No Injunction After the Hammer Falls and Strict Re‑Pleading of Defective Counterclaims: Clarifying s.52 LCLRA and Order 21 Rule 9 in McCarthy v Byrne [2025] IEHC 519

Introduction

This High Court judgment by Dignam J addresses three intertwined applications in long-running receivership litigation concerning two commercial properties at 88 and 90 South Main Street, Wexford:

• The defendants’ motion to set aside interlocutory orders made by Gilligan J in November 2016;
• The plaintiff receiver’s motion to strike out/dismiss the defendants’ Counterclaim under Order 19, Rule 28 (pre‑September 2023 text) and/or the Court’s inherent jurisdiction; and
• The defendants’ application for interlocutory injunctions restraining the sale of the properties.

The proceedings arise from two 2006 ACC Bank facilities to the first defendant, secured by mortgages over 88 and 90 South Main Street and a personal guarantee from the second defendant. After the loans were called in (2015), the plaintiff was appointed receiver (2015), with a later novation following a sale of ACC’s interest to Pepper Finance (2019). The plaintiff obtained interim and interlocutory injunctions in November 2016 to restrain alleged interference with the receivership. Both properties were sold by public auction on 2 December 2021, after which the defendants sought to restrain the sale and, later, to set aside the 2016 orders.

The case is notable for three clarifications:

• Once a property is sold at auction and a binding contract is concluded, the beneficial interest passes to the purchaser under section 52 of the Land and Conveyancing Law Reform Act 2009, rendering it inappropriate to grant an injunction restraining the sale; third‑party purchaser rights weigh heavily in the balance.
• Even a severely defective counterclaim (lacking a prayer for relief and properly pleaded facts) may survive immediate strike‑out where a cause of action can be discerned; the appropriate course is to compel prompt re‑pleading under a “guillotine” order (with dismissal if not complied with).
• Long‑delayed attempts to set aside historic interlocutory orders, especially where the proper remedy was appeal and where third‑party rights have intervened, will be refused—particularly when the evidential basis is absent and the parties had notice and representation at the time.

Summary of the Judgment

• Set‑aside application refused: The Court declined to set aside Gilligan J’s orders of 17 and 24 November 2016. The defendants’ bare assertion that affidavits of service were “a work of fiction” was unsupported by evidence on affidavit; they were present and represented when undertakings were given; any alleged error could have been appealed; and there was a six‑year delay with no explanation, during which third‑party rights arose.
• Strike‑out/dismissal of Counterclaim refused, but re‑pleading ordered: Although “fundamentally deficient,” the Counterclaim was not struck out under Order 19, Rule 28 or the Court’s inherent jurisdiction because a minimal cause of action (e.g., trespass, lack of valid appointment/novation) could be discerned. The Court ordered the defendants to deliver a properly pleaded amended Counterclaim within 14 days of perfection, failing which it will stand dismissed; liberty granted to the plaintiff to move against any amended pleading.
• Interlocutory injunction refused: Applying Merck Sharp & Dohme v Clonmel Healthcare, the Court assumed arguendo a fair question to be tried but held the balance of convenience/justice decisively against an injunction. The properties had already been sold at auction; the beneficial interest had passed to the purchaser (s.52 LCLRA 2009); the defendants’ delay was significant; damages were adequate for commercial property; and the defendants offered no undertaking as to damages.

Detailed Analysis

Precedents and Authorities Cited

The judgment canvasses a suite of authorities across three topics—strike‑out/inherent jurisdiction, the interlocutory injunction test, and undertakings as to damages, with targeted references to pleading rules for counterclaims:

• Pleading and counterclaims:
  • Morony v Guest (1878) 1 LR Ir 564 and Order 21, Rule 9 RSC: a counterclaim must state relief specifically and either plead supporting facts or clearly adopt them from the defence. Delany & McGrath (Civil Procedure) reinforce that facts in the defence can be adopted in the counterclaim if expressly so stated.
• Strike‑out/inherent jurisdiction:
  • Barry v Buckley [1981] IR 306; Lopes v Minister for Justice [2014] IESC 21; Keohane v Hynes [2014] IESC 66; Clarington Developments [2019] IEHC 630; Kearney v Bank of Scotland [2020] IECA 92; Scotchstone Capital Fund [2022] IECA 23; McAndrew v Launceston Property Finance [2023] IECA 43; Greally v Havbell [2021] IEHC 637; Wang v Ladywell Homes [2021] IEHC 468; and Fox v McDonald [2017] IECA 189. These authorities collectively set out the high bar, the sparing exercise of the jurisdiction, the “no real risk of injustice” standard, the obligation to take the claim at its “high‑water mark,” and the propriety of limited factual assessment under the inherent jurisdiction.
• Interlocutory injunctions:
  • Merck Sharp & Dohme v Clonmel Healthcare [2019] IESC 65 (eight‑step structured approach, emphasising flexibility and the centrality of adequacy of damages); Betty Martin Financial Services v EBS DAC [2019] IECA 327 (avoid box‑ticking; overall balance of justice); O’Gara v Ulster Bank [2019] IEHC 213 (threshold “serious issue to be tried” aligns with whether the claim would survive a strike‑out motion).
• Undertakings as to damages:
  • Nolan v Dildar [2020] IEHC 243 (undertaking usually required; balance‑striking rationale); Minister for Justice v Devine [2012] 1 IR 326 (invariable practice, exceptions where impecunious parties; undertaking still a significant factor).
• Special character of land and adequacy of damages:
  • Doran v Charleton [2022] IEHC 331; Sammon v Tyrell & Everyday Finance [2021] IEHC 6 (illustrating when land has a unique, non‑fungible character such that damages are inadequate—contrasted here with purely commercial property).

