McCarthy v McCarthy
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 19 February 2021 |
| Neutral Citation | [2021] IEHC 115 |
| Docket Number | [2019 No. 3888 P] |
| Court | High Court |
| Date | 19 February 2021 |
AND
AND
[2021] IEHC 115
Quinn
[2019 No. 3888 P]
THE HIGH COURT COMMERCIAL
The plaintiffs are receivers appointed over a property at 22 Lansdowne Road, Dublin 4. Their claim is for an order for possession of the property, orders restraining the defendants from attempting to carry on, manage or otherwise interfere with the exercise of their functions as receivers and from continuing in occupation of the property and restraining them from refusing access to the property, and related reliefs.
The defendants assert that they occupy the property pursuant to a tenancy which has not been validly terminated.
This judgment relates to an application for an interlocutory injunction restraining the defendants from remaining on or continuing in occupation of the property and restraining the defendants from refusing access to the property to the plaintiffs.
I have concluded that in the events which have occurred an interlocutory injunction should not be granted and the application will therefore be dismissed.
By a facility letter dated 7 October, 2004, IIB Bank Limited (which later became KBC Bank and is referred to in this judgment as “KBC Bank” or “the Bank”) granted loans to Emerald Properties (Irl) Limited (“Emerald”) amounting to a total sum of €10,750,000. Of this amount a sum of up to €9.5 million was for the purpose of refinancing existing borrowings of an equivalent amount with Anglo Irish Bank Corporation plc (as it was then). The balance was intended for use in respect of renovations of property at 24 Lansdowne Road, and for other financing purposes including the service of interest. The loan was stated to be repayable on demand, and in any event on or before 1 November, 2006.
The defendants are the directors of Emerald. They personally guaranteed the repayment of the loans.
The facility was amended and extended from time to time and ultimately by a facility letter dated 21 June, 2010, the facility was increased to a total amount of €13,271,820, and the maturity date was extended to 1 June, 2011.
The facilities were secured by a legal mortgage granted by Emerald on 1 December, 2004. The properties comprised in the mortgage were four houses at Lansdowne Road, namely numbers 18, 20, 22 and 24, two properties at Lansdowne Park, being properties at the rear of numbers 18 and 22 Lansdowne Road, and three apartments in a development known as The Plantations, Herbert St. These properties had been acquired by Emerald on various dates in 1989 and 1999.
It is clear from the mortgage instrument that the parties envisaged that the properties would be the subject of lettings or tenancies. The mortgage contains provisions regarding the treatment of rent, operation of a rent account, notices to tenants, and rent collectors.
The mortgage is expressed to extend in the charging clause (Clause 3) to Rent and Rent Accounts.
Clause 7 of the mortgage contains standard covenants on the part of the mortgagor, including at Clause 7.19 that the mortgagor will: -
“not lease, not without first obtaining the written consent of the Bank, give or agree to give any licence or tenancy affecting any part of the Secured Assets nor exercise the powers of leasing or agreeing to lease or of accepting or agreeing to accept surrenders conferred upon a mortgagor by statute or otherwise or enter into or permit any parting with possession or sharing agreement whatsoever in respect of the Secured Assets”.
The mortgage contains standard provisions concerning enforcement on the occurrence of a loan default and conferring on the bank the power to appoint a receiver at any time after the security should become enforceable.
It is not disputed that the mortgage is a valid legal mortgage containing these provisions or that the plaintiffs were validly appointed receivers. Nor is it disputed that the plaintiffs have the powers conferred on them by the mortgage, which include taking possession of, securing and selling the charged properties, save for the dispute in these proceedings as to the existence and terms of the tenancy of No. 22 Lansdowne Road asserted by the defendants.
In different proceedings before this court issues have been raised by Emerald and the defendants concerning repayment of the loan and I have delivered separately my judgment granting an application for summary judgment. It is not in dispute that the extended maturity date of 1 June, 2011, stipulated in the last amendment to the facility passed without repayment of the debt.
On 7 August, 2014, the bank served a demand on Emerald for the sum of €12,238,348.16, which has not been repaid.
