Roderic O'Beirne v Bank of Scotland Plc

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 27 October 2021
• Neutral Citation: [2021] IECA 282
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No. 2018/332

Between:

Roderic O'Beirne

and

Cormac O'Beirne

Respondents/Plaintiffs

and

Bank of Scotland Plc

First Named Defendant

and

Pentire Property Finance DAC

Appellant/Second Named Defendant

[2021] IECA 282

Whelan J.

Noonan J.

Pilkington J.

Court of Appeal Record No. 2018/332

High Court Record No. 2017/11390 P

THE COURT OF APPEAL

Interlocutory injunctive relief – Material non-disclosure – Costs – Appellant seeking to set aside interlocutory orders – Whether the respondents had been guilty of material non-disclosure when making the application for interim injunctive relief

Facts: The appellant, Pentire Property Finance DAC (Pentire), appealed to the Court of Appeal from the interlocutory orders of the High Court (Ní Raifeartaigh J) made on 10 July 2018, perfected on 25 July 2018, restraining Pentire from acting on foot of a letter of demand of 8 December 2017 to enforce security held over certain of the properties of the respondents, Messrs O'Beirne, including by the appointment of a receiver. Costs were awarded to the respondents with execution stayed pending the determination of the proceedings. Pentire sought to set aside the interlocutory orders and that the court make an order refusing the application of the respondents for interlocutory injunctive relief as brought by way of notice of motion which issued on 14 December 2017. By notice of appeal dated 3 August 2018, Pentire contended that the High Court judge erred in fact and/or in law in: (1) finding that the respondents had not been guilty of material non-disclosure when making the application for interim injunctive relief; (2) finding that damages were not an adequate remedy for the respondents; (3) her treatment of the proposal made by Pentire to the respondents in open correspondence to dispose of the application for interlocutory injunctive relief; (4) finding that the claim of the respondents gave rise to a necessity for interlocutory injunctive relief; (5) her treatment of the validity of the letter of demand dated 8 December 2017; (6) her treatment of the alleged loss of the title deeds to the secured property; (7) her treatment of the issue of surcharge interest; (8) determining that the balance of convenience lay in favour of granting interlocutory injunctive relief; and (9) awarding the full costs of the application for interlocutory injunctive relief to the respondents.

Held by Whelan J that: (1) the trial judge was correct to find that the allegation of material non-disclosure was not made out; (2) the trial judge was correct in finding that damages were not an adequate remedy for the respondents; (3) the trial judge did not err in her treatment of Pentire’s proposal; (4) the trial judge was correct in finding that the claim of the respondents gave rise to a necessity for interlocutory injunctive relief; (5) the trial judge did not err in finding that there was an issue to be tried concerning the validity of the letter of demand and the extent to which service of the said letter was prompted by the respondents’ requests that the issues of the lost title deeds and surcharge interest be taken into account in the assessment of the sum required to redeem the loan; (6) the trial judge did not err in finding that there was an issue to be tried regarding Pentire’s inability to produce the title deeds and the extent to which Pentire may be liable for same; (7) the trial judge did not err in finding that there was an issue to be tried regarding the enforceability of the surcharge interest clause in circumstances where it was arguable that the clause was a penalty and where the loss of the title deeds had impeded refinancing; (8) the trial judge did not err in determining that the balance of convenience lay in favour of granting the interlocutory injunctive relief; and (9) the trial judge did not err in awarding the full costs of the application for interlocutory injunctive relief to the respondents.

Whelan J held that as the appellant had been unsuccessful on all grounds of appeal, the appropriate order was that the appellant be liable for the costs of the respondents in the appeal when taxed or ascertained in default of agreement. Whelan J held that no stay should be granted in respect of the costs referable to the appeal. Whelan J held that the stay granted by the High Court would otherwise remain undisturbed. Whelan J held that Pepper Finance Corporation (Ireland) DAC, had made out a valid case for its joinder pursuant to O.17, r.4 as a co-defendant/co-appellant with Pentire in the proceedings. Whelan J so ordered its joinder to the intent that Pentire and Pepper were jointly and severally bound by all orders made in respect of Pentire to date or hereby or as may hereinafter be made in the proceedings; the respondents’ costs of the motion to be borne by Pepper and same to be taxed in default of agreement.

Appeal dismissed.

