Former Irish rugby star Frankie Sheahan and his business partner brother, Joseph, have lost their High Court challenge against Bank of Ireland taking possession of a number of their property investments and appointing a Receiver over them.
Ms Justice Iseult O’Malley today held that the bank was entitled, under “contractual powers” within the mortgage deeds, both to appoint a Receiver to the Sheahan properties and take possession of those where there had been repayment default.
The judge, in a related decision that is of little comfort to the Sheahan brothers, held that the bank had no statutory powers under the faulty Land and Conveyancing Law Reform Act as drawn up prior to 1st December, 2009, to take possession or appoint a Receiver.
The Act, following a landmark decision by Ms Justice Elizabeth Dunne striking down certain powers of banks to seize and sell property, had to be re-enacted. The afterthought provision applies only to mortgages created after the December 1st commencement date of the 2009 Act.
The faulty 2009 Act had accidentally repealed a section allowing banks to seize properties and appoint Receivers, and Judge Dunne, now a Supreme Court Judge, had held it was not for the High Court to supply the omission of the Oireachtas.
Judge O’Malley stated today that Judge Dunne had decided that by virtue of repeal provisions in the faulty 2009 Act a lender who had not acquired a right to apply to court for possession before its December 1st commencement date could not apply thereafter.
Barrister Ross Maguire, S.C., who appeared with Nollaig Lane for Frankie and Joseph Sheehan and their company MyMortgages Limited, had asked Judge O’Malley to follow her colleague Judge Dunne’s finding because certain arguments had not been put before her.
The Receiver, Michael McAteer, had sought reliefs including an order restraining the borrowers from interfering with him in the exercise of his functions.
Judge O’Malley, in her reserved judgment, said each of the mortgage deeds executed in respect of specified registered properties in Co Cork and Co Wicklow contained identical terms providing for the appointment of a Receiver by the bank in the event the mortgage fell into arrears.
She said that on dates after 1st December 2009 the Sheahan’s had defaulted in making the payments required under terms of the loan contracts and the whole of the monies due on each of the accounts was demanded in November 2011.
The loans were not repaid and on November 6, 2012 the bank had demanded possession. The property had not been given up and the bank now sought an order for possession.
Michael Mc Dowell S.C. and Ronan Murphy S.C., who appeared with Ms Una Tighe, for Bank of Ireland Mortgage Bank and its Receiver, sought time for all of the parties to consider the judgment.
Judge O’Malley made no specific orders today and adjourned the proceedings for mention on October 7 next.
In a statement issued after the judgment by Ross Maguire, S.C. he said: “Bank of Ireland has failed in its attempt to overturn a previous High Court ruling regarding its right to repossess properties where a mortgage default occurred after December 2009. It had put forward new points not argued previously but these were all rejected. The court further held that the statutory power to appoint receivers was repealed and is no longer available to lenders.
“The Court held that where a mortgage gives a contractual right to appoint a receiver that right is not affected by the change in the law. The powers of the receiver will be dependent upon the terms of the contract. The Sheahan mortgages do give a contractual power to appoint a receiver and therefore the appointment of the receivers is valid.
“However, our view is that the judgment could create major problems for lenders and in particular for Bank of Ireland. Its buy to let mortgages give very limited power to receivers and do not seem to include a power of sale. Where the Bank has limited power to repossess and the receiver has no power to sell, the difficulties for the lender are obvious.”