High Court grants interlocutory injunction to bank receiver against defendants trespassing on mortgaged property pending full trial.

Neutral Citation: [2015] IEHC 148

THE HIGH COURT

COMMERCIAL

[2015 No. 1736 P.]

BETWEEN

GOVERNOR AND COMPANY OF BANK OF IRELAND AND

TOM KAVANAGH

PLAINTIFFS

AND

BRIAN O’DONNELL AND MARY PATRICIA O’DONNELL

DEFENDANTS

JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 12th day of March, 2015

1. This is an application for an interlocutory injunction restraining the defendants, their servants and/or agents or other persons

acting on their behalf or persons having notice of the making of the order herein from trespassing, interfering with, entering upon or

otherwise attending at the property known as Gorse Hill, Vico Road, Killiney, Co. Dublin. The plaintiffs also seek interlocutory relief by

way of an order compelling the defendants, their servants and/or agents and all persons having notice of the making of the order, to

vacate the lands and properties known as Gorse Hill, Vico Road, Killiney, Co. Dublin. The plaintiffs seek further interlocutory injunction

relief restraining the defendants, their servants and/or agents or other persons acting on their behalf or persons having notice of the

making of an order from impeding or obstructing the second named plaintiff (“the receiver”), his servants and/or agents in securing

the property or from impeding, interfering with or obstructing him in attempting to secure and deal with the property. The plaintiffs

also seek an order directing the defendants, their servants and/or agents and all persons having notice of the making of the order to

vacate the property and to deliver up to the receiver forthwith any keys, alarm codes and/or other security and access devices and

equipment in respect of the property. Finally, the plaintiffs seek an interlocutory injunction restraining the defendants and each of

them, their servants and/or agents and each of them and other persons having notice of the making of the order from interfering with

the functions and office of the second named plaintiff as receiver of the property.

2. These proceedings follow a number of other legal proceedings taken by members of the O’Donnell family concerning Gorse Hill and

their right to remain in possession thereof. In the most recent proceedings, bearing record number [2015 No. 1553 P.], and heard on

the 2nd and 3rd March, 2015, I refused an application of Vico Limited and the O’Donnell children for an injunction restraining the bank

and receiver from taking possession of the premises and I also refused an application to put a stay on an order made by me on 10th

September, 2013, and perfected on 3rd October, 2013, in other proceedings.

3. Before dealing with the substance of the motion, I wish to deal with an application by the plaintiffs that they should have been

allowed more time to file an affidavit.

4. These proceedings were commenced by plenary summons dated 3rd March, 2015, and a notice of motion was served on the

defendants returnable for 5th March, 2015, pursuant to an order made by me granting a short service after I had delivered a

judgment on 3rd March, 2015, in proceedings bearing record number [2015 No. 1553 P.] brought by Vico Limited and the O’Donnell

children against the Bank of Ireland, the receiver and others. The defendants claim that the directions given by this Court on 3rd

March requiring them to furnish a replying affidavit with less than 24 hours notice, in respect of a hearing fixed for 11:00am on 5th

March, 2015, is unconstitutional and in breach of their rights under the European Convention of Human Rights and Fundamental

Freedoms. The papers were served on Gorse Hill on the evening of 3rd March, 2015. It is useful to look at some relevant facts which

were known to the defendants by that time.

5. The defendants rely on correspondence with the trustees of the settlement and in particular, a letter of 18th July, 2012, from Mr.

David A. Harris and to a letter of wishes dated 20th October, 2000 to the trustees of the settlement as giving them a right of

residence which can only be determined by least two calendar years notice. In these proceedings, the defendants also raise a number

of points about the formal requirements relating to the loan and security documents not being complied with. But so far as their claim

to a right of residence is concerned, it clearly rests on the correspondence with the trustees of the settlement.

6. The defendants live in the United Kingdom and returned to take up residence in Gorse Hill a short time ago around the same time

that Vico Limited and their children were seeking an injunction restraining the receiver from taking possession of the property. On

Friday, 27th February, 2015, the first named defendant wrote to the plaintiffs informing them of the defendants’ alleged right of

residence in the property which “must be terminated by writing with at least two calendar years notice”. The letter went on to state

that if the receiver or his agents “…trespass and harass us at our residence on Monday, 2nd March, 2015, we will call the police”.

