McAteer v Fried

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Mark Sanfey
• Judgment Date: 06 April 2021
• Neutral Citation: [2021] IEHC 249
• Year: 2021
• Docket Number: [Record No. 2014/4723 P]

BETWEEN

MICHAEL MCATEER, AENGUS BURNS, ULSTER BANK IRELAND LIMITED

AND

PROMONTORIA (ARAN) LIMITED

PLAINTIFFS

AND

LASZLO FRIED, LAZLO JEWELLERS LIMITED, JASZAI LIMITED

AND

CLADDAGH JEWELLERS LIMITED

DEFENDANTS

[2021] IEHC 249

Mark Sanfey

[Record No. 2014/4723 P]

THE HIGH COURT

JUDGMENT of Mr. Justice Mark Sanfey delivered on the 6th day of April, 2021.

Introduction

1 In these proceedings, the first and second named plaintiffs, Michael McAteer and Aengus Burns, were appointed by the third named plaintiff as joint receivers by a deed of appointment of 19th April, 2013 in respect of certain charged properties at 25 Mainguard Street, Galway. By a further deed of appointment of that date, the third named plaintiff appointed the first named plaintiff, Mr. McAteer, as receiver over properties at 20 William Street, Galway. These appointments were made in respect of facilities – to which I will refer to in more detail below – which were transferred to the fourth named plaintiff by the third named plaintiff by a global deed of transfer and deed of conveyance and assignment of 12th March, 2015. The fourth named plaintiff was substituted in place of the third named plaintiff by way of “Receiver Novation Deeds” for the purposes of the continued appointment of the receivers.

2 By a plenary summons of 23rd May, 2015, the first and second named plaintiffs sought various reliefs against the defendants, including a series of injunctive reliefs to restrain the defendants from preventing or interfering with the receivers from carrying out their roles in relation to the properties, and in particular from trespassing on the properties and collecting rents in connection with them. The third named plaintiff also claimed judgment against the first named defendant in respect of a facility which had been offered to him as I will outline below. A separate defence and counterclaim was delivered by the first and third named defendants, and by the second and fourth named defendants, on 4th September, 2015. The plenary summons was subsequently amended so that the claim for judgment against the first named defendant is now pursued by the fourth named plaintiff, and an amended statement of claim was delivered on 21st June, 2018. An amended defence and counterclaim was delivered by the first and third named defendant on 8th January, 2019.

3 The application before me arises on foot of a notice of motion issued on 7th October, 2019 on behalf of the plaintiffs. The reliefs sought in the notice of motion are as follows: -

“(1) Judgment as against the First Named Defendant in favour of the Fourth Named Plaintiff in the sum of CHF 6,117,076.80 Swiss Francs and USD $558.81 together with interest pursuant to contract.

(2) Interest pursuant to statute.

(3) An Order against the First and Third Named Defendants for an account of all rents and payments received by them from any party including but not limited to the Second and Fourth Named Defendants, their servants or agents since 19 April 2013 in respect of 20 William Street Galway and 25 Mainguard Street Galway and an Order directing the First and Second Named Defendants to pay same to the First Named Plaintiff forthwith in respect of the William Street property and the First and Second Named Plaintiffs forthwith in respect of the Mainguard property.

(4) In the alternative, judgment as against the First and Third Named Defendants in favour of the First and Second Named Plaintiffs in the sum of such rents or payment as they have received in respect of the properties identified at paragraph 3 ante.

(5) An order directing the tenants of 20 William Street Galway and 25 Mainguard Street Galway to make full payments of rents directly to the First and Second Named Plaintiffs until such time as the First and Second Named Plaintiffs take control of the properties.

(6) Insofar as it is necessary to do so an Order appointing the First and Second Plaintiffs as receivers over all future rents and payments paid by any occupants of the properties identified at paragraph 3 above.

(7) An Order restraining the Defendants, whether by their servants and/or agents from preventing, impeding and/or obstructing the First and Second Named Plaintiffs, their servants or agents from collecting the rents and payments associated with the William Street and Mainguard Street properties.

(8) Such further or other order as this Honourable Court shall deem fit.

(9) The costs of and incidental to these proceedings.”

