Coughlan v O'Brien
| Jurisdiction | Ireland |
| Judge | Ms. Melanie Greally |
| Judgment Date | 27 January 2023 |
| Neutral Citation | [2023] IEHC 35 |
| Court | High Court |
| Docket Number | 2021 5450 P |
[2023] IEHC 35
2021 5450 P
THE HIGH COURT
Interlocutory injunction – Receivership – Fair issue – Plaintiffs seeking an interlocutory injunction restraining the receivers of the defendants from acting as receivers of a commercial property – Whether there was a fair issue to be tried
Facts: The plaintiffs, Mr and Ms Coughlan, applied to the High Court for an interlocutory injunction restraining the receivers of the defendants, Mr O'Brien and Ms Larkin, appointed by Everyday Finance DAC (Everyday), from acting as receivers of a commercial property located at Main Street, Newbridge, County Kildare comprised in Folio 49359F, County Kildare. The plaintiffs argued that in the period between June 2020 and December 2021, the charges registered to AIB remained registered on the Folio in addition to the charge undergoing registration to Everyday, a fact which it was submitted, left open the question of who had the statutory power to appoint a receiver afforded by s. 62(6) of the Registration Title Act 1964 as amended. It was argued that the dual registration of AIB and Everyday led to the appointment of “Schrödinger’s receivers” whose appointment was at the same time valid and invalid. The plaintiffs pointed to the potential for abuse and absurdities arising from the continued registration of AIB on the Folio pending completion of the registration of Everyday. The plaintiffs maintained that the decision of Baker J in Harrington v Gulland Property Finance Ltd [2016] IEHC 447, supported their argument in that it uniquely addressed the requirement of registration in respect of transferred mortgages. The fair issue for which the plaintiff contended was an argument that the rights of an original charge holder differ from those of a transferee pending completion of the registration process. It was submitted that rights of the transferee while registration is pending are limited to those available under s. 90 of the 1964 Act which, if correct, necessarily precluded and invalidated the appointment of the receivers.
Held by Greally J that the Court did not view Gulland as an authoritative decision for differentiating between receivers appointed under a transferred mortgage and those appointed by an original mortgage holder. She held that Gulland was a decision made at the interlocutory stage of proceedings and had not featured in any subsequent judgement relating to the issue of registration; more decisive was the fact that in Gulland an application for registration had not been lodged. The “Schrödinger’s receiver” argument was, in her view, manufactured and failed to recognise the contractual obligations created by the Global Deed of Transfer, executed on the 14th of June 2014, by which the seller, AIB, transferred the charges and all rights relating to the underlying loans and finance documents to the buyer, Everyday, and she considered the likelihood of the transferor seeking to enforce previously held rights after execution of the Deed of Transfer to be a highly improbable scenario. She was satisfied that s. 90 is not directed to persons or entities who are registered, but to persons who have an entitlement to register, those who have either not applied for registration or who are, by virtue of statutory provisions or exceptions contained within the land registry rules or otherwise, ineligible to be deemed registered. She held that s. 90 has no application to transferred charges which are registered or deemed registered. The Court was satisfied that upon execution of the Deed of transfer on the 14th of June, 2014, and by operation of the provisions of s. 64(4)(b) of the 1964 Act on the 20th of August 2019, both dates which preceded the date upon which the receivers were appointed, the transferee had stepped into the shoes of the original mortgagee and acquired all of the enforcement rights previously held by the transferor, both contractual and statutory.
Greally J held that the threshold which must be met in order to establish a fair issue, while set at an achievable level, had not been met. She dismissed the plaintiffs’ application.
Application dismissed.
JUDGMENT of Ms. Melanie Greally delivered on the 27 th day of January 2023.
This judgement concerns an application by the Plaintiffs for an interlocutory injunction restraining the Defendant's receivers, appointed by Everyday Finance DAC, from acting as receivers of a commercial property located at Main Street, Newbridge, County Kildare comprised in Folio 49359F, County Kildare (hereinafter the property).
Affidavits and supplemental affidavits have been filed by both the Plaintiffs and Defendants advancing their respective claims and providing the relevant factual detail.
