Kavanagh and Lowe v Lynch and St Angela's Student Residences Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Laffoy
• Judgment Date: 31 August 2011
• Neutral Citation: [2011] IEHC 348
• Date: 31 August 2011

Kavanagh & Lowe v Lynch & St. Angela's Student Residences Ltd

BETWEEN

TOM KAVANAGH AND FERGUS LOWE

PLAINTIFFS

AND

JEREMIAH LYNCH AND ST. ANGELA'S STUDENT RESIDENCES LIMITED

DEFENDANTS

[2011] IEHC 348

[No. 7025 P./2011]

THE HIGH COURT

Abstract:

Practice and procedure - Company law - Equity - Receiver - Fair issue - Preventing access- Good title -Two receivers - Whether injunctive relief would be granted - Whether balance lay in favour of relief or whether damages a good remedy

Facts: The proceedings were brought by the first plaintiff receiver on the basis that the receiver claimed both defendants were preventing the receiver from obtaining possession and receipt of the rents and profits over property that they claimed to be receivers of. The plaintiffs sought orders restraining the defendants from remaining in in occupation and from interfering with the plaintiffs as receivers of the property. The defendants raised issues about the title of the plaintiffs. Both plaintiffs were receivers, who claimed to be receivers over the same 21 residential units. The Court had to consider whether there was any evidence that there was a fair issue to be tried.

Held by Laffoy J. that the title of each of the plaintiffs to possession could not be in issue. The defendants had not demonstrated that there was a fair issue to be tried by preventing the receivers taking possession which was the subject of securities that their actions would not amount to trespass. The plaintiffs had demonstrated a strong case. The plaintiffs would not be adequately compensated by an award of damages. The balance of convenience lay in favour of granting injunctive relief. On the basis that there was an undertaking as to damages, the Court would make the orders sought.

Reporter: E.F.

1 JUDGMENT of Ms. Justice Laffoy delivered the 31st day of August 2011

1. The parties to the application

2 2 1.1 The first plaintiff (Mr. Kavanagh) brings these proceedings as a receiver appointed by Bank of Scotland Ireland Limited, before it ceased to exist on the 31 ^st December, 2010, pursuant to a cross border merger by absorption. I will refer to Bank of Scotland (Ireland) Limited and its successor, Bank of Scotland plc, as "Bank of Scotland" hereafter. Mr. Kavanagh claims to be receiver over land, including 21 residential units and other buildings at St. Angela's College, Clogherrevagh, Co. Sligo (St. Angela's).

3 3 1.2 The second plaintiff (Mr. Lowe) is a party to these proceedings as receiver appointed by Irish Life & Permanent plc, hereinafter referred to as "Permanent". Mr. Lowe claims to be a receiver over 21 residential units at St. Angela's.

4 4 1.3 These proceedings are brought against the first defendant (Mr. Lynch) and the second defendant (the Company) on the basis that both defendants are preventing the plaintiffs from obtaining possession and receipt of the rents and profits of the property at St. Angela's over which they claim to be receivers. Each of the mortgages in favour of Bank of Scotland and Permanent on foot of which each of Mr. Kavanagh and Mr. Lowe was appointed receiver was created by Paul Feeney and Timothy Lynch, who were obviously the legal owners of the property mortgaged. It is Mr. Lynch's case that the property mortgaged was vested in Paul Feeney and Timothy Lynch on behalf of a partnership and that he has a 60% interest in the partnership. Mr. Lynch acknowledges that he is a director and shareholder of the Company. The position of Mr. Kavanagh and Mr. Lowe is that Mr. Lynch has a controlling interest in the Company. Mr. Lynch is the owner of three residential units at St. Angela's. However, those three units are not the subject of these proceedings. The position on the ground is that Mr. Lynch has been acting as "caretaker" of the student residences at St. Angela's and he has created the lettings in favour of student occupants and performed certain caretaking functions and he has collected the rent from the occupants. While I am unclear as to the precise status and function of the Company, it is alleged that it has also derived income from the letting of the residential units to students.

