McEnery v Sheahan

• Jurisdiction: Ireland
• Judge: Ms. Justice Dunne
• Judgment Date: 30 July 2019
• Neutral Citation: [2019] IESC 64
• Judgment citation (vLex): [2019] 7 JIC 3002
• Court: Supreme Court
• Date: 30 July 2019

[2019] IESC 64

THE SUPREME COURT

Dunne J.

O'Donnell Donal J.

Dunne J.

Charleton J.

BETWEEN

BRIAN McENERY

PLAINTIFF/RESPONDENT

AND

TIM SHEAHAN

DEFENDANT/APPELLANT

Appointment of receiver – Validity – Land and Conveyancing Law Reform Act 2009 – Appellant seeking to appeal against the judgment and order of the High Court – Whether the respondent was validly appointed reciever

Facts: The defendant/appellant, Mr Sheahan, appealed to the Supreme Court against the judgment and order of the High Court (Feeney J) of the 30th July, 2012 in which, inter alia, the following orders were made: (a) declaring that “pursuant to the provisions of the Interpretation Act 2005 and in particular s. 27(1)(c) thereof that the right of Ulster Bank Ireland Limited (sic) to appoint a receiver to the premises pursuant to the provisions of the Conveyancing and Law of Property Act 1881 has not been affected by the enactment of the Land and Conveyancing Law Reform Act 2009”; and (b) an order requiring Mr Sheahan to deliver up possession of a retail garage and service station located at Glenbeigh, County Kerry and comprised in Folio KY12523 and KY13290, the subject of Land Registry dealing D2009LR109560E to the plaintiff/respondent, Mr McEnery, being the receiver appointed by Ulster Bank Ireland Limited. In essence, the issues arising on this appeal concerned the validity of the appointment of the receiver. Central to this issue was the effect of the enactment of the 2009 Act, if any, on the right of the bank to appoint a receiver to the premises pursuant to the 1881 Act. A further issue raised on behalf of Mr Sheahan concerned the fact that the bank made a demand for payment on the 11th April, 2011 and purported to appoint Mr McEnery as receiver the following day thus raising an issue as to whether or not the bank had acted in a precipitous manner in sending in the receiver in circumstances where it was contended that the bank did not give Mr Sheahan sufficient time to make a proposal or to deal with the bank and in so doing, they had acted in an unreasonable manner.

Held by Dunne J that the position in this case was that as of the date of the creation of the mortgage, the Bank, by virtue of the provisions of the 1881 Act, had the power to appoint a receiver as if that power had been a power conferred expressly by the mortgage deed. She held that the repeal of the 1881 Act, or more accurately the repeal of the relevant section, did not have the effect of removing the power to appoint a receiver, a power which had already been conferred on the Bank; in effect, s. 19(1) of the 1881 Act created an implied contractual right on the part of the mortgagee to appoint a receiver. She held that this right was not excluded by the terms of the mortgage deed. She held that in circumstances where the 1881 Act was repealed, if it was intended to remove the power to appoint a receiver, that was something which would have had to have been expressly provided for in the 2009 Act. She held that as no such intention was discernible from the 2009 Act, the power to appoint a receiver remained a part of the contractual terms between the Bank and Mr Sheahan. She held that the mortgage deed was entered into in contemplation of the provisions of the 1881 Act.

Dunne J held that, in the circumstances, it would be appropriate to dismiss the appeal.

Appeal dismissed.

Judgment of Ms. Justice Dunne delivered on the 30th. day of July 2019

1 This is an appeal by the defendant/appellant (hereinafter referred to as Mr. Sheahan) against the judgment and order of the High Court (Feeney J.) of the 30th July, 2012 in which, inter alia, the following orders were made:

(a) declaring that ‘pursuant to the provisions of the Interpretation Act 2005 and in particular s. 27(1)(c) thereof that the right of Ulster Bank Ireland Limited ( sic) to appoint a receiver to the premises pursuant to the provisions of the Conveyancing and Law of Property Act 1881 has not been affected by the enactment of the Land and Conveyancing Law Reform Act 2009’; and

(b) an order requiring Mr. Sheahan to deliver up possession of a retail garage and service station located at Glenbeigh, County Kerry and comprised in Folio KY12523 and KY13290, the subject of Land Registry dealing D2009LR109560E to the plaintiff/respondent (hereinafter referred to as Mr. McEnery) being the receiver appointed by Ulster Bank Ireland Limited.

