High Court dismisses injunction application against receivers due to inadequate damages undertaking and balance of convenience.

Neutral Citation [2013] IEHC 112

THE HIGH COURT

[2013 No. 1915P]

BETWEEN

MICHAEL KINSELLA, GREG KINSELLA, BARBARA KINSELLA, AMANDA KINSELLA FERGUSON, GREG KINSELLA DESIGN STUDIO

LIMITED, SOUTHERN CARPETS LIMITED, MICHAEL KINSELLA INVESTMENTS LIMITED

PLAINTIFFS

AND

KIERAN WALLACE, PADRAIC MONAGHAN AND BANK OF SCOTLAND PLC

DEFENDANTS

Judgment of Ms. Justice Laffoy delivered on 12th day of March, 2013.

Factual background

1. The factual background to this application for an interlocutory injunction is extremely complex. The first named plaintiff (Mr.

Kinsella) and his two children, the second named plaintiff and the fourth named plaintiff, have obviously been involved in property

development in the Bray area for at least a decade. They have operated as a partnership, which is referred to in the documentation

as the “Kinsella Property Partnership”. Some or all of them have also carried on business through the medium of the three corporate

plaintiffs, that is to say, the fifth, sixth and seventh plaintiffs. Some or all of the three partners have entered into guarantees and

given security in a personal capacity in relation to borrowings by the partnership and by some or all of the corporate plaintiffs from

the predecessor of the third defendant (the Bank). The third plaintiff is the wife of Mr. Kinsella and she has joined with Mr. Kinsella in

giving security to the Bank over property owned by her and Mr. Kinsella jointly as security for certain borrowings by some of the other

plaintiffs from the predecessor of the Bank.

2. The predecessor of the Bank was Bank of Scotland (Ireland) Ltd., which merged with the Bank by a cross-border merger by

absorption effective from just before midnight on 31st December, 2010. The reference to the Bank hereafter means Bank of Scotland

(Ireland) Limited prior to the merger and Bank of Scotland Plc thereafter.

3. What triggered these proceedings was that on 20th February, 2013 the Bank appointed the first and second named defendants

(the Receivers), both of KPMG, to be joint receivers and managers over the assets and undertakings of the three corporate plaintiffs.

The relevant deeds of appointment have not been exhibited. Further, on the same day, the Bank appointed the Receivers to be joint

receivers over all the assets referred to and comprised in and charged by certain security documents given by Mr. Kinsella and the

second, third and fourth plaintiffs to the Bank. It would appear that there were four deeds appointing the Receivers as joint receivers

over the assets of Mr. Kinsella and the second, third and fourth plaintiffs. To take one example, one of the deeds of appointment

appointed the Receivers as joint receivers over all the assets charged by –

(a) a mortgage and charge dated 31st March, 2003 made between Mr. Kinsella of the one part and the Bank of the other

part “relating to, amongst other things, lands at 61 and 62 Main Street, Bray, County Wicklow”; and

(b) a mortgage and charge dated 8th September, 2006 made between Mr. Kinsella of the one part and the Bank of the

other part relating to “amongst other things, a premises known as Green Gables, Parnell Road, Bray, County Wicklow”.

The other deeds of appointment exhibited refer in a like manner to –

(i) 60 Main Street, Bray,

(ii) 9 and 10 School Lane, Bray,

(iii) 63 and 64 Main Street, Bray,

(iv) Eleda House, Brighton Terrace, Bray, and

(v) 32 The Nurseries, Killarney Road, Bray.

While copies of various letters of demand issued by the Bank’s solicitors, Mason Hayes & Curran, to the plaintiffs individually have

been exhibited, it is not possible to form a view on the total indebtedness of the plaintiffs to the Bank, because it is not possible to

form a view as to whether there is an overlap of the amounts demanded in the various letters of demand, in that some amounts may

relate to primary liability and also to secondary liability of a guarantor. It is unquestionably the case that there is a very substantial

amount of money due to the Bank under the security documents on foot of which the Receivers were appointed. Moreover, in the

absence of the deeds of appointment in relation to the security given by the corporate plaintiffs, not to mention any of the security

documents, there is no clear picture before the Court of the totality of the property and assets over which the monies due to the

Bank are secured.

4. The factual basis of these proceedings is to be found in the letter of complaint dated 5th March, 2012, apparently on behalf of the

plaintiffs to the Bank’s agent. The letter was on the letter heading of Peach Investments Limited with an address in Bray and it was

signed by Mr. Kinsella. Although he had an opportunity to do so in his second affidavit sworn on 4th March, 2013, Mr. Kinsella did not

explain the relationship of Peach Investments Limited and the plaintiffs. However, for present purposes, I consider it can be assumed

that the letter of 5th March, 2012 was written on behalf of the plaintiffs. The addressee of that letter was Mr. Matthew Harvey of

Certus. As explained in the replying affidavit of Jonathan Henderson sworn on 1st March, 2013 on behalf of the Bank, Certus is an

Irish registered unlimited company which has been engaged by the Bank to provide customer support and administration services to it.

