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Supreme Court of Ireland Decisions |
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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Bula Ltd. v. Crowley [2003] IESC 10 (13 February 2003) URL: http://www.bailii.org/ie/cases/IESC/2003/10.html Cite as: [2003] 2 ILRM 401, [2003] IESC 10, [2003] 1 IR 396 |
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Appeals Nos. 90/2002;
93/2002 and 95/2002
Denham J.
Murray J.
McGuinness J.
BETWEEN/
Plaintiffs/Appellants
Defendants/Respondents
Judgment delivered on the 13th day of February, 2003 by Denham J., [Nem Diss].
1. Litigation
Three appeals are considered in this judgment. These appeals are part of a long line of litigation, stretching over nearly two decades, between the parties. These matters were at hearing before the High Court for in excess of 26 days. The main action to which these appeals relate was commenced in 1986 and has not yet come to trial in the High Court. The first appeal considered in this judgment is a preliminary issue raised in the main action.
2. First Appeal
The first appeal is an appeal by plaintiffs/appellants, hereinafter referred to as the plaintiffs, from the judgment of the High Court (Barr J.) delivered on the 1st day of February, 2002. In addition, Laurence Crowley, the first named defendant/respondent, has served a notice to vary. The Northern Bank Finance Corporation Limited, Ulster Investment Bank Limited and Allied Irish Investment Bank Limited, the second, third and fourth defendants/ respondents, have also served notices to vary.
3. Parties
The parties in this action are as follows: (a) the first named plaintiff/appellant is Bula Limited (In Receivership), hereinafter referred to as Bula; (b) the second named plaintiff/appellant is Bula Holdings, hereinafter referred to as Holdings; (c) the third named plaintiff/appellant Thomas C. Roche died in 1999; (d) the fourth named plaintiff/appellant Thomas J. Roche is no longer a party in the litigation; (e) the fifth named plaintiff/appellant is Richard Wood; (f) the sixth named plaintiff/appellant is Michael Wymes; (g) the first named defendant/respondent is Laurence Crowley, hereinafter referred to as the Receiver; (h) the second named defendant/respondent is Northern Bank Finance Corporation Limited; (i) the third defendant/respondent is Ulster Investment Bank Limited; (j) the fourth defendant/respondent is Allied Irish Investment Bank Limited; the second, third and fourth defendants/respondents are referred to collectively as the Banks; (k) the fifth named defendant/respondent MacKay and Schnellmann Ltd. is no longer a party to the proceedings, the plaintiffs by consent in June, 1997 dropped their claim against this defendant. Richard Wood and Michael Wymes, the fifth and sixth plaintiffs/appellants are directors of Bula and Holdings. The sixth plaintiff/appellant is the moving party in the litigation. The third plaintiff/appellant (now deceased) and his son the fourth plaintiff/appellant, who took no part in this action, were directors of Bula. The first, second, fifth and sixth named plaintiffs/appellants are hereinafter referred to as the plaintiffs. Laurence Crowley, the first defendant/respondent, hereinafter referred to as the Receiver, is the Receiver appointed by the banks over the assets of Bula.
4. History
As stated previously this appeal is part of a long history of litigation between the parties. The history was recounted by the learned trial judge as follows:
"It was the intention of Bula and its directors to engage in major mining operations on its lands and to that end large sums of money were borrowed from the Banks and duly secured by a number of mortgages and debentures, which entitled the relevant bank holding security to appoint a Receiver over the property of the company in the event of default being made by Bula in its obligations to the bank in question.
Bula's commercial intentions were not realised and major financial difficulties ensued in consequence of which the Banks called in their loans by formal demands dated respectively 25th June, 28th July and 5th August, 1982.
The latest dates for uncontested repayments in respect of the sums borrowed are 19th February, 1986 as to NBFC; 31st October, 1984 as to UIB and 19th October, 1983 as to AIIB. Regarding UIB; there is a contested payment made on 23rd May, 1986. There are also contested issues as to whether certain alleged acknowledgements were made by or on behalf of Bula which would have the effect of extending respective commencement dates for the running of time under the Statute of Limitations, 1957 (the Statute).
On 8th October, 1985 the Banks appointed the first defendant as Receiver over Bula's secured property and it is contended by the Banks that he thereupon entered into possession of the property.
On 4th April, 1997 each of the Banks issued proceedings seeking the recovery of principal and interest due by Bula to the respective banks.
On 22nd April, 1997 each of the Banks brought well charging order proceedings against Bula. None of the summonses relating to these actions were served until 30th March, 1998.
It is not in dispute that the purpose of the Banks in appointing the Receiver was that he would take control of the company's assets and arrange for the sale of its lands, including the proposed mine, in discharge of the debts owing by Bula to the Banks. The Receiver has actively pursued that objective since appointment but has been frustrated in his efforts by persistent unsuccessful litigation orchestrated by the sixth defendant who has demonstrated that he is implacably opposed to the sale of the potential Bula mine in any circumstances and is determined to place every possible obstacle in the way of the Banks obtaining the benefit of their securities through such a sale."
The issues before the High Court were listed by Barr J. as follows:
"1. Whether time has run against the Banks
2. Whether the title of the Banks has been extinguished.
3. Whether the Banks are entitled to recover six years interest on capital monies due to them under the securities.
4. Whether the summonses issued in 1997 have the effect of stopping time running for the purposes of the statute. (I have already held that the NBFC summonses were served within time)
5. Whether the monies paid to the Banks relating to the Bula debts are repayable.
6. Whether the Receiver is entitled to pay a statute-barred debt.
7. Whether, in the light of findings on the foregoing matters, the Banks are obliged to return to Bula the title documents to its property.
8. Whether the sale of the Orpheus Mining shares in 1986 was a part-payment for the purposes of the Statute.
9. Whether there have been any acknowledgements of debt by or on behalf of Bula which affects time under the Statute.
10. Whether the Statute can run in the face of an active Receiver."
5. High Court Judgment
In the High Court Barr J. held:
"The objective of statutory limitation of actions is to bring order into practical situations which otherwise could be chaotic and might lead to injustice. For example, it is recognised that a person claiming damages for personal injury caused by the negligence of another should not be allowed to remain inert indefinitely before launching his/her action against the wrongdoer. A limitation period of three years for instituting such proceedings from the happening of the event which gave rise to the injury is prescribed by the Statute, after which such a claim (subject to certain exceptions) is statute barred. In the area of property rights there are even stronger reasons for regulating the practical ownership of land. It has long been recognised through a series of Statutes of Limitation over the centuries that it is contrary to the ordered regulation of property rights that the owner of land in the unlawful occupation of another may sleep on his rights indefinitely and do nothing, (perhaps for generations after the original wrongful occupation), to recover the land by action from the trespasser or his successors. Accordingly, it is provided by the Statute that where there is adverse possession of land against the interest of the true owner (or other person having analogous rights such as the Banks in the instant case) the latter must bring proceedings to recover possession within twelve years from the date when the right of action first accrued.
The problems of land ownership which the Statute is intended to regulate concern unlawful occupation and do not arise in circumstances where there has been a change in the possession or control of land pursuant to a relationship (such as that created by mortgages and debentures) between the original owner and occupier of the land and those in whose favour the change in possession and/or control has come about. No adverse possession in the context of section 18(1) arises where such change occurs consequent upon an activation of rights in particular circumstances as provided for in the mortgages and debentures the terms of which were accepted by the debtor prior to default. In short, the activation of rights under the debentures which arose when, consequent upon default by the company in paying its debts, the Banks appointed the Receiver to take control of the company and to arrange the sale of its secured assets for the benefit of the mortgagees, does not create a situation of adverse possession within the meaning of section 18(1) because there is no possession without right or authority which is the essence of 'adverse possession' within the meaning of the Statute."
Having reviewed law the learned trial judge held:
". . . I conclude that the plaintiffs have failed to establish the fundamental requirement of adverse possession of the lands under section 18(1) which is essential to the operation of the Statute. Furthermore, as already stated, the relationship between Bula, the Banks and the Receiver is one derived from the debentures and mortgages. It is not within the realm of the Statute. In arriving at my decision I have also come to the conclusion that the arguments advanced by the defendants to which I have referred herein are well founded.
In the light of this judgment other issues argued in course of the trial have become moot and it is unnecessary to address them."
