High Court grants injunctions to insolvency practitioner receiver against mortgagor interfering with receivership duties.

Neutral Citation: [2016] IEHC 391

THE HIGH COURT

[2015 No. 4571 P]

BETWEEN

SHANE McCARTHY

PLAINTIFF

AND

SEAMUS MURPHY

DEFENDANT

JUDGMENT of Mr. Justice David Keane delivered on the 8th day of July 2016.

Introduction

1. The plaintiff in these proceedings is an insolvency practitioner. By deed of appointment dated the 1st of May, 2014, ACC Bank plc,

now ACC Loan Management Limited (“the bank”), as mortgagee, appointed him as receiver of certain mortgaged property registered

on Folio 22202F of the Register of Ownership of Freehold Land Co. Meath. (“the property”).

2. The defendant is the owner and mortgagor of the property. He denies that the plaintiff has been validly appointed as receiver over

it.

3. Two applications are now before the Court. In the first, the plaintiff seeks various interlocutory injunctions restraining any

interference by the defendant with the plaintiff’s conduct of the said receivership or with the exercise of the plaintiff’s functions as

receiver of the property, or both, together with certain ancillary orders in aid of the receivership. In the second, the defendant seeks

orders permitting the cross-examination of each of the two deponents who have sworn affidavits in support of the plaintiff’s

application; namely, the plaintiff himself and one John Ryan, an official of the bank.

Background

4. By Letter of Loan Sanction & Agreement dated the 26th of July 2006, (“the facility letter”), the bank confirmed its willingness to

make available to the defendant a loan facility in the sum of €228,000 on the terms set out both in that letter and in the bank’s

General Terms and Conditions applicable to Commercial Credit Facilities (together, “the loan agreement”). The said sum was to be

made available for two identified purposes: first, to facilitate the repayment of the defendant’s existing debt with another financial

institution; and second, to enable the complete refurbishment of the “3 Residential Investment Duplex Units” contained in the

property known as “The Cottages, Grangeboyne, Kilmessan, County Meath.”

5. The defendant signed his acceptance of that offer on those terms on the 3rd August 2006 and, subsequently, drew down the full

amount of the facility in two tranches; one of €168,000 on the 15th September 2006 and another of €60,000 on the 2nd March 2007.

6. The term of the loan was 20 years, although the facility letter made clear that, during that period, it was to be repayable on

demand. Failing demand or repayment in full, it was to be repaid by monthly instalments over its twenty year term. Those payments

were to comprise interest only for the first twelve months, and principal and interest thereafter.

7. It was an express term of the facility letter and, hence, the loan agreement that the security required by the bank was to include

a first legal mortgage and charge over the “3175 square foot Residential Investment Property known as The Cottages containing 3

duplex units at Grangeboyne, Kilmessan, County Meath” in a form and in substance acceptable to the bank’s solicitor.

8. In purported compliance with the requirement to provide a mortgage over that property, a deed of mortgage (“the mortgage”) was

executed by the defendant and the bank on the 18th September 2006 in respect of “the lands hereditaments and premises now

registered on Folio 22202F of the Register of Ownership of Freehold Land Co. Meath.”

9. The mortgage was registered in the Land Registry on the 2nd of January 2007.

10. The defendant failed to meet his repayment obligations under the terms of the loan agreement, in that the relevant loan account

went into arrears on or about the 15th November 2011 and has remained in arrears ever since.

11. The bank sent a letter of demand to the defendant on the 8th of April 2014, requiring immediate repayment of all monies due

under the loan agreement and specifying a redemption figure of €212,492.61 as of that date. The bank contends that the defendant’s

failure to repay those monies in response to that demand fell within clause 8.2.1 of the mortgage. That clause provides that the non-

payment or non-discharge of any of the secured liabilities when due, at any time and for any reason, whether or not beyond the

control of the borrower, is an ‘enforcement event.’ Clause 1.1 of the mortgage defines ‘secured liabilities’ to include all monies due on

any account. Clause 9.1 provides, in material part, that, at any time after the bank’s security has become enforceable (such as on

the occurrence of an enforcement event), the bank may appoint ‘under seal or under hand of a duly authorised officer or employee of

the bank’, any person to be receiver and manager of the secured assets or any part or parts thereof.

