High Court of Ireland Decisions

THE HIGH COURT

Record No. H.P.2024/3600

[2025] IEHC 199

BETWEEN

 

LIAM PHILPOTT AND ANNE POUNDS

PLAINTIFFS

AND

 

PEPPER FINANCE CORPORATION (IRELAND) DESIGNATED ACTIVITY COMPANY AND COLIN GAYNOR

DEFENDANTS

 

 

Judgment of Ms. Justice Stack delivered on the 3^rd day of  April, 2025.

Introduction

 

1.                  This is an application for an interlocutory injunction to restrain the sale of any part of a farm comprising 113 acres, situate in Bohernascrub, Buttevant, County Cork, and registered in Folio 2125 of the Register, County of Cork ('the Lands').

2.                  The lands are a non-residential farm acquired by the first plaintiff from his father by way of voluntary transfer in 1987, and of which he became registered as full owner with absolute title on 4 February, 1991.

3.                  As part of the transfer, the first plaintiff agreed, in effect, to take out a loan to cover his father's outstanding borrowings (which were themselves incurred as part of family arrangements which suggest that the first plaintiff's father also inherited the Lands) and for that purpose arranged in 1990 to borrow £55,000 from Irish Nationwide Building Society ('INBS') ('the 1990 Loan'). From the papers available to date, it appears that while the Loan Offer letter was received in 1990, and payments on the related endowment policy commenced in about July, 1990, the loan monies were not drawn down until 28 January, 1991.

4.                  The loan account number for the 1990 Loan was 217496959. The loan was an interest only term loan for 20 years supported by an endowment insurance policy and secured on the Lands by way of a first legal charge registered on the Folio.

5.                  On 28 January, 1991, the first plaintiff signed both a Deed of Charge and supplemental Deed of Variation (the purpose of which was to alter the covenant to pay in the Deed of Charge to reflect the fact that it was an endowment mortgage) and this charge was registered as a burden at Entry No. 2 on the Folio.

6.                  Approximately four years later, the first plaintiff borrowed the sum of £6,000, by way an additional interest only loan from INBS, for a term of 16 years, the term apparently being designed to coincide with the term of the 1990 Loan. The purpose of this loan was to carry out improvements on the Lands, and I will refer to it as 'the 1994 Loan'. The loan account number for this loan was 207496924 and it was also supported by an endowment policy. The conditions of the loan as set out in the loan offer letter and accepted by the first plaintiff on 27 May, 1994, stated that it was to be a secured by a first legal charge on the Lands.

7.                  This charge registered on the Lands appears to have been transferred by operation of law to Irish Bank Resolution Corporation ('IBRC'), and was subsequently sold by the Special Liquidator of IBRC to Shoreline Residential Ltd. ('Shoreline'). Shoreline were registered as owner of this charge on the 30 June, 2014. Shoreline subsequently sold it to the first defendant ('Pepper') and the Folio shows that Pepper became owner of this charge on 25 July, 2019.

8.                  The plaintiffs object to the fact that the 1990 Loan was classed by IBRC as a residential or buy to let loan, which it clearly was not. However, at this interlocutory stage at least, I do not see how the inaccurate categorisation of the loan gives rise to any legal problem with the transfer of the loan and security or give rise to any cause of action in favour of the plaintiffs.

9.                  Notwithstanding that it appears that there was only ever one charge, and that the terms of the 1994 Loan seems to show that it was intended that that additional loan would be secured by the pre-existing charge, a second charge was registered in favour of INBS on 28 June, 1994. This was subsequently transferred to Shoreline on 30 June, 2014, but that charge has been cancelled from the register and not in any way replaced. It is not clear what the second charge was, how it came to be registered, or why it was cancelled. The documents associated with the dealing numbers shown on the Folio for these transactions, if still available, would no doubt shed light on that but it does not at this stage affect the legal issues between the parties and it may be of no relevance whatsoever.

 

Letter of Offer and Deed of Charge

 

10.              The letter of offer in relation to the 1990 Loan has been put in evidence, but the first page of it is barely legible, apparently through an error in photocopying which resulted in the copy of the first page becoming so shaded as to be almost illegible, though I think it could possibly be deciphered with a bit of effort as at least some of the conditions are legible through the shadowing.

11.              However, the fundamental terms of the loan are clear from other correspondence as, in a letter from IBRC to the plaintiff dated 4 April, 2011, it is stated:

'As specified in our Letter of Offer dated 2 April, 1990, the full amount outstanding plus interest was due for repayment in full at the end of the agreed term. I wish to advise that the term on the above account expired on 27 January, 2011...'

