Corcoran & Anor v Permanent TSB PLC & Ors (Approved)

Factual and Procedural Background

The Plaintiffs obtained three loans in late 2007 from the first Defendant, Company A, secured by mortgages over multiple properties. Each loan included special conditions allowing for an interest-only repayment period of three or five years, subject to review by Company A. Notices were sent in December 2010 informing the Plaintiffs that the interest-only periods would end and repayments would convert to principal and interest. The Plaintiffs engaged in correspondence with Company A regarding extensions, but ultimately the loans converted to principal and interest repayments.

The Plaintiffs subsequently fell into arrears and agreements were made to capitalise arrears and extend interest-only periods for limited times. In 2019, Company A assigned the loans and related securities to Company B. Receivers were appointed over certain properties secured by the loans. The Plaintiffs initiated proceedings challenging, among other things, the conversion of the loans from interest-only to principal and interest repayments, the validity of the mortgage loan sale to Company B, and the appointment and conduct of the receivers.

The Defendants applied to strike out the proceedings as unsustainable, frivolous, vexatious, and/or bound to fail, to strike out unnecessary or prejudicial pleadings, and to vacate a lis pendens registered by the Plaintiffs.

Legal Issues Presented

1. Whether the Plaintiffs' claim that Company A wrongfully converted the loans from interest-only to principal and interest repayments without conducting a required review is sustainable.
2. Whether the sale of the mortgages by Company A to Company B was valid or void.
3. Whether Company B had the right to appoint receivers over the mortgaged properties.
4. Whether the receivers breached their duty by failing to let the properties, causing loss to the Plaintiffs.
5. Whether specific paragraphs of the Statement of Claim should be struck out as unnecessary or prejudicial to a fair trial.
6. Whether the lis pendens registered by the Plaintiffs should be vacated on the basis that the proceedings do not include a bona fide claim to an estate or interest in land or are bound to fail.

Arguments of the Parties

Applicants' Arguments

• The proceedings are unsustainable, frivolous, vexatious, and/or bound to fail, justifying strike out under the Court's inherent jurisdiction.
• The loan agreements, including Special Condition 7, provide for automatic conversion from interest-only to principal and interest repayments after the specified period unless extended by Company A, and any conversion during the period requires a review.
• The Plaintiffs' claim lacks clarity and precision regarding which loans were converted and when.
• The sale of the mortgages to Company B was valid under the terms of the mortgage conditions and applicable law.
• Company B had the power to appoint receivers despite the repeal of the Conveyancing Act 1881 prior to registration of the charges.
• Specific paragraphs of the Statement of Claim are unnecessary and would delay a fair trial.
• The lis pendens should be vacated because the proceedings do not claim an estate or interest in land and are bound to fail.

Plaintiffs' Arguments

• Company A wrongfully converted the loans from interest-only to principal and interest repayments in 2010/2011 without conducting the required review, causing arrears and forcing them into disadvantageous agreements.
• The Plaintiffs were assured by a Company A manager that the mortgages would not be sold, but the loans were sold to Company B, which was improper and void.
• Company B misrepresented the nature of the mortgages and conspired with Company A, invalidating the sale and the appointment of receivers.
• Company B did not have the right to appoint receivers due to the timing of charge registrations and statutory changes.
• The receivers breached their duty by failing to let the apartments, causing significant loss of rental income.
• There is confusion and lack of clarity in the pleadings, but the claims should proceed to trial for resolution.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Scotchstone Capital Fund Ltd & anor v Ireland & anor [2022] IECA 23	General principles on the Court's inherent jurisdiction to strike out proceedings as unsustainable, frivolous, vexatious, or bound to fail.	Guided the Court's approach to the strike out application, emphasizing the threshold and sparing use of the jurisdiction.
McAndrew v Launceston Property Finance DAC & anor [2023] IECA 43	Reiteration of principles governing inherent jurisdiction to dismiss cases bound to fail, including evidential scope and burden of proof.	Supported the Court's discretion to consider evidence and facts beyond pleadings in assessing whether the claim is bound to fail.
Salthill Properties Ltd v Royal Bank of Scotland plc [2009] IEHC 207	Use of documentary evidence in strike out applications.	Referenced to justify considering documentary evidence in assessing the merits of the claim on strike out.
Lopes v Minister for Justice [2014] IESC 21, [2014] 2 IR 301	Scope of Court's engagement with facts in strike out applications.	Supported the limited factual inquiry permissible on strike out motions.
Keohane v Hynes [2014] IESC 66	Limits on factual analysis in strike out, focusing on documentary evidence.	Informed the Court's approach to assessing whether factual assertions lack evidential basis.
Moylist Construction Ltd v Doheny [2016] 2 IR 283	Comparison of criteria for adjournment and strike out on inherent jurisdiction grounds.	Used to analogize the test for strike out with summary judgment principles.
Headfort Arms Limited t/a The Headfort Arms Hotel v Zurich Insurance plc [2021] IEHC 608	Principles of contract construction (text-in-context approach).	Applied to interpret the disputed loan agreement clause concerning interest-only repayment periods.
Premier Dale Limited t/a The Devlin Hotel v Árachas Corporate Brokers Limited [2022] IEHC 178	Contractual interpretation principles.	Supported the Court’s text-in-context approach to contractual terms.
Aer Rianta cpt v Ryanair [2004] IESC 23, [2004] 1 IR 506	Limitations on striking out parts of pleadings under Order 19 Rule 28.	Referenced regarding the Court’s reluctance to strike out part of a claim under Order 19 Rule 28.
Ballymore Residential Ltd v Roadstone Ltd [2021] IECA 167	Inherent jurisdiction to strike out part of a claim and policy considerations.	Guided the Court’s cautious approach to partial strike out of claims under inherent jurisdiction.
Christian v Symantec Ltd [2022] IEHC 397	Inherent jurisdiction to strike out proceedings and possibility of striking out parts of claims.	Supported the Court’s discretion to strike out parts of claims in clear abuse of process cases.
EBS v Gillespie [2012] IEHC 243	Effect of repeal of statutory provisions on mortgagee rights and receivership.	Distinguished by the Court; Plaintiffs’ reliance on it was rejected concerning validity of receiver appointment.
Start v Gunn [2011] IEHC 275	Repeal of statutory provisions and mortgagee powers.	Referenced in context of mortgagee powers and registration timing.
Duffy v PTSB & Ors [2021] IEHC 511	Validity of receiver appointment under mortgage conditions.	Referred to support validity of receiver appointment under similar mortgage conditions.
Kavanagh & Lowe v Lynch & ors [2011] IEHC 348	Interpretation of mortgage conditions and effect of statutory repeals on mortgagee rights.	Followed by the Court to conclude receiver appointment was valid despite repeal of statutory provisions.
Bula v Tara Mines Ltd (No. 6) [2000] 4 I.R. 412	Principle that multiple unstateable points do not make a claim sustainable.	Quoted to support dismissal of claims with numerous unstateable points.
JO'N v SMcD [2013] IEHC 135	Protection of lay litigants' access to courts despite lack of drafting skill.	Referenced to caution against depriving Plaintiffs of access due to pleading deficiencies.
Bennett v Earlsfort Centre (Developments) Unlimited Company [2018] IEHC 61	Lis pendens registration and bona fide claim to estate or interest in land.	Applied to determine that proceedings not claiming estate or interest in land do not support lis pendens.
Hurley Property ICAV v Charleen Limited [2018] IEHC 61	Jurisdiction to vacate lis pendens where proceedings are not bona fide or are bound to fail.	Supported vacating lis pendens where claim is doomed to failure or an abuse of process.