12. The defendant denies that he received the bank’s letter of demand and, indeed, asserts that no such letter was ever sent.

13. As previously stated, the plaintiff contends that he was validly appointed receiver pursuant to the provisions of clause 9.1 of the

mortgage on the 1st of May 2014. The defendant asserts that the relevant deed of appointment is invalid on a number of grounds.

14. In support of the plaintiff’s application, Mr Ryan has exhibited a fifteen page statement of account in respect of the defendant’s

loan, dated the 15th April 2015 and covering the period between the 15th September 2006 and the 14th April 2015. According to that

statement, the amount of the loan outstanding on the 15th April 2015, together with interest, was €232,970.65 and the loan arrears

that had by then accrued amounted to €60,207.56. The defendant takes issue with those figures, suggesting that there is a ‘major

discrepancy’ in them, although he has not yet explained what that alleged discrepancy is.

The underlying proceedings

15. A plenary summons issued on behalf of the plaintiff on the 4th June 2015 seeking: an order for possession of the lands,

hereditaments and premises now registered on Folio 22202F of the Register of Ownership of Freehold Land Co. Meath; permanent

injunctions restraining any interference with the functions of the receiver and any trespass on the receivership property; various

ancillary orders requiring the delivery up of keys etc., an account of all rents received, and the delivery up of any books and records

relating to the receivership property, including any lease or licence agreements; and, finally, damages for trespass.

The relief now sought

16. The motion now before the Court issued on the 4th June 2015. In it, the plaintiff seeks orders: (i) restraining the defendant from

impeding or obstructing the plaintiff from taking possession of the receivership property; (ii) restraining the defendant from interfering

with the office or functions of the plaintiff as receiver of the property; (iii) restraining the defendant from impeding or obstructing the

plaintiff in changing the locks at the property; (iv) restraining the defendant from trespassing on the property; (v) prohibiting the

defendant from purporting to collect rents on the units within the property or holding himself out as the person entitled to let those

units or to collect rents in respect of them; (vi) directing the defendant to deliver up the keys and any other items or information

necessary to access and secure each of the units within the property; (vii) directing the defendant to furnish an account of rents

received in respect of the units within the property; and (viii) directing the defendant to deliver up the books and records relating to

the property, such as any lease or licence agreement in respect of any residential unit within it.

Interference with the receivership

17. There are significant conflicts between the parties concerning a number of aspects of the conduct of the receivership to date.

For example, there is a dispute between them concerning the circumstances in which the plaintiff’s appointment as receiver was

communicated to the defendant. There is also a wide-ranging dispute between them concerning the manner in which each of them

dealt with the tenants who, when the receivership commenced, were in situ in two of the three units in the property and, more

particularly, the manner in which each of the parties dealt with the issue of the rent due from those tenants. The parties have raised

a miscellany of other issues. To mention just two, the defendant alleges that the receiver has not acted in good faith in failing to

meet with him, or to attend at the property, in person, whereas the plaintiff alleges that the defendant entered into residential lease

agreements in respect of certain of the units within the property without seeking the prior consent of the bank, which was required

under the terms of the mortgage.

18. I have come to the conclusion that it unnecessary to address any of these factual disputes in order to properly decide either of

the applications now before the Court. That is because it does not seem to be in controversy that the defendant has not surrendered

possession of the property to the plaintiff, and is not proposing to do so unless otherwise ordered by the Court, on the ostensible

basis that he is not satisfied that the plaintiff’s appointment as receiver over the property is valid or, in the defendant’s own words in

correspondence, on the basis that the plaintiff’s appointment as receiver is “an unsatisfactory and unacceptable state of affairs.”

