Receivership Appointments & Peaceable Repossession – An Update
The recent High Court decision in John Coulston & Ors -v- Elliot & Anor [2024] IEHC 697 addresses two topical issues in relation to the repossession of property by banks under Irish law. These issues are:
- whether the breaking of locks may be considered peaceable re-entry to a property; and
- whether the appointment of a receiver by a bank may be ratified years after their duty has been fulfilled.
The case concerned a property in Waterford comprised of a home and a retail unit which was subject to a mortgage. Following a period of financial difficulty, the defendants were unable to maintain repayments on the mortgage and the bank appointed a receiver to recover money owed to them including through the repossession and sale of the mortgaged property.
Peaceable Repossession
In taking possession of the property, the receiver arrived at the property in the early hours of the morning and sought to break the locks on the front door to gain entry. The defendants alleged that this caused them great distress. The receiver was entitled to make peaceable re-entry to the property, but owing to the fact that ‘doors do not open themselves’, the defendants alleged that what had taken place did not amount to peaceable repossession.
In arguing their case, the defendants made reference to the Forcible Entry Act of 1381 (a statute over 800 years old which remains on the statute book) and alleged that what had taken place was a forcible re-entry. Nolan J. referred to recent decisions (including the decision of Allen J in ILG Limited & Ors -v- Aprilane Limited [2024] IEHC 420) and ultimately agreed that the taking of possession by means of breaking locks was not peaceable.
Appointment of Receiver
Mr. Coulston was appointed as receiver by the mortgagor. Whilst it was agreed that his initial appointment was not validly made, it was determined by the court that the subsequent ratification by resolution of his appointment allowed for the deed of appointment to be deemed valid ab initio.
Extensive reference was made to the case of McCleary -v- McPhillips [2015] IEHC 591, where the court pointed to the importance of adherence to formalities in the appointment of receivers. The cases of Brennan -v- O’Connell [1980] IR 13 & Farrell -v- Petrosyan [2016] IEHC 522 were also relied upon in order to confirm that procedural defects in receiver appointments may be subsequently rectified by company resolution.
Discussion
In summary, the court deemed the receiver to be entitled to take possession of the property under the subsequently ratified deed of appointment but it criticised the manner in which such an endeavour was carried out. Based on the ruling in this case, the breaking of locks in order to take back possession of a premises is a forcible re-entry and therefore an unlawful trespass. However it seems that the use of a master key by a landlord to gain entry will be deemed peaceable. It also is worth noting that no damages were awarded to the defendants for the trespass against them but a more beneficial costs order was afforded them by the court in order to mark the trespass.
Finally, in the court’s closing statements it made an interesting reference to the suspected use of generative AI in the preparation of court pleadings by the law litigants. Nolan J. warned about such usage (if indeed it occurred) and indicated qualified legal professionals should be preferred for the giving of legal advice.
If you have any queries relating to the judgment, please contact Brian O’Longaigh, Partner at brian@crowleymillar.com