McGarry v O'Brien

• Jurisdiction: Ireland
• Judge: Ms. Justice Stewart
• Judgment Date: 12 December 2017
• Neutral Citation: [2017] IEHC 740
• Docket Number: [2017 No. 4686 P]
• Court: High Court
• Date: 12 December 2017

[2017] IEHC 740

THE HIGH COURT

CHANCERY

Stewart J.

[2017 No. 4686 P]

BETWEEN

JAMES MCGARRY

and

LOUISE MCGARRY

PLAINTIFFS

AND

TOM O'BRIEN

DEFENDANT

Practice & Procedure - Interlocutory relief - S. 19 of the Conveyancing Act 1881 - S. 108 of the Land and Conveyancing Law Reform Act 2009 - Right of possession and power of sale - Adequacy of damages - Balance of convenience

Facts: The plaintiffs, in the present proceedings, sought a number of reliefs, including interlocutory relief against the defendant restraining him from interfering in the plaintiffs' ownership and quiet possession of the same. The plaintiffs submitted that the receiver/defendant lacked the requisite powers of possession, sale, and disposal of the relevant properties. The plaintiffs contended that neither the statutory provisions nor the contractual modifications empowered a duly appointed receiver to take possession of, sell, or dispose of the properties. The defendant contended that the matter did not seem to be as absolute as the plaintiffs had contended them to be and that the plaintiffs failed to set out a fair question to be tried for the grant of interlocutory relief.

Ms. Justice Stewart granted the injunctive relief sought by the plaintiffs. The Court was satisfied that the balance of convenience lay with the plaintiffs. The Court concluded that fair questions for trial had been established with regard to the validity of the appointment of the defendant and the precise powers vested in him by the deed of appointment. The Court observed that the plaintiffs' property rights were at stake and damages would not be an adequate remedy for them.

JUDGMENT of the Hon. Ms. Justice Stewart delivered on the 12th day of December, 2017.

1 The plaintiffs in these proceedings seek a number of reliefs, including interlocutory relief against the defendant restraining him and his agents from dealing in any way with two properties in Co. Sligo and from interfering in the plaintiffs' ownership and quiet possession of same. Said reliefs are set out in the plaintiffs' ex parte docket and notice of motion, both dated 24th May, 2017. The defendant purports to act as a receiver on behalf of Havbell DAC, who claim to be the successor-in-title to the mortgagee's interests in the relevant loan agreements created between the plaintiffs and Permanent TSB.

2 The application is grounded upon the affidavit of James McGarry, dated 22nd May, 2017, in which he avers that the above loan agreements were entered into on 5th March, 2006, and were secured by a charge arising from a deed of mortgage dated 1st June, 2009. That charge operates over two properties and was registered in favour of Permanent TSB. Mr. McGarry avers that the mortgage incorporates the Permanent TSB Mortgage Conditions 2002 and that neither of these documents contain a standalone power to appoint a receiver; instead, they rely on a modified version of the statutory powers outlined in the Conveyancing Acts 1881 - 1911. Mr. McGarry avers that these powers do not include a power to possess the properties, sell the properties or run any business operating out of the properties. He avers that Irish Life & Permanent Plc, its successors and its assigns have the power to possess and sell the properties but not a receiver, whose powers relate to the income from the properties. He avers that a company known as Havbell Ltd (now Havbell DAC) claims to have been assigned the security interest in the 2009 mortgage and, on that basis, purported to appoint the defendant as receiver over the properties. He avers that, following said appointment, the defendant sent him a letter dated 1st March, 2017, in which he stated that he had taken possession of the properties and demanded that the plaintiff either remove all items from the properties within seven days or expect the receiver to avail of his rights under the mortgage deed to deal with the goods as his client sees fit. Mr. McGarry disputes the receiver's right to take such steps under the mortgage. He avers that his solicitors have sent correspondence to the defendant requesting documentation to evidence the defendant's entitlements over the property and have yet to be provided with same. He refers to multiple incidents in April, 2017, in which he and the second-named plaintiff discovered that agents of the defendant has forced their way into one of the properties. He refers to one particular incident, in which he observed these agents removing furniture from one of the properties and even damaging same. He avers that these men stated that they were legally entitled to act in this manner and that the defendant was preparing the property for sale. This belief was reiterated in correspondence sent from the defendant's solicitors to the plaintiffs. Mr. McGarry is also aware that the defendant has instructed an auctioneer to place one the properties for sale on the open market. Correspondence is exhibited between the parties, in which the plaintiffs repeatedly demand that possession of the properties be returned, the defendant reiterates that he was validly appointed and both sides threaten legal proceedings. Mr. McGarry highlights that the defendant is acting as a receiver and not as a mortgagee in possession or as a receiver over income. The plaintiff offers to make the usual undertaking as to damages.

