M and J Developments Ltd v Everyday Finance DAC and Others

• Jurisdiction: Ireland
• Court: Court of Appeal (Ireland)
• Judge: Mr. Justice Allen
• Judgment Date: 12 June 2024
• Neutral Citation: [2024] IECA 141
• Docket Number: Appeal Number: 2024/1

Between/

M & J Duddy Developments Limited

Plaintiff/Appellant

and

Everyday Finance DAC, Andrew Dolliver and Wilsons Auctions

Defendants/Respondents

[2024] IECA 141

Binchy J.

Pilkington J.

Allen J.

Appeal Number: 2024/1

THE COURT OF APPEAL

CIVIL

NO REDACTION NEEDED

JUDGMENT of Mr. Justice Allen delivered on the 12 ^th day of June, 2024

Introduction

1 . This is an appeal against the judgment of the High Court (Stack J.) delivered on 4 ^th August, 2023 ( [2023] IEHC 510) and consequent order made on 10 ^th October, 2023, refusing an application by the plaintiff for a series of interlocutory orders “in the nature of an injunction” prohibiting the defendants from offering for sale by way of an internet auction three properties in Donegal.

2 . The High Court judge held that the appellant had not established a bona fide issue to be tried. The appellant contends that she erred in so finding. The respondents contend that the judge was correct in her conclusion that there was no fair question to be tried. Alternatively – against the eventuality that this court might find otherwise – the respondents argue that the decision of the High Court ought to be upheld on the ground that the balance of convenience is overwhelmingly against the granting of the orders sought and that the undertaking as to damages offered by the appellant is worthless.

3 . The notice of appeal as originally filed set out 63 grounds of appeal. In the directions list, these were whittled down to 25; but in truth the appeal raises a single issue of law as to whether an insolvency practitioner who had previously been appointed as a receiver over a mortgaged property – without a power of sale – may later lawfully act as the agent of the mortgagee in offering the property for sale. The appeal is said to raise an issue as to whether a previous decision of this court in Vitgeson Ltd. v. O'Brien [2019] IECA 184 was correctly decided.

The facts

4 . The facts are not in dispute.

5 . By two deeds of mortgage and charge dated 19 ^th January, 2006 and 21 ^st April, 2006 made between the appellant and Allied Irish Banks p.l.c. (“AIB”) the appellant mortgaged an unregistered property at Ray, Kilmacrennan, County Donegal (“the Ray property”) and charged two registered properties, one at Ballymagowan Lower, Kerrykeel, County Donegal, (“the Ballymagowan property”) and the other at Knockbrack, Kerrykeel, County Donegal (“the Kerrykeel property”) as security for the payment of all sums then due or which might thereafter become due by the appellant to AIB.

6 . The deeds of mortgage and charge were in the standard AIB printed form which provided for the appointment of a receiver over the properties who would be entitled to collect the rents and profits but would not have a power of sale.

7 . On 22 ^nd November, 2017 AIB appointed Mr. Patrick Horkan as receiver over the properties. There is no evidence that anything was ever done on foot of that appointment and Mr. Horkan was eventually discharged.

8 . By divers mesne assurances acts in the law and events, the appellant's liabilities to AIB and the security held in respect of those liabilities were transferred to Everyday Finance DAC (“Everyday”) on 2 ^nd August, 2018; and on 11 ^th December, 2018 the two folios were updated to show Everyday as the owner of the charges.

9 . The Knockbrack property is a detached dormer bungalow on about 0.59 acres. The Ray property is a detached house on about 0.6 acres. The Ballymagowan property is a large, detached house on a site of about 1.45 acres. All three are described as being finished to a builder's finish: that is to say, they are weathertight but there is no kitchen, bathroom, or flooring.

10 . It is not clear precisely when work on the houses stopped, but counsel for the appellant accepted in argument that it is reasonable to infer that it must have been no later than 22 ^nd November, 2017 when – following a demand made by AIB on a previous unspecified date – Mr. Horkan was appointed as receiver. Since then, the houses have been vacant.

11 . The appellant implicitly acknowledges that it is indebted to Everyday. Ms. Margaret Hartigan, a senior asset manager with a company which provides loan administration and asset management services to Everyday, deposed that the appellant's liabilities to Everyday amounted in total to €2,274,384.75. Mr. Duddy objected that all that Ms. Hartigan would have said and some of what Mr. Andrew Dolliver would have said was inadmissible on the ground that it was hearsay but he did not contest Mr. Dolliver's evidence that the appellant's most recent abridged accounts filed with the CRO – for the year ended 31 ^st December, 2017 – show liabilities to “a Bank” of €2,098,521 and overall net liabilities of €2,110,886. The only assets shown are development land – at €125,000 – and work in progress – valued at €210,000.