6. High Court Order
The High Court ordered (on the 18th February, 2002):
"The Court DID FIND that the Plaintiffs have failed to establish adverse possession of the lands the subject matter of these proceedings.
And the matter being thereupon adjourned to this day for the making of such Orders consequent upon the said finding as to the Court might seem meet . . .
IT IS ORDERED as follows
1. that the claims of the Plaintiffs herein against the first to fourth named Defendants (other than in respect of the Statute of Limitations issues dealt with below) do stand dismissed effective from 15th January 1999
2. that the third and fourth named Plaintiffs having applied to discontinue their claims herein on the 1st day of March 1993 do pay to the Defendants the costs of these proceedings up to and including the 1st day of March 1993 to include the costs of all applications in respect of which the third and fourth named Plaintiffs were a moving party either alone or in conjunction with other Plaintiffs and of all Motions brought against them by the first to fourth Defendants or any one or more of them in respect of which the Court has not adjudicated on the issue of costs or reserved costs
3. that the first second fifth and sixth named Plaintiffs do pay Defendants the costs of this Action to include the costs of all applications in respect of which the said Plaintiffs were a moving party either alone or in conjunction with other Plaintiffs and of all Motions brought against them by the first to fourth Defendants or any one or more of them in respect of which the Court has not adjudicated on the issue of costs or reserved costs
4. that all claims material to the Statute of Limitations agitated by the first second fifth and sixth named Plaintiffs do stand dismissed together with an Order that the first second fifth and sixth named Plaintiffs do pay to the first to fourth named Defendants all costs of such Statute of Limitations issues to include the costs of all applications in respect of which the said Plaintiffs were a moving party either alone or in conjunction with other Plaintiffs and all Motions brought against them by the first to fourth Defendants or any one or more of them in such issues in respect of which the Court has not adjudicated on the issue of costs or reserved costs
5. that the lis pendens registered by the Plaintiffs on the 5th day of October 1988 doth stand discharged and that the Plaintiffs and each of them do join in all acts necessary to effect this end
6. pursuant to Order 123 r 3 of the Rules of the Superior Courts 1986 that it was expedient that the proceedings herein should have been reported by a shorthand writer as in fact they were and it is accordingly ordered that remuneration of the said shorthand writer or writers shall form part of the costs in cause and issues
7. that the Order for costs in these proceedings made in respect of the Statute of Limitations issues be stayed for twenty-one days – The application for a stay in respect of all other Orders for costs is refused
8. that the application by Motion dated the 8th day of April 1997 of the second third and fourth named Defendants to join a counter claim in the proceedings do stand adjourned generally with liberty to re-enter. Liberty to apply."
7. Grounds of Appeal of the Plaintiffs
The plaintiffs appealed against the determination of the High Court on the following general grounds:
"1. That the Learned High Court Judge erred in fact and in law in failing to find that:
(a) Pursuant to the plain ordinary meaning of Section 33 of the Statute of Limitations 1957 ('the Statute'), the title of the mortgagees ('the Banks'), and each of them, to the property of the First named Plaintiff ('Bula'), has been extinguished.
(b) Pursuant to the plain ordinary meaning of Section 38 of the Statute, the right of the Banks, and each of them, to the principal and interest secured by their mortgages, has been extinguished;
(c) Pursuant to the plain ordinary meaning of Section 36(1) of the Statute, the principal and interest of Ulster Investment Bank ('UIB') and Allied Irish Investment Bank ('AIIB') are statute barred;
(d) Pursuant to the plain ordinary meaning of Section 37(1) of the Statute, interest in excess of 6 years on the principal of Northern Bank Finance Corporation Ltd. ('NBFC') is statute barred;
(e) There is no requirement for Bula under its claims pursuant to Sections 36(1), and 37(1) of the Statute to prove adverse possession against the Banks.;
(f) The need to prove adverse possession under Section 18(1) of the Statute is only relevant to an 'action to recover land' (which is a matter dealt with at Section 24), and is irrelevant to 'an action claiming sale' of mortgaged land (as is referred to at Sections 33 and 38), or an 'action to recover any principal sum' (as is referred to at Section 36(1)), or 'an action to recover arrears of interest' (as is referred to at Section 37);
(g) An 'action to recover land' which is referred to in Sections 18(1) and 24 of the Statute is not the same as an 'action claiming sale of mortgaged land', or an 'action to recover a principal sum', or an 'action to recover arrears of interest', as referred to in Sections 32(2), 33, 36, 37 and 38;
(h) The Banks, and each of them, are obliged to return to Bula the title documents to its property, by reason of the extinguishment of their principal and interest;
(i) The monies held in Suspense Accounts as security by the Banks, and each of them, relating to the Bula debt are repayable, by reason of the extinguishment of their said debts.
2. That the Learned High Court Judge erred in fact and in law in finding that:
(a) There is a fundamental requirement of adverse possession of lands under Section 18(1) of the Statute which is essential to the operation of the Statute, notwithstanding that Section 18(1) and adverse possession thereunder are expressly limited in the Statute to an action for the recovery of land (a matter dealt with at section 24), and have no application with regard to the Plaintiffs' claims pursuant to Sections 32(2)(a), 33, 36(1)(a), 37(1) and 38, which sections deal with an action for the sale of land, an action for the recovery of principal, and an action for the recovery of interest, and not an action for the recovery of land.
(b) The Plaintiffs had failed to establish the fundamental requirement of adverse possession, and that there could be no adverse possession as and from the appointment of a Receiver, notwithstanding that Bula remained in law and in fact in possession and occupation, of the lands after the appointment of the Receiver in 1985, and has at all material times contested his appointment, and his right in law to act or sell.
(c) The relationship between Bula, the Banks and the Receiver was not within the realm of the Statute, notwithstanding that:
(i) The Statute contains no extension or exception in respect of a secured creditor who has appointed a receiver, and it is the settled law within this jurisdiction that if there are to be any further extensions or exceptions to the Statute, the same are to be left up to the legislature, and are not to be regarded as matters left to the Courts, and
(ii) It has been the settled law for over 100 years that the Statute does operate in a Receivership against a secured creditor who has appointed a receiver, and that a receiver cannot pay a statute-barred debt.
3. The Learned High Court Judge erred in fact and in law in giving no adequate reason for his failure to implement the plain ordinary meanings of Sections 32(2), 33, 36(1), 37(1) and 38, and in accordance with the settled law within this jurisdiction to the effect that a statute must be interpreted in the plain, ordinary meaning of the words used.
4. The Learned High Court Judge erred in fact and in law in giving no adequate reason for his findings at 2(a) above.
5. The Learned High Court Judge erred in fact and in law in giving no or no adequate reason for his rejection of the settled law referred to at 2(c) above.
6. The Learned High Court Judge erred in fact an in law in failing to have any regard to the provisions of Section 36(1)(a) and Section 37, these being sections which are nowhere referred to or considered in the judgment of the learned trial judge.
7. The Learned High Court Judge erred in fact and in law in failing and refusing in a Ruling dated 20th February 2001 to allow the proposed amendments to the Points of Claim, as identified in New Paragraphs 24, 26, 27 and 3 in the Draft Amended Points of Claim redelivered on 14th November 2000.
