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You are here: BAILII >> Databases >> Irish Court of Appeal >> Fox v Reilly & Anor (Unapproved) [2025] IECA 115 (22 May 2025)
URL: http://www.bailii.org/ie/cases/IECA/2025/2025IECA115.html
Cite as: [2025] IECA 115

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THE COURT OF APPEAL

 

NO REDACTION NEEDED                                              UNAPPROVED

 

 

Neutral Citation Number: [2025] IECA 115

 

Court of Appeal Record Number: 2025/49

 

High Court Record Number: 2024/ 6103P               

 

 

Binchy J.

Meenan J.

Hyland J.

 

 

BETWEEN/

 

SYLVIA FOX

PLAINTIFF/RESPONDENT

- AND -

 

MARTIN REILLY AND DONNA HESLIN

 

DEFENDANTS/APPELLANTS

 

 

JUDGMENT of the Court delivered on the 22 of May 2025 by Ms. Justice Hyland

Introduction  

1.      This is an appeal from a decision of Quinn J. of 7 February 2025 given ex tempore where he made an order directing the defendants (hereafter the "appellants") to vacate and yield up possession of a house in County Cavan (described hereafter as "No. 24" or the "property"), as well as orders restraining the appellants from entering into the property, obstructing the appellants from entering the property or changing the locks, or causing or being a nuisance to the plaintiff (hereafter the "respondent").

2.      In short, on 28 February 2006, a Mr. Patrick Stack granted a charge over No. 24 in favour of AIB along with other properties, which were comprised in what was called Plan C3E2H in folio CN9260 in the register of free holders for County Cavan and was registered in 2006. On 15 August 2019, the facility was sold to Everyday Finance DAC, and it was registered as the owner of the charge. As noted by the trial judge, Everyday Finance (described as mortgagee in possession) sold the property to the respondent for €130,000 on 12 June 2024.

3.      The appellants are in occupation of the property. Mr. Reilly, the first appellant, says he is a tenant in the property since 2015, that he entered into a purchase option agreement with the said Patrick Stack, the mortgagor of the property to AIB, and paid him €20,000 euro for the option, together with a yearly lease for rent thereafter, being €100 euro per annum. In fact, the document described as a lease, is not a yearly lease but rather a lease for an indefinite term, subsisting until No. 24 is sold to Mr. Reilly. I describe the lease later in this judgment.

Registered Owner

4.      The plenary summons was issued on 22 October 2024 and the motion seeking possession on 31 October 2024. Following the exchange of 10 affidavits, the matter was heard on 7 February 2025. At that stage, the respondent had made an application to become the registered owner of No. 24 as averred to at para. 19 of her grounding affidavit sworn 30 October 2024 but had not yet become the registered owner. However, by the time this matter was heard on 6 May before this Court, the Court was informed that the respondent had become the registered owner in the interim period, and the Court were provided with a copy of the certificate of registration. A new folio number was provided by the Property Registration Authority, being 37860F and the property was identified as freehold land without any burdens as and from 19 July 2024, in other words the date of the respondent's application. No objection was taken to the provision of the certificate of registration. This appeal therefore proceeds on the basis that Ms. Fox is the registered owner, although this was not the position when the matter was before the High Court.

Applicable legal test

5.      The law on an application for an interlocutory injunction seeking possession of lands in the case of an alleged trespass is well established. In Keating & Company Ltd v Jervis Shopping Centre Ltd [1997] 1 IR 512, Keane J. said that a land owner whose title is not in issue is prima facie entitled to an injunction to restrain a trespass, including where the claim is for an interlocutory injunction only, but, following Patel v. WH Smith [1987] 2 All ER 569, the defendant may seek to put in evidence to establish he has a right to what would otherwise be a trespass and then the court must consider the application of the traditional injunction principles. It is helpful to delve a little into the judgment in Patel. There, Balcombe J. held as follows:

"The two recent cases to which I have referred, Woollerton and Wilson Ltd. v. Richard Costain Ltd . and John Trenberth Ltd. v. National Westminster Bank Ltd., 39 P. & C.R. 104 are also authority that the same principle, namely prima facie a landowner whose title is not in issue is entitled to an injunction to restrain trespass, applies where the claim is for an interlocutory injunction. However, the defendant may put in evidence to seek to establish that he has a right to do what would otherwise be a trespass. Then the court must consider the application of the principles set out in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396 in relation to the grant or refusal of an interlocutory injunction. I cite a short passage from the well-known speech of Lord Diplock in that case, at p. 407:

"The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried. It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial."

