The High Court has refused a receiver’s application to dismiss claims brought by two management companies over the proposed sale of business park lands in Portlaoise, and declined to vacate a lis pendens registered against the properties.
Mr Justice Haughton’s ruling on 19 December 2014 leaves the underlying claims to be determined in later proceedings. It does not decide whether the companies hold beneficial interests in the lands or whether a purchaser would be bound by the developer’s management agreements.
Coolnaleen Developments Limited, which was in receivership, had agreed to sell two lots at auction in October 2014. Lot 51 sold for €1 million and Lot 52 for €820,000. Togher Management Company Limited and National Enterprise Park Management Company Limited then sought declarations concerning the lands, easements and obligations under management agreements, along with other relief including an injunction and damages.
The receiver argued that the claims were frivolous or vexatious, disclosed no reasonable cause of action or were bound to fail. He also sought to remove the lis pendens on the ground that the proceedings were not being pursued in good faith. Among his arguments was that purchasers would not be bound by positive covenants in the agreements. The management companies said they were acting to protect unit owners and preserve the intended management structure.
The judge found that the dispute raised a significant issue: whether, and to what extent, purchasers could acquire the properties without being bound by the management agreements. He identified legal questions for later consideration, including how the agreements’ terms might bind purchasers and whether the common law rules on positive covenants applied. He said these issues should not be decided summarily on the dismissal motion. The court also declined to decide summarily whether the common areas and leasehold reversions were held in trust for the management companies.
The judge refused the dismissal applications, finding the receiver had not shown the claims to be frivolous or vexatious or bound to fail. He also refused to vacate the lis pendens. At this interlocutory stage, he was not satisfied that the proceedings were being pursued in bad faith, but said the companies should deliver their statement of claim without undue delay. The lis pendens could be reconsidered later if there were unreasonable delay.
The court adjourned the remaining relief sought in the receiver’s notice of motion. The judgment records that the contracts of sale had been entered into but not completed; it did not determine the final rights of the parties or the eventual outcome of the sales.