The High Court has ruled that Mark Walsh and Gary Wedick must make their interest in an agreement for a lease of Dublin City Council land available as security for qualifying borrowing by Marlan Homes Limited. The court also held that they must execute a further limited recourse mortgage, within the scope of that ruling.
The judgment, delivered by Mr Justice Clarke on 20 March 2009, decided two preliminary issues in Marlan’s proceedings seeking specific performance of a building licence agreement dated 23 November 2006. It did not determine the full claim.
The dispute concerned a development site at Kilmore Road, Artane, comprising land in three folios. Walsh and Wedick owned two portions. Their separate agreement with Dublin City Council gave them an entitlement to receive a lease of the third portion, measuring about 1,345 square metres, subject to conditions.
Under clause 6(c) of the November agreement, Marlan could require a limited recourse mortgage or charge over the “subject lands” to support borrowing for the licence fee and development costs. Marlan argued that this required mortgage security over all three portions, including the council land. The defendants argued that their obligation over the council land could extend only to their own interest under the agreement for a lease.
Mr Justice Clarke accepted the defendants’ interpretation of the extent of the security. He held that the agreement covered all of their interest in the subject lands: their freehold interests in two portions and their entitlement to a lease of the council land. The defendants must seek to procure the council’s consent to security over their interest under the December 2006 agreement. The ruling does not require them to procure a mortgage over the council-owned land itself.
The court also rejected the defendants’ argument that the obligation was exhausted because they had already executed a limited recourse mortgage in favour of AIB plc over two folios. The judge found that clause 6(c) allowed a further mortgage, provided it remained within the scope of the first ruling. The security could cover borrowing within the clause, including the licence fee and development costs.
The court resolved the two preliminary issues on those terms. It had not yet made a costs order: the judge proposed hearing counsel further on costs.