In considering that passage, one must bear in mind that in this type of case it is the defendant who is making the claim, because the plaintiff has established, without objection, that he has a title to the land in question."

6.      In other words, the defendant must establish that there is serious issue to be tried in respect of his alleged entitlement to occupy the property before the court will go on to consider traditional injunction principles. Absent any such evidence, the plaintiff is entitled to an injunction without being required to address those principles. In Clare County Council v McDonagh [2022] IESC 2, Hogan J. observed that where the applicant for such relief for orders restraining trespass was a purely private party, the case for the granting of interlocutory relief would, generally, be almost unanswerable.

7.      The appellants have argued that this must be treated as an application for a mandatory injunction, given that the respondent seeks an order for possession, and therefore a strong case must be established following the decision in Maha Lingham v HSE [2006] 17 ELR 137. I am unpersuaded by that argument, given the observation of Simons J. in Start Mortgages v. Kavanagh [2024] IEHC 125, where he concluded that in the case of an alleged trespass, the application is more correctly described as an application for a prohibitory injunction to restrain an ongoing trespass, rather than a mandatory injunction requiring a defendant to deliver up possession of property to which they might have lawful title. Accordingly, the usual test applies.

Grounds of appeal

8.      The appellants' grounds of appeal may be summarised as follows. First, they argue that a lis pendens previously registered on folio CN9260 by Mr. Stack and his wife Mary Stack (no longer appearing on the new registration) ought to have prevented the injunction being granted since, if the proceedings the subject of the lis pendens were successful, they would result in the sale of No. 24 being set aside, and no injunction should be granted pending the resolution of those proceedings. Their second complaint is that there was a failure to disclose material facts at the ex parte application made by the respondent. Their third argument was that there was no evidence of the respondent's ability to honour the undertaking as to damages that she provided. Finally, they argue that the trial judge erred in deducing that the mortgage contained a negative pledge clause requiring consent in the absence of sight of the mortgage. I will deal with each of those grounds of appeal in turn.

Lis Pendens

9.      A lis pendens appeared on the register of the previous folio in the following terms:

"8  June 2023 proceedings affecting the interest of Patrick Stack and Mary Stack in the property are pending in the High Court record number 2023/2266P in a cause or matter of Patrick Stack and Mary Stack (appellants) and Finian O'Reilly and Everyday Finance DAC trading as Link Finance (defendants)."

10.  The absence of same in the new registration may be explained by the existence of s. 21(1) of the Conveyancing Act, 1881 (the "1881 Act"), which provides as follows:

"A mortgagee exercising the power of sale conferred by this Act shall have power, by deed, to convey the property sold, for such estate and interest therein as is the subject of the mortgage, freed from all estates, interests, and rights to which the mortgage has priority, but subject to all estates, interests, and rights which have priority to the mortgage; ..."

11.  The first named plaintiff in the proceedings bearing record number 2023/2266P, Mr. Patrick Stack, is the developer of No. 24 and the person to whom AIB granted a mortgage in 2006. The 2023 proceedings were not exhibited in these proceedings but Counsel for the appellants informed the Court that the plaintiffs are challenging the alleged legality of the transfer of the loan from AIB to Everyday Finance in 2019, and the conduct of Mr. Finian Reilly, the original owner of the lands, and is looking for recission of the sale of No. 24, as well as other properties, as well as other reliefs. The appellants argue that where a party purchases lands being aware of the lis pendens on those lands, then the purchaser takes the lands subject to the rights and liabilities in respect of land which might be subsequently declared by a court in those proceedings.

12.  The nexus between the appellants and the proceedings bearing record number 2023/2266P is difficult to identify in the context of this application, particularly since the respondent is not a party to those proceedings. However, the argument appears to be that if the plaintiffs are successful in the proceedings, the contract for sale for No.24 will be rescinded, thus affecting the respondent's ownership of No.24, and that, in the circumstances, an injunction should not be granted. It is impossible to understand how the contract could be rescinded without the respondent being a party. Moreover, the complaint in those proceedings is not even about the conduct of Everyday in the sale to the respondent, but rather about the sale of the facilities by AIB to Everyday.

