THE COURT OF APPEAL
Neutral Citation Number: [2019] IECA 234
Record Number: 2017 No. 579
Peart J. Whelan J. McCarthy J. BETWEEN:
FIRST DEFENDANT/APPELLANT
- AND -
IRISH AGRICULTURAL DEVELOPMENT COMPANY, BLACKROCK HOSPITAL LIMIITED, GEORGE DUFFY, ROSALEEN DUFFY AND TULLYCORBETT LIMITED
SECOND, THIRD, FOURTH,
FIFTH AND SIXTH DEFENDANTS
JUDGMENT OF MR. JUSTICE MICHAEL PEART DELIVERED ON THE 31ST DAY OF JULY, 2019
1. This is Breccia's appeal against the order of the High Court (Haughton J.) dated 30th November 2017 refusing its application for an order discharging an interlocutory injunction granted previously by the High Court (Noonan J.) on the 22nd December 2014.
2. For that injunction to have been granted the High Court must have been satisfied that a fair issue(s) had been raised by the respondent. The application to set aside the injunction was premised on Breccia's belief that the only plank upon which the injunction application depended for the conclusion that a fair issue was raised (namely that there is a term to be implied in a Shareholders' Agreement entered into by the parties that they owed each other mutual duties of good faith and fair dealing) has been subsequently removed by the judgment of this Court in other proceedings, namely Flynn & Benray Limited v. Breccia [2017] IECA 74, which I will refer to as " Flynn ".
3. In Flynn , this Court decided, inter alia, that "the Shareholders' Agreement does not include an implied term that the parties owe each other mutual general duties of good faith and fair dealing".
4. It was submitted to the High Court that in the light of this finding, there was no longer a basis for maintaining the interlocutory injunction, and that the Court enjoyed a jurisdiction to discharge the injunction in such circumstances, and should exercise it.
5. The respondent on the other hand contends that although the judgment in Flynn has disposed of the good faith and fair dealing issue, this was not the only basis on which the High Court had determined that a fair issue was raised for the purpose of the interlocutory injunction application, and that the trial judge was correct to so find. In that regard the trial judge stated at para. 52 of his judgment:
"52. It is the position of the applicant that there is no longer a legal basis upon which the respondent is entitled to continue his injunction. There are various grounds advanced by the applicant as to why this is the case. First, it is contended by the applicant that the Flynn proceedings have effectively dealt with all matters raised by the respondent. Although the arguments in relation to the implied term of good faith and fair dealing have effectively fallen away following the Court of Appeal decision in Flynn, it cannot be said that there is no longer any fair issue to be tried in the present proceedings. After careful examination of the statement of claim, it is clear to the Court, that a number of pleaded claims survive. Most notably, the conspiracy issue remains to be determined, as well as claims of misuse of confidential information. The claims for inducement of breach of contract and intentional interference with economic interests are also still alive. It is not appropriate for the court on this application to assess the evidence that might support these claims, or the weight that might be attached to that evidence, or to express any view as to the prospects of success. It is sufficient for the court to conclude on the pleadings and affidavit evidence, as I do, that these claims are not bound to fail ." [emphasis provided]
6. The trial judge went on at paras. 53-54 to give other reasons for his conclusion that the interlocutory injunction ought not to be lifted. He stated: "53. Furthermore, although the conspiracy issue was unsuccessful in the Flynn proceedings, this court gave a clear indication that a prima facie case was not made out primarily because Mr George Duffy was not a party to those proceedings and he was not called to give evidence. At paragraph 385 of that decision, after considering the judgment of Gilligan J. in McCann & Dillon v. Hade [2013] IEHC 652, I stated: "In this instance what was in the mind of Dr. Duffy as of 4th April, 2014 is critical to these issues". By contrast, in these proceedings, Mr Duffy is a defendant to the action and the applicants would be in a position to cross-examine him should he choose to give evidence, or ask the court to draw inferences or give added weight to other evidence if he did not give evidence. The court is not forming any views as to whether a prima facie case of conspiracy is made out, however, it is clear that as Mr Duffy is a defendant in the present case, there is a possibility that the applicant can make out a case of conspiracy at the substantive hearing. [Emphasis provided]
54. Furthermore, the Court cannot agree, potentially at least, that a finding of conspiracy in relation to the Duffy transaction does not in any way taint the transaction the subject of the within proceedings. It is arguable that if the applicant had not, as is alleged, unlawfully frustrated the respondent's attempt to acquire Duffy's loans alongside his own (both being required in order to obtain finance from Talos Capital), the applicant would not have been in a position to purchase the respondent's loans and would not currently find themselves in a situation where his shares are under threat."