Legal Reasoning

1) Application to set aside the 2016 orders

The attempt to set aside the ex parte service declaration (17 November 2016) and the interlocutory injunction (24 November 2016) failed for multiple reasons:

• Absence of sworn evidence: The core allegation—that the affidavits of service were “a work of fiction”—was not supported by affidavit evidence addressing any specific averments; late oral assertions at the hearing did not suffice. This alone warranted refusal.
• Acquiescence and representation: The defendants attended on 24 November 2016, were represented by counsel, and gave undertakings. No issue about service or “short service” was raised contemporaneously; any procedural grievance should have been brought then or on appeal.
• Delay and third‑party prejudice: The set‑aside motion issued in February 2023—over six years later—without explanation, after the properties had been sold by auction. The Court emphasised that, especially where third‑party rights have attached, extreme delay counts heavily against set‑aside relief.

2) Motion to dismiss/strike out the Counterclaim

The Court was scathing about the counterclaim’s pleading quality, finding it “fundamentally deficient” because:

• It contained no prayer for relief;
• It failed to plead the factual basis for relief, either expressly or by clear adoption of defence facts in compliance with Order 21, Rule 9.

Nonetheless, applying the high‑threshold authorities on strike‑out and the inherent jurisdiction, the Court held that the counterclaim could not be dismissed at this stage because a discernible cause of action exists at its “high‑water mark,” including:

• Allegations of trespass/interference with property (para. 46 of the defence/counterclaim);
• Contentions that the receiver’s appointment and/or novation were invalid (paras. 50–51), underpinning the trespass claim.

The appropriate remedy was therefore a strict re‑pleading order (a “guillotine” direction): the defendants must serve an amended, properly pleaded counterclaim within 14 days of perfection, failing which the counterclaim stands dismissed. The Court underscored that it would not have offered an amendment opportunity if it had concluded that no cause of action was disclosed; the indulgence was granted solely because the case could not be dismissed under the stringent strike‑out standards, while ensuring procedural fairness to the plaintiff through proper pleadings.

3) Defendants’ application for interlocutory injunction

Adopting the Merck v Clonmel framework, the Court assumed (without deciding) that there was a fair question to be tried (e.g., concerning cross‑security, appointment/novation issues, title documentation accuracy), but the application failed decisively on the balance of justice:

• Completed sale—beneficial interest passed: The properties had already been sold by auction on 2 December 2021. By operation of section 52 LCLRA 2009, the beneficial interest passed to the purchaser on execution of a binding contract for sale. The Court cannot enjoin what is already done; at a minimum, the equities strongly favour respecting the purchaser’s rights.
• Delay:
  • General delay: Years elapsed before a defence and counterclaim were delivered; challenges to the receiver’s 2015 appointment were not pursued promptly.
  • Specific delay: The defendants were warned by letter on 14 October 2021 that the sale process was underway but did not move for injunctive relief until 2 December 2021 (the auction date) and sought no interim relief. The defendants’ delay directly created the post‑auction posture that made injunctive relief unsuitable.
• Adequacy of damages for commercial property: Unlike unique family farmland (Doran; Sammon), these are commercial investment properties; any loss is compensable in damages if the defendants ultimately succeed.
• No undertaking as to damages: The defendants did not offer the usual undertaking. While not invariably fatal (Minister v Devine), the absence of any explanation meant this factor weighed significantly against relief.

For all these reasons—each independently sufficient and cumulatively overwhelming—the injunction was refused.

What This Judgment Changes or Clarifies

• Post‑auction injunctions: The judgment emphatically confirms that once a binding sale contract has been struck (e.g., on the fall of the hammer), the beneficial interest passes to the purchaser (s.52 LCLRA 2009), making injunctions to restrain “the sale” highly unlikely. Courts will either refuse jurisdiction to restrain what has already occurred or give decisive weight to the purchaser’s rights in the balance of justice.
• Pleading discipline for counterclaims: A counterclaim that omits a prayer for relief and does not plead or clearly adopt the factual basis breaches Order 21, Rule 9 and will not be allowed to proceed in that state. However, where the court can discern a viable cause of action at the “high‑water mark,” the appropriate response is not immediate strike‑out but a short, strict re‑pleading window with an automatic dismissal sanction.
• Set‑aside of historic orders: Bare allegations against affidavits of service, not made on affidavit and contradicted by conduct (attendance with counsel; undertakings given) will not justify set‑aside years later—especially where appeal was the proper route and third‑party rights have since arisen.