Court's Reasoning and Analysis

The Court applied established principles governing the inherent jurisdiction to strike out proceedings that are unsustainable, frivolous, vexatious or bound to fail, emphasizing that such jurisdiction is to be exercised sparingly and only in clear cases. It engaged with the documentary evidence and the pleadings, noting the lack of clarity in the Plaintiffs' case, particularly regarding which loans were converted and when.

Regarding the conversion of the loans, the Court analysed Special Condition 7 of the loan agreements using the text-in-context approach to contractual interpretation. It concluded that while the clause's express terms lean towards the Defendants' interpretation—that loans automatically convert after the interest-only period unless extended and that conversion during the period requires a review—there is sufficient ambiguity and factual dispute to preclude summary dismissal. The Plaintiffs have a stateable case that conversion without review was wrongful, particularly for the loan with a five-year interest-only period.

The Court rejected the Plaintiffs' argument that not having seen the terms and conditions excused them from their contractual obligations, given their solicitor witnessed the loan acceptances and mortgage deeds.

On the validity of the mortgage sale to Company B and the appointment of receivers, the Court found the claim that Company B lacked power to appoint receivers due to the repeal of the Conveyancing Act 1881 was bound to fail. The Court relied on precedent holding that repeal of statutory provisions does not affect contractual rights incorporated by reference.

The Court acknowledged that the Plaintiffs' claims regarding assurances from Company A's manager and breach of duty by the receivers involve factual disputes requiring oral evidence and thus cannot be struck out at this stage.

The Court refused to strike out specific paragraphs of the Statement of Claim under Order 19 Rule 27, holding that jurisdiction under that rule is not properly used to determine the merits of pleaded matters but to remove irrelevant or prejudicial material.

On the lis pendens, the Court held that the proceedings do not include a bona fide claim to an estate or interest in land, as the Plaintiffs' reliefs are primarily for damages and not for proprietary or declaratory relief concerning the land. Accordingly, the lis pendens was vacated.

Holding and Implications

The Court made the following orders:

• Refused to strike out the Plaintiffs' claim that the loans were wrongfully converted from interest-only to principal and interest repayments and related claims concerning fraudulent misrepresentation and breach of duty by receivers.
• Ordered the delivery of an Amended Statement of Claim to clarify the Plaintiffs' case within two weeks.
• Struck out the claim that Company B did not have the right to appoint receivers due to the timing of charge registration and repeal of the Conveyancing Act 1881, finding it bound to fail.
• Refused relief pursuant to Order 19 Rule 27 to strike out specified paragraphs of the Statement of Claim.
• Ordered the vacating of the lis pendens registered by the Plaintiffs as the proceedings do not include a bona fide claim to an estate or interest in land.

The decision preserves the Plaintiffs' right to a trial on the core issues concerning loan conversion and related claims, recognizing factual and legal complexities unsuitable for summary dismissal. The striking out of the claim regarding receivership powers clarifies that such arguments based on statutory repeal and registration timing are not sustainable. Vacating the lis pendens removes a procedural impediment for the Defendants but does not preclude the substantive proceedings. No new legal precedent is established, but the judgment reaffirms existing principles on inherent jurisdiction, contract interpretation, and lis pendens registration.