O'Malley v Breen & Anor [2019] IEHC 645 (13 September 2019)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

JUDGMENT of Mr. Justice Tony O’Connor delivered on the 13th of September 2019

are applied when determining the beneficial ownership of a buy-to-let property at Distillery Mews,

Dundalk (“Dundalk property”). In 2000, the Dundalk property was purchased jointly with a

mortgage in the joint names of the first named defendant (“Kay Breen”) and her late estranged

husband (“the deceased”) that was discharged in 2008 by the deceased.

2. In addition to undisputed facts supported by public records, the parties identified on

two sheets of paper prepared during the hearing of these proceedings other facts which are

agreed. After taking instructions, counsel for the plaintiff, who is the executor to the estate of

the deceased (“the estate”), accepted that the discharge in 2008, which was effected without

notice to Kay Breen until recently, could not affect whatever interest Kay Breen had in the

Dundalk property in 2008. It was also acknowledged that the estate could not benefit from

the discharge in 2008 if it was undertaken to prejudice Kay Breen. The parties further

opted to rely on evidence of belief adduced on affidavit, which in many instances cause a

3. In order to avoid calling witnesses about events in 2008 and so that this Court could

make a final determination in these proceedings, counsel for the plaintiff informed the

Court that the plaintiff was willing to accept the worst possible interpretation from the

4. The deceased was married to Kay Breen in 1986. The deceased called regularly to

the family home in Dundalk after moving out in 1996 and was involved in the activities of

the two children of the marriage. Relations with the deceased following his departure were

described by Kay Breen as “cordial”. Kay Breen owns and resides in the family home

where the two children grew up. The deceased did not enter into a separation agreement

and did not provide maintenance to Kay Breen. However, Kay Breen accepts that the

deceased “did fund the education of the two children”. She further explains her recent

discovery that the deceased had furnished his address in County Down to the Irish Revenue

for them as a married couple and had used any of her “unused tax allowances” in returns.

5. The second named defendant (“Mary Breen”) averred in her affidavit sworn on

the 29th January, 2019, (without contradiction from Kay Breen) that she was “in a

committed co-habiting relationship” with the deceased in 2000. Mary Breen further

averred that she was not aware when the mortgage in 2008 was discharged that the

Dundalk property had been purchased by the deceased and Kay Breen in 2000. At the time

of his death on 22nd February, 2017, the deceased and Mary Breen had lived together for

many years in Co. Down with their four dependent children, the eldest of which was

sixteen in February 2017. Mary Breen owns that home where she and her four children

6. A petition to the High Court of Northern Ireland for divorce resulted in a “decree

nisi absolute (Divorce)” on the 6th January, 2017, in respect of the marriage of the

deceased to Kay Breen. Kay Breen averred in her affidavit sworn on 26th November,

2018, that “[h]ad the deceased not been in his last illness the matter of ancillary orders for

7. The deceased and Mary Breen subsequently married in Newry on 24th January,

2017. The deceased, by his last will and testament made on that day, bequeathed the

Dundalk property to Kay Breen in addition to their former family home in Dundalk.

Included in his bequests to Mary Breen was their jointly-owned holiday home in

8. The plaintiff, who is a brother of Mary Breen, initially renounced his entitlement to

administer the estate. After obtaining leave of the court to revoke his renouncement, the

plaintiff obtained a grant of probate on 21st June, 2018, which referred to a nil value for net

assets. The plaintiff, in his grounding affidavit sworn in October 2018, elaborates by

9. The Dundalk property was purchased for IR£190,000 in May 2000 with a

IR£160,000 mortgage loan from AIB plc (“AIB”) in the joint names of the deceased and

Kay Breen. The deceased paid the balance of IR£30,000 from his own funds. “By

agreement of [the deceased] and Kay Breen the entire rental income from [the Dundalk

property] was taken by [the deceased], and was to be used to pay the mortgage over the

10. Following his death, Kay Breen avers that she has received the rent “in

circumstances where I am entitled to the entire legal and beneficial interest in that

property, it having passed by survivorship, and, in so far as needed to, having been

bequeathed to me in the last will of the deceased”. Kay Breen accepts that she did not

directly contribute financially to the purchase of the Dundalk property. The Court has not

been furnished with accounts or records for the management of the Dundalk property.