13.  The trial judge addressed the argument at para. 53, noting that the first named plaintiff, Mr. Stack, did not seek to restrain the sale by Everyday Finance or the purchase by the respondent in 2024, that Mr. Stack's proceedings were not being pushed on with any vigour and that no statement of claim had been delivered despite the plenary summons being issued in 2023.

14.  As noted above, events have moved on since the decision of the trial judge, because there is now no lis pendens registered against No.24. The argument might be considered moot in those circumstances. However, an attempt is being made by the Stacks to register a new lis pendens and the respondent is seeking to vacate this in the High Court. In those circumstances, I will deal with the point raised by the appellants in this regard.

15.  In my view, the trial judge was correct in concluding that the existence of the lis pendens did not affect the entitlement of the respondent to an interlocutory injunction. First, as he noted, no attempt had been made to prevent the sale by the person who had registered the lis pendens, and the proceedings had not been progressed. To that I would add that this Court has no knowledge of the proceedings except what was argued by counsel, the proceedings not having been exhibited; the proceedings were brought 5 years after the sale the subject of the complaint i.e. the sale by AIB to Everyday; and they do not involve the respondent, thus making the prospect of recission illusory. Most important of all, however, are the statutory guard rails of s. 21(1) and 21(2) of the 1881 Act. Section 21(1) of the 1881 Act (set out in material part above) provides a statutory protection for purchasers who buy from mortgagees exercising the statutory power of sale.  

16.  A similar provision is found at s.5(1) of the Conveyancing Act, 1911 which provides:

"Upon any sale made in professed exercise of the power conferred on mortgagees by the Act of 1881, a purchaser is not, and never has been, either before or on conveyance, concerned to see or inquire whether a case has arisen to authorise the sale, or due notice has been given, or the power is otherwise properly and regularly exercised."

17.  In Langan v Tailte Eireann [2024] IECA 59, Butler J. held at para. 81 that the protection afforded to the purchasers under s.21(2) of the 1881 Act and s.5(1) of the Conveyancing Act 1911 provided an absolute defence to any case the appellant wished to make regarding their purchase of his property from the mortgagee. Butler J. observed that regardless of how the appellant attempted to frame his claim, it came down to the contention that the transfer to the purchasers was unlawful and the purchasers should have known this was the case. She observed that the statutory provisions made the purchaser's title unimpeachable and thus provide an absolute defence in those circumstances. She noted the claim against the purchasers was therefore unstateable and bound to fail.

18.  Moreover, s.21(2) makes it clear that where the power of sale is exercised under the 1881 Act, the title of the purchaser cannot be affected by proceedings, as follows:

"(2.) Where a conveyance is made in professed exercise of the power of sale conferred by this Act, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly exercised; but any person damnified by an unauthorised, or improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power."

19.  In my view, those provisions are determinative of the issue, particularly given that the Stacks are not looking for any relief against the respondent. The respondent obtained good title freed from all estates, interests, and rights to which the mortgage has priority and Mr. Stack's remedy is in damages against the person exercising the power. The respondent's title is not impeachable because of any claim by Mr. Stack.  In all the circumstances, this ground of appeal cannot succeed.

Non-disclosure

20.  The appellants raised arguments about non-disclosure by the respondent in her application for short service and substituted service. The trial judge referred to Bambrick v. Cobley [2005] IEHC 43, finding he was not satisfied there was material non-disclosure that would disentitle the appellant to relief as the Bambrick jurisprudence related to a situation where a party obtains an interim order on an ex parte basis and omits material facts, thus leading to a possible entitlement to a discharge of the interim order or a refusal of an interlocutory order. He noted that no application for an interim order was made. He further concluded that the matters alluded to were marginal and that in relation to the issue of the sub-sale (described below) it was of no moment, since the respondent had exhibited the deed of transfer from Everyday Finance to the respondent in June 2024, which made it clear that the vendor was Everyday Finance.

21.  Bambrick is authority for the proposition that, where a party goes into court on an ex parte basis and fails to disclose material facts, that party may not maintain the benefit of any order made on foot thereof and may be precluded from getting further orders depending on the culpability of the plaintiff and the overall circumstances of the case. As the trial judge notes, no interim orders were made in this case and the principles in Bambrick do not apply directly to the circumstances of this case. The order appealed against was made after a full - indeed an excessive - exchange of affidavits, many of which contained averments that were irrelevant to the issues in the application. Further, even if the principles identified in Bambrick were applicable, for the reasons identified below, I do not believe the respondent was guilty of material non-disclosure. In short, neither the letter nor the spirit of Bambrick applies in this case. 

