Judgment
Title: | McEnery -v- Sheahan |
Neutral Citation: | [2019] IESC 64 |
Supreme Court Record Number: | 389/12 |
Court of Appeal Record Number: | 579/14 |
High Court Record Number: | 2011 3505 P |
Date of Delivery: | 07/30/2019 |
Court: | Supreme Court |
Composition of Court: | O'Donnell Donal J., Dunne J., Charleton J. |
Judgment by: | Dunne J. |
Status: | Approved |
Result: | Appeal dismissed |
 | |
THE SUPREME COURTDunne J.
Charleton J.
BETWEEN
BRIAN McENERY
PLAINTIFF/RESPONDENT
DEFENDANT/APPELLANT
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 of sale and other powers shall be exercisable at any time after demand."
Clause 11 provided:
"At any time after the power of sale has become exercisable the Bank or any Receiver appointed hereunder may enter and manage the Mortgage Property or any part thereof and provide such services and carry out such repairs and works of improvement, reconstruction, addition or completion (including the provision of plant equipment and furnishings) as deemed expedient. All expenditure so incurred shall be immediately repayable by the Mortgagor with interest as the rate aforesaid and shall be a liability charged on the Mortgaged Property. Neither the Bank nor any Receiver shall be liable to the Mortgagor as mortgagee in possession or otherwise for any loss howsoever occurring in the exercise of such powers."
Finally, Clause 12 contained the following provision:
"Any Receiver appointed by the Bank hereunder over the Mortgaged Property or any part thereof shall be deemed to be the Agent of the Mortgagor and the Mortgagor shall be solely responsible for such Receiver's acts or defaults and for his remuneration."
8. As can be seen, the mortgage itself makes reference in a number of places to the terms of the Conveyancing Act 1881 and to the role of a receiver. It would therefore be helpful at this point to refer to the provisions of s. 19(1)(iii) of the Act of 1881 which provides as follows:
“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.”
9. It will have been observed that the terms of the mortgage expressly disapplied the application of ss. 17 and 20 of the Act of 1881. Section 17 of the Act provided for a restriction on the consolidation of mortgages and expressly provided that the section "applies only if and as far as a contrary intention is not expressed in the mortgage deeds or one of them". Section 20 regulated the circumstances in which the mortgagee may have been entitled to exercise the power of sale so that for example, a mortgagee would not be entitled to exercise the power of sale conferred by the Act unless notice requiring payment of the mortgage money had been served on the mortgagor and default had been made in payment of the mortgage money or part thereof for a period of three months after such service. Thus, insofar as the mortgage at issue in these proceedings is concerned, by virtue of the provisions of the mortgage itself the provisions of s. 20 of the Act of 1881 did not apply and therefore the requirement that there should be a three month default after a notice requiring payment of the mortgage money had been served would not have been applicable to this mortgage. The issue arising in these proceedings concerns the question as to whether any of the terms of the Act of 1881 continued to apply to the mortgage in this case after the coming into force of the Act of 2009.
10. The function of the Act of 2009 is perhaps best explained by a comment made by Professor J. C.W. Wylie in his Land and Conveyancing Law Reform Act 2009: Annotations and Commentary in which he stated in the introduction (page 1):
"The Land and Conveyancing Law Reform Act 2009 introduces the most momentous changes to land law and the law which underpins the conveyancing system of Ireland since the legislation of the late 19th century - in particular the Conveyancing Acts 1881 to 1911 and the Settled Land Acts 1882 – 1890. For the most part, it replaces those Acts, although not entirely because provisions in the former relating to landlord and tenant law will survive until further recommendations made by the Law Reform Commission are implemented…”.
11. Section 8(3) of the Act of 2009 sets out the repeals made by the Act of 2009 and as is apparent from the Second Schedule to the Act, a number of the provisions of the Act of 1881 have been repealed including the provisions of s. 19.