12 . By two deeds dated 28 ^th July, 2022 – one under each of the deeds of mortgage and charge – Everyday appointed Mr. Dolliver as receiver over the three properties. On the same day, Mr. Horkan was discharged. By letter of the same date the appellant was notified of Mr. Dolliver's appointment as receiver and asked to complete a form and to provide various documents and information. If the appellant did anything other than ignore that correspondence, I expect that someone would have said so. As I have said, the deeds of mortgage and charge provided for the appointment of a receiver but not that any receiver who might be appointed would have a power of sale. The houses are unfinished and incapable of being let. There was no suggestion that Mr. Dolliver had done anything, or might do anything, or could do anything in his capacity as receiver.

13 . By two deeds dated 23 ^rd September, 2022 – one in respect of the Kerrykeel property and the other in respect of the Ballymagowan property and the Ray property – Everyday appointed Mr. Dolliver as its agent, and Mr. Dolliver agreed to act as Everyday's agent, to provide the “Services” as therein defined, being:-

• “(i) the services relating to the maintenance and marketing and contracting to sell the [appellant's] Assets (which excludes the Excluded Services); and

• (ii) any additional services requested by [Everyday] and agreed in writing to be undertaken by the Agent in respect of the Project provided such services do not include any of the Excluded Services performed Qua Receiver.”

14 . The deeds defined “Excluded Services” as meaning:-

“… the services and/or functions that are or should be undertaken by the Receiver pursuant to the Receiver's appointment under the Mortgage and the relevant provisions of the [Conveyancing Act 1881].”

15 . Thus, Everyday, in appointing Mr. Dolliver as agent, and Mr. Dolliver, in accepting that appointment, were careful to draw a clear line between the two capacities and to forestall any overlap.

16 . Mr. Dolliver's appointment as agent post-dated his appointment as receiver by two months. If in the interim any assessment was made as to what, if anything, he could do in his capacity as receiver, there was no evidence of that. If before Mr. Dolliver's appointment as receiver any consideration was given to what, if anything, he might be able to do in that capacity, there is no evidence of that either.

17 . By letter dated 30 ^th September, 2022 Mr. Dolliver notified Mr. Michael Duddy, as director and secretary of the appellant – as well as Mrs. Josie Duddy, the other director – of his appointment as agent. He wrote:-

“As a result of my appointment as Agent, I have been delegated certain powers by the charge holder in respect of the Properties to include readying the properties for sale, instructing an agent to commence marketing of the Properties and contracting to sell the Properties. In my instruction as Agent, I exercise the above certain delegated powers only to the extent that I cannot perform the powers pursuant to my appointment as a fixed charge receiver on 28 July 2022.”

18 . This reflected the delineation by the agency agreement of the separate capacities and powers.

19 . Soon after his appointment as agent, Mr. Dolliver commissioned Wilsons Auctioneers Limited (“Wilsons”) to submit a sales and marketing strategy for each of the properties. Wilsons recommended that they be sold – or at least offered for sale – by public online auction. They valued the Kerrykell property at between €80,000 and €130,000; the Ray property at between €100,000 and €150,000; and the Ballymagowan property at between €150,000 and €200,000: in each case “subject to VP and contentious levels.” I understand “VP” to be vacant possession. I understand the reference to “contentious levels” to anticipate that the mortgagor might not be altogether enthusiastic at the prospect of a sale.

20 . On 4 ^th January, 2023 the properties were advertised for sale by online auction to be conducted by Wilsons on 22 ^nd February, 2023 at 4:00 p.m. As Wilsons had previously recommended, the advised minimum values were stated to be €90,000, €110,000 and €160,000.

The High Court proceedings

21 . By plenary summons issued on 17 ^th February, 2023 the appellant issued proceedings claiming “an order in the nature of an injunction” prohibiting the respondents from offering each of the properties for sale by way of an internet auction on the platform of the website of Wilsons on 22 ^nd February, 2023 at 4.00 p.m. “and any such further offer for sale of the aforementioned property” and damages for misrepresentation, slander of title, trespass, breach of constitutional rights, negligence and/or unlawful acts on the part of the respondents, their servants or agents, or any of them.

22 . On 20 ^th February, 2023 – by leave of the chancery list judge – the appellant issued a motion returnable for 22 ^nd February, 2023 by which it sought interlocutory orders in the terms of the general indorsement of claim...