Dowdall & anor -v- O'Connor & anor

Factual and Procedural Background

In May 2006, the defendants, a married couple, purchased a property at 9, Dalkey Avenue, County Dublin, financed by a loan facility from Ulster Bank Ireland Ltd. The loan consisted of two facilities: Facility A for €2,055,000 to purchase and develop the site, and Facility B for €625,000 to clear an existing mortgage. An additional loan of €300,000 was provided in February 2007 for developing a site in County Galway. The loans were secured by mortgages over the properties, including the Dalkey Avenue site and the Galway site.

The defendants constructed two dwellings on the Dalkey Avenue site: 'The Laurels' and 'Pinehaven'. The second named defendant resided at 'Pinehaven', and the first defendant resided at the Galway property. 'The Laurels' was leased to tenants and was not a family home within the meaning of the Family Home Protection Act 1976.

By letter dated 8th November 2012, the Bank demanded payment of €2,075,221.27 due to arrears on the loan facilities. Subsequently, the plaintiffs were appointed as joint receivers by the Bank over 'The Laurels' by Deed of Appointment dated 29th November 2012. The plaintiffs notified the defendants of their appointment and sought cooperation, which was not forthcoming.

The plaintiffs alleged that the defendants, particularly the second named defendant, obstructed the receivership by taking physical possession of 'The Laurels' and intimidating the tenants. The tenants cooperated with the receivers and intended to vacate the premises by July 2013. However, the defendants allegedly prevented security personnel from securing the property, changed locks, and intimidated tenants and agents.

The plaintiffs sought interlocutory relief restraining the defendants from interfering with the receivers and possession of the premises, and an order for possession of 'The Laurels'. The defendants opposed the appointment of the receivers, disputing the validity of the Deed of Appointment and the Bank's compliance with procedural requirements.

Legal Issues Presented

1. Whether the plaintiffs were lawfully appointed as joint receivers over 'The Laurels'.
2. Whether the Bank complied with the contractual and statutory requirements in calling in the loan facilities and appointing receivers.
3. The validity of the Deed of Appointment of receivers, including compliance with the Bank's Articles of Association and relevant statutory provisions.
4. Whether the defendants' actions constituted unlawful interference with the receivers' duties and justified the granting of interlocutory injunctions.

Arguments of the Parties

Defendants' Arguments

• The demand letter dated 8th November 2012 was not properly served at their home address as required by the loan facility agreement, rendering the call-in of the loan and appointment of receivers premature.
• The Deed of Appointment of receivers was not executed in accordance with the Bank's Articles of Association, lacking the required seal and signatures, thus invalid.
• The Bank acted ultra vires in appointing receivers pursuant to a Deed that was not properly sealed.
• The mortgage enabling the Bank to appoint receivers under section 19 of the Conveyancing and Law of Property Act 1881 was no longer valid due to repeal of that section by the Land and Conveyancing Law Reform Act 2009.
• The mortgage was not signed or sealed on behalf of the Bank, only by the defendants, questioning its enforceability.
• The second named defendant disputed the appointment of the receivers and claimed the receivers were trespassers, without engaging in detail with the factual allegations of obstruction.

Plaintiffs' Arguments

• The demand letter was properly sent to the address specified in the loan facility agreement, and the defendants were aware of it, fulfilling contractual notice requirements.
• The Deed of Appointment was validly executed by an individual under a power of attorney from the Bank, witnessed appropriately, and thus compliant with statutory requirements under the Land and Conveyancing Law Reform Act 2009.
• The decision in the cited Safeera Ltd case does not apply because the appointment was made by an individual under power of attorney rather than by the company directly.
• The mortgage provisions, including the power to appoint receivers, remain effective despite the repeal of certain statutory provisions, as the mortgage contract incorporates those rights by reference.
• The plaintiffs have established a strong case for lawful appointment and entitlement to possession, supported by statutory and contractual authority.
• The defendants have obstructed the receivers’ lawful duties, justifying the granting of interlocutory injunctions to prevent ongoing interference and loss.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the contractual and statutory framework governing the loan facilities, mortgages, and appointment of receivers. It found that the Bank complied with the notice provisions of the loan agreement by sending the demand letter to the address specified in the facility letter, and the defendants were aware of this demand.

The court analysed the validity of the Deed of Appointment of receivers, concluding that the appointment by an individual acting under a valid power of attorney, duly witnessed, satisfied the requirements of the Land and Conveyancing Law Reform Act 2009. Consequently, the Deed was valid despite the absence of the company seal on that instrument itself.

Regarding the mortgage powers, the court held that although certain statutory provisions enabling the appointment of receivers had been repealed, the mortgage agreement incorporated these powers by reference, preserving their contractual effect. The court relied on precedent to support this interpretation.

The court considered the defendants' conduct, particularly the obstruction and intimidation of tenants and interference with the receivers' duties. It found that the defendants had acted unlawfully in obstructing the receivers and that such conduct justified the granting of interlocutory relief.

Applying the three-part test from Campus Oil Ltd., the court determined that the plaintiffs had established a fair issue to be tried, that damages would not be an adequate remedy given ongoing losses, and that the balance of convenience favoured granting the injunctions to protect the receivers’ rights and the Bank’s interests.

Holding and Implications

The court's final decision was to grant interlocutory injunctions restraining the defendants, their servants, agents, and persons acting in concert with them from:

• Interfering with or frustrating the activities of the plaintiffs as joint receivers over 'The Laurels'.
• Entering or interfering with the premises without the express consent of the plaintiffs.
• Harassing or intimidating any occupant of the premises.

The court further ordered possession of the premises to the plaintiffs pending the determination of the substantive proceedings.

Holding: The interlocutory injunctions sought by the plaintiffs were granted.

Implications: The decision enforces the lawful appointment and authority of receivers under valid loan and mortgage agreements despite procedural challenges by the defendants. It protects the Bank’s interests and the receivers’ ability to manage the property and recover arrears. No new precedent was established beyond the application of existing legal principles.