2 Following the Thirty Third Amendment of the Constitution, the appeal was transferred to the Court of Appeal on its establishment, but the matter was subsequently transferred back to this Court pursuant to the provisions of Article 64 of the Constitution. A number of appeals were the subject of applications pursuant to the terms of Article 64 to return to this Court given that they remained outstanding in the Court of Appeal. In circumstances where this Court wished to assist in alleviating the backlog which has emerged in the Court of Appeal, this case came to be returned to the Supreme Court.

3 The notice of appeal lodged on behalf of Mr. Sheahan contained some thirty one grounds of appeal. In essence, the issues arising on this appeal concern the validity of the appointment of the receiver, Mr. McEnery. Central to this issue is the effect of the enactment of the Land and Conveyancing Law Reform Act 2009 (hereinafter referred to as the Act of 2009), if any, on the right of the bank to appoint a receiver to the premises pursuant to the Conveyancing and Law of Property Act 1881 (hereinafter referred to as the Act of 1881). A further issue raised on behalf of Mr. Sheahan concerned the fact that the bank made a demand for payment on the 11th April, 2011 and purported to appoint Mr. McEnery as receiver the following day thus raising an issue as to whether or not the bank had acted in a precipitous manner in sending in the receiver in circumstances where it was contended that the bank did not give Mr. Sheahan sufficient time to make a proposal or to deal with the bank and in so doing, they had acted in an unreasonable manner.

Background

4 On the 26th October, 2007, Mr. Sheahan entered into a mortgage debenture agreement with Ulster Bank Ireland Limited (hereinafter referred to as the Bank) in respect of the retail garage and service station at Glenbeigh, County Kerry. It was a term of the mortgage debenture agreement that it was to be a continuing security for the present or future indebtedness of Mr. Sheahan to the Bank. On the 9th December, 2010, two overdraft facilities were provided by way of a facility letter issued by the Bank to Mr. Sheahan in the amount of €20,000 each. In addition, there was a facility for a demand loan in the sum of €230,958, a committed loan for €1,484,994 and three bond facilities in respect of relatively small amounts. The Bank issued a letter of demand to Mr. Sheahan on the 11th April, 2011 seeking repayment of the sum of €1,833,671.67 together with interest in the sum of €9000 and €25,000.17, being the liability due at that stage under the facility letter. The letter required immediate payment of the said sum. No payment was received on foot of the letter of demand and on the following day, Mr. McEnery was appointed as receiver by the Bank of the property. The deed of appointment of the 12th April, 2011 appointed Mr. McEnery as receiver and manager of all of the property comprised in the folios referred to above being the subject matter of the dealing in the Land Registry and provided for the receiver to enter upon and take possession of the property. The receiver duly gave notice of his acceptance of the appointment. At the time of the appointment of the receiver, the Bank's charge was not registered nor was it registered on the date when these proceedings commenced. However, as is apparent from the description of the property contained in the deed of appointment of the receiver, and bearing in mind the reference to the Land Registry dealing number, registration of the Bank's charge was pending. The application for the registration of the charge was made on the 15th June, 2009 and was completed in August, 2011.

5 Mr. McEnery attended the premises on the date of his appointment seeking to take possession, but this was refused by Mr. Sheahan. His solicitors then wrote to Mr. Sheahan and a response was received disputing the Bank's entitlement to possession of the property. A plenary summons was issued on the 15th April, 2011 and Mr. McEnery applied ex parte on that date and obtained an interim order for possession of the property. An application for an interlocutory order for possession came before the Court on the 20th April, 2011 and was adjourned to the 29th April, 2011. On that date an interlocutory order granting possession of the property to Mr. McEnery was made, Mr. McEnery having given an undertaking as to damages, and the proceedings were then adjourned for full hearing.

6 Ultimately a full hearing took place in the High Court before Mr. Justice Feeney and judgment was delivered on the 30th July, 2012. At that time, the orders which are the subject matter of this appeal were made.

The validity of the appointment of the receiver

7 The key issue in this case as I have already mentioned is the validity of the appointment of the receiver. In those circumstances it would be helpful to look briefly at the terms of the mortgage. Apart from providing that the mortgage was to be a continuing security for the discharge on demand of all present and/or future indebtedness of Mr. Sheahan, the mortgage contained a number of provisions making specific reference to a receiver. Clause 8 of the mortgage provided as follows:

‘Sections 17 and 20 of the Conveyancing Act 1881 shall not apply to this mortgage and the statutory power...