7. Some background needs to be provided in order to put all this into proper context.
8. The injunction which Breccia sought to have discharged was one whereby Breccia was restrained (i) from carrying out any acts for the purpose of making any demand or acting on any demand as threatened in the Letter of Demand dated 18th December 2014; and (ii) from seeking to enforce any security attaching to the respondent's loan facilities and/or purported guarantee or exercising any remedy and, in particular: (a) selling, transferring and/or encumbering the respondent's shareholding in Blackrock Hospital Limited and/or Blackrock Clinic Limited; and (b) appointing a receiver, including a receiver over the shares of the respondent in Blackrock Hospital Limited and/or Blackrock Clinic Limited.
9. To put that injunction into context, it is convenient to set out the general background by reference to the very concise yet perfectly adequate summary contained in the judgment of the trial judge at paras. 2-7 thereof as follows:
"2. Blackrock Hospital Ltd ("BHL") was incorporated in 1982 with BUPA Investments Limited ("BUPA"), the plaintiff James Sheehan, George Duffy and Maurice Neligan as shareholders. BHL owns the share capital of the Blackrock Clinic Limited ("BCL") which was founded in 1986 by the plaintiff, James Sheehan, George Duffy and Maurice Neligan. In 2006, BUPA decided to sell its 56% shareholding to the plaintiff, the first named defendant, Benray (a company owned by John Flynn) and George Duffy. The purchase of these shares was funded by Anglo Irish Bank plc ("Anglo") and the loans of the shareholders were cross-guaranteed. The plaintiff, James and Rosemary Sheehan, George Duffy, Breccia and Benray Limited then entered into a Shareholders Agreement dated 28 March, 2006.
3. The plaintiff entered into two facilities with Anglo; one on the 28 March, 2006 in the amount of €11,188,256 and one on 12 November, 2008 and the amount of €6,342,000. These facilities fell due for repayment in December 2010 but payment was not demanded at that time.
4. By special resolution dated 3 October, 2011, Anglo became Irish Bank Resolution Corporation Limited ("IBRC"). Kieran Wallace and Eamonn Richardson were appointed as Special Liquidators to implement the winding up of IBRC. On 29 May, 2013, IBRC wrote to the plaintiff notifying him that the loan facilities were in default and that IBRC when reserving their rights. On 31 October, 2013, the plaintiff was notified that both the facilities of the plaintive end of the fourth named defendant were to be sold. On 8 November 2013 the plaintiff wrote to IBRC informing them that he wished to redeem his loans.
5. The plaintiff then began a process to buy his loans. He entered into negotiations with Talos Capital Limited ("Talos") for the purpose of financing the purchase, he also established two special purpose vehicles, Medfund Limited and JCS Investments Holdings XIV Limited, which were to be used to acquire the loans. Talos offered to finance the acquisition which offer was contingent on Talos acquiring both the plaintiff's loans and security, and the loans and security of the fourth named defendant. It is the plaintiff's case that he then entered into negotiations with the fourth named defendant in relation to the offer from Talos and that on the 3 April, 2014 he met with the fourth named defendant, who had supplied a consent to sale, to confirm the agreement.
6. The plaintiff also claims that during the course of these agreements, the fourth named defendant became privy to certain confidential information, such as inter alia:
(a) details of the plaintiff's loans with Anglo, including their value and performance;
(b) details relating to the proposed purchase of the plaintiff's loans, including the price and conditions of sale;
(c) details related to the financing of the loans, including the condition that both the plaintiff's loans and fourth named defendant's loans were to be acquired.