Impact and Practical Implications

For borrowers/defendants in receivership litigation

• Act early: If you seek to restrain a sale, you must move promptly—ideally as soon as a marketing process is flagged. Waiting until the auction (or later) is fatal.
• Undertaking as to damages: Be prepared to offer an undertaking or explain cogently why it should be dispensed with; its absence will often tip the balance against relief.
• Plead properly: Counterclaims must:
  • State the relief sought (the prayer);
  • Plead the material facts or expressly adopt facts from the defence under O.21, r.9;
  • Link pleaded facts to each relief claimed.
  Expect “guillotine” re‑pleading orders and dismissal if you do not comply.
• Service complaints: Raise them immediately and on affidavit. Failure to do so (especially where represented and undertakings are given) undermines later set‑aside attempts.

For receivers, lenders and purchasers

• Security of post‑auction contracts: The decision bolsters confidence that Irish courts will protect the integrity of auction outcomes and the purchaser’s equitable interest once a contract is concluded.
• Case management and pleading enforcement: The Court’s willingness to enforce pleading discipline via short timelines and automatic dismissal enhances procedural efficiency and reduces ambush/prejudice.
• Defending injunctions: Emphasise s.52 LCLRA 2009, defendants’ delay, adequacy of damages for commercial assets, and the absence of an undertaking.

Complex Concepts Simplified

• Beneficial interest (s.52 LCLRA 2009): When a binding contract for the sale of land is made (e.g., at the fall of the hammer in an auction), equity treats the purchaser as owning the beneficial interest, even before completion. Courts are reluctant to interfere with that equitable ownership.
• Interlocutory injunction: A temporary order to preserve the status quo until trial. The applicant must show at least a “serious issue to be tried,” and then the court weighs the “balance of justice,” focusing on whether damages would be an adequate remedy and other equities.
• Undertaking as to damages: A promise by the applicant to pay the respondent compensation if it later turns out the injunction should not have been granted. It is the usual “price” of an injunction.
• Counterclaim and Order 21, Rule 9: A counterclaim is a defendant’s claim back against the plaintiff. It must specify the relief claimed and plead (or expressly adopt) the facts grounding that relief. A bare narrative without a prayer and pleaded facts is non‑compliant.
• Strike‑out vs. inherent jurisdiction:
  • Order 19, Rule 28 (pre‑Sept 2023): The court assumes pleaded facts are true and asks whether, even on that basis, there is a reasonable cause of action.
  • Inherent jurisdiction: Allows limited factual assessment to prevent an abuse of process, but is exercised sparingly and only where the case “cannot succeed.”
• Frivolous and vexatious: Proceedings that, in context, cannot be justified—e.g., where they have no prospect of success or would cause unjust prejudice (like re‑litigating the same claim).

Conclusion

McCarthy v Byrne [2025] IEHC 519 offers clear guidance on three recurring issues in receivership and property litigation:

• Courts will not grant injunctions to restrain sales that have already been concluded by contract—beneficial interests pass to purchasers under s.52 LCLRA 2009, and those third‑party rights dominate the balance of justice, especially where applicants have delayed and offer no damages undertaking.
• Defective counterclaims that fail to plead relief and facts contravene O.21, r.9 and will not be permitted to proceed in that form. However, if a viable cause of action can be discerned at its high‑water mark, the proper course is a short re‑pleading window with an automatic dismissal sanction.
• Attempts to set aside historic interlocutory orders will fail where evidential support is absent, the proper route was appeal, the parties had notice and representation, and third‑party rights have since intervened.

The judgment therefore strengthens transactional certainty for purchasers, reinforces rigorous pleading standards for counterclaims, and reaffirms the disciplined application of interlocutory injunction principles in commercial property disputes. Practitioners should take careful note: timely action, proper pleadings, and attention to the balance of justice (including undertakings and third‑party rights) are decisive.

Key Takeaways

• After an auction sale, the court will not restrain completion save in the most exceptional circumstances; s.52 LCLRA 2009 is pivotal.
• Delay and absence of an undertaking as to damages are significant factors against injunctive relief, particularly with commercial assets.
• Counterclaims must include a prayer and pleaded/adopted facts; otherwise expect a guillotine re‑pleading order with dismissal for non‑compliance.
• Set‑aside of old orders requires sworn evidence, promptness, and cognizance of third‑party rights; appeal, not set‑aside, is the proper route to challenge judicial error.