19. There is no doubt that the defendant has obstructed the plaintiff from taking possession of the property; has interfered with the

functions and office of the plaintiff as receiver; has trespassed on the receivership property; has reserved to himself the right to let

the units comprising the property and to collect any rent due; has refused to deliver up the keys and any other items or information

necessary to access and secure each of the units within the property; has refused to furnish an account of rents received; and has

refused to deliver up the books and records relating to the property. Of course, the defendant hopes to establish at trial that he was

perfectly entitled to do all of those things on the basis that, although he has defaulted on his debt and the terms of his mortgage

permit the appointment of a receiver in those circumstances, the receiver’s appointment is nonetheless invalid.

The defences put forward

20. In challenging the validity of the plaintiff’s receivership over the properties, the defendant puts forward a number of arguments.

The plaintiff joins issue with each of them.

i. deed of appointment void for uncertainty

21. The first is that the deed of appointment of the plaintiff as receiver is invalid on the ground that the deed does not identify the

relevant property, or any property, on its face and is, thus, void for uncertainty.

22. In response to that argument the plaintiff points out that the deed of appointment recites the plaintiff’s appointment as receiver

“of all assets of the chargor referred to and comprised in and charged by the security document”, having earlier identified the

‘security document’ as a deed of charge dated the 18th September 2008 between the defendant, as chargor, and the bank. The

schedule to the said deed of charge describes the ‘secured property’ as “all that and those lands hereditaments and premises now

registered on Folio 22202F of the Register of Ownership of Freehold Land Co. Meath.” Thus, the plaintiff contends that there can be

no uncertainty in relation to the property to which the receiver’s appointment relates. The plaintiff argues that there is no

requirement in law to provide any further or other details in relation to the identification of the property ‘in the body of the deed’ in

circumstances where the property is readily identifiable by reference to the terms of the deed of charge expressly referred to in the

deed of appointment.

ii. deed of appointment invalid as not properly sealed by the bank

23. The second argument put forward by the defendant is that the deed of appointment is invalid on the separate ground that it has

not been properly sealed since the seal is only authenticated by one signature, whereas – the defendant contends - two signatures

are required under both company law and the bank’s articles of association as each stood at the material time.

24. In response to that argument, the plaintiff again points to the express words of the deed of charge, whereby a receiver may be

appointed “under seal or under hand of a duly authorised officer or employee.” The plaintiff submits that it is plain on the face of the

deed of appointment that it was executed under seal of the bank and was signed by an identified person, authorised to authenticate

that seal.

25. The plaintiff points out that the company law upon which the defendant seeks to rely is, in fact, regulation 115 of Table A in

Schedule 1 of the Companies Act 1963, as amended (“the 1963 Act”) and not s. 115 of the 1963 Act as the defendant suggests.

Table A sets out precedent regulations for the management of a public limited company. Regulation 115 of Table A provides:

“The Seal.

115. The seal shall be used only by the authority of the directors or of a committee of directors authorised by the

directors in that behalf, and every instrument to which the seal shall be affixed shall be signed by a director and shall be

countersigned by the secretary or by a second director or by some other person appointed by the directors for the

purpose.”

26. In seeking to rely upon the terms of regulation 115 of Table A, the defendant has adduced no evidence that the said regulation

was adopted by the bank in the bank’s own articles of association. S. 13 of the 1963 Act provides that articles of association may

adopt any or all of the regulations contained in Table A and, in the case of a private or public company limited by shares, it is only

where no articles are registered or where the articles that are registered do not exclude or modify the regulations contained in Table

A that those regulations automatically apply. In Courtney, The Law of Companies, 3rd ed., (Dublin, 2012) the following point is made

at p.109:

"The fact that a company must have articles does not mean that the legislature is attempting to control the operation of

the company. On the contrary, the fact that a company may adopt and adapt the model articles at will indicates that the

legislature was merely concerned that doubt and uncertainty should be minimised by ensuring that provision is made for

certain basic matters."