8. The Learned High Court Judge erred in fact and in law ordering costs against the Plaintiffs, and in refusing a stay on the said costs pending the appeal herein:"
8. Notice to Vary by Receiver
The Receiver brought a notice to vary the judgment of the High Court. The Receiver sought an order dismissing the claims of the first, second, fifth and sixth named plaintiffs pursuant to the Statute of Limitations. The specific grounds submitted by the Receiver had been argued before the High Court but were deemed by the learned High Court judge not to be necessary to the determination of the claims. The grounds were as follows:
(i) the plaintiffs as persons indebted to the banks were not entitled to invoke the equitable jurisdiction of the High Court to seek orders requiring the delivery of property mortgaged on the basis of admitted liabilities and/or declaratory relief, on the grounds that the claims of the said plaintiffs were statute barred;
(ii) the claims made by the plaintiffs were in substance, fact and law a redemption action, which the plaintiffs are not as a matter of law entitled to pursue without discharging or undertaking to discharge the debts the subject thereof;
(iii) the second, third and fourth named defendants having instituted proceedings for the recovery of outstanding monies and proceedings seeking Orders for Possession and Sale of the mortgaged lands, issued on April 4, 1997 and April 22, 1997 respectively, any claims of the said defendants for the recovery of the sums due are not statute barred;
(iv) a receiver duly appointed by a mortgagee or chargeholder pursuant to powers in a debenture to that end, is entitled to discharge any debt owing by the mortgagor or chargeant to the appointor, irrespective of whether same was statute barred;
(v) the Receiver is entitled, pursuant to the mortgages and charges consequent upon which he was appointed, to pay to the banks all monies recovered by him, in discharge of any debt owing by the said plaintiffs to the said defendants;
(vi) having regard to the acknowledgements and/or part payment of debts owing to, and title of, the banks relied upon in the within proceedings, neither the said debts, nor the entitlement of the said banks to the said lands pursuant to the said mortgages and charges, are statute barred or extinguished;
(vii) the contentions advanced by the said plaintiffs herein are contrary to the intention behind and wording of the provisions of the Statute of Limitations 1957, as amended;
(viii) the said plaintiffs are estopped from claiming the relief sought herein by reason of their opposing the winding up of the Receiver;
(ix) the banks have by the appointment of a Receiver over the lands, taken an action within the meaning of the Statute of Limitations 1957, as amended, and in the circumstances the plaintiffs are not entitled to invoke the provisions of the Statute of Limitations 1957 as sought;
(x) the Statute of Limitations, 1957 as amended is inapplicable in the face of an active Receiver;
(xi) the Statute of Limitations, 1957, as amended, does not preclude a creditor from satisfying its debt by means other than by action.
9. Notice to Vary by the Banks
The Banks have each served a notice to vary. It was submitted that in the event that this Court be of the opinion that the appeal of the plaintiffs ought to be allowed on any of the grounds in the notice of appeal, then the Banks sought an order confirming the decision of the High Court to dismiss the claims of the plaintiffs on the grounds that the other issues argued in the trial are a complete answer to the claims of the plaintiffs. In the circumstances and in justice it was submitted that the claims of the plaintiffs rightly failed and that this Court ought not to interfere in the order of the High Court dismissing the claim of the plaintiffs together with costs or alternatively ought only to vary the order of the learned trial judge to the extent necessary by confirming the dismissal on all such grounds as were argued before the learned High Court judge on behalf of the defendants.
10. Other Issues
The other issues argued in the course of the trial were listed as:
11. Statutory Law
A significant part of the claim of the plaintiffs is based on legal argument as to the true construction of a number of sections of the Statute of Limitations, 1957. The relevant sections are:
"Section 2(1) In this Act . . .
'action' includes any proceeding (other than a criminal proceeding) in a Court established by law;
'action to recover land' includes . . .
(b) proceedings by a mortgagee for the delivery of possession of land by a mortgagor. . .
Section 2(6) In this Act -
(a) references to a right of action to recover land shall include references to a right to enter into possession of the land . . .
(b) references to the bringing up an action to recover land shall include references to the making of an entry into possession of the land . . ."
At the commencement of Part II of the Statute of Limitations, 1957 is s. 10, which states:
"The subsequent provisions of this Part of this Act shall have effect subject to the provisions of Part III of this Act which provide for the extension of the periods of limitation in the case of disability, acknowledgment, part payment, fraud and mistake."
"Section 13(2) The following provisions shall apply to an action by a person to recover land:
(a) subject to paragraph (b) of this subsection, no such action shall be brought after the expiration of twelve years from the date on which the right of action accrued to the person bringing it or, if it first accrued to some person through whom he claims, to that person; . . ."
Section 13(2)(b) is not relevant.
"Section 18(1) No right of action to recover land shall be deemed to accrue unless the land is in the possession (in this section referred to as adverse possession) of some person in whose favour the period of limitation can run."
"Section 18(3) Where a right of action to recover land has accrued and thereafter, before the right of action is barred, and the land ceases to be in adverse possession, the right of action shall no longer be deemed to have accrued and no fresh right of action shall be deemed to accrue unless and until the land is again taken into adverse possession. . . ."
"Section 20 – For the purposes of this Act –
(a) no person shall be deemed to have been in possession of any land by reason only of having made a formal entry thereon. . . ."
"Section 24 - Subject to section 25 of this Act and to section 52 of the Act of 1891, at the expiration of the period fixed by this Act for any person to bring an action to recover land, the title of that person to the land shall be extinguished."
"Section 32(2) The following provisions shall apply to an action by a person (other than a State authority) claiming the sale of land which is subject to a mortgage or charge:-
(a) subject to paragraph (b) of this subsection, no such action shall be brought after the expiration of twelve years from the date on which the right of action accrued to the person bringing it, or, if it first accrued to some person through whom he claims, to that person; . . ."
"Section 33 - At the expiration of the period fixed by this Act for a mortgagee to bring an action claiming sale of the mortgaged land, the title of the mortgagee to the land shall be extinguished."
"Section 34 (1)(a) Where a mortgagee of land has been in possession of any of the mortgaged land for a period of twelve years, no action to redeem the land of which the mortgagee has been so in possession shall thereafter be brought by the mortgagor or any person claiming through him."
"Section 37 - No action shall be brought to recover arrears of interest payable in respect of any principal sum of money secured by a mortgage or charge of land . . . or to recover damages in respect of such arrears after the expiration of six years from the date on which the interest became due."
"Section 38 - At the expiration of the period fixed by this Act for a mortgagee of land to bring an action to recover the land or for a person claiming as mortgagee or chargeant to bring an action claiming sale of the land, the right of the mortgagee or such person to the principal sum and interest secured by the mortgage or charge shall be extinguished."
"Section 53 - Where -
(a) the right of an incumbrancer of land to bring an action claiming sale of the land has accrued, and
(b) the person in possession of the land or the person liable for the debt secured by the incumbrance acknowledges the debt,
the right of action shall be deemed to have accrued on and not before the date of the acknowledgement."
"Section 63 - Where -
(a) the right of an incumbrancer of land to bring an action claiming sale of the land has accrued, and
(b) the person in possession of the land or the person liable for the debt secured by the incumbrance makes any payment in respect thereof, whether of principal or interest,
the right of action shall be deemed to have accrued on and not before the date of the payment."
12. Case Law
Very extensive case law was opened to the Court, as it had been to the High Court. Many cases cited related to the Statute of Limitations. Thus the Court was referred to Touhy v. Courtney [1994] 3 I..R. 1 at 48 where Finlay C.J. stated:
"The primary purpose [of Statutes of Limitations] would appear to be, firstly, to protect defendants against stale claims and avoid the injustices which might occur to them were they asked to defend themselves from claims which were not notified to them within a reasonable time."
Many cases were cited relating to the construction of statutes, such as Howard v.Commissioners of Public Works in Ireland [1994] 1 I.R. 1. Extensive reference was made to case law relating to the word 'action' and to the references to 'a right of action to recover land' in the Statute of Limitations, 1957. Also, there was extensive reference to case law relevant to a receiver. There was a considered analysis of Hibernian Bank v. Yourell [1916] 1 I.R. 312 (H.C. and C.A.), Yourell v. Hibernian Bank [1918] A.C. 372 and Hibernian Bank v. Yourell (No. 2) [1919] I.R. 310 by the parties. While I have not referred to all the cases opened and considered in these appeals they were of significant benefit in the analysis.
