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ICC Bank plc v. Gorman [1997] IEHC 47 (10th March, 1997)
THE
HIGH COURT
1996
No. 469 Sp
BETWEEN
ICC
BANK PLC
PLAINTIFF
AND
MICHAEL
A. GORMAN
DEFENDANT
Judgment
of Miss Justice Laffoy delivered on the 10th day of March 1997
1. In
these proceedings, the Plaintiff claims an Order for Possession of the
dwelling-house and premises known as Hill House, Banagher, County Offaly, by
virtue of an Indenture of Mortgage dated the 11th day of April, 1991 made
between the Defendant of the one part and the Plaintiff, by its former name,
Industrial Credit Corporation Plc, of the other part (the "Mortgage").
2. The
Defendant has sought to resist the claim for possession on two grounds, namely:-
(b) that
he has an enforceable agreement with the Plaintiff to release a portion of the
lands the subject of the Mortgage from the Mortgage.
3. In
relation to the first ground, namely, that the Mortgage is void, I find that
the relevant facts are as follows:-
1. By
a letter of offer dated 31st January, 1991, the Plaintiff offered to advance to
the Defendant the sum of £200,000 subject, inter alia, to the following
terms and conditions, namely:-
(a) The
term of the advance was to be ten years and the advance was to be repayable by
one payment not later than 30th March, 2001. Interest would be payable by
direct debit on the last day of each month commencing the month following the
first disbursement of the loan at the rate of 3% per annum over Base Rate.
(b) The
advance would be secured by a first specific charge over three properties at
Banagher, Hill House, the subject of these proceedings, The Barracks and The
Malt House and a ten year endowment life policy.
(c) £120,000
of the facility could be drawn down when the security arrangements were
completed, with the remaining £80,000 being disbursed on production of
architect's certificates.
(d) The
Plaintiff's standard conditions formed part of the offer including the
condition that if the Defendant should fail to pay on the due date any monies
payable, the Plaintiff should be entitled to call for immediate repayment of
all monies outstanding, including interest.
4. A
form of acceptance annexed to the letter of offer was signed by the Defendant
on 10th February, 1991 and his signature was witnessed by Nicola J. Gorman on
the same date.
2. The
Mortgage was in the form of the Plaintiff's printed form of mortgage. At the
commencement, it was dated 11th April, 1991. It was executed by the Defendant
and his execution was attested by the signature of Patricia Martin, Solicitor,
Limerick. It was also executed by the Plaintiff. At the foot of the page on
which it was executed by both the Defendant and the Plaintiff, there the
signature of Nicola J. Gorman was appended followed by the signature of
Patricia Martin, who was described as "Solicitor, Limerick". On the next page
of the Mortgage, there was a heading "Endorsement" to the following text:-
"I,
Nicola J. Gorman being the lawful spouse of Michael A. Gorman described in
within the deed as 'the Borrower' hereby give my prior consent to the mortgage
of the property described in the Schedule to the within deed to Industrial
Credit Corporation Plc.
Dated
the day of 19
Nicola
J. Gorman
Witness:
Patricia
Martin
Solicitor
Limerick.
I,
of being the Solicitor to
the
Borrower named in the within Deed hereby certify that to the best of my
knowledge, information and belief the above named
is
the lawful spouse of
Dated
the day of , 19 ."
5. The
names "Nicola J. Gorman" and "Michael A. Gorman" at the commencement of the
text were inserted in manuscript. Apart from the later signature "Nicola J.
Gorman" and the signature and address of the attesting witness, the remainder
of the text was part of the printed form. The Mortgage secured all sums due by
the Defendant to the Plaintiff on, inter alia, Hill House.
3. Of
the advanced sanctioned, only £180,000 was drawn down by the Defendant.
4. The
Defendant defaulted in the payment of interest due on the loan and on 8th May,
1996 the Plaintiff demanded repayment of the balance then outstanding.
5. The
balance was not repaid and on 30th August, 1996 the Plaintiff's Solicitor
called for possession of Hill House under the Mortgage from the Defendant. A
demand for possession was also sent by the Solicitor for the Plaintiff to
Nicola Gorman at an address in England.
6. These
proceedings were instituted by Special Summons which issued on 18th September,
1996 and were grounded on an Affidavit sworn on 18th September, 1996 by Michael
Rigney, a manager of the Plaintiff. The letter of offer and the Mortgage were
exhibited in the grounding Affidavit and it contained an averment in the
following terms:-
"I
say that the defendant was married at the time the security was taken and his
wife, Nicola Gorman, gave her consent in writing to the said mortgage being
created. In this regard, I beg to refer to her consent endorsed thereon."
