The Court of Appeal has remitted Promontoria (Aran) Limited’s claim against Kevin Gilroy to the High Court after finding that the High Court judge erred in his view of the effect of a 2013 loan letter on an earlier equitable mortgage. The appeal court did not grant a well-charging order or order a sale, and left any further steps to the High Court judge.
Promontoria, which acquired Mr Gilroy’s loans and security from Ulster Bank Ireland Limited, sought to enforce security over a Dublin property co-owned by Mr Gilroy and his wife, Miriam Gilroy. She was not a party to the proceedings. Mr Gilroy took no part in either the High Court case or the appeal.
Promontoria’s case was that title deeds to the property had been deposited with the bank as security. A 2010 facility letter listed an equitable deposit of the deeds as continuing security for the borrower’s liabilities. A 2013 letter, which provided for a facility to restructure existing balances, instead specified a first legal mortgage over a number of properties, including the property at issue. It also said it superseded earlier arrangements and set conditions that had to be met by February 2013.
The High Court dismissed Promontoria’s application, finding that the 2013 letter undermined its pleaded case that the deeds remained held as an equitable mortgage securing the restructured loan. It also refused a request, made after judgment, for leave to bring an application to amend the pleadings.
On appeal, Justice Allen held that the 2013 letter did not show that the parties intended immediately to dissolve the existing equitable mortgage before a legal mortgage was put in place. He considered that the evidence supported an inference that the earlier deposit continued as security, and that the 2013 facility had lapsed if its conditions were not met. The court noted there was no direct evidence on that point; its view was an inference from Promontoria’s reliance on the equitable mortgage and the terms of the facility letter.
The court nevertheless stressed that the claim had not been properly constituted: the property’s co-owner had not been joined or given notice, and an order for sale could not properly be made in her absence. It allowed the appeal only insofar as it challenged the refusal of a well-charging order by reference to the 2013 letter, and remitted the matter to the High Court without directing how it should proceed. The appeal over permission to amend was formally refused because the amendment then contemplated differed from the earlier proposal. No costs order was made in the appeal; the High Court’s no-costs order was affirmed.