High Court of Ireland Decisions

You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Duffy & anor v Kavanagh & anor [2019] IEHC 798 (14 November 2019)
URL: http://www.bailii.org/ie/cases/IEHC/2019/2019_IEHC_798.html
Cite as: [2019] IEHC 798

[New search] [Printable PDF version] [Help]

Page 1 ⇓

THE HIGH COURT

[2019] IEHC 798

[Record No. 2018/4201 P.]

BETWEEN

DERMOT DUFFY AND MARY DUFFY

PLAINTIFFS

AND

TOM KAVANAGH AND HAVBELL DESIGNATED ACTIVITY COMPANY

DEFENDANTS

JUDGMENT of Ms. Justice Pilkington delivered on the 14th day of November, 2019

1. This judgment is linked to and was heard with a related case entitled “The High Court,

Record No. 2017/3007 P., between Tom Kavanagh, plaintiff and Harry Hilliard and Ursula

Hilliard, defendants and Dermot Duffy and Mary Duffy, notice parties” (“the 2017

proceedings”). Within my judgment to the 2017 proceedings I also reference these

proceedings, which I styled the 2018 proceedings.

2. Whilst these proceedings relate solely to a premises known as 2 Woodford Cottages,

Palmerstown, County Dublin (“Palmerstown”), the 2017 proceedings also relate to it, but

in addition also deal with other properties and issues within this receivership.

3. Essentially within the 2017 proceedings the receiver (here the first named defendant)

seeks certain interim reliefs in respect of certain properties including Palmerstown. This is

the only property in which these plaintiffs have an interest and they in turn have issued

these 2018 proceedings seeking certain reliefs against the first named defendant receiver

appointed over Palmerstown and the second named defendant the holder of charges,

executed by the plaintiffs and registered against it.

4. At the outset the second named plaintiff has applied to maintain these proceedings as a

person of unsound mind not so found suing through her daughter and next friend Louise

Duffy and I acceded to that application.

5. In or about October, 2014, the second named plaintiff instructed Declan O’Connell,

solicitor in respect of the execution of an enduring power of attorney. Arising from that,

Mr. O’Connell began to make enquiries with regard to his client’s interest in Palmerstown.

6. Enquiries by Mr. O’Connell, in dealing with the enduring power of attorney, found a

charge granted by Dermot and Mary Duffy (“the Duffys”) in favour of Permanent TSB.

Thereafter, Mr. O’Connell became aware of the 2017 proceedings and he was concerned

that his clients’ interests in Palmerstown might be in jeopardy and sought to be joined as

a notice party to the 2017 proceedings.

7. In respect of these 2018 proceedings, a plenary summons issued on 11th May, 2018 and

a notice of motion issued on 14th May, 2018 seeking certain declaratory, injunctive and

other reliefs, including injunctive reliefs restraining the defendants from dealing with any

interest of the plaintiffs in the Palmerstown property.

Page 2 ⇓

8. The motion is grounded upon an affidavit of Declan O’Connell, solicitor sworn on 10th

May, 2018, an affidavit sworn by the first named plaintiff and the daughter and next

friend of the second named plaintiff both on the 31st May, 2018. There is a replying

affidavit on behalf of the second named defendant, it does not appear that the first

named defendant has sworn a separate affidavit in this matter but reference is made

throughout to the grounding affidavit sworn by him in the 2017 proceedings and I have

had regard to it.

9. The background facts and circumstances have been set out within the 2017 proceedings.

However, in summary I will also set them out here. The plaintiffs are the parents of

Ursula Hilliard and parents in law of Harry Hilliard (“the Hilliards”). The folio to

Palmerstown (117421F) discloses that the Hilliards and the Duffys each acquired an

undivided one quarter interest in that property as tenants in common. Mr. O’Connell avers

(and the Duffys subsequently confirm) that Palmerstown is tenanted.

10. The affidavits disclose that the Duffys financed Palmerstown from their own resources as

follows:-

(a) The payment of €157,500.00 as their contribution to the purchase price.

(b) The sum of €7,875.00 stamp duty.

(d) The sum of €30,000.00 for renovations

11. The Duffys are adamant that they never borrowed any monies for the purchase of

Palmerstown. The only persons who borrowed monies for the purchase were the Hilliards.

Reference is made to the grounding affidavit of Tom Kavanagh within the 2017

proceedings and its exhibits containing mortgage and other documentation executed by

the Hilliards in their acquisition of Palmerstown.

