THE HIGH COURT
[H.P.2024/3600]
[2025] IEHC 274
BETWEEN
LIAM PHILPOTT AND ANNE POUNDS
PLAINTIFFS
AND
PEPPER FINANCE CORPORATION (IRELAND) DESIGNATED ACTIVITY COMPANY AND COLIN GAYNOR
DEFENDANTS
Judgment of Ms. Justice Stack delivered on the 9th day of May, 2025.
Introduction
1. This is an application by the plaintiffs for the costs of an interim injunction granted on 17 July, 2024, and of an interlocutory injunction granted on 3 April, 2025, and in which I delivered a written judgment: [2025] IEHC 199. The injunction granted was a continuation of the interim relief and, in essence, restrains the defendants or either of them from taking possession of, advertising for sale, offering for sale, or selling any part of the first plaintiff's lands as defined at para. 1 of my judgment on the interlocutory injunction.
2. The plaintiffs now seek their costs and the defendants argue that costs should be reserved to the trial of the action or made costs in the cause.
Relevant Legal Principles
3. The starting point for this application is O. 99, r. 2(3) of the Rules of the Superior Courts, 1986, as inserted by the Rules of the Superior Courts (Costs) 2019 (S.I. No. 584 of 2020) which reproduces the former O. 99, r. 1(4A) which had been introduced by S.I. No. 12 of 2008. Order 99, rule 2(3) provides, in material part:-
"The High Court ... upon determining any interlocutory application, shall make an award of costs save where it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application."
4. In addition, O. 99, r. 3(1) of the Rules provides in material part:-
"The High Court, in considering the awarding of the costs of any action or step in any proceedings ... in respect of a claim or counterclaim, shall have regard to the matters set out in section 169(1) of the [Legal Services Regulation Act, 2015], where applicable."
5. Section 169(1) of the 2015 Act provides that:-
"A party who is entirely successful in civil proceedings is entitled to an award of costs against a party who is not successful in those proceedings, unless the court orders otherwise, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties, including—
(a) conduct before and during the proceedings,
(b) whether it was reasonable for a party to raise, pursue or contest one or more issues in the proceedings,
(c) the manner in which the parties conducted all or any part of their cases...."
The remaining factors do not appear to be relevant to this application.
6. The leading authority on the previous iteration of the relevant portion of O. 99 appears to be ACC Bank plc v. Hanrahan [2014] 1 IR 1, [2014] IESC 40. In that case, Clarke J. (as he then was) considered the correct approach to the costs of an application for summary judgment, which he thought should be similar to the approach to the costs of interlocutory injunctions. It therefore gives some guidance as to the approach to costs of an interlocutory injunction application.
7. The defendants rely strongly on para 10 of that judgment where, having distinguished matters such as discovery and particulars, which are usually fully dealt with at interlocutory stage and are not revisited at trial, Clarke J. stated that the issue of whether the plaintiff has established a fair question to be tried - as with the issue as to whether a defendant has established an arguable defence to an application for summary judgment - is "dependent on facts which will not be determined at the interlocutory stage save for the purposes of analysing whether the facts for which there is evidence give rise to an arguable case or an arguable defence."
8. The defendants contend that the true meaning and effect of the letter sent in August 2012 by IBRC, the first defendant's predecessor-in-title, will be examined further at trial and can only justly be determined at trial. Accordingly, they submit, in reliance on Hanrahan, that costs should not be awarded to the successful plaintiffs at this stage.
9. Leaving aside for the moment the fact that that was only one of two issues found to raise a serious question to be tried - and that I left over any question as to, for example, the validity of the second defendant's appointment as it was not necessary to consider any other points once a serious question had been raised on at least one issue - I do not think that the judgment of the Supreme Court in Hanrahan can be interpreted as in any sense requiring that the question of the costs of an interlocutory injunction should be reserved to the trial judge or left as costs in the cause, nor does it create any default position that that would be so.
10. In fact, Clarke J. was explicit in his judgment that the fact that there would be further evidence at trial was not the only factor relevant to a consideration by the judge hearing the interlocutory application as to whether he or she could "justly" adjudicate on costs. He went on to state (at para. 14):
"There are ... other factors which can properly be taken into account in my view. Part of the reason for the introduction of new costs regimes, such as those contained within O. 99, r. 1(4A) of the Rules of the Superior Courts 1986, is to discourage parties from bringing unreasonable applications or resisting reasonable ones ... . [T]here will be motions for summary judgment, and these motions come into that category, which take on something of a life of their own and require a separate allocation of court time and a consequent incurrence by the parties of significant additional costs. It seems to me that it is in accordance of the principle behind the rule that the Court should retain, in an appropriate case, an entitlement to impose some or all of the burden of the costs of the motion for summary judgment on an unsuccessful plaintiff if the Court is satisfied that the plaintiff acted unreasonably in the way in which the motion was approached, including any unreasonable failure to agree to a matter going to plenary hearing in the light of affidavits filed. In such a case a plaintiff who acts unreasonably in that manner must be at risk that any additional costs incurred by virtue of a lengthy and disputed summary judgment application (which becomes a centre of costs in itself) may be awarded against them."
