Section 58(9) Asset Transfers: Data-Protection Liabilities “in respect of” a Mortgage Account Move with the Account

Case: O'Toole v EBS Designated Activity Company and Anor (Approved) [2026] IEHC 247
Court: High Court of Ireland
Judge: Mr Justice Micheál O'Connell
Date: 28 April 2026

1. Introduction

This decision concerns an application under section 678 of the Companies Act 2014 for leave to continue Circuit Court proceedings against EBS Mortgage Finance Unlimited Company (EBSMF) after it entered voluntary liquidation. The applicant borrower had sued both EBS Designated Activity Company (EBS DAC) and EBSMF alleging negligence and breaches of duty, including alleged breaches of the Data Protection Act 2018 and the GDPR, arising from erroneous credit reporting to the Irish Credit Bureau.

The central issue was whether the claim against EBSMF was bound to fail because, before proceedings were issued, EBSMF had transferred the applicant’s residential mortgage account to EBS DAC under a Central Bank-approved transfer scheme governed by section 58 of the Asset Covered Securities Act 2001. If the contingent liability pleaded was an “obligation … in respect of” the transferred “business or … assets” within section 58(9), it would have moved to EBS DAC, leaving no viable claim against EBSMF.

2. Summary of the Judgment

  • The Court reiterated the established approach to section 678 applications: a discretionary decision balancing court access against orderly liquidation, with a general tendency to allow proceedings to continue unless the claim can conveniently be made in the liquidation, or is frivolous/vexatious or bound to fail.
  • The Court held that the applicant’s alleged data-protection liability (assumed at its height) arose “in respect of” the transferred mortgage account and the transferred mortgage business.
  • Because the mortgage account had transferred from EBSMF to EBS DAC under the 2020 Transfer, section 58(9) operated so that EBS DAC acquired the relevant obligations and EBSMF ceased to have them.
  • Accordingly, the claim against EBSMF was bound to fail, and leave under section 678 to continue the proceedings against EBSMF in liquidation was refused.

3. Analysis

3.1 The statutory and procedural setting

Section 678(1)(c) of the Companies Act 2014 imposes a litigation stay once a company resolves to wind up voluntarily: no action may be proceeded with or commenced against the company without leave of the court. The Court treated the governing principles as largely settled (including that the provision reflects section 222 of the Companies Act 1963, and that leave may be granted retrospectively: Re MJBCH Ltd [2013] 1 IR 407).

The High Court adopted the familiar discretionary framework emphasising “what is right and fair according to the circumstances of each case” (Brightman LJ in Re Aro Co Ltd [1980] Ch 196, as cited in Wright-Morris v Irish Bank Resolution Corporation (In special Liquidation) [2014] 3 IR 468), and the balance between constitutional access to courts and the collective interests of creditors (Gilligan v Faxgore Ltd (In Liquidation) [2021] IEHC 605).

Critically, the Court reiterated that the applicant’s case must be taken “at its height”; leave will generally follow unless the claim can be dealt with conveniently in the liquidation, or it is frivolous/vexatious or bound to fail (drawing on Gilligan and authorities including Re Exchange Securities & Commodities Ltd and others [1983] BCLC 186). The “bound to fail” threshold was treated as analogous to the high bar for striking out (the Court referenced Moylist Construction Limited v Doheny [2016] 2 IR 283 in that vein).

3.2 The transfer machinery under section 58 of the 2001 Act

Section 58 provides a statutory mechanism for transferring a credit institution’s “business” or “assets” by an approved scheme. The key consequences relied on were:

  • Section 58(9)(a)-(b): on transfer, the transferee has the same rights and obligations “in respect of” the transferred business/assets, and the transferor ceases to have them.
  • Section 58(11): addresses substitution of parties where proceedings are pending immediately before the transfer takes effect (not applicable here because proceedings were commenced after the transfer date).

The transfer scheme here (approved by the Financial Regulator in SI 499/2008) contemplated future transfers by schedules. The applicant’s mortgage was included in Schedule 19, transferring (from 1 September 2020) residential mortgage assets and business from EBSMF to EBS DAC.

