O’Donnell children begin appeal over possession of home

Children appealing order permitting Bank of Ireland to get possession of their luxury home

The four adult children of solicitor Brian O'Donnell have asked the SupremeCourt to quash an order permitting Bank of Ireland to get possession of their luxury home in Killiney, Co Dublin.

The appeal by Blake, Blaise, Bruce and Alexandra O'Donnell against a High Court order giving the bank the right to possession of the property at Gorse Hill, Vico Road opened today before a five judge court.

The bank claims entitlement to the property, now said to be worth between €6-7m, under securities obtained by it in 2006 concerning the property when it advanced various loans to Brian and Mary Patricia O’Donnell.

It sought possession and appointed a receiver as part of its efforts to execute a €71m judgment obtained against Mr O’Donnell and his wife in December 2011.

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The children allege they are the legal and beneficial owners of Gorse Hill, the bank has no valid claim to it and the court should discharge the receiver.

The house and three and a half acres at Gorse Hill are owned by Vico Ltd, an Isle of Man company, and the shareholding of Vico Ltd is owned by a discretionary trust set up by the O’Donnell parents in favour of their children.

The legal dispute centres on whether Gorse Hill was an asset of the trust legally and benefically owned by the children.

In his July 2013 High Court judgment, Mr Justice Brian McGovern found Vico Ltd acquired the beneficial interest in Gorse Hill by way of transactions based on a power of attorney scheme in 1998 and 2000. In 2006, full legal and beneficial title was transferred to Vico Ltd and duly registered, he found.

The expectation at that time was the borrowings would facilitate the O’Donnell parents to ultimately increase the family estate which would ultimately benefit the children, he said.

The children were entitled to a beneficial interest in the shares of Vico Ltd but it was clear the trust held shares, rather than any interest, in Gorse Hill, he said. Having found Gorse Hill was not held by the trust, there was no proprietary claim open to the children as beneficiaries of the trust, he ruled.

The judge also dismissed claims Bank of Ireland had knowledge, actual or constructive, of any breach of duty or breach of trust by the directors of Vico Ltd or the trustees.

Outlining the appeal today, Ross Maguire SC, for the children, argued the children are the beneficial owners of the shares in Vico Ltd because, he argued, the shares in Vico Ltd were settled on the trust.

In giving the 2006 guarantee in favour of Bank of Ireland concerning the O’Donnell parents loans, Vico Ltd breached the terms of the trust and the bank should not, in equity, benefit from that, he argued. The children were asked to consent to that guarantee and did so and Vico secured that guarantee by mortgaging Gorse Hill to the bank, he said.

His case was that amounted to a breach of trust by Vico of which the bank was aware. In those circumstances, a constructive trust was imposed and the children’s proprietary interest was established.

The declarations given by the children were obtained under influence by their parents in circumstances where their parents were about to be financially ruined, he argued. Two of the children were minors at the time and the children essentially did what they were told, he added.

The bank was on notice of all these matters, counsel also argued.

The appeal continues.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times