11. Before deciding the matter, it therefore seems that I should consider whether the defendants acted reasonably in defending the interlocutory application.
Decision
12. By way of preliminary remark, I should point out that the interlocutory application was a substantial one, listed for a full day after exchange of affidavits and legal submissions, some nine months after the interim application was brought. It was – as the defendants say in their written submissions for the costs application – "hard fought", not least because the defendants raised a large number of issues, on each of which they failed. These are set out in the judgment on the interlocutory application, and it is not necessary to rehearse them here.
13. In addition to all of that, the injunction application involved a remarkable feature to which I have already alluded in my judgment on the injunction itself: that is that the defendants do not appear to be in a position to identify the terms of the loan on which they rely to take the steps which they have purported to take because they do not appear to have a copy of the 1990 Loan Offer Letter. The first defendant was certainly not able to identify it in the letter of demand of 20 March, 2024.
14. The issues in the proceedings cannot, on the facts of this case, be finally determined without full consideration of the terms of the 1990 Loan Offer Letter and identification of the "due date" for the purposes of the Mortgage. However, as I have already stated in the judgment on the interlocutory injunction, all of the evidence available at this stage - and in particular the documents put in evidence by the defendants - points to that date as being 27 January, 2011.
15. Notwithstanding that evidence, the submission was made that the debt fell due on demand and that demand was made on 20 March, 2024, but no basis for this submission in either the Deed of Mortgage (as varied by the Deed of Variation) or the 1990 Loan Offer Letter was identified.
16. In addition, it should be remembered the date on which the alleged debt became due and owing should be discernible from the Loan Offer Letter, the standard terms and conditions applied by INBS to loans of the type afforded to the first plaintiff in 1990, and the terms of the Deed of Mortgage as varied by the Deed of Variation. Oral evidence is unlikely to be material to that issue. It therefore seems that the only significant step outstanding may be to decipher the poor quality copy of the Loan Offer Letter put in evidence by the plaintiffs, or perhaps to source additional documentation such as bank statements and correspondence which would supply extrinsic evidence of the relevant date if that letter cannot be deciphered.
17. In any event, the documentation available after the exchange of affidavits for the purposes of the interlocutory hearing seems to be consistent in identifying that date as 27 January, 2011. If that turns out to be correct, then that is, most likely, the date of accrual of the cause of action for the purposes of ss. 32 and 33 of the Statute of Limitations, 1957, which could have very significant ramifications for the issue of whether the mortgagee's rights under the Mortgage (and indeed to recover the sum claimed) were - entirely independently of the effect of the August 2012 Letter - statute barred such that there was no power at the relevant time to appoint a receiver.
18. All of this raises the very uncomfortable prospect that the first defendant purported to demand payment of a sum from the first plaintiff, and to appoint a receiver who asserted the right to repossess the entire of the first plaintiff's lands, even though the documentary evidence available to the defendants suggested that the right to demand payment and the power to appoint a receiver had been extinguished by the Statute.
19. While there are many cases where mortgagees are entitled to take the drastic step of appointing a receiver in order to recover sums due, and where they should not be restrained from doing so, it would be somewhat disquieting if such steps were taken in circumstances where there was a significant question mark over the continued existence in law of the power to appoint a receiver in the first place. The timeline of the steps taken by the receiver in this instance are set out in the judgment on the interlocutory injunction and demonstrate the drastic and swift nature of the remedies which are available to a receiver. While it is important that receivers are not impeded in exercising their powers, it is equally important that where a serious question is raised as to the continued existence of those powers, they should not be permitted to take irrevocable steps before the courts have had a chance to adjudicate on the issues. The existence of the receiver's powers is usually clear from documentary evidence and can often be disposed of at interlocutory stage.
20. It should be recalled also that, prior to the institution of proceedings, there was explicit communication between the receiver and the plaintiffs' representative on the question of whether the debt was statute barred. I think it only fair to the second defendant to point out that he indicated he had taken legal advice. However, the plaintiffs' representative was very clear in stating that a review of the documentation showed the last payment to be no later than 2010, and that the debt must be statute barred. The date of the last payment of course would be material to the issue of whether the limitation period in question had been extended by part payment or acknowledgement, rather than the due date, but reference to it demonstrates that the issue of the Statute was raised prior to the placing of the lands for sale and of course prior to the institution of proceedings.
21. The defendants did not, in response, assert that payments were made at a later time and it may be that they do not know when the last payment was made as they do not have the relevant documentation. They do not appear to have the Loan Offer Letter which is quite likely to be material to identification of the key date, which is when the alleged debt fell due and whether or not a demand was necessary at all. It was submitted during the costs hearing on 7 May, 2025, that the defendants were at a disadvantage because they were not the original lender. If it is in fact the case that the defendants do not have the relevant documentation, that is a matter between the first defendant and its predecessor-in-title and cannot affect the plaintiffs' rights. (It should be noted that, in these types of injunction application, however, in my experience it is usually the case that the relevant facility letter is available to the successor-in-title of the original lender.)
