Brendan O'Reilly and Darren O'Reilly v Promontoria (Finn) Ltd, Paul McCleary, Jimmy Murphy and Damien Harper

• Jurisdiction: Ireland
• Judge: Ms. Justice Emily Egan
• Judgment Date: 07 April 2022
• Neutral Citation: [2022] IEHC 218
• Court: High Court
• Docket Number: [2020 6198 P]

Between

Brendan O'Reilly and Darren O'Reilly

Plaintiffs

and

Promontoria (Finn) Limited, Paul McCleary, Jimmy Murphy and Damien Harper

Defendants

[2022] IEHC 218

[2020 6198 P]

THE HIGH COURT

Injunctive relief – Properties – Possession – Plaintiffs seeking interlocutory injunctions – Whether the plaintiffs had raised a fair issue to be tried

Facts: The plaintiffs, Messrs O’Reilly, applied to the High Court seeking interlocutory injunctions: (a) directing the second, third and fourth defendants, Mr McCleary, Mr Murphy and Mr Harper (the receivers), to deliver up possession of two properties in County Meath (the properties); and (b) restraining the defendants from selling or marketing the properties. Although the plaintiffs’ written submissions advanced an argument that the global deed of transfer dated 29th September, 2015 was legally invalid, this was not maintained at the hearing of the action. Rather, the plaintiffs’ challenge was to the validity of the notice of that transfer by letter of 5th November, 2015 from the Capita Asset Services (Ireland) Ltd addressed to the plaintiffs at an address at 28 Oak Crescent, Athlumney Wood, Navan, County Meath. The plaintiffs’ written submissions disputed that there were valid demands to ground the appointments of the receivers. The plaintiffs also made a related point in relation to the Circuit Court proceedings and maintained that the lender could not institute Circuit Court proceedings seeking possession and at the same time appoint a receiver. Insofar as concerns the Elm Drive property (17 Elm Drive, Athlumney Wood, Navan, County Meath), the plaintiffs alleged that the instrument of appointment of Mr McCleary of 17th May 2017, the deed of discharge of Mr McCleary of 9th October, 2019 and the instrument of appointment of Mr McCleary of 9th October, 2019 were all invalid. Insofar as concerns the Distillery Quay property (7 Distillery Quay, Mill Lane, Navan, County Meath), the plaintiffs alleged that the instrument of appointment of the joint receivers dated 23rd December, 2013, their deed of discharge of 8th January, 2016, the instrument of appointment of Mr Murphy of the same date, his deed of discharge of 18th November 2020 and the deed of appointment of Mr Harper of the same date were all invalid for a number of reasons. The plaintiffs maintained that they were overcharged interest on their accounts in respect of both facilities by reference to the interest rate agreed.

Held by Egan J that, on the basis of the affidavit evidence before the court, the plaintiffs had not raised any fair issue to be tried in the proceedings such as would entitle them to the interlocutory reliefs sought; as no fair issue to be tried had been raised the plaintiffs therefore failed to pass the first hurdle in their application for injunctive relief.

Egan J held that, in those circumstances, it was not necessary to consider the balance of convenience or the balance of justice. However, had that been necessary, Egan J would have determined that same was evenly balanced and, in the light of the undertakings offered by the plaintiffs, that injunctive relief would have been merited.

Application refused.

JUDGMENT of Ms. Justice Emily Egan delivered on the 7 ^th day of April, 2022

Introduction

1 . The plaintiffs seek interlocutory injunctions (a) directing the second, third and fourth named defendants (“the receivers”) to deliver up possession of two properties in County Meath (“the properties”) and (b) restraining the defendants from selling or marketing the properties.

2 . The appropriate legal principles to apply in relation to the grant or refusal of an injunction are those set out in the judgment of O'Donnell J. (as he then was) in Merck Sharpe and Dohme Corporation v. Clonmel Healthcare [2019] IESC 65. Those principles are well known and will not be repeated here. In applying those principles, the first issue to be determined is whether or not the plaintiffs have raised a fair issue to be tried. If they have, then it will be necessary to consider the balance of convenience and if necessary to craft a remedy which would achieve the “least risk of injustice”.

Factual Background and issues arising

3 . By a loan facility dated 6 ^th April, 2006, Ulster Bank Ltd (“the Bank”) advanced to the plaintiffs €262,000 which was secured by a mortgage dated 8 ^th September, 2006 over 17 Elm Drive, Athlumney Wood, Navan, County Meath (“the Elm Drive mortgage”). By a loan facility dated 21 ^st June, 2006, the Bank advanced €323,000 which was secured by a mortgage dated 29 ^th June, 2007 over 7 Distillery Quay, Mill Lane, Navan, County Meath (“the Distillery Quay mortgage”).

