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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Goodbody Stockbrokers v Allied Irish Banks & Anor [2013] IEHC 155 (16 April 2013)
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Cite as: [2013] IEHC 155
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Judgment Title: Goodbody Stockbrokers v Allied Irish Banks & Anor Neutral Citation: [2013] IEHC 155 High Court Record Number: 2012 76 SP Date of Delivery: 16/04/2013 Court: High Court Composition of Court: Judgment by: Birmingham J. Status of Judgment: Approved |
Neutral Citation [2013] IEHC 155 THE HIGH COURT [RECORD NO] 2012 76 SP BETWEEN GOODBODY STOCKBROKERS PLAINTIFF AND
ALLIED IRISH BANKS PLC AND CARMEL PATTERSON DEFENDANTS JUDGMENT of Mr. Justice Birmingham delivered on the 16th day of April, 2013 1. These proceedings commenced with the issue of a special summons, an interpleader summons, by Goodbody Stockbrokers (“the interpleader”). The summons was issued in a situation where the interpleader was faced with competing claims to a portfolio account from Allied Irish Banks Plc (“the Bank”) and from Carmel Patterson (“the claimant”). 2. The background to the present dispute is that Mr. William Patterson (“the customer”) who is the husband of the claimant, entered into a discretionary portfolio management agreement with the plaintiff, Goodbody Stockbrokers, opening a portfolio account no. GSPA0070. 3. By Letter of Pledge (“letter of pledge”) dated 27th June, 2006, Mr. Patterson charged in favour of the Bank by way of first fixed charge all of his rights, title, benefit and interest whatsoever both present and future in and to the stocks, shares and investments (together called “the securities”) to which he was then or might thereafter become beneficially entitled and which were then or from time to time held in the account, together will all monies then or from time to time standing to the credit of the account (the “credit balance”) and all rights relating to the securities and the credit balance together with all other monies as might comprise or represent the proceeds of realisation of, or any income received on investments forming all or part of the securities as security for all sums due to the Bank. As further appeared from the Letter of Pledge, Mr. Patterson irrevocably authorised the stockbroker to hold the secured property to the Bank’s sole order, to issue to the Bank a written statement showing the securities held in the account and their value upon request, and upon receipt of a request in writing from the Bank, to sell the securities and apply or make over or transfer so much of the proceeds of any sale or any part or any amount of the Credit Balance in or towards the permanent reduction of secured obligations. 4. Following a letter from the Bank dated 10th February, 2011, enclosing an authority from Mr. Patterson addressed to the Bank to encash the account and apply the proceeds in reduction of his loan facility with the Bank, the account was duly encashed to the extent that was possible. There followed a formal request from the Bank dated 31st March, 2011, asking that the funds be remitted to the Bank in reduction of the secured obligations of Mr. Patterson. 5. The background to the Letter of Pledge is that Mr. Patterson availed of a loan facility provided by AIB, a condition of which was the provision of certain items of security including a charge over the account that has been referred to. This loan facility was reviewed and extended in both 2007 and 2009 and in each instance a condition of the facility was the provision of certain items of security, including a charge over the specified account. The loan facility of 19th June, 2006, was in the amount of €2,343,000.00, that of 29th May, 2007, in the amount of €4,855,000.00, and that of February, 2009 in the amount of €5,162,510.00. 6. As the provision of Clause 2 and in particular Clause 2(c) of the Letter of Pledge is of particular significance, it is convenient to set it out here:-
(a) to hold the Secured Property for the time being subject to this security to the Bank’s sole order; (b) to issue to the Bank a written statement showing the Securities held in the Account and their value upon request, at any time, by the Bank and; (c) upon receipt of a request in writing from the Bank and whether with or without notice to the Customer TO SELL the securities and apply or (by any other usual means) MAKE OVER OR TRANSFER so much of the proceeds of such sale (and any interest accruing thereon) or any part thereof or any amount of the Credit Balance in or towards the permanent reduction of the Secured Obligations and notwithstanding that legal proceedings have been taken or that the Customer or any other person or persons claiming through or under the Customer shall have applied for payment thereof.” [Emphasis in original]
Mrs. Patterson contends that these are assets of the marriage and accordingly that she is entitled to a minimum of a 50% beneficial interest in the lands in the portfolio. Furthermore, Mrs. Patterson did not sign any documentation at any stage which purported to pledge her interest in the portfolio to be accrued to AIB Bank or to any other party. We understand that these proceeds of the portfolio and the portfolio itself are in the process of being transferred across to AIB. We now formally call on you to stop this transaction going ahead until such time as our client has been able to fully engage with both yourselves and with AIB Bank in relation to her interest therein. In the alternative, kindly confirm by return that you acknowledge the 50% interest of Mrs. Patterson in the portfolio and that a separate portfolio will now issue in her name forthwith…” 9. In relation to the shares, she says that in September/Autumn 2004, her husband indicated that he was purchasing thirty acres in Letterkenny for €4.5m and that some shares would have to be sold to pay for the deposit. She agreed to that but did not agree to the balance of the portfolio being offered to the Bank by way of security. Her husband did not consult her in advance and had she been asked, she would not have agreed to offer the shares as security. 