7. On 4 April 2014, the loans of the fourth named defendant were purchased by the first named defendant. Shortly thereafter the plaintiff's loans were also purchased from IBRC by the first named defendant. Both of the plaintiff's loans were called in by the first named defendant by letter dated 18 December, 2014. The plaintiff was warned that if he failed to repay the sums which were due, the first named defendant was reserving the right to exercise the power of sale or appoint a receiver without further notice to the plaintiff. On 22 December, 2014, the plaintiff was granted interim injunctive relief as against the defendants, and by consent, this injunction, which I shall term "the interlocutory injunction", was extended to remain in place until the hearing of the substantive proceedings."
10. These proceedings were commenced by plenary summons on the 21st December 2014. On the following day, and prior to the delivery of a statement of claim, an ex parte application was made to the High Court (Noonan J.) for interim injunctive reliefs, resulting in the order of Noonan J. dated 22nd December 2014. In addition, the respondent was given leave to issue and serve a notice of motion seeking interlocutory injunctive reliefs returnable on the 12th January 2015. On the 26th January 2015 those injunctions were continued until the trial of the substantive proceedings. As I have said, that continuation was not opposed by Breccia. It follows from these events that the only occasion on which the grounds for seeking the injunction orders in existence was on the ex parte application made in the absence of Breccia on the 22nd December 2014. There is no transcript of that hearing before this Court, including what may have been said by Noonan J. when he must have expressed himself satisfied that there was a prima facie case made out for the purpose of granting the interim injunction. The statement of claim was not delivered by that date, and accordingly the only documents before the Court on the 22nd December 2014 will have been the plenary summons itself containing its general indorsement of claim, and the grounding affidavit of Joseph Sheehan and its exhibits.
11. When the application for the interlocutory injunction came before the High Court, Breccia did not oppose the continuation of the interim injunction until the trial of the action. There was therefore no determination by the court on that occasion that a fair issue or issues were raised by the respondent, or whether damages would be an adequate remedy, or indeed where the balance of convenience lay. In other words, there was no consideration by the court of the principles in Campus Oil Ltd v. Minister for Industry & Energy (No. 2) [1983] IR 88.
12. It is accepted by the parties that the Court has jurisdiction to lift an injunction where, inter alia , there has been some material change of circumstances such as where a plaintiff relies upon a particular issue as constituting a serious issue to be tried and which is accepted as such by the Court when granting the interlocutory injunction, and where subsequently that issue is either abandoned by the plaintiff or where, as here, a determination by a court albeit in different proceedings, has the effect of preventing the same issue being advanced again in these proceedings.
13. Breccia contends that the removal of the good faith issue by the Flynn proceedings has removed the only issue in the present proceedings which, if the High Court had been called upon to determine whether a fair issue was raised, could have constituted a fair or serious issue to be tried. In other words, such claims as now remain to be argued by Dr Sheehan at the hearing of the substantive hearing would not have constituted fair or serious issues to be tried for the purpose of being granted the injunctive relief sought.
14. Breccia makes two other points in this regard. Firstly, it submits that such issues as remain to be determined can only give rise to an award of damages, and therefore could not be matters in respect of which permanent injunctive relief could be granted; and secondly, Breccia would have opposed the continuation of the interim injunction until the determination of the proceedings.
15. As can be seen from the passage quoted above from the judgment of the trial judge, he was satisfied from an examination of the statement of claim that a number of other claims made by the plaintiff survived the Flynn decision, and in particular the conspiracy claim and the claim that confidential information had been misused by Breccia. He referenced also claims such as inducement to cause a breach of contract, and intentional interference with economic interests. He concluded, as shown above, that these remaining claims were "not bound to fail". As seen above, the trial judge went on to state that given that, unlike in Flynn, Mr Duffy was a defendant in the present proceedings and could therefore be cross-examined "there was a possibility that the applicant can make out a case of conspiracy at the substantive hearing". He followed up by saying that such a conspiracy, if found, could taint the transaction in these proceedings, and that if there had been no such conspiracy, Dr Sheehan would not be in his current position "where his shares are under threat". In other words, it is possible that that the Talos finance would have been available to Dr Sheehan to enable him to redeem his loans and thereby the release of his shares which were pledged as security for his loans.
