors of their just debts.

I am also satisfied that there was valuable consideration moving from Nora Lowe to John Lowe for the assignment of the contents of the house.

At the time she had a valuable interest in the equity of the house and she was placing same on risk in order to enable her husband, John Lowe, to obtain the facilities necessary to enable him to complete the purchase of the premises known as "The Viking" and for this purpose, she executed the guarantee dated the 19th day of March 1982. Being satisfied, she is entitled to the relief which she seeks namely,

( 1 ) a declaration that the contents of the premises 27 Lower Baggot Street, i.e. pictures, furniture, jewellery silver, china, plate and all other goods are her sole property and

(2) the said John Lowe, and the Official Assignee as the official assignee in bankruptcy of the estate of the said John Lowe has no estate or interest in the said contents or any of them.