Clarifying Costs in Moot Interlocutory Proceedings: Insights from Naughton v Bank of Ireland

1. Introduction

The High Court of Ireland’s decision in Naughton v Governor and Company of the Bank of Ireland & Ors ([2025] IEHC 124) addresses a scenario in which an interlocutory injunction became moot due to action taken by the defendants. The case arose from an application by the plaintiff, Mr. Thomas Naughton, seeking to restrain a receiver (initially lacking powers of sale) from acting outside his authority. The second defendant, Mr. Anderson, was appointed as a rent receiver over the plaintiff’s properties under certain charges held by the first defendant, The Governor and Company of the Bank of Ireland.

Key issues included:

Whether the receiver initially had the authority to market and sell the plaintiff’s properties.
Whether Mr. Anderson’s subsequent formal appointment as agent of the Bank impacted the litigation’s outcome.
Whether the plaintiff was entitled to costs after the issues giving rise to the injunction became moot.

The parties involved were:

Thomas Naughton (Plaintiff): The registered owner of the properties who alleged that the receiver lacked authority to act as vendor.
The Governor and Company of the Bank of Ireland (First Defendant): The Bank holding charges over the plaintiff’s properties, with powers of sale.
James Anderson (Second Defendant): Initially appointed receiver (with limited powers) and later appointed agent of the Bank, gaining authority to sell.
O’Donnellan Joyce (Third Defendant): A party connected with the process of marketing and selling the property.

2. Summary of the Judgment

Justice Stack determined that the application for interlocutory relief became moot once Mr. Anderson was formally appointed as agent by the Bank. Prior to this 20 November 2024 appointment, Mr. Anderson was acting solely as a rent receiver without a legally effective power of sale. Because the action’s central concern—namely, whether Mr. Anderson could sell the properties—was resolved by the Bank’s unilateral appointment of Mr. Anderson as agent, the question before the court shifted to who should bear the costs of the motion and the action.

The court awarded costs to the plaintiff, reasoning that the plaintiff’s application for injunction was justified when initially made: Mr. Anderson did not have the power of sale originally. However, once the Bank appointed Mr. Anderson as its agent, the need for the injunction ended, rendering the original proceedings moot. The judge rejected the defendants’ arguments that the plaintiff could never have succeeded or was out of time.

3. Analysis

3.1 Precedents Cited

Two precedents stand out in shaping the Court’s approach:

Cunningham v. President of the Circuit Court [2012] 3 I.R. 222: Referenced by the plaintiff to demonstrate that where proceedings become moot due to defendants’ subsequent actions, the plaintiff may be entitled to costs.
Brennan v. Lockyer [1932] IR 100: Cited by Justice Stack for the principle that bare or conclusory assertions are insufficient in affidavit evidence. A party must set out the factual basis on which it asserts a legal conclusion.

These cases informed the Court’s approach on the allocation of costs and the evidential threshold required to prove or disprove a receiver’s authority.

3.2 Legal Reasoning

The High Court’s analysis hinged on whether Mr. Anderson was in fact the agent of the Bank, with concomitant powers of sale, at the time the plaintiff sought an injunction. The Court concluded there was no reliable evidence that Mr. Anderson had been appointed as an agent prior to 20 November 2024. In reaching this conclusion, Justice Stack emphasized:

Documentary Consistency: All contemporaneous documentation—letters from the receiver and the draft contract—pointed to Mr. Anderson acting solely as a receiver, not as an agent.
Conflicting Affidavit Assertions: Mr. Anderson’s affidavit suggested a verbal or informal agency, yet contained contradictory statements. The Court found this evidence unsupported by any emails, correspondence, or contractual terms, rendering it unreliable.
Unilateral Action Leading to Mootness: The Bank’s unilateral act of formally appointing Mr. Anderson as agent effectively resolved the issue of authority, but also mooted the need for continued injunctive relief.

Given the mootness, the central procedural question became whether the plaintiff was entitled to costs for both the motion and the underlying plenary proceedings. The Court found that the plaintiff’s argument was valid at the time it was raised, and the subsequent appointment of Mr. Anderson as agent was decisive in mooting the claim.

3.3 Impact

This decision clarifies the approach to awarding costs when an action for interim or interlocutory relief becomes moot prior to a final hearing:

Costs May Follow the Plaintiff: Where a plaintiff’s legal position is initially justified and subsequently overtaken by new facts or actions from the defendant, the plaintiff may still recover costs.
Requirement for Evidentiary Rigor: The judgment warns against relying solely on uncorroborated affidavit statements, reminding litigants that the court can reject such statements if they are contradictory or lack supporting documentation.
Continuing Relevance of Trespass Claims: Although the interlocutory relief aspect was resolved, a trespass claim—whether large or nominal—can persist if a receiver oversteps lawful authority. Plaintiffs may still be entitled to their costs if they can demonstrate such a cause of action.

4. Complex Concepts Simplified

Several legal concepts arise in this judgment:

Receiver vs. Agent: A “receiver” typically manages property (for example, collecting rents) under limited powers granted by a security document. An “agent” of a bank has broader authority, potentially including the power of sale, which the receiver alone may lack unless so appointed or delegated.
Mootness: A proceeding becomes “moot” when the underlying dispute or harm no longer exists. Here, formal ratification of an agent appointment after the suit began removed the key issue—whether the receiver had sale authority—thus mooting the injunction request.
Costs in Moot Cases: Courts often decide the question of who pays legal costs even when the main issue in a case disappears. The Court examines each side’s original legal position and whether the plaintiff was forced to initiate proceedings to protect their rights.
Trespass by a Receiver: A rent receiver only has the powers explicitly granted by the charge or necessary to fulfill rent-collection duties. Entering or seizing a property for purposes beyond that limited authority may amount to trespass.

5. Conclusion

In Naughton v Bank of Ireland, the High Court provides significant guidance on awarding costs when interlocutory proceedings become moot. Where a defendant’s unilateral action effectively resolves the power or authority issue at the heart of the injunction, the plaintiff, who legitimately sought to restrain an unauthorized action, may recover costs. The judgment underscores the importance of precise, documented evidence of any purported agency, clarifies that mere assertions of agency or power may not suffice, and highlights that any trespass—however brief—can influence the court in assigning costs.

Overall, this decision strengthens judicial clarity on mootness and costs, reminding parties and practitioners to ensure correct, evidence-based representations of receivership and agency in real-property disputes.