The High Court has refused an application by M & J Duddy Developments Limited to stop the sale of three parcels of land in County Donegal pending trial of its action against Everyday Finance DAC and others.
In a judgment delivered on 4 August 2023, Ms Justice Stack held that the company had not established a fair question to be tried on its argument that the receiver’s simultaneous appointment as Everyday’s agent created a conflict of interest. The court therefore refused the injunction. It did not decide the separate questions of whether damages would be adequate or whether delay would independently bar relief.
The lands comprise unfinished residential development plots described in the judgment as the Ballymagowan Property, Knockbrack Property and Ray Property. Two are registered, while the Ray Property is unregistered. The court said the properties were unfinished and not capable of being let. The receiver had not sought possession, and the plaintiff appeared to remain in possession.
The company’s case was that the second defendant could not act as Everyday’s agent while appointed receiver, because the mortgage deeds treated the receiver as the borrower’s agent. The defendants argued that Court of Appeal authority established that a receiver could also act as the mortgagee’s agent to arrange a sale.
Justice Stack concluded that the authorities could be reconciled. She said a receiver may be appointed as an agent to arrange a sale without necessarily creating a conflict, where the receiver has not entered into possession. A potential conflict could arise where a receiver takes possession of income-producing property and then acts as the mortgagee’s sale agent, because the duties owed to the borrower may differ. That situation was not shown here: the properties could not generate rental income and no defendant had purported to take possession.
The judgment also said a receiver’s right to take possession is ancillary to the exercise of the receiver’s powers. Where the receiver has no power of sale, possession cannot be sought under the receivership merely to facilitate a sale by the mortgagee. The mortgagee may need to obtain possession through the statutory process or peaceful entry. Those issues did not determine this application, which sought only to restrain the sale on the asserted conflict arising from the dual appointment.
The plaintiff’s director had registered a lis pendens in separate proceedings, but the court noted that the summons in those proceedings had not been produced and appeared not to have been served on Everyday. The judge said those proceedings could not provide a basis for the injunction sought in this application.