Ferris v Markey Pubs Ltd
| Jurisdiction | Ireland |
| Court | High Court |
| Judge | Mr. Justice Twomey |
| Judgment Date | 21 February 2019 |
| Neutral Citation | [2019] IEHC 117 |
| Docket Number | [2018 No. 9496 P.] |
| Date | 21 February 2019 |
[2019] IEHC 117
THE HIGH COURT
COMMERCIAL
Twomey J.
[2018 No. 9496 P.]
AND
Property – Landlord and Tennant – Interlocutory Injunction – Plaintiffs seeking an interlocutory injunction directing the defendant to vacate property – Whether the plaintiffs had a strong case likely to succeed at trial, whether damages were an adequate remedy, and whether the balance of convenience lay with the court granting the injunction
Facts: The plaintiffs were appointed as receivers of a property known as ‘O’Donaghues Pub’ (‘the Property’) arising from a mortgage executed in 2004. The owner of the Property was Thingmote Limited, and the defendant, Markey Pubs Limited, was a tenant. The plaintiffs sought to realise the value of the security by selling the Property and sought an interlocutory injunction ordering the defendant to vacate the Property. The defendant argued that the injunction should not be granted as Circuit Court proceedings were in process which, if the defendant was successful, would deny the plaintiffs any entitlement to possession of the Property.
Held by Twomey J that the test for granting a mandatory interlocutory injunction had been met. The plaintiffs had demonstrated a strong case likely to succeed at trial and damages were not an adequate remedy given the financial state of the defendant company. When looking at whether the balance of convenience favoured the granting of the injunction, Twomey J stated that the court should adopt whatever course of action would carry the lower risk of injustice if the wrong decision was made. In the interests of reducing the risk of injustice, Twomey J granted the injunction ordering the defendant to vacate the property but gave the defendant an option to have a stay put on the order conditioned on the payment of monthly rent.
Relief granted.
This case concerns an application by the plaintiffs, Martin Ferris and Patrick McCoy (the ‘Receivers’) for an interlocutory injunction directing the defendant, Markey Pubs Limited (‘Markey Pubs’) to vacate a property known as “O'Donoghues Pub” which is at 15/15a Suffolk Street, Dublin 2 (the ‘Property’). The owner of the Property is Thingmote Limited (‘Thingmote’).
For the reasons set out hereunder and in particular since this Court has determined that the Receivers have established a very strong case that Markey Pubs will not be granted in the Circuit Court a renewal of its alleged tenancy from the owner of the Property, Thingmote, this Court grants the injunction. One of the reasons that the Receivers have established a strong case that Markey Pubs would not get in the Circuit Court a renewal of its alleged tenancy is because, as outlined in greater detail hereunder, the claim for a tenancy renewal is based on the extraordinary claim that Markey Pubs had been assigned a lease of the Property, yet even the most cursory examination of the lease in question would reveal that it was a complete nullity since the alleged landlord had no interest in the Property and so could not grant a lease over the premises.
The Receivers were appointed by Havbell DAC (‘Havbell’) on 18th July, 2018 as receivers of the Property arising from a mortgage dated 30th November, 2004 (the ‘Mortgage’) which was executed by Thingmote as security for a loan of €9.48 million which was extended by Permanent TSB plc (‘PTSB’) under its previous name, Irish Life and Permanent plc, to EOD Investments Limited (‘EOD’), which was the parent company of the owner of the Property, Thingmote.
Approximately €6 million of this loan is outstanding at present. On 19th June, 2015 the loan was lawfully assigned and transferred by PTSB to Havbell, along with the security relating to the Property. Thus, it is Havbell which will benefit from the actions of the Receivers in seeking vacant possession of the Property in order to sell the Property, which is estimated to have a value of approximately €2.5 million, which proceeds are intended to be used to partially discharge the outstanding loan.
The crux of this dispute is that while the Receivers wish to realise the value of the security by selling the Property, Markey Pubs, which was incorporated on 13th January, 2016, claims to be entitled to a tenancy in the Property from the owner of the Property, Thingmote, and has instituted Circuit Court proceedings in which it seeks a new tenancy under Part II of the Landlord and Tenant (Amendment) Act 1980 (the ‘1980 Act’).
In particular, Markey Pubs claims that the Receivers should not be granted an interlocutory injunction to force it to vacate the Property because Circuit Court proceedings are in being, which, if successful, would deny the Receivers any entitlement to possession, since in those proceedings Markey Pubs claims to be entitled to a new tenancy from the owners of the Property, Thingmote.
