Sheehan v Breccia
| Jurisdiction | Ireland |
| Judge | Mr Justice Robert Haughton |
| Judgment Date | 20 November 2017 |
| Neutral Citation | [2017] IEHC 692 |
| Court | High Court |
| Docket Number | Record No. 2014/10816 P |
| Date | 20 November 2017 |
AND
[2017] IEHC 692
Record No. 2014/10816 P
THE HIGH COURT
(COMMERCIAL COURT)
Practice & Procedure – Banking & Finance – Non-payment of loan – Grant of interlocutory injunction – Discharge of injunction – Adequacy of damages – Balance of convenience
Facts: Following the grant of injunction to the plaintiff for restraining the first and second defendants from enforcing the plaintiff's security for clearing debt, the first defendant/applicant had now filed a motion for the vacation of injunction. The first defendant argued that in a related proceedings, the Court of Appeal had delivered a judgment, the effect of which was that the injunction should have been vacated. The plaintiff/respondent claimed that the said injunction was granted by the consent of the applicant and the other defendants to the substantive claim. The respondent also argued that the judgment of the Court of Appeal had only decided a part of the substantive claim while the other part remained unaffected.
Mr. Justice Robert Haughton held that the interlocutory injunction originally granted on consent would remain in place. The Court noted that it had wide discretion to vary or lift the interlocutory injunction if there was discovery of new information, inordinate delay or breach of agreement by any party. The Court observed that the fact that the respondent did not apply for permanent injunction would not have been a factor for deciding whether to discharge the interlocutory injunction. The Court further noted that the respondent's proprietary rights were at stake such as the right to sell shares or the attendant's right to vote and receive dividends, and the damages would not be sufficient to make good of the loss suffered by the respondent if the injunction sought had been granted. The Court found that the applicant would not be gravely prejudiced by the continuation of that injunction.
2 Background
The following proceedings relate to the granting of an injunction by Noonan J. on 22 December, 2014, to the plaintiff restraining the first and second named defendants from calling in the plaintiff's loans or taking enforcement against in respect of his security. Breccia (the first named defendant to the substantive matter but the applicant in this application) claim that as a result of a judgment delivered by the Court of Appeal in related proceedings, there is no longer any bona fide case that permanent injunctions would be granted at the trial of the action and on that basis the injunctions should be discharged. The respondent, who is the plaintiff to the substantive proceedings, submits that a substantial part of his claim remains undisturbed by the decision of the Court of Appeal and asks that the injunction continue until the trial of the action.
Blackrock Hospital Limited ('BHL') was incorporated in 1982 with BUPA Investments Limited ('BUPA'), the Plaintiff, James Sheehan, George Duffy and Maurice Neligan as shareholders. BHL owns the share capital of the Blackrock Clinic Limited ('BCL') which was founded in 1986 by the Plaintiff, James Sheehan, George Duffy and Maurice Neligan. In 2006, BUPA decided to sell it's 56% shareholding to the Plaintiff, the first named defendant, Benray (a company owned by John Flynn) and George Duffy. The purchasing of these shares was funded by Anglo Irish Bank plc ('Anglo') and the loans of the shareholders were cross-guaranteed. The plaintiff, James and Rosemary Sheehan, George Duffy, Breccia and Benray Limited then entered into a Shareholders Agreement dated 28 March, 2006.
The plaintiff entered into two facilities with Anglo; one on the 28 March, 2006, in the amount of €11,188,256 and one on the 12 November, 2008, in the amount of €6,342,000. These facilities fell due for repayment in December 2010 but payment was not demanded at that time.
By special resolution dated 3 October, 2011, Anglo became Irish Bank Resolution Corporation Limited ('IBRC'). Kieran Wallace and Eamonn Richardson were appointed as Special Liquidators to implement the winding up of IBRC. On 29 May, 2013, IBRC wrote to the plaintiff notifying him that the loan facilities were in default and that IBRC were reserving their rights. On 31 October, 2013, the plaintiff was notified that both the facilities of the plaintiff and of the fourth named defendant were to be sold. On 8 November, 2013, the plaintiff wrote to IBRC informing them that he wished to redeem his loans.
