The Court of Appeal has dismissed an appeal by the trustees of the Victory Christian Fellowship, upholding the appointment of receivers over properties used as security for the Fellowship’s substantial bank debt.
The trustees acknowledged on appeal that €18,758,224.88 was owed to Bank of Scotland and did not continue to challenge the High Court’s judgment for that amount. Their remaining appeal sought to invalidate the receivers’ appointment, arguing that the bank had relied on confidential information disclosed without their authority by their accountant, Mr L.
The bank had appointed the receivers on 29 May 2013, after demanding repayment and receiving none. By March 2013, arrears stood at €1,836,477.60. The trustees said a strategy discussed with the bank in March would give them time to refinance or sell property. The High Court had found that the parties discussed a consensual solution but had not reached an agreement. The bank said it acted because arrears were mounting and refinancing had not progressed.
The disputed information included allegations concerning invoices said to have been used in a potential VAT fraud, and information about Revenue’s withdrawal of the Fellowship’s charitable tax exemption. The judgment records that the invoice allegations’ accuracy or outcome had not been disclosed to the court. The accountant’s disclosure of the invoice issue was not authorised by the trustees. He sent the Revenue letter to the bank on 17 May; the trustees authorised disclosure of the tax-status information on 28 May, the day before the receivers were appointed.
The appeal court said the receivers had a duty of candour when seeking equitable relief and should have disclosed the unauthorised information in the affidavit supporting their injunction application. The court said it could only speculate whether that disclosure would have changed the outcome of the application.
On the appointment itself, the court found that the bank had a contractual entitlement to appoint receivers because of the repayment defaults, independently of the information it received. The disclosures may have heightened the bank’s concern, but the court was not satisfied on the balance of probabilities that they caused or materially contributed to the appointment, or that the bank would otherwise have refrained from appointing receivers. It dismissed the appeal and held the appointment valid. The judgment does not set out a separate order on the earlier injunction application.