What is an Injunction?

In simple terms, an injunction is an order of the Court which requires a person to refrain from doing, or compelling them to do, a particular act. The aim of an injunction is to preserve the status quo between the parties between the time of the granting of the injunction and the full hearing of the issues in dispute between the parties. It can be a valuable legal tool in repossession cases to protect all assets until a final decision has been reached by the Courts.

Is a Receiver also an Agent?

When it comes to repossessions, this is a very important distinction to make, as the powers of a Receiver and an Agent are different. A recent judgement serves to clarify the issue of whether a Receiver is acting as a Receiver or as sometimes alleged as Agent for the Mortgagee in possession. i.e., the Bank or Vulture Fund (ref. Michael Nihill -v- Everyday Finance DAC, Ken Tyrell and Wilsons Auctions of Judge Dignam delivered on the 29th of July 2022, The High Court [2022] IEHC 484).

In this case, Mr Nihill obtained an Interlocutory Injunction against the Mortgagee in possession and Vulture Fund Everyday Finance DAC, the Receiver Ken Tyrell and the Auctions Company, Wilsons Auctions, who were seeking to sell property including property and farmlands owned by Michael Nihill.

As part of that case the Defendants alleged that the Receiver was not acting as a Receiver, per se, but also acting as an Agent of the Mortgagee in possession or otherwise the fund Everyday Finance DAC.

One of the main arguments that arose here was what were the powers of the Receiver.  The Judgment clearly illustrates that the Receiver only has those powers which are conferred on him or her by the security document or by statute, that being the Deed of Mortgage or otherwise under the law.  In essence, whereby the Deed of Appointment of Receiver or the Deed of Mortgage does not provide for the Receiver to be appointed as a Receiver and an Agent, or as an Agent solely there is a very big question mark over whether the Receiver can be deemed to be acting as an Agent were the Receiver says he or she is acting as an Agent.

Judge Dignam held in this particular case that the Plaintiff Mr Nihill had established an arguable case that the Receiver was exceeding his powers by purporting to exercise a power of a sale for two reasons:

  1. That he appeared to have carriage a sale.
  2. He stated in the draft contract of sale that he the Receiver acting on behalf of the Plaintiff was doing so as the Vendor.

The question that arose was the contract (which had not yet been entered into) contented the Receiver was acting as an Agent of Everyday Finance who were the owners of the loan, however the Receiver in this instance had not been appointed as Agent (of the first named Defendant) Everyday Finance, in the Deed appointing the Receiver.  It was clear from the instrument that that had not been the case.  Furthermore no other appointment document was referred to by Everyday Finance as part of the defence of this case and it was not clarified as to whether the receiver was acting as Agent.

Judge Dignam in granting an Interlocutory Injunction felt that the Plaintiff had established an arguable case on the question of the allegation that the Receiver was acting in excess of their powers in purporting to sell the lands. And furthermore, that if the Injunction was refused and the case ultimately was successful in damages, then they could not replace the plaintiff’s farm as it would be artificial for the Court to proceed on a farm of that size as purely a commercial enterprise.

Judge Dignam commented For many Farmers in Ireland, while farming is a Commercial Enterprise it is also a way of life with strong, emotional and historic bonds to the specific lands and therefore often cannot be considered as a pure commercial entity.”

Judge Dignam further held that the Court could not ignore the fact that the lands would have been lost and that there would be no guarantee to the Plaintiff that if he wished to resume farming he could do so in the same area because they may not be able to purchase alternative lands.  Finally, the Court held that the appropriate way to restrain matters pending the trial of the action was to restrain all three Defendants in this matter, from selling the lands on the basis of the draft Contract for Sale and the marketing process held on foot of that.

Article written by Donnacha Anhold, Principal of Carter Anhold & Co. Solicitors.

If you are affected by repossession or would like to explore the possibility of an injunction then we can help you navigate through what is often a highly stressful and complicated process.  Contact a member of our team today on 071-9162211 or at info@carteranhold.ie