16. I agree with Breccia's submission that the test adopted by the trial judge was not the correct test. In my view it is not so much a question, as the trial judge stated, of whether the remaining claims are "not bound to fail" or whether there is some possibility on the pleaded case that the claims might succeed, but rather whether the remaining claims would, if this was an application for an interlocutory injunction, have met the test of being a fair issue or issues to be tried, and in respect of which damages would not be an adequate remedy.
17. I consider that on an application such as the present one to discharge an interlocutory injunction in the circumstances of the present case must consider whether the remaining issues, shorn as they are of the good faith issue determined by the Flynn decision, could or would have entitled the plaintiff to an interlocutory injunction under Campus Oil principles. If the answer to that question is in the negative, I can see no basis for the continuation of the injunction until the determination of the proceedings.
18. The question whether the remaining issues are bound to fail is in my view the wrong question, as is whether or not there exists a possibility that the conspiracy claim will succeed.
19. The question whether a fair issue exists in the remaining claims does not depend solely upon an examination of the pleaded case in the statement of claim. The Court must give some consideration to the evidence said to support the claim, as averred to on affidavit. The Court at this interlocutory stage cannot decide conflicts of fact, but there must be some analysis of the available evidence said to support the claims pleaded in the statement of claim. Without some sort of analysis, it is difficult to see how the Court can reach a conclusion that on a prima facie basis a fair or serious issue to be tried has been raised.
20. As I have said already, there had been no necessity for the High Court when granting the interlocutory injunction, to consider whether any of the issues raised in the proceedings met the Campus Oil test. It therefore fell to the trial judge for the first time to consider the remaining issues as if he was hearing an application for an interlocutory injunction so that he could determine whether there remained any proper basis for leaving the interlocutory injunction in place.
21. On this appeal there has been much debate as to whether on an application for an interlocutory injunction a plaintiff must establish, not just that a fair issue or serious issue is raised, but also that if successful at trial the plaintiff would be entitled to be granted a permanent injunction in the same or similar terms to that sought on the interlocutory application.
22. Breccia contends that even if Dr Sheehan succeeded in his claim for conspiracy and/or in relation to his claim of inducement to cause a breach of contract, such success could only sound in damages, and could not entitle him to an injunction to restrain Breccia from taking steps to enforce its security where the loans are in default and have not been repaid. Indeed, Breccia refers to the fact that in his judgment the trial judge concluded at para. 76(c) thereof that Dr Sheehan was unable to obtain a permanent injunctive relief at trial in the light of the Flynn decision.
23. Breccia also refers to the fact that in his affidavit sworn on the 14th January 2015 to support his application for an interlocutory injunction, Dr Sheehan himself stated that his claim in relation to, inter alia , conspiracy, was a claim for damages, and accordingly even if that case was to be made out at trial, the remedy will sound in damages only, and not an injunction to restrain enforcement steps being taken in relation to the shares.
24. Dr Sheehan rejects the appellant's submission that in order to be entitled to an interlocutory injunction a plaintiff must establish that if he succeeds at trial he would be entitled to a permanent injunction in similar terms to the interlocutory injunction being sought. In support of that submission the respondent relies on a judgment of Keane J. (as he then was) in the Supreme Court in McGilligan v. O'Grady [1999] 1 I.R. 346.
25. Dr Sheehan placed reliance and emphasis on the fact that action taken by Breccia to enforce its security would have the effect of extinguishing his rights as a shareholder in Blackrock Hospital Limited, and his property rights in those shares, in circumstances where Breccia has contrived to exclude him from that company.
26. In answer to that submission Breccia has submitted that the respondent himself has put himself in the position where his property rights in his shares might be jeopardised or put at risk by agreeing to pledge his shares as security for his borrowings. Indeed, Breccia draws attention to the fact that the money that Dr Sheehan borrowed and which is owing to Breccia was borrowed for the sole purpose of purchasing the shares, and without which he would not have the shares. Breccia submits therefore that where the loans are in default, and have not been repaid following demand made, it must be entitled to have recourse to the security put up, and that there could be nothing unlawful about doing so. It submits that accordingly there could be no possible lawful basis on which the Court could injunct it from so doing, even if the remaining damages claims succeed.
