Healy & Anor v McGreal, Healy v McGreal and Healy & Anor v McGreal

Factual and Procedural Background

The appeals concern three sets of High Court proceedings brought by the Plaintiffs against the Defendant, who was appointed receiver and manager over a portfolio of residential and commercial properties securing significant loans originally provided by Anglo Irish Bank Corporation plc ("Anglo"). The Plaintiffs defaulted on their loan obligations, and the Defendant was appointed receiver on 12th September 2013. The Plaintiffs challenged the validity of the Defendant’s appointment and his powers, asserting defects in the appointment instruments and non-compliance with statutory requirements. The High Court dismissed the Plaintiffs’ claims in all three proceedings and granted injunctions in favor of the Defendant to enable him to perform his functions. The Plaintiffs subsequently appealed this decision.

Legal Issues Presented

1. Whether the Defendant was validly appointed as receiver and manager over the Plaintiffs' properties.
2. Whether the Defendant had lawful power of sale under the mortgage deeds and statutory provisions.
3. The effect of the Loan Sale from IBRC (in special liquidation) to Kenmare Property Finance Limited on the Defendant’s appointment and powers.
4. The validity and effect of the Deeds of Novation and the Deed of Confirmation and Acknowledgment executed post-appointment.
5. Whether the Plaintiffs’ loans had been securitized and the impact of floating charges granted by Anglo in favor of the Central Bank.
6. Whether the Defendant’s appointment and actions breached the Central Bank Code of Practice on the Transfer of Mortgages and related statutory provisions.
7. Whether evidential rulings concerning redacted loan sale documents affected the Plaintiffs’ ability to challenge the Defendant’s appointment.
8. Whether procedural fairness and prejudice issues arose during the trial.
9. Whether failure to present or sign a Form 56 from the Land Registry affected the validity of the Receiver’s appointment.

Arguments of the Parties

Appellants' Arguments

• The Defendant’s appointment as receiver was invalid, alleging the appointment instrument dated 12th September 2013 was a false document.
• The Defendant bore the burden to prove lawful entitlement to act as receiver.
• The letter of demand from IBRC (in special liquidation) did not comply with the Land and Conveyancing Law Reform Act 2009, thus the Defendant lacked power of sale.
• The deeds of appointment did not specifically authorize sale or disposal of properties as required by statute.
• The floating charges created in 2008 in favor of the Central Bank captured their loans, invalidating subsequent transfers and the Defendant’s appointment.
• The Loan Sale to Kenmare left IBRC (in special liquidation) with no assets to transfer, rendering deeds of novation and confirmation invalid.
• IBRC (in special liquidation) breached the Central Bank Code of Practice on the Transfer of Mortgages by failing to obtain borrower consent and provide adequate information.
• The trial judge improperly allowed reliance on a redacted Loan Sale agreement and the Deed of Confirmation and Acknowledgment, impeding Plaintiffs’ ability to challenge the transfer.
• Procedural complaints regarding the conduct of the hearing and interference with examination of the Defendant.
• Failure to produce or sign a Form 56 from the Land Registry undermined the validity of the Receiver’s appointment.

Respondent's Arguments

• The Defendant’s appointment was valid and supported by contractual provisions in the mortgage deeds independent of statutory powers.
• The Defendant was entitled to rely on the deeds of appointment and novation, which were properly executed and sealed.
• The Loan Sale and subsequent deeds did not affect the Receiver’s continuing appointment or powers.
• The Plaintiffs’ loans were lawfully transferred to Kenmare, and the Defendant’s appointment remained valid regardless of ownership changes.
• The Central Bank Code of Practice on the Transfer of Mortgages did not apply or afford the Plaintiffs any defence to legal proceedings.
• The trial judge correctly exercised discretion regarding evidential rulings on redacted documents and admissibility.
• The conduct of the trial was fair, and interference with examination was appropriate as the issue was the legal power, not the Defendant’s opinion.
• The Land Registry issue was part of the same consent argument and did not affect the Receiver’s appointment.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming that the Defendant bore the initial burden to prove prima facie the validity of his appointment as receiver, which the trial judge found had been established through properly executed deeds supported by credible evidence. The mortgage deeds provided a free-standing contractual basis for the appointment and power of sale, independent of any statutory power. The court rejected the Plaintiffs’ argument that the Receiver’s powers were limited to statutory powers of sale, noting that clauses in the mortgage deeds expressly granted the bank and Receiver contractual powers to appoint and sell.

The court analyzed the effect of the Loan Sale from IBRC (in special liquidation) to Kenmare, concluding that the sale did not invalidate the Receiver’s appointment or powers. The Deeds of Novation and the Deed of Confirmation and Acknowledgment, though executed after the Receiver’s appointment, were valid and did not affect the Receiver’s ongoing authority. The court found that these deeds concerned the relationship between IBRC, Kenmare, and the Receiver, not the Plaintiffs, and thus did not impact the Plaintiffs’ obligations or the Receiver’s powers.

Regarding the Plaintiffs’ claims about floating charges and securitisation, the court accepted the trial judge’s factual finding that there was insufficient evidence of securitisation and that, even if it had occurred, it would not extinguish the lender’s security rights. The equitable interest granted by floating charges did not transfer legal ownership or affect the Receiver’s appointment.

On the issue of the Central Bank Code of Practice on the Transfer of Mortgages, the court agreed with the trial judge that the code applied only to residential properties where the borrower resided, which was not the case. Moreover, breach of the code did not provide a defence to legal proceedings. The voluntary nature of the code further negated its applicability as a basis for the Plaintiffs’ claims.

The court also addressed evidential matters, upholding the trial judge’s decision to admit the Deed of Confirmation and Acknowledgment despite the withdrawal of the redacted Loan Sale agreement, applying the modern approach to the best evidence rule. Procedural fairness complaints were dismissed, with the court emphasizing that the legal power of the Receiver was the relevant issue, not his personal belief or opinion.

Finally, the court found no merit in the Plaintiffs’ Land Registry arguments or other technical objections, concluding that the trial judge’s extensive and detailed reasoning was sound and well-supported by evidence and legal principles.

Holding and Implications

DISMISSED

The court dismissed the Plaintiffs’ appeals in their entirety, affirming the High Court’s decision to reject the Plaintiffs’ claims and uphold the Defendant’s appointment and powers as receiver and manager with a power of sale. The decision confirms that mortgage deeds can confer contractual rights to appoint receivers independently of statutory powers, and that subsequent loan transfers and novation deeds do not necessarily affect the validity of an existing receivership. The ruling underscores the limited effect of floating charges on the lender’s rights and clarifies that breach of certain Central Bank codes does not provide a defence to possession or receivership proceedings. No new precedent was established beyond the affirmation of existing principles, and the decision primarily affects the parties by upholding the Receiver’s authority and enabling the continuation of the receivership and asset realisation process.