The plaintiff then began a process to buy his loans. He entered into negotiations with Talos Capital Limited ('Talos') for the purpose of financing the purchase, he also established two special purpose vehicles, Medfund Limited and JCS Investments Holdings XIV Limited, which were to be used to acquire the loans. Talos offered to finance the acquisition which offer was contingent on Talos acquiring both the Plaintiffs loans and security, and the loans and security of the fourth named defendant. It is the plaintiffs case that he then entered into negotiations with the fourth named defendant in relation to the offer from Talos and that on the 3 April, 2014, he met with the fourth named defendant, who had supplied a consent to sale, to confirm the agreement.
The plaintiff also claims that during the course of these agreements, the fourth named defendant became privy to certain confidential information, such as, inter alia;
a) Details of the plaintiff's loans with Anglo, including their value and performance;
b) Details relating to the proposed purchase of the plaintiff's loans, including the price and conditions of sale;
c) Details related to the financing of the loans, including the condition that both the plaintiff's loans and the fourth named defendants loans were to be acquired.
On 4 April, 2014, the loans of the fourth named defendant were purchased by the first named defendant. Shortly thereafter the plaintiff's loans were also purchased from IBRC by the first named defendant. Both of the plaintiffs loans were called in by the first named defendant by letter dated 18 December, 2014. The plaintiff was warned that if he failed to repay the sums which were due, the first named defendant was reserving their right to exercise the power of sale or appoint a receiver without further notice to the plaintiff. On 22 December, 2014, the plaintiff was granted interim injunctive relief as against the defendants and by consent, this injunction, which I shall term 'the interlocutory injunction', was extended to remain in place until the hearing of the substantive proceedings.
The first named defendant, Breccia, is the moving party in this matter and is seeking to lift the interlocutory injunction granted to the plaintiff (who is the respondent in this application).
As a preliminary matter, Breccia address the issue of jurisdiction. They submit that the Court is entitled to discharge interlocutory orders and cite the Supreme Court decision in Irish Commercial Society v Plunkett [1986] ILRM 504. Although this matter is substantially different to the matter at hand as it relates to the discharge of a consent order where consent was given under a misapprehension, it is authority for the general principal that interlocutory orders, obtained by consent or otherwise, can be varied or discharged at the discretion of the Court. At pg 506, Henchy J. states:
'It has for long been judicially accepted that where (as was the case here) a consent order was an interlocutory order, the court has a discretionary jurisdiction to set it aside or to vary it subsequently: see the judgment of Jessel M. R. in Mullins v Howell (1879) Vol II Ch D 763. More recently, Lord Denning said in Purcell v F. C. Trigell Ltd [1970] 3 All ER 671:
'The court has always a control over interlocutory orders. It may, in its discretion, vary or alter them even though made originally by consent.' (at p. 675).
....Whether that jurisdiction should be exercised depends on the circumstances of the case.'
In relation to the circumstances which give rise to the possibility of a variation and / or discharge of an injunction, Breccia again refer to Irish Commercial Society where an interlocutory order was discharged on the basis that new material facts and information had been discovered. In that case, new details of the Plaintiff's financial circumstances came to light which resulted in the Court discharging a security for costs order that had been granted. Breccia also refer to IBRC v Quinn [2015] IECA 84 which is authority for the proposition that a misapprehension relating to the willingness of the Plaintiffs to progress matters expeditiously is another ground for discharging an interlocutory order. In that matter, the receivers consented to an order for inspection which was later varied due to the persistent delay and lack of cooperation by the Quinn family.
Further grounds for the discharge or variation of an interlocutory order advanced by the applicants include where a fundamental breach of the Order or any written agreement has occurred, as in AIB v Darcy [2016] IESC 65, or where subsequent judicial decisions undermine the legal basis for the injunction, in support of which they cite a number of English authorities. In Regent Oil v JT Leavesely [1966] 1 WLR 1210, the plaintiff was a fuel supplier who alleged that the defendants, who were various motor garages, had breached a 'solus' agreement. The plaintiff was granted an injunction on an ex parte basis restraining the defendants from selling fuel from other suppliers – the defendants later consented to...
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