The High Court has refused James Walsh’s application to have a bank release the remaining proceeds from the sale of a Dublin property to him or his solicitors. It ordered the Bank of Ireland, after deducting its costs of the proceedings, to pass the residue to M. & J. Gleeson & Co., which the court identified as next entitled to the money.
The case concerned the sale of 57 Mountain View Drive, Churchtown, Dublin 14. The bank sold the property as mortgagee in possession, with the sale closing in late April 2016. The agreed sale price was €282,000. After €128,318.95 in sale costs and expenses, mortgage principal and interest were deducted, net proceeds of €153,681.05 remained.
Walsh and Francis Power held the property jointly, with equal beneficial interests in the net proceeds, according to the judgment. After an encumbrance on Power’s interest was paid, she received €65,090. The remaining €76,840.52 related to Walsh’s half share, but seven judgment mortgages registered against his interest remained in issue.
Walsh argued that all but one of those mortgages were statute barred and that the sale had overreached the creditors’ interests in the property. He also said he had agreed in principle to settle with M. & J. Gleeson & Co. at a reduced amount, but the offer expired while the bank withheld the proceeds. His solicitor said an undertaking to pay the company could secure its interest if the funds were released. The bank disputed the account of the proposed settlement and said no acceptable undertaking had been offered.
The bank maintained that it held the surplus as trustee for whoever was next entitled to it. It said it had made reasonable inquiries into the later judgment mortgages and could not safely treat the older ones as unenforceable, since acknowledgments, part payments or proceedings could affect limitation periods. It argued that the remaining proceeds should go to M. & J. Gleeson & Co., subject to costs.
The court accepted the bank’s account of its duties under section 21(3) of the Conveyancing Act 1881. It held that a mortgagee holding surplus funds must make reasonable efforts to identify subsequent encumbrancers. Where entitlement is clear and undisputed, the mortgagee may pay the money to the next entitled party, which then holds any excess on trust for the person entitled after it.
The court refused the reliefs Walsh sought on the special summons. It ordered the bank to deduct its costs of the proceedings, to be fixed by the court, and then pass the residue to M. & J. Gleeson & Co. The judgment noted that the company had not been joined as a party.