4 The matter was heard before me along with an application for judgment against the defendants in related proceedings entitled “The High Court, Record No. 2019 No. 341 S, between Promontoria (Aran) Limited, (Plaintiff) and Jaszai Limited and Laszlo Fried (Defendants)”. I will refer to these proceedings as ‘the summary proceedings’, and that application will be the subject of a separate judgment which should be read in conjunction with the present judgment.

5 The issues between the parties in the present proceedings were set out extensively in an exchange of affidavits, and also in lengthy written submissions delivered by both sides. In order to understand the context of the issues, it is necessary to set out the background to the dispute in some detail. What follows therefore is a broad outline of the matters canvassed in the affidavits, which is not intended to be exhaustive, but rather to facilitate an understanding of the issues of law which the court has to decide.

The affidavits on behalf of the Plaintiffs

6 The application as regards the reliefs sought by the receivers is grounded upon the affidavit of the first named plaintiff of 4th October, 2019. The deponent refers firstly to a facility letter of 21st December, 2009 (‘the Jaszai facility’), by which the third named plaintiff offered the third named defendant (‘Jaszai’) loan facilities in the following amounts:

“(a) €290,000 by way of an overdraft facility for the purpose of providing working capital.

(b) Continuation of an existing demand loan facility in the sum of Swiss Francs equivalent to €7,000,000 the balance on [sic] which was €7,558,537 as of the date of the facility letter. At all material times, the demand loan facility was held in Swiss Franc (CHF). The balance as of the date of the Facility Letter was CHF 11,294,500.

(c) $25,000 by way of an overdraft facility for the purpose of providing working capital.” [Paragraph 3 of affidavit]

7 The Jaszai facility is stated to be secured by a deed of charge between the third named plaintiff and Jaszai in respect of the property at 25 Mainguard Street, Galway (‘the Mainguard property’). The deed provides for the appointment of receivers over the charged property, the assignment, transfer, sub-mortgage, sub-charge or otherwise grant of interests in the property, and also provides for a negative pledge by Jaszai that it would not without the bank's prior written consent “…grant or agree to any lease, tenancy, licence or right of occupation (whether shared or otherwise) affecting any part of the mortgaged property…”.

8 It is averred that Jaszai “failed to comply with the repayment terms of this facility and thereby defaulted on the said facility” [paragraph 6].

9 The first named plaintiff avers that, by a facility letter of 29th March, 2010 (‘the Laszlo Fried facility’), the third named plaintiff “…agreed to advance the First Named Defendant loan facilities in the amounts of (a) Swiss Franc (CHF) 7,318,850 (the then Euro equivalent of which was €5,141,808) and (b) €485,000”. It is asserted that this facility was secured, inter alia, by a deed of mortgage between the third named plaintiff and the first named defendant of 15th April, 2003 under which the property at 20 William Street, Galway was charged. This deed of mortgage contained terms similar to those in respect of the charge over the Mainguard property, including the negative pledge clause.

10 The first named plaintiff avers that the Jaszai facility and the Laszlo Fried facility were transferred to the fourth named plaintiff by way of global deed of transfer and deed of conveyance and assignment of 12th March, 2015, and that by way of “Receiver Novation Deeds” dated 12th March, 2015, the fourth named plaintiff was substituted in place of the third named plaintiff for the purposes of the appointment of the receivers. The first named plaintiff avers that he and the second named plaintiff carried out their obligations as receivers over the securities relating to the two facilities “as if the fourth named plaintiff was the original party to the said deeds of appointment”.

11 The deponent avers that, on or around 23rd February, 2012, the third named plaintiff was provided with a copy of a purported lease entered into between the third and fourth named defendants of the Mainguard property, and that on or around 29th April, 2013, the third named plaintiff was provided with a purported lease entered into between the first and second named defendants in respect of the ground floor of the William Street property. It is further averred that, from the date of the appointment of the receivers in April 2013 “until in or around 12th August, 2013”, the fourth named defendant discharged sums in respect of its occupancy of the Mainguard property, and that in the same period, the second named defendant discharged sums in respect of its occupancy of the William Street property.

12 However, by letter of 12th August, 2013, solicitors acting on behalf of the receivers and the third named plaintiff wrote to the fourth named defendant and advised it that the purported lease of the Mainguard property was invalid, and requested it to surrender vacant possession of the property within one month. By a further letter of the same date, solicitors acting on behalf of the first and third named plaintiffs wrote to the second named defendant advising it that the purported lease of the William Street property was invalid,...