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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Fergus Lowe -v- Gerard Burns & Anor [2012] IEHC 162 (17 April 2012)
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Cite as: [2012] IEHC 162
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Judgment Title: Fergus Lowe -v- Gerard Burns & Anor Neutral Citation: 2012 IEHC 162 High Court Record Number: 2012 3008P Date of Delivery: 17/04/2012 Court: High Court Composition of Court: Judgment by: Mary Laffoy J. Status of Judgment: Approved |
Neutral Citation 2012 [IEHC] 162 THE HIGH COURT [2012 No. 3008P] BETWEEN FERGUS LOWE PLAINTIFF AND
GERARD BURNS AND ANNE BURNS DEFENDANTS Judgment of Miss Justice Laffoy delivered on 17th day of April, 2012. 1. The application and its history 1.2 In the notice of motion the plaintiff sought prohibitory injunctions restraining the defendants, and each of them, their servants and agents and all persons acting in concert with them from-
(b) harassing or intimidating any occupant of the premises identified in the schedule, and (c) entering on to the premises identified in the schedule without express consent of the plaintiff,
(ii) apartment 29, Emmet Court, Inchicore, Dublin, 8; (iii) apartment 4, 109 Parnell Street, Dublin, 1; and (iv) the property registered on Folio 110613F of the Register of Freeholders County Dublin and more commonly known as 11 Ashmount, Clonsilla, Dublin, 15. 1.3 When the matter was before the Court on 28th March, 2012 the first defendant (Mr. Burns) attended in person and he was accompanied by a McKenzie friend. The second defendant (Mrs. Burns) did not appear. Mr. Burns sought an adjournment to enable him file a replying affidavit. That application was acceded to. The matter was adjourned for hearing to 30th March, 2012. 1.4 The plaintiff’s application was heard on 30th March, 2012. Once again, Mr. Bums appeared in person accompanied by the McKenzie friend. There was no appearance by or on behalf of Mrs. Burns and the Court established that she was not in Court. Mr. Burns indicated that she was a "silent partner" and that she was consenting to the position he was adopting. Counsel for the plaintiff informed the Court that the plaintiff has no specific complaint against Mrs. Burns, except that, by being a party to correspondence to which I will refer later, she subscribed to Mr. Bums' activities. The title position in relation to the properties with which the Court is concerned is that Mr. Bums is the sole owner of the Navan Property and Mr. Bums and Mrs. Bums are joint owners of each of the Dublin Properties. 1.5 On 30th March, 2012, the affidavit evidence was opened in Court and the Court heard submissions from counsel for the plaintiff and from Mr. Burns. The Court adjourned the matter until 2pm on that day. When the matter was back in Court at 2pm, the Court, having noted the plaintiff's undertaking as to damages, made interlocutory orders in the terms sought on the notice of motion. The Court indicated that it would give its reasons in writing for that decision on the first available opportunity, Tuesday, 17th April, 2012. 1.6 The purpose of this judgment is to set out the reasons for that decision. 2. The basis of the plaintiff's claim for relief 2.2 As the description in the notice of motion discloses, the Navan Property is registered on Folio 22133F of the Register of Freeholders County Meath. Mr. Burns was registered as full owner with absolute title on that folio on 9th April, 2008. On the same day a charge was registered as a burden of the folio. The charge is described as a charge "for present and future advances repayable with interest". The Bank is registered as owner of the charge on the folio. 2.3 The Navan Property is a commercial property which is let to two tenants. The tenant on the ground floor carries on the business of seamstress and pays a weekly rent. The offices on the first and second floors are let to Ormonde Mining Plc, but, according to the plaintiff, are currently not being used owing to a dispute with Mr. Burns over the terms of the lease. 2.4 The charge in favour of the Bank was created by a deed dated 20th December, 2007 made between Mr. Bums of the one part and the Bank of the other part (the Navan Charge), which, as I have stated, is registered as a burden on Folio 22133F. It contained the following provisions:
