Receivership Update

• Published date: 14 May 2020
• Author: Mr Jamie Olden and Michael Quinlan
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Corporate and Company Law, Conveyancing, Real Estate
• Law Firm: Ronan Daly Jermyn

This note provides a summary of some of the more recent developments in relation to receivership in Ireland. The insight will cover:

1. The formalities to be observed in appointing receivers
2. Lis pendens registered over receivership property

The formalities for the appointment of Receivers

The key thing to remember in appointing a Receiver is to ensure that the Deed of Appointment reflects the language contained in the Debenture providing for the appointment. Unfortunately, a significant amount of time and money was spent by charge holders in mending their hand after it transpired that borrowers were able to unseat a receiver due to errors in the Deed of Appointment. The Courts have tended to side with the borrower in circumstances where the debenture holder was generally in a stronger position than the borrower.

In a recent case of the High Court¹ Mr Justice McDonald gave a judgment in respect of an interlocutory injunction taken by the Plaintiff/receiver where he upheld the settled case-law that the formal obligations outlined in the charge debenture were to be strictly adhered to in respect of the appointment of receivers under that debenture. There was nothing new in this and reflected previous judgments. Mr Justice McDonald refused to grant the mandatory injunction sought by the receiver (who sought delivery up of possession of lands) on the basis of the strict Maha Lingham test for obtaining a mandatory injunction, which is a higher bar than the test for an injunction to prevent something from happening.

During the course of the judgment, the Judge appeared to accept the argument that the receiver may not have been validly appointed where the debenture provided for the appointment of a 'receiver and manager' but the deed of appointment referred to the appointment of a 'Receiver' only. As the Deed of Appointment appointed Mr McCarthy as a 'receiver' not as a 'receiver and manager', the Judge was of the view that Mr McCarthy would 'face an uphill struggle in persuading a court at the trial that he had been validly appointed.'

There was concern that the judgment could be interpreted more broadly than perhaps it was intended and that it may have applied the obligation to strictly adhere to the provisions of the debenture too stringently.

Fortunately, the High Court had an opportunity to clarify the position in a recent judgment. Mr Justice Allen clarified the position in a subsequent High Court case² in finding that the test is to look at what power is...