22. However, the Court is left with the very uncomfortable feeling that the defendants do not, and did not prior to the appointment of the second defendant, have the documentation which would have identified with certainty the date upon which the monies allegedly fell due for the purposes of the mortgage and which was material to the power to appoint the second defendant and to the possible extinguishment of the alleged debt and the first defendant's title, but nevertheless proceeded to take some very drastic steps, up to and including offering some of the first plaintiff's lands for sale.
23. More importantly for the purposes of the question of whether the issue of costs can justly be decided at this case, the potential problems with the appointment of the receiver were or should in my view have been apparent to the defendants on the exchange of affidavits for the purposes of the interlocutory hearing.
24. In the light of all of that, it was in my view "unreasonable" in the sense used by Clarke J. in Hanrahan for the defendants to contest the injunction application on the basis that the monies allegedly outstanding after the endowment policy matured in 2010, only fell due and owing on demand being made by the first defendant on 20 March, 2024.
25. The defendants are of course perfectly entitled to litigate the issues of when the monies fell due and owing, the application of the Statute, and the effect of the August 2012 Letter. Nothing in this judgment is intended to express any view other than on the evidence as it currently stands. The entire picture may change at trial.
26. However, in considering how the defendants approached the application for interlocutory relief, the question was whether it was reasonable of them, given the questions that arose from the documents available, to insist that they should have a power to sell part of the first plaintiff's lands before that issue could be determined.
27. There has been ample time in this case, between the grant of interim relief on 17 July, 2024, and the interlocutory hearing on 21 March, 2025, for the defendants to review the evidence and to consider whether or not to contest the interlocutory application. They chose to fully contest the application by reference to a large variety of legal points all of which failed. The affidavit evidence in this case, and in particular the documentary evidence available from 2010 to 2014 disclosed two serious questions to be tried, including the highly significant issue of the potential operation of the Statute of Limitations.
28. Notwithstanding that, the defendants insisted on a full fight on these issues and, moreover, asserted that damages would be an adequate remedy for the plaintiffs when it was, in fact, perfectly obvious that damages would be an adequate remedy for them, given the very modest sum claimed and the very significant unencumbered assets in the ownership of the first plaintiff.
29. Finally, in the defendants' written submissions for the purposes of the costs hearing, they point to relief sought at paragraph 5 of a Notice of Motion dated 16 August, 2024, in related proceedings against IBRC and KPMG and bearing Record no. 2015/7823P in which the plaintiffs apparently seek:
"A declaration that the conditions of the second plaintiff's mortgage and the contractual provisions contained in Paragraph 15 of the Principal Debenture (the first loan) associated with Folio CK2125 requires that a statutory notice and a default has to occur before the power of sale and the power of transfers (sic) of a charge becomes exercisable."
30. The reference to the "second plaintiff" there is presumably a reference to the first plaintiff in these proceedings. In any event, the defendants complain that this contradicts the plaintiffs' argument at the interlocutory hearing that the loan became due on the expiry of the 20 year term. However, Clause (15) of the Deed of Mortgage of 28 January 1991 restricts the power of INBS to transfer the mortgage. In fact, it provides that this can only be done after the mortgagee's power of sale has become exercisable. (I alluded to this at para. 16 of my judgment on the interlocutory injunction but did not decide anything on that basis, as it had not been argued.)
31. I have some sympathy for the defendants in trying to decipher that paragraph as it is not particularly well drafted. However, all it seems to say is that a default on the loan must have already occurred if the mortgagee is to sell the loan and security. That begs the question of whether there has been a default. The plaintiffs claim there has not and that the loan was paid in full prior to August, 2012. The reference to a "statutory notice" is unclear and I do not think it is for me to investigate in this judgment what might be meant by it. However, it does not seem to refer to a letter of demand of the kind relied upon by the defendants. In any event, none of this was argued for the purposes of the interlocutory application and, while I appreciate the Notice of Motion in question was not available to the defendants until after the application had been heard, absent clear evidence of some kind of misrepresentation - which this is not - I do not think it is relevant.
32. In any event, in my view, none of this takes from what seems to be the somewhat unsatisfactory position which appears to be taken by the defendants that they have no obligation to identify the relevant dates, or to satisfy themselves that the power to appoint the receiver was still in existence at the time it was purportedly exercised. If I am correct in stating the defendants' position, then it follows that the plaintiffs were forced to come to Court to protect themselves from what they allege to be unlawful interference with the first plaintiff's lands and the livelihoods of both plaintiffs.
33. The plaintiffs have been put to very significant expense and, I would imagine, stress in seeking to defend their right to the ownership (in the case of the first plaintiff) and the occupation (in the case of both plaintiffs) of the lands in question. In a mere matter of months, a somewhat vague demand for monies due and owing on foot of a contested loan dating back to 1990 was followed up by a demand for possession and an attempted sale of a portion of land worth many times the sum claimed. In my view, the plaintiffs were forced to go to court and were then successful in a hard-fought interlocutory application. It would in my view be unjust not to award the plaintiffs their costs at this stage.
34. In the circumstances, the plaintiffs are entitled to the costs of the interim injunction, the interlocutory application and the costs application heard on 7 May, 2025, which will of course include the costs of today's sitting.