On 8 August, 2014, the bank served a demand on the defendants pursuant to the guarantee, also for the sum of €12,238,348.16, which sum has not been paid.
On 11 August, 2014, the bank appointed the plaintiffs as joint receivers of all of the properties charged by the mortgage. At that time the defendants were residing at the property at No. 22 Lansdowne Road.
In November 2018, the loans and the mortgage were sold by KBC to Beltany Property Finance DAC (“Beltany”), and a Deed of Transfer was executed on 30 November, 2018, to give effect to that sale.
On the same day, there was executed a Deed of Novation substituting Beltany for KBC in relation to the receivership appointments.
On 4 April, 2019, Beltany gave notice to Emerald and its directors of the assignment of the loans and called for payment of the balance then due.
On 28 May, 2019, Beltany notified the defendants of the assignment and called on them to pay the amount of €12,308,785 pursuant to the guarantee.
On 17 May, 2018, the plaintiffs' solicitors, Messrs Kane Touhy, wrote to the defendants informing them that the joint receivers wished to secure vacant possession of No. 22 Lansdowne Road. They continued: -
“We are instructed that you currently occupy the premises, although it is unclear on what basis you do so. From our instructions, you occupy without written consent, and without paying rent, and that you have no legal entitlement to remain in occupation”.
Kane Touhy called on the defendants to hand up vacant possession within 21 days from the date of that letter, failing which the plaintiffs reserved their rights to take such steps as were necessary to secure vacant possession. This is the first demand for possession.
On 18 May, 2018, Crowley Millar solicitors replied on behalf of the defendants stating that the defendants have kept the bank informed of the basis upon which they occupied No. 22 Lansdowne Road since 2012. They continued: -
“…I note the fact that despite your clients, both KBC and the receivers, have had full knowledge of the position since at least KBC placed the company into receivership in 2014, this is the first occasion on which a demand has been made that the McCarthy's vacate the property. Leaving aside for now the validity of the demand, my clients assert their right to mitigate any loss and damage caused by KBC's acts and the conduct of the receivership”.
Crowley Millar continued by stating that their clients had instructed them to offer a sum of €2.3 million for an adjoining property, namely No. 18 Lansdowne Road.
On 7 March, 2019, Kane Touhy wrote again to the defendants noting that they remained “unlawfully in occupation of 22 Lansdowne Road” and warning them that they had received instructions to proceed to secure vacant possession of the property.
On 21 March, 2019, the first defendant emailed the first plaintiff referring to Kane Touhy's letter of 7 March, 2019, expressing his surprise at the threat of legal proceedings in circumstances where he said that he believed there was engagement in relation to an offer by him to buy the bank's loans, on which he stated he was awaiting a reply. No assertion of a tenancy was made.
On 3 April, 2019, Kane Touhy wrote again to the defendants. They made no reference to the replies made to their previous letters. They notified the defendants that they had been instructed to issue court proceedings to secure vacant possession of property.
On 16 May, 2019, these proceedings were commenced by plenary summons. The first relief claimed is an order granting the plaintiffs possession of the property described in the Schedule, being premises known as 22 Lansdowne Road and 99 Lansdowne Park. The premises at 99 Lansdowne Park are not the subject of this injunction application.
The plaintiffs also claim orders restraining the defendants from interfering with the exercise by the plaintiffs of their functions as joint receivers over the property, restraining the defendants from remaining on or continuing in an occupation of the property, and from refusing access to the property to the plaintiffs.
Further reliefs sought include orders directing the defendants to deliver up the keys, alarm codes, locks and other security and access devices and equipment or information, to account to the plaintiffs for rents and other licence fees received since the date of appointment of the receivers, and an order restraining the defendants from preventing, impeding or obstructing the plaintiffs from taking possession of, getting in and collecting the rents and licence fees associated with the property.
On 10 July, 2019, the plaintiffs issued a motion, returnable for 15 July, 2019, seeking an order entering these proceedings in the Commercial List and initial directions and an injunction restraining the defendants from remaining on or continuing in occupation of the property and from refusing access to the property to the plaintiffs.
On 15 July, 2019, the...
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