Sheahan's property battle with bank ends in 'stalemate'
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.
However, in what has been described as a "stalemate situation", the complex ruling means the receiver can collect rent on properties in Cork and Wicklow but cannot sell them.
A source close to the Sheahan brothers likened the result to a "nil-nil" draw, adding: "This case has brought about a stalemate situation which is not in anybody's interest.
"Somebody needs to see sense here and settle it – in other words do a deal. There's a deal to be done here."
In the latest High Court proceedings, Ms Justice Iseult O'Malley held that the bank was entitled to appoint a receiver to the Sheahan properties and take possession of those where there had been repayment default.
The judge held that the bank had no statutory powers under the Land and Conveyancing Law Reform Act as drawn up prior to December, 1, 2009, to take possession or appoint a receiver.
The Act followed a landmark decision by Ms Justice Elizabeth Dunne, which struck down certain powers of banks to seize and sell property.
The brothers' barrister Ross Maguire had asked Judge O'Malley to follow Judge Dunne's findings.
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 said each of the mortgage deeds provided for the appointment of a receiver by the bank if the mortgage fell into arrears.
She said that on dates after December 1, 2009, the Sheahans had defaultedand 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 McDowell, who appeared with 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 and adjourned the proceedings for mention on October 7.
In a statement issued after the judgment, Mr Maguire 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.
"The court further held that the statutory power to appoint receivers was repealed and is no longer available to lenders."
He accepted that "the Sheahan mortgages do give a contractual power to appoint a receiver and therefore the appointment of the receivers is valid".
But he added: "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."