The decision of Judge Hogan of the Court of Appeal in a judgement delivered on 28th July 2016 in the case of Permanent TSB PLC v. David Langan (the “Langan decision”) concluded a long debate on the use of rateable valuation of a residential property to ground jurisdiction in the Circuit Court. The issue is of particular importance to the hundreds of possession cases which are currently being processed in Circuit Courts in every county in the jurisdiction. The Circuit Court currently has jurisdiction to hear claims involving land where the rateable valuation of the land does not exceed €253.95. Subsequent to what she perceived to be two conflicting High Court decisions on the issue, Judge Baker of the High Court decided, on 4th February 2016, to state a case to the Court of Appeal.

Details and analysis of the two conflicting High Court decisions can be found in a previous Insight here

COURT OF APPEAL DECISION

Permanent TSB PLC v David Langan –Decision of Judge Hogan

Judge Hogan essentially agreed, on balance, with the decision of Judge Murphy in Bank of Ireland Mortgage Bank v. Finnegan & Ward and departed from the decision of Judge Noonan in Bank of Ireland v Shane Hanley and Alan Giblin. He found that if a property is not rateable by virtue of the Valuation Act 2001, then the Circuit Court has no jurisdiction to hear the proceedings. This is subject to a further statement of Judge Hogan that where a Defendant puts the jurisdiction of the Circuit Court at issue, the Circuit Court is not entitled to proceed to judgment if the property is not rateable save with two exceptions – (i) where the mortgage is a housing loan mortgage executed on or after 1st December 2009, in which case the relevant sections of the Land and Conveyancing Law Reform Act 2009 apply or (ii) where the property is a borrower’s principal private residence (“PPR”) and the mortgage was executed on or before 1st December 2009, in which case the Land and Conveyancing Law Reform Act 2013 applies. While Judge Hogan appreciated the unfortunate consequences of his decision, he felt it was a conclusion he was obliged to reach.

EFFECT OF THE LANGAN DECISION ON PROCEEDINGS CURRENTLY BEFORE THE CIRCUIT COURT AND PROCEEDINGS YET TO BE ISSUED, RELYING ON RATEABLE VALUATION FOR JURISDICTION:

The above seems to imply that if the issue of jurisdiction isn’t raised by a Defendant in the Circuit Court then the Circuit Court can proceed to judgment. It will be interesting to see how Judge Baker applies this point to the Langan case in due course, particularly where the Defendant in the Langan case did not raise the issue of jurisdiction at the Circuit Court stage, but only on appeal to the High Court.

For the moment, the Court of Appeal decision should only impact Circuit Court cases where:

  1. The property is not the borrower’s PPR; and
  2. The mortgage is a pre 1st December 2009 mortgage; and
  3. The property was built on or after the commencement of the Valuation Act 2001 (2nd May 2002) and is therefore not rateable.

If a particular case falls within a, b and c as outlined above, any possession proceedings should be issued in the High Court.

Potentially the Langan decision may also affect Circuit Court cases where the property was built prior to the commencement of the Valuation Act 2001 (2nd May 2002) but where a Certificate of Valuation/Extract from the Valuation List (RV Certificate) cannot be obtained for it. This situation has occurred on the rare occasion. It may be that proof that a property was built prior to 2nd May 2002 will satisfy a Circuit Court that it has jurisdiction but this remains to be seen. It would be open to a Lending Institution in this situation, to obtain a Certificate pursuant to Section 67 of the Valuation Act 2001 but it seems that it would be necessary to have the person who created the Certificate, attend court to give evidence.

Unfortunately the Valuations Office are currently not processing any applications (for either pre or post 2nd May 2002 properties) for RV Certificates, pending receipt of advices from their legal advisors on the Langan decision.