7. On 31st July, 2013, this Court delivered a judgment in proceedings bearing record number [2012 No. 7554 P.] brought by the

O’Donnell children against the Governor and Company of the Bank of Ireland, Bank of Ireland Private Banking Limited and Tom

Kavanagh (the receiver). These proceedings arose out of various securities executed in favour of the bank over the Gorse Hill

property. The securities were in respect of liabilities of the defendants in these proceedings as well as various corporate entities

controlled by them. In those proceedings, the children of the defendants asserted beneficial ownership over Gorse Hill and extensive

evidence was given concerning the trust set up by the defendants in favour of their children and issues surrounding the ownership of

Gorse Hill. The O’Donnell children failed in that action to establish beneficial ownership and the court held that the owner of Gorse Hill

is Vico Limited. An appeal was taken to the Supreme Court. The Supreme Court dismissed the appeal. In the course of my judgment,

given in those proceedings, I remarked that neither Brian nor Mary Patricia O’Donnell were called to give evidence at the trial and that

Mr. O’Donnell, in particular, would be uniquely placed to confirm the position with regard to the trust settlement. No satisfactory

reason has been given to the Court by the defendants as to why they did not join in those proceedings to assert a right of residence.

It is inconceivable that the defendants in these proceedings did not know what entitlement (if any) they had to reside at Gorse Hill at

the time when those proceedings were taking place. Their children took those proceedings in order to prevent the receiver taking

control of the property but they chose to take no part in those proceedings. By the time they wrote to the first plaintiff on 27th

February, 2015, claiming a right of residence which required to be terminated in writing with at least two calendar years notice, they

must have formulated in their own minds, the basis on which this assertion was being made.

8. Having regard to these matters, the defendants were perfectly well placed to make this case on affidavit for the purpose of

resisting the interlocutory injunction sought by the plaintiffs even if they were required to do so within one working day. There was no

information canvassed by the plaintiffs in their affidavits which was not known to the defendants for a long time. In the

circumstances, I reject the defendants’ complaint that they were given insufficient time to furnish a replying affidavit for the purpose

of this interlocutory injunction.

Interlocutory Injunction

9. This is an application for an interlocutory injunction. Such an application does not determine the proceedings but merely strives to

preserve the status quo until the hearing or until further order. No rights are determined nor are issues decided at this stage. In

Campus Oil v. Minister for Industry and Energy & Ors (No. 2) [1983] I.R. 88, the Supreme Court (in upholding Keane J. in the High

Court) held that the test to be applied on a motion for interlocutory relief is whether:-

“…a fair bona fide question has been raised by the person seeking the relief. If such a question has been raised, it is not

for the Court to determine that question on an interlocutory application: that remains to be decided at the trial.”

The court must then go on to consider the balance of convenience and preservation of the status quo before reaching its decision

and, of course, the plaintiffs will be required to give an undertaking as to damages. There is no difficulty about the last point in this

case as the plaintiffs have given an undertaking as to damages in the event that an interlocutory injunction is granted.

10. In the case of Kavanagh & Lowe v. Lynch & Anor [2011] IEHC 348, Laffoy J. held that similar principles apply in an injunction to

restrain a trespass and she applied the principles in American Cyanamid Co. v. Ethicon Limited [1975] A.C. 396. Even where some of

the relief sought in an application for an interlocutory injunction to restrain trespass may be formulated in mandatory terms (such as

an order directing the defendants to deliver up keys, alarm codes and such like) this relief is ancillary to the primary relief sought

which is, in substance, prohibitory in that an order is sought seeking to restrain the defendants’ trespass. She held that a plaintiff in

such a case did not have to establish that they had “a strong case” that they are likely to succeed but that the Campus Oil

principles applied.

11. Certain facts are not in dispute in this case. On 4th March, 2011, the defendants signed a settlement agreement with the first

named plaintiff and they had independent legal advice at the time. On 12th December, 2011, the first named plaintiff recovered

judgment against the defendants in the sum of €71,575,991.29 and costs. The defendants are not the owners of the property. Gorse

Hill is owned by Vico Limited. The defendants reside in the United Kingdom. In an application to be adjudicated a bankrupt brought in

the United Kingdom, the defendants claimed that their centre of main interest was in the United Kingdom and that they resided there.

