Woods v Ulster Bank ireland
| Jurisdiction | Ireland |
| Judge | Ms. Justice Baker |
| Judgment Date | 21 February 2017 |
| Neutral Citation | [2017] IEHC 155 |
| Court | High Court |
| Docket Number | [2015 No. 129 P] |
| Date | 21 February 2017 |
AND
[2017] IEHC 155
[2015 No. 129 P]
THE HIGH COURT
Land & Conveyancing – Practice & Procedures – Conveyancing and Law of Property Act 1881 – Power to appoint receiver – Dismissal of claim
Facts: The plaintiffs had filed the proceedings to set aside the appointment of receivers and damages for breach of contract against the defendants. The defendants sought an order for the dismissal of the plaintiff's claim on the basis that the plaintiff's action was an abuse of process of law. The plaintiff contended that the relevant security instruments namely, the mortgages deed had made no reference to the appointment of a receiver.
Ms. Justice Baker granted an order for striking out the plaintiff's claim. The Court held that the Bank had the contractual power to appoint a receiver and that power was not dependant on the continuation of the provisions of s. 19 of the Conveyancing and Law Property Act 1881. The Court further held that the Bank's contractual power to appoint a receiver was not dependent upon the registration of the Bank as the owner of the charge.
The plaintiff has instituted these proceedings seeking various reliefs, and the defendants have sought by motion to strike out the claims on the grounds that they are bound to fail. This judgment is given in regard to the legal bases of the claims.
The relevant facts are as follows.
By charge made on 3rd March, 2006 the plaintiff charged his interest in certain registered lands at Unit 3, Milltown Business Park, Milltown, Monaghan, Co. Monaghan (‘the Milltown Unit’) to Ulster Bank Ireland Limited (‘the Bank’). The charge was registered on folio 1052L, Co. Monaghan on 31st May, 2013 and the first defendant is the registered owner of the charge.
By deed of appointment made on 26th March, 2013 the Bank appointed the second and third defendants joint receivers over the Milltown Unit.
By deed of mortgage made on 7th February, 2007 the plaintiff demised to the Bank by way of security the hereditaments and premises described in the schedule thereto, situate and known as 1 Old Cross Square, Monaghan, Co. Monaghan, (‘Old Cross’) held by the plaintiff in fee simple.
By deed of appointment made on 22nd November, 2013 the Bank in pursuance of the power contained in that mortgage appointed the second and third defendants as joint receivers over Old Cross.
By charge made on 27th June, 2007 the plaintiff charged his interest in the lands comprised in folio 2872 and part of folio 23347, Co. Wexford (‘the Wexford lands’) to the Bank. The charge is registered as a burden on new folio 48902F, Co. Wexford and the Bank is registered owner of the charge.
By deed of appointment made on 29th August, 2013 the Bank appointed the second and third defendants joint receivers over the Wexford lands which have since been sold by them, and the new purchaser was registered as full owner on 14th January, 2015.
The three mortgages and charges were in the same form, and for convenience I will refer to them collectively as the security instruments, albeit in some cases different arguments are made regarding the mortgage on the unregistered lands, and the charges registered on the folio lands.
The plaintiff has brought proceedings to set aside the appointment of the joint receivers, and for damages against the first defendant for breach of contract and breach of fiduciary duty, and against the second and third defendants for breach of fiduciary duty.
The plaintiff argues that the Bank acted wrongly in appointing the joint receivers as the security instruments made no express provision for the appointment of a receiver, or in regard to other matters which might have governed the right of the Bank to appoint a receiver by way of enforcement. The statement of claim had articulated a number of other claims, that the receivers and or the Bank were guilty of fraud, conspiracy or deceit, and these claims have since been abandoned.
The Bank and the receivers have brought separate motions to dismiss the claim of the plaintiff as being an abuse of process or having no reasonable prospects of success. An ancillary order is also sought pursuant to s. 123 of the Land and Conveyancing Law Reform Act 2009 (‘the Act of 2009’), directing the plaintiff to take all steps as are necessary to vacate the lis pendens registered on the Milltown Unit and on Old Cross.