5 5 1.4. The application addressed in this judgment is an application by the plaintiffs for interlocutory orders:-

6 (a) restraining the defendants from remaining on or continuing in occupation of the property described in the schedule to the plenary summons and restraining them from refusing access to the property to the plaintiffs (para. 1 of the notice of motion),

7 (b) restraining the defendants from attempting to carry on, manage or otherwise interfere with the exercise by the plaintiffs of their functions as receivers over any portion of the said property (para. 2),

8 (c) directing the defendants to deliver up to the plaintiffs forthwith the keys, alarm codes, locks and other security and access devices and equipment in respect of the said property (para. 3),

9 (d) granting the plaintiffs possession of the said property (para 4),

10 (e) directing the defendants to deliver up all books and records held by them relating to the said property, including copies of all leases and licence agreements, and a schedule of all tenants and licensees, setting out particulars of their occupancy (para. 5), and

11 (f) restraining the defendants from preventing, impeding and/or obstructing the plaintiffs from taking possession of, getting in and collecting the property (sic), and collecting the rents and licence fees associated with the said property (para. 6).

12 The property in issue is described in the Schedule to the plenary summons, which issued on 29 ^th July, 2011, as follows:

"All That and Those part of the lands of St. Angela's College … being the property more particularly described in the Conveyance dated the 18 day of November 2005 and made between Marianne O'Connor … of the one part and Timothy Lynch and Paul Feeney of the other part and including 21 units over which the first named plaintiff has been appointed receiver and 21 units over which the second named plaintiff has been appointed receiver …"

13 6 1.5 It is clear from the affidavits filed on behalf of the plaintiffs, and, in particular, the grounding affidavit of Mr. Kavanagh sworn on the 29 ^th July, 2011, that the property at St. Angela's originally the subject of the Bank of Scotland security now comprises four apartment blocks containing 72 residential units, together with common areas and a convenience store, gym, laundry, administration building and waste water treatment plant. Mr. Kavanagh, as receiver, claims to be entitled to possession of 21 identified residential units and also the common areas and ancillary buildings. Mr. Lowe, as receiver, claims to be entitled to possession of another 21 identified residential units.

14 7 1.6 The entitlement of Mr. Kavanagh and Mr. Lowe to possession has been vigorously disputed by Mr. Lynch on his own behalf and on behalf of the Company. He has filed two affidavits sworn on the 9 ^th August, 2011 and 23 ^rd August 2011, setting out the basis on which he contends that the reliefs sought by the plaintiffs should not be granted. Before outlining the arguments advanced by Mr. Lynch, I think it is convenient to consider in detail the documentation on foot of which the plaintiffs claim, as receivers, to be entitled to possession and receipt of the rents and income of the property in issue.

2. Security of Bank of Scotland

15 2 2.1 By a mortgage dated 18 ^th November, 2005, made between Timothy Lynch and Paul Feeney of the one part and Bank of Scotland of the other part (the 2005 Mortgage), the lands at St. Angela's, which were described by reference to the conveyance dated the 18 ^th November, 2005, referred to in the schedule to the plenary summons, "together with … all buildings, erections, fixtures, fittings (including trade fixtures and fittings) and all fixed plant and machinery from time to time therein or thereon" (Clause 4.1.3) were conveyed to the Bank of Scotland as security for all monies, obligations and liabilities therein covenanted to be paid or discharged by the mortgagors.

16 3 2.2 The provisions in relation to the appointment of a receiver and his powers are set out in Clause 9 of the 2005 Mortgage. Clause 9.1 provides:-

"At any time after the power of sale has become exercisable whether or not the Bank has entered into or taken possession of the Secured Assets … the Bank may from time to time appoint … any person or persons to be receiver and manager … (hereinafter called "Receiver" …) of the Secured Assets …"

17 Clause 9.2 provides that the foregoing power of appointment of a receiver "shall be in addition to and not be to the prejudice of all statutory and other powers of the Bank under the Act …". The Act is defined as meaning the Conveyancing Act 1881 (the Act of 1881).

18 4 2.3 The introductory segment of Clause 9.4, which sets out the powers of a receiver, is in the following terms:-

"A Receiver so appointed, shall have and be entitled to exercise all powers conferred by the Act in the same way as if the Receiver had been duly appointed thereunder and shall furthermore, but without limiting any powers hereinbefore referred to, have power to do the following things either in his own name or in the name of the Mortgagor in addition to, and not in substitution for the powers contained in the Act and in the event of conflict the terms of this Deed shall prevail …"

19 The first power conferred on a receiver so appointed (clause 9.4.1) is to enter into, take immediate possession of, get in and collect the Secured Assets or any part thereof. What is of significance in relation to the provisions of Clause 9, in the context of the argument (based on the decision in Start Mortgages Ltd. v. Gunn & Ors. [2011] IEHC 275 considered later)...