12.              That is consistent with Clause 7A (a) (i) of the Deed of Charge as inserted by Clause B of the Deed of Variation which provides, in effect, that the 1990 Loan was repayable on the Due Date (as intended to have been defined in the Deed of Charge)  unless a previous demand was made. There was a proviso that if any instalment of interest would be in arrears for one month, the whole loan or so much of the balance thereof as was outstanding should immediately on expiration of that month fall due and owing. However, there is no evidence of any prior demand or the accrual of any arrears during the term of the loan, and in any event, there is a covenant at Clause C of the Deed of Variation that INBS might not demand payment before the Due Date provided the relevant insurance premia were paid.

13.              It therefore appears that the default position applied and that the whole loan became payable on the Due Date. The Due Date was not inserted at the appropriate point in the Deed of Charge but, as I say, the correspondence of 4 April, 2011, appears to state that it was 27 January, 2011, 20 years after drawdown (albeit that the endowment policy appears to have been taken out in July, 1990, and encashed in July, 2010).

14.              Clause (8) (g) of the Deed of Charge deals with the power to appoint a receiver and when this power is exercisable. In simple terms, the power to appoint a receiver is only exercisable if there was a default in paying the loan or any instalment of interests. Section 20 of the Conveyancing Act, 1881, is disapplied and, as a consequence, there is no obligation on the mortgagee to serve notice requiring payment nor is there any provision staying the appointment of a receiver for a period of three months from such notice.

15.              Clause (10) (a) provides that the receiver has power of sale of the secured assets or any part thereof. Otherwise, the Deed of Charge leaves it to ss. 19 and 24 of the Conveyancing Act, 1881, to regulate the appointment of the receiver and his or her powers.

16.              It was not argued at the hearing of the interlocutory application but I note in passing Clause (15) (a) provided that the INBS has a power to assign its interest under the Charge if 'the power of sale is exercisable'. As will be seen, the fundamental argument of the plaintiffs is that the loans were both paid off in full no later than August, 2012, and that the power of sale - and consequently the power to appoint a receiver - was never exercisable.

17.              Correspondence between the plaintiff and INBS put in evidence shows that redemption figures were sought and obtained in June, 2010. At that point, the sum of €69,146.49 was due on foot of the 1990 Loan and the sum of €1,216.14 was due on foot of the 1994 Loan. The endowment policy seems to have matured in late July 2010 and the proceeds of €54990.09 were credited to loan account 217496959 on 4 August, 2010, reducing the redemption figure for the 1990 Loan to €14,200.77.

 

Issues between the parties

 

18.              The controversy between the parties is focussed on the 1990 Loan as it is common case that the 1994 Loan was paid off in full by 22 August, 2012. As seen above, there was a shortfall on the maturity of the endowment policy, which occurred in July, 2010, and monies remained due and owing on foot of the 1990 Loan.

19.              It is evident that the plaintiffs have long contended that this shortfall was not due and owing. While the precise detail of their complaint is not entirely clear to me, they appear to have complained about mis-selling of the endowment mortgage, the imposition of a requirement to have unnecessary insurance on the farm buildings (which resulted in additional payments), and possibly the miscalculation of interest. These complaints were initially made to INBS and subsequently pursued with IBRC, and the Financial Services and Pensions Ombudsman (FSPO), the Central Bank of Ireland, and the Department of Finance.  

20.              None of those complaints resulted in a successful outcome from the first plaintiff's point of view, and the Charge remained registered on the Folio and was, as set out above, transferred from time to time.

21.              What seems abundantly clear, however, is that the first plaintiff cancelled all direct debits and made no further repayments on the 1990 Loan at least from after receipt of a letter from IBRC dated 22 August, 2012 ('the August 2012 Letter'), and probably for some time before that. The letter of 4 April, 2011, already referred to above, suggests that the first plaintiff was already contending at that time that no further monies were due and owing.

22.              In any event, the August 2012 Letter was in the following terms:-

'Property: Boherascrub, Buttevant, County Cork

Mortgage account number: 207496924

Cc:

Dear Mr. Philpott,

I am writing to inform you that IBRC wishes to inform you that the term of the loan has now expired as of 15 August, 2012, and all monies owed to the Society have now been paid.

Our Legal Department have been contacted in relation to the sealed Deeds of Vacate, which will be released to you in 6-8 weeks from the date of redemption. If such time has elapsed however, please contact our legal department in relation to same.

All loans relating to the above property were paid off in full at that time and IBRC no longer holds any interest in the above property.' [Emphasis in original]

23.              On the basis of that Letter, on 17 July, 2024, I granted interim relief restraining the defendants their servants and agents and all persons on notice from advertising for sale, offering for sale or selling the property or any part thereof.

24.              However, correspondence from IBRC to the first plaintiff put in evidence for the purposes of the hearing of the interlocutory application heard on 21 March, 2025, makes it clear that there was subsequently a dispute between IBRC and the first plaintiff as to the effect of that letter. For example, a letter of 6 November, 2012, from IBRC to the first plaintiff (which again refers to the fact that the term of the 1990 Loan expired on 27 January, 2011) said that the balance of €14,013.90 was still outstanding.