(b) It was declared that the secured monies should be deemed to become due within the meaning of the Conveyancing Acts 1881 to 1911 immediately on demand for payment being made by the Bank (Clause 6(1)). (c) It was declared that the powers of sale and appointing a receiver conferred by the Conveyancing Act 1881 should apply at any time after such demand was made by the Bank (Clause 6(2)). (d) It was declared that a receiver appointed by the Bank should, in addition to the relevant statutory powers, if the Bank should so direct, have the following powers- (i) to enter upon and take possession of the mortgaged property or any part thereof, (ii) to sell the mortgaged property, (iii) to do all such acts and things as an absolute owner could do in the management of the mortgaged property, and (iv) to exercise the further powers set out therein, which is not necessary to outline (Clause 6(3)). 2.6 In fact, by deed executed on 27th January, 2012 the Bank appointed the plaintiff to be receiver of the assets charged by the Navan Charge, that is to say, the Navan Property, and to enter upon and take possession of the assets in the manner specified in the Navan Charge and to exercise all powers conferred by the Navan Charge and by law. The plaintiff accepted the appointment on 3rd February, 2012, which is the date of the appointment. 2.7 Following the appointment of the plaintiff as receiver, his solicitors, Peter Morrissey & Co., who are acting for him on this application, wrote to Mr. Burns advising him of the appointment and inviting him to contact the plaintiff. Mr. Burns' response of 14th February, 2012 to them was to the effect that the plaintiffs solicitors were acting without authority and had no legal standing. It continued:
2.8 In summary, the authority of the plaintiff in relation to the Dublin Properties has arisen as follows:
(b) Apartment 4, 109 Parnell Square is the subject of a mortgage dated 25th October, 2006 made between Mr. Bums and Mrs. Bums of the one part and the Bank of the other part, which was in similar terms to the Navan Charge. It was registered in the Registry of Deeds on 3rd June, 2009. (c) The property registered on Folio 110613F of the Register of Freeholders County Dublin, of which Mr. Bums and Mrs. Bums are registered as full owners, is the subject of a charge dated 11th March, 2007 made between Mr. Bums and Mrs. Bums of the one part and the Bank of the other part, which was also in similar terms to the Navan Charge. That charge was registered as a burden on Folio 110613F on 16th January, 2008 and the Bank is registered as owner of the charge on the folio. 2.9 There is absolutely no doubt but that the Bank has valid securities over the Navan Property and the Dublin Properties as outlined above. Moreover, there is no doubt but that when the Bank appointed the plaintiff as receiver over both the Navan Property and the Dublin Properties its power to do so under the various security documents was exercisable. Indeed, Mr. Burns made it clear that he was not challenging the entitlement of the Bank to appoint the plaintiff as receiver. Prima facie, the plaintiff was validly appointed as receiver with the authority to exercise the powers conferred on him by the various security documents in relation to both the Navan Property and the Dublin Properties. 2.10 In the interests of clarity, I should record that each of the Dublin Properties is let and that the defendants are not in occupation of any of those properties. 3. The evidence adduced by the plaintiff 3.2 There followed in the plaintiff's affidavit an outline of information he obtained from various sources. For instance, he has exhibited an e-mail of 16th February, 2012 from Mr. Farrelly, who had attended at the Navan Property later on 16th February, 2012 and who informed the plaintiff that Mr. Burns was there. There was also a locksmith engaged by Mr. Bums there who changed the locks on the premises once again. Mr. Farrelly reported that the tenant on the ground floor was distressed. Arising out of that contact and out of contact which the plaintiff received directly from the tenant of the ground floor, the plaintiff’s solicitors wrote to Mr. Bums and Mrs. Bums by letter dated 23rd February, 2012 setting out the plaintiff’s entitlement to the rent payable by the tenant and threatening injunction proceedings. On the same day, 23rd February, 2012, the plaintiff engaged a security firm, Pinnacle Security, to attend at the Navan Property daily from 8am to 8pm. He also contacted An Garda Siochana at Navan Garda Station to apprise them of the situation. The locks were changed once again on 23rd February, 2012 on the direction of the plaintiff. 