13. Points of Plaintiffs
Counsel for the plaintiffs set out the main points argued by the plaintiffs. They serve as a useful indication of the issues argued before the court. The points submitted by the plaintiffs were:
(i) pursuant to the provisions of ss. 33 and 38 of the Statute of Limitations, 1957, the title of the Banks to Bula's assets, and their right to repayment of their principal monies and interest, become, prima facie, extinguished on the following dates:
in the case of NBFC (now NIIB), on 19th February, 1998;
in the case of UIB, on 31st October, 1996;
in the case of AIIB, on 19th October, 1995;
(ii) the issue by the Banks of their legal proceedings in 1997 did not save them; the UIB and AIIB proceedings were already out of time. In the case of NBFC, as neither s. 33 nor s. 38 contain any provision saving a mortgagee's title, or right to recover its principal monies or interest from extinguishment by the mere issue of a writ, its rights also became extinguished notwithstanding that its proceedings, when issued, were within the twelve year period established by the Act of 1957, on the 12th anniversary of the State payment of interest, on the 19th February, 1998;
(iii) if any of the Banks claims are not extinguished pursuant to
ss. 33 or 38 they only have the right to receive the repayments of their principal monies and 6 years arrears of interest pursuant to the provisions of s. 37(1) of the Statute of Limitations, 1957;
(iv) in the case of NIIB, the principal monies advanced totalled only IR£2.75 million. Its right (should it continue to exist) to charge interest is limited to 6 years arrears of interest. The 6 years arrears of interest must be calculated on the principal monies due; the effect of earlier compounding is excluded. The NIIB principal sum of IR£2.75 million and 6 years arrears of interest at prevailing rates of interest is relatively modest (circa IR£5 million);
(v) if the AIIB is statute barred, Mr. Woods qua Guarantor is entitled to the repayment of the securities realised by AIIB amounting to IR£1,190,012.00 plus interest thereon. (The AIIB realisations, like those of NIIB, were kept in separate securities realised accounts and not appropriated to Bula's debt). Mr. Wood is willing, and would wish in that event, to apply those monies towards the reduction of any monies owing to NIIB that have not been extinguished;
(vi) NIIB also has other monies available to it on suspense account, being monies realised from other guarantors. Barr J. refused to allow the plaintiffs to expressly plead an entitlement to have these monies taken into account in his ruling of the 21st February, 2001. The plaintiffs submit that he erred in this regard. In any event, if the plaintiffs are entitled to succeed in this action, the reliefs claimed by them at paragraph (xiii) of the prayer to their claim will permit such monies to be taken into account in any final reckoning of the final sum due to NIB;
(vii) the plaintiffs believe that, in the event that the NIIB's right to receive repayment of its principal sum and 6 years interest has not been extinguished, that the application of the monies to the repayment to which Mr. Wood may be found entitled to received from AIIB, coupled with the availability of the collateralised assets furnished by Mr. Wood and Mr. Wymes and their companies to the Banks in support of their guarantor liabilities, coupled with the NIIB suspense account monies, and any other money received, e.g. from the Roches, will be sufficient to offset any monies remaining properly due to NIIB under the terms of its charges; and will be such as to obviate the need for any sale of Bula's assets;
(viii) in the event of the Banks' titles being extinguished pursuant to s. 33 of the Statute of Limitations, 1957 Bula is entitled to the return of all its original documents of title;
(ix) in the event of the Banks' rights to payment of their principal monies and arrears of interest being extinguished, Mr. Wymes and Mr. Wood and their nominee companies are entitled to be relieved of all past and present liabilities to the Banks on foot of their guarantees, and are entitled to have the Banks' unsatisfied judgments against them set aside; alternatively, the Banks must be held disentitled from issuing execution in respect of such judgments against Mr. Wymes and/or Mr. Wood and/or their associated companies.
In the defences filed to the plaintiffs' claims pursuant to the Statute of Limitations, the Banks and the Receiver, while disputing the plaintiffs' primary claims, also sought to make two further contentions:
(i) that a number of documents purporting to have emanated from Bula and/or the Receiver and/or their servants or agents, constitute acknowledgements in writing sufficient to postpone the running of their respective causes of action; thereby preserving their titles and debts from extinguishment;
(ii) in the case of UIIB, that a payment made by a company called Orpheus Mining Limited, of which Mr. Wymes and Mr. Wood were directors, and which was made in May 1986, was a payment made by or on behalf of Bula, and thereby operated as a part payment within the meaning of the Statute of Limitations, 1957, also preserving UIIB's rights from extinguishment.
These points, submitted by the plaintiffs, are a clear statement of the issues opened before this court on the first appeal.
14. Preliminary Issues
The first appeal raises preliminary issues to the main appeal. The plaintiffs have sued the defendants in what may be referred to as the main action, and which may also be referred to in the overall litigation between the parties as the Banks' case. These are appeals on preliminary issues to that main action against the Banks. The issues in these cases centre around the application of the Statute of Limitations, 1957.
15. Facts
The facts have been found by the learned High Court judge in his judgment. On the first issue in the first appeal the issue is one of law and there was no dispute on the relevant facts.
16. Time
At the core of the plaintiffs' claim is the submission that time has run against the Banks. Section 33 of the Statute of Limitations, 1957 is the bedrock of the claim of the plaintiffs. Counsel for the plaintiffs stressed that the section related to an action claiming sale of the mortgaged land, that the period fixed for the mortgagee is 12 years from the date the right accrued, and that at the end of that time the title of the mortgagee is extinguished. Further, it was submitted that the right of action to seek sale of the land accrues when the money becomes due. It was submitted that a part payment or an acknowledgment would stop time, which would then recommence. It was submitted that the 12 year period after which the right of the mortgagee is extinguished is independent of the right of a mortgagee to possession. It was submitted that the key sections to be construed were s. 33 and s. 38 of the Statute of Limitations, 1957. The approach to be taken by a court to the construction of the statute was addressed and the court was referred to Howard and Ors. v. Commissioners of Public Works in Ireland [1994] 1 I.R. 101; Perry v. Woodfarm Homes Limited [1975] I.R. 104; D.P.P. (Ivers) v. Murphy [1999] 1 IR 98 and Gooden v. Waterford Regional Hospital (Supreme Court, Unreported, 21st February, 2001 per McGuinness J.), amongst other cases.
17. Decision on First Appeal
(i) Basis for the appointment of the Receiver
The issue for decision is one of law. I am satisfied that the core of the case is to be found in the appointment of the Receiver. An analysis of the legal relationships of the parties, the plaintiffs, the Receiver and the Banks, and the consequences arising from those relationships, is the kernel of the matter.
The factual matrix which is not in dispute, save where expressly indicated, upon which the legal decision falls to be made is as follows. Bula borrowed money from the Banks. The borrowings were secured by a number of mortgages and debentures each of which entitled the relevant bank holding security to appoint a receiver over the property in the event of default being made by Bula in its obligations to the relevant Bank. In default of repayment of the loan the Northern Bank Finance Corporation Limited demanded repayment on the 25th June, 1982, the Ulster Investment Bank Limited demanded repayments on the 28th July, 1982 and Allied Irish Investment Bank Limited demanded repayment on the 5th August, 1982. The latest dates for uncontested repayments of the sums borrowed were the 19th February, 1986 in respect of Northern Bank Finance Corporation Limited, the 31st October, 1984 in respect of Ulster Investment Bank Limited, and the 19th October, 1983 in respect of Allied Irish Investment Bank Limited. In respect of Ulster Investment Bank Limited there is a contested payment of the 23rd May, 1986. On the 8th October, 1985 the banks appointed Laurence Crowley Receiver over the secured property. The Receiver has been an active receiver. On the 4th April, 1997 each of the Banks issued proceedings seeking the recovery of principal and interest due by Bula to the Banks. On the 22nd April 1997 each of the Banks brought well charging order proceedings against Bula. None of these proceedings was served until the 30th day of March, 1998. The secured property has now been sold by the Receiver, who wishes to distribute the money to the Banks.
The first matter which I would stress is the contractual base to the tripartite relationship of Bula, the Receiver and the Banks. Since the core of the case is to be found in the appointment of the Receiver, the key to the situation is to be found in the contractual documents establishing the relationships between the parties on the establishment of the loans. The documents relating to each bank are broadly the same and may be treated as such as regards the relevant issues of law. In this case, thus, facility letters were entered into to govern the arrangement. An example is the letter of the Northern Bank Finance Corporation Limited dated the 16th October, 1974. It states:
"Northern Bank Finance Corporation Limited
16th October, 1974.
The Directors
Bula Limited
Hill Samuel House
25-28 Adelaide Road
Dublin 2.
Dear Sirs,
I have pleasure in advising you that Northern Bank Finance Corporation Limited (hereinafter referred to as the Corporation) will make loan facilities available to Bula Limited (hereinafter referred to as the Borrower) on the following terms and conditions:-
1. Amount of the loan:
£1,750,000 (One million, seven hundred and fifty thousand pounds) subject to further review as set out in Paragraph 6.
2. Purpose of the loan:
a) To complete further land purchases and to meet the company's requirements for working capital, capital expenditure and interest payments in the period to June, 1976.
b) To take over existing borrowings of approximately £653,000 from Bank of Ireland.
c) Guarantee of an overdraft facility of £100,000 from Northern Bank Limited, it being understood that the amount due on foot of this guarantee is included in the total facility mentioned at 1, above.