Judgment of the High Court
12. The learned High Court judge in the course of his judgment stated at paragraph 8.2 that:
". . . those facts demonstrate that the mortgagee acquired the right to appoint a receiver upon the creation of the deed of mortgage whilst the Act of 1881 was still in force and even though that right did not accrue until an act of default occurred by the defendant which occurred subsequent to the repeal of the Act of 1881 provisions in the Act of 2009 based upon the ratio of Dunne J. in the O'Sullivan case, leads to the conclusion that the right of the mortgagee to appoint a receiver survived the Act of 2009 by virtue of the provisions of s. 27(1)(c) of the Act of 2005."
He continued at paragraphs 9.1 and 10.1 as follows (the “Act of 2005” referred to is the Interpretation Act 2005):
"The Court is satisfied that the provisions of the Act of 2005 apply and accordingly the rights acquired by the mortgagee under the Act of 1881 continue to apply and that since the provisions of s. 19 of the Act of 1881 were incorporated as a term of the mortgage as of the date of the creation of the mortgage, that term cannot be removed by the operation of a subsequent statute. The plaintiff as mortgagee had a statutory right to appoint a receiver and the receiver had statutory powers under the statutory provision.
10.1 The defendants contended that the bank's deed of mortgage/charge was not registered and since it was not registered that the charge did not operate as a mortgage by deed and since the charge was not a mortgage by deed, the bank had no power of sale nor had it a power to appoint a receiver. It was therefore claimed that as a result of the non-registration that the bank had no right to summary possession of the premises. The facts are that an application for registration of the charge over the mortgaged property was made on the 15th June, 2009 and that charge was ultimately registered in August 2011. Since the charge is now registered, the issue which the defendant raises in relation to non-registration is moot due to the fact that the registration of the charge, which is now complete, is deemed effective from the date of application which is the 15th June, 2009. The Court must proceed on the basis that the registration was effective from 15th June, 2009, which is prior to the appointment of a receiver."
13. For the reasons set out above the High Court was satisfied that the right of the Bank to appoint a receiver pursuant to the provisions of the Act of 1881 had not been affected by the enactment of the Act of 2009 and accordingly that the Bank was entitled to an order compelling Mr. Sheahan to deliver up possession of the property.
Submissions and discussion
14. The Court had the benefit of succinct written and oral submissions from the parties. Counsel on behalf of Mr. Sheahan contended that the High Court erred in following the decision of the High Court (Laffoy J.) in Kavanagh and Anor. v. Jeremiah Lynch and Anor., (Unreported, 31st August, 2011). It was also contended that the High Court erred in concluding that there was a distinction between the impact of the repeal of s. 62(7) of the Registration of Title Act 1964 as set out in Start Mortgages v. Gunn and Ors. [2011] IEHC 275, a provision which was also repealed by the Act of 2009 and the provisions at issue in Kavanagh.
15. It is correct, as pointed out by counsel on behalf of Mr. Sheahan, that there is some difference between the provisions contained in the mortgage deed in the case of Kavanagh to those which can be found in the mortgage deed in this case. In Kavanagh the terms of the mortgage relevant to the appointment of a receiver are set out in paragraphs 2.2 of the judgment of Laffoy J. where she observed:
"The provisions in relation to the appointment of a receiver and his powers are set out in Clause 9 of the 2005 Mortgage. Clause 9.1 provides:
'At any time after the power of sale has become exercisible whether or not the Bank has entered into or taken possession of the Secured Assets . . . the Bank may from time to time appoint . . . any person or persons to be receiver and manager . . . (hereinafter called 'Receiver' . . .) of the Secured Assets . . .'
Clause 9.2 provides that the foregoing power of appointment of a receiver 'shall be in addition to and not be to the prejudice of all statutory and other powers of the Bank under the Act . . .'. The Act is defined as meaning the Conveyancing Act 1881 (the Act of 1881)."