Conclusions
27. I am satisfied that the trial judge erred in his approach to the application, as indicated above. He determined that the remaining issues were not bound to fail, and that there was at least the possibility that the respondent can make out a case of conspiracy at the substantive hearing bearing in mind that Dr Duffy is a defendant in these proceedings, unlike in the Flynn proceedings. In my view that approach was an error, and instead, the question to be determined was whether, shorn of the good faith issue which had been the principal basis on which injunctive relief had been sought, the remaining claims are claims which, even if they are "fair issues to be tried", in respect of which Dr Sheehan would be entitled to permanent injunctive relief if he was to succeed at the substantive hearing.
28. The issue as to the implied duty of good faith, which was rejected in the Flynn proceedings, but which underpinned the injunction granted herein, undoubtedly, if it had succeeded, had the potential to disentitle Breccia from its entitlement to enforce the security provided for the borrowings which had enabled Dr Sheehan to purchase the shares. If that claim had succeeded at trial the court may well have considered it appropriate to grant an injunction, if not in identical terms, at least in similar terms sufficient to protect the respondent's legal rights.
29. The remaining claims do not in my view have the same potential, even if they were to succeed at trial. If they succeed, the respondent will be entitled to an award of damages if he can establish causation to any loss he contends he has suffered as a result. But I cannot see any possible basis on which the Court would go further and prohibit Breccia from enforcing its security in order to obtain repayment of the loans for which that security was provided. I am not overlooking the submission made by Dr Sheehan that the motivation of Breccia has nothing to do with making sure the loan has been repaid by Dr Sheehan, but rather Breccia's desire to acquire the shares. But that aspect of the respondent's case does not appear to me to influence, less still determine the question whether this injunction must be lifted. That submission may well have relevance to the question of the balance of convenience, if the court considering the granting of the injunction or indeed its discharge, got to the point of having to consider that question. But does not speak to whether a fair issue for the purpose of granting an interlocutory injunction still remains in these proceedings.
30. The trial judge considered that the court's discretion in relation to the granting of injunctive relief, and by extension, to discharge an injunction already granted, was wider than was urged by Breccia, and that by reference to s. 28 (8) of the Supreme Court of Judicature Act (Ireland), 1877, as reflected now in O. 50, r. 6 RSC the court could grant injunctive relief "in all cases in which it appears to the Court to be just or convenient to do so". He stated in this regard that "the underlying consideration is that the approach taken is that which the Court deems to be just or convenient" (para. 45).
31. The trial judge noted that such an approach had been endorsed by Barrett J. in his judgment in Bainne Álainn v. Glanbia [2014] IEHC 482. The trial judge felt supported in his view of the Court's wide discretion to do what is "just or convenient" by what was stated by Barrett J. in a passage quoted by the trial judge as follows:
"46. Such an approach was also endorsed Barrett J. in his decision in Bainne Álainn v. Glanbia [2014] IEHC 482. In that case, Barrett J. discussed the principles applicable in granting injunctive relief, discussing the well-established " Campus Oil " test and the considerations set out in such cases as American Cyanamid v. Ethicon [1975] AC 396. During the course of this analysis he stated:
‘Moreover, while there are obvious advantages to the court complying with such recognised guidelines as may be drawn from case-law in this area, not least in terms of ensuring certainty and avoiding arbitrariness, that case law has long been informed by the common-sense recognition, evident in the just-quoted extract from the Rules of the Superior Courts, that the question as to whether or not to grant an interlocutory injunction is one in respect of which the court ultimately retains a degree of flexibility and discretion that is unconstrained by strict criteria, the subject of course to the rules of precedent. This necessary flexibility and discretion is reflective, at least in part, of the fact that the life of the law is not logic, it is experience, and experienced teachers that even ostensibly similar facts can sometimes require entirely dissimilar treatment when viewed through the prism of context".
32. Referring to Breccia's submission that Dr Sheehan was no longer seeking a permanent injunction as the substantive relief, and therefore that he was not entitled to the benefit of interlocutory injunction, the trial judge stated at paras 48 - 51 of his judgment: "48. The applicants in this matter contend that as the respondents are no longer seeking a permanent injunction as the substantive relief in these proceed, that they cannot be granted any interlocutory injunctive relief. They rely on the test set out in American Cyanamid as adopted in Campus Oil. However, following from the above discussion of the court's discretion in interlocutory matters, it does not seem to follow from that reasoning that the court is so restricted when determining whether or not to grant such relief. As stated by Barrett J. in Bainne Álainn , the court is not constrained by such rigid rules as would lead to an unjust result.
