Fennell v Creedon & anor

Factual and Procedural Background

These proceedings concern a commercial mortgage loan advanced by Company A to the Defendants for the purchase, refurbishment, and construction related to properties located at 129 and 131 Tritonville Road and the rear of 127 Tritonville Road in The City. The loan, originally granted in 2004, was secured by first legal mortgages over these properties. The Defendants moved into one of the mortgaged properties, which later became their family home, in 2008.

Following a default on the loan repayments, Company A appointed the Plaintiff as receiver over the mortgaged properties, initially excluding the family home to allow the Defendants time to arrange their affairs. After continued non-payment and unsuccessful negotiations, the Plaintiff was appointed receiver over the family home as well. The Plaintiff seeks interlocutory injunctions restraining the Defendants from interfering with his powers as receiver and orders compelling delivery of keys, security codes, and relevant records.

Procedurally, Company A obtained judgment against the Defendants in 2014 for the loan balance, with execution stayed pending certain undertakings. The present proceedings were issued in early 2015 to enforce the Plaintiff's appointment as receiver over the family home and to obtain injunctive relief.

Legal Issues Presented

1. Whether the receiver is entitled to rely on the loan agreement and mortgage provisions to obtain possession of the family home property.

Arguments of the Parties

Plaintiff's Arguments

• The Code of Conduct on Mortgage Arrears (the Code) does not apply to receivers as they are not financial service providers licensed or supervised by the Central Bank, per s. 117 of the Central Bank Act 1989 and the decision in Irish Life & Permanent v. Dunphy.
• Even if the Code applied, it does not interfere with contractual rights except for the moratorium period, which was complied with in this case.
• The mortgage agreement clearly provides for the appointment of a receiver upon default, conferring rights to take possession and deal with the property, which cannot be overridden without clear statutory provision.
• The decision in Irish Life and Permanent plc v. Duff does not prohibit possession by a receiver; rather, it requires court proceedings prior to possession, which the current interlocutory application satisfies.
• The mortgage loan was a commercial transaction, and the Defendants consented to judgment in the Commercial Court, confirming the commercial nature of the loan and mortgage.
• The Plaintiff contends that the Defendants transferred ownership of the property to Company A by mortgage and thus the Defendants do not retain ownership rights that would be protected by the Code.
• The Plaintiff relies on literal statutory interpretation principles and case law supporting the enforcement of contractual mortgage rights.

Defendants' Arguments

• Article 40.5 of the Constitution protects the inviolability of the family home, and possession cannot be yielded without a final court order following formal possession proceedings.
• The mortgage arrears resolution process (MARP) under the Code requires compliance before repossession of a primary residence; the Code's moratorium and procedural protections must be observed.
• The appointment of a receiver to take possession of the family home without a court order circumvents the protections afforded by the Code and established legal principles.
• The Code envisages repossession only through formal court proceedings with notice, foreseeability, and independent judicial determination of necessity, as supported by Irish Life and Permanent plc v. Duff and Ryan v. Danske Bank.
• The Defendants argue that damages would not be an adequate remedy for eviction and that the balance of convenience favors their right to remain in the family home.
• The Defendants maintain that the Code applies to their situation as borrowers whose property became their primary residence after the loan was granted.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court first established that the loan and mortgage agreement at issue were commercial in nature, entered into in 2004 before the property became the Defendants' family home in 2008. The Defendants transferred ownership of the property to Company A by mortgage agreement, which included express provisions empowering Company A to appoint a receiver upon default.

The Court noted that the Code of Conduct on Mortgage Arrears applies only to financial institutions licensed by the Central Bank and does not extend to receivers, referencing the Supreme Court decision in Irish Life & Permanent v. Dunphy. Even if the Code applied, the moratorium period had been observed, and the Code does not override contractual mortgage rights except in limited respects.

The Defendants’ argument that possession of a primary residence requires a court order following formal possession proceedings was addressed by the Court with reference to Irish Life and Permanent plc v. Duff. The Court held that the Plaintiff’s interlocutory application provides the necessary judicial oversight, notice, and opportunity for submissions, thus satisfying the protections required before possession.

The Court rejected the Defendants’ contention that the Code prohibits possession through appointment of a receiver, reasoning that the Code contemplates multiple forms of repossession and that unresolved issues under the Code revert the parties to their contractual rights. The Court also noted the Land and Conveyancing Law Reform Act 2009 provision requiring a court order for possession applies only to mortgages created after its commencement, which is not the case here.

Accordingly, the Court concluded that the Plaintiff is entitled to enforce the mortgage provisions, including appointment as receiver with powers of possession and sale, notwithstanding the property being the Defendants’ family home.

Holding and Implications

The Court GRANTED the Plaintiff’s application for interlocutory injunctions, restraining the Defendants from interfering with the Plaintiff’s powers and functions as receiver over the property, including entry and possession.

Additionally, the Court ordered the Defendants to provide keys, alarm codes, security devices, and all relevant books and records relating to the property to the Plaintiff forthwith.

The direct effect of this decision is to enable the Plaintiff, as receiver appointed under the mortgage, to take possession and control of the family home property for the purpose of enforcing the security. The Court did not establish any new precedent limiting the application of the Code or constitutional protections but reaffirmed that contractual mortgage rights govern where the Code’s protections do not apply or have been exhausted.