11. The twenty-year policy to secure IR£160,000 on the death of either the deceased or

Kay Breen was arranged by the deceased and it was a condition of the mortgage to have

same in place. The deceased discharged the monthly premium of IR£42.83 (€54.38) for

that policy until his death despite the redemption of the AIB mortgage in 2008. Kay Breen

was paid the proceeds of that policy in July 2017 following notification that the deceased

12. In October 2008, the deceased and Mary Breen purchased the Donegal property for

€480,000 in their joint names. They received a loan from Bank of Ireland Mortgage Bank

(“Bank of Ireland”) on the 10th October, 2008, in the sum of €750,000. The loan was

used to fund the purchase of the Donegal property and to discharge another outstanding

loan. €143,741.32 of the loan was used to redeem the AIB mortgage on the Dundalk

13. The Bank of Ireland loan required a charge over both the Dundalk property and the

Donegal property which were purportedly created. Kay Breen was not informed of the

redemption nor of the newly created charge in favour of Bank of Ireland. Mary Breen

asserts that “she was asked to sign and agreed to sign the mortgage of both properties” and

that she was not aware in 2008 that Kay Breen was registered as joint owner of the

14. Mary Breen acknowledges that a life policy for her benefit taken out in 2008,

which was not assigned to Bank of Ireland, led to her receipt of the proceeds of that policy

15. The plaintiff, when commencing these proceedings, expressed a belief on affidavit

that it was the intention of the deceased and Bank of Ireland that the Dundalk property

would be conveyed to the deceased and Mary Breen subject to the mortgage. This belief

of the plaintiff executor, who was not privy to the 2008 transactions and who cannot

adduce any supporting evidence, is one of those beliefs expressed on affidavit that the

16. In October 2018, solicitors for the plaintiff advised Bank of Ireland that it would

“issue these proceedings without including the Bank” if they did not hear from the Bank of

Ireland within fourteen days. Bank of Ireland was not joined and has not sought to join in

17. There is no agreement as to the intention of the deceased and Kay Breen at the time

of the acquisition of the Dundalk property in 2000. The plaintiff agrees that he has no

evidence to support his “understanding that the purpose of the deceased in acquiring the

property was to provide an income from the [Dundalk] property to fund the education of

the two children from the marriage with [Kay Breen]”. Mary Breen avers that “the idea”

of purchasing the Dundalk property “was to secure” the education costs of the two

children. Kay Breen in her affidavit mentions her assumption that the purchase of the

jointly held Dundalk property “was an effort to take account of his responsibilities to [Kay

18. In short, this Court cannot determine a common intention of the deceased and Kay

Breen when the Dundalk property was purchased in joint names. Further the Court cannot

determine the intention of the deceased when he redeemed the mortgage in 2008. He

consciously did not inform Kay Breen of the redemption, who believed that the joint

mortgage continued to be served by the rental income. Both the deceased and Kay Breen

19. The plaintiff argues that the bequest of the Dundalk property to Kay Breen

demonstrates that the deceased (who had been a practising solicitor) identified that Kay

Breen did not have a right of survivorship. Counsel for Kay Breen replied that the bequest

shows that the deceased always intended for Kay Breen to own the property.

20. During the hearing, the Court expressed concern about inferring intentions without

21. As of September 2018, the existing balance due to Bank of Ireland was €567,834,

with interest continuing to accrue. The plaintiff avers that the Donegal property is now

valued at €300,000 and is therefore insufficient to discharge the debt. The Dundalk

property is valued at around €220,000. Counsel for the plaintiff informed the Court that

the proceeds of sale from both properties could, with negotiation, allow the plaintiff to

discharge or settle most debts of the deceased. While Mary Breen agrees to the sale of the

Donegal property, Kay Breen declines to accept that her interest in the Dundalk property

22. The plaintiff submits, with the agreement of Mary Breen who was separately

represented by counsel, that there are four alternative possibilities arising from the

(i) Kay Breen holds her interest in the Dundalk property under a resulting trust

for the deceased, and hence in trust for the estate. To the extent that the

Dundalk property was bequeathed to Kay Breen, that is an issue to be

addressed by the plaintiff executor after the debts of the deceased have been

(ii) The payment of €143,741.32 by the deceased to AIB in 2008 re-acquired

the Dundalk property from AIB by the release of that mortgage and caused

a severance of the joint tenancy such that the parties then held in unequal

shares. Consequently, Kay Breen holds her interest in the property subject

to the deceased’s equitable interest created by the repayment of the loan.

(iii) The Bank of Ireland mortgage on the Dundalk property caused a severance

of the joint tenancy and thus the estate is entitled to a half share subject to

the Bank of Ireland mortgage. Counsel submitted that bad faith is not

relevant in that instance because the deceased was entitled to at least a half

share in 2008. In the absence of evidence that the deceased acted to

disadvantage Kay Breen in 2008, the Court, according to counsel, should

not make a finding adverse to the interests of the deceased. In 2008, the

deceased could not further encumber the interests of Kay Breen in the

Dundalk property and was therefore not in breach of the maxim requiring

(iv) Kay Breen is correct and the deceased’s interest in the property terminated

on his death, meaning that Bank of Ireland has no security in the property.

23. The following submissions were made in response to the said four alternatives:-

(i) The Dundalk property was acquired by the deceased and Kay Breen as joint

tenants in equal shares. No presumption of advancement could arise as the

deceased did not gift the property to Kay Breen. The purchase was

primarily funded by way of a mortgage for which both Kay Breen and the

(ii) The 2008 transaction “was knowingly and fraudulently entered into by the

deceased and Mary Breen … and to argue that the same could have

adversely impacted on the original 2000 arrangement or the existence of a

joint tenancy whether at law or in equity is under the circumstances

unsustainable, as it would compensate [the deceased] and indeed [Mary

Breen], for significant wrongdoing.” The deceased and Mary Breen

unlawfully purported to create a further mortgage over the Dundalk

property in 2008. In addition, the Bank of Ireland mortgage cannot affect

(iii) There should be no severance of the joint tenancy in equity. The deceased

continued to take all the rental income from the Dundalk property after

2008, with the consent of Kay Breen, on the basis that it was being applied

in the same way since 2000. As such, the deceased and his estate are

estopped in equity from claiming a severance of the joint tenancy.

(iv) The Dundalk property is held by Kay Breen as surviving joint tenant and

24. Co-ownership often involves a split in the ownership of the property into the legal

ownership and the equitable or beneficial ownership. As Wylie notes:-

“… it will frequently be the case that the co-owners will hold the legal estate or interest

in the property as joint tenants, so that the right of survivorship applies, but that the

legal estate or interest is held by the joint tenants for themselves in equity as tenants in

common. In this case, on the death of one co-owner his legal estate or interest passes

to the surviving co-owner, but that survivor must hold the legal estate or interest in

trust for the deceased co-owner’s estate and his beneficial share under the tenancy in

common will pass according to the terms of his will or on intestacy.” (Wylie, Irish Land

25. In Dyer v. Dyer (1788) 2 Cox Eq Cas 92; (1788) 30 ER 42, Eyre CB said “… the

trust of a legal estate … results to the man who advances the purchase money” irrespective

of who takes the legal title (p. 93). This gives rise to the presumption of a resulting trust

which Biehler suggests as resting on the principle that equity intends bargains not gifts

(Biehler, Equity and the Law of Trusts in Ireland, 6th ed., Roundhall, 2016, p. 159).

26. Denham J. in Stanley v. Kieran [2011] IESC 19 (unreported, Supreme Court, 7th

June, 2011), at para. 28 stated “[t]here is a presumption that the provider of funds for the

purchase of the property is the beneficial owner.” In that case, the appellant plaintiff had

advanced all of the monies for the purchase of the relevant property. Further, there was no

27. In Laskar v. Laskar [2008] EWCA Civ 347 (“Laskar”) a mother exercised her

right to purchase a council property at a discount. The mother and her daughter borrowed

money and contributed different sums but less than 5% each in order to acquire the

property in their joint names. The rent from the property discharged the repayments and

28. In the Court of Appeal, it was argued on behalf of the daughter appellant “that

there is a presumption that the beneficial interests were the same as the legal interests, and

that the presumption was not rebutted in this case.” (para. 12). In the alternative, it was

submitted that the discount of some £29,000 should have apportioned equally between the

parties and that the joint liability for the mortgage should be treated as a contribution

29. At para. 15, Neuberger L.J. distinguished the facts from those in Stack v. Dowden

involved a property purchased by a couple with children whereas Laskar related to an

investment property. At para. 19, Neuberger J. mentioned that the mother in Laskar had

other children who were dependent and the appellant daughter had been brought in as a co-

purchaser primarily because the mother could not afford the purchase on her own.

30. Ultimately, he saw “… no reason not [to] fall back on the resulting trust analysis,

namely that in the absence of any relevant discussion between the parties, their respective

beneficial shares should reflect the size of their contributions to the purchase price …”

31. Having determined that the discount should be attributed to the mother, Neuberger

L.J. concluded that in the absence of an agreement or understanding “… it would be right

to treat the mortgage loan of £43,000 as representing a contribution of £21,500 by each of

the parties as the two joint purchasers of the property.” (para. 28). After calculating as

described in para. 32, he decided that the daughter had a 33% interest in the property.

32. Rightly, he thought it “sensible to stand back and see whether that looks a fair

result” and determined that it “seems not unreasonable.” (para. 33).

33. The presumption of a resulting trust can be rebutted where there is evidence that the

purchaser intended the property as a gift. As made clear by the Court of Appeal in

Standing v. Bowring (1885) 31 Ch D 282, the relevant time for establishing evidence of

intention to make a gift is the time of the transfer. The onus is also on the person seeking

to rebut the presumption of a resulting trust to produce evidence that the purchaser did

34. The Court cannot determine the intentions of the deceased when he paid the

IR£30,000 in 2000 and purchased the Dundalk property in joint names. The deceased,

who was at all relevant times a practising solicitor, unfortunately engaged in a series of

untidy transactions relating to the Dundalk property. Kay Breen believed that she was the

joint owner with a right of survivorship. There is no evidence of a gift of the Dundalk

35. The presumption has therefore not been rebutted. Further, both parties remained

liable to AIB for the mortgage repayments and thereby both contributed to the purchase.

36. The plaintiff submitted that the limited, antiquated and dubious presumption of

advancement, whereby a husband is presumed to make a gift to his wife, ought not apply in

circumstances where an investment property was purchased between an estranged husband

and wife. Counsel for Kay Breen submitted originally that “there is no presumption of

advancement because there was no gift …”. However, supplemental written submissions

were filed in July 2019 to the effect that if the Court found that there was a resulting trust,

then the presumption of advancement would apply unless there was evidence to rebut such

presumption. Counsel for Kay Breen argued that no such evidence was before the Court.

37. The doctrine of advancement has been the subject of debate as to its repugnancy to

the Constitution and more particularly the guarantee of equality under Article 40. It has

been weakened greatly in England and Wales (see Stack v. Dowden). The claim before

this Court now does not permit or require a ruling on the constitutionality of the

presumption. Nevertheless, it is accepted that the presumption harks back to a different era

and the Court recognises the need to modernise the application of the doctrine to

38. In this case, the deceased and Kay Breen were living apart at the time of the

purchase of the Dundalk property. In fact, the deceased was in “a committed co-habiting

relationship” with Mary Breen and had children with her. Most significantly, the Dundalk

property was an investment property and was not a family home. In those circumstances,

39. This Court acknowledges the following valuable contributions referred to in

submissions with a view to future modern consideration of similar circumstances having

(i) Professor Biehler’s note that the principle of proportionate interest deriving

from the rationale behind the resulting trust “has ensured a degree of

consistency in decision-making” but that this has “perhaps been at the

expense of an element of flexibility which might in certain circumstances be

desirable.” (Biehler, Equity and the Law of Trusts in Ireland, 6th ed.,

(ii) Professor Mee’s argument that the category of presumed resulting trusts

appears to be “indefensible in modern times” (“The Past, Present and Future

of Resulting Trusts” (2017) 70(1) Current Legal Problems 189 at p. 191).

This Court acknowledges that “[i]t is hard to reconcile with modern

sensibilities this emphasis on the separate intentions of the individual

contributions and the assumption that each person’s intention is

determinative in respect of the portion of the ownership that she has

brought with her contribution to the purchase price.” (p. 213).

40. The necessity to use concepts or principles of constructive trust, unjust enrichment,

unconscionability of transactions and reasonable expectations, as used in other

(iii) because this claim is confined to a jointly-owned investment property.

41. A resulting trust arises because of the unequal contributions to the purchase price of

the Dundalk property and because both parties remained equally liable for the mortgage

repayments. While Kay Breen holds the legal interest to the property, she holds a portion

of the beneficial interest on trust for the estate of the deceased.

42. The plaintiff is seeking equitable relief and the Court is informed by the maxims

that “he who comes to equity must come with clean hands” and “equality is equity”. The

2008 transactions had the intended effect of allowing the deceased and Mary Breen to

purchase a holiday home and to redeem other loans. They purported to encumber the

entire interest in the Dundalk property and the Donegal property with this increased loan.

It remains to be established what Bank of Ireland will do to enforce its security over the

interest of the deceased in the Dundalk property. Kay Breen did not consent to the 2008

transactions and should not be disadvantaged by the untidy if not wrongful conduct of the

deceased. The deceased, as a practising solicitor, did not come with clean hands and failed

to acknowledge the tenancy in common which he had created. He redeemed the AIB

mortgage for his own benefit and it is coincidental that Kay Breen no longer has a liability

pursuant to a mortgage of the Dundalk property. Although Kay Breen does not now have

this liability, she lost the opportunity to have the mortgage with AIB repaid from the rent.

Until 2017, Kay Breen acted on the basis that the rent would service the mortgage

repayments and she was unaware that the rent was purportedly secured in fact for other

43. The approach adopted in Laskar is commendable and practical. The orders to be

made in these proceedings are supported by also considering the law relating to severance

44. The conversion of a joint tenancy into a tenancy in common by severance may

occur by law or in equity. The redemption and replacement of the mortgage on the

Dundalk property in 2008 resulted at a minimum in an alienation of the deceased’s interest

in the Dundalk property. It is noted that s. 30 of the Land and Conveyancing Law Reform

Act 2009, which now requires consent for alienation, did not apply to the re-mortgaging in

45. Therefore, the deceased, in alienating his interest in 2008, severed the unity of

interest in the ownership of the Dundalk property. The estate of the deceased and Kay

Breen own the beneficial interest in the Dundalk property as tenants in common.

46. The Court will hear the parties if requested about the precise terms of any

declaration or other order which may be sought in addition to the reliefs sought in the

47. Subject to hearing counsel on a convenient day, the Court proposes to make the

following orders which track the issues identified in para. 15 of the Special Summons:-

(i) Kay Breen has a legal and beneficial interest in the Dundalk property;

(ii) Kay Breen holds a beneficial interest in the Dundalk property for the estate

(iii) Kay Breen does not hold her interest in the Dundalk property subject to the

(iv) The 2008 mortgage over the Dundalk property severed any joint tenancy in

(v) The bequest of the deceased’s interest in the Dundalk property to Kay Breen

under the will of the deceased is subject to any enforceable mortgage of the

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> O'Malley v Breen & Anor [2019] IEHC 645 (13 September 2019) URL: http://www.bailii.org/ie/cases/IEHC/2019/2019_IEHC_645.html Cite as: [2019] IEHC 645

High Court of Ireland Decisions