While Markey Pubs did not borrow any of the funds lent by PTSB, the sole director and sole shareholder of Markey Pubs, Mr. Des Markey (‘Mr. Markey’), and thus the controlling mind of Markey Pubs, was a director of EOD, the borrower of the secured funds, from February 2011 to October 2013. In addition, sworn evidence was provided by the Receivers that Mr. Markey owned 2/3 of the shareholding in EOD up until the date of EOD's dissolution in January 2016, and that upon EOD's court ordered restoration in 2018, a Ms. Markey, with the same address as Mr. Markey, owned a 2/3 shareholding in EOD.
It is not a determinative factor in this case that Mr. Markey was the sole shareholder of Markey Pubs (the alleged tenant), and also the majority shareholder in EOD (the borrower), or that EOD was itself the owner of Thingmote (the owner of the Property and the grantor of the security). It is nonetheless relevant that this Court is not dealing with a completely unconnected third-party tenant challenging a receiver's right to possession of the secured property. Rather, this is a case where there is a connection between the owner and director of Markey Pubs (the alleged tenant), on the one hand (which is seeking to restrict the Receivers in realising their security over the Property), and on the other hand, the owners and directors of the company (EOD) which borrowed the funds, which company itself owned Thingmote, which charged the Property as security for the loan to its parent company, EOD.
It is also relevant to note that the controlling mind of Markey Pubs, Mr. Markey, was also a director of a company called San Benedetto Limited (‘San Benedetto’) and he owned the entire shareholding in the company along with Ms. Jacqueline Markey, whom he avers (at para. 5 of his affidavit of 14th November, 2018) was his wife until their divorce which he avers (at para. 16 of his affidavit of 11th December, 2018) took place around January 2016.
San Benedetto is a critical part of Markey Pubs' claim to be entitled to a tenancy in the Property, since San Benedetto was a tenant in the Property under at least one lease prior to its dissolution on 18th May, 2016. As noted hereunder in more detail, Markey Pubs claims to have been assigned San Benedetto's lease on 15th January, 2016, such that Markey Pubs is now entitled to the renewal of that lease. It is on this basis that Markey Pubs claims to be entitled to defeat the Receivers' application for an injunction ordering Markey Pubs to vacate the Property.
The Receivers, for their part, argue that despite the issue of Circuit Court proceedings by Markey Pubs for a tenancy renewal, there is no possible entitlement on the part of Markey Pubs to a renewal of a tenancy under the 1980 Act, and that this is a suitable case for the granting of an interlocutory injunction, notwithstanding the existence of Circuit Court proceedings.
It seems clear to this Court from the caselaw (including the Supreme Court case of Kenny Homes Ltd v. Leonard [1997] IEHC 230 (Supreme Court, unreported, 18 June, 1998)), and, in particular, Article 34(1) of the Constitution (which provides that the High Court has full original jurisdiction to determine all matters of law and fact), that this Court does in fact have jurisdiction in appropriate circumstances to determine whether an alleged tenant has a strong case for entitlement to a renewal of a lease in High Court proceedings in which such a renewal is relevant (such as in this case, which are, in essence, possession proceedings against that tenant), notwithstanding the fact that the Circuit Court has exclusive jurisdiction to determine the renewal of tenancies under the 1980 Act.
For example, in Walpoles (Ireland) v. Dixon (1935) 69 ILTR 232 at 233, O'Byrne J. in the High Court (and affirmed on appeal in the Supreme Court) states in relation to the predecessor of the 1980 Act, i.e. the Landlord and Tenant Act, 1931:
‘Mr. Campbell, who appears for the defendant, says that his client has served a notice under that Act, and that the issue raised therein will come on for hearing in the Circuit Court; and that pending such hearing I should adjourn this action.’
However, O'Byrne J. rejected this application, which is similar to the application made by counsel for Markey Pubs in this case, in the following terms:
‘I would certainly take that course if I thought there was any substantial ground in which such application might be granted, but in my opinion, having regard to the facts of the case, and to the documents, and to the provisions of the Act of 1931, such an application could not possibly succeed.’
A similar approach, regarding the jurisdiction of the High Court to effectively determine the prospect of the renewal of a...
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...Finlay Geoghegan J. in Crofter Properties Ltd v. Genport Ltd [2007] IEHC 80 and the decision of Twomey J. in Ferris v. Markey Pubs Ltd [2019] IEHC 117), a stay should be placed on any order made by the court in these proceedings to last until the outcome of the Circuit Court proceedings. 31......