Langan v Promontoria (Aran) Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Robert Haughton
• Judgment Date: 18 May 2017
• Neutral Citation: [2017] IEHC 309
• Docket Number: [2017 No. 966P]
• Court: High Court
• Date: 18 May 2017

[2017] IEHC 309

THE HIGH COURT

COMMERCIAL

Haughton Robert J.

[2017 No. 966P]

BETWEEN:

DAVID LANGAN

PLAINTIFF

-AND-

PROMONTORIA (ARAN) LTD

AND

TOM O'BRIEN

DEFENDANTS

Banking & Finance – Non-payment of loan – Appointment of receiver – Bona fide issue – Interlocutory injunction – Balance of convenience – Adequacy of damages

Facts: The plaintiff sought interlocutory injunctions in the proceedings commenced by way of plenary summons in relation to the subject property that was the subject of charge between the plaintiff and the processor-in-title of the first defendant. The first defendant acquired right, title and interest in the said property by way of mortgage sale deed, deed of novation and global deed of transfer. The first defendant argued that the plaintiff had no bona fide issued to be tried. The plaintiff contended that the first defendant had failed to provide the documents pertaining to its succession to the loans and security, and the charge in question was not amendable to transfer without the plaintiff's consent. The plaintiff argued that the claim of the first defendant was statue barred and the relevant form TR4 should not be the proof of ownership of charge.

Mr. Justice Robert Haughton granted the desired reliefs to the plaintiff provided that the plaintiff would provide certain undertakings to the effect that he would update the defendants about the particulars concerning all the lettings of the property; keep the rented income on deposit trust account in the name of his solicitor; would neither sell nor dispose of the property; and would not change the solicitor without giving immediate notice to the first defendant's solicitors. The Court held that if the plaintiff failed to give the aforesaid undertaking, the interlocutory order would be refused. The Court found that the plaintiff had raised the bona fide issue pertaining to the assignment of the charge in question. The Court held that the subject property was the plaintiff's own property and the damages would not be an adequate remedy in case of loss of the said property.

Judgement of Mr Justice Robert Haughton delivered this 18th day of May 2017

1 The plaintiff seeks interlocutory injunctions in proceedings commenced by plenary summons on 2 February, 2017, in which he seeks injunctions, declarations and other reliefs related to Flat 902, Belvedere Heights, 199 Lisson Grove, City of Westminster, NW8 8 HZ, United Kingdom (‘the Property’).

2 The Property was the subject of a Charge dated 8 February, 2002, made between the plaintiff of the one part and Ulster Bank Ireland Ltd of the other part. The first named defendant asserts that it is the successor in title to Ulster Bank Ireland Ltd in respect of the Charge, the underlying borrowing and guarantees which supported it. The second named defendant asserts that by Deed of Appointment dated 28 October, 2016, he was appointed by the first named defendant as receiver over the Property. The plaintiff contests this succession and the validity of the appointment of the first named defendant.

3 The defendants oppose the application for interlocutory relief on the basis that;

(1) no fair or bona fide question has been raised by the plaintiff;

(2) damages would be an adequate remedy in the event that the plaintiff were to succeed;

(3) the Court should not accept the plaintiff's ‘undertaking as to damages’ having regard to the extent of his undischarged debts.

4 The application is grounded on the affidavit of the plaintiff sworn on 21 February, 2017. A replying affidavit was sworn by Mr Andrew Harris, Senior Asset Manager of Capita Asset Services (Ireland) Ltd, which company undertakes loan administration and asset management services in respect of the loans of the plaintiff that are owned by the first named defendant as successor in title to Ulster Bank Ireland Ltd. The plaintiff makes a preliminary point that as Mr Harris is not an officer of the Bank, his affidavit evidence relative to the loans and accounts in question is inadmissible having regard to the Bankers Books Evidence Acts. That argument is unsustainable in the light of Order 40 of the Rules of the Superior Courts, rule 4, which states: –

‘4. Affidavits shall be confined to such facts as the witness is able of his own knowledge to prove, and shall state his means of knowledge thereof, except on interlocutory motions, on which statements as to his belief, with the grounds thereof, may be admitted…’

As this is an interlocutory application the evidence in Mr Harris' affidavit is admissible.

