Terracotta Construction Ltd v Everyday Finance DAC and Anor (Approved)

Factual and Procedural Background

This is an interlocutory judgment delivered by Judge Jordan on 9 April 2026 in proceedings brought by the Plaintiff against Company A and a named individual Defendant. The Plaintiff sought an interlocutory injunction dated 21 August 2025 (returnable 26 August 2025) to restrain the proposed sale by public auction of a dwelling known in the record as [Number] Mill Race Park, The City. The appointment of a receiver had occurred and the Plaintiff contended that, under a mortgage dated 12 September 2007, the receiver did not have contractual power to market or sell the Plaintiff's lands but only to collect rents and, where applicable, relet premises. The application was heard alongside related proceedings. The Defendants conceded that the question of the receiver's power to sell raised a fair issue to be tried. The court proceeded to consider the balance of convenience and adequacy of damages and ultimately refused the interlocutory relief sought. The court listed directions and a further hearing date for 23 April 2026.

Legal Issues Presented

1. Whether, under the terms of the mortgage dated 12 September 2007, the receiver had contractual power to market and sell the Plaintiff's property.
2. Whether an interlocutory injunction restraining the proposed sale should be granted, having regard to (a) the existence of a fair issue to be tried, (b) adequacy of damages, and (c) the balance of convenience/least risk of injustice.

Arguments of the Parties

Plaintiff's Arguments

• The mortgage (pre-2009) did not authorise conferral of power on a receiver to market or sell the lands; its terms limited receiver powers to actions such as obtaining possession, ejectment and letting.
• Discovery showed Company A knew of this limitation prior to appointment but proceeded and empowered the Receiver to auction the property; Company A had been advised by solicitors that a receiver could not sell and could only collect rent.
• The Receiver was therefore purporting to exercise a power of sale it did not possess; this raised a fair question to be tried and, given the nature of property rights, damages would not be an adequate remedy in the event of sale.
• The Plaintiff offered an undertaking as to damages and relied on case law protecting property rights and prior authorities where injunctions were granted in analogous circumstances.

Defendants' Arguments

• The Defendants conceded a fair issue existed as to the receiver's power but argued that, on the balance of convenience, damages would be an adequate remedy and the dispute was essentially commercial.
• They relied on authorities emphasising that the court must aim to minimize the overall risk of injustice and treat adequacy of damages as part of that balance rather than as a strict mechanical test.
• The Defendants pointed to the Plaintiff's commercial status, the nature of the asset as buy-to-let, the Plaintiff's indebtedness and delays in prosecuting the action as factors tipping the balance in their favour.

Table of Precedents Cited

Court's Reasoning and Analysis

The court accepted that the Plaintiff had raised a fair issue to be tried as to whether the receiver had power to sell. It then proceeded to the balance of convenience/least risk of injustice, considering adequacy of damages alongside other factors.

The court analysed authorities cited by both sides but emphasised the need for a facts-based assessment rather than a rigid application of trilogy principles. It noted:

• The property was a commercial buy-to-let asset owned by the Plaintiff company as part of a portfolio.
• No rent had been received by the Receiver since appointment and the parties’ cooperation had been limited.
• The Plaintiff had significant indebtedness, had not repaid for years, and there were valid charges; the Plaintiff and its directors had substantial equity available to meet an undertaking as to damages.
• The Plaintiff had been culpably dilatory in prosecuting the proceedings and had unreasonably failed to engage on opportunities to postpone sale.
• Although the Defendants conceded a fair issue, they demonstrated that damages would be an adequate remedy and that delaying enforcement risked injustice to the charge holder.

Balancing these factors, the court concluded that the overall risk of injustice favoured refusing the interlocutory injunction.

Holding and Implications

INTERLOCUTORY INJUNCTION REFUSED

Implications:

• The Plaintiff's application for an interlocutory injunction restraining the sale of the dwelling was refused; the Defendants may proceed with enforcement in accordance with their rights.
• The court considered damages to be an adequate remedy in the circumstances and found the balance of convenience weighed in favour of the Defendants given the commercial nature of the dispute, the Plaintiff's delay, and the available security.
• The court set a further hearing date and directions for 10:30 a.m. on 23 April 2026 to address timetable and costs.
• No broader legal principle or new precedent was established beyond the application of existing authorities to the particular facts; the decision turns on the factual matrix and the court's assessment of the least risk of injustice.