UNAPPROVED

NO REDACTION NEEDED

Judgment of Ms. Justice Máire Whelan delivered on the 27 ^th day of October 2021

Introduction

1 . This is an appeal from the interlocutory orders of the High Court (Ní Raifeartaigh J.) made on 10 July 2018, perfected on 25 July 2018, restraining the appellant, Pentire Property Finance DAC (“Pentire”), from acting on foot of a letter of demand of 8 December 2017 to enforce security held over certain of the respondents' properties including by the appointment of a receiver. Costs were awarded to the respondents with execution stayed pending the determination of the proceedings. Pentire seeks to set aside the interlocutory orders and that this court make an order refusing the application of the respondents for interlocutory injunctive relief as brought by way of notice of motion which issued on 14 December 2017.

Background

2 . The respondents are chartered surveyors and are engaged in business as property investors and managers.

3 . By loan facility letter dated 11 September 2003, Bank of Scotland (Ireland) Limited (“BOSI”) advanced a loan facility in the amount of €630,000 to the respondents secured by a deed of mortgage and charge dated 6 February 2004 over Unit Nos. 4, 5, 6 and 7 at 333/337 Le Fanu Road, Lower Ballyfermot Road, Dublin 10 (“the secured property”). The title deeds (comprising 35 muniments in all) to the secured property were deposited with BOSI's solicitors at that time.

4 . By virtue of an order of the Scottish Court of Session made pursuant to the UK Companies (Cross-Border Mergers) Regulations 2007 and an order of the High Court pursuant to the European Communities (Cross-Border Mergers) Regulations 2008 ( S.I. No. 157 of 2008), the business of BOSI became vested in the first defendant, Bank of Scotland plc (“BOS”), with effect from 31 December 2010.

5 . By loan purchase deed dated 29 November 2014 and deed of conveyance and assignment dated 20 April 2015, the rights, title, interest and benefits of BOS in the loan facility, facility letter (as amended) and mortgage were assigned to Pentire. The respondents were informed by BOS that it had agreed to sell its rights under the loan and security to Pentire by letter dated 19 December 2014. By letter dated 20 March 2015 from BOS, the respondents were informed that the sale was completed and would take effect from 20 April 2015.

6 . Originally the loan facility was for a term of three years with interest payable quarterly and the principal repayable at the end of the term. However, the terms of the loan were varied and extended from time to time including by letter dated 19 February 2007 from BOSI to the respondents and by letters dated 18 January 2011 and 25 November 2011 from BOS to the respondents.

7 . By letter dated 20 November 2012 from BOS, the term of the loan was extended by nine months up to 31 July 2013. It was a term of this amendment that if the loan was not paid by said date, it would attract a surcharge rate of 6%.

8 . By letter dated 16 October 2013, BOS agreed to forebear from seeking repayment until 30 April 2014 to allow the respondents time to raise funds to repay the loan on the condition that the respondents paid to BOS a minimum sum of €3,595 per month up to that date and that the loan be repaid by 30 April 2014.

9 . By letter dated 21 August 2014 from BOS's agent, Certus, the respondents were notified that their account had expired and that the forbearance period had ended. The balance on the account was stated to be €342,574.62.

10 . It is clear from the papers and exhibits that from 2015, the respondents were desirous of refinancing their loans with another institution and redeeming the mortgage with Pentire. Following the transfer of the loan to Pentire in 2015, the respondents continued to pay €3,595 per month to Pentire. They sought to agree a settlement with Pentire's agent, Pepper, without success. The respondents were informed that a balance of €321,981.60 was due and owing and that Pentire was insisting on the full amount of the loan being discharged.

Efforts to redeem mortgage

11 . In or about 2 June 2015, the respondents instructed their solicitors to complete refinancing with Bank of Ireland, from whom they had a loan offer of €350,000. The secured property was intended to be subject of a fixed legal charge in favour of Bank of Ireland. However, in the course of investigation of title, it transpired that Pentire was unable to produce 17 of the 35 title deeds which had been deposited with BOSI's solicitors at the time of creation of the mortgage in 2004. The respondents' solicitors raised the issue of lost title deeds with Pentire inter alia in correspondence dated 18 September 2015, 13 November 2015, 18 November 2015, 15 December 2016 and 25 January 2017. A feature of this case is the stance exhibited by Pentire to its ongoing inability as mortgagee over several years to provide all the muniments of title to the respondents to enable refinancing of the loan to take effect expeditiously and its apparent...