The High Court has set aside a Circuit Court injunction that had prevented a receiver and Promontoria (Arrow) Limited from completing the sale of properties at the Brú na Sionna development in Shannon unless the purchaser accepted conditions sought by Tullyvaraga Management Company Limited.
In a judgment delivered on 8 April 2020, Mr Justice Denis McDonald allowed the appeal by receiver Stephen Tennant and Promontoria. He dismissed the management company’s application for an interlocutory injunction. The order removes the interim restrictions on the sale; it does not decide the parties’ claims at trial or finally determine the management company’s rights under its agreements.
The proposed sale, contracted in July 2019, covered 44 unsold apartments and an unsold commercial unit over which the receiver had been appointed. It did not cover the whole development. The Circuit Court’s January 2020 order had required the purchaser to accept obligations under three management agreements, take similar 999-year leases to other units, join the management company, and ensure transfer of common areas. It also required the receiver to hold the sale proceeds in escrow pending trial.
The management company argued that the agreements gave it rights to the common areas, that the Multi-Unit Developments Act 2011 supported its claim, and that the receiver had adopted the agreements. It also said the proposed transfer could not shift the developer’s contractual obligations without its consent.
The judge treated the requested injunction as mandatory because it would require substantial steps by the purchaser and the receiver. That meant the management company had to show a strong case. On the evidence then before him, he found it had not met that threshold on its arguments, and had not even shown a serious issue to be tried on those grounds.
Among his reasons, the judge said there was no evidence that Anglo Irish Bank, the original lender, had consented to the management agreements or knew their terms before the 2004 mortgage. He concluded for the purposes of the interim application that Promontoria’s mortgage had priority over rights the management company asserted under the later agreements. He also found no basis on the evidence to treat the receiver as having adopted those agreements. The developer remained liable under them, the judgment said, but that did not establish a claim against the receiver or Promontoria on the arguments advanced.
The judge added that damages could adequately compensate the management company if it ultimately established a claim, while there was doubt about its ability to meet an undertaking for damages if the injunction caused the sale to fail. He also considered the company’s delay in seeking interim relief.
The judgment expressly leaves final findings on the disputed issues to the trial judge, on the evidence then available. The parties were invited to make written submissions on the appeal costs within 14 days; the court said it would issue a separate ruling.