22.  One matter complained of by the appellants was that the respondent incorrectly averred at para. 19 of her affidavit that she was the legal owner of No.24, despite the registration not being complete. That statement must be read in the light of the very next line in that paragraph where the appellant averred that she had made an application to become the registered owner, and this was at an advanced stage. Therefore, the position was perfectly clear to the trial judge and there was no nondisclosure in that respect.

23.  Second, the question as to the identity of the vendor was focused upon by counsel for the appellants, where he argued that, initially it was said that the sale was being carried out by Maple Gate, but that in fact the vendor was ultimately Everyday Finance. But as noted by the trial judge, the deed of transfer was exhibited. Moreover, in the respondent's grounding affidavit, she clearly avers that the vendor was Everyday Finance. Therefore, the identity of the vendor was perfectly clear to the Court. The reference in the respondent's supplemental affidavit at para. 6 to the sale by Maple Gate is in the context of an explanation of the sub-sale structure. It certainly could have been explained more clearly; but by that stage the trial judge had already been provided with clear evidence that the vendor of the property was Everyday Finance so there was no question of material non-disclosure. Of course, parties should be assiduous to ensure that every line in every affidavit is correct; but a mistake is not the same things as material non-disclosure.

24.  Finally, counsel complained that there was inconsistent evidence put before the court as to whether the respondent knew whether the appellants were in the property or not prior to the sale. In fact, the respondent avers in her grounding affidavit at para. 9 that she was on notice that the receiver and/or agent of Everyday Finance could not gain access and did not hold keys to No.24. She later avers in her supplemental affidavit that her solicitors were not aware of the appellants' presence in the property. Those two statements are not necessarily inconsistent, contrary to the submissions of the appellant. Moreover, the contract for sale that was exhibited did not provide for vacant possession. In those circumstances, I am satisfied that there was no material non-disclosure in this respect and the Court understood the factual position in relation to occupation of the property.

Undertaking given by the respondent

25.  The appellants argued that in the context of an injunction the person seeking same must give an adequate undertaking, and that here the undertaking was not adequate because there was an absence of detail or documentation identifying that the respondent would be in a position to meet an undertaking were it to be called upon. The trial judge deals with that argument at para. 55 where he says that a proper, normal averment as to an undertaking as to damages was made by the respondent who described herself as a businesswoman who had purchased the property for €130,000 in the summer of 2024. He notes that Mr. Reilly, the first appellant, would have read that when he was legally represented and made no challenge or raised no query as to the adequacy of that undertaking. In those circumstances, the trial judge did not consider that to be a basis to refuse the reliefs.

26.  In the grounding affidavit of the respondent sworn 30 October 2024 at paras. 27 and 28 the respondent gives an undertaking to abide by any order as to damages should the appellants suffer by reason of the interlocutory relief and makes the usual averment that the nature of the undertaking has been explained to her. Mr. Reilly swore a replying affidavit of 22 November 2024. He was legally represented when doing so, and no issue is made about the adequacy of the undertaking. Rather, he says at para. 18 that he has a property right which cannot be compensated by damages. He goes on to say that it is not good enough to ask him to leave the family home and then pay damages if they win. That appears to indicate that his concern is not with the ability of the respondent to pay the damages, but rather that damages will not be an adequate remedy.

27.  The averment is in the normal format. If a challenge had been made to the adequacy of the undertaking, then it may have been necessary for the respondent to exhibit documentation indicating her ability to make good any undertaking. Had she failed to do so, an inference may have been drawn about that ability. However, in circumstances where no challenge was made to her averment, the appellants have not identified any case law or court rule which requires that an undertaking in the context of an injunction must be supported by evidence of financial wellbeing, particularly where there is no reason on the face of the facts of the case to doubt the ability of the person to meet the undertaking. In those circumstances I cannot accept that there was any flaw in the trial judge's reasoning in this respect.

The 2015 lease

28.  Paragraph (b) of the notice of appeal is in the following terms:

"[The trial judge] Placed undue emphasis/weight in deducing the mortgage in respect of Lough Eala between Patrick and Mary Stack (the former developers of Lough Eala site including 24 Lough Eala) of the one part and AIB of the other part, which said mortgage was not before the Court, contained a negative pledge clause which the Court found would preclude the tenancy of 24 Lough Eala by the Defendants/Appellants in the absence of sight of the mortgage."