27. While the plaintiff did not adduce any direct evidence concerning the bank’s articles of association either, he does call in aid the

decision of this Court (per Cregan J.) in McCleary v. McPhillips [2015] IEHC 591. That was a case involving the same bank. The

pertinent issue addressed by the Court there was the quite different one of whether the deed of appointment of the receiver in that

case had been executed in accordance with the precise terms of the relevant deed of mortgage or charge and, more particularly,

whether the appointment of the receiver under seal complied with the requirement under that deed that the bank make the

appointment “by writing under its hand.” Construing the latter term as specifically requiring the signature of a person duly authorised

by the bank to sign such documents (and not the application of the bank’s seal) Cregan J. concluded that the requirements of the

deed of charge had not been complied with and that, in consequence, the appointment of the receiver in that case was invalid.

28. Before reaching that conclusion however, at paragraphs 113 to 116 of the judgment, Cregan J. noted the uncontroverted

evidence adduced on behalf of the bank that it had disapplied the Table A precedent regulations and had adopted instead its own

distinct articles of association, most recently in 2002. In particular, those articles provide (at paragraph 18, in evident substitution for

regulation 115 of Table A) that:

“Signature of Sealed Instruments

Every instrument to which the seal shall be affixed shall be signed by two directors or by a Director and the Secretary or

by any person appointed by the Directors for the purpose….”

29. Here, the applicable deed of charge permits the appointment of a receiver “under seal or under hand of a duly authorised officer

or employee” and the deed of appointment of the plaintiff as receiver bears the seal of the company and the signature of one Loretta

McCawley over the stamp “Person Authorized to Authenticate the Seal.” Mr Ryan, an official of the bank, avers that Ms McCawley

was a person authorised to authenticate the seal of the bank.

30. Returning to the decision in McCleary, the following passage from the judgment of Cregan J. is illuminating (at paragraphs 135-

136):

“135. In this case, the document appointing the receiver is in writing. It is stated to be a ‘deed of appointment of

receiver.’ It has the seal of the company affixed to it, and the seal is witnessed by a person authorised by the Board of

Directors to witness it. It is, therefore, a document under seal.

136. I am satisfied that all of the requisite formalities in the Bank’s articles of association have been complied with, and

therefore if the deed of mortgage had specified that the appointment of the receiver should be by deed under seal, then

those formalities would have been fulfilled in this case.”

iii. receivership does not cover one of the properties

31. The third argument put forward by the defendant is that only two of the three residential units comprising the property are within

the folio to which the receivership applies. In response to that assertion, which appears to have been made for the first time in

opposition to the present application, arrangements were made between the parties for an inspection of the property on behalf of the

plaintiff. That inspection occurred on the 30th November 2015.

32. The plaintiff has now exhibited the resulting report of his expert engineer, dated the 27th January 2016. It notes that the building

comprising the property appears to be sub-divided into 3 residential units. It concludes that a part of the southern-most residential

unit in the building extends beyond the boundary of Folio MH22202F onto the neighbouring property, which is covered by Folio

MH2341F, to a distance of 3.62 metres on the western side and 2.54 metres on the eastern side. It appears to be common case that

the residential unit concerned is, in fact, occupied by the defendant.

33. In response to that report, the defendant has since averred that a firm of surveyors retained on his behalf have expressed the

view that the said residential unit is actually located largely within the boundary of Folio MH2341F, subject only to the “possibility

that it encroaches slightly on Folio 22202F.” Needless to say, that conflict of expert opinion cannot be resolved in the context of the

present application.

34. In response to the defendant’s submission that the plaintiff should be refused the relief he seeks by reference to the evidence

just described, the plaintiff makes a number of points. First, the plaintiff notes that, in the form of acceptance that the defendant

signed on the 3rd August 2006, he agreed to provide the bank with the security it sought under the terms of the facility letter,

namely, a first legal mortgage and charge “over 3,175 square foot Residential Investment Property known as The Cottages containing

3 duplex units at Grangeboyne, Kilmessan, Co. Meath.” Mr Ryan of the bank avers that, to the extent that the property does not fall

entirely within the bounds of the lands charged, the defendant is therefore in breach of his loan agreement with the bank and the

bank is likely to have an equitable security interest in that part of the property that falls outside the lands charged. Of course, that is

of no relevance to these proceedings as presently constituted. Nor, more particularly, is it of any relevance to this application.