In the letter, ten issues were raised in relation to the dealings of the plaintiffs with the Bank in relation to the plaintiffs’ development

known as Southpoint, Main Street, Bray, which I understand to consist of a combination of residential and commercial units. The

factual basis of these proceedings centres on three of the issues raised in that letter, namely:

(a) It was asserted that at the outset of the project, which I understand to mean the Southpoint development, in 2005

the Bank was fully aware and accepted that “the build cost and additional premises acquisition costs would generate a

shortfall of €7,000,000”. It was asserted that the “agreed plan” between the Kinsellas and the Bank was that all of the

apartments would be sold, but with the commercial units being retained, leaving an estimated loan repayment shortfall of

€7,000,000, which the Bank agreed it would finance “over a 15 year non development loan which would be secured and

serviced from the rental income generated from the retained commercial units”. The plaintiffs’ complaint at the core of

these proceedings is that the Bank has resiled from that agreement in enforcing its security by the appointment of the

Receivers.

(b) It was asserted that after the building contract for the Southpoint development was signed in July 2006 and after the

site works had commenced, in September 2006 the Bank demanded additional security from the Kinsellas before it would

release part of the loan to be advanced to the Kinsellas to enable them to discharge monies due to the building

contractor. It was represented by a named official of the Bank that the requirement for additional security would not be

long-term and it was agreed that it would be released when the development reached a certain height. In was on that

basis, and under protest, that the Kinsellas gave additional security to the Bank of what are referred to as the “non-core

properties”, which are listed in the grounding affidavit of Mr. Kinsella as:

(i) Green Gables, Parnell Road, Bray,

(ii) 32, The Nurseries, Killarney Road, Bray,

(iii) The Gables, Parnell Road, Bray (sic),

(iv) Store at St. Kevin’s Square, Bray,

(v) 55, Main Street, Bray, and

(vi) Shop unit at St. Kevin’s Square, Bray.

The plaintiffs’ complaint is that, not only did the development reach the certain height stipulated, but it has actually been

completed and the apartment units are fully occupied and a number of the commercial units are also occupied. However,

the Bank has not released the non-core properties, despite the agreement on the part of the Bank to do so. As regards

the identity of the non-core properties and the other secured properties, it must be stressed that there is no evidence

before the Court as to on what property the Southpoint development was constructed, nor is there evidence as to in

which of the plaintiffs the title to the unsold portions of the Southpoint development is vested. I mention this because

the non-core properties listed above do not coincide with the properties listed in paragraph 3 over which the Receivers

have been appointed.

(c) The complaint, which is referred to as Issue 4 in the letter, has been described in the grounding affidavit of Mr.

Kinsella as dealing with “the promises and representations made by the bank in 2008”. He has also averred that after the

“selling market” crumbled in 2008, the Kinsellas retained Douglas Newman Good to carry out a valuation of the unsold

apartments. That firm produced a document which the Kinsellas produced to the Bank and they pressed the Bank to agree

to reduce the selling price to the lower levels suggested by Douglas Newman Good. The reaction of an official of the Bank

was that they could not sell at those lower prices. However, they were told not to worry by the official and were told to

“hold the line” and the Bank would extend their facilities and roll over the loans. They were specifically instructed by the

Bank that they should “wait out the market” and in the interim let out the unsold apartments. On the understanding that

the Bank was going to support them, the plaintiffs fitted out the unsold apartments and for that purpose the Bank

advanced a loan of €300,000. Their complaint now at the core of these proceedings is that, in appointing the Receivers,

the Bank has resiled from their representations.

5. The letter of 5th March, 2012 was responded to by Bank of Scotland from its Leeds office by letter dated 2nd May, 2012. As

regards the complaints summarised at (a), (b) and (c) in the previous paragraph, the response of the Bank was as follows:

(a) The author of the Bank’s letter (Vanisha Patel, Complaints Officer) interpreted this complaint as being that the Bank

agreed to provide a loan facility of €7,000,000 to be repaid over fifteen years in relation to the commercial units at

Southpoint but that this was not documented. In the response, reference was made to the most recent facilities granted

to the Kinsella Property Partnership in 2008 and 2009 and the repayment requirements in them and it was stated that the

facility documentation in question remains relevant and that a formal re-finance offer as was asserted was never made by

the Bank.

(b) The author’s understanding of this complaint was that part way through the construction of the Southpoint

development additional security was sought from the Kinsellas and it was their understanding that the additional security

would be released once the Southpoint development reached a certain height. The answer was to dispute the plaintiffs’

assertion and to state that the intention was that the properties would remain charged to the Bank until either full

repayment of the facilities or by formal approval for release by the Bank.

(c) The author’s understanding of this complaint was that the Bank had instructed the Kinsellas to let out the apartments

at the Soutpoint development rather than reduce the price and seek a sale. The answer was that the Bank’s

understanding was that the income streams and sales proceeds would be insufficient to enable the various loan facilities

to be repaid in line with the relevant facility documentation, if the apartments were sold at levels proposed and its

commercial units were let at level proposed and it was on that basis that the requests were declined.