Fair Bona Fide Question

5 Under the test established in Campus Oil Ltd v. Minister for Industry and Energy (No. 2) [1983] IR 88, the first issue is whether the plaintiff has raised a fair bona fide question to be tried. In his grounding affidavit sworn on 21, February 2017, the plaintiff sets out the three underlying borrowings from Ulster Bank Ireland Ltd which have been the subject matter of demands for payment by the first named defendant:

(1) A Bank facility dated 8 January, 2007, in the amount of €125,020 made available to the plaintiff as of 5 September, 2016, ‘to assist with personal investment in Private Clients Tax Shelter Hotel Investment’. The first named defendant alleges that the plaintiff's liability on foot of this facility amounts to €124,041.17.

(2) A Bank facility dated 9 April, 2008, making available to the plaintiff first, an overdraft of €5,000 and, secondly a demand loan facility of €412,000 a bridging loan facility of €500,000. The first named defendant alleges that the plaintiff's liability on foot of these facilities amounts to €1,118,767.95.

(3) Loan facilities made available to Classic Furniture Ltd (‘the Company’) pursuant to facility letter dated 9 April, 2008, in respect of which some seven guarantees were executed by the plaintiff in the years 2002-2008 inclusive. The first named defendant alleges that the plaintiff's liability on foot of these guarantees as of 5 September 2016 is €3,178,998.88 including principal and interest.

6 In his affidavit, the plaintiff avers that he purchased the Property in about 1999 and that he executed a legal Charge dated 8 February, 2002, in favour of Ulster Bank Ireland Ltd over his interest in the Property in respect of present or future liabilities to the Bank. He exhibits a copy of the Charge. Under clause 11, English law is the governing law.

7 Mr Harris in his affidavit asserts that the first named defendant acquired the interest of Ulster Bank Ireland Ltd in the borrowings, guarantees and charges in question by Mortgage Sale Deed dated 16 December, 2014, a Deed of Novation dated 12 February, 2015, and Global Deed of Transfer dated 12 February, 2015. Mr Harris further exhibits Deeds of Power of Attorney which he asserts authorised certain persons to assign the relevant transfer documentation on behalf of the relevant parties. He also exhibits a copy Form TR4 from the UK Land Registry purporting to show the first named defendant as the proprietor of the charge dated 8 February, 2002, over the Property. However there is no affidavit of English law indicating the precise status and significance of this exhibit and the copies of the conveyancing documentation relied upon by the plaintiff to show its title are significantly redacted.

8 The plaintiff seeks to prevent the first named defendant's claim that he is ______ to it, or that the first named defendant can rely on the charge. He claims that despite requests and correspondence his solicitors have not been furnished with the documentation that would prove the first named defendant's succession to the loans and security; that the exhibited documentation is deficient; that the charge is not amenable to transfer or assignment by Ulster Bank without the plaintiff's consent; and that the receiver has not been properly appointed. He also asserts that any claim that the first named defendant might have is now statute barred, and that in the absence of any affidavit as to English law the Court should not have any regard to the Form TR4 as proof that the first named defendant is the owner of the Charge. The plaintiff also alleges negligence/breach of duty in and about the circumstances in which the 2007 facility was drawn down for the purposes of an investment.

9 The plaintiff also asserts that Ulster Bank Ltd agreed to release its interest in the Property. At paragraph 18 of his affidavit the plaintiff avers: –

‘18. In this regard, I say that in or around May 2008 your Deponent engaged in communication with Mr Neil Kinsella, my and the Company's then Bank Relationship Manager, and the signatory on behalf of the Bank on the letter of loan offer of 9 April 2008. I say in the course of these communications, on or about early May 2008 Mr Kinsella on behalf of the Bank agreed to release the Bank charge over the Property, subject to your Deponent providing an up to date leasehold valuation for the Company's property at Blanchardstown Retail Park showing a value of at least €800,000. I say that on my instruction Ms Imelda Lennon, the Company's financial controller, sought an amended facility letter on your Deponent's behalf from Mr Kinsella by email dated 12 May 2008, to reflect the release of the Property as security. I say that Mr Kinsella replied by email...