The High Court refused a woman’s application for an absolute garnishee order over money owed by Meath County Council to Darlington Properties Limited, finding that a bank’s floating charge had priority over her unsatisfied judgment debt.
In a judgment delivered on 6 July 2011, Mr Justice Michael Peart said the plaintiff remained an unsecured creditor and had not executed her judgment before the charge crystallised. The court therefore declined to give her priority over the funds Darlington was entitled to receive from the council.
The plaintiff had obtained judgment on 20 April 2010 against Darlington and Woodgreen Builders Limited for €64,404.86, plus costs. The judgment remained unpaid. A receiver was appointed to both companies on 7 May 2010 by Ulster Bank under a mortgage debenture.
Darlington later obtained a €4 million judgment against Meath County Council. On 14 March 2011, the plaintiff obtained a conditional garnishee order over money the council owed Darlington, up to the amount needed to satisfy her judgment and costs. An order dated 16 March allowed the council to pay €2.2 million to Darlington and directed that €150,000 be placed on joint deposit in the names of the plaintiff’s solicitor and the receiver.
The receiver argued that Ulster Bank was a secured creditor and ranked ahead of the plaintiff. The receiver said Darlington owed the bank €142,534.16 as principal borrower and was also liable under a guarantee for Woodgreen’s and another company’s debts to the bank, stated to total €22,883,915. The bank’s security was created by a debenture over Darlington’s assets.
The plaintiff argued that no demand had been made under the guarantee, so the guaranteed amount was only a potential liability and could not take priority over her judgment. The judge rejected that distinction as a basis for deciding priority. He said a demand could be required to enforce the guarantee, but that did not mean Darlington had no liability under it before a demand was made.
The judge found that the floating charge crystallised when the receiver was appointed on 7 May 2010. The plaintiff’s judgment pre-dated that appointment, but she had not executed it before crystallisation. Her garnishee order came later, in March 2011, and could not give her priority over the bank’s charge. The court refused the application for an absolute garnishee order.