IEHC 746
This case was a typical injunction application by a receiver where there was interference with possession. Over the course of a few months the locks on the property were changed a number of times by both the receiver's agent and the mortgagor. The Court adopted the view that the application on its face sought interlocutory orders restraining the mortgagor from interfering with the receiver, but in substance was intended to be an application for final orders so that the receiver would be permitted to sell the mortgaged property.
The following points are particularly relevant to all banks and receivers as regards what the Court considers to be the "correct approach" to be taken in receiver injunctions:
- In this case, the bank was not a party to the proceedings and it was the receiver only, who brought the application to Court. It was the receiver's case is that he was appointed in a dual capacity as receiver and mortgagee’s agent. The Court noted that the receiver was not expressly authorised to sue on behalf of the bank and the bank had not sued on its own behalf. The Court went on to say "If the changing of the locks was lawful and effective to recover possession of the property on behalf of Everyday, it seems to me that from then on it could only have been Everyday’s possession that could have been interfered with by the changing and re-changing of the locks."
- The Court could not see how a mortgagor's right to inspect title documents (as per s.91 of the Land and Conveyancing Law Reform Act, 2009) could properly be contested. The Court found that there is no obligation on a mortgagor to justify a request for inspection but it is for a receiver, if his appointment is challenged, to prove the validity of his appointment.
- The Court accepted that there is clear authority that the registered owner of a charge (or a mortgagee of the legal estate in land) may only lawfully take possession if that can be done peaceably. However, it scrutinised what qualifies as taking 'peaceable possession' and whether a receiver is entitled to cause minimal damage, including the drilling of locks.
- As regards whether or not a property is a family home or PPR, the Court proposed that on the authorities, the relevant time is the time at which the loan was drawn down and not the time at which the mortgagee seeks to recover possession.
- Ultimately, the Court determined that injunctions will not be granted if the effect is to summarily deal with the matter. Mr Justice Allen stated that:
"without any evidence that the property is likely to realise less than the secured liabilities there is little basis for concluding that the intervention of the court is called for at this time"
This is a rather sobering development from the perspective of banks and receivers and from now on, great care should be taken before taking possession of charged properties and taking injunctions against defaulting borrowers.
Fieldfisher are well placed to provide a full review of security and an account of legal remedies available to banks and receivers.
Written by: Mark Woodcock and Ciara Gilroy
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