Ryan v Promontoria [Aran] Ireland Ltd & Ors (Approved)

Factual and Procedural Background

The Plaintiff initiated motions in two sets of proceedings seeking interlocutory injunctive reliefs, including restraining the sale of certain properties. The motion in the first set was subsumed by the motion in the second set, and this judgment concerns only the latter. The Plaintiff seeks interlocutory injunctions to prohibit the Defendants—referred to as Company A, Company B, and two individuals acting as receivers—from transferring confidential information, appointing receivers, interfering with the Plaintiff's property rights, and selling or auctioning a specific property located at 4 Corr na Cille, Church Street, Banagher, Co. Offaly ("the Property").

The Plaintiff and his spouse had multiple loans with Company B for purchasing "Buy to Let" properties, including the Property, secured by a mortgage dated 22 December 2004. The mortgage and loan were transferred from Company B to Company A in February 2015, a transfer whose validity the Plaintiff contests. A receiver was appointed over the Property in July 2016 and subsequently novated to another individual in November 2020, appointments also challenged by the Plaintiff in substantive proceedings.

The Property was advertised for sale by online auction in early 2021, prompting the current proceedings. The relief sought is primarily to restrain the sale of the Property pending determination of substantive issues regarding the validity of the transfer and appointment of receivers, which are reserved for trial.

Legal Issues Presented

1. Whether the Plaintiff has established a fair, serious, or bona fide question to be tried regarding the power of sale exercised by the receivers over the Property;
2. Whether the balance of convenience and justice favors granting or refusing the interlocutory injunction restraining the sale of the Property;
3. Whether damages would be an adequate remedy for the Plaintiff or Defendants pending trial;
4. The effect of delay and acquiescence on the Plaintiff's entitlement to interlocutory relief;
5. The significance and adequacy of the Plaintiff’s undertaking as to damages;
6. The impact of recent case law and statutory provisions on the interlocutory application.

Arguments of the Parties

Plaintiff's Arguments

• The receivers lack a power of sale under the mortgage, and the sale is being conducted at an undervalue without a proper method to obtain the best price reasonably obtainable.
• The transfer of the loan and mortgage from Company B to Company A is invalid, and Company A lacks authority to appoint receivers.
• The Defendants have failed to provide sufficient information and documentation, hindering the Plaintiff’s ability to ascertain the true indebtedness.
• The Plaintiff disputes the amount of indebtedness, not the existence of indebtedness per se.
• Damages would not be an adequate remedy due to irreparable harm to business interests and property rights.
• The status quo should be maintained by restraining the sale, especially given the delay by Defendants in selling the Property.
• The Plaintiff relies on recent case law supporting the inadequacy of damages and the need for injunctive relief in similar circumstances.
• The Plaintiff asserts the debt may be statute-barred, extinguishing the mortgage and debt obligations.

Defendants' Arguments

• The mortgagee in possession (Company A) has a statutory power of sale under the 1881 Act, which has become exercisable due to default, and thus the receivers’ lack of explicit power of sale under the mortgage does not preclude the sale.
• The Plaintiff’s delay of several years in challenging the appointment of receivers and sales of other properties weighs against granting interlocutory relief.
• Damages would be an adequate remedy, as the Property is an investment asset and the Plaintiff’s undertaking as to damages is not meaningful given significant indebtedness.
• The Plaintiff’s new arguments and submissions post-hearing should not be entertained as they amount to re-argument or raise issues reserved for substantive proceedings.
• Recent case law cited by the Plaintiff is either distinguishable or irrelevant to the current interlocutory application.
• The Plaintiff’s assertion of a statute-barred debt is countered by evidence of acknowledgements and correspondence indicating ongoing indebtedness within limitation periods.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by confirming the low threshold for granting interlocutory injunctions, requiring only a fair or serious issue to be tried. The Plaintiff successfully established a fair issue regarding whether the receivers have a power of sale under the mortgage, as clauses in the mortgage do not expressly confer such power on the receivers. The Defendants’ contention that Company A, as mortgagee in possession, has statutory power of sale was acknowledged but found not determinative because the sale is currently being conducted by the receivers purportedly exercising power as receivers, not as mortgagee in possession.

The Court noted the absence of evidence that Company A is in possession or intends to sell as mortgagee in possession, and that the contract of sale explicitly identifies the vendor as the receivers. This creates a genuine issue as to the receivers' authority to sell.

Regarding the balance of justice, the Court applied the framework from Merck Sharpe & Dohme and considered the adequacy of damages, delay, and the Plaintiff’s undertaking as to damages. The Court found that the Property is a commercial investment asset, making damages generally an adequate remedy. The Plaintiff failed to demonstrate irreparable harm or that damages would be inadequate.

Delay was considered but its weight was limited because the Plaintiff acted promptly once the Property was advertised for sale in 2021, despite prior delay in challenging earlier appointments and sales.

The Plaintiff’s undertaking as to damages was found to be of limited value due to significant indebtedness and inability to prove capacity to satisfy damages, an important factor weighing against granting the injunction.

The Court rejected the Plaintiff’s argument that exemplary damages imply inadequacy of compensatory damages, reasoning that exemplary damages are a form of damages and do not negate the adequacy of damages generally.

Several new arguments and submissions by the Plaintiff post-hearing were disallowed as impermissible re-argument or matters reserved for substantive trial.

Overall, the Court concluded that while a fair issue exists, the balance of justice does not favor granting the interlocutory injunction restraining the sale of the Property.

Holding and Implications

The Court REFUSED the Plaintiff's application for interlocutory injunctions restraining the sale of the Property.

The direct effect of this decision is that the sale of the Property by the receivers may proceed pending the substantive hearing. The Court did not establish any new legal precedent but applied existing principles concerning interlocutory injunctions, the power of sale by receivers, and the adequacy of damages. The Plaintiff retains the right to litigate substantive issues including the validity of the loan transfer and receiver appointments at trial.