Mackay & Anor v Ashwood Enterprises Ltd & Ors (2012)
An application to vary a court order to allow the owner of a block of flats to retain possession of one flat when receivers took possession of the block amounted to an application for a mandatory injunction requiring the receivers to allow him to remain in the property.
The applicant (M) applied for variation of an order allowing court-appointed receivers to take possession of a property so that he could remain in possession of one flat in the property.
The receivers had been appointed at the behest of a bank that had a charge over the property. The charge secured a loan that the bank had made to M and his brother when they purchased the property. M and his brother held the property in trust for the first defendant (A), which had given M the right to occupy the flat until it was sold.
(1) Although the relief sought at the instant hearing was a variation of the receivers' possession order, the reality was that M would ultimately have to assert his possession rights; the variation was merely an interim position pending determination of what rights he had. He therefore effectively sought a mandatory injunction to compel the receivers to allow him to remain in the flat. The test for a grant of a mandatory injunction was whether the applicant had a strong case, because mandatory injunctions, unlike negative injunctions, involved effort on the part of somebody. (2) The court-appointed receivers' title derived from a mortgage that was superior to any other rights that M or A could grant. M's right to occupy the flat was at best a contractual licence from A; M made no assertion that his right was enforceable against the bank or the court-appointed receivers. Additionally, the interest was transitory, and courts could not grant specific performance of periodic tenancies. A court therefore would not enforce M's rights against the court-appointed receivers, and M was not entitled to an injunction. (3) To grant an injunction was not an appropriate exercise of discretion. Injunctions were only appropriate where damages were not an adequate remedy. M's damages would be the relatively modest costs of his securing alternative accommodation in place of the rent-free occupancy of the flat. There was no doubt that the bank had more than enough money to discharge such a liability. Additionally, the flat was gratuitous as M had a family home in Dublin and he had the means to rent a flat or hotel when visiting London. Also, his brother had a home in London where he could stay; there was no evidence that he was not welcome there. There was no evidence that he had any business interests requiring him to be in the flat now that the receivers had taken possession of the property. He had interfered with the prior out-of-court receivers, and if he were in the flat there was a strong prospect that the interference would continue with the court-appointed receivers.
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05 Jul 2012
Peter Smith J