12. In respect of the rental of Palmerstown, the plaintiffs aver that an amount of €1,175.00 is

paid per month, €150.00 is deducted by the Hilliards as a collection fee and an amount of

€1,025 is deposited into the Duffys’ account every month. Enquiries by Mr. O’Connell

revealed the following:-

(a) On 4th April, 2016, the mortgage department of Permanent TSB wrote to the

Duffys confirming that they “do not currently have any active mortgages with

Permanent TSB.”

(b) It proved more difficult for Mr. O’Connell to make direct contact with the second

named defendant (‘Havbell’) as his clients were not its customers, which

necessitated Mr. Connell assisting the plaintiffs in making a data request pursuant

to the Data Protection Acts. There is no doubt that Mr. O’Connell has been

assiduous in this matter. In any event, by letter dated 5th May, 2017 from Capita

Page 3 ⇓

Asset Services addressed to Ms. Louise Duffy (daughter and next friend) with

regard to Dermot Duffy and Mary Duffy it states as follows:-

“I refer to your letter of 20th April, 2017 to Havbell DAC in respect of a DSAR

request for Dermot Duffy and Mary Duffy

This letter is being sent to you by… for Havbell.

Havbell DAC has no borrowings to Dermot Duffy and Mary Duffy and,

therefore, the aforementioned are not customers of Havbell DAC. Havbell,

therefore, do not hold any personal information for Dermot Duffy and Mary

Duffy.”

13. Accordingly, this would appear to demonstrate that the Duffys were not debtors of

Permanent TSB and, thereafter, Havbell.

14. Mr. O’Connell, thereafter, assisted his clients with a further data access request in respect

of their files from their previous solicitors in their acquisition of Palmerstown. As I

understand the position from the averments of Mr O’Connell and the documents

exhibited:-

(a) The same firm of solicitors acted for the Duffys as for the Hilliards.

(b) In the normal course, the Duffys’ solicitors had given an undertaking that they

would register a charge against the Palmerstown property prior to drawdown.

the Hilliards’ interests only, a demand was made of the Duffys’ (and Hilliards)

solicitors that they honour their undertaking and register the charge over the entire

property.

15. Mr. O’Connell has exhibited the undertaking provided by the Duffys’ solicitors for their

registration of the mortgage over Palmerstown. It appears to be without any qualifications

on title.

16. On the 8th December, 2008, solicitors for Permanent TSB wrote to the Duffys’ solicitors in

the following terms:-

“In relation to the property…. we note from the folio furnished with your certificate

of title herein that the borrowers hold a one quarter share each in the property of

tenants in common with Dermot Duffy and Mary Duffy who also hold a one quarter

share each in the property and our charge affects only the interest of Harry Hilliard

and Ursula Hilliard. This is not acceptable to the bank and is in breach of the terms

of your undertaking wherein you undertook to furnish good and marketable title,

free from encumbrances with the first legal charge over the entire of the property.

We were not aware or advised of the interest of the other parties in the property.

We note Dermot and Mary Duffy have completed the deed of confirmation but we

would not have agreed to their interests being dealt with in that manner.”

Page 4 ⇓

17. The reply of 6th February, 2009 is in part as follows:-

“…We wish to confirm that a separate mortgage deed in the names of Dermot Duffy

and Mary Duffy was executed on closing but due to an oversight, same was not

registered. We are currently arranging to have same lodged to the Property

Registration Authority….”

18. On 10th March, 2009, Permanent TSB write again in the following terms:-

“As advised, we were not aware that parties other than the borrowers had an

interest in this property. This should have been advised to us prior to the issue of

the loan cheque herein. Your undertaking was furnished on the understanding that

title was in the joint names of the above named borrowers and we continue to rely

upon same. Without prejudice to the foregoing, we enclose herewith request for

transfer of the account which should be executed by all parties and returned to us

for consideration.”

19. The Duffys’ solicitors then wrote to Permanent TSB on or about 23rd July, 2009 and

confirmed that the mortgage had been registered against the plaintiffs’ interests in the

property.

20. Finally, in a letter of 1st September, 2009, Permanent TSB wrote to the Duffys’ solicitors

and stated:-

“…Your undertaking confirmed that the security in this case was vested in the

names of Harry Hilliard and Ursula Hilliard. There is clearly a breach of your

undertakings in that two other parties… were also on title and the loan should not

have been drawn in such circumstances.