3. Security
a) A floating debenture over all the assets of the Borrower.
b) A fixed charge over 117 acres of unregistered freehold land at Nevinstown, Co. Meath, underlain by mineral deposits.
c) A fixed charge over a further 143 acres surrounding the land mentioned in b.
4. Rate of Interest:
The rate of interest will be 2% per annum over the average cost to the Corporation of raising funds on the Dublin Inter-bank Market in the week prior to the date of drawdown, and will be reset every three months thereafter on the same basis. Interest will be calculated on the outstanding balance on a day-to-day basis and will be payable without deduction of tax in arrears on the 30th April and 31st October during the term of the loan and on final repayment of the loan, but without prejudice to the provisions of the other terms and conditions of this facility, if interest is not paid on the due date the amount thereof will bear interest at the same rate as if it were a capital sum.
5. Reserve Requirements:
If there shall be any increase in the cost to the Corporation of making or maintaining the loan by an amount which the Corporation deems material resulting from any changes in the reserve or liquidity requirements of the Central Bank of Ireland, then the Borrower shall pay as additional in interest such amount as the Corporation shall certify as will compensate for such increased cost as from the date of notification.
The Borrower shall be at liberty at any time after such notification and without payment of any premium or penalty to repay the full amount of the loan outstanding.
6. Period:
The loan and interest thereon will be repayable on demand, but it is the Corporation's general understanding that repayment will be effected from re-financing to be arranged not later than the 30th June, 1976, subject to a general review of requirements not later than the 31st December, 1975.
7. Arrangement Fee:
An arrangement fee of £10,000 is payable by the Borrower on acceptance of the facility.
8. Commitment Fee:
A commitment fee is payable at the rate of ½% per annum, payable half-yearly in arrears, on any undrawn portion of the loan with effect from the date of acceptance of this facility until such date as the loan is fully drawn.
9. Drawdown of the loan:
The loan may be drawn down in tranches of a multiple of £100,000 subject to a minimum drawing of £100,000. On completion of the security arrangements drawings up to a maximum amount of £400,000 may be made in respect of Purpose a in Clause 2 above, together with the amount set out in respect of Purpose b in the same Clause. The balance of the total facilities may not be drawn until:
1. the completed formal contract regarding the acquisition by the State of 49% of the issued share capital of the Borrower has been produced to the Corporation. The Corporation is to be satisfied that the terms of this contract are in line with the Agreement in Principle dated the 26th July, 1974 already executed.
10. Insurance:
The property described in Clause 3 is to be insured in an office approved by the Corporation against all normal risks at amounts as may be considered necessary, and the Borrower is to provide the Corporation with a copy of the relevant policy together with premium receipts. The Corporation will require its interest as mortgagee to be noted by the insurer.
11. It is a condition of this loan that in any transaction involving the appointment of Merchant Bankers or Banking Advisors, the Corporation will be so appointed. The Corporation is also to be firstly offered the opportunity of providing or arranging the necessary long term finance for the development and operation of the mine.
12. Subject to there being no developments in the meantime that would be likely, in our opinion, to have adverse effects upon the business of the Borrower or its future prospects, the loan will be available upon completion of the security arrangements.
13. A certified copy of the Board resolution accepting the facility and authorising the loan is required to be supplied.
14. Any costs, including solicitors' fees, stamp duty, etc., to be discharged by the Borrower.
15. The offer will remain open until the 31st October, 1974 and will be subject to re-negotiation if acceptance is not received by that date.
16. Audited balance sheets and accounts are to be provided annually and the Borrower is to make available to the Corporation from time to time such information regarding its future plans, trading and financial position as may be requested.
17. A copy of the Memorandum and Articles of Association of the Borrower is to be provided.
18. The Borrower represents and warrants to the corporation as follows:
a) the making and performance of this agreement are within the Borrower's corporate powers and have been duly authorised by all necessary corporate action and do not contravene any law or contractual restrictions binding on the borrower;
b) there are no pending or threatened actions or proceedings before any court or tribunal which might materially adversely affect the financial condition or operations of the Borrower;
c) that the loan herein referred to is used for the purpose stated in Clause 2.
This letter supercedes and cancels all previous facility letters to the Borrower from the Corporation.
Subject to the Borrower's acceptance of the foregoing we shall arrange for our solicitors to proceed with the necessary legal formalities.
If there is any further information required, please do not hesitate to contact us.
Yours faithfully,
FOR AND ON BEHALF OF NORTHERN
BANK FINANCE CORPORATION LTD.
-----------------
M.K. Condell
Director
We, the Directors of Bula Limited, hereby confirm agreement with the terms and conditions of the foregoing and undertake to carry out all the obligations set out therein.
---------------------------
Michael J. Wymes
---------------------------
Thomas J. Roche"
Security was provided by deeds which had relevant express terms. Thus, for example, there was the floating charge made by deed dated the 25th day of November, 1974 between Bula and the Northern Bank Finance Corporation Limited. Clause 8 made provision for the appointment of a receiver. Clause 9 provided for the specific powers of the receiver. These clauses stated:
"8. At any time after the money owing upon this security shall have become due and payable as aforesaid the Bank shall have power by instrument in writing to appoint any person or persons whether an Officer or Officers of the Bank or not to be a Receiver or Receivers of the assets and may in like manner remove any such Receiver.
9. Any Receiver so appointed shall have power from time to time to take possession of collect and get in all or any of the assets and to carry on or concur in carrying on the business of the Company and (without being required to give any notice in that behalf) to sell or concur in selling all or any part of the assets including the goodwill of the Company's business (and as to fixtures to sell or concur in selling the same either attached to or separated from the hereditaments to which they are fixed) and to make any arrangement or compromise which he may think expedient and to demise or to let the Company's premises or any part or parts thereof for such term of years or from year to year or other less period than a year at such rent and subject to such agreements covenants and conditions and either with or without fine or premium as such Receiver shall think fit and may also accept surrenders of any Lease or Tenancy of the Company's premises or any part thereof whether granted by such Receiver or not upon any terms (including the payment of money) which such Receiver shall think reasonable and may grant other Leases or Tenancies of the premises so surrendered or any part or parts thereof under the power aforesaid and may without the necessity for the Bank to give any written direction in that behalf effect any insurance execute any repairs and pay any outgoings which such Receiver shall think proper and may expend for such purposes not only any income which he may receive but also such further moneys as may be necessary such further moneys with interest to be repayable by the Company and in the meantime to be charged on the assets as if they had formed part of the moneys secured hereby at the time of the appointment of such Receiver and such Receiver may make any arrangement or compromise which he shall think expedient in the interests of the Bank and may take or defend any legal or other proceedings in the name of the Company or otherwise and may for the purpose of carrying on the business of the Company raise money on the assets in priority to the charge hereby created and may carry any sale demise or lease into effect by conveying assigning demising and leasing in the name and on behalf of the Company (for which purpose the Company hereby irrevocably appoints every Receiver appointed hereunder to be the Attorney of the Company) or otherwise and may make calls conditionally or unconditionally on the members of the Company in respect of the uncalled capital with such and the same powers for that purpose and for the purpose of enforcing payment of any so made as are by the Articles of Association of the Company conferred on the Directors thereof in respect of calls authorised to be made by them and in the names of the Directors or in that of the Company or otherwise and to the exclusion of the Directors' power in that behalf and every Receiver appointed by the Bank shall be the agent of the Company and the Company shall be solely responsible for his acts or defaults and for his remuneration and in particular the receiver shall be entitled to work all or any mines and minerals the subject of this security.
10. All moneys received by any such Receiver shall after providing for the matters specified in paragraphs (i) (ii) and (iii) of Section 24 (8) of the Conveyancing and Law of Property Act 1881 and in Sections 98 and 285 of the Companies Act, 1963 and for all costs charges and expenses of and incidental to the exercise of the Receiver's powers be paid to the Bank and applied in discharge or part discharge first of any interest and secondly of any principal due and payable to the Bank hereunder. The foregoing provisions shall take effect by way of variation and extension of Sections 19 and 21 to 24 inclusive of the Conveyancing and Law of Property Act 1881 as amended by the Conveyancing Act 1911 and the provisions of those Sections and the powers thereby conferred on a Mortgagee or Receiver as so varied and extended shall apply to and be exercisable by any such Receiver so far as applicable and Section 20 of the Conveyancing and Law of Property Act 1881 shall not apply."