35. Hence, the plaintiff goes on to submit that any such failure by the defendant to comply with the terms of the loan agreement is

no bar to the reliefs that the plaintiff seeks in aid of the receivership over the property comprised in Folio 22202F whether in this

application or in the underlying proceedings.

36. Nonetheless, to avoid any practical difficulties in attempting to deal with a residential unit which is only partially within the said

folio, the plaintiff proposes that, should he be granted the relief that he now seeks, he will deal only with the two residential units

that are wholly contained within Folio 22202F and will take no further steps in relation to the other unit, pending the trial of the

action.

iv. deed of appointment invalid as not preceded by a letter of demand

37. The defendant avers that he never received the bank’s letter of demand, dated the 8th of April, 2014, and doubts that it was

ever sent.

38. As a representative of the bank, Mr Ryan avers in response that the letter was sent and exhibits a bar-coded item delivery record

from the national postal service in support of that contention.

v. the bank cannot enforce its security because it has assigned the underlying debt

39. The defendant invites the Court to note the terms of paragraph 4.22.3 of the bank’s General Terms & Conditions Applicable to

Commercial Credit Facilities, which by incorporation form part of the loan agreement. That paragraph provides:

“The bank may (without the need for any further consent from or notice to the Borrower) assign, transfer, mortgage, charge or

otherwise grant interests in or otherwise dispose of the whole or any part of its rights, benefits and obligations in respect of a

Facility, and all security therefore.”

40. Referring to that term of the loan agreement, the plaintiff then avers to his belief that the bank did not hold the right to appoint a

receiver on the 1st May 2014. Insofar as I can see, the plaintiff has so far adduced no evidence whatsoever to substantiate that

belief. Apparently anticipating this difficulty, the defendant goes on to submit that, as a matter of law, the plaintiff bears (or, as the

defendant puts it, ‘enjoys’) the burden of proving that the bank has not disposed of its rights under the loan agreement or, at least,

that it has not disposed of its right to the security at issue or to enforce that security through the appointment of a receiver.

41. It is by no means clear to me that, as the defendant contends, the plaintiff bears the burden or onus of proof of that fact. On

the contrary, once it is accepted (as it appears to be in the context of the present application) that the plaintiff entered into the

relevant loan agreement with the bank and that he executed the relevant deed of charge in respect of the property comprising the

relevant folio, thereby conferring upon the bank the right to appoint a receiver over that property in certain defined circumstances,

then neither the mere fact that the bank is entitled to dispose of its rights in that regard nor the mere belief of the defendant that it

has done so is sufficient to cast any onus of proof on the plaintiff to establish (as proof of a negative) that the bank has not. Rather,

it seems to me that, in asserting that the bank has actually exercised its undoubted entitlement to dispose of its right to hold or

enforce the relevant security, the defendant is advancing an affirmative defence to the plaintiff’s claim that his appointment as

receiver by the bank is valid. Hence, it is the defendant who bears the onus of proving that fact on the basis that ‘he who asserts

must prove’.

42. Even if I am wrong in that conclusion, I cannot ignore the averment of Mr Ryan on behalf of the bank that he has carefully

inspected the bank’s records in relation to both the loan agreement and the deed of charge that provides security in relation to it and

has confirmed that neither has been “sold, assigned or otherwise transferred to a third party.” Mr Ryan goes on to aver that neither

the re-registration of ACC Bank plc as a private limited company named ACC Bank Limited on the 27th June 2014 nor the issue on the

same day of a certificate of incorporation of change of name, certifying that the name of ACC Bank Limited had changed to ACC Loan

Management Limited, involved any sale, assignment or transfer of either the facility or any of the rights under the relevant deed of

charge.

