The High Court has found ACC Loan Management Limited entitled to specific performance of an agreement requiring Dr Gerald Stephens to execute a first legal charge over Thornhill Manor in Mayo. The court did not settle the form of its order, saying it would hear submissions from both parties on that point.
The dispute arose from a €400,000 bridging loan advanced in March 2004 by ACC Bank, as it then was, to Dr and Mrs Stephens. The loan agreement required them to provide a first legal mortgage over Thornhill Manor and 30 acres. The judgment records that they did not provide the agreed security. Their former solicitor had given the bank an undertaking to take steps to register the charge, but the deed was not signed by Dr Stephens.
The proceedings were heard against Dr Stephens alone. A separate order in proceedings brought by the former solicitor had resulted in Mrs Stephens’s signature being supplied by a High Court registrar after she failed to sign. The bank told the court it was no longer seeking orders against her.
The bank had previously obtained a separate summary judgment against both defendants for €775,234.57, with continuing interest and costs, in proceedings concerning repayment of the debt. That judgment had been stayed for a period, but the stay had expired; the court recorded that no payment had been made. The bank’s present claim concerned completion of the mortgage security, rather than recovery of the debt.
Dr Stephens argued that the bank’s claim was barred by delay and by the earlier judgment. He also advanced a “no transaction” defence, saying the funds had been released before the charge was signed and that there had therefore been no completed contract. The bank submitted that it had performed its part of the loan agreement and that Dr and Mrs Stephens had not provided the promised security.
The judge rejected the laches defence, finding that the 2013 decision allowing renewal of the summons had already dealt with the reasons for delay up to that point. The judge also found that the bank had proceeded with reasonable expedition since renewal. The earlier debt judgment did not decide the separate question of whether the mortgage charge should be executed, the court held, and neither res judicata nor the rule in Henderson v Henderson barred the claim.
The court rejected the “no transaction” defence, finding that the borrowers received the loan and that the agreement’s written terms were sufficiently certain. It concluded that damages would be inadequate because the bank’s priority in the property was weaker without the executed charge. The court found for the bank against Dr Stephens and reserved the form of the order for submissions.