25.              A letter from IBRC dated 7 April, 2014, asserted that the August 2012 Letter 'confirmed only this one account [i.e., loan account 207496924] was not closed'. I have to say I do not think that the August 2012 Letter, though it only cites one loan account number, is really capable of that interpretation. It is simply too clear in stating that it applies to all loans secured on the Lands, that the Charge will be cancelled, and that no monies are owing to INBS. It may well have been written in error, but, on its face, it clearly states that everything that was due and owing has been paid.

26.              At the hearing of the interlocutory application, counsel for Pepper, as part of a very able and comprehensive submission, said that the Rule in Pinnel's Case meant that that letter was not enforceable. While I have no difficulty in accepting that any statement by a lender to the effect that part of a loan has been forgiven is unenforceable as being unsupported by consideration, in my view, on the current state of the evidence, that Rule is not applicable to the legal issues raised in this application.

27.              The first plaintiff is not saying that the lender offered to write off part of the loan: he is disputing the calculation of interest, arrears and possibly related insurance premia, and saying that all monies legitimately due and owing were in fact paid many years ago. In any event, while I do not agree that the August 2012 Letter bears the interpretation which representatives of IBRC (that is, representatives other than the author of the letter) subsequently sought to put on it, it is clear that they are asserting that there are no monies due and owing on the 1990 Loan. There is no mention of any write down. That is quite a different thing from saying that, having promised to write off part of the loan, it is now intended to enforce it. In my view, it cannot be said that the Rule in Pinnel's Case applies so as to render the plaintiffs' position unstateable.

28.              Perhaps it will transpire at trial that someone within INBS agreed to write off the balance of the 1990 Loan and that this was an error from which IBRC subsequently resiled. But this is not what the plaintiffs are saying: as I understand it, they are saying that the amount said to be due and owing after maturity of the endowment policy was wrongly calculated, that no further monies were actually due and owing, and that IBRC acknowledged this in August 2012 Letter. As the evidence stands at present, there is a serious issue to be tried on this point and the Rule in Pinnel's Case does not apply to that argument.  

29.              From all of this, two very salient points emerge. First, there is a dispute between the first plaintiff and the successor-in-title of IBRC as to whether or not the 1990 Loan was paid off in full at some point prior to 22 August, 2012, (and a related historical dispute between the plaintiff and INBS and/or IBRC as to the calculation of the sums due at the time the endowment policy mature and at the time the term of the loan expired). Secondly, the evidence at this stage points clearly to all sums owing on foot of the 1990 Loan falling due on 27 January, 2011.

30.              Pepper argued at the interlocutory hearing that the sum did not become due and owing until demand was made, and that this was not done until 20 March, 2024. However, on the state of the evidence at the moment, this seems to be wrong. This was a term loan and any outstanding principal fell due at the end of the term of the loan.

31.              It is not, however, entirely clear, when the payments on the 1990 Loan ceased.

32.              Furthermore, on the state of the evidence at the moment, though it is not entirely explicit – in particular because statements of account for 2011 and 2012 have not been exhibited – it appears that all direct debits from the first plaintiff's account in respect of either loan were cancelled on foot of the August 2012 Letter and certainly no repayment on either loan was made since then.

 

Letter of Demand and Appointment of Receiver

 

33.              On 20 March, 2024, Pepper sent a Letter of Demand to the first plaintiff claiming arrears of €27,695.01, comprising arrears of €15,840.47 and interest of €11,854.54.

34.              This Letter of Demand refers to 'certain letters of offer/facility letters (as may have been amended and varied from time to time)', but does not specify any such letter of offer, for example by referring to the date of any such letter. It does, however, identify the account number as 217496959. It states that the current interest rate on the loan was 8.96% and has a total outstanding balance of €27,695.01. However, it does not contain any statement of account explaining these figures, in particular, the calculation of interest.

35.              In the interim, by letter dated 16 April, 2024, the second defendant ('the Receiver') wrote to the first plaintiff informing him that he had been appointed by way of Deed of Appointment dated 16 April, 2024, as Receiver over the Lands, and claimed full control of the Lands. Detailed information was sought as to whether there were tenants, details of any boundary or encroachment issues, financial information including the first plaintiff's PPS No. and details of any contents or chattels on the Lands. A copy of the instrument of appointment dated 16 April, 2024 was enclosed.

36.              By letter dated 19 April, 2024, the Receiver wrote to the first plaintiff advising him that his agents would be attending the Lands on Thursday, 2 May, 2024 'to secure possession of the Lands'. The plaintiff was asked to ensure that all livestock and chattels were removed from the Lands on or before 5pm on Wednesday, 1 May, 2024, failing which he would offer the Lands for sale without vacant possession which would have a negative impact on value.