43. The defendant sought to challenge that evidence on the basis of the assertion, undoubtedly correct as far as it goes, that Mr

Ryan does not work in the securities department of the bank and, consequently, cannot have direct knowledge of whether the bank

has securitised the defendant’s mortgage. However, I do not think that this can avail the defendant for the purpose of the present

application. The assertion that the relevant averments of Mr Ryan must be disregarded on that basis fails to take account of the

provisions of Order 40, rule 4 of the Rules of the Superior Courts (“RSC”), whereby interlocutory motions constitute an exception to

the general rule that affidavits must be confined to facts within the direct knowledge of the deponent concerned. Mr Ryan’s

statement of belief on this point is expressed to be based upon his inspection of the bank’s records. The defendant has conspicuously

failed to set out any basis for his statement of belief to the contrary. Nor has the defendant provided any authority for his assertion

that the plaintiff is obliged to obtain an affidavit in that regard from the bank’s “Head of Securities” in terms prescribed by the

defendant.

44. In conclusion on this point, it may be of assistance to the parties to draw their attention to the judgment of this Court in the

case of Charleton & Anor. v. Scriven [2014] IEHC 415. That was a case involving an application very similar to the one here. The

following passage from the judgment seems apposite:

“38. The third proposition upon which the defendant relies in challenging (or, at least, questioning) the bank’s entitlement

to enforce the particular loan and mortgage agreements at issue in these proceedings and, by extension, the bank’s

entitlement to appoint receivers, is the defendant’s professed concern that the bank may not be the beneficial owner of

the defendant’s loans at this point. That proposition derives from the defendant’s averment that: “I am aware from my

own knowledge that Bank of Scotland plc have securitised and sold many of their loans.” The defendant does not explain

the basis upon which he claims to have direct knowledge of the bank’s dealings with third parties, nor does he provide any

detail of the securitisation transactions upon which he relies in advancing this argument.

39. In response, the plaintiffs rely on the decision of Peart J. in Wellstead v Judge White [2011] IEHC 438. In that case

the proposed applicant for judicial review sought leave to argue that a bank that had obtained an order for possession

against him no longer had any entitlement to benefit from that order because, the proposed applicant contended, it had

sold his mortgage as part of some unspecified securitisation agreement. Peart J. rejected that argument by reference to a

specific term of the particular mortgage deed at issue in that case, before continuing:

‘But there is another obstacle which faces the applicant, and which he has not addressed, and it is that there is nothing

unusual or mysterious about a securitisation scheme. It happens all the time so that a bank can give itself added liquidity.

It is typical of such securitisation schemes that the original lender will retain under the scheme, by agreement with the

transferee, the obligation to enforce the security and account to the transferee in due course upon recovery from the

mortgagors.’”

45. In short, it would not be enough for the defendant in this case to establish that the mortgage at issue here falls within a

mortgage securitisation scheme entered into by the bank, if that were the case. He would have to go on to establish that the terms

of that scheme are such that the bank has not retained the right (or, from it perspective under any such scheme, the obligation) to

enforce the security provided under the mortgage where necessary.

The defendant’s application to cross-examine the plaintiff’s deponents

46. The defendant invokes Order 40, rule 1 of the RSC, which states:

“Upon any petition, motion or other application, evidence may be given by affidavit, but the Court may, on the application

of either party, order the attendance for cross-examination of the person making any such affidavit.”

47. The defendant seeks orders under that rule directing the attendance for cross-examination of both the plaintiff and Mr Ryan of

the bank. They are the two deponents who swore affidavits in support of the plaintiff’s application for interlocutory relief. From the

affidavit that the defendant swore to ground his application, it would appear that he wishes to cross-examine the plaintiff about the

conduct by him of another receivership involving the property of a person who is not a party to these proceedings and that he wishes

to cross-examine Mr Ryan concerning the issue of whether the defendant’s mortgage is the subject of any securitisation scheme

entered into by the bank.

48. The defendant submits that the threshold he has to meet in this regard is a low one but he has not produced any authority for

that proposition.