3.3 Thereafter, the plaintiff has exhibited a series of documents, each of which is described as an "Incident Report", made by security officers of Pinnacle Security. On the basis of what is reported, it is clear that Mr. Bums, in combination with associates of his, has acted in a manner which has interfered with and frustrated the activities of the plaintiff in relation to the plaintiff's rights as receiver validly appointed in relation to the Navan Property. Moreover, I am satisfied that, whether intentional or not, Mr. Bums, in combination with his associates, has harassed the tenant occupant of the ground floor of the Navan Property. The contents of three Incident Reports describing what happened on 9th March, 2012 when, at the behest of Mr. Bums, the locks on the property were changed once again demonstrate that. A later Incident Report in relation to events on 20th March, 2012, which was also exhibited by the plaintiff, indicates that Ormonde Mining Plc has been locked out of the first and second floors of the Navan Property through the actions of Mr. Bums. 3.4 The plaintiff also exhibited an e-mail from an official of his firm, Sherry Fitzgerald Kennedy Lowe, sent on 15th March, 2012, which contains evidence, which has not been disputed by Mr. Bums, that Mr. Bums has intimidated at least one of the tenants of one of the Dublin Properties. 3.5 Although he did not avail of the opportunity in his replying affidavit, which was sworn on 29th March, 2012, to address the matters of fact outlined in the plaintiffs affidavit, at the hearing of the application Mr. Bums objected to the evidence in relation to harassment of the occupants of the property. 3.6 I am satisfied that it is proper for the Court to rely on the hearsay evidence contained in the plaintiff’s affidavit. As is pointed out in Delany and McGrath on Civil Procedure in the Superior Courts (3rd Ed.) at para. 20 -70, Order 40, rule 4 of the Rules of the Superior Courts 1986 lays down the important principle that, except on interlocutory applications, an affidavit should be confined to facts within the first hand knowledge of the deponent. In relation to an affidavit sworn in an interlocutory application, the authors state as follows at paras. 20 - 71:
4. Mr. Burns' answer to the application and the plaintiff’s response 4.2 In his replying affidavit, Mr. Burns also exhibited correspondence from Padraig O'Connell to the Bank. In the first letter, dated 7th February, 2012, Mr. O'Connell stated that he was acting as "a Mediator" in order to resolve the outstanding amount due by Mr. Burns and Mrs. Burns. In a subsequent letter dated 16th February, 2012, Mr. O'Connell made reference to what I understand to be the summary proceedings in this Court by the Bank against Mr. Bums and asked to be contacted with regard to setting up a meeting to discuss the matter. There was a further letter dated 20th February, 2012 from Mr. O'Connell to the Bank seeking a meeting. Finally, there was a letter dated 13th March, 2012 from Mr. O'Connell of "O'Connell Mediation Services", setting out "a proposal" to the Bank and seeking a meeting. Mr. Bums complained that the Bank had not provided a meeting, as requested. I am satisfied on the evidence that Mr. O'Connell was one of the associates of Mr. Bums and was involved in a number of the incidents reported by officers of Pinnacle Security to have taken place at the Navan Property. 4.3 In his submissions Mr. Burns relied on a decision of the Court of Appeal of England and Wales delivered on 26th May, 1999 and furnished the Court with a copy of the judgment as approved by the Court. In fact, the authority in question has been reported as Medforth v. Blake [1999] 3 All ER 97. The facts in that case were that the plaintiff owned a pig farming business which was financed by loans from a bank, which were secured by a charge over his farm. The bank appointed receivers over the mortgaged property. The receivers managed the farm business under a power contained in the charge. The plaintiff was dissatisfied with the management of the business, alleging, in particular, that the receivers had failed to obtain freely available discounts on feed. Accordingly, he commenced proceedings against the receivers, contending, inter alia, that they had owed him a duty of care in managing the farm business. On the trial of a preliminary issue, the receivers contended that they owed the plaintiff no duty beyond one of good faith. The decision of the Court of Appeal is succinctly summarised in the head-note as follows:
4.4 Mr. Burns also submitted that he had "fired" the receiver because the receiver did not realise that he had an equitable duty to him. He submitted that the Conveyancing Act of 1881 and also s. 108(2) of the Land and Conveyancing Law Reform Act 2009 (the Act of 2009) are biased towards receivers and banks. Section 108(2) of the Act of 2009 provides that a receiver appointed under s. 108(1) is the agent of the mortgagor, who is solely responsible for the receiver's acts or defaults, unless the mortgage provides otherwise. Mr. Burns submitted that he must have power to dismiss the receiver because, if the position were otherwise and he was required to be responsible for an agent, that situation would be against his human rights and unlawful. 4.5 In responding to that point, counsel for the plaintiff relied on the decision of the Court of Appeal of England and Wales in Gomba Holdings UK Ltd. & Ors. v. Minories Finance Ltd & Ors. (I 989) 5 BCC 27 and, in particular, the following passage from the judgment from Fox L.J. in relation to the nature of a receiver's agency (at p. 29):