37.              I digress here to explain that the second plaintiff - who is the wife of the first plaintiff - has sued because she is the owner of high value livestock present on the Lands. However, were the first plaintiff to be found liable to deliver up vacant possession either to Pepper as mortgagee, the Receiver as such, or to any third party who might - if the plaintiffs do not succeed in these proceedings - obtain good title to a portion of the Lands by way of a sale by Pepper, then as part of the obligation of the first plaintiff to deliver up vacant possession of that part of the Lands, he would be obliged to withdraw the licence granted to the second plaintiff to have her cattle on the Land and she would have to remove them. She keeps her cattle on the Lands by licence from the first plaintiff as registered owner of the Lands and she does not enjoy a distinct cause of action. Her position does not, therefore, require to be considered further.

38.              On 19 June, 2024, the first plaintiff, through his financial advisor indicated that vacant possession would not be delivered up and the Receiver then indicated that he would sell without vacant possession and that this might result in a lesser sale price being achieved.

39.              Further detail of Pepper's claim is contained in a latter dated 16 May, 2024, purporting to be a statement of account dealing with the period 23 August, 2014, to 16 May, 2024. This appears to relate to the period from transfer of the Charge and loan to Shoreline and states that €12,139.45 has accrued in interest since then. However, it seems from this statement of account that interest in the sum of €746.10 is said to accrue between 23 August, 2014 and 30 April, 2018, and that the bulk of the interest has accrued since that latter date.

40.              However, while there is a reference to an interest rate of 7.7% changing on 18 November, 2022, to 8.96%, no breakdown of the sum claimed in interest from 30 April, 2018 to 16 May, 2024, is given. The sums claimed in interest for that period is significant in light of the overall sum claimed. It was also said at oral hearing of the interlocutory injunction that the sum now due and owing is over €50,000 but this figure is nowhere in the papers and it is unclear how it is said to arise.

41.              A subsequent statement of account dated 24 July, 2024, does not contain any further detail save that the balance then said to be due and owing had increased to €28,184.96.

42.              I was told at the hearing of the interlocutory application on Friday, 21 March, 2025 that a sum of over €50,000 was now outstanding but I have not seen any demand for a sum of this nature.

43.              A 'for sale' sign was placed on the Lands and when the first plaintiff became aware of this on 4 July, 2024, the second plaintiff searched online and found that 9.2 acres of the Lands were listed for sale at an advised minimum value of €110,000 to be sold by way of online auction on 24 July, 2024. It is averred by the second plaintiff that the sale price is approximately half the value of the Lands in sale and many multiples of the sum said to be due and owing.

44.              By letter dated 10 July, 2024, the plaintiff's then solicitors sought a statement of account and a copy of the letter of offer by letter. Undertakings were also sought. By letter of 10 July, 2024, Pepper furnished copies of the mortgage, the Deed of Variation, the folio, the demand letter, but did not forward the letter of offer or any statement of account. At this stage, it seems that Pepper may not have any copy of the letter of offer from April, 1990, or any bank statements, but this is not entirely clear. They certainly had - or had access to - correspondence relating to the loan as they have exhibited correspondence from INBS in 2011 and IBRC in 2014 in the replying affidavit sworn on their behalf on 24 July 2024 so it is not clear why they would not have the letter of offer or bank statements. In any event, they did not furnish them as requested.

 

 

Whether there is a serious question to be tried

 

45.              The plaintiffs seek to continue the interim order on a continuing basis. As the relief sought is prohibitory in nature, the plaintiffs must satisfy the Campus Oil test which requires, first of all, to show that there is a serious question to be tried. In this case, that being a serious question as to whether the receiver is entitled to sell part of their Lands as proposed.

46.              The key argument based on the August 2012 Letter, already referred to above, is that the plaintiffs say, quite simply, that the loan was repaid before that date, and therefore the power to appoint a receiver is simply not exercisable. It seems to me that there is a legitimate dispute of fact between the parties as to whether this is so.

47.              The terms of the August 2012 letter are so comprehensive and clear, notwithstanding the reference to only one account number, that I think it must follow that there is a serious question to be tried in this issue. At present, this correspondence is all in the nature of hearsay, albeit that the August 2012 Letter appears to be an admission against interest and therefore admissible as one of the common law exceptions to the rule against hearsay. Ultimately, I think disclosure of the entire correspondence from the period 2011 to 2014 should clear this matter up, though oral evidence will most likely also be relevant.

48.              To put the dispute in crude terms, either the author of the August 2012 Letter was in error in thinking that all loans had been paid off, or the author of the subsequent correspondence were in error in thinking that, because only one loan account number was referred to in the heading of that letter, that Letter was only intended to refer to the 1994 Loan. That is a matter that has to be resolved and which can only be resolved at plenary hearing. It is manifestly a serious question to be tried.