The dispute was therefore not whether the mortgage asset transferred (it did), but whether the contingent liability pleaded in the Circuit Court proceedings transferred automatically as an “obligation … in respect of” that mortgage asset or business.

3.3 The meaning of “in respect of”: breadth, context, and limiting principles

The judgment provides an unusually detailed survey of how courts have construed “in respect of” across statutory and contractual settings. The Court extracted a set of working propositions, while cautioning that context controls meaning.

3.3.1 Authorities supporting breadth

  • Trustees Executors and Agency Co. Ltd v. Reilly [1941] VLR 110: Mann CJ’s oft-cited dictum that “in respect of” has “the widest possible meaning” as a connector between subject matters.
  • Tatam v. Reeve [1893] 1 Q.B. 44: “in respect of” can capture payments connected to gaming debts even absent a direct betting contract between plaintiff and defendant; a “but for” analysis was influential.
  • Paterson v Chadwick [1974] 1 WLR 890: discovery in a negligence action against solicitors was “in respect of personal injuries” because the injuries were an essential ingredient of the claim.
  • Campbell v O'Donnell [2009] 1 IR 133: “in respect of a wrong” was construed broadly under PIAB legislation; the Court approved Reilly.
  • Hyper Trust (t/a the Leopardstown Inn) v FBD Insurances plc [2023] IEHC 455 and Diamrem v Cliffs of Moher Visitor's Centre [2023] IECA 235: recent Irish decisions reaffirming the wide connective force of “in respect of”, while recognising context and comparative phrases such as “in consequence of”.

3.3.2 Context-driven caution and potential narrowing

  • British and Commonwealth Holdings plc v Barclays Bank plc [1996] 1 WLR 1: warnings against transplanting interpretations across contexts; “in respect of” did not immunise a company from liability for breach of covenants merely because the breach coexisted with failure to redeem shares.
  • Rodan International Ltd v Commercial Union Assurance Co plc [1999] Lloyd's Rep IR 495: in an insurance context, the Court of Appeal resisted an approach that would expand cover from products liability into general contractual liabilities; the Court treated the connective language as requiring a closer fit to the insured risk.
  • R.(Geologistics Ltd) v FS Compensation Scheme [2004] 1 WLR 1719 and R(Manchikalapati) v FSCS [2024] 1 WLR 1383: both emphasised that “in respect of” depends on the surrounding statutory scheme; in Manchikalapati, “in respect of” was read as “for” or “for the payment of” because the rules also required the claim to be “under” the insurance contract.

3.3.3 The Court’s synthesis

The Court distilled the authorities into propositions (expressly caveated), including:

  • “In respect of” is a broad connector capable of capturing a wide array of connected matters.
  • It is generally wider than “in consequence of” or “under”.
  • Context and legislative purpose can narrow the phrase’s effect.
  • “But for” analysis can assist but is not determinative.
  • Depending on context, “in connection with” / “in relation to” may be treated as equivalent.

3.4 Applying section 58(9): do GDPR/DPA liabilities move with a mortgage account?

The applicant argued that data-protection liability is a standalone statutory cause of action (relying on Dillon v Irish Life Assurance plc [2025] IESC 37), and that such liability should not be treated as “in respect of” transferred mortgage assets/business. The respondents accepted (for the purpose of the leave application) that contingent liabilities can fall within “obligations” in section 58(9), but contended the liability had moved to EBS DAC.

The High Court’s reasoning proceeded in two steps:

  1. Identify the real source-connection of the pleaded liability. While GDPR/DPA duties can arise without a contract, the personal data at issue here was held and processed “solely because of, and for the purposes of administration of, the account”. The mistaken report to the Irish Credit Bureau, although not framed as performance of a borrower-benefiting contractual obligation, was “structurally embedded” in the lender-borrower relationship as a reserved right typical of loan agreements.
  2. Characterise credit reporting as part of the transferred “business”. The Court located the activity within the banking business transferred, holding it “plainly fell within” activities “incidental or ancillary” to providing mortgage credit, referencing the policy context for such reporting (including Cagney v Bank of Ireland [2015] IEHC 288 on the importance of credit registers). On that footing, a liability arising from how that reporting was carried out was a liability “in respect of” the transferred business/assets within section 58(9).
Key doctrinal move: the Court treated the “in respect of” enquiry as a fact-sensitive assessment of the closeness of connection between (a) the contingent liability and (b) the transferred account/business. A standalone statutory cause of action (GDPR/DPA) does not, by itself, prevent a liability from transferring if, on the facts, it is sufficiently connected to the transferred banking relationship and its ancillary functions.