7. The
Special Summons, the grounding Affidavit and the exhibits referred to in the
grounding Affidavit were served on Nicola Gorman on 14th October, 1996 at her
address in England, where she remains.
8. The
validity of the Mortgage was first questioned in a replying Affidavit sworn by
the Defendant on 16th December, 1996, wherein the Defendant averred as follows:-
"I
am advised and say and believe that the conveyance upon which the Plaintiff
relies is void having regard to the provisions of S.3 of the Family Home
Protection Act, 1976, in that the said Deed of Mortgage was executed on the
11th day of April 1991 without the prior consent in writing of my spouse,
Nicola Gorman. I beg to refer to a letter dated 28th May, 1991 from the
Plaintiff's Solicitor, Ms. Clare Connellan, addressed to my Solicitors, Messrs.
Collins and Martin, seeking that Nicola Gorman effect the necessary Family Home
Act Declaration ... "
6. Having
regard to the importance which the Defendant attaches to the letter of 28th
May, 1991, I propose quoting its full text which was as follows:-
"I
acknowledge receipt of your letter of 21st May, 1991 and I note that Nicola
Gorman has no beneficial interest in the property. Accordingly, I suggest that
you have her complete Family Home Protection Act Declaration with Michael
O'Gorman in which they state that the property is the Family Home, that she
consents to the creation of the charge for the purposes of the Mortgage by
Michael Gorman, and in which she declares that she has no beneficial interest
in the property whatsoever and she further declares that she obtained
independent legal advise for the purposes of the execution of the Statutory
Declaration."
9. A
further Affidavit was sworn by Michael Rigney on 24th February, 1997 which
contains the following averment:-
"Messrs.
Collins and Martin confirmed to ICC that Mrs. Gorman had no beneficial interest
in the property and while although after Mrs. Gorman had given her prior
consent in writing to the Mortgage that Firm were asked to forward to ICC a
correct Statutory Declaration as the previous Declaration which had been
furnished to ICC was incorrect. I am informed by Clare Connellan of ICC's
Legal Department, that no such declaration was furnished. Notwithstanding
this, I say and do so believe that the absence of any such declaration does not
affect the validity of the Mortgage."
10. Nicola
Gorman did not appear and was not represented at the hearing of the Plaintiff's
application. Apparently, there was some contact between her and the
Plaintiff's Solicitor and a draft Affidavit was furnished to the Plaintiff's
Solicitor. There is reference to this draft in paragraph (7) of the Affidavit
sworn by Mr. Rigney on 24th February, 1997. However, I have ignored the
contents of that paragraph.
7. Counsel
for the Defendant submitted that there is no proof that -
(a) the
consent form signed by Nicola Gorman was prior in time to the execution of the
Mortgage by the Defendant, or
(b) that
Nicola Gorman had independent legal advice in relation to giving consent,
both
of which matters are questions of fact. The letter dated 28th May, 1991, it
was contended, amounted to a concession that the Mortgage was void under
Section 3 of the 1976 Act. It was urged that the Plaintiff's application
should be adjourned because Nicola Gorman "may" swear an Affidavit or,
alternatively, that the application be adjourned for plenary hearing.
8. The
Plaintiff's entitlement to an Order for Possession of Hill House depends on the
Mortgage being a valid Mortgage. It is common case that Hill House was the
family home of the Defendant and Nicola Gorman when the Mortgage was created
and that, as a non-owning spouse, the prior consent in writing of Nicola Gorman
to the Mortgage was necessary to render it valid. The characteristics of a
consent for the purposes of Section 3 were considered by the Supreme Court in
Bank
of Ireland -v- Smyth
,
(1995) 2 IR 459. In his judgment, Blayney J. stated as follows:-
"The
consequences of a consent under s. 3 are not as far reaching as the
consequences of a consent to marry or to place a child for adoption but one of
the elements required for the validity of the consent in each of these cases is
in my opinion applicable in the case of a consent under s. 3 also. This is the
requirement that the consent must be an 'informed consent'. .....
In
my opinion, a consent under s. 3 must satisfy this requirement. It must be a
fully informed consent. The spouse giving it must know what it is that she or
he is consenting to. Since giving one's consent means that one is approving of
something, obviously a pre-condition is that one should have knowledge of what
it is that one is approving."
