Moylist Construction Ltd v Doheny and Others

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 21 April 2010
• Neutral Citation: [2010] IEHC 162
• Judgment citation (vLex): [2010] 4 JIC 2101
• Court: High Court
• Date: 21 April 2010

[2010] IEHC 162

THE HIGH COURT

[No. 10071P/2009]

Moylist Construction Ltd v Doheny & Ors

BETWEEN

MOYLIST CONSTRUCTION LIMITED

PLAINTIFF

AND

THOMAS DOHENY, DELOITTE & TOUCHE, ULSTER BANK LIMITED AND TOM O'CARROLL

DEFENDANTS

CONVEYANCING & LAW OF PROPERTY ACT 1881 S19

RSC O.19 r28

HOUNSLOW LONDON BOROUGH COUNCIL v TWICKENHAM GARDEN DEVELOPMENTS LTD 1971 CH 233 1970 3 WLR 538 1970 3 AER 326

AMERICAN CYANAMID CO v ETHICON LTD (NO 1) 1975 AC 396 1975 2 WLR 316 1975 1 AER 504

CAMPUS OIL LTD & ORS v MIN FOR INDUSTRY & ORS (NO 2) 1983 IR 88 1984 ILRM 85

TARA CIVIL ENGINEERING LTD v MOORFIELD DEVELOPMENTS LTD 46 BLR 72 16 CON LR 46

COURTNEY THE LAW OF PRIVATE COMPANIES 2ED 2000 PARA 22.063

LATHIA v DRONSFIELD BROS LTD 1987 BCLC 321

ARDMORE STUDIOS (IRL) LTD v LYNCH & ORS 1965 IR 1

ASTOR CHEMICALS LTD v SYNTHETIC TECHNOLOGY LTD 1990 BCLC 1 1990 BCC 97

BUCKLEY & ORS BUCKLEY ON THE COMPANIES ACTS 14ED 1981

LIGHTMAN & MOSS THE LAW OF RECEIVERS OF COMPANIES 1ED 1986 81

MACJORDAN CONSTRUCTION LTD v BROOKMOUNT EROSTIN LTD 1992 BCLC 350 1994 CLC 581

DE MATTOS v GIBSON 1859 4 DE G & J 276 45 ER 108

SWISS BANK CORP v LLOYDS BANK LTD & ORS 1979 CH 548 1979 3 WLR 201 1979 2 AER 853

LIGHTMAN & MOSS THE LAW OF RECEIVERS & ADMINISTRATORS OF COMPANIES 3ED 2000 PARA 7.056

GALE v FIRST NATIONAL BUILDING SOCIETY 1985 IR 609 1987 ILRM 30 1985/8/2161

O MURCHU T/A TALKNOLOGY v EIRCELL LTD UNREP SUPREME 21.2.2001 2001/20/5410

BARRY v BUCKLEY 1981 IR 306 1981/9/1485

CONTRACT

Building contract

Interlocutory injunction - Receiver - Effect of appointment of receiver on contracts - Status of receiver - Liability of receiver - Priority of rights under building agreement and in mortgage - Purpose of contractual licence in building agreement - Application, inter alia, to compel defendants relinquish possession of land - Reasonable cause of action - Whether appropriate to join firm of employment of receiver as defendant - Whether rights under building agreement has priority over rights in mortgage unregistered at date of building agreement - Whether equitable rights under mortgage and rights of possession under building agreement suspended until determination of building agreement - Whether receiver entitled to possession of subject matter of mortgage where subject matter changed in character - Whether receiver bound by terms of building agreement - Whether serious question to be tried - Whether damages adequate remedy - Whether balance of convenience lies in favour of granting relief - Hounslow LBC v Twikenham GD Ltd [1971] 1 Ch 233 distinguished - American Cyanamid v Ethicon Ltd, [1975] AC 396; Campus Oil v Minister for Industry (No 2) [1983] 1 IR 88 considered - Tara Civil Engineering Ltd v Moorfield Developments Ltd (1989) 46 BLR 72; Lathia v Dronsfield Bros Ltd [1987] BCLC 321; Ardmore Studios (Ir) Ltd v Lynch and Others [1965] 1 IR 1; Astor Chemical v Synthetic Technology [1990] BCLC 1; MacJordan Construction Ltd v Brookmount Erostin Ltd [1992] BCLC 350; De Mattos v Gibson (1858, 1859) 4 De G & J 276; Swiss Bank v Lloyds Bank [1979] 3 WLR 301; Gale v First National Building Soc [1985] IR 609; Barry v Buckley [1981] 1 IR 306 approved - Ó Murchú t/a Talknology v Eircell Ltd (Unrep, SC, 21/2/2001) applied; - Conveyancing Act 1881 (44 & 45 Vic, c 41), s 19 - Rules of Superior Courts (SI No 15/1986), O 19 r 28 - Reliefs sought by plaintiff refused, relief sought be first to third defendants granted (2009/10071P - Laffoy J - 21/4/2010) [2010] IEHC 162