49.              The second issue which there is to my mind no doubt a serious question to be tried, is whether the entire loan is statute-barred. Some complaint was made at hearing on behalf of Pepper that this issue had not been specifically raised by the plaintiffs. I agree that the written submissions did not set forward clearly the points to be raised. However, there are numerous references in the affidavits, including for example para. 17 of the grounding affidavit to the effect that any cause of action on foot of the 1990 Loan is statute-barred. Furthermore, the question of whether the powers of the mortgage were exercisable and whether they were statute-barred was listed as one of the issues between the parties at the end of the affidavit of both the first plaintiff sworn on 12 July, 2024, for the purposes of seeking the interim relief and the affidavit of the second plaintiff sworn on 24 July, 2024, for the purposes of the interlocutory hearing. This point, therefore, was clearly notified to the defendants as an issue which would be raised.

50.              As with most disputes about the operation of the Statute, identification of the date on which the cause of action accrued is critical. On the evidence available to date, it seems that that principal sum due and owing fell due on 27 January, 2011, unless it was extended by an acknowledgement or subsequent payment. There is no evidence whatsoever of any acknowledgment and in fact, such evidence as is available, is to the effect that the first plaintiff vehemently denied - certainly from August, 2012, but it would seem from early 2011 - that any further monies were due and owing on foot of the 1990 Loan. On the current state of the evidence, it does not appear that the accrual of the mortgagee's cause of action against the first plaintiff - whether for a liquidated sum on foot of the covenant to pay contained in the Charge or for possession or sale - was delayed by the making of any acknowledgement by the first plaintiff that monies were outstanding. On the contrary, he and the second plaintiff seem to have gone to significant lengths to dispute any such suggestion.

51.              It is not entirely clear when the last payment was made, but there is, in my view, a serious question to be tried on the issue of fact as to whether the last payment was more than twelve years before the appointment of the Receiver on 16 April, 2024, and indeed the first letter of demand from Pepper, which was sent on 20 March, 2024. The tenor of the correspondence from April, 2011, was that the first plaintiff was already disputing any claim for further monies. Such evidence as is available to date suggests that the plaintiffs have pursued that dispute with tenacity by such means as they thought appropriate. That all suggests that no payments at all have been made from sometime in early 2011.

52.              If so, then it would appear from s.32 (2) (a) of the Statute of Limitations, 1957, that Pepper could not at this point institute proceedings claiming sale of the Lands. That provision says that 'no [action by a mortgagee claiming the sale of mortgaged land] shall be brought after the expiration of twelve years from the date on which the right of action accrued to the person bringing it, or, if it first accrued to some person through whom he claims, to that person.'

53.              That would mean that, because any such cause of action first accrued to INBS on or about 27 January, 2011, Pepper could not now institute proceedings claiming sale of the Lands.

54.              Needless to say, Pepper has not instituted proceedings seeking the sale of the Lands but has appointed a receiver (though the plaintiffs do not accept the validity of that appointment) who seeks to enter into possession and conclude a sale of portion of the Lands. The appointment of the Receiver and the exercise by him of any of his powers as such are all done on foot of the authority of the Charge. However, s.33 of the Statute goes on to provide: -

'At the expiration of the period fixed by this Act for a mortgagee to bring an action claiming sale of the mortgaged land, the title of the mortgagee to the land shall be extinguished.'

55.              The extinguishment of the mortgagee's title would mean that the Charge and all rights and powers derived from it became extinguished at the same time as the expiry of the limitation period for proceedings by the mortgage claiming sale of the Lands. If that is so, then the power to appoint the Receiver was possibly extinguished some time in 2023. The question, therefore, of whether the limitation period provided for in s. 32 of the Statute has expired is material to the continuing enjoyment by Pepper of a power to appoint a Receiver.

56.              Pepper argued that the right of action first accrued to it on the sending of the letter of demand dated 20 March, 2024, but, other than generally referring to the Charge, did not point to any specific provision in the Charge or the Deed of Variation as a basis for this submission.

57.              In addition, it was argued that, even if a demand had been made by a predecessor-in-title, the clock could be reset by the sending of the demand on 20 March, 2024. I do not have to decide this issue at interlocutory stage so I will confine myself to saying that this argument appears to be incorrect and, indeed, possibly contrary to the express wording of s. 32 of the Statute of Limitations, 1957, which contemplates that the cause of action may first accrue to a predecessor-in-title.

58.              It could potentially also be argued that the correspondence from INBS dating back to early 2011, such as the letter of 4 April, 2011, already referred to above, itself constitutes a demand for payment, but the better view on the evidence available at present is that the full amount became due and owing on expiry of the term of the 1990 Loan on 27 January, 2011. Either way, there is a serious question to be tried on the basis that the cause of action referred to in s. 32 accrued to Pepper's predecessor-in-title in 2011, and therefore more than 12 years before Pepper sought to take action on the loan agreement and Charge.

59.              Counsel for Pepper says that the Folio is conclusive, and the Charge is still on the Folio. As a general proposition, that is obviously correct and would, for example, make it very difficult for anyone to argue that Pepper did not purchase the Charge, as they became registered as owner in 2019.

