Proposed Clarification To Mortgagees’ Rights Welcomed

Overview

On 28 March 2013, the Irish Government published the Land and Conveyancing Law Reform Bill 2013 (the "Bill"), which, if passed, provides that particular statutory provisions granting certain powers, rights and remedies to mortgagees (such as the right to summary possession, overreach, appoint a receiver or sell as mortgagee in possession) continue to apply to mortgages created prior to the commencement of the Land and Conveyancing Law Reform Act 2009 (the "2009 Act"), notwithstanding the repeal and amendment of those statutory provisions by the 2009 Act on 1 December 2009 1.

Background

The Bill has been drafted to address the unintended consequences of the 2009 Act and the uncertainty in the law relating to the exercise by lending institutions of their right to summary possession. This uncertainty arose as a result of the decision in Start Mortgages Limited & Ors v Gunn and Ors 2 (the "Start Mortgages Case").

In the Start Mortgages Case, Ms Justice Dunne held that the repeal of section 62(7) of the Registration of Title Act 1964 (the "1964 Act") with effect from 1 December 2009 by the 2009 Act precluded chargeholders from seeking to recover possession of registered property in a summary (short / simplified) manner, unless the principal monies secured by the charge were due prior to that date (which under the mortgages in question required a valid demand for payment prior to that date). This was on the basis that, unless the secured monies had become due by 1 December 2009, the mortgagee's right to obtain possession by summary proceedings had not been 'acquired' or 'accrued' by the date of the repeal. Therefore it was not saved by section 27(1)(c) of the Interpretation Act 2005, which protects rights that are 'acquired' and 'accrued' prior to the repeal of the legislation on which they are founded.

As a result of the Start Mortgages Case, mortgagees by deeds entered into under the Conveyancing Acts 1881 to 1911 (the "1881 Act"), were concerned as to whether they could continue to rely on the powers and rights conferred on a mortgagee by the 1881 Act (including the power of sale, the power to appoint a receiver or the right to "overreach" subsequent encumbrances on title) and certain sections of the 1964 Act (including the right to seek summary possession) despite their repeal.

While subsequent decisions of the High Court, such as Kavanagh and Ors v Lynch and Ors 3), EBS Limited v Gillespie 4) and McEnery v Sheahan 5 tempered the...