Moylist Construction Ltd v Doheny, Deloitte & Touche, Ulster Bank Limited

Facts the fourth defendant appointed the first defendant to be receiver and manager of all the undertaking, property and assets charged by a mortgage in respect of a construction development. By a separate deed, the third defendant appointed the first defendant as its agent of all the undertaking, property and assets charged by the mortgage, so that he should have the powers conferred on the bank as mortgagee under the mortgage and at law including power to enter and take possession of the property the subject of the mortgage. On his appointment, the first defendant took possession of, and effectively secured, the development. By the time the first defendant was appointed as receiver, the position, according to the first and third defendants, was that construction had to all intents and purposes been completed, although the plaintiff's position was that the works had not been completed under the building agreement. The plaintiff had suspended work on the development as of the 21st December, 2007 until outstanding payments due to it had been made. On the 14th April, 2008, the plaintiff issued a summary summons against the fourth defendant claiming payment of €328,297.88, being the balance of monies due and owing by the fourth defendant to the plaintiff in respect of works done and services rendered. The plaintiff subsequently issued a plenary summons against the defendants claiming, inter alia, (a) that the first and second defendants had been appointed "as the receiver" on foot of the mortgage and had unlawfully entered the development as trespassers and secured the same, thereby expelling the plaintiff, by reason of trespass and of waste the plaintiff has suffered loss and damage; (b) that the trespass was "instructed by" or "colluded in" by the third defendant and the fourth defendant as a result of which the third defendant and the fourth defendant "are also guilty of trespass and waste" and conspiracy to commit trespass and waste, by reason of which the plaintiff had suffered loss and damage; (c) that the first, second and third defendants induced the fourth defendant to commit a breach of contract, namely, the unlawful taking back of the development and the breach of the plaintiff's contractual licence to remain on the development until the completion of the works and/or any lawful termination of the building agreement, it being pleaded that -; (i) the works had not been completed, and (ii) the building agreement had not been terminated and the plaintiff had not operated clause 34(b), so that the building agreement still subsisted and the plaintiff was entitled to continue to possess the development until completion of the works. (d) that there was €328,297.88 due and owing to the plaintiff by the fourth defendant pursuant to architect's/surveyor's recommendations; …and (f) that "as the funder" of the building agreement, the third defendant owed a duty of care to the plaintiff to ensure that the fourth defendant complied with the terms and conditions of the building agreement, but, in breach of that duty of care, failed to ensure that the fourth defendant established the guarantee account and further the third defendant was in breach of its duty of care by failing to ensure that the plaintiff continued in possession of the development until the completion of the works, which the plaintiff alleged had not been completed. The first, second and third defendants brought applications to strike out the plaintiff's claim. The plaintiff also brought a motion seeking an interlocutory injunction restraining the defendants from expelling it from the site.

Held by Ms. Justice Laffoy in making an order striking out the plaintiff's claims against the second defendant as being an abuse of process, an order dismissing the plaintiff's application for an interlocutory injunction against the first, second and third defendants, an order striking out the plaintiff's claims against the first defendant and an order striking out the plaintiff's claims against the third defendant that

The building agreement did not create any equitable right in favour of the plaintiff which would prevent the mortgagee from enforcing its rights under the mortgage.

That the contractual licence in the building agreement existed to enable the plaintiff to fulfil its obligations to the fourth defendant whose obligation, in turn, was to pay the plaintiff for performing its obligations. In reality, the breach of contract for which it was alleged the fourth defendant was liable, was his failure to make payment to the plaintiff. The exercise of its rights under the mortgage by the third defendant, including the taking of possession by the first defendant of the development on foot of the powers in the mortgage did not interfere with the performance by the fourth defendant of his contractual obligation which it was alleged had been breached. when the mortgage had been created, and before the third named defendant was in a position to exercise its statutory rights as the registered owner of a charge under the Registration of Title Act 1964, the third defendant, and a receiver appointed by the third defendant, had a contractual licence to enter, take possession of and manage the development pursuant to the terms of the mortgage.

That the first defendant, as receiver, in exercise of his powers on foot of the mortgage was entitled to enter the development and take possession of it to the exclusion of the plaintiff and notwithstanding whatever rights the plaintiff had against the fourth defendant under the building agreement. Damages would be an adequate remedy for the plaintiff and the balance of convenience favoured the refusal of the injunction.

Reporter: P.C.

1 Judgment of Miss Justice Laffoy delivered on the 21st day of April, 2010.

The background

2 1. The fourth defendant in these proceedings is the owner of a development site comprising eighteen holiday homes known as The Greens at Ballybunion, County Kerry, to which I will refer as "the development". The development is registered on Folio 3855F of the Register of Freeholders County Kerry. The fourth defendant has been registered as owner on the Folio since 29 ^th November, 2006.

3 2. By a mortgage dated 21 ^st June, 2006 made...