The Northern Bank Finance Corporation appointed the Receiver by deed dated the 8th October, 1985. It provided:
"NORTHERN BANK FINANCE CORPORATION LIMITED having its registered office at Griffin House, 7-8 Wilton Terrace in the City of Dublin (hereinafter called 'the Bank') being the registered holder of a Floating Charge and Mortgages specified in the Schedule hereto (hereinafter called 'the Securities') issued in its favour by Bula Limited (hereinafter called 'the Company') to secure the monies therein specified pursuant to the powers in that behalf contained HEREBY APPOINTS LAURENCE CROWLEY F.C.A. of 1, Stokes Place, St. Stephen's Green, in the City of Dublin to be Receiver (hereinafter called 'the Receiver') of and over all the undertaking property and assets of the Company charged by the Securities to the intent and so that the Receiver may exercise all the powers conferred on the Receiver by the Securities.
Dated the 8th day of October 1985.
SCHEDULE
1. Floating Charge given on the 25th day of November 1974 by the Company in the favour of the Bank.
2. Mortgage given on the 12th day of July 1984 by the Company in favour of the Bank.
3. Mortgage given on the 8th day of November 1984 by the Company in favour of the Bank.
PRESENT when the Common Seal
of NORTHERN BANK FINANCE (signed)
CORPORATION LIMITED was affixed -----------------------
hereto:- Authorised Signatory
(signed)
(signed)
------------------------
Authorised Signatory
I, the above-named Laurence Crowley F.C.A. do hereby agree to act as
Receiver of the undertaking property and assets of the Company charged by the Securities and I hereby undertake to discharge all the duties of such office and to duly and regularly account to the Bank for all monies received by me as Receiver.
Dated the 8th day of October 1985.
SIGNED by the said LAURENCE CROWLEY"
The essence of the central issue on this appeal is grounded on the above and similar relevant documents which once implemented led to the appointment of the Receiver. On the appointment of the Receiver a special relationship between the parties was established. The plaintiffs, including Bula, had agreed to the clauses relating to the provision of a receiver and to his powers. This was done in the context of a contractual relationship. The plaintiffs agreed to the terms of the agreements and to the specific clauses relating to the Receiver. The appointment of the Receiver was a fulfilment of a term of the contractual relationship.
(ii) Unique nature of the position of the Receiver
The second matter I would stress is the unique and exceptional nature of the position of a receiver. The position of a receiver is unique. The agency of a receiver is exceptional. There is a duality in the agency of the receiver. In an analysis of this unique position may be found the answer to the first appeal.
The nature of the position of a receiver has been considered extensively in case law. In Gomba Holdings v. Minories Finance [1989] BCLC 115 Fox L.J. said at p. 117:
"The agency of a receiver is not an ordinary agency. It is primarily a device to protect the mortgagee or debenture holder. Thus, the receiver acts as agent for the mortgagor in that he has power to affect the mortgagor's position by acts which, though done for the benefit of the debenture holder, are treated as if they were the acts of the mortgagor. The relationship set up by the debenture, and the appointment of the receiver, however, is not simply between the mortgagor and the receiver. It is tripartite and involves the mortgagor, the receiver and the debenture holder. The receiver is appointed by the debenture holder, on the happening of specified events, and becomes the mortgagor's agent whether the mortgagor likes it or not. And, as a matter of contract between the mortgagor and the debenture holder, the mortgagor will have to pay the receiver's fees. Further, the mortgagor cannot dismiss the receiver, since that power is reserved to the debenture holder as another of the contractual terms of the loan. It is to be noted also that the mortgagor cannot instruct the receiver how to act in the conduct of the receivership.
All this is far removed from the ordinary principal and agent situation so far as the mortgagor and the receiver are concerned. Whilst the receiver is the agent of the mortgagor he is the appointee of the debenture holder and, in practical terms, has a close association with him. Moreover he owes fiduciary duties to the debenture holder, who has a right, as against the receiver, to be put in possession of all the information concerning the receivership available to the receiver: see Re Magadi Soda Co. Ltd. (1925) 41 TLR 297.
The result is that the receiver, in the course of the receivership, performs duties on behalf of the debenture holder as well as the mortgagor. And these duties may relate closely to the affairs of the entity which is the subject of the receivership. It is, therefore, not satisfactory to approach the problem of the ownership of documents which come into existence in the course of the receivership on the basis that ownership depends on whether the documents relate to the affairs of (in this case) the companies."
I adopt this statement of the law. I favour especially the description of the agency of the receiver as primarily a device to protect the mortgagee. This primary duty to the secured creditor was referred to in Rottenberg and Ors. v. Monjack & Anor. [1993] BCLC 374 where Judge Roger Cooke stated at p. 377-378:
"It is quite clear, both from these powers and the purpose for which receivers are appointed and the job they are called on to do, that their duty must be to the secured creditor. They cannot be put in the position, negligence and dishonesty apart, of having to weigh discretions between the secured creditor and the debtor. If they behave efficiently and honestly, the secured creditor must come first."
I adopt this statement of the law also. Applying that statement, the Receiver was put into place pursuant to the agreements for the primary benefit of the Banks in this case.
I adopt also the analysis of Fox L.J. of the tripartite relationship of the receiver involving the mortgagor, the receiver and the debenture holder, in other words, Bula, the Receiver and the Banks. This is far removed from the routine principle and agent situation.
The special and unique nature of the agency of a receiver was described in Irish Oil & Cake Mills Ltd. v. Donnelly (Unreported, High Court, 27th March, 1983, Costello J.) which is reported in Irish Company Law Reports (1963-1993) p. 564 at p. 567-8 where he stated:
"The agency here is of course very different from the ordinary agency arising every day in commercial transactions. Here the receiver has been appointed by the owner in equity of the companies' assets with the object of realising their security and for this purpose to carry on the companies' business.
The exceptional nature of his status is to be seen from the fact that notwithstanding his appointment as agent he is to be personally liable under contracts entered into by him (with a right of indemnity out of the assets) unless the contract otherwise provides (section 316 (2) Companies Act 1963)."
This exceptional and unique position of the receiver was also described in Ardmore Studios (Ir.) Ltd. v. Lynch and Others [1965] I.R. 1. McLoughlin J. at p. 38-9 stated:
"In re B. Johnson & Co. (Builders) [1955] 1 Ch. 634 . . . many of the views expressed by the distinguished judges who constituted the Court of Appeal in that case are certainly helpful. At page 644 Evershed M.R., after stating some of the powers given to the receiver under the debenture, which are similar to those in this case, continued:- 'The situation of someone appointed by a mortgagee or a debenture holder to be a receiver and manager – as it is said, "out of Court" – is familiar. It has long been recognised and established that receivers and managers so appointed are, by the effect of the statute law, or the terms of the debenture, or both, treated, while in possession of the company's assets and exercising the various powers conferred upon them, as agents of the company, in order that they may be able to deal effectively with third parties. But, in such a case as the present at any rate, it is quite plain that a person appointed as receiver and manager is concerned, not for the benefit of the company but for the benefit of the mortgagee bank, to realise the security; that is the whole purpose of his appointment, and the powers which are conferred upon him, and which I have to some extent recited, are . . . really ancillary to the main purpose of the appointment, which is the realisation by the mortgagee of the security (in this case, as commonly) by the sale of the assets.'"
I adopt and apply these statements of the law. The Receiver is in a unique and exceptional position. It is a position unlike that of the ordinary agent in commercial transactions. Thus the Receiver is treated while in possession of the company's assets as an agent of the company so that he may deal effectively with third parties. But the Receiver is concerned for the benefit of the mortgagee bank to realise the security, which is usually, as in this case, by the sale of the assets.
It is this relationship which governs this case and is the key. Approaching the relationship from another aspect, this unique position may be further illustrated. In considering the possession of land one has to consider all the relevant circumstances. If a person is in possession with consent that is a critical factor.