49. The approach of Barrett J. is supported by Keane J. in McGilligan v. O'Grady [1999] 1 I.R. 346. In that matter, an application was made to restrain a company from removing director until the hearing of a s. 205 petition. Keane J. discussed the usual principles as set out in Campus Oil . and concluded that the test is whether there is a serious issue to be tried, whether damages are an adequate remedy and if not, where the balance of convenience lies. He also discussed the relationship between interlocutory relief and permanent injunctions and found that the court was not so restrained in that regard he stated:
‘I am bound to say, with all respect, that I do not understand why it should be thought that, because the relief sought in the interlocutory proceedings is not the same as the relief which will ultimately be sought in the s. 205 proceedings, and interlocutory injunction should not be granted on that ground alone. If it is desirable, in accordance with the principles laid down in [ American Cyanamid ] and [ Campus Oil ] to preserve the plaintiff's rights pending the hearing of the s. 205 proceedings and the balance of convenience does not point to a different conclusion, I see no reason why interlocutory relief should not be granted. To cite but one example, the relief granted in many Mareva cases is very often not the relief which is sought in the substantive proceedings.
50. Furthermore, the Court was directed to Okunade v. Minister for Justice [2012] 3 I.R. 182. At paragraph 70, Clarke J, as he then was, distilled the Campus Oil test into the following limbs: ‘a) The party seeking an injunction must show that there is a fair or bona fide or serious question to be tried.
b) If that be established the court must then consider two aspects of the adequacy of damages. First, the court must consider whether, if it does not grant an injunction at the interlocutory stage, a plaintiff who succeeds at the trial of the substantive action will be adequately compensated by an award of damages for any loss suffered between the hearing of the interlocutory injunction and the trial of the action. If the plaintiff would be adequately compensated by damages the interlocutory injunction should be refused subject to the proviso that it appears likely that the relevant defendant would be able to discharge any damages likely to arise.
c) If damages would not be an adequate remedy for the plaintiff, then the court must consider whether, if it does grant an injunction at the interlocutory stage, a plaintiff's undertaking as to damages will adequately compensate the defendant, should the latter be successful at the trial of the action, in respect of any loss suffered by him due to the injunction being enforced pending the trial. If the defendant would be adequately compensated by damages, then the injunction will normally be granted. This last matter is also subject to the proviso that the plaintiff would be in a position to meet the undertaking as to damages in the event that it is called on.
d) If damages would not adequately compensate either party, then the court must consider where the balance of convenience lies.
e) If all other matters are equally balanced the court should attempt to preserve the status quo.'
Nowhere in the capital in the analysis does he state that the requirement of a permanent injunction as a relief in the substantive proceedings is absolute. Moreover, he states that the courts are not only empowered but also required to adapt the test to suit differing issues which come before it. At paragraph 74 he states:
‘However, it is clear that those detailed rules derive from the courts' regular experience of having to deal with the day-to-day issues which are thrown up in deciding whether to put in place interlocutory orders in the context of commercial or property litigation so as to minimise the risk of injustice. In that context it does also need to be noted that the courts have had to involve variations on the test or move accurately the precise implementation of the test in order to deal with the specific types of problems which arise in particular types of litigation.'
51. This passage correlates with the reasoning of Barrett J., And indeed my own view, that the overriding principle in assessing whether or not to grant injunctive relief is what the Court considers to be just in all the circumstances. For the foregoing reasons, the Court does not feel that the inability of the respondent to obtain permanent injunctions at the substantive trial is a part of them receiving interlocutory injunctive relief."