29.  Before identifying the findings of the trial judge, it is necessary to describe the lease. The lease is a one-page typed document that describes the parties being Patrick Stack, lessor, and Martin Reilly, lessee, and the demised premises, being 24 Loch Eala, Gowna, Co. Cavan. It gives the lessee uninterrupted use of the house, requires him to effect insurance and then provides as follows:

"The lease is to remain in force until such time as the proposed sale is complete to the satisfaction of both parties at which time it will cease without penalty to either party.

The annual rent for the duration of the lease will be €100 euro.

The sale of the property will complete as soon as possible".

30.  The lease is signed by the lessor and the lessee. There is no definition of the "proposed sale" in the lease. However, in his affidavit sworn 22 November 2024, it is averred by Mr. Reilly that he entered into a purchase option agreement with Mr. Stack to buy No.24 and he paid him €20,000 euro for the option, together with a yearly lease for rent thereafter in the amount of €100. He exhibits as part of the lease a handwritten document that includes the following: "Receipt for deposit monies paid re sale of house no. 24 Loch Eala, Gowna, Co. Cavan. To Martin Reilly 20,00 paid with thanks." I observe in passing that it is difficult to see how the lease can survive the sale of No.24, given that it only exists until No 24 is sold to Mr. Reilly, which condition cannot now be fulfilled.

31.  Turning now to the High Court judgment, at para. 43 the trial judge identifies that Everyday sold the property as mortgagee in possession and that the only challenge flagged to the court is the putative lease whereby it is said by the appellants that they had permission to be there pursuant to the lease document of August 2015. He observes that neither the appellants nor Mr. Stack even assert any consent "bearing in mind the onus is on them as Ms. Justice Dunne says in N17 they do not even assert consent in the affidavits." He goes onto say that the law is clear that the tenancy, whether it creates any legal rights as between Mr. Reilly and Ms. Heslin or either of them and Mr. Stack, does not bind AIB, Everyday Finance or Ms. Fox in circumstances where consent is not alleged. He refers to the decisions in Fennell v N17 Electrics Ltd [2012] 4 IR 634, Kennedy v O'Kelly [2020] IECA 288 and AIB v. Richard Fitzgerald [2021] IEHC 172 and says those authorities make it clear that the lease does not bind Ms. Fox as purchaser where consent is not alleged. He notes at para. 44 that this is not a scenario where there is even a slim possibility of consent emerging on discovery and there is no basis for saying that discovery be sought because consent is not alleged. As a result, he concludes that the plaintiff has established a strong basis for her property ownership and entitlement ex debitio justiciae for an order for possession and that the court is not required to move to a balance of convenience or adequacy of damages analysis (although in fact he does engage in a short exercise in that respect).

32.  Before considering the law in this area, it is necessary to consider the evidence. At para. 8 of Ms. Fox's grounding affidavit she says the appellants went into occupation of No.24 in or around 2016 without the consent of Everyday Finance or the previous mortgagee. In the replying affidavit of Martin Reilly, he says that No.24 is his family home. At para. 4 he says that he has been a tenant in the property since 2015, he entered into a purchase option agreement with Patrick Stack, the developer of the site to buy the property, and he paid him €20,000 euro for the option together with a yearly lease for rent thereafter and he exhibits a copy of the lease.

33.  At para. 5 of her supplemental affidavit of 6 December 2024, Ms. Fox says she is a stranger to the putative lease relied upon by the appellants, and that the onus is on the appellants to show that such a lease is valid, which they have failed to do. She notes that the title to the property was in any case transferred to her, discharged from the charge which ranked above all burdens, including any putative lease.

34.  An affidavit was sworn by Mr. Stack, the developer of the properties, on 22 November 2024. At para. 7 he says that Everyday Finance knew about the appellants' occupancy of No. 24. He also avers the respondent's solicitor, Paul Kelly, knew of their occupation. There is an affidavit from Mr. Paul Kelly solicitor of the 14  January 2025, where he says he was not aware of any occupancy of the property or a putative lease. In an affidavit sworn by Mr. Reilly of 17 December 2024, he avers that he and Donna Heslin are bona fide tenants.

35.  In short, the position appears to be that the appellants are asserting a valid lease but are not asserting that consent was given by Everyday Finance or AIB, although it is averred that Everyday Finance knew of same.