60.              However, it should be noted that s.33 mirrors the provisions of s.24 of the Statute, which similarly provides that, at the expiration of the period fixed by the Statute for any person to bring an action to recover land, the title of that person to the land shall be extinguished.

61.              I have no difficulty in accepting that, ultimately, if the title to the Charge is being extinguished, then the Charge should be removed from the Folio. However an application to do so can only be made after the period of limitation has expired, because it is only then that s.33 of the Statute of Limitations will apply. The earliest that could have happened was January, 2023.

62.              Furthermore, where - as appears to be the case here - there is dispute as to whether or not the period of limitation has elapsed, then that is not a matter that could be decided by the Registrar of Titles, but would have to be decided by a court. If the plaintiffs are successful in these proceedings in showing that the mortgagee's title has been extinguished, then the necessary application to cancel the burden on the Folio can be made (or an order can be made directing the Registrar of Titles to cancel it). But that point has not been reached yet.

63.              In my view, there is clearly a serious issue to be tried as to whether this loan has become statute-barred, such that the power of sale is no longer exercisable and the title to the owner of the Charge extinguished. That will have to be determined at full hearing.

64.              It was in fact argued at the interlocutory hearing that the plaintiffs were statute-barred and it was said that they had a claim for breach of contract which was now statute-barred. I find it very difficult to understand this argument. The proceedings concern liability on foot of a loan agreement, secured by the Charge. The first plaintiff had an obligation on foot of the loan agreement to repay the loan in accordance with the terms applicable thereto. He says he has paid everything he owed and he does not owe any more. If that is incorrect, then he is in breach of the loan agreement and, were it not for the Charge, the mortgagee for the time being would have had six years to sue for the monies due and owing. Because there is a covenant to pay in the Charge, that period is actually 12 years. That means that Everyday and their predecessors-in-title had a right to sue for the debt for the 12 years from the due date. They have not done so as it stands at present. Pepper's right to sue for that debt is now prima facie statute-barred and I do not see how the Statute operates here against the plaintiff. If someone asserts that they don't owe money, and they refuse to pay any money, and they are not pursued for the debt, it is difficult to understand what their cause of action is or why they should sue.

65.              Having said that, it seems that the first plaintiff - or perhaps both plaintiffs - issued proceedings against IBRC some time around 2015. I have not seen those proceedings, though it seems likely that they would be sufficient to meet any argument that they are somehow statute-barred from litigating the issues raised in these proceedings. However, my principal finding on this argument is that it is Pepper who has purported to take action on foot of the Charge, by appointing a Receiver, and the question is whether it is statute-barred from doing so.

66.              Simultaneously, it is said that the Rule in Henderson v. Henderson (1843) 3 Hare 100, which in general prohibits the litigation of issues which ought to have been raised in earlier proceedings, might apply. It seems that those proceedings never progressed in any event, but as I have not seen the pleadings - nor indeed have the defendants - it is difficult to see how the Rule in Henderson v. Henderson applies. It remains to be determined until copies of the proceedings are furnished but I think it is highly likely that the allegation that the 1990 Loan has been fully paid off was in fact raised in those proceedings and, if that is so, the Rule in Henderson v Henderson would not apply.

67.              Similarly, any suggestion of abuse of process seems to me to be prematurely raised in the absence of sight of those proceedings and in any event at this point would seem not to arise as it seems likely that the first plaintiff raised the issues about alleged miscalculation of sums due and the acknowledgement in the August 2012 Letter that all loans had been paid off in those earlier proceedings also. That remains to be seen. It also seems likely that the proceedings were never progressed because IBRC did not pursue the alleged arrears, and the loan and Charge were transferred. I cannot see how allowing proceedings to lapse because the defendant had sold on their interest could amount to an abuse of process. It certainly is not so clearly so as to lead to the conclusion that an interlocutory injunction should not issue as the plaintiffs are bound to fail for abuse of process.

68.              I am therefore satisfied that on two points, there is a serious question to be tried.

69.              I therefore do not need to consider additional arguments raised by the plaintiffs, including ones directed at the validity of the Receiver's appointment, an allegation that the first plaintiff was a 'consumer' (though the consequence which it was contended follow from this was not entirely clear to me), and an argument that there had been no valid, unconditional assignment of the 1990 Loan to Pepper.

70.              I should add that I have some reservations about the absence of detail in the letter of demand of 20 March, 2024, and subsequent correspondence.

71.              The plaintiff through their former solicitors and by the action of registering on the online portal apparently made available by Pepper to borrowers, have sought details of the calculation of this sum and have requested a statement of the account and a certificate of interest. This apparently has not been provided.