In order to properly secure this loan, a new loan should be approved in four names

with a condition that the existing loan can be redeemed from the proceeds of the

new loan.”

21. It appears that no new loan was ever made.

22. It also noteworthy that in the documentation lodged with the PRA for registration of the

Duffys’ charge, states that it is in favour of Irish Life and Permanent PLC as a charge for

present and future advances and stamped to cover €250,000.00.

23. On 20th January 2017 by indenture of appointment of receiver between the second

named defendant and the first named defendant on foot of the security documents recited

within that document (comprising the charges executed by these plaintiffs) and in reliance

upon their terms, the first named defendant was appointed receiver of the interest held

by the plaintiffs (although the security documentation does not appear to make it clear

that their combined interest is only in a moiety of Palmerstown).

Page 5 ⇓

24. Mr. O’Connell avers that he wrote a very lengthy letter to the first named defendants’

solicitor on 28th February, 2018 setting out the position with regard to the Palmerstown

property as he understood it and seeking certain undertakings in that regard.

25. The affidavit of the first named plaintiff discloses that he suffered a stroke in 2007 and

has lived in a nursing home residential care since January, 2018 and continues to suffer ill

health and that he extends his gratitude to his instructing solicitor for his assistance in the

matter and in particular in preparing the grounding affidavit on the basis of his

instructions. Thereafter it largely mirrors that affidavit.

26. The first named plaintiff, Mr. Duffy says that he did not borrow money from the second

named defendant and did not give security over Palmerstown. Mr. Duffy states that both

he and his wife wished to maintain the tenancy of Palmerstown and require the rental

income. Their entitlement to do so is of course an entirely separate issue. Mr. Duffy avers

that the receiver, the first named defendant, should not be appointed over Palmerstown

as it his intention to sell it which will place their income at risk.

27. In respect of the charge executed by the plaintiffs, Mr. Duffy avers as follows:-

“The second named plaintiff and I were not willing or informed parties to this

charge. It appears that a deed of confirmation was relied on. When the second

named plaintiff and I executed this document, neither of us expected it to be used

to give a charge over our interest in the property.”

28. The first named plaintiff further avers that the charge is not valid nor enforceable and

that when notified of this, the second named defendant took no steps to mend their hand.

Thereafter, in essence Mr. Duffy seeks an order from this Court restraining the receiver

from taking any further steps pending resolution of the matter at plenary hearing. He also

avers:-

“The second named plaintiff and I require assistance in our day to day lives and

both of us reside in residential care facilities. The rental income from the property is

applied to discharge our monthly living expenses. If the rental income was affected,

a burden would be placed on the second named plaintiff and I to meet our monthly

outgoings, in fact we would require assistance from their family. Damages are not,

therefore, an adequate remedy.”

29. Ms. Louise Duffy, the next friend swearing an affidavit on behalf of her mother, the

second named plaintiff, essentially rehearses the same matters and, in particular, points

to the fact that the defendants and both of them were given a chance to “mend their

hand” when full details of this matter was sent to them by their instructing solicitor and

that their continued refusal to engage has caused suffering, stress and anxiety to two

elderly plaintiffs.

30. An affidavit has been filed by Karl Smith on behalf of the second named defendant. Mr.

Smith goes through the deed of charge executed by the Hilliards and also the indenture of

Page 6 ⇓

confirmation executed by the plaintiffs and witnessed by their solicitor in which he asserts

that the beneficial interest held by the plaintiff was conveyed to Permanent TSB, its

successors and assigns.

31. Mr. Smith then deals with the registration of the charge by the solicitor acting for the

plaintiff on 18th February, 2009 including a family home declaration in respect of each

plaintiff signed by them and witnessed by their solicitor. Mr. Smith correctly points out

that the plaintiffs’ registration was made on foot of a mortgage duly signed and executed

by the plaintiffs as confirmed by their solicitors. Mr. Smith then avers:-

“I say and believe that the registration of the charge was entirely in keeping with

the intentions of the plaintiffs. Indeed, as exhibited to “DOF” in the grounding

affidavit, the plaintiffs executed a power of attorney on or about December 2nd,

2004 prior to the purchase of the company granting their then solicitor, the

authority to, inter alia, “do every other thing whatsoever which may be necessary

or proper for the purchase of the property.”

