Tuesday 24 September 2019

Bank entitled to order requiring a doctor to provide a legal charge over 'Palladian-style' 11-bedroom home, High Court rules

The High Court, Dublin
The High Court, Dublin

Tim Healy

A BANK is entitled to an order requiring a doctor to provide a legal charge over his and his wife's "Palladian-style" 11-bedroom home arising out of a €400,000 bridging loan they were given, the High Court ruled.

Dr Gerald Stephens and his wife Mary Anne Stephens built "Thornhill Manor", Hollymount, Co Mayo, in 1995.  It is 8,500 square feet with a 2,000 sq. ft three-bed apartment attached to it and sits on a large parcel of land.

Mr Justice Paul Gilligan ruled ACC is entitled to an order requiring Dr Stephens to specifically perform an undertaking that Thornhill would be put up as security for a €400,000 loan given to the couple when they decided to sell the house and build another home on adjacent land they had acquired.

Mr Justice Gilligan, in his judgment, said they they received an offer of €1.7m for Thornhill and to build their new home, they got the €400,000 bridging loan from ACC Loan Management Ltd, formerly ACC Bank.

The judge said Dr Stephens initially indicated he would execute a deed of charge over Thornhill after they got the loan. 

Subsequently however, the Stephens indicated they were not going to sign that deed unless the bank increased the loan to 65 per cent of the value of Thornhill, the judge said.

The bank did not agree to this and in 2008 ACC brought proceedings against the couple.

In July 2012,  the High Court ordered that ACC could recover around €775,000 from the couple and there followed further proceedings by Dr Stephens against this order, including an appeal which is still pending.

In the meantime, the bank pursued its case for specific performance of the contract whereby the Stephens agreed to give first legal charge over Thornhill.

Dr Stephens argued the bank did not move with expedition in prosecuting its case against him and his wife and that the case had already been dealt with under the 2012 judgment proceedings. 

The bank said it did move expeditiously, there was no prejudice or economic injury to the couple by any delay and it disputed that the matter at issue here had already been dealt with by the courts.

Mr Justice Gilligan found the issue (of specific performance) in this case had not been previously decided. 

The question of whether there had been a delay in prosecuting the case by ACC had been dealt with in a previous case in which another judge deemed the reasons put forward by the bank for the delay to be good, he said.

He also rejected Dr Stephens' claim that the defence of "no transaction" applied to the facts of this case.

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