Pat Ryan v Dengrove Dac

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray
• Judgment Date: 17 February 2021
• Neutral Citation: [2021] IECA 38
• Date: 17 February 2021
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No.: 2020/222

Between

Pat Ryan

Plaintiff/Appellant

and

Dengrove Dac

Respondent

Between

Pat Ryan and Phil Monaghan

Plaintiffs/Appellants

and

Dengrove Dac and Ken Tyrell

Defendants/Respondents

[2021] IECA 38

Faherty J.

Haughton J.

Murray J.

Court of Appeal Record No.: 2020/222

High Court Record No.: 2018/1872 P & 2020/4756 P

THE COURT OF APPEAL

CIVIL

Interlocutory relief – Injunctive relief – Sale of secured assets – Appellants seeking injunctive relief – Whether the respondent should be precluded from exercising its rights under the relevant security documentation

Facts: The High Court (Twomey J) refused the ‘receiver injunction’ sought by the appellants, Mr Ryan and Mr Monaghan ([2020] IEHC 533). The appellants appealed to the Court of Appeal. The appellants did not object in principle to the sale of the secured assets. What both appellants objected to was the sale of those assets by a receiver in the particular context that presented itself. Central to that context was the fact that the parties to the first of the actions had, following the commencement of the trial of the action, entered into a settlement agreement. The appellants said that this agreement remained in force. However, they also said that if that agreement was not in force, the consequence was that the trial of that action must resume. This, it was their contention, leaned heavily in favour of the grant of the injunctive relief they claimed. This was said to be the case because there was a significant dispute between the parties as to the basis on which the amount outstanding on the relevant facilities was determined. On the appellants’ account, the sum properly charged by the relevant securities was in the region of €17.3M and they would be in a position to discharge that sum, and thereby obtain possession of the charged assets. On the interpretation of the documents urged by the respondent, Dengrove DAC (Dengrove), the amounts in issue exceeded €430M. In those circumstances, it was said, to enable the respondent to obtain the benefit of the appointment of the receiver was, in effect, to deprive the appellants of their equity of redemption before the dispute between the parties as to the sum charged on the assets had been duly determined at a full hearing.

Held by Murray J that in circumstances where (a) the appellants had not on the evidence they had tendered to the court established that there would actually be any loss if the receiver proceeded as he proposed, (b) they had laid no foundation for the suggestion that the receiver would not be good for such loss as might arise, (c) they had not identified a likely cause of that loss for which Dengrove (but not the receiver) would be legally responsible, (d) on their own case the financial loss that would arise were the property disposed of at an undervalue was limited and (e) they had not established that Dengrove would be unable to discharge damages awarded within the limited range likely to present itself, it was impossible to see why Dengrove should be precluded from exercising its rights under the relevant security documentation. Murray J held that this was the case irrespective of whether Dengrove’s financial loss if an injunction was granted could be quantified and recovered. Murray J held that the onus was on the appellants to establish that the circumstances were such as to merit injunctive relief in the first place, and this they had failed to do.

Murray J held that the trial judge did not err in refusing the application for interlocutory relief, and that it was proper in the circumstances to order costs in full against the appellants.

Appeal dismissed.

UNAPPROVED

JUDGMENT of Mr. Justice Murray delivered on the 17 ^th day of February 2021

The issue

1 . In the course of the judgment giving rise to this appeal, Twomey J. referred to the relief sought by the appellants — and refused by the Court — as a ‘ receiver-injunction’. Applications for such injunctions – in this instance restraining the appointment by a creditor of a receiver and/or the undertaking by the receiver of one or more actions vis a vis secured assets – are not uncommon. Where arising in the context of commercial loans secured by commercial assets, they are often refused. In such disputes, damages will generally be an adequate remedy, and the appointing institution and/or receiver will frequently be good for any award made against them. Generally in a purely commercial dispute of this kind where the parties' interests are exclusively financial, the law adopts the position that they are best left to their respective remedies in damages. The cases of this kind in which there is a particular factor tilting the balance in favour of the claimant such as would justify the making of orders restricting the creditor's freedom of action pursuant to agreed security instruments, tend to be the exception.

