EBS Limited v Gillespie - Further Clarification Of Issues Arising From Start Mortgages Judgment

The judgment in the case of EBS Limited v Gillespie provides welcome clarification of the concerns which arose as a result of the controversial Start Mortgages judgment. The question of what triggers the accrual of a mortgagee's statutory rights is a matter for interpretation of the relevant mortgage or charge in each case and does not necessarily turn on whether a demand was made prior to 1 December 2009 (being the date on which the Land and Conveyancing Law Reform Act 2009 Act came into force).

Backdrop

Following the Start Mortgages case 1, mortgagees by deeds entered into under the Conveyancing Acts 1881 – 1911 were concerned that, unless they had issued demands prior to the repeal of the 1881 Act on 1 December 2009, there was a risk their rights under the 1881 Act had not yet "accrued" and that, therefore, they could no longer rely on the 1881 Act for the power of sale, the power to appoint a receiver or the right to "overreach" subsequent encumbrances on title.

S 27 of the Interpretation Act 2005 provides that any right which has been acquired or has accrued prior to the repeal of a legislative provision cannot be affected by the repeal. This is of critical relevance where mortgagees need to rely on certain provisions of the 1881 Act or the Registration of Title Act 1964 which were repealed by the Land and Conveyancing Law Reform Act 2009, as the 2009 Act only applies to mortgages entered into after 1 December 2009.

The subsequent decision of Ms Justice Laffoy in the Lynch case 2, tempered, to a certain extent, the potential ramifications of the Start Mortgages case. In this case Ms Justice Laffoy found that where certain statutory powers, in force at the time a mortgage or charge was entered into, are incorporated by reference into a mortgage or charge, such powers became contractual in nature thereby surviving the repeal of the relevant statute. Therefore mortgagees, pursuant to well-drafted mortgages, could rely on a contractual power of sale and power to appoint a receiver.

However, even if Lynch remains the settled law, the issue of "overreaching" can still present a problem in circumstances where the right to overreach is purely statutory in nature and cannot be overcome by agreement between the parties to the mortgage or charge.

The recent judgment of Ms Justice Laffoy in the case of EBS Limited v Gillespie 3 provides further comfort to mortgagees in this regard. In this case, Ms Justice Laffoy held that the provisions of the...