Leahy and Another v Bank of Scotland Plc and Others
| Jurisdiction | Ireland |
| Judge | Mr Justice Rory Mulcahy |
| Judgment Date | 16 May 2023 |
| Neutral Citation | [2023] IEHC 246 |
| Docket Number | Record No.: 2016/6718P |
| Court | High Court |
[2023] IEHC 246
Record No.: 2016/6718P
THE HIGH COURT
Interlocutory injunction – Loans – Transfer – Plaintiffs seeking an interlocutory injunction restraining the transfer of loans – Whether the plaintiffs had made out an arguable case for the grant of the injunction sought
Facts: The plaintiffs, Mr and Mrs Leahy, issued proceedings by plenary summons dated 25 July 2016 arising from the transfer by the first defendant, Bank of Scotland PLC, of the benefit of two loans made to the plaintiffs and of the security for those loans to the second defendant, Pentire Property Finance Ltd, a mortgage dated 20 August 2004, and the appointment by the second defendant of the fourth defendant, Mr Kavanagh, as receiver over the assets secured by the mortgage, being 11 Kilkenny Street, Castlecomer, Co. Kilkenny (the Property). The only injunctive reliefs sought by the plaintiffs in the proceedings were an injunction compelling the second defendant and the third defendant, Pepper Finance Corporation, to remove the fourth defendant as receiver and an injunction compelling the receiver to vacate the Property. By judgment dated 5 April 2019, the High Court (Simons J) dismissed the plaintiffs’ claim against the first defendant pursuant to Order 19, Rule 28 of the Rules of the Superior Courts. The plaintiffs appealed to the Court of Appeal which rejected the appeal in a judgment dated 12 July 2021. The Supreme Court refused an application for leave to appeal on 13 January 2022. The second, third and fourth defendants delivered a defence and counterclaim on 24 July 2018 and an amended defence and counterclaim on 11 July 2023. On 7 August 2020, the loans and mortgage were transferred from the second defendant to the third defendant. On or about 16 March 2023, the second plaintiff received a notice from the third defendant stating that it had agreed to transfer the benefit of the plaintiffs’ loans and mortgage to Everyday Finance DAC. The plaintiffs applied to the High Court seeking an interlocutory injunction restraining that transfer. The plaintiffs said that they had made out an arguable case and that the balance of convenience favoured the grant of an injunction.
Held by Mulcahy J that the plaintiffs had not made out an arguable case for the grant of the injunction sought. He held that the injunction sought did not relate to any relief sought in the proceedings. He held that there was no relief sought challenging the loans or the security granted for them, no relief seeking to restrain the transfer of those loans and security – which had occurred twice already – and none of the reliefs claimed would be compromised if the loans were transferred again to Everyday Finance DAC. He held that, as noted in Merck, Sharp & Dohme Corporation v Clonmel Healthcare Ltd [2019] IESC 65, the grant of a temporary injunction will be “extremely unlikely” where the grant of a permanent injunction at the trial of the action is not a possibility. He held that, on the basis of the pleaded case, there was no possibility of such a permanent injunction. Although the first plaintiff referred to amending pleadings, Mulcahy J held that the application must be assessed on the basis of the case as pleaded. He speculated that the plaintiffs’ goal was that, if successful in the proceedings, the Property would be returned to them, unencumbered. While that may have been the commercial outcome that they sought to achieve, he held that it was not a relief which they had sought in the proceedings.
Mulcahy J refused the plaintiff’s application.
Application refused.
JUDGMENT of Mr Justice Rory Mulcahy delivered on the 16 th day of May 2023
The Plaintiffs, a married couple, issued proceedings by Plenary Summons dated 25 July 2016 arising from the first Defendant's transfer of the benefit of two loans made to the Plaintiffs and of the security for those loans to the second Defendant, a mortgage dated 20 August 2004, and the appointment by the second Defendant of the fourth Defendant as receiver over the assets secured by the mortgage, being 11 Kilkenny Street, Castlecomer, Co. Kilkenny (“the Property”).