6. Following receipt of the Bank’s letter, the second plaintiff took issue with various aspects of Mr. Patel’s response and threatened to

make a complaint to the Financial Services Ombudsman (FSO) in a letter dated 31st May, 2012. Following a holding letter of 15th

June, 2012, Mr. Patel issued his final response on behalf of the Bank by letter dated 12th July, 2012 stating that he had not been

provided with any new evidence that might change the Bank’s decision on the complaint. He pointed out that the complainants could

refer the complaint to the FSO.

7. In fact, on 19th July, 2012, Mr. Kinsella and the second, third and fourth named plaintiffs, through their solicitors, Cullen Tyrrell &

O’Beirne, submitted a complaint against the Bank to the FSO. In section (c), in which the complainants were asked to describe the

complaint in their own words, they stated that they had ten grounds of complaint with the Bank as detailed in their letter of 5th

March, 2012 to Certus and in their letter of 31st May, 2012 to the Bank. In response to a further question as to how they wanted the

Bank to put things right, the complainants responded that they requested the FSO to deal “with our complaints, in particular as

regards the disclosure of relevant documents, submissions and oral hearing”. They went on to state that their complaints concerned,

inter alia, “oral assurances made by the Bank, which the Bank deny and the essence of our complaints cannot be resolved without an

oral hearing”. They requested that the Bank should not make any decision, procedural or otherwise, without first hearing from them.

In reality they did not answer the question posed, although the clear implication is that they require that the Bank be compelled to

abide by its oral assurances. The relevant correspondence commencing with the letter of 5th March, 2012 to the Bank and ending

with the letter of 12th July, 2012 from the Bank was attached to the complaint. A further complaint in similar terms in the name of the

three corporate plaintiffs was submitted by the plaintiffs’ solicitors to the FSO on 23rd July, 2012.

8. By letter dated 2nd August, 2012 from the Head of Legal Services of the FSO, the plaintiffs’ solicitors were informed that the file

had been referred to him to make a determination with respect to the FSO’s jurisdiction to investigate the complaint. It was pointed

out that any decisions, determinations or procedural action taken in respect of complaints before the FSO are matters which are

entirely within the jurisdiction of that office to make. That position was reiterated in a further letter of 13th August, 2012 from the

FSO to the plaintiffs’ solicitors. Despite two requests from the plaintiffs’ solicitors for “an up date” there had been no response to the

complaint from the FSO prior to the appointment of the Receivers.

The proceedings and the application

9. These proceedings were initiated by a plenary summons which issued on 25th February, 2013. As counsel for the defendants

emphasised the nature of the reliefs sought on the general endorsement of claim on the plenary summons, it is appropriate to outline

it. Apart from exemplary damages, interest and costs, the reliefs sought were framed as follows:

(a) a declaration that the deeds of appointment dated 20th February, 2013 appointing the Receivers over the properties

set out in the schedule appended were “improper and otherwise unlawful in circumstances where the scheduled properties

and the conduct of the [Bank] is the subject matter of a complaint before the [FSO] dated 19th July, 2012”;

(b) an order setting aside the appointments under the deeds of appointment;

(c) an order restraining the defendants from taking any steps pursuant to the deeds of appointment; and

(d) a declaration that the Bank “has wrongly and improperly sought to take steps likely to prejudice or negate the effect

or implementation of a decision by the [FSO] in the plaintiffs’ complaint against the Bank dated 19th July, 2012.”

In the appended schedule six mortgages and charges and the properties secured by them respectively are listed, being the mortgages

and charges referred to in the four deeds of appointment in relation to the securities given by Mr. Kinsella and the second, third and

fourth plaintiffs referred to above. For instance, in relation to the example I have given at para. 3 above, the mortgage and charge

dated 31st March, 2003 given by Mr. Kinsella in relation to 61 and 62, Main Street, Bray, is listed at 6 and the mortgage and charge

dated 8th September, 2006 given by Mr. Kinsella in relation to Green Gables, Parnell Road, Bray, is listed at 5. The terminology used in

the deeds of appointment is replicated in that, for instance, in relation to the mortgage and charge dated 31st March, 2003 it is

expressed as relating to, among other things, the lands at 61 and 62, Main Street, Bray. The seventh item in the schedule refers to

the deeds of appointment in relation to the three corporate plaintiffs, which have not been received by the plaintiffs’ solicitors. In

other words, as I understand it, the plaintiffs seek to have all seven deeds of appointment executed on 20th February, 2013 set

aside, so that their claim relates to all of the properties and assets over which the Bank has security.

10. On 25th February, 2013 the plaintiffs were given leave by the Court to issue a notice of motion returnable for 1st March, 2013

seeking the following reliefs:

(a) an order restraining the Receivers from taking any steps whatsoever pursuant to the deeds of appointment dated 20th

February, 2013 pending the determination of the proceedings; and

(b) an order restraining the Bank from taking any further steps likely to prejudice or negate the effect or implementation

of a decision of the FSO pending the determination of the plaintiffs’ complaint against the Bank of 19th July, 2012.