At the time the proceedings were drafted Mr. Woods did not have the benefit of legal representation, but subsequently came to be represented by solicitor who instructed junior and senior counsel. Submissions were directed on four legal issues arising from the arguments of the parties concerning the security instruments. These are as follows:
(a) Whether the security instruments contained a power on the part of the Bank to appoint a receiver;
(b) Whether the power to appoint a receiver is dependent upon the continuation in force at the date of appointment of the relevant provisions of the Conveyancing and Law of Property Act 1881 (‘the Act of 1881’);
(c) Whether the Bank was entitled to appoint a receiver before it was registered as owner of the charge on the Milltown Unit;
(d) Whether the deeds of appointment were properly executed.
The first two questions may be dealt with together, and the plaintiff makes the argument that the security instruments are deficient in a number of respects.
The security instruments were made in the Bank's standard form and it is common case that they contain no express power to appoint a receiver, and no express incorporation by reference of the relevant provisions of the Act of 1881. Certain references to a ‘receiver’ are found, as follows.
Clause 8 of the security instruments expressly excludes the provisions of ss. 17 and 20 of the Act of 1881, such that the statutory power of sale and other powers are exercisable at any time after demand, and states as follows:
‘8. Sections 17 and 20 of the Conveyancing Act 1881 shall not apply to this Mortgage and the statutory power of sale and other powers shall be exercisable at any time after demand.’
The security instruments contain a number of references to any receiver appointed ‘hereunder’. Clause 11 provides that at any time after the power of sale had become exercisable, the Bank, or any receiver appointed under the mortgage, may enter and manage the mortgage property or any part thereof, and provision is made as to the works that might be carried out and the fixing of liability for any expenditure so incurred on the mortgagor.
There is also a provision at clause 12 that any receiver appointed by the Bank should be deemed to be the agent of the mortgagor who was thereby deemed to be solely responsible for any acts, defaults and remuneration of the receiver.
The plaintiff points to the fact that the deeds by which the receivers were appointed as joint receivers on foot of each of the securities were purported to be exercised by the Bank ‘in pursuance of the powers contained’ in the deeds of mortgage or charge. There was not included any saver provision in the form of a phrase such as ‘in the exercise of any other power in that behalf it enabling’, a saver provision frequently found and which might expressly import the statutory power of appointment. The plaintiff therefore rests his case on the argument that the security instruments did not contain an express power to appoint a receiver, and that none may be implied as a matter of contract.
McDermott J. considered precisely the terms of the Ulster Bank mortgage in Dowdall & Anor. v. O'Connor & Anor. [2013] IEHC 423, and the argument of the defendants arising from the fact that no express power existed in the mortgage to appoint a receiver.
McDermott J. dealt with the matter by construing the deed of mortgage and said the following at para. 25:
‘The proper construction of the mortgage and the rights and remedies and powers created by its terms requires that the relevant provisions of the Act of 1881, including s. 19(1)(iii), must be read into the mortgage agreement and conditions where this is appropriate and where, as a matter of proper construction, the court can be satisfied that they have been incorporated as part of the terms of the agreement. …’
McDermott J. also made reference to Section 19 (1)(iii) of the Act of 1881 which vests a statutory power in the holder of a mortgage to appoint a receiver:
‘19. (1)— A mortgagee, where the mortgage is made by deed, shall, by virtue of this Act, have the following powers, to the like extent as if they had been in terms conferred by the mortgage deed, but not further (namely):
…
(iii.) A power, when the mortgage money has become due, to appoint a receiver of the income of the mortgaged property, or of any part thereof;’
He also said as follows at para. 25:
‘I am satisfied that the provisions of s. 19(1)(iii), on the proper construction of the mortgage agreement, apply to the agreement made between the defendants and the bank notwithstanding the repeal of that section after the making of the mortgage agreement.’
With regard to the argument that the repeal s. 19 of the Act of 1881 had the contractual effect that the power to appoint a receiver no longer existed, McDermott J. relied on a judgment of Laffoy J. in Kavanagh & Anor. v. Lynch & Anor. [2011] IEHC 348, where she held that:
‘The fact that since the commencement of the Act of 2009, on the 1st December, 2009, ss. 15 to 24 of the...
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