49. In Bank of Ireland & Anor. v. O’Donnell & Anor [2015] IECA 73, the Court of Appeal (Finlay Geoghegan, Peart and Irvine JJ, nem.

diss.) rejected an appeal against a decision of the High Court to refuse to grant leave to cross-examine deponents in the context of

an application for interlocutory relief broadly similar to the present one.

50. In that case, the High Court heard the application to cross-examine and then, having reserved its decision, proceeded with the

hearing of the application for interlocutory injunctive relief. I adopted the same course in this case.

51. In its judgment, the Court of Appeal stated (at paragraphs 81 and 82):

“The High Court judge’s attention was drawn to the following passage from Delaney & McGrath ‘Civil Procedure in the

Superior Courts’, 3rd ed. at para. 20-87 where the authors state in relation to interlocutory applications:

‘…a notice to cross-examine may only be served with the leave of the Court. It was emphasised by Denham J. in Bula Ltd.

v. Crowley (No. 4) 2 I.R. 430, 459 that a trial judge has a discretion in relation to such an application. In general, leave

will only be granted if there is a conflict of fact upon the affidavits that it is necessary to resolve in order to determine

the proceedings…’

The Court is satisfied that the above is a correct statement of the relevant principles in relation to leave to cross examine

on a motion for interlocutory relief in accordance with the judgment of Denham J. in Bula Ltd. v. Crowley (No. 4) provided

the reference to “the proceedings” is understood as being the motion seeking the interlocutory injunction or other relief.

The Court also considers it consistent with the principles in the judgment of O’Donovan J. in Director of Corporate

Enforcement v. Seymour [2006] IEHC 369 which did not relate to an application for interlocutory relief.”

52. As Hardiman J. emphasised in Dunne v. Dún Laoghaire-Rathdown County Council [2003] 1 I.R. 567, in dealing with an interlocutory

application the Court is not finally deciding any factual or legal aspect of the controversy before it. In Tejo Ventures International Ltd

v. O’Callaghan [2009] IEHC 410, Laffoy J. reiterated that it is no part of a court’s function at the interlocutory stage to try to resolve

conflicts of evidence on the affidavits before the Court.

54. Since it is unnecessary, indeed inappropriate, to seek to resolve any conflict of fact there might be between the parties in

relation to the particular issues the defendant has sought to raise in the context of the present interlocutory injunction application, in

the exercise of my discretion I must refuse the defendant’s application for leave to cross-examine the plaintiff and Mr Ryan.

Present application - test to be applied

55. Although the defendant did not address the Court on this point, the plaintiff acknowledges that an issue arises concerning the

correct test to be applied in the determination of the present application for interlocutory injunctive relief.

56. That issue is whether, in considering the threshold test for the interlocutory relief sought under the appropriate American

Cyanamid principles, endorsed in Campus Oil Ltd. v. Minister for Industry and Energy (No. 2) [1983] I.R. 88, the Court is to apply the

standard test of whether the plaintiff as applicant has raised a serious or fair bona fide question to be tried or the more rigorous one

of whether the plaintiff has made out a strong prima facie case.

57. The plaintiff contends for the application of the former test on the basis that the injunctions he seeks are primarily prohibitory,

rather than mandatory, in nature. In that regard, reliance is placed from the following passage of the judgment of this Court (per

Laffoy J.) in Kavanagh & Anor. v. Lynch & Anor. [2011] IEHC 348 (at paragraph 7.6):

“Although some of the reliefs sought on the notice of motion have been formulated in mandatory terms, I consider the orders sought

by the plaintiffs directing the defendants to deliver up keys, alarm codes and such like and the documentation evidencing the rights of

third parties to portions of the properties the subject of the securities, such as copies of leases and licence agreements, are, in

reality, ancillary to primary reliefs sought by the plaintiffs which, in substance, are prohibitory, in that they are seeking to restrain the

defendant’s trespass. Therefore, I am of the view that the plaintiffs do not have to show that they have “a strong case” that they

are likely to succeed at the hearing of the action, in line with the decision of the Supreme Court in Maha Lingam v. Health Service

Executive [2006] 17 ELR 137. Having said that, I am of the view that they have demonstrated that they have a strong case.”