Bank’s knowledge of complaint to FSO

11. In his replying affidavit, Mr. Henderson acknowledged that the letter of complaint dated 19th July, 2012 to the FSO had been

copied by the plaintiffs’ solicitors to Certus, but he contended that Certus had not received copies of the enclosures, such as the

complaint form, with the covering letter. The FSO had not written to either the Bank or to Certus informing them of the making of the

complaint. However, on the basis of inquiries made on the days prior to 1st March, 2013, when the replying affidavit had been sworn,

on behalf of the Bank with the office of the FSO, the Bank had learned that the FSO had still not reached a decision as to whether he

had jurisdiction to entertain the complaint. The correspondence subsequent to the complaint between the plaintiffs’ solicitors and the

FSO had not been brought to the attention of either the Bank or Certus.

12. Apropos of the plaintiffs’ response to the question posed on the FSO complaint form as to what the complainants wanted the

Bank to do to put things right, Mr. Henderson observed that “the Bank still does not know what relief the plaintiffs seek against it

before the FSO” and he asserted that the issue was not at all clarified by Mr. Kinsella’s grounding affidavit.

Judicial review proceedings in relation to FSO complaint

13. The plaintiffs’ application for an interlocutory injunction was listed for hearing on 5th March, 2013. When the matter came on for

hearing, the Court was furnished with an affidavit sworn by Maurice Phelan, a partner in Mason Hayes & Curran. Mr. Phelan averred

that he had been instructed by the defendants to contact the FSO with a view to ascertaining the current status of the plaintiffs’

complaint. He had received a letter dated 1st March, 2013 from the Head of Legal Services at the office of the FSO, which was

exhibited, in which it was confirmed that the current status of the complaint before the FSO was a preliminary issue as to whether

the FSO had jurisdiction to investigate the complaint. It was stated that it was expected that a final determination on that issue

would be made before noon on Tuesday, 5th March, 2013.

14. In fact, at 10.13am on 5th March, 2013, Mr. Phelan had received a copy of a letter dated 5th March, 2013 from the FSO to the

plaintiffs’ solicitors. He exhibited that copy letter in his affidavit. In that letter, the plaintiffs’ solicitors were informed that the FSO

had decided not to investigate the plaintiffs’ complaint. While, for the reason which will be obvious shortly, this Court is not

concerned with the validity of that decision, nonetheless, I think it is appropriate to record that it was based on two grounds. The

first was that, as the financial product or services provided were initially provided by the Bank to the complainants in June 2005, the

complaint had not been brought within the time prescribed in s. 57BX (3)(b) of the Central Bank and Financial Services Authority of

Ireland Act 2004 (the Act of 2004), which provides that a consumer is not entitled to make a complaint if the conduct complained of

occurred more than six years before the complaint is made. Secondly, having analysed the nature of the complaint itself, it was found

that the matters which it entailed were beyond the remit of the FSO. It was stated that the investigation of the complaint was more

appropriate for a court of law. In this context, the Head of Legal Services referred to s. 57BX(2) of the Act of 2004, which provides

that the FSO has sole responsibility for deciding whether a complaint is within his jurisdiction. He also quoted s. 57BZ to the effect

that the FSO can decide not to investigate a complaint, or to discontinue an investigation of a complaint, on the ground that there is

or was available to the complainant an alternative and satisfactory means of redress in relation to the conduct complained of. It was

emphasised in the letter that no determination in respect of any allegations or any aspect of the substantive complaint was being

made at that stage. Rather, a determination as to jurisdiction of the FSO to investigate the complaint only was being made.

15. While the interlocutory application was still at hearing, on 6th March, 2013, the plaintiffs obtained an order from the High Court

(Cross J.) giving them leave to apply by way of judicial review for an order of certiorari quashing the decision of the FSO of 5th

March, 2013 and staying the effect of that decision pending the determination of the judicial review proceedings.

Factual controversies

16. The affidavits filed on behalf of the parties are replete with factual controversies. The most important is that the Bank denies the

substance of the plaintiffs’ complaint to the FSO. While the Bank has not adduced any evidence on the part of its officials or former

officials who are alleged to have made the various representations relied on to the plaintiffs, it was made clear that it stands over the

position adopted in its letter of 2nd May, 2012.

17. There is also a factual controversy as to the state of knowledge of the officials of the Bank in relation to the plaintiffs’ complaint

to the FSO. In this connection, an affidavit sworn on 4th March, 2013 by Martin Kavanagh, the father-in-law of the second named

plaintiff, was filed on behalf of the plaintiffs. In that affidavit, Mr. Kavanagh, who attended the meetings, made it clear that officials

of the Bank were informed at meetings of 24th July, 2012 and 23rd January, 2013 of the plaintiffs’ complaint to the FSO. Mr.

Kavanagh’s evidence was that at the meeting of 23rd January, 2013, in response to a request by the Bank’s officials that the

complaint to the FSO be withdrawn, it was made clear by the plaintiffs’ representatives that there was no possibility of withdrawing

the complaint.

18. In the complaint to the FSO, it was explained, in broad terms, that the property the subject of the Bank loans was held by the

corporate plaintiffs, being non-trading companies of which Mr. Kinsella and the second, third and fourth plaintiffs are directors. It was

then stated:

“The rental income is paid into Kinsella Property Partnership (not a limited liability company). The total rental income

received is paid over to Bank of Scotland. The Bank currently receives €446,000 per annum, which represents 100% of

the net turnover of the named companies.”