33. Very respectfully, I have to disagree with the above analysis. By stating as he has done at para. 48 of his judgment, he appears to consider that the long established principles stated in Campus Oil , and which emanated from American Cyanamid, have been in some way diluted all varied by the addition of some broad and unconfined discretion two in all cases do what the court considers to be "just or convenient". I do not think that Okunade supports such a position, and insofar as the trial judge considered that the judgment of Barrett J. in Bainne Álainn to be authority for such a proposition, my view is that it is not a view of the position that this Court can endorse. There is nothing in Okunade to suggest that where no injunction might be granted at the substantive hearing in a case such as the present case, or indeed where the only claim in the proceedings are claims for an award of damages, the Court nevertheless on some unspecified basis other than being "just or convenient" could decide to do so. I would refer to p. 408 in American Cyanamid where Lord Diplock when discussing the balance of convenience, stated "… unless the material available to the court at the hearing of an application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction of the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that he sought". In my view it is clear from long established authority, and is still the case, that when the court is called upon to consider whether or not a plaintiff who seeks an interlocutory injunction has raised "a fair issue to be tried", such a fair issue must be one which could lead, following the trial of the issues at a substantive hearing, to the granting of a permanent injunction.in most types of cases, the purpose of the court granting an interlocutory injunction is to preserve the existing state of affairs so that the court remains in a position at the conclusion of the substantive hearing to provide a remedy by way of permanent injunction, where it is satisfied at the interlocutory stage that damages are not an adequate remedy. Some exceptions to that general rule have evolved, such as applications under s. 205 of the Companies Act 1963 (now replaced by s. 212 of the Companies Act, 2014). It is in that exceptional context that the judgment of Keane J. (as he then was) in McGilligan v. O'Grady must be seen. The same can be said about the wider discretion to preserve the existing state of a defendant's assets in Mareva -type injunctions where the risk of dissipation is established.
34. I note also that in Snell's Equity (33rd ed.) at p. 499 the authors state that an interlocutory injunction will be refused to a plaintiff who has "no real prospect of succeeding in his claim for a permanent injunction at the trial". So it is clear in my view that before the question of considering of it is just or convenient to grant an interlocutory injunction, the Court must in accordance with established principles be satisfied that if a serious issue has been raised, it is one which could entitle the plaintiff to a permanent injunction in order to protect a legal right, and not just any issue such as a claim only to damages, albeit that such a claim can be considered to be raised to the level of a "fair issue". In the present case not only was the trial judge satisfied that Dr Sheehan could not obtain a permanent injunction at trial, to restrain the enforcement of the security for the loans, now that the good faith issue has fallen out of the case, but Dr Sheehan in fact does not claim an injunction arising from the remaining claims such as they are, namely the conspiracy claim, and the claim based on the misuse of confidential information, and the other claims to which I have already referred.
35. Returning to McGilligan for a moment. I would not agree that McGilligan is authority for what is considered by the trial judge to be the very broad discretion in any case to do what is "just or convenient". The first thing to note about McGilligan is that it was a case brought by an oppressed minority shareholder under s. 205 of the Companies Act, 1963. That is an important distinction from the present case given the nature of the discretion conferred upon the courts by the Oireachtas in applications under that section, where in subsection (3) it is provided:
"(3) if, on any application under subsection (1) or subsection (2) the court is of opinion that the company's affairs are being conducted for the directors' powers are being exercised as aforesaid, the court may, with a view to bringing to an end to the matters complained of, make such order as it thinks fit, whether directing or prohibiting any act or cancelling or varying any transaction or for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company, or by the company and in the case of the purchase by the company, for the reduction accordingly of the company's capital, or otherwise".
36. It stands to reason that given the breadth of the discretion conferred by that section that the court might grant an interlocutory injunction to maintain the status quo in relation to the affairs of the company until such time as it has heard the substantive case, since the court's jurisdiction under the section includes making such order as it thinks fit "with a view to bringing to an end the matters complained of". Without such an interlocutory injunction being put in place, the court would potentially be restricted by the time the substantive hearing took place in what order it could make in order to bring the dispute within the company to an end. That is a special jurisdiction created by statute, and cannot assist the respondent's argument made in reliance upon the judgement in McGilligan. The same reasoning applies in relation to the court's jurisdiction in Mareva - type applications. In these types of applications, it will not always be the case that following the substantive and injunction in the same or similar terms to the interlocutory injunction aimed at the preservation of the status quo will be granted even where the plaintiff is successful in the substantive claim.