The Court also rejected the notion that the Scheme itself had to expressly enumerate GDPR/DPA liabilities: section 58(9) is the operative mechanism that can carry liabilities not explicitly described in the contractual scheme documentation, provided they are “in respect of” the transferred business/assets.

3.5 Discretionary factors and prejudice

Having concluded the claim against EBSMF was bound to fail, the ordinary pro-leave inclination under section 678 was displaced. The Court nonetheless addressed practical concerns about remedies and prejudice, finding no material disadvantage to proceeding only against EBS DAC:

  • Declaratory relief: a declaration is contemplated by section 117(4) of the 2018 Act; a declaration against EBS DAC (as transferee of liabilities) would have the same practical import.
  • Disclosure/injunction-type relief: the alleged wrongdoing was “remarkably simple” and admitted; records were limited, EBS DAC had administered the account, and any residual evidential gap could be addressed via discovery mechanisms (including potential non-party discovery against the liquidator if needed).
  • Damages and costs: no suggestion EBS DAC was not a “mark” for Circuit Court-level damages and ancillary orders.

An argument of laches (delay in raising the transfer point) was rejected, particularly given the proceedings had been stayed by agreement and no defence had yet been delivered.

4. Impact

The decision is significant for two intersecting fields:

  • Covered bond / asset transfer regimes (section 58): it confirms that “obligations … in respect of” transferred mortgage business/assets can extend to regulatory/statutory liabilities (including data-protection liabilities) where the underlying conduct is tightly connected to the operation and administration of the transferred accounts and ancillary industry functions such as credit reporting.
  • Insolvency litigation stays (section 678): it illustrates how a robust merits-screen (“bound to fail”) can dispose of a leave application even where the claim is contested and cannot conveniently be proved in the liquidation. The case underscores that section 678 leave is not a route to keep a transferor in liquidation in the proceedings merely for comfort or belt-and-braces pleading if section 58 has shifted the legal burden to the transferee.

Practically, the judgment encourages early, careful analysis of whether complained-of conduct is (i) account-specific and operationally embedded in the transferred business, or (ii) genuinely institution-wide or detached from transferred relationships (e.g., a standalone cybersecurity breach affecting data beyond transferred accounts), which the Court flagged as potentially “hard cases”.

5. Complex Concepts Simplified

  • “Leave to continue proceedings” (Companies Act 2014, section 678): when a company enters liquidation, court permission is usually needed to sue or continue suing it, so that claims are managed fairly for all creditors.
  • “Bound to fail”: a high threshold—more than “unlikely to succeed”. If there is no reasonable prospect of establishing liability against the liquidating company (here, because liability transferred by statute), leave will be refused.
  • Section 58 transfer effect: once a qualifying transfer occurs, the transferee steps into the transferor’s shoes for rights and obligations “in respect of” the transferred business/assets, and the transferor stops holding them.
  • “In respect of”: a connective phrase meaning “sufficiently connected with”. It is broad, but not limitless: courts interpret it in context, considering how close the connection is to the subject matter identified in the statute/contract.
  • “Incidental or ancillary” banking activities: activities that support the core business (here, mortgage lending), even if not the direct performance of a borrower-facing contractual duty—credit reporting was treated as one such embedded function.

6. Conclusion

The High Court held that, where a borrower’s mortgage account transfers under a section 58-approved scheme, a contingent liability for alleged GDPR/DPA breaches tied to credit reporting on that account can be an “obligation … in respect of” the transferred mortgage business/assets within section 58(9). In such circumstances, the transferor ceases to bear that obligation, making proceedings against it (even if otherwise arguable on the facts) bound to fail. The result was refusal of leave under section 678 to continue the action against the company in voluntary liquidation.