58. Very properly, the plaintiff has drawn to the Court’s attention that part of the decision of the Court of Appeal in Bank of Ireland &

Anor. v. O’Donnell & Anor, already cited, in which, in the particular circumstances of that case, the Court of Appeal found that what

was being sought by the receiver was, in essence, a mandatory injunction to vacate the property the subject of the receivership.

The Court of Appeal then concluded on that point as follows (at paragraphs 104-105 of the judgment):

“104. The Court has noted from the judgment in Kavanagh & Lowe v. Lynch that the defendants therein were not stated

to be residing in the relevant property and there was no order sought requiring them to vacate the property. The Court

considers this distinguishes the present application.

105. It follows from this conclusion that as the substance of [the] respondents’ application for the interlocutory relief

sought was mandatory it required to be considered in accordance with what has been referred to as a variation of the

‘pure’ Campus Oil test where the courts have required the plaintiff not just to establish a fair or arguable case but rather

the higher standard of a strong case in accordance with the Supreme Court judgment of Fennelly J. in Maha Lingam.”

59. In the event, I find it unnecessary to decide which of the two alternative threshold tests ought more appropriately to apply on

the particular facts of the present case. The defendant does not deny that he entered into the relevant loan agreement; that he

drew down the relevant funds; and that he has had the benefit of those monies. He does not deny that he provided a mortgage or

charge over the property as security for that borrowing, conferring upon the bank a right to appoint a receiver over it in the event of

any default in repayment. He does not deny that he failed to repay that loan in accordance with the terms of the loan agreement or

that he remains in default in that regard.

60. The defendant has raised a number of technical arguments concerning the validity of the plaintiff’s appointment as receiver

notwithstanding his own default but I have come to the conclusion that those arguments are insufficient - whether taken individually

or considered together - to persuade me that the plaintiff has failed to raise a clear and strong prima facie case that his appointment

as receiver is valid and that he is consequently entitled to take possession of the mortgaged property unimpeded and unobstructed

by the defendant.

61. It is important to reiterate that, in determining this aspect of the present application, I have not purported to finally decide any

factual or legal aspects of the plaintiff’s claim or of any defence that may be put forward in answer to it. I fully appreciate that, as

Hardiman J. observed in Dunne v. Dun Laoghaire Rathdown Co Council, already cited (at 581), it would not be appropriate to do so

when, at trial, the evidence may be different and more ample and the law will be debated at greater length.

62. The second matter I must consider under American Cyanamid or Campus Oil principles is the extent to which damages are an

adequate remedy for the plaintiff if an injunction is wrongly withheld or for the defendant if the injunctions sought are wrongly

granted. I am satisfied that, in the former instance, the defendant’s continuing failure to honour his significant loan commitments

provides persuasive evidence that he would not be in a position to compensate the plaintiff for any losses suffered by him if the

injunctions he seeks were refused. In the latter instance, the plaintiff has averred in his grounding affidavit to his willingness to

provide the necessary undertaking to compensate the defendant for any damage or loss sustained by him should the injunctions

sought ultimately prove to have been wrongly granted.

63. Insofar as it is necessary to consider the balance of convenience, I am satisfied that it also militates in favour of the grant of the

injunctions sought. The defendant has not sought to controvert the plaintiff’s averment that the ultimate objective of the

receivership is to realise the security that the defendant gave to the bank in respect of his indebtedness, upon which interest

continues to accrue daily, so that the receivership is plainly is in the immediate financial interests of all parties.

Conclusion

64. I will therefore make orders broadly in terms of paragraphs 1 to 8 (inclusive) of the plaintiff’s notice of motion, although I will hear

the parties in relation to any amendment necessary to reflect the plaintiff’s acknowledgment, for the purpose of the present

application only, that the relevant orders should only extend in their effect to the two units of the property which are wholly

contained within Folio 22202F Co. Meath.