Farrell v Promontoria (Aran) Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Pilkington
• Judgment Date: 18 December 2018
• Neutral Citation: [2018] IEHC 748
• Docket Number: [2018 No. 4454P]
• Court: High Court
• Date: 18 December 2018

[2018] IEHC 748

THE HIGH COURT

Pilkington J.

[2018 No. 4454P]

BETWEEN

PATRICK FARRELL

PLAINTIFF

AND

PROMONTORIA (ARAN) LIMITED

and

KEN FENNELL

DEFENDANTS

Interlocutory injunction – Property – Costs – Plaintiff seeking interlocutory injunction – Whether the terms of the injunction satisfied the criteria for the grant of interlocutory relief

Facts: The plaintiff, Mr Farrell, applied to the High Court seeking the following reliefs: a) an interlocutory injunction restraining the defendants, Promontoria (Aran) Ltd and Mr Fennell, their servants, employees and/or agents and or persons having notice of the order from taking any steps to sell and/or market the plaintiff’s property at Belmont, Drumsna, Co. Leitrim, and/or to assign, transfer and or dispose of the property until further interlocutory order and/or final order from the Court; b) an interlocutory injunction directing the defendants, their servants, employees and/or agents to vacate the plaintiff’s property at Belmont, Drumsna, Co. Leitrim forthwith; c) an interlocutory injunction restraining the defendants, their servants, employees and/or agents and all key persons having notice of the order from trespassing on or interfering in any way with the plaintiff’s ownership and quiet possession of the property at Belmont, Drumsna, Co. Leitrim; and d) further or other order and costs.

Held by Pilkington J that, having applied Campus Oil, the Minister for Industry and Energy (2) [1983] IR 88, the terms of the injunction were to be granted as having satisfied the criteria for the grant of interlocutory relief.

Pilkington J held that she would hear the parties with regard to the final orders sought and also on the question of costs.

Application granted.

Judgment of Ms. Justice Pilkington delivered on the 18th day of December, 2018.

1 This is an application by the plaintiff for an interlocutory injunction. Pursuant to a notice of motion issued on the 18th May, 2018, the plaintiff seeks the following reliefs:

a) An interlocutory injunction restraining the defendants, their servants, employees and/or agents and or persons having notice of the Order from taking any steps to sell and/or market the plaintiff's property at Belmont, Drumsna, Co. Leitrim, and/or to assign, transfer and or dispose of the property until further interlocutory order and/or final order from this Honourable Court.

b) An interlocutory injunction directing the defendants, their servants, employees and/or agents to vacate the plaintiff's property at Belmont, Drumsna, Co. Leitrim forthwith.

c) An interlocutory injunction restraining the defendants, their servants, employees and/or agents and all key persons having notice of the Order from trespassing on or interfering in any way with the plaintiff's ownership and quiet possession of the property at Belmont, Drumsna, Co. Leitrim.

d) Further or other order and costs.

2 By order of McDonnell J. dated the 18th May, 2018, the order in terms of paragraph 1 above was granted until further interlocutory and/or final order of the Court.

3 Within this application there is:

a) The grounding affidavit of the plaintiff sworn on the 18th May, 2018.

b) An affidavit sworn by the plaintiff's solicitor on the 22nd May, 2018.

c) Affidavit of Albert Prendiville sworn on behalf of the first named defendant on the 15th June, 2018.

d) Affidavit of Caroline Shanahan sworn on behalf of the defendants on 20th September, 2018.

e) Affidavit of the plaintiff's solicitor sworn on 19th October, 2018.

f) Final affidavit sworn by the second named defendant on 23rd October, 2018.

4 In my view, the facts of this case are important to any order that might ultimately be made in the grant of injunctive relief and accordingly it is necessary to recite them in some detail.

The Background

5 On the 19th March, 2003, the plaintiff (a carpenter) sought an overdraft facility of €95,000. The terms of that offer state that:

‘Repayment is to come from sale of houses number 3, 8 and 9 based on €30,000 to be lodged from sale proceeds of the first two houses and the balance from the third house to clear the overdraft in full by 28th of August, 2003.’

6 By letter dated 31st March, 2003, addressed to Messrs George Lynch and Company (Mr. Noel Farrell of that firm), the plaintiff's solicitors throughout, Ulster Bank wrote seeking execution and registration of a mortgage in favour of the bank in respect to the borrowings referred to above.

7 The mortgage is between the plaintiff of the one part and Ulster Bank Limited of the other part and it was executed on the 14th May, 2003 (“the 2003 mortgage”). The schedule to that document is clear that it relates to the hereditaments and premises contained in folio 37S in the Registrar of Freeholders County Leitrim.

8 Thereafter Ulster Bank wrote three letters to the plaintiff's solicitor dated the 25th July, 2003, 13th October, 2003 and 21st May, 2004 respectively. The letters refer specifically to house numbers 3, 8 and 9 which appears to mirror the matters within the initial facility letter above.

9 The first letter 25th July, 2003, acknowledges the receipt of the net proceeds of sale of no. 3 state:

‘I wish to confirm that your undertaking in relation to this particular site number is now discharged.’

With regard to the proceeds of no. 8 their letter in October, 2003, states:

‘Your undertaking will be discharged in due course.’

10 The final letter of 21st May, 2004, again acknowledging receipt of the net proceeds of sale in respect of no. 9 states:

‘A formal letter of release will issue to you shortly.’

11 It is noteworthy that nowhere within the documentation can I find any reference to the bank issuing any proceedings on foot of the €95,000 or any suggestion that the monies were not discharged in full.

12 Matters then move to 2005. By letter dated 14th July, 2005, Ulster Bank wrote to Pat Farrell Builders Drumsna Limited (“the company”) offering a loan of €2,000,000. In respect of what is styled as the ‘site loan’ repayments are again a fixed sum of money from the sale proceeds of each unit sold within the development. With regard to what is described as the ‘working capital loan’ of €1,500,000 it is stated;

‘Security:

It is understood that as security the bank will hold and/or continue to hold the following and that these securities will continue to be available for all of the borrower's liabilities to the bank:

To be held:

1. First legal charge over eight-acre site at Dromod, Co. Leitrim.

2. Solicitors undertaking over the sale proceeds from the 48 units of the Dromod development.

3. Debenture over company's assets.

4. Assignment of life cover for the sum of €2,000,000.

5. Letter of guarantee signed by Pat Farrell for €2,000,000 with the deeds of his PDH.’

13 Thereafter, on the 30th August, 2005, the plaintiff executed a personal guarantee in respect of the company for a sum not exceeding €2,000,000. By letter of the same date the plaintiff executed an addendum to that guarantee, acknowledged the recommendation that he seek independent legal advice and indicated that he wished to proceed to execute the security without such advice.

14 By letter dated the 7th May, 2008, there is then a second loan facility from Ulster Bank to the company Pat Farrell Builders Drumsna Limited, including an overdraft facility and the two of the other facilities above. There is also an additional continuation loan with regards to one of the properties within the development and the following;

‘Security:

The following,

Held:

1. Firstly, the charge over eight-acre site at Dromod, Co. Leitrim.

2. Solicitors undertaking over the sale of proceeds from the 48 units at the Dromod development.

3. Debenture of the company's assets.

4. Assignment of life cover for the sum of €2,000,000.

5. Letter of guarantee signed by Pat Farrell for €2,000,000 with the deeds of his PDH as collateral.

Security items above must be in place before utilisation of the Facilities’

15 On the 15th December, 2016, in a letter to the plaintiff personally Promonteria (Aran) Limited, “PAL”, seek repayment of sum €1,760,000 pursuant to the August 2005 guarantee.

16 By letter dated the 12th June, 2017, Messrs Mason Hayes and Curran on behalf of PAL, pursuant to the letter of demand on foot of the guarantee, seek and demand possession of the property at folio 37S Co. Leitrim, pursuant to the deed of mortgage dated 14th May, 2003, which was in turn registered on the 11th July, 2005.

17 On 13th February, 2018, a letter to the plaintiff from Chartered Assets on behalf of the receiver (the second named defendant) notifies him that the locks will be changed on the 16th February, 2018. The substantive letter from the plaintiff's solicitor to the defendants' solicitor is dated the 6th March, 2018, and it asserts:

a) There was never a default on the mortgage entered into on 14th May, 2005, (I presume this should properly read 18th May, 2003, and I am construing it accordingly.)

b) It queries the linkage of a personal mortgage from 2003 to a 2005 personal guarantee- in essence the letter questions how it can relate to the plaintiff's family home insofar as any reliance placed on the mortgage of 14th May, 2003 contends that the process is seriously flawed.

18 The substantive response of Messrs Mason Hayes and Curran of 19th April, 2018, discloses the following:

a) The two facility letters pointing to the security element of each was described as ‘held’ in the latter 2008 facility letter. They say that it referable to the 2003 mortgage.

b) A copy of the letter of guarantee.

c) A copy of the deed of mortgage/charge executed on the 14th May, 2003,

d) They assert that the plaintiff's liabilities under the guarantee/demand having been made, thereafter their entitlement to rely upon the rights under the facility letter, letter of guarantee and the deed of mortgage/charge of 14th March, 2003.

In short, that is the...