O'Gara & anor v Ulster Bank Ireland dac & anor

Factual and Procedural Background

This judgment concerns the plaintiffs' application for an interlocutory injunction to restrain the first defendant, Company A, from selling six commercial properties located in various places within The State of the United Kingdom pending determination of the proceedings. The plaintiffs had obtained loan facilities from Company A to finance investments in these commercial properties and a property syndicate. The loans were secured by mortgages over the properties, governed by English law.

Company A contended that the economic interest in the loan facilities was transferred to Company B during 2015, while Company A retained the legal interest. The plaintiffs challenge the validity and effectiveness of this transfer, the validity of demands made by Company A, and the appointment of receivers over the properties by Company A. The receivers have sought to sell the properties, prompting the plaintiffs to seek interlocutory injunctive relief to prevent such sales.

The proceedings were initiated by plenary summons on 18th October 2018, with the plaintiffs seeking declarations that the purported transfer of economic interest was void, that Company A had no right to make demands or appoint receivers, and that the receivers' appointment was invalid. The case was admitted to the Commercial List of the High Court, and the interlocutory injunction application was heard by the presiding judge.

Legal Issues Presented

1. Whether the plaintiffs have established a fair question or serious issue to be tried regarding the validity of the purported transfer of economic interest in the loan facilities from Company A to Company B.
2. Whether damages would be an adequate remedy for the plaintiffs if the interlocutory injunction is refused but they ultimately succeed at trial.
3. Whether damages would be an adequate remedy for the defendants if the interlocutory injunction is granted but the defendants ultimately succeed at trial.
4. Where the balance of convenience lies with regard to granting or refusing the interlocutory injunction.
5. Whether the plaintiffs' application should be refused on equitable grounds due to allegedly misleading communications from the plaintiffs' solicitor.

Arguments of the Parties

Plaintiffs' Arguments

• The purported disposal of the plaintiffs' loans by Company A to Company B breached the terms of the April 2005 facility, as Company B was not a subsidiary or entity within Company A's group, nor a bank or financial institution as required.
• The demands made in June 2018 were invalid as they were not signed by an officer of Company A, contrary to the facility terms.
• The appointments of the receivers were invalid as they were based on the allegedly invalid demands.
• If the disposal was valid, it amounted to an assignment under the Supreme Court of Judicature (Ireland) Act 1877, depriving Company A of the power to make demands or appoint receivers.
• Alternatively, the disposal amounted to an equitable assignment with similar consequences.
• Company A breached contract by overcharging interest, amounting to €567,188.80, which the plaintiffs seek to recover.
• The plaintiffs contend that damages would not be an adequate remedy because the properties represent a carefully selected portfolio with personal and business significance beyond mere commercial investment.

