ICC Bank plc v. Gorman [1997] IEHC 47 (10th March, 1997)

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:- (a) that the Mortgage is void by virtue of the provisions of Section 3 of the Family Home Protection Act, 1976 (the "1976 Act"); and (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 BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII