Ireland: The Application Of The Equitable Doctrine Of Consolidation - AIB Mortgage Bank V O'Toole

Last Updated: 1 May 2018
Article by Keith Robinson and David O’Shea

Most Read Contributor in Ireland, April 2019


The doctrine of consolidation generally applies where a borrower has mortgaged separate properties to secure separate debts owed to the same lender. Where a borrower has defaulted on one of those debts, the doctrine of consolidation allows the lender to pool the assets secured by the borrower and to realise those secured assets against the aggregate sum owing, rather than confining the lender to recovering only the secured assets securing the distressed loan.

The doctrine protects a lender's rights by preventing borrowers from selectively redeeming mortgages over valuable properties, thereby potentially leaving the lender at risk of assets of inadequate value supporting the outstanding debts while the Borrower has the benefit of a surplus. It would be inequitable for a borrower to redeem security supporting a performing loan only without discharging its obligations in respect of other distressed loans.

The right of consolidation is an equitable right. Accordingly there are a number of conditions that must be satisfied in order for a lender to exercise its rights of consolidation. These include:

  1. the contracted date for redemption of the underlying loan must have passed;
  2. the mortgages in question must have been originally created by the same person; and
  3. all applicable mortgages must be in existence at the time that consolidation is claimed.

Case summary

To date, the equitable doctrine of consolidation has been recognised by the Irish Courts in limited circumstances.

The decision of Ms. Justice Whelan, delivered on the 29th January, 2018 in AIB Mortgage Bank v O'Toole & Anor as part of the judgment considered the equitable doctrine of consolidation.

Allied Irish Banks, p.l.c. (the Bank) had advanced a number of loans to the appellants which were secured by mortgages containing terms which effectively cross secured the loans advanced by the Bank. The loans advanced are referred to in the following paragraphs as the First Loan and the Second Loan respectively.

In 2015, the appellants disposed of a property which, amongst others, was securing the First Loan. The Second Loan subsequently went into default. Having effected the sale of the property, one of the appellants proceeded to partially redeem the First Loan and retained the surplus proceeds of sale. The Bank obtained ex parte orders restraining disposition of the additional properties which were also securing the First Loan. The High Court directed that a preliminary issue be determined which was whether the Bank was entitled to rely upon the terms of the loan agreements and security instruments (the Finance Documents) to prevent the disposition of the remaining properties secured in favour of the Bank.

The appellants argued that the equitable doctrine of consolidation was engaged and unless the Bank had complied with the stringent requirements of that doctrine it was not entitled to purport to consolidate the First Loan and the Second Loan. The Bank disputed the appellants' contentions, noting that the Bank was not seeking to exercise the equitable doctrine of consolidation and that the terms of the Finance Documents were clear that the First Loan and the Second Loan were to be crossed secured. The Bank state that it was not relying on the doctrine of consolidation and that it had no application to the case.

In reaching judgment, Mr. Justice Binchy determined that the concepts of "secured monies" and "secured liabilities" as well as a covenant to pay all monies owing to the Bank in the Finance Documents for each loan were clear and unambiguous such that the High Court found in favour of the Bank.

The Court of Appeal Decision

The appellants appealed the decision of the High Court on a number of grounds including the ground that notwithstanding the express terms of the Finance Documents, the Bank was not entitled to rely on such terms for the purposes of enforcing cross security unless they could demonstrate strict compliance with the equitable doctrine of consolidation in addition to the express terms of the documents.

In determining whether the provisions of the doctrine of consolidation could be implied into the Finance Documents, Ms. Justice Whelan concluded that it cannot be contended that the provisions of the doctrine are to be read into a security instrument in each case. Ms. Justice Whelan referred to the fact that the Bank at no point sought to exercise the doctrine of consolidation and that the Bank were relying solely on their contractual rights. She further clarified that there is no authority for the proposition that a lender can be compelled to exercise this right by an attempt of a borrower to unilaterally invoke the remedy. Rather, the doctrine is reserved for the benefit of the lender to be invoked at their will.

In upholding the appeal, Ms. Justice Whelan found that the language contained in the Finance Documents was sufficiently clear and unequivocal such that the terms expressly provide that the loans are effectively cross secured by the separate mortgages and the Bank had validly invoked the cross security arrangement. It was noted that all of the properties comprised as security in respect of the First Loan should remain as security in respect of the outstanding sums due on the Second Loan.


This decision reasserts the position that the right of consolidation belongs to a mortgagee and not to the mortgagor. It confirms that a mortgagor cannot compel a mortgagee to invoke or exercise consolidation. As with other equitable remedies, it is for the party who wishes to avail of an equitable remedy to invoke it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions