O'Gara v Ulster Bank Ireland dac

JurisdictionIreland
JudgeMr. Justice David Barniville
Judgment Date10 April 2019
Neutral Citation[2019] IEHC 213
CourtHigh Court
Docket Number[2018 No. 9113 P.]
Date10 April 2019
BETWEEN
LARRY O'GARA

AND

AILEEN O'GARA
PLAINTIFFS
AND
ULSTER BANK IRELAND DAC

AND

SEACONVIEW DAC
DEFENDANTS

[2019] IEHC 213

Barniville J.

[2018 No. 9113 P.]

THE HIGH COURT

COMMERCIAL

Interlocutory injunction – Commercial properties – Sale – Plaintiffs seeking an interlocutory injunction restraining the defendant from selling commercial properties pending the determination of the proceedings – Whether damages were an adequate remedy for the plaintiffs

Facts: The plaintiffs, Mr and Ms O’Gara, applied to the High Court for an interlocutory injunction restraining the first defendant, Ulster Bank Ireland DAC (UBI), its servants or agents from selling six commercial properties in the United Kingdom (the UK properties) pending the determination of the proceedings. While the interlocutory injunctive relief was sought against UBI only, the proceedings had also been commenced against the second defendant, Seaconview DAC. The plaintiffs had a number of loan facilities with UBI. UBI maintained that the economic interest in those facilities was transferred to Seaconview during the course of 2015 and that, thereafter, UBI held the legal interest in the facilities and Seaconview held the economic interest in them. As security for the facilities, the plaintiffs entered into mortgages over the UK properties. UBI appointed receivers in the United Kingdom over each of the UK properties the subject of the mortgages in July 2018. The receivers sought to sell the UK properties. The plaintiffs sought to prevent the sale of the UK properties by seeking the interlocutory injunctive relief against UBI, its servants or agents.

Held by Barniville J that, having applied the test identified by the Supreme Court in Campus Oil Ltd v Minister for Industry and Energy (No. 2) [1983] IR 88, the plaintiffs’ application should be refused. Barniville J noted that the properties in question were commercial properties which were heavily mortgaged in favour of UBI and were let out to commercial tenants. Barniville J was satisfied that any loss which the plaintiffs would suffer in the event that their interlocutory injunction application failed but they ultimately succeeded at trial would be capable of being compensated by an award of damages. Barniville J rejected the case advanced by the plaintiffs that the plaintiffs had some particular or special attachment to the properties going beyond that of property investors or landlords. Barniville J held that if he was incorrect in that conclusion, and if it was necessary to proceed separately to consider the issue of the balance of convenience, he would conclude that the balance of convenience clearly favoured the refusal of the plaintiffs’ application. Barniville J was satisfied that in the particular circumstances of this case, the least harm would be done by refusing the plaintiffs’ application and permitting the sale of the properties to proceed in the United Kingdom.

Barniville J held that the plaintiffs’ application would be refused.

Application refused.

JUDGMENT of Mr. Justice David Barniville delivered on the 10th day of April, 2019.
Introduction
1

This is my judgment on the plaintiffs” application for an interlocutory injunction restraining the first defendant, Ulster Bank Ireland DAC (‘UBI’), its servants or agents from selling six commercial properties in the United Kingdom (the ‘UK properties’) pending the determination of the proceedings. The properties are in various locations in the United Kingdom including Stockton-on-Tees, Bicester, Blackpool, Rochdale, Reading and Hartlepool.

2

While the interlocutory injunctive relief is sought against UBI only, the proceedings have also been commenced against the second defendant, Seaconview DAC (‘Seaconview’). The plaintiffs had a number of loan facilities with UBI. UBI maintains that the economic interest in those facilities was transferred to Seaconview during the course of 2015 and that, thereafter, UBI held the legal interest in the facilities and Seaconview held the economic interest in them.

3

As security for the facilities, the plaintiffs entered into mortgages over the UK properties. UBI appointed receivers in the United Kingdom over each of the UK properties the subject of the mortgages in July 2018. The receivers have sought to sell the UK properties. The plaintiffs seek to prevent the sale of the UK properties by seeking the interlocutory injunctive relief referred to above against UBI, its servants or agents. UBI and Seaconview have resisted the plaintiffs” application on several grounds.

Summary of Decision
4

As this is an application for an interlocutory injunction, it must be considered in accordance with the test identified by the Supreme Court in Campus Oil Ltd. v. Minister for Industry and Energy (No. 2) [1983] IR 88 (‘ Campus Oil’). Applying that test, I have no doubt that the plaintiffs” application should be refused.

5

The plaintiffs have raised several issues in the proceedings concerning the validity and effectiveness of the transfer by UBI of the economic interest in the facilities to Seaconview, the validity of the demands made by UBI and the validity of the appointment of the receivers. Having regard to the low threshold applicable to the establishment of a fair question or serious issue to be tried, I have proceeded on the basis that the plaintiffs have established that there are fair questions or serious issues to be tried.

6

However, the plaintiffs have failed to establish that damages would not be an adequate remedy for them in the event that the interlocutory injunction is refused but the plaintiffs ultimately succeed at trial. For reasons which I set out in greater detail in this judgment, I am satisfied that damages are clearly an adequate remedy for the plaintiffs in the particular circumstances of this case. The properties in question are commercial properties which are heavily mortgaged in favour of UBI and are let out to commercial tenants. I am satisfied that any loss which the plaintiffs will suffer in the event that their interlocutory injunction application fails but they ultimately succeed at trial will be capable of being compensated by an award of damages. I have no hesitation in rejecting the case advanced by the plaintiffs that the plaintiffs have some particular or special attachment to the properties going beyond that of property investors or landlords. I conclude, therefore, that damages would be an adequate remedy for the plaintiffs.

7

If I am incorrect in that conclusion, and if it were necessary to proceed separately to consider the issue of the balance of convenience, I would again have no hesitation in concluding that the balance of convenience clearly favours the refusal of the plaintiffs” application. I am satisfied that in the particular circumstances of this case, the least harm would be done by refusing the plaintiffs” application and permitting the sale of the properties to proceed in the United Kingdom. Therefore, I refuse the plaintiffs” application.

Factual Background
8

While there are many factual and legal issues in dispute between the parties, the relevant facts for the purposes of this interlocutory injunction application are not really in dispute and can be summarised quite briefly.

9

Between 2003 and 2006, the plaintiffs obtained loan facilities from UBI to finance investment in commercial properties in the United Kingdom and to invest in a property syndicate. Four facilities initially provided in 2003 and 2004 (facilities A to D) were consolidated into one loan facility which was the subject of a facility letter dated 14th April, 2005 (the ‘April 2005 facility’). The total amount of the loans advanced to the plaintiffs by UBI on foot of the April 2005 facility was £6,313,366.00. The purpose of the facilities, the subject of the April 2005 facility was to amalgamate existing loans advanced to purchase some of the UK properties. The facilities were all demand loans. There is a second relevant facility letter. By letter dated 23rd November, 2006, UBI agreed to provide an additional loan facility of €300,000.00 to finance an investment by the plaintiffs in a property syndicate for another property in the United Kingdom at 33 Old Broad Street, London (the ‘November 2006 facility’). This was also a demand loan facility. As security for the April 2005 facility, it was agreed that UBI would hold or continue to hold a first legal charge over the six UK properties as well as a first legal charge over a zoned site in Roscommon, an assignment over an investment bond and an assignment over an Ulster Bank hedge fund. The security provided for the November 2006 facility encompassed the first legal charges over the UK properties together with an assignment over a fund and certain bonds. The first legal charges over the UK properties were given in the form of six separate legal charges or mortgages (one in respect of each of the UK properties) (the ‘mortgages’). The mortgages were expressly stated to be governed by English law.

10

Before turning to the circumstances in which UBI maintains that it disposed of the economic interest which it held in the April 2005 and November 2006 facilities (the ‘facilities’), and the circumstances in which the plaintiffs were informed of such reported disposal, I should refer briefly to some of the relevant provisions of the April 2005 facility and of the November 2006 facility.

11

The April 2005 facility was expressly stated to be subject to certain ‘general conditions’. Clause 12 of those general conditions provides as follows:-

‘Ulster Bank Ireland Limited shall have the right to assign or transfer or sub-participate the benefits and/or obligations of the Facility/all or any of the facilities or any part thereof to another entity within the Ulster Bank Group (that is, Ulster Bank Ireland Limited and its subsidiaries) and/or another bank or financial institution at no additional cost...

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