About this case:

• Citation:
  [2022] IECA 137
• Judgment:
  External link
• Court:
  Court of Appeal
• Judge:
  Mr Justice Seamus Noonan

Delivering judgment in the case, Mr Justice Seamus Noonan held that orders seeking possession by way of interlocutory injunction should not be easily granted and a strong case had to be demonstrated. Further, the court held that there was a clear representation that the receiver would sell the house to the couple, which raised the arguable defences of promissory and proprietary estoppel.

Background

Between 2006 and 2010, AIB provided certain loans to two borrowers. In May 2008, the borrowers executed a deed of charge in favour of the bank over a property in Adare, County Limerick which was duly registered. The borrowers defaulted on the loans and demand for repayment was made by AIB in March 2015.

In September 2015, the borrowers concluded an oral agreement to sell the property to the defendants for €100,000. AIB were advised of the sale and considerable delay ensued thereafter. The plaintiff was appointed as receiver over the property in April 2016.

In October 2016, the defendants and borrowers agreed that the defendants would go into occupation of the property on foot of a one-year lease at €100 per month. The defendants had sold their family home at this point. Further, the defendants were anxious to renovate the property, which was in poor condition.

After being notified of the appointment of a receiver, the defendants spoke to one of his staff. It was uncontested that the defendants were clearly and unequivocally told that the sale would proceed. At this point, €20,000 had been spent on the renovations.

The borrowers’ loans were transferred to Everyday Finance DAC in August 2018 and the receivership continued. In April 2019, Everyday demanded possession of the property from the defendants and a plenary summons issued in March 2020. In July 2020, the plaintiff issued a motion seeking an interlocutory injunction directing the defendants to deliver up possession of the property.

In the High Court, there was little dispute about the facts or the applicable law to the motion. It was noted that the sale of the property by the borrowers to the defendants could not bind the bank or Everyday without their consent (Fennell v. N17 Electrics Limited (In Liquidation) [2012] 4 IR 634). On the issue of promissory estoppel, the trial judge considered the six principles identified in The Barge Inn Limited v. Quinn Hospitality Ireland Operations Limited [2013] IEHC 387 and held that there was no pre-existing relationship between the plaintiff and defendants.

Further, it was held that there was no element of unfairness or unconscionability in the case, noting that the receiver had offered to sell the property to the defendants for €120,000 and that they had lived rent-free in the property for five years.

The trial judge determined that no arguable defence had been raised in the proceedings and therefore the higher threshold for mandatory injunctive relief had been met (Maha Lingam v. HSE [2005] IESC 89). Accordingly, the injunction was granted. The defendants appealed to the Court of Appeal on the basis that the trial judge erred in applying the promissory estoppel principle and overlooked the issue of proprietary estoppel.

Court of Appeal

In an ex tempore ruling, Mr Justice Noonan began by stating that the plaintiff was effectively seeking summary judgment for possession “by way of the medium of an interlocutory injunction”. In seeking mandatory relief, there was no dispute that the plaintiff had to show a strong case that he was likely to succeed and, as a corollary, that the defendants did not have an arguable defence.

The court observed that there were recent Supreme Court judgments on the use of interlocutory injunctions to obtain possession. It was stated that this should not routinely occur and injunctions should only be used to maintain a situation prior to trial (Charleton v. Scriven [2019] IESC 28; Clare County Council v. McDonagh & Anor [2022] IESC 2).

As such, it was held that a court should be slow to grant an injunction “in the presence of a colourable defence” and that a “relatively cautious approach” should be taken where the injunction would effectively be a final order for possession.

It was noted that the trial judge held that was a stateable case on two of the Barge Inn criteria, being an unambiguous representation that the sale would occur and reliance by the defendants. However, Mr Justice Noonan disagreed with the trial judge that there was no unfairness or unconscionability to the proceedings. Since a clear representation had been made that the sale would occur and monies were spent on renovation, the defendants had acted to their detriment in the case, the court said.

On the issue of proprietary estoppel, the court noted that the constituent elements of the doctrine were detriment, expectation/belief of the party, encouragement by the other party and no bar to the equity (see An Cumann Peile Boitheimeach Teoranta (Bohemian Football Club Ltd) v Albion Properties Ltd & Ors [2008] IEHC 447; Re Basham [1986] 1 WLR 1498).

While the court accepted that the receiver did not technically have a power of sale in the case, the doctrine of proprietary estoppel was flexible enough to recognise the reality that the receiver had been acting on behalf of AIB in making the representations. The court also held that the issue of delay by the receiver was “at least arguable” as a defence in the case.

Conclusion

The court disagreed with the trial judge’s assessment of the balance of convenience. It was difficult to see how the balance of convenience “would other than favour a couple in their 70s not being turned out of their home as against any relatively minor prejudice suffered by a financial institution having to await the outcome of the trial before enforcing its security”. As such, the court allowed the appeal and dissolved the injunction.

Finally, the court commented that the sum between the parties was only €20,000 but the costs of the proceedings were significantly in excess of this figure. As such, it seemed to the court that the “matter should never have come before the High Court at all”.

Tennant v. Reidy and Anor. [2022] IECA 137