Laffoy J. went on to observe at paragraph 3.5 as follows:
"By the combined operation of the 2007 Mortgage and the Mortgage Conditions, certain rights, remedies and powers were given to Permanent, in some instances by reference to the Act of 1881. At the time the 2007 Mortgage and those rights, remedies and powers were created, the Act of 1881 was in force. In properly construing the extent of the mortgagee's rights, remedies and powers, one must read into the 2007 Mortgage and the Mortgage Conditions, where appropriate, the relevant provisions of the Act of 1881 where they have been incorporated therein, subject to any variations which are expressly provided for. The fact that since the commencement of the Act of 2009, on the 1st December, 2009 ss. 15 to 24 of the Act of 1881 have been repealed cannot vary the proper construction of the 2007 Mortgage or impact on the contractual relationship of the mortgagors and Permanent, as mortgagee, thereby created. The rights, remedies and powers conferred on Permanent ab initio in the 2007 Mortgage still apply”
She went on to say in paragraph 3.6 as follows:
“Accordingly, in my view, the considerations which arose in Start Mortgages Limited v. Gunn and Others [2011] I.E.H.C. 275 in consequence of the repeal of s. 62(7) of the Registration of Title Act 1964 (the Act of 1964) by s. 8 of the Act of 2009 do not arise in relation to the power of Permanent to appoint Mr. Lowe as receiver or the nature of the powers conferred on Mr. Lowe as such receiver, insofar as they are conferred by reference to the provisions of the Act of 1881.”
16. Relying on those passages, the contention put forward by counsel on behalf of Mr. Sheahan is that as there was an express provision for the appointment of a receiver contained in the mortgage at issue in the case of Kavanagh, that that case can be distinguished from the facts of the present case.
17. Counsel on behalf of Mr. McEnery contends that whilst there is no express power of appointment of a receiver contained in the deed of mortgage in this case, the statutory power of appointment is referred to and incorporated in a number of clauses of the deed of mortgage, namely Clause 8, 11 and 12. It is contended that, by reference to the express powers contained in the Act of 1881, the deed of mortgage has incorporated the power of appointment provided for under the Act of 1881 into the deed of mortgage.
18. It is clear that Section 19(1)(iii) gave the power to a mortgagee to appoint a receiver together with other powers provided for in the Act of 1881. That provision was applicable to the mortgage deed entered into by Mr. Sheahan on the 26th October, 2007, when the Act of 1881 was still in force. Given that it is the case that those rights were available to the Bank prior to the repeal of the Act of 1881 by the Act of 2009, one has to ask the question as to whether or not the Oireachtas, by enacting the Act of 2009 intended to take away the rights that had been conferred by the provisions of the Act of 1881. In that context it is worth reflecting briefly again on the wording of s. 19(1) of the Act of 1881 which conferred a number of powers including the power to appoint a receiver "to the like extent as if they had been in terms conferred by the mortgage deed . . .". Clearly, these terms were incorporated into the mortgage deed as if they had been expressly incorporated into the mortgage deed. Indeed, as we have seen, it was possible to exclude the possibility of certain provisions of the Act of 1881 from being incorporated as terms of the Mortgage Deed such as the exclusion of the provisions of s. 17 and 20 of the Act of 1881 as set out in clause 8 of the mortgage deed. If the Oireachtas intended that the powers conferred by the Act of 1881 were no longer to be incorporated as part of the terms of the mortgage deed as a result of the repeal of the Act of 1881, one would have expected that such intention would have been clearly expressed in the Act of 2009. As Feeney J. pointed out in the course of his judgment in this case in paragraph 6.1:
"Section 27(1)(c) of the Act of 2005 expressly provides that where an enactment is repealed, the repeal does not:
'(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the enactment'.
19. It is a well established principle consistent with the Act of 2005 that the legislature does not intend to change the law beyond the immediate scope and object of an enactment and that the more radical a change can be said to be, the more weight is given to such presumption. See judgment of Finnegan J. in Meagher v. Luke J. Healy Pharmacy Ltd. [2010] IESC 40 (Unreported, Supreme Court, 16th June, 2010) where Finnegan J. adopted with approval (at p. 19) the statement of the law contained in the textbook Statutory Interpretation - Bennion (2nd Ed.) set forth at s. 269 which stated:
'It is a principle of legal policy that laws should be altered deliberately rather than casually, and that Parliament should not change either common law or statute law by a sidewind, but only by measured and considered provisions. In the case of common law, or Acts embodying common law, the principle is somewhat stronger than in other cases. It is also stronger the more fundamental the change is'."