That statement was replicated in the grounding affidavit of Mr. Kinsella. Mr. Henderson took issue with the statement in his replying

affidavit. Mr. Henderson averred that at the point in time when the Receivers were appointed, the receipts from the secured

properties being paid over to the Bank by the plaintiffs were insufficient to discharge the interest accruing on the various loans. Mr.

Henderson also averred to the actual rents received by the Bank out of the secured properties in 2011 and 2012 and the figures he

set out are consistent with his general statement that the receipts have been insufficient to discharge the interest accruing on the

various loans. The figures also revealed that in both 2011 and 2012 the sums received by the Bank in respect of rent fell short of

€446,000 and he referred to the discrepancy and suggested that the plaintiffs were in receipt of more money than was being passed

on to the Bank. In his replying affidavit Mr. Kinsella has taken issue with the figures given by Mr. Henderson for receipts in 2011 and

2012 and gave particulars. He also averred that, if he had been more precise, he would have stated that for 2013 the Bank will

receive €445,083 “or a figure thereabouts”.

19. By way of general observation, I do not get the sense from what has transpired between the plaintiffs and the Bank over the last

five years that the Bank has had any serious misgivings that the plaintiffs were not properly accounting for the rents of the

properties. The reality of the situation, as Mr. Henderson has averred, is that the indebtedness of the plaintiffs to the Bank is greatly

in excess of the value of the secured properties and the Bank’s medium-term objective, if not its immediate priority, is that the

Receivers will sell the secured properties and the Bank will receive the proceeds in discharge of the plaintiffs’ indebtedness.

20. The Court was informed, in response to a question to counsel for the plaintiffs, that, with the exception of a small warehouse

which is not let, all of the non-core assets are let. All of the unsold apartments in the Southpoint development are let, and of the

commercial units in that development, three are let and three are not let.

Authority of corporate plaintiffs to bring these proceedings

21. In his affidavit Mr. Henderson averred that the Receivers had confirmed to him that neither of them had given authority that

these proceedings should be instituted in the name of the corporate plaintiffs, nor had the Receivers authorised Mr. Kinsella to swear

an affidavit on behalf of the corporate plaintiffs.

22. It was submitted by counsel for the defendants that, in the absence of authority from the Receivers, the directors of the

corporate plaintiffs were not entitled to commence these proceedings, given the nature of the reliefs sought, in the name of the

corporate plaintiffs. Counsel relied on the following passage from the judgment of the High Court (Keane J.) in Lascomme v. United

Dominions Trust (Ireland) Ltd. [1993] 3 I.R. 412 (at p. 416):

“It is clear that when a receiver is appointed by a debenture holder under the powers in that behalf in the debenture, the

powers vested by law in the directors of the company are not thereby terminated. They may not, however, be exercised

in such a manner as to inhibit the receiver in dealing with and disposing of the assets charged by the debenture or in a

manner which would adversely affect the position of the debenture holder by threatening or imperilling the assets which

are subject to the charge. Subject to that important qualification, the powers vested by law in the directors remain

exercisable by them and include the power to maintain and institute proceedings in the name of the company where so to

do would be in the interests of the company or its creditors.”

23. While the issue of the entitlement of the directors of the corporate plaintiffs to pursue these proceedings was raised as an issue,

the Court was not asked to take any particular action, such as striking out the proceedings insofar as they have been instituted in

the names of the corporate plaintiffs. It would not be appropriate to make such an order on this application for an interlocutory

injunction, particularly, where the objective of the proceedings is to have the appointment of the Receivers set aside. However, while

the Court is taking no action on this point on this application, the defendants are not precluded from raising the matter at some

future date.

The law

24. There is no controversy as to the appropriate criteria to be applied by the Court in determining whether to grant the interlocutory

reliefs sought by the plaintiffs. They are the criteria prescribed by the Supreme Court in Campus Oil Ltd. v. Minister for Industry and

Energy (No. 2) [1983] I.R. 88, which may be summarised as follows:

(a) whether a fair bona fide question to be tried has been raised by the plaintiffs;

(b) whether, if the plaintiffs were to succeed at the trial, they would be adequately compensated by an award for

damages;

(c) whether, if the defendants were successful at the trial, they could be adequately compensated under the applicants’

undertaking as to damages for any loss which they would have sustained by reason of the grant of the interlocutory

relief; and

(d) if there is a question as to whether damages would be an adequate remedy for either party, whether the balance of

convenience lies in favour of the award or the refusal of an interlocutory injunction.

I will consider the application of each of the foregoing criteria in turn.

Fair bona fide question

25. Before identifying the question which the plaintiffs have raised, it is convenient to make some preliminary observations.