10. On behalf of the claimant, it is submitted that she had an interest in the shares and stocks and investments held in the portfolio management account which entitles her to a half share in the proceeds and that is so because of the agreement or understanding that had been reached between the claimant and her husband. In that regard, it is said that the Court has direct evidence from the claimant as to the discussions that took place involving the spouses. This is the sort of evidence required to establish a common intention trust as emerges from cases such as Lloyds Bank Plc v. Rosset [1991] 1 AC 107 and Midland Bank v. Cooke [1995] 4 AER 265. 11. It is also submitted on behalf of the claimant that in the aftermath of the discussions that she says took place, that she acted to her detriment, though one senses a certain reluctance, on her part, to use that word, in putting her career on hold and committing herself on a full-time basis to looking after the home and family. 12. The claimant’s interest is said to be a proprietary one, in the nature of a constructive trust and on the basis that it is first in time, is one that is entitled to priority over whatever rights, the defendant, AIB, has over the Portfolio by reason of the security that it held. The letter of pledge, whatever else it might do, does not create a legal interest in the Portfolio and does not give the Bank title. Mr. Patterson, it is contended, had not been in a position to charge or offer the Portfolio as security, as he held the investment in trust. 13. It is submitted that the absence of notice on the part of the party acquiring the later interest, in this case the Bank, of the existence of the first interest is irrelevant, if that be the situation. However, in fact that is said not to be the position as the Bank is said to have had constructive notice arising from the fact that both spouses had banked with AIB, throughout their marriage and, accordingly, the Bank was in a position to and, did in fact have, a detailed knowledge of their financial affairs. Bank’s submissions
(ii) Mrs. Patterson has no beneficial interest in the Portfolio Account in that she never contributed to the acquisition of the Shares/Portfolio Account. As acknowledged by Mrs. Patterson, her husband already had the portfolio of shares when they met for the first time in 1985. (iii) The Bank took the charge on the basis that Mr. Patterson had the full legal title to the Portfolio Account in good faith and without notice of any claim on Mrs. Patterson’s part and, in particular, without notice of the fact that she is now claiming a fifty per cent entitlement. (iv) Insofar as it has been contended on behalf of Mrs. Patterson that Mr. Patterson represented to her that she had a legal entitlement to the Portfolio Account and/or to the extent that he did not discuss using the Portfolio Account by way of pledge, that is a matter as between Mr. and Mrs. Patterson. (v) Even if the Bank was, as alleged on the part of the claimant, on some form of notice that the Pattersons had an arrangement between themselves as to using the proceeds of the Portfolio Account by way of income, the Bank was nonetheless still entitled to take the view that the full legal title and rights in relation to the Portfolio Account resided with Mr. Patterson. (vi) As Mrs. Patterson only asserted her claim for the first time five years after Mr. Patterson signed the Letter of Pledge, her claim must in any event be defeated on the basis of delay/laches and/or acquiescence. 16. In determining where the equities lie, the fact is that the shares were pledged and money was advanced by the Bank in good faith. I do not believe that there was any actual or constructive notice on the part of the Bank as to any interest held by Mrs. Patterson. I am not at all convinced by the suggestion that the original decision to advance funds to Mrs. Patterson, when she took her first steps in property development, was influenced by the existence of the share Portfolio which was in part an asset of Mrs. Patterson. On the contrary, I am satisfied that the position is as averred to by Mr. Declan Toner, on behalf of the Bank, that the Bank had no reason to believe that the items pledged were other than Mr. Patterson’s and that he had absolute title to them. 17. There is a further aspect to which I should refer and that is the approach of Mrs. Patterson. She failed to protest or assert an entitlement to restrain activity or even an entitlement to be consulted in 2006 when Mr. Patterson sought a loan using the account as security and likewise, did not raise any issue when the facility was renewed and extended in 2007 and 2009. In particular, Mrs. Patterson took no action when in August 2009, Mr. Patterson authorised the payment of €67,000 from the account to service interest payments due on his loan. In fairness to Mrs. Patterson, even on her best case, her husband continued to have some rights in relation to the account, which might provide at least a partial explanation for her inactivity in August 2009. Nonetheless, the fact that no steps were taken to regularise the situation, as seen from her perspective, militates against the case that she is advancing. It seems to me that whether this is discussed in terms of laches, or delay that affects equities, or as a factor which when weighed in the balance means that the equities are not equal, that the effect is the same. 18. Taken together, the factors to which I have referred have persuaded me that the claim advanced by Mrs. Patterson must fail and that the AIB claim succeeds.
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