72.              Were Pepper to institute proceedings by way of summary summons to seek this amount, then, in accordance with Bank of Ireland Mortgage Bank v. O'Malley [2022] 2 IR 487, then they would have to supply this information as part of the proceedings. The appointment of a receiver and the action in seeking to take possession of the property and ultimately offering it for sale by way of public online auction are very drastic and intrusive steps to take. The logic behind the O'Malley jurisprudence is that, before a borrower agrees or submits to the demand for payment or entry of judgment, they are entitled to know how it is said to be owing and how it is computed.

73.              It does not seem unreasonable, particularly given the passage of time in this case since any communication was received from any lending institution in relation to the loan - approximately ten years - that such information would be furnished. The powers sought to be exercised by the Receiver were very far reaching indeed. I do not think it is too much to ask that a computation of the interest would be made available. A copy of the facilities or loan offer letter was also requested and this was not provided. However, it may be that Pepper did not have it and certainly the defendants were not able to supply a better copy of the loan offer letter at hearing than that made available by the plaintiffs.

74.              However, given my conclusions in relation to both the dispute as to the underlying loan and the possible application of ss. 32 and 33 of the Statute of Limitations, 1957, it is not necessary to make any explicit decision on this point.

 

Balance of justice.

 

75.              It was urged upon me very strongly that damages were an adequate remedy for the plaintiffs in this case. Reliance was placed on Ryan v. Dengrove DAC [2021] IECA 38, where Murray J. stated, in relation to injunction seeking to restrain receivers in exercising their power:

'Where arising in the context of commercial loans secured by commercial assets, they are often refused. In such disputes, damages will generally be an adequate remedy, and the appointing institution and/or receiver will frequently be good for any award made against them. Generally in a purely commercial dispute of this kind where the parties' interests are exclusively financial, the law adopts the position that they are best left to their respective remedies in damages. The cases of this kind in which there is a particular factor tilting the balance in favour of the claimant such as would justify the making of orders restricting the creditor's freedom of action pursuant to agreed security instruments, tend to be the exception.'

76.              It was said this was a purely commercial dispute as the farm in question is non-residential, as apparently the plaintiffs are living on their other farm. I have to say that I think Ryan v. Dengrove DAC is entirely distinguishable on its facts. That was a dispute where it was acknowledged by all parties that the commercial investment property in question should be sold. The appellant in that case was arguing that the Receiver should not sell because this would achieve a low price. There was also argument as to how the proceeds of sale would be distributed, i.e., whether the lender would have recourse to the proceeds for all of the loans due to it or only some. Nobody was actually objecting to sale, and the property appears to have been a commercial investment in the form of the purchase of a site which was to be developed with the intention of bringing it to market and making a profit.

77.              While Ryan v. Dengrove DAC is of course binding on me, I do not understand the comments of Murray J. in respect of commercial investments to apply to the current circumstances of the proposed sale of a family farm. It should be noted that in Charleton v. Scriven [2019] IESC 28, which is also binding on me and which was also cited by the defendants, Clarke C.J. stated (at para. 6.12):

'Indeed, I would go further and suggest that, having regard to the underlying principle of attempting to fashion an order which runs the least risk of injustice, there may very well be an important distinction to be made in receivership cases between situations where the receivers concerned simply intend to maintain the situation pending a trial and ones where the substance of the interlocutory order sought is one designed to, in practice, bring the proceedings to an end. There is considerable logic in the view that, for example, a receiver who wished to obtain possession of residential property or a family farm so that it could be sold would need to make out a strong arguable case for it to be appropriate, having regard to the greatest risk of injustice test, to allow such an order to be made. On the other hand, where the matters are essentially financial or where there are strong grounds for believing that a receiver is necessary to ensure that property is properly managed and maintained pending a trial, very different considerations may apply.' [Emphasis added.]

78.              Clearly, this property is of intrinsic value to its occupier. It is a family farm inherited by the first plaintiff from his father (who also seems to have inherited it) and which has been farmed by the first plaintiff for decades and on which the first plaintiff no doubt relies for at least part of his livelihood.  It is not a commercial investment property or a property in which the interest of the plaintiffs is 'exclusively financial'.

79.              Furthermore, it would be noted that Ryan v. Dengrove DAC, Murray J. referred to the need to protect the creditor's 'freedom of action pursuant to agreed security instrument'. This case is a long way from disclosing any agreement on the part of the plaintiffs that there is any money due and owing at all. That may indeed be the case - though I stress that this is a matter for trial, and I am not deciding anything other than that the plaintiffs have raised a serious question to be tried. Furthermore, it is possible, if the plaintiffs succeed on the Statute of Limitations issue, that the Charge will need to be removed from the Folio as it has been extinguished from s.33 of the Statute of Limitations.

80.              In practical terms, I have to consider what would happen if I refuse the injunction and it turns out at trial that the plaintiffs are right and that either no money is due and owing, or that the money is due and owing but has become statute-barred, and that the Charge has been extinguished by the Statute. If I were to refuse an injunction, the effect in that instance would turn out to be that a portion of the farm held by a family for at least two generations would have been unnecessarily sold by a receiver appointed by someone who in fact was not entitled to pursue the plaintiffs for any money or to exercise any rights over the Lands. That would clearly be unjust.

