O'Reilly and Another v Promontoria (Finn) Ltd and Others
| Jurisdiction | Ireland |
| Judge | Ms. Justice Faherty |
| Judgment Date | 17 October 2023 |
| Neutral Citation | [2023] IECA 250 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Appeal Number: 2022/147 |
[2023] IECA 250
Donnelly J.
Faherty J.
Pilkington J.
Appeal Number: 2022/147
THE COURT OF APPEAL
Judgment of Ms. Justice Faherty dated the 17 th day of October 2023
. This is the plaintiffs' appeal against the judgment and Order of the High Court (Egan J.) dated 11 May 2022 wherein the court refused to grant injunctive relief to the plaintiffs. The plaintiffs had sought interlocutory orders that the defendants deliver up possession of two properties in County Meath and/or restraining the defendants from selling or marketing the properties. Egan J. (hereinafter “the Judge”) determined that the plaintiffs had not raised a fair issue to be tried in respect of any of the five separate issues they had advanced (which themselves were divided into numerous sub-issues). She thus determined that the plaintiffs had failed to pass the first hurdle for interlocutory injunctive relief, the test for such relief having been refined by O'Donnell J. (as he then was) in Merck Sharpe and Dohme Corporation v. Clonmel Healthcare [2019] IESC 65. As O'Donnell J. made clear, the two relevant factors are (1) the fair issue or serious issue to be tried (without which no interlocutory injunction could ever be granted) and (2) whether the balance of convenience (or the balance of justice) is in favour of or against the grant of the interlocutory injunction sought, with the adequacy of damages being considered as part of that balance rather than as a separate component of the test.
. The Judge went on to note that the balance of convenience was against the granting of the first relief sought by the plaintiffs. In respect of the second relief, she considered that the balance of convenience was evenly balanced between the parties. In such circumstances, she determined that had she been satisfied that the plaintiffs had raised a fair issue to be tried, she would have granted the plaintiffs the second interlocutory relief on the basis of undertakings which they had tendered to the court for the first time during the hearing of the application. However, as no fair issue to be tried had been established, this did not ultimately arise.
. Thereafter, the matter was listed on 5 May 2022 before the High Court for the purpose of dealing with costs and ancillary orders. On that date, the plaintiffs also sought interim relief pending an appeal to this Court.
. On 11 May 2022, Egan J. delivered an ex tempore judgment and, in summary, made orders in the following terms:
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(i) There would be “No Order” as to the plaintiffs' costs of the interlocutory injunction application.
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(ii) The defendants' costs of the injunction application would only be costs in the cause.
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(iii) The cost of both parties of the supplemental hearing of 5 May 2022 to be costs in the cause.
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(iv) refusing the plaintiffs' application for an interim injunction pending the bringing of an appeal.
. Furthermore, on the application of the plaintiffs, the Judge fixed directions for the prosecution of the proceedings.
. The background to all the foregoing is as follows:
. By a loan facility dated 6 April 2006, Ulster Bank Limited (“Ulster Bank”) advanced the sum of €262,000 (“the First Facility”) to the plaintiffs which was secured by a mortgage (“the First Mortgage”) dated 8 September 2006 over a property in County Meath (hereinafter referred to as “the First Property”). By a loan facility dated 21 June 2006, (“the Second Facility”) Ulster Bank advanced a further €323,000 to the plaintiffs which was secured by a mortgage (“the Second Mortgage”) dated 29 June 2007 over a different property in County Meath (hereinafter “the Second Property”). The interest of Ulster Bank in the First and Second Mortgages was duly registered as a burden on the respective folios.
. It is not disputed that the monies were advanced to the plaintiffs pursuant to the aforesaid loan facilities, nor that the plaintiffs defaulted on their repayment obligations.
. On 25 February 2013, Ulster Bank wrote to the plaintiffs in connection with the Second Facility demanding repayment of €332,645.96. No repayment was made by the plaintiffs on foot of this demand. In or about 2013, receivers were appointed by Ulster Bank over the Second Property.
. Pursuant to a Global Deed of Transfer dated 29 September 2015, the loan facilities were transferred by Ulster Bank to the first defendant (“Promontoria”) and Promontoria's interest in the mortgages was duly registered as a burden on the respective folios.
. By Deed of Discharge dated 8 January 2016, the receivers previously appointed over the Second Property were discharged. On the same date, Promontoria appointed the third defendant as receiver over the Second Property and the plaintiffs were apprised of the appointment of the third defendant as receiver by letter dated 25 February 2016.