The property referenced being the disputed property in the present proceedings

(Palmerstown). He further avers;

“Accordingly, I say and believe that there can be no credible assertion on behalf of

the plaintiffs that there was any suggestion of a mistake in the registration of the

charge over their portion of the property. Indeed, the plaintiff signed both an

indenture of confirmation and a deed of mortgage, both with the effect of providing

a charge in favour of the second defendant and both subject to the standard

mortgage terms in place at the time. Those terms explicitly empower the second

defendant to appoint a receiver such as the first named defendant.

Furthermore, and notwithstanding the implied allegation of criminality contained in

para. 41 of the plaintiffs’ affidavit, there can be no suggestion of the perpetration of

any form of fraud where the plaintiffs, with the benefit of legal advice from their

solicitor, executed both the indenture of confirmation and the mortgage deed.

In the circumstances, I say and believe that the charge as registered is valid and

that the plaintiffs have failed entirely to demonstrate the existence of a fair issue to

be tried between the parties.”

32. Mr. Smith also avers that in the 2017 proceedings, the receiver has not sought any reliefs

against the plaintiff and nor has he asserted otherwise.

33. Mr. Smith on behalf of the second named defendant essentially advances the proposition

that the second named defendant acted upon the documentation furnished to them by the

plaintiffs who were legally represented throughout. It was the plaintiffs’ solicitors who

forwarded the documentation upon which the second named defendants now rely. Whilst

that is undoubtedly factually correct, it is not the end of the matter.

Page 7 ⇓

34. As matters stand, the second named defendant is now on notice that it has a mortgage

registered at entries two and three of folio 117421F – the Palmerstown property in favour

of the plaintiffs. They must now be aware from their own enquiries that no monies were

advanced to the plaintiffs and in such circumstances in light of these averments of Mr.

Smith it would require a hearing of this matter to determine the entitlement of the

defendants to rely upon this charge in light of what, on the basis of the documentation,

appears to be their present knowledge of the facts and circumstances of this matter.

There are specific entries on the folio stating that the second named defendant has

acquired the interest in respect of the entries against the plaintiffs. The suggestion that

because the plaintiffs executed a power of attorney that their solicitors or other parties

were thereafter entitled to take the steps that they did is rejected. In my view it is no

answer for the second named defendant to assert that a charge is executed on foot of any

power of attorney and thereafter that is an end of the matter.

35. The second named defendant contends, in essence, that it has advanced a mortgage to

the Hilliards, in respect of the loan approval form completed by them in which they failed

to disclose any other beneficial interest in the property. Furthermore, the plaintiffs

executed an indenture of confirmation in respect of their interest in Palmerstown.

36. Within this application the plaintiffs do not deal with the implications of the indenture of

confirmation. On behalf of the second named defendant, it is averred that that is

sufficient for their purposes that the documentation was duly executed and forwarded to

them. However, what the first and second named defendants have yet to clarify is, if their

contentions are correct, why, if they contend that the Hilliards’ mortgage and the

indenture of confirmation by the plaintiffs is sufficient, did they separately and

independently act to appoint the first named defendant as receiver over the Duffys’

interest on 20th January, 2017.

37. The fact is, from the documentation exhibited in both proceedings, the plaintiffs signed a

mortgage and a deed of confirmation following the execution by the Hilliards of their

mortgage. The execution of both documents is curious to say the least and neither of the

defendants has sought to deal with, let alone explain this apparent discrepancy.

38. Moreover, they have yet to deal with the fact that there are two mortgages over

Palmerstown each disclosing a loan of €250,000. They have yet to confirm from their

records whether an amount of €500,000 was advanced as the mortgages appear to

disclose; €250,000 to the Hilliards and €250,000 to the Duffys. The second named

defendant is now on notice of matters that in my view make it incumbent upon them to

assess their entitlement as a matter of law to act on foot of the charges registered on

folio 117421F in favour them and executed by the plaintiffs.

39. In such circumstances their appointment of the first named defendant as receiver in a

document dated 20th January 2017 on foot of such charges also requires clarification. It

may well be that at a full hearing of this matter these matters can be properly dealt with;

but at this time, with the facts as presently known, the execution of the mortgage, its

Page 8 ⇓

registration in favour of the second named defendant and the appointment of the first

named defendant over that interest are matters that remain clouded in mystery.

40. The first named defendant in his grounding affidavit sworn in the 2017 proceedings does

aver quite clearly (paragraph 15) that monies are owed to the second named defendant

by the plaintiffs to these proceedings. That aspect of the matter has not been clarified and

would appear incorrect.

