The High Court has refused to stop Bank of Scotland-appointed receivers from acting over a portfolio of Bray properties owned by members of the Kinsella family and associated companies.
The dispute arose after the Bank appointed KPMG partners Kieran Wallace and Padraic Monaghan as receivers on February 20, 2013. The appointments covered corporate assets and properties including premises on Main Street, School Lane, Brighton Terrace, Parnell Road and Killarney Road in Bray.
Michael Kinsella and other plaintiffs claimed the Bank had previously made agreements and representations which restricted its ability to enforce the loans. These included an alleged arrangement to finance a €7 million shortfall over 15 years from rental income, an alleged promise to release additional “non-core” security once the Southpoint development reached a specified stage, and representations after the 2008 market collapse that unsold apartments should be rented until conditions improved.
The Bank disputed those claims.
The plaintiffs had complained to the Financial Services Ombudsman in July 2012. The Ombudsman later decided not to investigate, but the plaintiffs obtained leave for judicial review and a stay on that decision while their injunction application was before the High Court.
Ms Justice Laffoy therefore approached the application on the assumption that the Ombudsman complaint remained pending. She found that the plaintiffs had crossed the relatively low threshold of showing a fair issue to be tried over whether the Bank could enforce its security in those circumstances.
That was not enough to obtain an injunction. The judge held that the core complaints concerned financial loss and that damages could adequately compensate the plaintiffs if they ultimately proved the alleged agreements. Most of the so-called non-core properties were commercial investments rather than occupied homes.
The plaintiffs’ undertaking to compensate the Bank if the injunction proved unjustified was also considered inadequate because their indebtedness substantially exceeded the value of the secured properties.
The injunction application was therefore refused, although the court proposed exploring an early substantive hearing.