The High Court has ruled that an alleged oral lease of two Dublin guesthouses did not take priority over the bank’s mortgage, rejecting the defence raised by the borrower and a company he controlled. The court’s judgment addressed the receiver’s claim for possession; the source does not record a separate order specifying when possession must be delivered.
The properties are 10 Warrington Place and 21 Harrington Street, Dublin 2. Ronald McCourt borrowed €1.25 million from Anglo Irish Bank, later renamed IBRC, and secured the borrowing over both properties under a mortgage deed dated 12 August 2002. A demand for repayment was made and default was conceded. Jim Stafford was appointed receiver on 21 February 2014 and brought proceedings seeking possession.
McCourt and Ashcliff Guesthouses Limited argued that a lease from McCourt to Ashcliff existed when the mortgage was signed and ranked ahead of the bank’s security. No written lease was produced. The court said the evidence about its terms was limited to a reference to rent paid by Ashcliff to McCourt. McCourt did not give evidence at trial. The only witness called for the defence was Frank Kenny, a financial adviser and broker who had negotiated the loan.
Kenny’s letter to the bank before the mortgage was executed described Ashcliff as trading at the guesthouses and recorded that it had paid rent and rates to McCourt. The judge held that the bank’s awareness of rent payments did not establish consent to a lease or its terms. The mortgage deed restricted leasing without the bank’s prior written consent. The judgment also relied on replies to title requisitions, signed on McCourt’s behalf, stating that there was no lease, and on facility letters requiring a first legal mortgage over the properties.
The court cited earlier decisions on mortgage restrictions and leases, including Fennell v N17 Electrics and Murphy v Hooton. It concluded that the evidence did not show that Anglo had consented to a lease taking priority over its security. It also found that Ashcliff had notice of the mortgage restriction through McCourt, who controlled the company, and that it would be unconscionable to let the company rely on the alleged lease to outrank the receiver’s interest.
The judgment noted that McCourt had also failed to pay rent to the receiver as required by an interlocutory injunction arrangement pending the full hearing. The receiver’s claim that a further €170,000 was owed on that account was not denied. The court’s conclusion was that the alleged lease did not have priority over the bank’s mortgage.