. On 14 March 2017, letters were sent by Promontoria to the plaintiffs in respect of the First Property demanding €284,652.00 by close of business on 21 March 2017. Again, there is no dispute but that the plaintiffs did not make repayment on foot of that demand.
. On 15 May 2017, the second defendant was appointed as receiver over the First Property. Due to a typographical error in the instrument of appointment, the second defendant was discharged as receiver by Deed of Discharge dated 9 October 2019. On the same date, he was re-appointed as receiver over the First Property and by letter dated 9 October 2017, the plaintiffs were informed of the re-appointment of the second defendant.
. The within proceedings issued by way of plenary summons on 7 September 2020.
. The plaintiffs' notice of motion for interlocutory relief issued on 14 September 2020 wherein they sought an injunction directing the defendants to deliver up possession of the Properties and/or an injunction restraining the first, second and third defendants from marketing for sale or selling the Properties. The application was grounded on the affidavit of the second plaintiff sworn 10 September 2020.
. At para. 7 of his affidavit, the second plaintiff averred that there was no lawful basis for the purported appointment of the second and third defendants as receivers over the respective properties and that even if the receivers were validly appointed, they had no substantive right to possession or to exercise any power of sale over the properties. At para. 8 it was averred that Promontoria had not provided any meaningful proof that the plaintiffs had a liability to Promontoria and any such claimed liability was denied.
. Without prejudice to those general denials, at para. 12, the second plaintiff referred to a report obtained from Mr. Eddie Fitzpatrick of “BANKcheck” which, the second plaintiff deposed, “demonstrates that there has been over-charging of interest in the sums of €58, 987.33 and €73, 050.56 respectively in respect of the Loan Accounts”. He goes on to state:
“13. As appears from this report, the interest rate for both Loan Accounts was governed by the 'ECB rate plus 1.35% and, in Mr. Fitzpatrick's view, the ‘ECB rate’ being applied by [Ulster Bank] was the ‘Main Refinancing Operations Minimum Bid Rate’, which rate ceased to exist and/or operate from 9 th October 2008.
14. However, notwithstanding the aforesaid, I say that it appears that [Ulster Bank] nonetheless, thereafter, unlawfully sought to calculate interest by reference to the ‘fixed rate’ tender rate of the ECB Main Refinancing Operations, which it had no legal or contractual right to do so.
15. Therefore, I say and am advised that, where such a breach of contract has occurred, it would be unconscionable for [Ulster Bank], (and any/or any valid assignee) and/or said parties would be estopped from seeking to claim any interest on the Loan Accounts subsequent to 9 October 2008, hence the figures of €58,987.33 and €78.050.56, which equal a total sum of €132,037.89.
16. Alternatively, I say and am advised that [Ulster Bank] and/or any valid assignees would be limited to a margin of 1.35%, which (itself) leads to overcharging of sums of €17, 950.84 and €22,069.90 respectively, which equal a total of €40,020.74.”
. Mr. Fitzpatrick in his report stated that whilst “there is no clarity over which ECB rates was being used by way of reference (either in the main body of the facility letter or the general terms and conditions)…” he could confirm based on the statements that the rates being applied by the Bank was the “Main Refinancing Operations Minimum Bid Rate” which, Mr. Fitzpatrick said, would have been the key reference rate for tracker products at the time. Mr. Fitzpatrick went on to advise as follows:
“It is the client's instruction that the ECB rate was to be used for the purpose of interest calculation is the Main Refinancing Operations Minimum Bid Rate which ceased to exist from 9 October 2008 (to be replaced by what was known as a fixed rate tender and therefore the argument is that the reference rate from that point onwards is Zero percent (indicating a total rate of 1.35%, being the applicable margin)”.
. Essentially, the plaintiffs' argument is that the MRO minimum bid rate ceased to exist on 9 October 2008 and that, thereafter, the Bank unlawfully sought to calculate interest by reference to the “fixed rate” tender rate of the ECB's main refinancing operations which, the plaintiffs contend, the Bank had no legal or contractual entitlement to do so. They claim that as a result of this breach of contract, the Bank and Promontoria are estopped from seeking to claim any interest subsequent to 9 October 2008 or, alternatively, are limited to recovering purely the margined rate of 1.35%.
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