81.              By contrast, Pepper say that they are owed a sum of money which is relatively small by virtue of the Lands as a whole. It is stated on affidavit that the farm is worth approximately €2 million. There is no evidence as to the value of the plaintiff's other farm, but that evidence is unnecessary because the value of the Lands is so far in excess of any sum that is likely to become due and owing before a trial is held that Pepper will have good security not only for the sum due and owing now - if it is due and owing - but any sum which accrues by way of interest. Pepper is fully protected from the refusal of an injunction if it transpires after a full hearing that it has been restrained in exercising its rights.

82.              Furthermore, Pepper's interest is without question 'purely commercial', as its only interest in the Lands is to use them as security to recover the payment of monies.

83.              There has been some criticism in this case of the very pro forma offering of an undertaking as to damages. It is true that this matter is sometimes overlooked, and that, in many of these so-called 'receiver injunctions', the meaningfulness of the undertaking as to damages must be in question as they are given by debtors who quite clearly owe significant sums of money to lending institutions - even if the precise sum is questioned - and who may even be hopelessly insolvent.

84.              However in view of the uncontroverted evidence as to ownership by the first plaintiff of very significant unencumbered assets in the form of a farm worth €2 million, it seems to me that no real query can be raised about the fact that the undertaking has been given and that assets will be available to give effect to it, if required.

85.              I would add that the sale proposed is an unusual one as the lands offered for sale comprise one field near the public road together with a portion of a neighbouring field which is marked on an aerial map but which does not appear to have been marked on a map suitable for registration or in any way fenced off. It is also not entirely clear how it could be said that justice requires the immediate sale of a portion of the Lands which is said to be worth approximately four times the monies said to be due and owing. However, given the conclusions I have already reached under the balance of justice and the adequacy of damages, I do not think it is necessary to consider these matters further for the purposes of this application as the considerations outlined above are sufficient to conclude that the balance of justice favours the grant of the interlocutory relief.

86.              Finally, it was argued that because the plenary summons in this case did not seek to restrain a sale, the injunction should not be granted in line with the statement of the Supreme Court in Merck Sharpe & Dohme v. Clonmel Healthcare Ltd [2020] 2 IR 1 that an interlocutory injunction should not be granted where a permanent injunction would not be granted at trial.

87.              The fundamental principle being referred to by the Supreme Court there is whether a permanent injunction is a remedy recognised by law for the right of action being asserted by a plaintiff in any particular case. In this case, while I agree that it is somewhat unsatisfactory that the statement of claim has not been delivered - though there is a dispute as to whether the defendants ever actually served the plaintiff's solicitor with the appearance which contains the request for statement of claim - it is abundantly clear from all of the evidence that the plaintiffs are saying that the first plaintiff owns his property, that he doesn't owe any money to Pepper, and that Pepper are not entitled to have recourse to his lands to seek to recover moneys to which they are not in fact entitled - either because the first plaintiff was overcharged in the first instance or because any debt is statute-barred. If he succeeds in proving that at trial, he will of course obtain a permanent injunction restraining Pepper from entering on the Lands as that would be the usual remedy granted in order to uphold a plaintiff's property rights.

88.              The plenary summons as drafted does not in express terms seek a permanent injunction restraining a sale. Such an order is sought only in terms of interim relief, which was the immediate concern on 15 July, 2024, when the plenary summons was issued. However, it does claim a permanent injunction restraining the defendants, their servants and/or agents, and other persons having notice of the making of the order, from 'interfering with the lands, farms or part thereof and the rights of the plaintiffs and their peaceful possession and carrying out a farming activities in the said lands and farms.' Notwithstanding that a sale is not identified in express terms, it is difficult to conceive that an injunction granted in these terms would not operate so as to preclude the selling of a portion of the Lands on the open market and the purported transfer of title to a purchaser who would then no doubt seek to gain possession of the Lands which the defendants had purported to sell to him.

89.              In my view, this argument is misconceived and does not prevent the grant of the interlocutory injunction.

 

Conclusion

90.              In my view, the balance of justice is clearly supports the grant of an injunction in this case, a serious question to be tried having been shown. Damages would not be an adequate remedy to compensate the plaintiffs for the loss of part of their family farm should it turn out that in fact Pepper is not owed any money by the first plaintiff and that, consequently, the second defendant ought not to have been appointed as receiver over the Lands. In contrast, should it turn out that the plaintiffs are wrong in their contentions, they have very considerable assets which will be available to the defendants to recover all additional sums due and owing which may accrue between now and the conclusion of any trial.

91.              In those circumstances, I will grant an order in the form of the interim relief granted on 17 July, 2024, pending determination of the proceedings.