Frustration Frustrated

The High Court case of Irene Walsh v Gerard Walsh, John Archbold and Promontoria (Aran) Limited (“PAL”) highlights the dim view that the Courts take where a borrower, or a party connected to the borrower, either directly or indirectly seeks to frustrate the legitimate enforcement of security by a lender. 

In that case, Ms Walsh issued proceedings which were registered as a lis pendens on property (7 to 12 Victoria Road) over which her husband (the first named defendant) and the second named defendant granted security in favour of the third named defendant’s predecessor in title, Ulster Bank. Access to the property was via Victoria Lane. The proceedings were issued following the appointment of a receiver over the property by PAL.

Ms Walsh contended that she had acquired the freehold to 7 Victoria Road and Victoria Lane and alleged that an agreement had been reached whereby, in consideration of the payment of €1.3 million by the first and second named defendants from the proceeds of sale of the property, the plaintiff would grant to the first and second named defendant’s rights of access over or to run services under Victoria Lane. In the absence of this payment, the plaintiff contended that the first and second named defendants (and by extension PAL) were not entitled to enjoy any such rights and the plaintiff was entitled to remove such services and restrain the defendants from trespassing on the lane.

Mr Justice Creedon did not find the plaintiff to be a “credible witness” and did not accept her evidence that she entered into an agreement with the first and second named defendants at the time or in the circumstances contended by her.

Mr Justice Creedon held that certain easements arose in equity and that the plaintiff was, due to her representations and acquiescence (upon which the first and second named defendants placed reliance and acted to their detriment), estopped from denying the third named defendant access over and the free and uninterrupted passage of services below the laneway.

For further information please contact John O’Sullivan (Managing Partner), Mary Coffey (Partner) or your usual AMOSS contact.