36.  From the notice of appeal, it appears that the issue raised by the appellants is whether the trial judge was correct in assuming that the mortgage contained a negative pledge clause requiring consent, and thus precluded the tenancy in the absence of same, given that the mortgage was not exhibited. In fact, the trial judge does not refer to the existence of a negative pledge clause. He identified that consent was required, and he referred to the cases cited above, all of which are concerned with situations where consent was required because of a negative pledge clause.

37.  Because the mortgage was not exhibited by the respondent, this case cannot be treated as one where consent was required by a negative pledge clause. However, in my view, for the reasons discussed below, the trial judge was entitled to take the view that the appellants were obliged to establish consent, in the absence of them identifying any other basis for the lease binding Everyday Finance.

38.  As discussed earlier in this judgment, following Keating, a landowner whose title is not in issue is prima facie entitled to an interlocutory injunction to restrain a trespass unless the occupier has established an arguable case that they have a right to do what would otherwise be a trespass. Simply pointing to the lease, without more, was insufficient to establish an arguable case in circumstances where the law is as expressed by Monroe J. in In Re O'Rourke's Estate [1889] 23 LR Ir. 497 as follows:

"I take it that the law on this subject is free from all manner of doubt. A lease made by a mortgagor, subsequent to the mortgage and not coming within the provisions of the Conveyancing and Law of Property Act, 1881 ... is absolutely void as against the mortgagee".

(I should indicate that because the mortgage was created before 2009, the provisions on leases in the 1881 Act apply rather than the equivalent sections in the Land and Conveyancing Law Reform Act 2009 (the "2009 Act"), since the power of leasing conferred by s.112 of the 2009 Act applies only to mortgages created after the commencement of that Part).

39.  In Law of Mortgage, (Butterworths, 15th Ed., 2019) Fisher and Lightwood explain that normally a lease created by a mortgagor after the mortgage will not be binding upon the mortgagee, but qualifies that as follows:  

"29.19: There are, however, four circumstances where a tenancy granted after the mortgage will be effective against the mortgagee:

(a)           if it was granted under an express power of leasing in the mortgage deed;

(b)           if it was granted under the statutory power of leasing;

(c)            if the mortgagee expressly consents to the grant of the lease; and

(d)           if the mortgagee treats the tenant as his own."

40.  The statutory power of leasing was created under s.18 of the 1881 Act, as explained in Wylie on Irish Landlord and Tenant Law, (Bloomsbury 4th d Ed., 2022) at para. 6.10 (quoted by Dunne J. in N17 as follows):

"Though both the mortgagor and mortgagee have power to lease the land at common law, such leases were of limited effect since, while binding between the lessor and lessee, they could not prejudice the rights of the other party to the mortgage i.e. in the case of a lease by the mortgagor, the mortgagee's paramount rights to take possession or otherwise realise his security ... these difficulties were removed by s. 18 of the Conveyancing Act 1881, which conferred a statutory power of leasing upon both mortgagor and mortgagee, exercisable while either is in possession of the mortgaged land. A lease granted by the mortgagor under his statutory power binds every mortgagee ... provided in each case the statutory powers are complied with ... it is also important to note that most mortgage deeds restrict the mortgagor's power of leasing, by requiring the consent of the mortgagee, if the power is not excluded altogether."

41.  At para. 30 of N17, Dunne J. explains the relevance of negative pledge clauses:

"I think, first of all, that it is clear that a mortgagor and mortgagee can expressly agree to exclude the power conferred by s. 18 of the 1881 Act. If the power is excluded, it may be done in a way that permits the mortgagor to grant a lease subject to the prior consent of the mortgagee. If such prior written consent is not obtained by the mortgagor and the mortgagor proceeds to enter into a lease with a tenant, the lease will be binding on the mortgagor as lessor, but as against the mortgagee, the lease will not be binding".

42.  There are several recent Irish decisions upholding the necessity for consent from the mortgagee if the tenancy is to be binding upon them, all of them in circumstances where a negative pledge exists. In Kennedy v O'Kelly the notice party had entered a tenancy agreement with the defendant not authorised by the lender or receiver and she sought to invoke the provisions of the Residential Tenancies Act 2004 against the receiver to prevent an injunction requiring her to vacate the premises. Both Ní Raifeartaigh and Collins, JJ. found that the receiver had established a strong case that he was entitled to take possession of, and deal with, the mortgage property on behalf of Mars Capital because any letting of the property was in breach of the mortgage.

