Pepper Finance Corporation (Ireland) DAC v Gabriel Petrut and Margaret Hanrahan

• Jurisdiction: Ireland
• Judge: Ms. Justice Ní Raifeartaigh
• Judgment Date: 14 October 2021
• Neutral Citation: [2021] IECA 257
• Court: Court of Appeal (Ireland)
• Docket Number: High Court Record No. 2020/6888P CoA Record No:2020/268

Between

Pepper Finance Corporation (Ireland) DAC

Plaintiff/Respondent

and

Gabriel Petrut and Margaret Hanrahan

Defendants/Appellants

[2021] IECA 257

Whelan J.

Ní Raifeartaigh J.

Binchy J.

High Court Record No. 2020/6888P

CoA Record No. 2020/271

CoA Record No:2020/268

THE COURT OF APPEAL

Possession of property – Surrender – Interlocutory injunction – Appellants appealing against a decision granting orders for the immediate surrender of possession and control of the properties to the respondent – Whether the trial judge was in error in proceeding to hear the case in the absence of the appellants

Facts: The appellants, Mr Petrut and Ms Hanrahan, appealed to the Court of Appeal against a decision of the High Court (Reynolds J) on the 25 November 2020 granting orders in respect of two premises: 31 Richmond Avenue and 21 Little Mary Street, both of which were addresses in Dublin. They said that they were tenants in those properties and that they paid rent to Mr Beades. The orders were for the immediate surrender of possession and control of the properties to the respondent, Pepper Finance Corporation (Ireland) DAC, together with certain related orders. The two appellants were not present for the hearing on the 25 November 2020. Their grounds of appeal related to the fact that Reynolds J proceeded with the hearing of an application for an interlocutory injunction in their absence.

Held by Ní Raifeartaigh J that Mr Petrut provided no explanation for his failure to appear at the hearing on the 25 November 2020 despite having entered an appearance to the proceedings. She found that all of the evidence before the Court suggested that there was a history on the part of the respondent in trying to engage with the persons in occupation of the two premises, and that there was little appetite for reciprocal engagement. She held that an adjournment of a hearing date is not a matter of right on the part of a party to litigation; it is incumbent upon the parties themselves to find a way of informing the court that they are seeking an adjournment. Ní Raifeartaigh J held that even if Ms Hanrahan was not in sufficiently good health to attend court herself, she could have found some person to attend court on her behalf; or indeed, if she could not do that, she could have emailed the court office. Ní Raifeartaigh J held that when medical explanations are put forward as a reason for non-attendance in court, it is customary and necessary to provide adequate medical evidence and none had ever been forthcoming on behalf of Ms Hanrahan. Ní Raifeartaigh J noted that Mr Petrut made no attempt to seek an adjournment and provided no explanation to the Court for his failure to do so. She noted that neither of the appellants had claimed that they were unaware of the Court hearing date. She held that a litigant is not entitled to fail to attend or dispatch a letter to the other side, and then complain that the court failed to grant an adjournment. She held that something more is required from them before they can complain of a breach of natural justice. She noted that neither of the appellants put forward any evidence in support of their grounds of appeal that they were not properly informed that the application was a physical hearing and not a remote hearing as noted on the Courts website; and/or by not facilitating the defendants with an adjournment in line with the HSE guidelines as applied to other litigants. She held that the trial judge was not in error in proceeding to hear the case in the absence of the two appellants.

Ní Raifeartaigh J held that the appeal would be dismissed. She held that the respondent was entitled to an order for costs against the appellants in respect of the appeal.

Appeal dismissed.

NO REDACTION NEEDED

JUDGMENT of Ms. Justice Ní Raifeartaigh delivered on the 14th day of October, 2021

Nature of the case

1 . This is an appeal against a decision of the High Court (Reynolds J.) on the 25 November 2020 granting orders in respect of two premises; 31 Richmond Avenue and 21 Little Mary Street, both of which are addresses in Dublin. The Court was told that Mr. Petrut resides in 31 Richmond Avenue and that Ms. Hanrahan resides in 21 Little Mary Street. They say they are tenants in these properties and that they pay rent to Mr. Jerry Beades. The orders were for the immediate surrender of possession and control of the properties to the respondent together with certain related orders as set out in further detail below.