The learned judge in the bankruptcy hearing in England and Wales found against them on the COMI point but held that they were

resident in the United Kingdom. Indeed, the affidavit sworn by the first named defendant in respect of this application on his own

behalf and on behalf of the second defendant gives his address as East Haxted, Haxted Road, Edenbridge, Kent TN8 6PT, United

Kingdom.

12. In these proceedings the defendants seek to raise issues surrounding the appointment of the receiver and the efficacy of the loan

and security documents. In proceedings bearing record number [2012 No. 7554 P.], this Court and the Supreme Court concluded that

Vico Limited is the owner of Gorse Hill and upheld the validity of the security documents. However, the defendants seek to challenge

the validity of the loan and security documents. The status quo is that these matters have been ruled upon and if they seek to

pursue this line of attack in these plenary proceedings, they may be faced with an argument based on issue estoppel since they did

not take part in the earlier proceedings in which their children sought to challenge the entitlement of the plaintiffs to take possession

of and deal with the properties. In the earlier proceedings, although their children asserted an interest in the property, the defendants

did not do so and neither did Vico Limited take any steps to restrain the bank and the receiver until the recent proceedings bearing

record number [2015 No. 1553 P.]. On 3rd March, 2015, I delivered judgment refusing the application of Vico Limited and the O’Donnell

children for an injunction. By letter dated 2nd March, 2015, the O’Donnell children wrote to the plaintiffs’ solicitors confirming that

they have vacated the property in compliance with the order of this Court dated 12th September, 2013, and perfected on 3rd

October, 2013, but without prejudice to their recent injunction application and other proceedings. Three days earlier the defendants

wrote to the plaintiffs asserting a right of residence and around the same time moved into Gorse Hill.

13. I have already referred in para. 11 to the settlement agreement of 4th March, 2011, between the defendants and the first named

plaintiff signed at a time when they had independent legal advice. Clause 3.5 of the settlement agreement states:-

“Brian O’Donnell and Mary Pat O’Donnell agree, subject to para. 3.4 above, that in the event that the bank exercises its

security in respect of the property at Gorse Hill, that they will immediately provide full vacant possession of the property

in good repair and condition and will cooperate with the bank in relation to any sale or disposal of the property.”

14. While the defendants have informed the court that they intend to challenge that agreement, it remains a valid and binding

agreement until such time as a court holds that they are entitled to repudiate it.

15. At the time the plaintiffs came to court seeking this interlocutory injunction, the status quo is as follows:-

(a) The owner of Gorse Hill is Vico Limited.

(b) The defendants reside in the United Kingdom.

(c) On 1st June, 2006, Gorse Hill was offered by Vico Limited as security for the indebtedness of the defendants and

companies related to them.

(d) By the settlement of 4th March, 2011, the defendants agreed that in the event that the first named plaintiff exercised

its security that they would immediately provide vacant possession of the property and cooperate with the first named

plaintiff in relation to any sale or disposal of the property.

(e) On 12th December, 2011, the first named plaintiff recovered judgment against the defendants in the sum of

€71,575,991.29 and costs.

(f) The second plaintiff was appointed by a deed of appointment dated 7th June, 2012.

(g) This Court and the Supreme Court have held that the mortgages and charges are valid and enforceable.

Have the plaintiffs met the Campus Oil test?

16. At the beginning of March 2015, and around the time Vico Limited and the O’Donnell children unsuccessfully applied for an

interlocutory injunction and a stay on previous orders requiring them to vacate the property, the defendants travelled back from the

United Kingdom where they live. They took up possession of Gorse Hill and invited third parties who are wholly unconnected with the

matters in dispute onto the premises. Effectively, they blockaded themselves into the premises with the assistance of third parties.