43.  Kennedy was followed by Simons J. in AIB v Fitzgerald where he held that the mortgagee is not bound by a lease granted in breach of the mortgage and there was no inconsistency between that principle and the provisions of part 5 of the Residential Tenancies Act 2004, noting that it was unnecessary for a mortgagee to terminate a lease in circumstances where they are simply not bound by the lease at all.

44.  In Shay Murtagh Ltd v Cooke [2022] IEHC 436, a person who had brought a property on notice of its occupation by persons unknown successfully sought possession on the basis that the defendants were trespassers with no right to be present at the property where the occupants had entered into a tenancy agreement with the original owner. Phelan J. determined that the agreement was invalid in the absence of mortgagee's approval, rendering the defendants trespassers.

45.  In each of the above cases, the Court had evidence that the contractual arrangements between the parties - either the mortgage itself, or, in the case of N17, the facility agreement - excluded the statutory power to create a lease unless consent was obtained from the mortgagee. In the absence of consent, any lease could not be relied upon against the mortgagee, or its successors in title.

46.  However, the appellants correctly make the point that the mortgage was not exhibited; and that it cannot be assumed that there is a negative pledge clause in the mortgage which prevents the creation of a tenancy without consent. I fully agree that if the respondent wished to assert the necessity for consent flowing from a negative pledge clause in the mortgage, she was obliged to prove same and she did not do so as the mortgage was not exhibited. Counsel for the respondent argued that the mortgage was not a document that she was party to, and therefore she could not readily exhibit it. However, in the contract for sale exhibited, the documents schedule includes the original indenture of mortgage of 2 February 2006 between Patrick and Mary Stack and AIB and therefore the mortgage was available to the respondent.

47.  I might add for the sake of completeness that the mortgage ought to have been exhibited, being one of the essential proofs of the respondent in an application such as this where, at the time of the application before the High Court, she was not the registered owner. However, as noted above, by the time the matter came to this Court, the respondent had been registered as the owner of the property and therefore her title to same is not in issue, given s.31 of the Registration of Title Act 1964, which provides that the register shall be conclusive evidence of the title of the owner to land as appearing on the register.

48.  Nonetheless, my conclusion in respect of the absence of proof of a negative pledge clause is not determinative of this appeal. The appellants did not explain why, on their case, the successor in title to Everyday Finance was bound by a lease to which neither AIB nor Everyday had consented. If the appellants wished to assert the respondent was bound because they had been granted a lease by Mr. Stack that came within s.18(1) of the 1881 Act, thus rendering consent by AIB or Everyday unnecessary, it was essential for them to make that case (particularly since the document described as a lease does not on its face come within s.18, not being a building lease not exceeding 99 years, or an agricultural or occupation lease not exceeding 21 years, and does not contain a condition of re-entry on the rent not being paid). No such case was made.

49.  The height of the appellants' argument may be found in their written submissions to the effect that s.112 of the 2009 Act does not apply as the mortgage was created pre-2009. I agree with that proposition for the reasons given above; but nothing further is said, and no argument is made that the lease granted to them by Mr. Stack was one that came within s.18 of the 1881 Act. An argument was also made that the respondent had failed to serve the appellants notice under Part 4 of the Residential Tenancies Act 2004 and that a valid notice of termination was required. But that issue was not determined in the decision of the trial judge and is not included in the Notice of Appeal, and therefore cannot be raised in this appeal.

50.  Having regard to the foregoing, in my view, the appellants have failed to make an arguable case that they have a valid lease entitling them to remain in occupation and the respondent, having established good title, is therefore entitled to an injunction to restrain a trespass without there being any necessity to go on to consider the balance of justice issues. I therefore uphold the conclusion of the trial judge in this respect.

Conclusion

51.  For the reasons set out above, I am satisfied that the decision of the trial judge should be upheld. In so far as costs are concerned, the respondent should file and serve a short, written submission of not more than 1,500 words within 14 days from the date of delivery of this judgment, after which the appellants will have a further 14 days in which to file and serve replying submissions of similar length.

52.  Since this judgment is delivered electronically, I am authorised by Binchy and Meenan JJ. to state that they agree with it and with the orders proposed above.


Result:     Appeal dismissed.

 

 

 

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