The High Court dismissed Brian Cunningham’s claims against Springside Properties Limited, Arthur Cox and First Active plc, ruling that all were bound to fail. Mr Justice Clarke gave his reasons in a judgment delivered on 31 July 2009. The case concerned proceeds from the sale of two Drogheda Mall units and the priority of competing claims over Springside’s assets.
Cunningham had registered a judgment mortgage over Units 13 and 14 after obtaining a default judgment against Springside in 2004. In 2005, the court granted him a well charging order but declined to order a sale while receiver Ray Jackson was marketing the properties. The court required notice of a completed sale and that the proceeds be held for 14 days, giving Cunningham time to apply to court.
First Active later took possession as mortgagee and sold the units to James McCartan. Arthur Cox notified Cunningham on 1 June 2006 that the sale had closed and the proceeds were being held. The holding period was extended by agreement until a hearing on 18 July, when Cunningham sought to prevent payment of the money to a third party without court approval.
Cunningham alleged that the undertaking and subsequent correspondence meant Springside was to receive the proceeds, and claimed misrepresentation, breach of undertaking and related liability. Clarke found there was no arguable basis for that interpretation. The possibility of First Active selling as mortgagee in possession had been raised with the court and in correspondence. The undertaking required the proceeds to be held for 14 days to allow an application; that period was observed, and Cunningham did make an application. The judge concluded there was no stateable case that the undertaking had been breached or that the correspondence amounted to an actionable misrepresentation.
Cunningham also argued that First Active’s guarantees from Springside were invalid or unsecured, so his judgment mortgage should take priority. Clarke said the earlier Moorview proceedings had not decided the precise ultra vires question in a way that created issue estoppel. However, he ruled that the Henderson v Henderson rule barred a new challenge to the Second Guarantee: a separate basis for disputing its validity should have been pursued in the earlier case. He also held that clause 18.1 of the 2000 debenture kept it in force as continuing security despite repayment of amounts then due, extending to future liabilities, including guarantee liabilities.
On that basis, First Active had valid security over Springside’s assets with priority over Cunningham’s judgment mortgage. The court dismissed all claims. The judgment did not determine the other issues raised as fallback arguments because they were unnecessary to the outcome.