In analysing the position of the Receiver, from another angle, the test set out in Murphy v. Murphy [1980] I.R. 183 may be a guide. At p. 193 Costello J. stated:
"The first question of fact to be determined is whether the defendant was ever in 'possession' of the widow's lands. In a passage which was quoted with approval in Treloar v. Nute, [1976] 1 W.L.R. 1295 Lord O'Hagan in The Lord Advocate v. Lord Lovat (1880) 5 App. Cas. 273 said at p. 288 of the report: 'As to possession, it must be considered in every case with reference to the peculiar circumstances. The acts, implying possession in one case, may be wholly inadequate to prove it in another. The character and value of the property, the suitable and natural mode of using it, the course of conduct which the proprietor might reasonably be expected to follow with a due regard to his own interests – all these things, greatly varying as they must, under various conditions, are to be taken into account in determining the sufficiency of a possession.'"
And at p. 195 he described a test:
"Turning, then, to the nature of the defendant's possession, I think the test I should apply is this: Was the defendant's possession inconsistent with and in denial of the widow's rights as legal owner of the land? – see Moses v. Lovegrove [1952] 2 Q.B. 533 at p. 538 of the report. If it was, then the defendant would be 'a person in whose favour the period of limitation could run' within the meaning of s. 18 of the Act of 1957 and his possession would be adverse. In considering a problem of this sort, the relationship between the owner of the land and the person in possession and the nature of the lands in controversy are highly relevant matters to be taken into account. If a person is in possession of lands with the consent or licence of the owner, then his possession is not adverse: see Hughes v. Griffin [1969] 1 W.L.R. 23"
If it were necessary, which in fact I do not think it is, to go outside the analysis of the nature of the position of the Receiver, this test would be applicable. If one applied this test it would confirm that the rights of the mortgagees, the Banks, protected by the Receiver, would not be adversely affected by any concept of adverse possession. The Receiver in this case is in possession with consent. This is a matter upon which I would lay stress. Whether one considers the situation from the aspect of the title of Bula or the title of the Banks, the Receiver is in possession by consent. That is the beginning and end of the case. That consent within the unique relationship of the receiver governs the answer.
In analysing the facts of this case I would stress also that the Receiver has been an active receiver. He took control and possession of the assets. The length of time it took to sell the assets was as a direct consequence of the litigation brought by the plaintiffs.
The powers of this Receiver have already been recognised. In In Re Bula Ltd. [1990] 1 I.R. 440 a petition for the winding up of Bula was presented to the court by the secured creditors of the company, the Banks. The petition was brought on the grounds that the company was insolvent and unable to pay its debts and that in the circumstances it would be just and equitable to make the order. The High Court made the winding up order. However, on appeal the petition was dismissed. This Court held that where a petition was brought by secured creditors whose security attached to the entire assets of the debtor company and who had appointed a receiver whose power of sale was, effectively, at least as great as that of a liquidator, the court should refuse its aid. McCarthy J. stated, at p. 449:
"In proceedings that have existed since 2nd July, 1986, but have been substantially amended, Bula Holdings, and the guarantors have sued the Receiver and the Banks for, amongst other relief, an injunction restraining the Receiver from accepting any offers to purchase the assets of Bula until such time as all of four possible events shall have occurred.
(a) The resolution of a dispute concerning the purchase of the Harris lands. These lands offer access to the ore body; such access would increase the value.
(b) The Minister for Energy shall have refused to make an ancillary rights order on foot of the Minerals Development Act, 1940, in respect of the Harris lands – the effect of such order would be to afford access.
(c) Negotiations shall have taken place and irrevocably broken down between Bula and Tara Mines Ltd. in relation to possible co-operation in the exploiting of the entire ore body, implied, it is said, by paragraph (f) of the mining lease executed by the Minister for Energy and Tara Mines Limited. This aspect would appear to have a degree of unreality attaching to it but it is, nonetheless, part of the claim.
(d) The alleged liability of the banks to participate in a re-financing package.
In this Court, apparently for the first time, the argument has been advanced, not merely justifying the Receiver's rejection of the several alleged avenues of improved sale, but that a winding up order and the consequent appointment of a liquidator who would have a statutory power of sale to be, it is said, exercised under the control of the Court, would create a better prospect of sale. On enquiry, it seemed to prove difficult for counsel for the banks to identify any particular area in which the liquidator would be at an advantage save in the general way that he would not be encumbered by the record of the Receiver and, obviously, would not be a defendant in the action by Bula against the Receiver. He would until the appropriate application were brought to the court, be a plaintiff in that he would be Bula. More to the point, however, it is inevitable that a liquidator, court appointed, with all the independence of action and professional integrity that would be at his command would lack the enthusiasm and momentum that would be second nature to the guarantors, who, presently, control the progress of the action. This is indeed a step further in the argument; it is, in effect, saying that a liquidator, suitably monitored by the court, would be as effective in pursuing a legitimate claim of Bula as those presently in command. In my view, there is no reality in this suggestion. With the best will in the world, a court attempting such supervision is very much in the hands of the liquidator; it is his enthusiasm or lack of enthusiasm that will govern the decisions of the court – it is he who brings the matter to court – it is he who presents the case, so to speak, for continuing with litigation or ending it. In a real sense he is dominus litis, however vigilant the court may wish to be and however resourceful those upon whom notice must be given of any intended application to the court."
Having considered legal opinion McCarthy J. concluded at p. 451:
"Shorn of these expressions of legal opinion, many dependent upon a variety of single instances and special facts, in my judgment, in this case of special facts, where a petition is brought by secured creditors whose security attaches to the entire assets of the debtor company and who have appointed a Receiver whose power of sale is, effectively, at least as great as that of a liquidator, the Court should refuse its aid.
I would allow the appeal and dismiss the petition."
Further relevant court decisions have been made. In Wymes v. Crowley (Unreported, High Court, 27th February, 1987, Murphy J.) reported in Irish Company Law Reports (1963-1993) the plaintiffs had sought to add Bula Ltd., Thomas C. Roche, Thomas J. Roche and Richard Wood to the main action as plaintiffs. The defendants objected to the addition of Bula Ltd. Murphy J. gave permission for Bula to be joined. He stated, however:
"I have no doubt that the directors of Bula Ltd. retain their power to institute proceedings in an appropriate case. The limitation on their powers is that they must not deprive the debenture holders of the security granted to them and the very practical difficulty that the extensive nature of the charge deprives the company of the means of financing litigation. That the directors of Bula Ltd. would be entitled to institute proceedings in the name of that company to sue for negligence a receiver appointed over the assets of that company could not be questioned as a matter of law."
The receiver receives the assets of the mortgagor for the benefit of the mortgagee. Thus in this case the Receiver received the assets of Bula for the benefit of the Banks. The principal task of the Receiver is to secure the assets of the company which have been mortgaged in favour of the debenture holder which appointed him. Thus in this case the Receiver secured the assets of Bula in favour of the Banks. It is clear that a receiver appointed under a mortgage is there as a consequence of an agreement being activated and his position and powers follow accordingly. The appointment of the Receiver was a device to protect the Banks. Thus while the Receiver acts as agent for Bula, which was a party to the agreements pursuant to which he was appointed, his actions are for the benefit of the Banks. The Receiver took possession of the assets for the benefit of the Banks. It is an unusual and unique relationship. While the Receiver is the agent of Bula yet he has a special relationship with the Banks. It is a tripartite relationship. In this case the Receiver was appointed, on certain events happening, in accordance with the agreements, by the Banks, and, whilst the Receiver is the agent of Bula, that company cannot instruct the Receiver how to act in the receivership. Thus the Receiver has duties to both Bula and the Banks. However, the first duty of the Receiver is to the Banks. The object of his appointment was to realise the banks security, that is to sell the property of Bula in this case. The duty of the Receiver is to the Banks, to realise the security, to sell the assets. That, as Costello J. said, was the whole purpose of his appointment.
In this case all the circumstances have to be considered. They include the fact that the Banks moved quickly and the Receiver was appointed on the 8th October, 1985. The Receiver is an active receiver. Much of the activity over nearly two decades has been in relation to the litigation brought by the plaintiffs. The tripartite relationship, of Bula, the Receiver and the Banks, was brought about voluntarily, under agreements. The relationship of a receiver, (and this Receiver,) with mortgagors and mortgagees, with Bula and the Banks, is a unique and exceptional relationship unlike the normal agency in commercial actions. Acting in accordance with the agreements in this case, the Receiver went into possession of the assets by consent. That consent was given by both Bula and the Banks. In this case the Receiver had a duty to get in the property, take possession and sell it. This he has done. The Banks sought to be paid and exercised the remedy of the appointment of a receiver to achieve that end. The Receiver was appointed for the benefit of the Banks, under the agreements which had been entered into by Bula and the Banks. An action for possession does not arise as the Receiver was in possession of all the assets with the consent of all relevant parties. The question of the accrual of an action for possession does not arise and the Statute of Limitations, 1957 does not arise.