2 . The two appellants were not present for the hearing on the 25 November 2020. Their grounds of appeal relate to the fact that Reynolds J. proceeded with the hearing of an application for an interlocutory injunction in their absence in the circumstances which will be described below.

The orders made on 25 November 2020

3 . On the 25 November 2020, Reynolds J. ordered that the defendants and each of their servants and/or agents and all other persons having notice of the said order

• 1) immediately surrender possession and control of the property named in the title of each set of proceedings; and

• 2) immediately deliver up to plaintiff/respondent all keys alarm codes and/or security and access devices in relation to the property.

4 . The injunction orders also included various injunctions restraining the defendants and each of them, their servants and/or agents and all other persons having notice of the said order from impeding or obstructing the plaintiff in taking possession, securing the property, selling or renting the property or trespassing or interfering without the prior written consent of Pepper, collecting or attempting to collect any rent, holding themselves out as having any entitlement to sell, rent or otherwise grant any entitlement to possession, making contact with any current or prospective tenants or purchaser of any portion of the property without the written consent of Pepper.

5 . It was further ordered that Pepper's solicitors be at liberty to notify the making of the order to the defendants their servants or/agents and all other persons by hand delivery and ordinary pre-paid post. The order was stayed until the 14 January 2021. A further stay was refused by the Court of Appeal on the 15 January 2021.

The premises the subject of the orders made on the 25 November 2020

6 . The two premises at issue in these appeals have been the subject of long-standing litigation. The original proceedings date back many years and originally arose out of a bank debt incurred by Mr. Beades; the properties were mortgaged by him to IIB Homeloans Limited (hereafter “IIB”), a predecessor in title to the plaintiff/respondent, on the 12 June 2003 and arose by reason of a loan facility letter dated 20 May 2003 whereby a sum of €1,200,000 was advanced to Mr. Beades.

7 . Defaults having arisen in relation to compliance with the terms of the said mortgage, IIB instituted proceedings by way of special summons on the 29 November 2006 seeking possession of the said secured properties. The possession proceedings came on for hearing before Dunne J. in the High Court and on the 23 June 2008 an order was made requiring Mr. Beades to surrender possession of the said respective properties to IIB, the mortgagee. It will be noted that this was over 13 years ago.

8 . By notice of appeal dated the 16 July 2008, Mr. Beades appealed the said order for possession to the Supreme Court. That appeal was ultimately heard on the 29 April 2014 and judgment in respect of same was delivered on the 12 November 2014, dismissing the said appeal and affirming the order for possession previously made in the High Court on the 23 June 2008. This was almost 7 years ago.

9 . In the period between the order of Dunne J. in 2008 and the 7 August 2020, there were several changes of ownership of the IIB loan facilities and related securities, which in each case were the subject of substitution orders of the High Court. There has been litigation by Mr. Beades concerning issues arising from the transfer of title in this regard, none of it successful. Ultimately the legal estate in the facilities and the mortgages over the properties became vested in the plaintiff/respondent. The latter transaction was the subject of a substitution order made by Twomey J. in the High Court on the 18 November 2020, which order was in turn appealed by Mr. Beades, and which appeal is the subject of a judgment of Binchy J. in this Court, also handed down today.

10 . The deed of mortgage included a clause that the borrower will not without the previous written consent of the lender grant or agree to grant any lease or tenancy. Thus, on its face, it demonstrates a contrary intention (as per s.18(13) of the Conveyancing Act, 1881) in order to derogate from the provision of s.18(1) of that Act. 1 Such a clause is referred to in short-form as a ‘negative pledge clause’.

11 . However, special condition/clause 34 of the facility letter giving rise to the bank debt contained a form of limited and conditional consent to the creation of a tenancy. That provision reads as follows

“The Lender consents to the Borrower creating a tenancy in respect of the premises on the following terms:

• (i) The term of the tenancy must not under any circumstances exceed 1 year. No options to extend such a tenancy will be permitted.

• (ii) The tenancy must be in writing and at an arm's length transaction between the parties.

• (iii) The rent reserved must represent the open market rental of the premises.

• (iv) A solicitor's certified copy of the tenancy agreement must be furnished to the Lender once executed by the tenant. Any extension of a new tenancy must comply with the above provisions.”

12 . The consent is therefore conditional upon a number of conditions being satisfied. Further, the tenancy could not last longer than 1 year.

13 . There is a long line of authority that establishes that where consent...