A fund appointed receiver is entitled to possession of an apartment in Co Limerick where a couple have been living, mostly rent free, for some five years, a High Court judge has ruled.

Thomas and Catherine Reidy claimed they had an oral agreement with the registered owners of the apartment – whose debts of some €2.3 million have been acquired by Everyday Finance – to buy it for €100,000.

But Ms Justice Siobhán Stack ruled that receiver Stephen Tennant was entitled to an injunction for possession of the apartment at Fisherman's Wharf, Manor Court, Co Limerick. She said there was no unfairness to the Reidys, who had refused a 2019 offer from the receiver for them to purchase the apartment for €120,000.

A stay will be applied on the order to allow the couple time to make arrangements to move.

Charge registered

AIB registered a charge in 2008 over the apartment and, in 2016, appointed Mr Tennant as receiver over it and other assets of its registered owners, the borrowers, arising from debts of some €2.3 million. In August 2018, AIB assigned its interest in the borrowers' assets to Everyday.

The judge noted it was not disputed that Everyday was entitled to appoint Mr Tennant as receiver and that it is the registered owner of the charge over the apartment.

The Reidys’ essential case is that they have an oral agreement to buy the apartment from the borrowers and partly performed that by entering into possession of and renovating the property, she said.

They paid a €5,000 booking deposit with an estate agent and moved into the apartment on October 1st 2016 under a lease for one year at €100 a month.

They also argued the receiver was estopped from pursuing them on the basis of an alleged representation to them by one of his employees that the apartment sale would proceed.

Oral agreement

For the purpose of the injunction proceedings, the judge accepted the borrowers and the defendants, without recourse to legal advice, concluded an oral agreement in mid-September 2016 concerning purchase of the apartment.

The latest date when the defendants became aware the property was mortgaged to AIB was October 9th 2016, just a week after they went into occupation of it, she said.

Neither AIB nor Everyday ever provided any written consent for the sale of the property to the defendants, she said. Any sale without such written consent cannot bind AIB or its successor in title, and any agreement with the borrowers is “meaningless” without the release of the charge over the property, which could not be done without Everyday’s agreement.

Mr Reidy relied heavily on a phone call between himself and an employee of the receiver on October 16th, 2016, in which he says he was clearly told the sale would proceed.

He said he was asked the same day by an estate agent to provide proof of funds and had done so and, as a result of those two factors, the defendants understood the purchase of the apartment would proceed and said they had spent €30,000 on renovations.

The problem with that argument is that the defendants do not assert any agreement with AIB or Everyday that the apartment would be released from the charge, the judge said.

It appeared Everyday would have agreed to release the charge if the defendants had agreed to the receiver’s offer of September 2019 to buy the property for €120,000 but they refused.

Renovations

For reasons including that refusal, and there being no pre-existing legal relationship between the defendants and the receiver, they could not rely on the doctrine of primary estoppel, she held.

While accepting they spent some €20,000 on renovations, and had a stateable case Mr Reidy was told the sale would proceed, she was satisfied there was no unfairness to the defendants.

The property, she said, was offered to them at a price the receiver was prepared to recommend to Everyday, and they refused it, insisting on the €100,000 sum they had agreed with the borrowers.

Everyday was entitled to come to its own view on the value of the apartment, which was the shell and core market value, thus recognising the monies spent on renovations, she said.

The judge concluded Mr Tennant had made out a strong case for the possession order likely to succeed at hearing and, based on that and other findings, was entitled to the injunction sought.