37. It seems to me that where the court following the hearing of the substantive case to find in favour of Dr Sheehan's claim of conspiracy in relation to the Duffy transaction and in respect of which he has claimed damages, and/or if the court was to find in his favour that there was a misuse of confidential information around that transaction, and in respect of which he has claimed damages, there is no possibility that either instead of, or in addition to the damages claimed, the Court would order that Breccia be restrained from enforcing its security over the shares whether by the appointment of a receiver or otherwise. It has to be borne in mind that there is no dispute but that the loans are in default and have not been repaid. Again, I should say that I am not overlooking the fact that Dr Sheehan maintains that Breccia's purpose is not to get the loan repaid, but rather to acquire Dr Sheehan's shares. I have already expressed the view that this is not a matter that speaks to whether on some "just or convenient" basis, or because the court might have formed a very negative view of the motives and actions of Breccia in relation to the acquisition of Dr Sheehan's loans and the attempt to enforce the security provided by him in respect of those loans, an injunction should remain in place, where otherwise there would be no proper basis for doing so.
38. In my view the principles which must guide the court as to whether an interlocutory injunction should be granted remain unchanged, albeit that in a particular and limited number of specific types of cases, as discussed above, the court might consider that the status quo should be maintained by injunction until such time as the court has determined the proceedings.
39. It remains the case that before an interlocutory injunction is granted the plaintiff must establish that he or she has raised a fair issue to be tried, but, as I have stated, not just any fair issue. The issue must be one in respect of which the court may consider at the conclusion of the substantive hearing that a permanent injunction in the same or similar terms to the interlocutory injunction could be granted in order to restrain on a permanent basis the breach of some legal right which the plaintiff is entitled to have protected.
40. Where, as here, the remaining claims are claims to damages only, and not to injunctive relief to restrain the breach of any legal right, there is no fair issue raised that could lead to the granting of a permanent injunction to restrain Breccia from taking enforcement steps in relation to its security. I am not satisfied that the fact that Dr. Sheehan has a property right in these shares is sufficient to override the principles to which I have referred. As Breccia has pointed out, that property right in the shares is a qualified right by reason of Dr Sheehan's own decision to pledge the shares as security for his loans obtained for the purpose of acquiring the shares. It was always the position, regardless of who owned the loans, that if they went into default and a demand for them to be repaid was not complied with by Dr Sheehan, his property right in the shares would be at risk. The fact that he was a founder member of the Blackrock hospital does not in my view alter or improve that situation from his point of view.
41. There is no overriding discretion, as suggested by the trial judge, to grant an injunction by way of interlocutory order until the remaining damages claims are finally determined. Success in those claims could never result in a finding that Breccia was not entitled to rely upon its security for the loans that it now owns, and to enforce it, and to be subjected to a permanent injunction in that re. The position was different prior to the decision in Flynn , because if Dr Sheehan could have argued successfully that there could be read into the Shareholders Agreement and implied duty of good faith between the parties, then arguably he would have been entitled to a permanent injunction after trial to restrain any steps being taken to enforce the loans and the security.
42. The court would never permanently injunct a party from doing what it is lawfully entitled to do. The purpose of an injunction is to restrain a party from doing an unlawful act, and in the case of an interlocutory injunction, to restrain the doing of such an act, pending a determination as to whether it is or is not lawful to do the act, where that question is in dispute.
43. In my view, the remaining claims in these proceedings, had this been an application for an interlocutory injunction, would not have entitled Dr Sheehan to an interlocutory injunction as was granted. It follows in my view that in the light of the decision which has removed the only serious or fair issue that might have resulted in a permanent injunction, the interlocutory injunction granted must be lifted, since as a matter of law there is no proper basis for maintaining it.
44. There were other grounds relied upon by Breccia on this application such as a lack of candour on the part of Dr Sheehan, and an unreasonable delay by him in relation to the prosecution of these proceedings in the light of the interlocutory injunction he had obtained. The trial judge rejected those grounds as a basis for discharging the interlocutory injunction. However, in view of the basis for my decision that the injunction should be lifted, it is unnecessary for me to address those other grounds of appeal in relation to the trial judge's conclusions in that regard.
45. For the reasons stated, I would allow this appeal, and would discharge the interlocutory injunction granted by Noonan J. on an interim basis on the 22nd December 2014, and continued in the form of an interlocutory injunction by order dated the 26th January 2015.