26. First, not only did counsel for the defendants submit that the plaintiffs had not established that there is a fair bona fide issue to

be tried in these proceedings, but he submitted that it was open to the Court to determine at this juncture that the plaintiffs have

not established any issue and, therefore, the matter should be disposed of. In support of that argument, counsel relied on the

decision of the House of Lords in Associated British Ports v. T.G.W.U. [1989] 1 WLR 939. In particular, he relied on the following

observations of Lord Goff at the end of his speech, when, having stated that the plaintiff employers in an industrial relations dispute

had not established the existence of any serious issue to be tried, he continued (at p. 979):

“This is not a case concerned with a difficult question of law which calls for ‘detailed argument and mature consideration’

(cf. American Cyanamid Co. v. Ethicon Ltd. . . . per Lord Diplock). On the view which I have formed of the case, the

argument does not advance to the stage of examining the difficult question . . . of the ambit of the economic torts

invoked by the employers. As it appears to me, the employers’ argument fails in limine at the earlier stage which involves

no more than a limited question of the meaning and effect of one sub-clause in the Scheme. True, this is a point of law

which, concerned as it is with the meaning and effect of a provision set in a Scheme of some complexity, can ‘take a little

longer to understand’. . .; but, once the provision is understood, the solution to the problem is clear. It would be quite

wrong for a court not to decide a point such as this on an application for an interlocutory injunction, thereby disposing of

the matter.”

27. The response of counsel for the plaintiffs to that submission was to refer to the following observations from Hardiman J., with

whom the other Judges of the Supreme Court concurred, in Dunne v. Dun Laoghaire-Rathdown County Council [2003] 1 I.R. 567 (at p.

581):

“It is important to emphasise that, in dealing with an interlocutory motion, the court is not finally deciding any factual or

legal aspect of this controversy. On a full hearing the evidence may be different and more ample. The law will be debated

at greater length . . ..”

In line with those observations, in my view, it would not be appropriate for the Court to go any further on this application than to

determine whether the plaintiffs have established that a fair bona fide question has been raised.

28. Secondly, that passage from the judgment of Hardiman J. is a reminder that it is not the Court’s function to attempt to resolve

any factual controversies on an application for an interlocutory injunction. Some only of the myriad of factual controversies thrown up

by the affidavit evidence have been referred to earlier. To take one example, in the course of outlining the various facility letters

issued by the Bank to the plaintiffs, which were so numerous that they cover paragraphs 8 to 24 inclusive of Mr. Henderson’s

affidavit, Mr. Henderson drew attention to the fact that a facility granted to the seventh named plaintiff, Michael Kinsella Investments

Limited, in October 2008, which was amended in November 2008, was accepted by that corporate plaintiff some time after the oral

agreements or understandings alleged by the plaintiffs in their complaint to the FSO. At the outset, I have alluded to the complexity

of the arrangements between the plaintiffs and the Bank. The Court has not had sight of any of the facility letters issued to any of

the plaintiffs. The Court has not had sight of any of the security documents, whether mortgages, charges, debentures or deeds of

guarantee and indemnity, given by any of the plaintiffs to the Bank. As I have already recorded, the Court has not had sight of the

deeds of appointment of the Receivers as receivers and managers of the corporate plaintiffs. Not only is the Court not in a position to

form a view as to the total amount outstanding of the loans advanced to the primary debtors, but the Court cannot form a view as to

how much of the total amount outstanding is secured on property of primary debtors and how much is secured on property of

secondary debtors. The purpose of referring to those matters is to emphasise the difficulty which a Court is faced with on an

application such as this and the reason why, in the words of Lord Diplock, it is no part of the Court’s function at this stage to try to

resolve conflicts of evidence on affidavit as to facts on which the claims of the plaintiffs or the defendants may ultimately depend. I

should make it clear that there is no criticism of the Bank for not exhibiting the various facility letters and security documents implicit

in those remarks and the logistical difficulties in collating documents within a short time span is understood.

29. Thirdly, this Court has to exercise caution because of the existence of the parallel judicial review proceedings initiated by the

plaintiffs against a party who is not before this Court, the FSO, although I understand the Bank is a notice party in the judicial review

proceedings. For the purposes of this application, in my view, the proper approach for this Court to adopt is to act on the assumption

that no determination has been made by the FSO on foot of the plaintiffs’ complaints and that those complaints are still pending.

30. It is the plaintiffs’ case that there is a fair bona fide question raised in these proceedings as to whether the Bank acted improperly

and otherwise unlawfully in appointing the Receivers on 20th February, 2013, while the plaintiffs’ complaint against the Bank to the

FSO was still pending, so that the appointment of the Receivers should be set aside. In summary, the plaintiffs’ case is that they

have a statutory right to make the complaints which they have made to the FSO and that, assuming the complaint is determined by

the FSO in their favour, there is a wide range of options open to the FSO to redress the wrongs they allege. They contend that, in

effect, if the Receivers are left in place and obtain control of the secured assets, that will render nugatory such steps as the FSO

may decide to take to redress the wrongs of which they complain. Counsel for the plaintiffs referred to a number of decisions of the

Superior Courts on the provisions of the Act of 2004 which apply to the investigation of complaints by the FSO: the decision of the

Supreme Court in J. & E. Davy t/a Davy v. Financial Services Ombudsman [2010] 3 I.R. 324; the decision of the High Court in Koczan

v. Financial Services Ombudsman [2010] IEHC 407; the decision of the High Court in O’Hara v. ACC Bank Plc [2011] IEHC 367; and

the decision of the High Court in Lyons v. Financial Services Ombudsman [2011] IEHC 454. Having regard to the existence of the

parallel judicial review proceedings, I consider that it would be inappropriate to express any view on the merits of the plaintiffs’

complaint or on the application of the provisions of the Act of 2004 to it.