The Plaintiffs are solicitors by profession and are the registered owners of the property, originally a fire station located in the centre of Newbridge, County Kildare.
The property was purchased by the Plaintiffs during the 1990s. In the course of their ownership, it was partially restored by them and later converted into rental units. The first named Plaintiff conducted his practice as a solicitor from the property for a number of years.
Rent payable by tenants of the property was and continues to be collected biannually, in the months of January and July.
By Deed of mortgage, dated 13 th of June 2008, the Plaintiffs borrowed an undisclosed sum from AIB Mortgage Bank and Allied Irish Banks PLC and two charges on the property were duly registered in the Property Registration Authority on the 16 th of June 2008.
It appears from correspondence that the account went into arrears in 2011.
By Deed of transfer dated 14 th June 2019 AIB PLC and AIB Mortgage Bank transferred the loan and all rights and entitlements under the mortgage agreement to Everyday Finance DAC. The plaintiffs were advised of the transfer by letter dated 28 th June 2019.
By letter dated 20 th August 2019, the plaintiffs were advised that the future administration of their account would be conducted by Link Asset Services on behalf of Everyday Finance DAC.
By letter dated 13 th November 2019, the plaintiffs received a letter from Link Asset services seeking payment within 21 days of €727,728.22, being the balance outstanding on the loan.
By instrument dated 30 th June 2020, Everyday Finance DAC appointed the two Defendants to be receivers “ over all of the assets referred to, comprised in and charged by the Security document and to enter upon and take possession of the same in the manner specified in the Security Document and the Receivers shall have and be entitled to exercise the powers conferred on them by the Security Document and by law”. The Schedule to the instrument identifies a Deed of Mortgage dated 13 th June 2008 as the Security Document.
The first named Plaintiff visited the property in January and February 2021 to collect the rent due and was advised that the tenant had already paid the rent to the Defendants who had contacted the tenants directly.
The Plaintiffs subsequently engaged in a protracted course of correspondence with the Defendants seeking documents pertaining to the transfer of the loan and the appointment of the receivers which eventually concluded with the provision of a copy of the Deed of Appointment of the Receivers.
A search of the Property Registration Authority website conducted by the Plaintiffs during this period revealed that the application by Everyday DAC for registration as the owner of the mortgage submitted on the 20 th of August 2019 was not completed until the 3 rd of December 2021.
On the basis of the foregoing, the Plaintiffs maintain that, on the 30 th of June 2020, Everyday Finance DAC were not entitled to appoint Receivers and the purported appointment of the Defendants as Receivers was therefore invalid.
The principles applicable to interlocutory injunctions are well established since the decision in Campus Oil Ltd v Minister for Industry and Energy (no 2) [1983] IR 88 and its recent recalibration by the judgment of O'Donnell J. in Merck Sharpe and Dohme v. Clonmel Healthcare [2019] IESC 65, [2020] 2 IR 1.
The satisfaction of the first limb of the test, being that of whether there is a fair issue to be tried is the controversial aspect of the present application.
The Plaintiff argues that in the period between June 2020 and December 2021, the charges registered to AIB remained registered on the Folio in addition to the charge undergoing registration to Everyday, a fact which it was submitted, left open the question of who had the statutory power to appoint a receiver afforded by Section 62(6) of the Registration Title Act 1964 as amended. It was argued that the dual registration of AIB and Everyday led to the appointment of “Schrödinger's receivers” whose appointment was at the same time valid and invalid.
The Plaintiff also points to the potential for abuse and absurdities arising from the continued registration of AIB on the Folio pending completion of the registration of Everyday.
The Plaintiff concedes that Rule 60 of the Land Registry Rules provides that registration shall be completed as of the day on which the application is received for registration but makes an argument that Rule 60 is designed for the purpose of establishing priority among charge holders as distinct from conferring powers. In support of this narrow reading of Rule 60 reliance is placed on Section 90 of the Registration of Title Act 1964 which, it was argued, implicitly sets limits on rights which may be exercised pending registration, and which provides:
“Where persons on whom the right to be registered as owner of registered land or of a registered charge has devolved by reason of death of the owner or the defeasance of the estate or...
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