The Supreme Court has allowed Thomas and Antoinette Darcy’s appeal against a High Court order that discharged an agreement governing €650,000 in insurance proceeds after a fire damaged their home in Howth. The Court’s decision restores the 2010 consent order, which required the money to be used towards reinstating the property.
The bank, Allied Irish Banks plc, had brought proceedings in 2010 over the Darcys’ mortgage obligations after a fire seriously damaged their house, Woodview, in May 2009. The bank’s interest had not been noted on the insurance policy. Under the mortgage, the Darcys were required to apply insurance money to repair the damage or, in default, towards the secured debt.
A High Court consent order made in May 2010 provided for insurance proceeds attributable to reinstatement to be held in a joint account and used for the works, with payments made against architects’ certificates. After the insurer’s claim was settled, €650,000 was available for reinstatement. A dispute arose when the bank declined to pay a second certificate, for €146,123, which it considered remarkably high.
In 2012, the bank applied to vary or discharge the consent order and sought permission to apply the remaining funds against the Darcys’ debt. The bank alleged that the works and payment arrangements raised concerns, including a risk that funds would be diverted. The Darcys disputed those allegations and said the order required the proceeds to be used for reinstatement unless they failed to make good the damage.
The High Court discharged the consent order in July 2013 and permitted the remaining funds to reduce the debt. On appeal, the Supreme Court assumed, without deciding, that the High Court had jurisdiction to determine the bank’s application. It then considered whether the order had been properly discharged.
The Supreme Court said the consent order made reinstatement the agreed use of the insurance money. The bank could rely on the default provision if the Darcys breached their obligation to use the proceeds to repair the property. But the affidavit evidence contained a serious factual dispute that could not be resolved on the affidavits alone. The High Court therefore could not have been satisfied that a fundamental breach had been established.
The Court allowed the appeal and discharged the High Court’s 2013 order, restoring the consent order. It did not decide the disputed factual allegations. The judgment also noted that a separate 2015 High Court possession ruling concerning Woodview had been upheld by the Court of Appeal in July 2016.