Defendants' Arguments

• The plaintiffs have failed to establish any fair question or serious issue regarding the disposal of economic interest, which was valid under the securitisation clause in the April 2005 facility.
• The June 2018 demands were validly signed by attorneys acting under a power of attorney granted by Company A to Asset Services.
• The receivers were validly appointed under the mortgages governed by English law.
• Even if there were infirmities in the June 2018 demands, prior demands made in 2014 and 2017 support the appointments.
• The issues raised regarding the April 2005 facility do not apply to the November 2006 facility, which also secured the mortgages and receivership.
• The properties are commercial investments generating rent, and any loss can be compensated by damages.
• The plaintiffs have no special or emotional attachment to the properties beyond commercial interests.
• The undertaking as to damages offered by the plaintiffs is speculative and insufficient to protect the defendants.
• The defendants contend that the interlocutory injunction should be refused also on equitable grounds due to allegedly misleading communications from the plaintiffs' solicitor.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Campus Oil Ltd. v. Minister for Industry and Energy (No. 2) [1983] IR 88	Test for granting interlocutory injunctions: fair question to be tried, adequacy of damages, balance of convenience.	Applied as the governing test for the interlocutory injunction application.
American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396	Framework for interlocutory injunctions as endorsed in Campus Oil.	Referenced as the foundational authority for the test applied.
B & S Ltd. v. Irish Auto Trader Ltd [1995] 2 IR 142	Elaboration on the interlocutory injunction test and balance of convenience.	Used to clarify the approach to balance of convenience and status quo preservation.
Okunade v. Minister for Justice & Ors [2012] 3 IR 152	Detailed summary of the interlocutory injunction test emphasizing minimization of injustice.	Adopted in summarizing the multi-step test and guiding the analysis.
Curust Financial Service Ltd. v. Loewe-Lack-Werk [1994] 1 IR 450	Clarification that difficulty in assessing damages is insufficient; must be impossible to assess damages to deny adequacy.	Applied to assess whether damages would be an adequate remedy for plaintiffs.
Camden Street Investments Ltd. & Ors. v. Vanguard Property Finance Ltd. [2013] IEHC 478	Damages as an adequate remedy in commercial property cases absent emotional stake.	Relied upon to distinguish the present case and support adequacy of damages.
Wingview Limited t/a The Elphin Public House v. Ennis Property Finance DAC [2017] IEHC 674	Granting interlocutory injunction where plaintiff has significant emotional and business interest in property.	Distinguished from the present case on facts; plaintiffs lack such attachment here.
Whelan v. Promontoria (Finn) Limited and Fennell [2017] IEHC 739	Fact-based approach to adequacy of damages in property cases; commercial investments usually adequately compensated by damages.	Applied to support conclusion that damages are adequate remedy given commercial nature of properties.
Szabo v. Kavanagh [2013] IEHC 491	Damages may be adequate remedy even in trespass claims depending on facts.	Referenced to reject plaintiffs’ analogy to trespass cases and support adequacy of damages.
Fitzpatrick v. Commissioner of An Garda Síochána [1996] E.L.R. 244	Damages as adequate remedy for damage to reputation and good name.	Used to further support that damages can be adequate in non-property-specific claims.
McDonagh v Ulster Bank Ireland Limited [2014] IEHC 476	Contextual reference regarding receivership and property sales.	Referenced to illustrate similarity of status quo where receivers act and sell properties.

Court's Reasoning and Analysis

The court applied the established interlocutory injunction test from Campus Oil, requiring the plaintiffs to show a fair question or serious issue to be tried, followed by an assessment of the adequacy of damages as a remedy, and, if necessary, the balance of convenience.

The plaintiffs met the low threshold of establishing fair questions or serious issues regarding the validity of the transfer of economic interest, the validity of demands, and the appointment of receivers. The court noted that these issues were appropriately pleaded and supported by affidavits, and that the defendants disputed them, thus justifying the interlocutory stage.

However, on the critical second stage, the plaintiffs failed to demonstrate that damages would not be an adequate remedy. The court found the properties to be commercial assets heavily mortgaged to Company A and/or Company B, let to commercial tenants, and acquired as commercial investments. The plaintiffs' assertions of personal or special attachment were unsubstantiated and unsupported by documentary or testimonial evidence.

The court accepted the defendants' position that any financial loss the plaintiffs might suffer due to the sale of the properties could be quantified and compensated by damages. The difficulty in assessing damages was not deemed impossible, and expert evidence could assist in calculating any loss.

Accordingly, the court concluded that damages would be an adequate remedy for the plaintiffs, negating the need to fully consider the adequacy of damages for the defendants or the balance of convenience. Nonetheless, the court expressed that, if considered, the balance of convenience would favor refusal of the interlocutory injunction, given the status quo of receivership and the financial security interests involved.

Regarding the defendants' claim that the plaintiffs' solicitor's communications were misleading, the court found no intention to mislead and no breach of good faith, thus declining to refuse relief on equitable grounds.

Holding and Implications

DISPOSED OF: The plaintiffs’ application for an interlocutory injunction restraining the sale of the six UK commercial properties is refused.

The direct effect of this decision is that the defendants may proceed with the sale of the properties pending trial. The court found that damages are an adequate remedy for the plaintiffs if they ultimately succeed at trial, and thus no interlocutory relief is warranted. No new legal precedent is established by this ruling; rather, it applies established principles to the facts before the court.