2 . It was basically for these same reasons that Twomey J. refused the ‘ receiver injunction’ sought by the appellants in the two cases giving rise to this appeal ( [2020] IEHC 533). While I agree with both his conclusion, and the essential reasons for it, the cases present some unusual features.

3 . Specifically, unlike many applicants for such relief, the appellants do not object in principle to the sale of the secured assets. In fact, the first named appellant (‘Mr. Ryan’) has, in circumstances to which I will return, agreed to a sale and — on one version of the case he advances – still seeks to enforce that agreement. What both appellants object to is thus not the sale of those assets, but their sale by a receiver in the particular context that now presents itself.

4 . Central to that context is the fact that the parties to the first of the above entitled actions had, following the commencement of the trial of the action, entered into a settlement agreement. The appellants say that that agreement remains in force. However, they also say that if that agreement is not in force, the consequence is that the trial of that action must resume. This, it is their contention, leans heavily in favour of the grant of the injunctive relief they claim.

5 . This is said to be the case because there is a significant dispute between the parties as to the basis on which the amount outstanding on the relevant facilities is determined. On the appellants' account, the sum properly charged by the relevant securities is in the region of €17.3M and they will be in a position to discharge that sum, and thereby obtain possession of the charged assets. On the interpretation of the documents urged by the respondent (‘Dengrove’) the amounts in issue exceed €430M. In those circumstances, it is said, to enable the respondent to obtain the benefit of the appointment of the receiver is, in effect, to deprive the appellants of their equity of redemption before the dispute between the parties as to the sum charged on the assets has been duly determined at a full hearing.

The background

6 . The appellants are members of two partnerships — ‘the City Arts Partnership’ and ‘the City Partnership’. The partnerships are the respective owners of two properties at (i) 5–6 City Quay, 2–3 Gloucester Street and 26–30 Moss Street Dublin 2, and (ii) at 1–4 City Quay and 23–25 Moss Street (together ‘the property’). The other members of the partnerships are John, Brian, Niall and Alan McCormack, Paddy Kelly, and Pierse Contracting Limited (now in liquidation). As well as being governed by the partnership agreements, the relations between the partners were the subject of a joint venture agreement entered into between them in December 2003.

7 . Mr. Ryan is entitled to a 25% interest in the City Partnership, and a 12.5% interest in the City Arts Partnership, the members of the partnerships holding the relevant assets as tenants in common. The second named appellant (‘Mr. Monaghan’) avers that he, similarly, is the owner of ‘ in excess of 20%’ of the equity in the properties in question. The profits and losses of both partnerships belong to and are borne by the partners in proportion to their share of each partnership.

8 . The secured assets comprise a significant commercial site, being the last remaining substantial plot of development land along the south city centre quays. Its acquisition was funded by loans advanced by Anglo Irish Bank Corporation and charged by five instruments executed in 2003 upon the interests of the members of the partnerships in the respective assets. Following the establishment of the National Asset Management Agency (‘NAMA’) the loans and securities were transferred to it in March 2011, these being sold by NAMA to Dengrove on January 30 2017. As of now, Dengrove says, the partners have been in default of their obligations under the relevant facilities (which provided that recourse to the partners was several) for a period of more than ten years.

9 . Dengrove contends that the liabilities secured by the relevant charges and securities extend beyond the sums due and owing in respect of those facilities, and capture all of the indebtedness owed to it by each partner (and not just the sums advanced on foot of the specific facilities in issue). Pierse Contracting Limited (‘Pierse’) (which has been in liquidation since 2011), and the Kelly and McCormack families have very significant liabilities to Dengrove which were incurred outside the facility letters. Pierse alone, which has a 27% interest in the partnerships, owes Dengrove €44,226,963.52 and one of the other partners has an outstanding liability of €188,714,125. However, the only indebtedness to Dengrove of the appellants in these proceedings is that arising from the facility letters. The difference between the positions urged by the parties is, in financial terms, stark: as I have noted, on Dengrove's account the amount outstanding is €430M, while according to the appellants it is €17.3M.

10 . Before the institution of the...