Relying on those principles, Feeney J. concluded at paragraph 6.2:
"In those circumstances when the Court comes to ascertain the intention of the Oireachtas it is satisfied that if it had been the intention of the Oireachtas to disapply the provisions of the previously existing law, in particular, the provisions of the Act of 1881 to mortgages created prior to December 2009, the Act of 2009 would have expressly so provided."
20. I am satisfied that the approach of the High Court in this regard was correct. I should note that counsel on behalf of Mr. Sheahan in support of his arguments relied on the decision of the High Court in the case of Start Mortgages v. Gunn and Ors. [2011] IEHC 275 in which I delivered judgment. That case concerned the provisions of s. 62(7) of the Registration of Title Act 1964 which was also repealed by the Act of 2009. I found in that case that there was a lacuna in the Act of 2009 but as Feeney J. noted in his judgment in this case at paragraph 5.8:
"The judgment in the Start Mortgages case was expressly limited to the particular facts of that case. As Dunne J. (at p. 30) of her judgment:
'I reiterate the fact that this judgment is not intended to deal with any issue other than the right of the lender to apply for an order pursuant to s. 62(7) of the 1964 Act notwithstanding its repeal by s. 8 of the 2009 Act. Any other issues that may arise by way of defence can be dealt with in due course'."
21. The specific circumstances relevant to the repeal of s. 62(7) of the Act of 1964 following its repeal by the provisions of the Act of 2009 are not relevant to the issue that arises in this case. Quite simply, the position in this case is that as of the date of the creation of the mortgage in this case, the Bank, by virtue of the provisions of the Act of 1881, had the power to appoint a receiver as if that power had been a power conferred expressly by the mortgage deed. The repeal of the Act of 1881, 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 Act of 1881 created an implied contractual right on the part of the mortgagee to appoint a receiver. That right was not excluded by the terms of the mortgage deed. In circumstances where the Act of 1881 was repealed, if it was intended to remove the power to appoint a receiver, that is something which would have had to have been expressly provided for in the Act of 2009. As no such intention is discernible from the Act of 2009, the power to appoint a receiver remains a part of the contractual terms between the Bank and Mr. Sheahan. It is quite clear that the mortgage deed was entered into in contemplation of the provisions of the Act of 1881.
22. Counsel on behalf of Mr. Sheahan did not, in the course of the oral submissions, deal with the issue as to the assertion that the Bank acted precipitously in the manner in which it made demand for payment. Feeney J. noted in his judgment at paragraph 10.2:
"The evidence which was before the Court both on affidavit, which was admitted in evidence, and on oral evidence, makes it clear that a receiver was only appointed by the bank after there had been extensive discussions, negotiations and meetings between the defendant and his representatives and the bank and their employees and that notwithstanding those events, no agreement could be reached between the parties. The demand on the 11th April, 2011 was not a precipitous demand as it followed upon the extensive negotiations and contacts between the parties and the fact that that demand was made immediately prior to the appointment of the receiver in no way disentitles the bank to appoint the plaintiff as a receiver. As of the date that the plaintiff was appointed receiver there was a sum of over €1,800,000 due by the defendant to the bank and this Court is satisfied that pursuant to s. 19(1)(iii) of the Act of 1881 and pursuant to the provisions of the deed of mortgage, the Ulster Bank became and was entitled to appoint a receiver to the premises following an act of default by the defendant, namely, his failure to pay the monies due and owing to the bank upon demand and when such demand had been made."
I can see no reason for disagreeing with that view.
23. In the circumstances I am satisfied that it would be appropriate to dismiss this appeal.