While Mr. O’Donnell said that the purpose of the blockade was to prevent curious onlookers and members of the media from coming

into the premises, I am quite satisfied that the purpose of these third parties being present was to prevent the receiver from entering

upon the premises to take possession of them. Not only did the defendants invite these third parties onto the premises for that

purpose but some of these third parties made public statements about the case of both a legal and factual nature at the time when

these proceedings were pending or at hearing. The first named defendant claimed that he had no control over these people and what

they said. Having invited them onto the premises for the purpose of frustrating the plaintiffs from exercising their rights to take

possession of the property, he cannot repudiate their actions. He confirmed to the court that he did not tell the parties making such

statements in public or to the media to desist from doing so. Many of these statements were both factually and legally incorrect and

had little or no regard for the rule of law and the legal process. I take these matters into account in deciding whether or not it is

necessary for an interlocutory injunctive relief to be granted.

17. Having regard to the matters set out in the affidavits of Brian O’Connor and Tom Kavanagh sworn on 3rd March, 2015, and the

replying affidavit of the first defendant, I am satisfied that the plaintiffs have met the test for an interlocutory injunction. In reaching

this conclusion, I stress that I am not making any final findings in respect of matters raised by the defendants as issues in dispute

such as their challenge to the settlement agreement of 4th March, 2011 and the legal deficiencies they allege in the loan and security

documents. These are all matters for the plenary hearing in due course. In Keating & Co. Limited v. Jervis Shopping Centre Limited

[1997] 1 I.R. 512, Keane J. at p. 518 said:-

“It is clear that a land-owner, whose title is not in issue, is prima facie entitled to an injunction to restrain a trespass

and that this is also the case where the claim is for an interlocutory injunction only. However, that principle is subject to

the following qualification explained by Balcombe L.J. in the English Court of Appeal in Patel v. W.H. Smith (Eziot) Ltd.

[1987] 1 W.L.R. 853 at p. 859:-

‘However, the defendant may put in evidence to seek to establish that he has a right to do what would otherwise

be a trespass. Then the court must consider the application of the principles set out in American Cyanamid Co. v.

Ethicon Ltd. [1975] A.C. 396 in relation to the grant or refusal of an interlocutory injunction.’”

18. In this case, the defendants claim that they have a right of residence. But the basis on which that right is asserted is

correspondence between the first named defendant and the trustees who do not own the property. The property is owned by Vico

Limited. In any event, the letter of wishes relied on by the defendants is dated 20th October, 2000 and does not in anyway establish

that the owner of the property, Vico Limited, agreed to the right of residence contended for. Furthermore, the letter of 18th July,

2012, from Mr. David A. Harris, a director of IFG International Limited states no more than that the trustees were absolutely happy for

the settlers to occupy the property with their children. But the trustees did not own the property. That is a matter that may be

canvassed more fully in the plenary hearing but is not sufficient to establish, at the hearing for interlocutory injunction – that the

defendants have a right to reside there and meet the test in Patel v. W.H. Smith. The letter of wishes relied on by the defendants

was 20th October, 2000. On 1st June, 2006, Vico Limited, the owner of the property, created the mortgages and charges. The

defendants entered into the settlement agreement on 4th March, 2011. If they wished to attack the security documents and the

settlement agreement which they entered into, this will have to be done at the plenary hearing. In the meantime these documents

can be relied on by the plaintiffs and represent the status quo which can only be protected by granting the interlocutory injunction

sought. The defendants are, prima facie, trespassing on the property at Gorse Hill.

19. So far as the balance of convenience is concerned, the following matters appear to be relevant. In the first place, the defendants

do not own the property. The legal and beneficial owner is Vico Limited. Secondly, the defendants live in the United Kingdom and have

been residing there for some time. It appears that they only returned to Gorse Hill in order to frustrate the attempts of the plaintiffs

to take possession of the property which was charged to secure very substantial debts incurred by them and companies related to

them. The balance of convenience favours the granting of the interlocutory relief sought.

20. The plaintiffs have a judgment in excess of €71m against the defendants and are seeking to exercise their powers on foot of

mortgages and charges against the property in partial satisfaction of that claim. They can only do that if they have vacant

possession of the property. Accordingly, damages would not be an adequate remedy in this case.

21. I will make an order granting the injunctions sought in paras. 2, 3, 4, 5, 6 and 7 of the notice of motion.