The High Court has refused Seaconview DAC’s application to approve a proposed sale of three retail units at Ardfallen Retail Park in Douglas, Cork, after the lender had entered into a contract that included two basements outside its stated legal mortgage power of sale.
Mr Justice Garrett Simons ruled on 24 April 2023 that the evidence did not allow the court to be satisfied the tender process had achieved the best price. He also said the sale conditions had not been considered or settled by conveyancing counsel, despite a 2019 order requiring the conditions to be settled by the court.
The units have unregistered title. Ulster Bank Ireland Ltd advanced loans of €4.55 million to Liam Fahey in March 2011, according to the judgment. Seaconview asserts it succeeded to the bank’s interests in the loans and mortgage. The mortgage deed described the charged property as the ground floors only, although Seaconview said the original intention was to include the basements. The judge said no explanation had been provided for the omission.
A well charging order was made in November 2019 in respect of Fahey’s interest in the lands. It recorded €3,290,645.81 due as of 10 May 2018, plus continuing interest, and provided for sale if payment was not made within three months. It also said sale conditions were to be settled by the court, with accounts and inquiries into encumbrances and their priorities to take place in the Examiner’s Office.
Seaconview sought to sell the three ground floors and two basements together, saying in affidavit evidence that two basements lacked independent access and could not practicably be sold alone. The lender ran a tender process and entered into a contract dated 3 October 2022 for a lot that included those basements, without first referring the sale to the High Court. Seaconview later applied for approval of an out-of-court sale or, alternatively, for the court to fix the mode of sale as a private treaty.
The judge said a reputable commercial estate agent’s involvement did not replace an independent valuation directed by the court, ordinarily accompanied by a reserve price. He also stressed that the well charging proceedings did not determine whether good marketable title could be given; they addressed the position between Seaconview and Fahey concerning the asserted discrepancy in the mortgage description.
The court also refused Seaconview’s request to retain the sale proceeds. Whether other encumbrancers existed was to be addressed through the Examiner’s Office on completion of a sale, and the judge said it could not be assumed none had arisen since the encumbrancer advertisement in September 2020. The motion was refused in full. No order for costs was made because Fahey did not appear to contest it.