The proceedings do not seek to challenge the transfer of the loans and mortgage or seek any injunctive relief in respect thereof. The only injunctive reliefs sought by the Plaintiffs in the proceedings are an injunction compelling the second and third Defendant to remove the fourth Defendant as receiver and an injunction compelling the receiver to vacate the Property.
The Plaintiffs delivered a Statement of Claim on 24 October 2016, an amended Statement of Claim on 4 July 2017 and a further amended Statement of Claim on 27 January 2018.
By judgment dated 5 April 2019, the High Court (Simons J) dismissed the Plaintiffs' claim against the first Defendant pursuant to Order 19, Rule 28 of the Rules of the Superior Courts. The Court found that the express terms of the Plaintiff's contract with the first Defendant provided for the transfer of the loans. The Court concluded that the Plaintiffs had, in any event, not suffered any loss or prejudice as a result of the transfer of the loans.
The Court also found that there was no statutory restriction on the first Defendant transferring the loans to the second Defendant. The Court relied, in this regard, on the decision of the Supreme Court in Launceston Property Finance v Burke [2017] IESC 62, [2017] 2 IR 798.
The Plaintiffs appealed to the Court of Appeal which rejected the appeal in a judgment dated 12 July 2021 ( [2021] IECA 194).
In rejecting the appeal, the Court agreed with the finding of the High Court that there was no statutory preclusion on the transfer of loans, and rejected the Plaintiffs' contention that the decision in Launceston could be distinguished on the facts from those at issue in the Plaintiffs' proceedings. The Court rejected the arguments that the High Court had misapplied Launceston in its judgment on the strike out application in these proceedings and in a number of other judgments, Hogan v Deloitte [2017] IEHC 673, Moroney v Property Registration Authority [2018] IEHC 379 and Geary v Property Registration Authority [2018] IEHC 727.
The Supreme Court refused an application for leave to appeal ( [2022] IESCDET 3) on 13 January 2022.
The second, third and fourth Defendants delivered a Defence and Counterclaim on 24 July 2018 and an amended Defence and Counterclaim on 11 July 2023.
On 7 August 2020, the loans and mortgage were transferred from the second Defendant to the third Defendant. The third Defendant had, prior to then, operated as an asset servicing agent on behalf of the second Defendant.
On or about 16 March 2023, the second Plaintiff received a notice from the third Defendant stating that it had agreed to transfer the benefit of the Plaintiffs' loans and mortgage to Everyday Finance DAC (“ Everyday Finance”).
In this application, the Plaintiffs seek an interlocutory injunction restraining that transfer.
There was no dispute between the parties as to the relevant principles to apply. The Plaintiffs referred to the Campus Oil test and also to the more recent refinement of that test in Okunade v Minister for Justice [2012] IESC 49, [2012] 3 IR 152 and in Merck, Sharp & Dohme Corporation v Clonmel Healthcare Limited [2019] IESC 65, [2020] 2 IR 1.
In order to obtain an interlocutory injunction, the Plaintiffs must show –
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i. That there is a serious issue to be tried;
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ii. That damages are an adequate remedy;
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iii. That the balance of convenience or balance of justice lies in favour of granting the injunction.
As made clear in the more recent cases, a rigid application of the above tests should be avoided and any application should be approached with a recognition of “ the essential flexibility of the remedy and the fundamental objective in seeking to minimise injustice where the legal rights of the parties have yet to be determined.” (see, Merck, Sharp & Dohme at paragraph 64(8)).
The Plaintiffs are representing themselves in these proceedings and it was the first Plaintiff who presented the application for the injunction. In so doing, he placed emphasis on the flexible nature of the remedy, especially where, as in Okunade, personal rights were in issue.
The first Plaintiff argued that there was clearly a serious issue to be tried. His principle submission in this regard was directed to the entitlement of the second Defendant, as an unregulated entity, to acquire the benefits of the loans and mortgage from the first Defendant. He very fairly accepted that “going forward” the Plaintiffs would have to deal with the implications of the decision of the Court of Appeal that the first Defendant was entitled to transfer the benefit of the loans to the second...
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