31. The plaintiffs also rely on the provisions of s. 57CP of the Act of 2004, which provides as follows:

“(1) The High Court may, on an application made by the Financial Services Ombudsman, grant an injunction restraining

conduct in which a regulated financial service provider is engaging or in which a regulated financial service provider

appears likely to engage, if the conduct is conduct that is being investigated or is proposed to be investigated under this

Part.

(2) The High Court may not grant an application under subs. (1) unless of the opinion that the conduct sought to be

restrained is likely to prejudice or negate the effect of the implementation of a decision that the Financial Services

Ombudsman might make under this Chapter if that Ombudsman were to find the complaint to which the conduct relates is

wholly or partially substantiated.”

It would appear that the word “injunction” should appear instead of “application” in subs. (2). Counsel for the plaintiffs submitted that

by analogy to that provision, the plaintiffs, as complainants, must have an entitlement to seek injunctive relief to restrain the Bank

from fettering their right of access to the FSO and to exercise their statutory right to prosecute their complaint against the Bank.

Indeed, the plaintiffs have expressly invoked the principle embodied in subs. (2) in relation to the likelihood of prejudice to and

negation of the effect of the decision of the FSO in formulating its claim in these proceedings and on the interlocutory application.

32. In a robust response to those arguments, counsel for the Bank contended that the plaintiffs had not pointed to any legal principle

under which the Bank could be restrained from exercising its contractual rights to enforce its securities at this point in time. Further,

no authority in point had been cited. Counsel for the defendants also sought to rely on the analysis of the complaint procedure under

the Act of 2004 by Hogan J. in the Lyons case and also on an opinion expressed in the letter of 1st March, 2013 from the FSO to

Mason Hayes & Curran. Because of the judicial review proceedings, I do not consider it appropriate to express a view on either of

those points. However, counsel for the defendants also submitted that the jurisdiction conferred by s. 57CP of the Act of 2004 is

confined to an application by the FSO and that a complainant has no right at law to “piggy bank” on the jurisdiction conferred by s.

57. It was further submitted that, in any event, in order to determine whether the appointment of the Receivers is “likely to prejudice

or negate the effect or implementation of a decision” that the FSO might make, the Court would have to consider what relief the

plaintiffs claim from the FSO, which has not been clarified by the plaintiffs on affidavit, notwithstanding that the issue was raised in

Mr. Henderson’s replying affidavit. Finally, it was submitted on behalf of the defendants that the plaintiffs’ recourse to this Court is a

delaying tactic, particularly in the context that the plaintiffs have not identified the reliefs they are seeking from the FSO.

33. Counsel for the defendants characterised the plaintiffs’ case for interlocutory relief on the basis advanced as “flimsy”. The

threshold which has been laid down in the jurisprudence as to the legal basis which must be demonstrated to establish an entitlement

to interlocutory relief, whether a fair bona fide issue has been raised by the plaintiff, is generally recognised as being a low threshold.

In this case, apart from that, because of the combination of factors which have already been adverted to, namely:

(a) that the entire basis of the plaintiffs’ claim as disclosed on the plenary summons is that the Bank is not entitled to

enforce its securities over the plaintiffs’ properties and assets while the plaintiffs’ complaint to the FSO is pending, and

(b) that the complaint to the FSO is subject to the parallel judicial review proceedings in this Court,

this Court has to be ultra cautious in its findings as to the legal implications of the complaint to the FSO on the relationship of the

plaintiffs and the Bank. For those reasons, I have come to the conclusion that the proper course is for the Court to find that the

plaintiffs have met the fair bona fide question threshold.

Adequacy of damages as a remedy for the plaintiffs

34. On any view of the plaintiffs’ complaints outlined at (a) and (c) in paragraph 4 above, they are about money and nothing else,

specifically, at what point in time the plaintiffs are liable to repay the monies borrowed or guaranteed to the Bank. The nub of the

complaint at (a) is that the Bank has resiled from an agreement to allow the shortfall of €7,000,000 to remain outstanding for a term

of fifteen years from a date not specified and in the interim to be secured and serviced only from rental income of the unsold

commercial units in Southpoint. The nub of the complaint at (c) is that the Bank has resiled from an agreement not to enforce its

security in relation to the unsold apartments until the property market recovers, whenever that may be. What seems to be overlooked

is that, not only have the plaintiffs given security to the Bank for the sums they borrowed from the Bank, but they are also

contractually liable to the Bank for the sums borrowed, and for interest and other monies due under the loan facilities and under the

deeds of mortgage, charge or guarantee and indemnity by which they are bound. The uncontradicted evidence is that the realisation

of the securities at this point in time is not going to discharge the plaintiffs’ liability to the Bank. If the plaintiffs do establish at the

hearing of the substantive action that enforceable agreements were entered into between the relevant plaintiffs and the Bank as a

consequence of which the Bank is obliged to postpone enforcing its security either for the remainder of the fifteen years referred to in

the complaint at (a) or indefinitely until the market recovers in relation to the complaint referred to at (c), the plaintiffs will be

adequately compensated in damages for any loss which they incur if the secured property and assets are realised now and produce a

lesser return than would have been the case if the Bank had postponed the realisation of its security in accordance with those

agreements. While the quantification of the damages may be challenging, nonetheless, if properly quantified the damages should be

an adequate remedy for the plaintiffs.

