William Moran and Others v AIB Mortgage and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian J. McGovern
• Judgment Date: 27 July 2012
• Neutral Citation: [2012] IEHC 322
• Court: High Court
• Date: 27 July 2012

Moran v AIB Mortgage Bank & Ors

COMMERICIAL

BETWEEN

WILLIAM MORAN, SHEILA MORAN AND MICHAEL MORAN

PLAINTIFFS

AND

AIB MORTGAGE BANK, ALLIED IRISH BANKS PLC. AND JIM LUBY

DEFENDANTS

[2012] IEHC 322

[No. 2701 P/2012]

THE HIGH COURT

COMPANY LAW

Receivership

Challenge to appointment of receiver in respect of mortgages - Repeal of legislation - Legislation incorporated into mortgage - Restriction on exercise of power of sale - Date of mortgage - Whether appointment of receiver valid - Whether provisions of Land and Conveyancing Law Reform Act 2009 incorporated into mortgage - Kavanagh v Lynch [2011] IEHC 348, (Unrep, Laffoy J, 31/8/2011) and Mannai Investment Co Ltd v Eagle Star Life Insurance Co Ltd [1997] AC 749 - Conveyancing Act 1881 (44 & 45 Vict, c 41), ss 20 and 24(1) - Land and Conveyancing Law Reform Act 2009 (No 27), ss 96 and 108(1) - Interpretation Act 2005 (No 23), s 18(h) - Claim dismissed (2012/2701P - McGovern J - 27/7/2012) [2012] IEHC 322

Moran v AIB Mortgage Bank

Facts: The plaintiffs had taken out 24 separate mortgages with the defendants. Following a failure to service the repayments on the mortgages, the third defendant was appointed as receiver in relation to the mortgaged properties. The plaintiffs sought to challenge the appointment, contending the Land and Conveyancing Law Reform Act 2009 (‘2009 Act’) applied to the mortgages and that the appointment contravened the terms of that Act.

Held by McGovern J, that the recent case of Kavanagh v Lynch [2011] IEHC 348 was accepted as relevant by all parties. The dicta of Laffoy J were a correct statement of law, which should be applied in the instant case. Kavanagh v Lynch [2011] IEHC 348 applied.

The plaintiffs sought to argue the 2009 Act applied to the current case. However, the 2009 Act was clear on its face that the provisions therein only applied to mortgages created after the coming into force of the Act. The Conveyancing Act 1881 was properly incorporated into the mortgages, and the plaintiffs” challenge to the third defendant”s appointment would therefore fail.

CONVEYANCING ACT 1881 S20

CONVEYANCING ACT 1881 S24(1)

KAVANAGH & LOWE v LYNCH & ST ANGELA'S STUDENT RESIDENCES LTD UNREP LAFFOY 31.8.2011 2011/29/8022 2011 IEHC 348

LAND & CONVEYANCING LAW REFORM ACT 2009 S108(1)

LAND & CONVEYANCING LAW REFORM ACT 2009 S108

LAND & CONVEYANCING LAW REFORM ACT 2009 S108(1)(A)

INTERPRETATION ACT 2005 S18(H)

MANNAI INVESTMENT CO LTD v EAGLE STAR LIFE INSURANCE CO LTD 1997 AC 749

1 JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 27th day of July, 2012

2 1. In this action, the plaintiffs have challenged the appointment of the third named defendant ("the Receiver") by the first and second named defendants on foot of 24 separate Deeds of Appointment in respect of 24 separate mortgages. Fifteen of the mortgages are with the first named defendant and the remaining nine mortgages are with the second named defendant. All the relevant provisions of both the AIB and Mortgage Bank mortgages are identical.

3 2. The plaintiffs claim that the power to appoint a receiver is incorporated into the mortgages by reference to the Conveyancing Acts. Under the terms of the mortgages, the Conveyancing Acts include the Conveyancing Act 1881 and "any statutory modification thereof, whether by way of amendment … or appear". The plaintiffs claim that the relevant provisions of the Conveyancing Act 1881 were repealed with effect from 1 ^st December, 2009, by the Land and Conveyancing Law Reform Act 2009 ("the 2009 Act"). Accordingly, the plaintiffs maintain that the power to appoint a receiver incorporated into the mortgages is now solely that contained in the 2009 Act. The plaintiffs claim that the 2009 Act contains specific notice provisions in relation to the appointment of a receiver which have not been complied with by the first and second named defendants, and that as a consequence, the appointment of the third named defendant as Receiver is invalid.

4 3. Both the AIB and the AIB Mortgage Bank mortgages contain interpretation provisions which provide, inter alia:-

"Reference to any enactment includes reference to any statutory modification thereof, whether by way of amendment, addition, deletion or appeal and re-enactment with or without amendment."

5 4. By Clause 8.01, the AIB mortgage provides, inter alia, as follows:-

"The Bank shall have the statutory powers conferred on mortgagees by the Conveyancing Acts with and subject to the following variation and extensions, that is to say:"

(a) The secured monies (whether demanded or not) shall be deemed to become due within the meaning and for all purposes of the Conveyancing Acts on the execution of these presents.

(b) The power of sale shall be exercisable without the restrictions on its exercise imposed by section 20 of the Act of 1881…"

6 5. The mortgages relevant to this case predate the commencement of the 2009 Act. In each case, the Mortgage Deed expressly provides that the mortgage debt is deemed to have accrued due on the date of execution of the Mortgage Deed. Thus, the right to appoint a receiver accrued prior to 1 ^st December, 2009. Clause 8.02 of the Mortgage Deed and Clause 7.2 of the AIB Mortgage Conditions expressly excluded the restrictions on the exercise of the power of sale imposed by s. 20 of the 1881 Act. Section 20 of the 1881 Act provides:-

"A mortgagee shall not exercise the power of sale conferred by this Act unless and until-"

(i) Notice requiring payment of the mortgage money has been served on the mortgagor, or one of several mortgagors, and default has been made in payment of the mortgage money, or part thereof, for three months after service; or

(ii) some interest under the mortgage is in arrears and unpaid for two months after becoming due; or

(iii) there has been a breach of some provision contained in the Mortgage Deed or in this Act, and on the part of the mortgagor, or of some person concurring in making the mortgage, to be observed or performed, other than and besides a covenant for payment of the mortgage money or interest thereon."

7 6. Pursuant to s. 24(1) of the 1881 Act, the restrictions imposed by s. 20 effectively apply also to a power to appoint a receiver. Section 24(1) states:-

"A mortgagee entitled to appoint a receiver under the power in that behalf conferred by this Act shall not appoint a receiver unless he has become entitled to exercise the power of sale conferred by this Act, but may then, by writing under his...