The Court of Appeal has overturned a “wholly excessive” award of €550,000 in exemplary damages against a Grant Thornton receiver who “at all stages attempted to act lawfully and abide by legal advice”.
The High Court had awarded the sum to businessman Niall Hade against receiver Michael McAteer to mark its disapproval of what it described as his “wrongful action” in possessing two properties and selling three without a court order.
On Thursday, the appeal court found the judge failed to afford Mr McAteer fair procedures and erred in awarding exemplary damages against him.
Mr McAteer sought and obtained legal advice before selling the properties and “therefore he did not act in reckless disregard of whether he was entitled to sell the properties”, said Ms Justice Caroline Costello in her judgment, approved by two colleagues.
The selling of the properties without a prior order was not, in these circumstances, “of such moral turpitude or so egregious” to warrant the court awarding exemplary damages against the receiver. His conduct fell “well short” of justifying such orders, the judge said.
Even if exemplary damages were appropriate, the amount given by the High Court was “wholly excessive”, given Mr McAteer has “clearly” always sought to act lawfully and abide by legal advice, albeit that there was an error on one point.
The receiver accepted during the appeal hearing that he was obliged, under the terms of the loan security documents, to obtain Circuit Court orders before selling the properties, and failed to do so, she added.
Ms Justice Costello said Mr Justice Anthony Barr erred in also concluding that the receiver unlawfully took possession of repossessed properties.
She said the Land and Conveyancing Law Reform Act of 2009 entitled Mr McAteer to take possession of these without possession orders. It follows that he was never a trespasser upon these properties, and awarding damages and exemplary damages for this point was an error, she added.
Mr Hade, a co-owner of three of the properties sold, never sought exemplary damages against Mr McAteer, and the issue only arose when Mr Justice Barr gave judgment, Ms Costello said.
Mr McAteer was therefore not on notice of any claim for exemplary damages against him and did not have an opportunity to submit evidence or make submissions on this point.
She allowed his appeal against the exemplary damages award, which came in proceedings by Mr Hade, representing himself in court, against Bank of Ireland Mortgage Bank and Mr McAteer.
The Court of Appeal agreed with the High Court’s decision to dismiss Mr Hade’s claim against both defendants.
Both courts were satisfied the receiver did not sell the properties at an undervalue or mismanage any of the properties over which he was appointed. They also found the Hades did not suffer any direct financial loss arising out of Mr McAteer’s possessions and sale of some of the properties.
Mr Hade also appealed findings in a connected case, brought by the bank against him and his wife, Joyce Hade.
Ms Justice Costello was satisfied the judge was correct to grant judgment against them jointly and severally in the sum of €2 million. This was on foot of a €2.7 million loan, secured over eight properties, taken out in June 2006 to refinance borrowings for their family home and other properties.
He gave further judgment of €1.4 million against Mr Hade over 2007 borrowings advanced for the purchase of four properties at St Maelruan’s Park, Oldbawn, Tallaght, Dublin 24, which also acted as security.
Between about 1985 and 1999, Mr Hade operated two plant hire companies before operating a hostel, under contract with the government, from a premises at Kilakee Way in Dublin until 2016.
The couple, who have five children, fell into arrears during a period when interest only was due on the loans, the judge explained.
The bank demanded immediate full repayment of both loans, plus interest, totalling €3.9 million, in September 2011. Between 2011 and 2013 it appointed Mr McAteer as receiver over all 12 security properties.
The bank appealed the High Court’s decision to direct it to pay its own legal costs in the cases. The Court of Appeal awarded the bank its costs as it was entirely successful in both cases.
Mr Justice Seamus Noonan and Ms Justice Nuala Butler agreed with the judgment.