Ryan v Dengrove DAC

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 29 September 2020
• Neutral Citation: [2020] IEHC 533
• Date: 29 September 2020
• Court: High Court
• Docket Number: [2018 No. 1872 P]

BETWEEN

PAT RYAN

PLAINTIFF

AND

DENGROVE DAC

DEFENDANT

BETWEEN

PAT RYAN

AND

PHIL MONAHAN

PLAINTIFFS

AND

DENGROVE DAC

AND

KEN TYRRELL

DEFENDANTS

[2020] IEHC 533

Twomey

[2018 No. 1872 P]

[2020 No. 4756 P]

THE HIGH COURT

COMMERCIAL

Interlocutory injunction – Sale – Settlement agreement – Plaintiffs seeking an interlocutory injunction restraining the defendants from selling a commercial/development site pending the trial of the action – Whether the balance of justice favoured granting an injunction prohibiting the defendants from selling the site

Facts: The first plaintiff, Mr Ryan, applied to the High Court for an interlocutory injunction restraining the defendants, Dengrove DAC and Mr Tyrrell, from selling a commercial/development site on the quays in Dublin, pending the trial of the action. It concerned a dispute about the meaning of a Settlement Agreement dated 11th October, 2019 between Mr Ryan and Dengrove. The second plaintiff, Mr Monahan, while not a party to the Settlement Agreement, averred that he was entitled to benefit from its terms. The dispute between the parties related to valuable commercial/development sites situated in Dublin 2. The first of these sites is situated at 1-4 City Quay and 23-25 Moss Street and the second is situated at 5-6 City Quay, 2-3 Gloucester Street and 26-30 Moss Street (collectively, the Site). Mr Ryan purchased the Site, along with Mr Monahan and a number of other experienced property developers, through two partnerships (the Partnerships) with the help of funding in 2007 from Anglo Irish Bank Corporation plc. The rights to those loans and the related security were assigned to Dengrove in 2017. Mr Ryan sought an interlocutory injunction against Dengrove and Mr Tyrell, a receiver appointed by Dengrove over the Site (the Receiver). The purpose of the injunction sought by Mr Ryan was to prevent the Receiver selling the Site. Both Mr Ryan and Dengrove wished to sell the Site. However, the dispute arose because Mr Ryan wanted a sale by the owner of the Site, i.e. the Partnerships, and thus in accordance with the terms of the Settlement Agreement, which made no reference to the Receiver, since he was appointed after its execution. Dengrove wished to sell the Site through the Receiver. Dengrove claimed that it was entitled to appoint a receiver (when it did on the 25th June, 2020), as it claimed that the Settlement Agreement terminated by virtue of the failure to sell the Site in accordance with its terms, by the deadline in that Agreement of the 24th of April, 2020. Within days of the appointment of the Receiver, Mr Ryan obtained an ex parte injunction on the 3rd July, 2020 prohibiting, inter alia, the Receiver from selling the Site. Dengrove sought to have that interim injunction discharged, while Mr Ryan sought its continuation until the trial of the action as he claimed that a receiver-sale of the Site would be at undervalue.

Held by Twomey J that an injunction preventing the Receiver from selling the Site should not be granted because, inter alia: (i) one was dealing with commercial property (‘one of the last remaining office development sites on the south quays, located in a pivotal position where there is an expectation a significant density of development will be sustained’), and not a family home; (ii) money had been owing for over a decade secured on that Site and accordingly the balance of justice favoured the bank/assignee selling the Site and discharging the secured borrowings; (iii) no compelling evidence had been provided that a commercial/development site in Dublin 2 would be sold at undervalue if sold by the Receiver (rather than by the Partnerships); and (iv) even if this were established at the trial, no compelling evidence was adduced to convince the Court that Dengrove would not be able to meet an award of damages for the alleged undervalue if the Site was sold by the Receiver prior to that trial.

Twomey J held that the plaintiffs’ application for an interlocutory injunction would be refused.

Application refused.

JUDGMENT of Mr. Justice Twomey delivered on the 29th day of September, 2020

Summary

1 This case involves an application by a borrower for an interlocutory injunction restraining a receiver from selling a commercial/development site on the quays in Dublin, pending the trial of the action. It concerns a dispute about the meaning of a Settlement Agreement (the “Settlement Agreement”) dated 11th October, 2019 between the first named plaintiff (“Mr. Ryan”) and the first named defendant (“Dengrove”). The second named plaintiff (“Mr. Monahan”), while not a party to the Settlement Agreement, avers that he is entitled to benefit from its terms. The dispute between the parties relates to valuable commercial/development sites situated in Dublin 2 which Mr. Ryan estimates to be worth €60 million. The first of these sites is situated at 1-4 City Quay and 23-25 Moss Street and the second is situated at 5-6 City Quay, 2-3 Gloucester Street and 26-30 Moss Street (collectively, the “Site”).

2 Mr. Ryan purchased the Site, along with Mr. Monahan and a number of other experienced property developers, through two partnerships (the “Partnerships”) with the help of funding in 2007 from Anglo Irish Bank Corporation plc (“Anglo”). The rights to those loans and the related security were assigned to Dengrove in 2017.

3 In these proceedings, Mr. Ryan seeks an interlocutory injunction against Dengrove and against the second named defendant, a receiver appointed by Dengrove over the Site, (Mr. Ken Tyrrell, referred to herein as the “Receiver”). The purpose of the injunction sought by Mr. Ryan is to prevent the Receiver selling the Site.

4 This is a curious ‘receiver-injunction’ case, since it is not the more usual case, where a borrower, such as Mr. Ryan, wishes to prevent the sale of the Site, while the bank/assignee wishes to sell the Site. In this case, both Mr. Ryan and Dengrove wish to sell the Site. However, the dispute arises because Mr. Ryan wants a sale by the owner of the Site, i.e. the Partnerships, and thus in accordance with the terms of the Settlement Agreement, which make no reference to the Receiver, since he was appointed after its execution.

5 For its part, Dengrove wishes to sell the Site through the Receiver. Dengrove claims that it was entitled to appoint a receiver (when it did on the 25th June, 2020), as it claims that the Settlement Agreement terminated by virtue of the failure to sell the Site in accordance with its terms, by the deadline in that Agreement of the 24th of April, 2020.

6 Within days of the appointment of the Receiver, Mr. Ryan obtained an ex parte injunction on the 3rd July, 2020 prohibiting, inter alia, the Receiver from selling the Site. Dengrove seeks to have that interim injunction discharged, while Mr. Ryan seeks its continuation until the trial of the action as he claims that a receiver-sale of the Site would be at undervalue. An issue for the trial will be whether, in the light of the terms of the Settlement Agreement, it is lawful for the Site to be sold by the Receiver or whether it must be sold by the Partnerships.

7 The key issue for this court, in these interlocutory proceedings, is to determine whether, on the balance of justice, an interlocutory injunction preventing the Receiver selling the Site should be granted pending the trial.

8 This Court concludes that an injunction preventing the Receiver from selling the Site should not be granted because, inter alia:

• one is dealing with commercial property (’ one of the last remaining office development sites on the south quays, located in a pivotal position where there is an expectation a significant density of development will be sustained’), and not a family home,

• money has been owing for over a decade secured on that Site and accordingly the balance of justice favours the bank/assignee selling the Site and discharging the secured borrowings,

• no compelling evidence has been provided that a commercial/development site in Dublin 2 would be sold at undervalue if sold by the Receiver (rather than by the Partnerships), and,

• even if this were established at the trial, no compelling evidence was adduced to convince the Court that Dengrove would not be able to meet an award of damages for the alleged undervalue if the Site was sold by the Receiver prior to that trial.

Background

9 The background to the Settlement Agreement is that there was a High Court hearing in October 2019 concerning a dispute between Mr. Ryan and Dengrove. This dispute related to whether the Mortgages dated 17th December, 2003 between Anglo and the Partnerships over the Site were security for just the borrowings of the Partnerships in relation to the acquisition of that Site (a figure of approximately €17 million) or whether the Mortgages were also security for all the other borrowings of the partners in the Partnerships to Anglo/Dengrove, a figure of approximately €440 million.

10 After the parties went into evidence in that litigation, the case was compromised by the execution of the Settlement Agreement, which resolves the dispute by providing for the sale of the Site, with Mr. Ryan getting 20.8% of the proceeds (being his share in the Partnerships), with the balance being used by Dengrove to discharge the borrowings in order to release the security it holds over the Site. The Agreement provides, inter alia, that:

“1. Definitions and Interpretation

In this Agreement, unless the context otherwise requires, the following words and expressions have the following meanings:

“Adjourned Date” means 25th October 2019 or such later date as agreed in writing between the Parties;

“Contribution Sum” means €356,700;

[…]

“Requisite majority” means 51% or more of the votes of the Partners cast in ‘w accordance with the agreements governing the Partnerships.

2. Settlement

2.1 Subject to receipt of the unconditional written consent of the...