(iii) Adverse Possession
I am satisfied that it is not necessary to consider any further aspects of the claims of the plaintiffs. There was no adverse possession contrary to the owner. The Receiver had control of the assets as an agent. He was in control pursuant to the contractual agreements for the benefit of the Banks. There was no possession without the authority of the owner, whether you consider it from the title of Bula or the Banks. Consequently the concept of adverse possession does not arise or apply. I would uphold the reasoning and decision of the learned trial judge.
(iv) Yourell
The plaintiffs invoked the Yourell decision in their favour. I have considered Hibernian Bank v. Yourell [1916] 1 I.R. 312 (H.C. and C.A.), Yourell v. Hibernian Bank [1918] A.C. 372, and Hibernian Bank v. Yourell (No. 2) [1919] 1 I.R. 310. The first two cases referred to above are not relevant to the issues on this appeal. The third case referred to above, Hibernian Bank v. Yourell (No. 2) [1919] 1 I.R. 310, hereinafter referred to as Yourell, was opened on the appeal by the plaintiffs as authority for the proposition that "time can run against the debt of a secured creditor even when he has appointed a receiver; and, further, that time continues to run against the secured creditor thereafter." However, Yourell decided that a receiver appointed by a mortgagee, being essentially the agent of the mortgagor, commits a breach of duty if he pays arrears of interest on a mortgage that is statute barred. In Franks, Limitations of Actions, 1959 at p. 161 this case is cited for the proposition that such a receiver cannot pay a statute barred debt. Also Picarda, The Law Relating to Receivers, Managers and Administrators, 2nd Edition, at p. 266 refers to the case as authority for the proposition that a receiver cannot pay statute barred interest. Similarly Falcon and Chambers, Fisher and Lightwood's Law of Mortgage, 11th Ed. At para. 16.34 so refers. I am satisfied that Yourell is an authority for the proposition that a receiver cannot pay a statute barred debt, while acting as agent for the mortgagor. However, the plaintiffs have taken the matter a step further and submitted that Yourell stated that the Statute of Limitations can run in the face of an active receiver. However, I am satisfied that Yourell is not an authority for that proposition. It was neither argued nor decided that time ran against an active receiver. At issue were the specific debts in the specific situation. Consequently I would distinguish that case from the issues at the core of this case. The circumstances, facts and law of that case are not applicable.
(v) Remaining Points on the First Appeal
In light of my findings in this case it is unnecessary to analyse the Statute of Limitations, 1957 or to consider the construction of sections in that Act. Equally the issues of part payments and acknowledgements are not relevant. There is no good reason to take a "but if" approach and analyse further why the Act does not apply. The Statute of Limitations, 1957 does not apply in the circumstances of this case.
The decision on this first issue renders the other issues irrelevant and moot.
(vi) The Passage of Time
The passage of time has been a critical element in the appeals of the plaintiffs. Having considered the technical submissions and analysis of the nature of an active receiver, the Statute of Limitations and the concept of adverse possession, I am conscious also of the equity of the situation. In this case there has been a considerable passage of time. The main action has been in being for 17 years and has not yet come to trial. It was this time, this delay, which initiated this preliminary issue and case.
Without in any way making a pejorative statement about the actions of the plaintiffs over the last 17 years, and while not denying their right of access to the courts, the findings of fact by the learned trial judge must be noted. He stated:
"It is not in dispute that the purpose of the Banks in appointing the Receiver was that he would take control of the company's assets and arrange for the sale of its lands, including the proposed mine, in discharge of the debts owing by Bula to the Banks. The Receiver has actively pursued that objective since appointment but has been frustrated in his efforts by persistent unsuccessful litigation orchestrated by the sixth defendant who has demonstrated that he is
implacably opposed to the sale of the potential Bula mine in any circumstances and is determined to place every possible obstacle in the way of the Banks obtaining the benefit of their securities through such a sale."
It is clear that the learned trial judge had grounds to make such a finding. It is notable that the plaintiffs claimed that the Banks had lost rights because of a lapse of time which passage of time has arisen largely because of the plaintiffs' war of attrition against the Banks. Concepts of equity are not before this court on the first issue on the first appeal. However, all courts must be conscious of the justice of a case.
The findings on this appeal are findings of law, regarding the nature of the relationships arising on the appointment of the Receiver. On this issue, related to the delay, the finding in law is also a finding in justice.
18. Conclusion on First Appeal
First, on the appointment of the Receiver a special relationship was established between Bula and the Receiver on the one hand and the Banks and the Receiver on the other hand. This relationship was grounded on agreements entered into between the plaintiffs, Bula and the Banks. On the Receiver being appointed in 1985 he went into possession and control of the assets of Bula. The possession was for the benefit of the Banks. The Banks did not suffer a reduction in their rights by their appointment of the Receiver: rather their rights were protected. The Receiver has been an active receiver but has been frustrated by litigation brought by the plaintiffs. There was no possession contrary to the interests of the Banks. There was no possession without authority. There was no possession without consent. There was no possession that would come within the concept of adverse possession. The Receiver was there as of right. The Statute of Limitations, 1957, which is concerned with the limitation of actions, has no application. I would uphold the judgment and order of the High Court on this first issue. I would also uphold the determination of the High Court that as a consequence of that determination the other issues are moot and it is unnecessary to address them, thus no further issues fall to be decided on this first appeal.
19. Second Appeal
The second appeal before this court was against the decision of the High Court (Barr J.) given on the 20th February, 2001. On that date the High Court excluded additional pleas. Full written submissions were filed on this issue and were considered carefully. The learned High Court judge gave a considered ruling on the matters in which reasons were set out for the decision. The importance and relevance of these matters is affected by the decision of this court as to the position of the Receiver and the non-applicability of the Statute of Limitations, 1957 to the circumstances.
I have considered the arguments of the plaintiffs and the legal cases to which they referred, especially Bula Ltd. v. Crowley the decision of Carroll J. delivered on the 15th December, 2000 in a motion related to the main action; Irish Trust Bank Ltd. v. Central Bank of Ireland [1976-7] I.L.R.M. 50; Irish Land Commission v. Ryan & Ors. [1900] 2 I.R. 565; Baulk v. Irish National Insurance Company Limited [1969] I.R. 66.
I am satisfied that it was within the jurisdiction of the learned High Court judge to conclude as he did. Further, he was entitled in all the circumstances to consider himself bound by the decision of Carroll J. The trial court was a court of equal jurisdiction and it was clearly within his jurisdiction to consider himself bound by the decision of Carroll J. As to the meaning of the judgment of Carroll J. the trial judge was entitled to find it clear (as indeed do I) and to interpret it correctly on its ordinary meaning.
I am satisfied that the learned trial judge was correct in refusing the proposed amendments in paragraphs 26 and 27 as a matter of law and as they had no bearing on the determination of the Statute of Limitation issues. Further I am satisfied that the learned trial judge was entirely within his jurisdiction in refusing the paragraph 33 amendment.
I am satisfied that it would not be appropriate to remit any of these matters to the High Court. There has been a careful and reasoned decision of the High Court which has been appealed. On the appeal I am satisfied that the plaintiffs have not made any case to succeed.
20. Third Appeal
The third appeal was against the decision of the High Court (Barr J.) disallowing the further discovery sought in support of these claims. Barr J. held:
"Further Discovery
I am satisfied that the remaining Statute of Limitations issues are essentially matters of law in relation to which no further discovery of documents is required. However, it is proper that there should be up-to-date discovery relating to the suspense accounts held by NBFC and AIIB in connection with Mr. Wood and any company controlled by him."
I am satisfied that this was a ruling which the learned trial judge was entitled to make, it was within jurisdiction, without error, and in accordance with law, thus the application by the plaintiffs should fail.
21. Conclusion
For the reasons given I would dismiss the first appeal of the plaintiffs and make no orders on the notices to vary. I would also dismiss the second and third appeals of the plaintiffs.