41. Likewise, the plaintiffs have to be mindful of any legal entitlement to the entirety of the

rental monies from this property in the circumstances of this case. They clearly have an

interest in the Palmerstown property which does not extend to the entirety of it. As I say

it may well be that all of these matters could be clarified at a full hearing of the matter.

Certainly, the documentation discloses sufficient inherent contradictions that have not

been resolved or indeed explained that, in my view, make it appropriate on the facts of

this case to grant limited interlocutory injunctive relief.

42. Mr. Smith in his affidavit on behalf of the second named defendant claims that the

plaintiffs may not be in a position to furnish an undertaking as to damages and might not

be in a position to honour it. On the facts of this case where the defendants appear to be

on notice of a mortgage in respect of which no borrowings were advanced and who have,

it appears, no more than attributed the difficulties that arise from that to the plaintiffs and

particularly their solicitors, it is incumbent upon the second named defendant, given the

facts as outlined, to pursue this aspect of the matter further or to provide details as to

their legal position is intending to rely upon their existing security in so far as these

plaintiffs are concerned, in circumstances where significant doubts exist regarding the

mortgages executed by the plaintiffs.

43. On the facts of this case (and some of the relevant matters were disclosed within the

2017 proceedings and appear within that judgment) we appear to have the remarkable

situation that the plaintiffs executed a mortgage over the Palmerstown property where no

borrowings were sought by them or extended to them. Application was then made on foot

of that mortgage to register charges against each of these plaintiffs in respect of folio

117421F. It appears to be on the basis of that documentation that the first named

defendant was appointed receiver over their interests in the Palmerstown property in

January 2017. If the mortgages executed by the plaintiffs were to be impugned (and

there would, on the basis of the information available to me, appear to be a reasonable

basis for that assumption) then certain implications might flow in respect of the

appointment of the first named defendant as it was done expressly on foot of the

mortgages executed by the plaintiffs, not any deed of confirmation executed by them or

otherwise.

44. In my view, therefore, the plaintiffs have satisfied the threshold test of a fair or

reasonable case to be tried pursuant to the Campus Oil criteria (Campus Oil v Minister for

Industry and Energy (No 2) [1983] I.R. 88) principles. In my view not to grant limited

interlocutory relief(s) on the facts of this case would create a serious and disproportionate

risk of injustice (Okunade v Minister for Justice, Equality and Law Reform [2012] 3 I.R.

Page 9 ⇓

152) In my view there are matters where the interests of justice require that the issues

set out above require clarification. In the circumstances of the case, I believe that the

balance of convenience favours the plaintiffs in that regard. With regard to the question

as to the adequacy of damages, in my view the questions surrounding this transaction in

so far as these plaintiffs are concerned, raises sufficiently serious issues that this criteria

is, on the specific facts of this case, a less important one than the resolution of what is

clearly a situation that requires proper clarification. In my view the balance of

convenience clearly favours the grant of relief and in my view, on the facts of this case,

that the plaintiffs are potentially persons of limited means is a fact to which I have had

regard. However, in this case to deny reliefs on that ground would be to potentially

occasion them serious injustice. These are deserving plaintiffs.

45. For the avoidance of doubt, were any of the reliefs sought to be properly interpreted as

seeking mandatory relief(s), then I am further satisfied that the principles initially stated

by the Supreme Court in Maha Lingham v Health Service Executive [2005] IESC 89 being

a likelihood of success at the hearing of an action are also satisfied on the facts of this

case.

46. I also note that by letter dated 28th February 2018, the plaintiffs’ solicitor wrote to the

solicitors for the defendant setting out the position in some detail. Whilst I note that it has

been emphasised within the 2017 proceedings that no reliefs are sought against these

plaintiffs, in my view the appointment of the receiver over the interests of the plaintiffs in

Palmerstown in January 2017 and their continued reliance upon the security furnished to

them by the plaintiff’s solicitors on their behalf necessitates the grant of limited injunctive

relief upon the very unusual facts of this case.

47. The plaintiffs have sought numerous and varied reliefs within their notice of motion and,

in my view, a restricted form of interlocutory relief would be appropriate on the facts of

this case. I will hear the parties further as to the precise nature of that relief and any

other orders including the question of costs

Result: Plaintiffs sought numerous and varied reliefs within their notice of motion, the Court found a restricted form of interlocutory relief to be appropriate on the facts of the case.