9. In
support of its claim for possession, the Plaintiff has produced the original of
the Mortgage on which there is endorsed a form of consent which was signed by
Nicola J. Gorman whose signature was witnessed by a solicitor. By its terms,
the consent is a "prior consent" to the Mortgage. There is no requirement in
law that a spouse who is giving a consent for the purposes of Section 3 of the
1976 Act must have the benefit of independent legal advice in the sense of
advice from a legal practitioner who is not acting for the mortgagor spouse or
the mortgagee. What is required is that the consent should be a "fully
informed consent". As I have said, a solicitor witnessed the giving of the
consent by Nicola Gorman and attested her signature. In the circumstances, in
the absence of evidence to the contrary, in my view, the Court is entitled to
assume that Nicola Gorman gave her consent voluntarily and on the basis of
adequate knowledge of what she was doing. Nicola Gorman has been served with
these proceedings and has been put on notice of the reliance of the Plaintiff
on the fact that she consented in writing to the Mortgage. Given that she has
not challenged the validity of the Mortgage, the Court is entitled to assume
that she accepts its validity.
10. It
remains to consider whether the letter dated 28th May, 1991 casts doubt on the
validity of the Mortgage. What was requested in that letter was a joint
statutory declaration made by the Defendant and Nicola Gorman which, it would
appear, was intended to be primarily directed to the fact that Nicola Gorman
had no beneficial interest in the property in issue. While the letter
requested that the statutory declaration should contain a statement that Nicola
Gorman was consenting to the mortgaging of the property by the Defendant, the
reality is that the Mortgage had already been executed by the Defendant and, if
it was void for non-compliance with Section 3, a statement in a statutory
declaration made after it was executed by the Defendant was not going to
rectify the situation. The requirement that Nicola Gorman should state that
she had obtained independent legal advice, in my view, merely evidences an
abundance of caution, not an infirmity in the Mortgage.
11. The
circumstances which arise in these proceedings, in my view, are distinguishable
from the circumstances which arose in
Allied
Irish Banks -v- Finnegan
(1996) 1 I.L.R.M. 401, in which the non-owning spouse presented affidavit
evidence as to her lack of knowledge of the true nature of the consent she had
signed. Here, there is just a bald statement by the Defendant, unsupported by
any, not to mention any credible evidence that the Mortgage was executed
without the prior consent in writing of Nicola Gorman.
12. Accordingly,
on the evidence before the Court, I am satisfied that the Mortgage is a valid
Mortgage.
13. Turning
to the second ground advanced by the Defendant, in his replying Affidavit, the
Defendant exhibited an open letter dated 29th March, 1995 from the Plaintiff to
the Defendant and his wife, the text of which is as follows:-
"I
confirm that upon completion of the sale of Hill House, ICC Bank will release
to you the portion of land marked green on the attached map. This land will
have no right of access from Hill House.
ICC
Bank is anxious that the sale of Hill House be completed as speedily as
possible. In this context, the release of the land is dependent on your full
cooperation in the sale of Hill House ..."
14. Chronologically,
the next item of correspondence exhibited is a letter dated 13th March, 1996
from the Plaintiff to the Defendant's Solicitors which was exhibited in the
Supplemental Affidavit sworn by Mr. Rigney on 24th February, 1997. This letter
was headed "Without Prejudice". It was one item in a chain of correspondence.
Subsequent letters in the chain have been exhibited both by the Defendant and
the Plaintiff, some of which were headed "Without Prejudice" and others of
which were not. Not having sight of the full range of correspondence, I
express no view as to whether the entire correspondence was privileged, or
whether one of the parties could unilaterally waive the privilege, if it was.
The Plaintiff's contention is that the Defendant did not fulfil the terms of
the letter of 29th March, 1995 and that the Plaintiff's commitment to release a
portion of the land is no longer enforceable. The Defendant disputes that he
did not fulfil the terms of the letter. I think an issue of fact does arise
between the parties on this point which could only be resolved on oral evidence.
15. Accordingly,
I propose to make an Order for Possession in favour of the Plaintiff in
relation to Hill House save and except the portion thereof shown coloured green
on the map attached to the letter dated 29th March, 1995. As regards that
portion, I propose to adjourn the proceedings generally with liberty to either
party to re-enter. That portion will, of course, remain subject to the
Mortgage. If the Plaintiff wishes to have its entitlement to an Order for
Possession in relation to that portion adjudicated on, it can re-enter the
matter. Alternatively, if the Defendant wishes to enforce, by way of
counterclaim, the agreement he alleges the letter of 29th March, 1995
evidences, he can re-enter the matter.
© 1997 Irish High Court
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