The High Court upheld a Circuit Court order directing that €81,500 held from a man’s redundancy payment be paid to Allied Irish Banks in part discharge of the mortgage on 19 Lancaster Quay, Cork. Mr Justice McDermott ruled on 27 September 2013 that the court had jurisdiction to make the order as part of enforcing a divorce settlement.
The appeal followed a 26 July order by Judge Fulham in the Circuit Court. The money had been held under an interim order made in February, which restrained the appellant from dissipating his redundancy payment pending further order. The High Court was deciding whether the Circuit Court could direct the funds to the bank; it did not determine the remaining mortgage liability or make the precise final wording of its order. The judge said he would hear counsel on that wording.
Under the 2009 divorce settlement, the appellant was to be solely entitled to Lancaster Quay, subject to its mortgage and other interests, and both parties were to secure each other’s release from mortgages on properties allocated to them. The respondent obtained the appellant’s release from mortgages on the family home and reduced the Lancaster Quay mortgage by about €90,000 through re-mortgaging. The judge found that the appellant had not secured her release from the Lancaster Quay debt and had allowed mortgage arrears to accumulate while managing the property’s rents.
The parties later agreed to market Lancaster Quay for sale. A bank proposal in July 2013 envisaged a sale for at least €222,000, up to €10,000 in sale costs, and an additional €80,000 payment towards the debt. It also proposed treating €79,441.73 as unsustainable debt and forgiving that amount if the other conditions were met. A further €20,000 would remain, payable immediately or over three years at zero interest. The bank’s proposal required the sale proceeds and lump sum by 30 September 2013.
The appellant argued that the courts lacked statutory power to freeze and redirect his funds, that the settlement clause had not been turned into an enforceable order, and that it was too vague to support the relief. He also argued that an order could affect the bank’s interests when it was not a party. The judge rejected the jurisdiction challenge. He held that making a settlement term a rule of court allows it to be enforced through an application in the existing proceedings, and that in this case the motion and proceedings made clear the relief being sought. The court could give effect to the clause and direct payment to the bank as an ancillary step.
The High Court concluded that the appellant had not implemented his settlement obligations concerning Lancaster Quay and that the respondent risked losing the benefit of the bank’s proposal if the funds were released. It dismissed the appeal and upheld payment of the €81,500 to the bank in part discharge of the mortgage capital.