35. As regards the plaintiffs’ complaint outlined at (b) in paragraph 4 above, the position is slightly different, in that the nub of the

plaintiffs’ complaint is that the Bank agreed in 2006 to release its security over the non-core properties on the happening of an event,

which, apparently, happened around 2008, but the Bank did not release its security. If at the hearing of the substantive action the

plaintiffs were to establish that there was such an agreement, and if the Bank’s security over the non-core properties had not been

realised, the obvious remedy for the relevant plaintiffs would be to obtain a deed of release in respect of each of the non-core

properties from the Bank. However, if at that point in time the security over the non-core properties had been realised, so that the

only remedy available would be damages, the question is whether damages would afford an adequate remedy for the plaintiffs. With

the one exception which I have outlined earlier, all of the non-core properties are let. In other words, they are all commercial

investments which the relevant plaintiff owners own but do not occupy. Therefore, if the relevant plaintiffs were to establish in the

substantive action an entitlement to the core properties free of any encumbrance in favour of the Bank, it is difficult to see how they

would not be adequately compensated by an appropriate award of damages which compensated them for being deprived of the ability

to retain the core properties in specie free from any encumbrance in favour of the Bank.

36. What differentiates the plaintiffs’ case in relation to the non-core properties from their case in relation to the remainder of the

secured property and assets is their contention that the Bank has been in breach of the agreement which they allege exists since

around 2008 by not having released the securities over the non-core properties in accordance with that agreement. However, what is

not clear is how such release would have impacted on the personal liability of the plaintiffs who mortgaged the non-core properties to

the Bank. In view of the complexity of the totality of the transactions between the plaintiffs and the Bank it may be that, if the

plaintiffs are able to establish the complaint at (b), the only remedy which a court could give to the relevant plaintiffs is an award of

damages. However, that is mere conjecture and is for another day. For present purposes, I have come to the conclusion that, even in

relation to the non-core properties, an award of damages would be an adequate remedy for the relevant plaintiffs, given that the

non-core properties are commercial investments.

Inadequacy of the plaintiffs’ undertaking as to damages

37. It was contended on behalf of the defendants that the undertaking as to damages proffered by the plaintiffs is inadequate. It was

submitted that it would be of little or no value to the defendants having regard to the evidence of Mr. Henderson recorded at

paragraph 19 above that the indebtedness of the plaintiffs to the Bank is greatly in excess of the value of the secured properties.

The plaintiffs’ only answer to the defendants’ contention that the undertaking as to damages is inadequate was that it is hard to see

what damage the Bank will suffer if it continues to receive the rents out of the secured properties, as it has been. As has been

recorded earlier at paragraph 18, Mr. Henderson has averred that by 20th February, 2013, when the Receivers were appointed, the

receipts from the secured properties being paid over to the Bank were insufficient to discharge the interest accruing on the various

loans. Neither that averment nor the details given in relation to the amount of the interest charged in 2011 and 2012 on the loans

advanced to the seventh plaintiff alone have been contradicted. In the circumstances, it is not possible to conclude that the

undertaking as to damages given by the plaintiffs would be likely to adequately compensate the Bank, if the plaintiffs do not succeed

in the substantive action.

Balance of convenience

38. In view of the complexity of the relationship between the plaintiffs and the Bank, some aspects of which I have alluded to earlier,

and the narrowness of the focus of these proceedings, I have come to the conclusion that the balance of convenience does not

favour the grant of an injunction on the terms sought to the plaintiffs. The existence of the parallel judicial review proceedings is also

a complicating factor.

Order

39. There will be an order refusing the plaintiffs’ application. However, the Court will explore with the parties the prospect of getting

an early hearing of the substantive action in the context of the parallel judicial review proceedings.

40. Finally, it was submitted on behalf of the defendants that, if the Court were inclined to grant an injunction restraining the

Receivers from taking any steps whatsoever pursuant to the deeds of appointment, the Court might consider that any prejudice to

the plaintiffs could be met by an injunction restraining the Receivers only from entering into binding contracts for the sale of the

secured properties pending final determination of the proceedings. In the light of the conclusions I have reached as to the application

of the relevant criteria, on the basis of principle, it would not be appropriate to make such an order against the Receivers. However,

having regard to the objective of the Bank as set out by Mr. Henderson, it might be in the interest of all of the parties if the

Receivers were to give such an undertaking to the Court. However, I am of the view that the Court cannot compel them to do so.