4.7 In a nutshell, Mr. Bums' answer to the plaintiff’s application is misconceived, being based on an erroneous belief as to the relevant legal principles. 5. Conclusions on the plaintiff's entitlement to an interlocutory injunction 5.2 As regards the Navan Property, of which Mr. Bums is the owner, he entered into the Navan Charge with the Bank whereby he agreed that, at any time after demand for repayment of the monies secured by the Navan Charge, the Bank could appoint a receiver who could enter upon and take possession of the Navan Property. That is what has happened. The Bank demanded repayment of the monies secured by the Navan Charge, and, Mr. Burns not having complied with the demand, the Bank appointed the plaintiff as receiver and, as he was entitled to do, the receiver entered into possession of the Navan Property on 16th February, 2012. What has happened since then is that Mr. Burns has endeavoured to prevent the receiver retaining possession and from receiving the rents and profits of the Navan Property. Mr. Bums has adduced no evidence whatsoever, nor has he made any argument on the basis of which it is possible to conclude, that he has any entitlement to oust the plaintiff from possession or receipt of the rents from the Navan Property. I have absolutely no doubt that the plaintiff meets the first test on an application for an interlocutory injunction, in that there is a fair issue to be tried that he is entitled to remain in possession and is entitled to receipt of the rents and profits of the Navan Property, pending the determination of the substantive proceedings. The same applies to the Dublin Properties. 5.3 As regards the second test, whether damages would be an adequate remedy for the plaintiff, if he were to establish an entitlement to a permanent injunction at the substantive hearing but an interlocutory injunction had been refused, the glaring reality of the situation, on the basis of the evidence put before the Court by Mr. Bums, is that Mr. Bums and Mrs. Bums would not be able to meet a claim for damages. It is interesting to note that the "proposal", formulated as two alternative proposals, made by Mr. O'Connell on his behalf to the Bank in the letter of 13th March, 2012 were: to sell the property at its best possible selling price, and "for the remainder of the loan to be a write off'; or to ''bring down the loan to the actual market value at present, therefore lower repayments will be passed on to a possible tenant". Mr. O'Connell also stated in the letter that, having reviewed Mr. Bums' finances, those proposals seem to be the only way forward. On the other hand, the plaintiff has given an undertaking as to damages on foot of which Mr. Bums and Mrs. Bums could be adequately compensated for any loss which they might sustain by reason of the grant of an interlocutory injunction, if it were to transpire on the determination of the substantive proceedings that the interlocutory injunction should not have been granted. 5.4 I am also satisfied that the third test, whether the balance of convenience lies in favour of the grant of an interlocutory injunction, has been met by the plaintiff. Before the Bank demanded repayment of the monies secured by the various mortgages, Mr. Bums and Mrs. Bums had not been meeting their undenied and undeniable obligations to the Bank. I think it is reasonable to infer that, if they were allowed to continue in receipt of the rents out of the various properties, they would not rectify that situation, in consequence of which their joint liability to the Bank, which is now just short of €1.9m, would increase in circumstances in which it is obvious on Mr. Burns' own evidence that they will not be able to discharge the liability. Apart from that, I consider that it is appropriate that the Court should have regard to the position of the tenants in the various properties and to the strong evidence, which was not contradicted on affidavit, that some at least of those tenants are being harassed and intimidated by Mr. Bums and his associates and, as a matter of probability, will not continue to put up with that conduct. In the circumstances, I am satisfied that the balance of convenience favours the grant of, and the continuance in force of the interlocutory injunction which I granted on 30th March, 2012. 5.5 Accordingly, all the relevant tests having been met, the interlocutory injunction will continue until the determination of the substantive proceedings, or further order.
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