Fennell v Reilly and Another

• Jurisdiction: Ireland
• Judge: Ms. Justice Butler
• Judgment Date: 12 October 2023
• Neutral Citation: [2023] IEHC 554
• Court: High Court
• Docket Number: Record No. 2021/1248 P

Between

Ken Fennell

Plaintiff

and

Brian Reilly and Irene Reilly

Defendants

[2023] IEHC 554

Record No. 2021/1248 P

THE HIGH COURT

Interlocutory injunction – Possession of property – Receivership – Plaintiff seeking an interlocutory injunction to secure possession of the property – Whether the plaintiff established that he had a strong arguable case that he was entitled to the relief sought in the proceedings

Facts: The plaintiff, Mr Fennell, was appointed by Promontoria (Oyster) DAC (PODAC) as receiver over a residential property in Co. Dublin owned by the defendants, Mr and Ms Reilly, subject to a mortgage. The plaintiff applied to the High Court seeking an interlocutory injunction to secure possession of the property and to restrain the defendants from taking possession of the property and interfering with the receivership. Butler J analysed the pleas and arguments made by the defendants and the evidence adduced by them with a view to considering whether the defendants had raised a real case of any substance as part of her assessment of whether the plaintiff had met the “strong arguable case” threshold (per Fennelly J in Maha Lingham v HSE [2005] IEHC 186) for the grant of interlocutory relief which can be characterised as mandatory in nature. Butler J found that many of the arguments were made at a level of generality which was of little assistance in an attempt to apply them to the facts of the case; there was also a dearth of evidence to support the arguments the defendants wished to make. Some arguments (such as the contention that there were no arrears due on the loan at the time the receiver was appointed) were manifestly contrary to all the evidence in the case; others (such as the terms of the agreement allegedly reached between Ulster Bank and the defendants in 2011) changed during the course of the case.

Held by Butler J that the defendants did not dispute the fact that they borrowed money from and executed a mortgage in favour of Ulster Bank. The plaintiff exhibited redacted versions of the global transfer documentation as between Ulster Bank and PODAC showing the transfer of the defendants’ loan and mortgage to PODAC. Butler J found that the defendants had not advanced any stateable legal grounds in support of their objection to the transfer of their loan. The defendants did not dispute their indebtedness and did not dispute the figure of €845,704.13 as representing the amount of that indebtedness as of September 2017. Butler J found that the defendants challenged the validity of the plaintiff’s appointment as receiver without advancing any legal grounds to support that challenge apart from the generalised assertion that it was in breach of unfair contract terms. She found that the plaintiff had established a strong arguable case that he was validly appointed as receiver and that the powers exercised and proposed to be exercised in the course of the receivership were ones validly conferred on him. She found that the defendants had not established any real or substantial case to the contrary. Whilst an enforced sale of property was an interference with the defendants’ property rights, in her view the balance of justice permitted such interference for a number of reasons: firstly, the property was not the defendants’ family home, and they were not residing in it; secondly, there did not appear to be any reality to the defendants’ stated desire to redeem their mortgage; thirdly, no payment at all had been made on foot of the loan for in excess of six years; and fourthly, damages would be an adequate remedy for the defendants if they succeeded on any of the grounds set out in their defence.

Butler J proposed making the orders sought by the plaintiff in terms of paras. 1 to 5 inclusive of the Notice of Motion. She proposed making an order for the plaintiff’s costs as against both defendants to be adjudicated in default of agreement, such order to be stayed pending the determination of the proceedings by the court.

Relief granted.

Judgment of Ms. Justice Butler delivered on the 12 ^th day of October 2023

Introduction and Background Facts

1 . The plaintiff in this application has been appointed by Promontoria (Oyster) DAC (“PODAC”) as receiver over a residential property in Co. Dublin (“the house”) owned by the defendants subject to a mortgage. The plaintiff seeks an interlocutory injunction to secure possession of the property and to restrain the defendants from taking possession of the property and interfering with the receivership.