3 Karl Smith, a director of Havbell, swore an affidavit dated 31st May, 2017, in which he sets out the background facts, as he believes them to be, that led to the creation of the mortgage and the assignment of the mortgagee's interest to Havbell. He avers that the plaintiffs continually failed to make repayments on the loan, with the result that the loan became immediately repayable and a receiver was eventually appointed. He then exhibits the documents empowering him to appoint a receiver on behalf of Havbell. Even if these documents did not vest him with the requisite power of attorney, Mr. Smith avers that he remained empowered to appoint the defendant by virtue of his position as a company director of Havbell.

4 Tom O'Brien swore an affidavit dated 2nd June, 2017, in which he avers that he was appointed on 23rd September, 2016, to act as receiver over the properties in question and exercise all the relevant powers that come with that position under the mortgage agreement. He avers that the plaintiffs have consistently frustrated the proper administration of the receivership, notwithstanding their awareness of the circumstances of Mr. O'Brien's appointment and their failure to make proper repayments on the loan. He then offers an explanation for the failure to provide the plaintiffs with the documents they requested. Mr. O'Brien disputes the plaintiffs' characterisation of his attempts to gain possession of the properties and of the plaintiffs' attempts to frustrate same. The allegation that Mr. O'Brien's agents damaged chattels is denied. Mr. O'Brien also highlights the repeated requests made by him of the plaintiffs to remove their items from the premises, which have continually gone unheeded.

5 On 14th July, 2017, Mr. Smith swore a second affidavit, to which he exhibits a redacted version of the mortgage sale agreement. He then sets out the reasoning for those redactions and avers that none of the redacted material is relevant to the plaintiffs' case. He also exhibits documentation that remedies an administrative error made when filing exhibits to his first affidavit. Finally, he sets out the details of other loans owed by the plaintiffs to Havbell, which are not involved in these proceedings but remain in default.

6 On 19th July, 2017, Mr. McGarry swore a second affidavit, in which he challenges the statement in the defendant's outline submissions that Havbell intends to discharge the defendant and enter the properties as mortgagee in possession once the defendant has adequately prepared the properties for sale. He exhibits various documents to evidence the suggestion that, contrary to the above submission, the defendant has gone beyond the preparation stage and is actually selling the property.

7 Elaine McNally, a solicitor for the defendant, swore an affidavit on 20th July, 2017, to which she exhibits a copy of Havbell's memorandum and articles of association as they existed in August, 2016, when, on her account, Mr. Smith executed the deed appointing a receiver.

The Plaintiffs' Submissions

8 The plaintiffs submit that the receiver lacks the requisite powers of possession, sale and disposal. They submit that the receivers' powers are set out in the Conveyancing Acts 1881 - 1911, save where those powers are modified by Clause 6.2 of the 2002 Mortgage Conditions. It is alleged that neither the statutory provisions nor the contractual modifications thereto empower a duly appointed receiver to take possession of, sell or dispose of the properties. In making this argument, the plaintiffs set out the provisions of s. 19 of the Conveyancing Act 1881 and s. 108 of the Land and Conveyancing Law Reform Act 2009. In construing those provisions, the plaintiffs rely on Gilligan J.'s decision in The Merrow Ltd. v. Bank of Scotland Plc [2013] IEHC 130.

9 The plaintiffs submit that, as their rights over land are being infringed by a trespass, they have a prima facie entitlement to injunctive relief that can only be refused in exceptional circumstances. In making this argument, they rely on Feeney J.'s decision in McKeever v. Hay [2008] IEHC 145. In particular, it is submitted that no relevance can be found in the responsible party's willingness and ability to pay damages. In this regard, they rely on Clarke J.'s decision in AIB v. Diamond [2012] 3 I.R. 549 and Finnegan J.'s decision in Dellway Investments v. NAMA [2011] 4 I.R. 1. Finally, the plaintiffs reiterate that they are putting the defendant on strict proof of the transfer of security to Havbell, the amount of the mortgage...