4 . It is not disputed that the monies were advanced pursuant to these loan facilities, nor that the plaintiffs have defaulted on their repayment obligations. However, the plaintiffs maintain that interest was overcharged on their accounts in respect of both facilities.

5 . These loan facilities were transferred by the Bank to the first named defendant (“Promontoria”) by global deed of transfer dated 29 ^th September, 2015. Promontoria's interest in the mortgages is registered as a burden on the respective folios of the properties. No argument is raised by the plaintiffs in relation to the validity or effectiveness of this transfer. However, the plaintiffs argue that they were not appropriately notified of the transfer of the loan facilities and related mortgage securities.

6 . Letters of demand were sent by Promontoria to the plaintiffs in respect of the Elm Drive mortgage in March, 2017 and in respect of the Distillery Quay mortgage in February, 2013. The plaintiffs challenge the legal validity of these demands.

7 . It is not disputed, that the plaintiffs did not make payments on foot of these demands. The plaintiffs however contend that they had previously entered into an agreement with the Bank in the context of Circuit Court proceedings seeking an order for possession, pursuant to which it is alleged the Bank agreed to accept reduced repayments in respect of each facility. The plaintiffs submit that Promontoria is bound by this agreement. Furthermore, the plaintiffs argue that, as the Bank had elected to commence proceedings seeking possession, Promontoria is not legally entitled to appoint the receivers.

8 . The plaintiffs also challenge the legal validity of the various instruments of appointment of the receivers on a number of grounds.

9 . Since their appointment, the receivers have been unable to take possession of the properties or to collect any rent therefrom. However, the plaintiffs maintain that the receivers have unlawfully interfered with the sitting tenants and tenancy agreements in relation to both properties in taking unjustified cases to the Residential Tenancies Board, purporting to issue notices to quit and termination notices and removing advertisements for the rent of the properties from Daft.ie.

10 . This judgment will now consider the legal issues arising for determination.

Validity of notice of purported transfer by letter of 5 ^th November, 2015

11 . Although the plaintiffs' written submissions advanced an argument that the global deed of transfer dated 29 ^th September, 2015 was legally invalid, this was not maintained at the hearing of the action. Rather, the plaintiffs challenge is to the validity of the notice of this transfer by letter of 5 ^th November, 2015 from the Capita Asset Services (Ireland Ltd) (“Capita”) addressed to the plaintiffs at an address at 28 Oak Crescent, Athlumney Wood, Navan, County Meath. The subject matter of the letter is stated to be; “ Your loan facilities with Promontoria (Finn) Ltd (formerly your loan facilities with Ulster Bank Ireland Ltd or its affiliates (Ulster Bank) under borrower entity Brendan O'Reilly, Darren O'Reilly (“your facilities”)”. Under the heading, “ Important information on your facilities” the letter states that the Bank “ recently” wrote to the plaintiffs to inform them that the facilities noted, including the facility letter, security documents and the rights relating to the facilities have been sold to Promontoria. The letter informs the plaintiffs that Capita has been appointed by Promontoria to provide various loan management administration and relationship management services effective from 23 ^rd October, 2015, which appointment includes managing the collection and repayment of the plaintiffs' loan facilities. The letter goes on to indicate that the loan account numbers would change and provides the details of the former Ulster Bank loan account numbers for each property and the new loan account numbers. The plaintiffs' written submissions argue that whilst the letter sets out the relevant account numbers, there is no express reference to the facility letters or mortgages. At the hearing of the action, the plaintiffs accepted that the reference to the account numbers adequately identified the relevant loan facilities and associated securities. This concession was in my view well made.

12 . However, the plaintiffs maintain that the notice of the 5 ^th November, 2015 amounted to no more than a claim by Promontoria to the Ulster Bank debt and that this was insufficient. They argue that the statement in the letter that the loan facilities had been “ sold” to Promontoria was insufficiently specific to convey to the plaintiffs what had occurred in relation to their loans and that the notice ought to have specified that the loans had been assigned (rather than merely “ sold”).

13 . S. 28 (6) of the Supreme Court of Judicature (Ireland) Act, 1877 provides that any absolute assignment of any debt or other legal chose in action of which express notice in writing shall be given to the debtor shall be deemed to have been effectual in law to pass and transfer the legal right to such debt or chose in action from the date of such notice. The plaintiffs rely on AIB Mortgage Bank v....