2 . The defendants bought the property in 1990 and were duly registered as owners. In 2007 they arranged to re-mortgage the property in order to part-finance the purchase of an apartment. The plan was that the defendants would move from the house into the apartment, let out the house and, on their retirement, they would sell the house and, presumably, discharge any balance outstanding on the mortgage for the apartment. On 15 November 2007 Ulster Bank made a loan offer to the defendants of €800,000 of which €600,000 was intended to discharge the outstanding mortgage on the house and €200,000 was to be used in part-payment of the purchase price of the apartment. This loan was secured by way of a mortgage over the house which was registered on the Folio by Ulster Bank in January 2008. A second loan, also with Ulster Bank, was taken out by the defendants for the balance of the purchase price of the apartment (€550,000). This loan was secured by way of mortgage on the apartment. Thus, the defendants had two loans from the Ulster Bank secured over two different properties.

3 . The timing of these loans was unfortunate in light of the severe economic downturn which commenced in 2008. It seems that the first defendant's business failed and the defendants ran into difficulty servicing their mortgages. In his replying affidavit the first defendant claimed that he engaged fully with Ulster Bank and agreed to continue servicing both loans by way of a monthly payment (the defence indicates that this was to be the sum of €1,000 per month split equally between the two loans) and further that the house would be sold voluntarily “once a sustainable solution was reached” regarding the apartment.

4 . No documentary evidence has been put before the court to support the existence of this agreement and, as will be seen, the manner in which it has been described by and on behalf of the defendants has varied significantly over time. A letter from the defendants' then-solicitor to the plaintiff in December 2017 stated that “an agreement was reached that a sustainable solution would be put in place in respect of both loans”. This would, of course, suggest that at that point no such solution had actually been reached.

5 . The defence filed in March 2022 pleads that a concluded restructuring agreement in respect of both loans was reached in 2011. It is pleaded that under that agreement part of the combined loan was to be “warehoused” in that no further capital payments were required in respect of it and that a portion of the loan would be repaid on the voluntary sale of the house, which sale could not take place without the defendants' agreement as to “time, mode of sale and reserve price”. The other part of the loan would become due only if the defendants defaulted in the €1,000 monthly payment. Interest on the full balance was to accrue as simple interest only. No evidence was put before the court to support the contention that agreement was reached in these, somewhat unlikely, terms. The terms pleaded are inconsistent with the affidavit evidence of the first defendant and with the contents of the solicitor's letter written on their behalf in 2017 both of which suggest that there was “an agreement to agree” rather than an actual agreement between the defendants and Ulster Bank.

6 . The defendants' original position seems to have been that although they continued making the servicing payment no agreement was reached regarding the sale of the house or, latterly, the redemption by them of the mortgage over the house. Obviously, that is not consistent with the plea that a relatively detailed agreement had been reached with which the defendants were still complying in late 2016.

7 . In December 2016 Ulster Bank sold a tranche of its loan portfolio including the defendants' loan to PODAC. Separately, another tranche of loans was sold by Ulster Bank to a different entity which included the defendants' other loan secured over the apartment. Material exhibited by the plaintiff demonstrates that the loan agreement, the mortgage, and Ulster Bank's rights in the house were all part of the transfer to PODAC.

8 . The defendant objected to the transfer. The basis for this objection is not set out in the first defendant's affidavit but it appears from the defence that it was either because of the separation of the loan in respect of the house from the loan in respect of the apartment (which the defendants regard as part of the same transaction) or because the transfer to PODAC was not expressly subject to the terms of the restructuring agreement allegedly reached between the defendants and Ulster Bank in 2011. It also appears to be contended that the loan should not have been transferred because the defendants were not in breach of the revised terms – i.e., they had continued to pay the sum of €1,000 per month.

9 . In January 2017 appropriate communication was made with the defendants advising them of the transfer of the loan and of the new arrangements regarding repayment. No payment has been made by the defendants in respect of this mortgage since 23 March 2017. On 29 September 2017 PODAC sent a letter of demand to the defendants advising them that their loan facility was in default and demanding immediate repayment of €845,704.13. The defendants were advised that if the full amount was not paid within seven days of the letter,...