AIB Mortgage Bank UC & Anor v Burke & Ors (Approved)

Factual and Procedural Background

This plenary action involves the Plaintiffs seeking to set aside three conveyances of properties by the first and second Defendants to the third Defendant, their daughter, at a time when the first and second Defendants were significantly indebted to the Plaintiffs. The second Defendant has passed away, and the fourth Defendant was joined as a participant in the conveyances, though his existence and whereabouts remain unknown despite efforts by the Plaintiffs to locate him.

The first and second Defendants borrowed substantial sums from the Plaintiffs and defaulted on the loans. The Plaintiffs obtained judgments on consent in 2015 for sums approximating €9.5 million and €8.9 million against the first and second Defendants respectively, which remain unsatisfied. Subsequently, the Plaintiffs discovered three property transfers from the first and second Defendants to the third Defendant occurring after the judgments, allegedly at undervalue and with intent to defraud the Plaintiffs as creditors.

The Plaintiffs issued proceedings in 2020, initially without appearance from the Defendants. The first and third Defendants later entered appearances and filed defences, which were eventually struck out due to non-compliance with court orders for discovery and replies to particulars. The Defendants have largely ceased participation, with the first Defendant intermittently filing medical certificates and seeking adjournments, and the third Defendant not applying for any adjournments.

Legal Issues Presented

1. Whether the conveyances of properties by the first and second Defendants to the third Defendant were made with the intention of defrauding the Plaintiffs as creditors.
2. Whether the transfers should be set aside under section 43(3) of the Land and Conveyancing Law Reform Act 2009 as fraudulent conveyances.
3. Whether the Defendants’ conduct and the circumstances surrounding the conveyances constitute badges of fraud sufficient to infer intent to defraud.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court examined the conveyances of three properties from the first and second Defendants to the third Defendant, occurring after substantial judgment debts were owed to the Plaintiffs. The Court considered the statutory framework under section 43(3) and section 74(4)(a) of the Land and Conveyancing Law Reform Act 2009, which render conveyances made with intent to defraud creditors voidable, except where conveyed for valuable consideration to bona fide purchasers without notice.

The Court applied established legal principles from Irish case law, particularly the leading authority in Re Moroney, which explains that fraudulent intent may be inferred from the probable consequences of a conveyance. The Court found multiple "badges of fraud" present, including:

• The significant indebtedness of the first and second Defendants to the Plaintiffs.
• The timing of the conveyances occurring after judgments were obtained against the Defendants.
• The familial relationship between the Defendants and the third Defendant recipient.
• The inability to locate the intermediary fourth Defendant and the Defendants' refusal to provide information about him.
• The substantial undervalue at which the properties were transferred compared to market valuations.
• The retention by the first and second Defendants of lifetime residence rights in the family home.
• The absence of any credible explanation for the transactions in pleadings or evidence.

Based on these factors and the evidence presented, including expert valuations and testimony regarding the loans and property transfers, the Court concluded that the conveyances were not bona fide but were intended to evade the Plaintiffs’ judgment debts.

The Court also addressed the first Defendant's repeated applications for adjournments on medical grounds, referencing recent Supreme Court and High Court authority emphasizing the need to balance health concerns with the rights and interests of all parties and to assess realistic timeframes for resolution. The Court found that the first Defendant had engaged in a pattern of non-engagement and last-minute filings without adequate justification, and that the third Defendant had not sought any adjournments.

Holding and Implications

The Court ordered the setting aside of the three property transfers made by the first and second Defendants to the third Defendant on the grounds of fraud.

This decision directly affects the parties by invalidating the challenged conveyances and allowing the Plaintiffs to pursue satisfaction of their outstanding judgments. The Court did not establish any new precedent but applied established legal principles to the facts of this case.