The High Court has refused an application to stop the proposed sale of a mortgaged investment property while a borrower’s claim that it was being sold at an undervalue proceeds. Mr Justice Kennedy found a serious question to be tried about the receiver’s handling of the sale, but concluded that the balance of justice did not justify an injunction.
The borrower, Fintan O’Hagan, had borrowed from First Active Plc, secured by a mortgage over the property in 2002. The loan later fell into substantial arrears. Promontoria Scarriff DAC, to which the loan and mortgage were assigned, appointed Damien Harper as receiver in July 2023. The receiver took possession in September and instructed Hunters estate agents to market the property the following month.
It was initially advertised for €595,000, then reduced to €550,000 in early November. Although the borrower was told the property would be auctioned in January 2024, the receiver agreed in early December to sell it for €560,000, the highest offer received. The borrower argued that the sale was too quick and below market value, pointing to local sales and valuation figures, including a nearby property sold for €670,000 in March 2020.
The judge said the receiver had a duty to take reasonable steps to obtain the best price available, while being entitled to choose the timing of a sale within limits. The evidence did not explain why the asking price was reduced after about two weeks, why the receiver accepted an offer a month later for less than Hunters’ estimated market value of about €600,000, or why the process changed from the indicated January auction. The defendants also did not disclose Hunters’ advice on the timing, price reduction or likelihood of better offers.
Those gaps led the judge to find an arguable case that the proposed sale might be at an undervalue. He stressed that this was not a finding that the receiver had breached his duty. Determining that issue at trial would require fuller disclosure, evidence from the defendants and their agents, and independent expert testimony.
The application was nevertheless refused. The property was an investment asset, the borrower remained in default, and the sale would not clear the debt. The judge considered damages an adequate remedy for any proven shortfall and was not persuaded that the possible undervalue was likely to be large enough to justify stopping the sale. He also noted that the borrower had not shown he could meet his undertaking to compensate the defendants if the injunction caused loss. The judge said he was willing to consider directions aimed at resolving the substantive undervalue claim without delay.