In a judgment delivered on 31 August 2011 Ms. Justice Laffoy has clarified certain of the potential wider ramifications of the ruling in the case of Start Mortgages Limited & Ors v. Gunn & Ors.
Ms. Justice Laffoy has concluded that where a mortgagee’s statutory rights, powers and remedies (such as the right to appoint a receiver or sell as mortgagee in possession) pursuant to the Conveyancing Act 1881 (“1881 Act”) have been contractually incorporated into a mortgage/charge, such rights, powers and remedies are enforceable by the mortgagee, notwithstanding the repeal of the relevant sections of the 1881 Act by the Land and Conveyancing Law Reform Act 2009 (“2009 Act”).
In the Start Mortgages case, Ms. Justice Dunne concluded that unless demands had been served before 1 December 2009 (the date on which the 2009 Act came into effect), chargeholders were precluded from relying on section 62(7) of the Registration of Title Act 1964 (the “1964 Act”) (which section has been repealed by the 2009 Act) entitling a chargeholder to apply to court in a summary (short/simplified) manner for an order for possession in respect of registered land.
In the Lynch case, it was argued by the defendants that by extension of the ruling in the Start Mortgages case, any appointment of a receiver which was reliant in any way upon the terms of the 1881 Act was ineffective in circumstances where the relevant provisions of the 1881 Act had been repealed.
Ms. Justice Laffoy held that there is a clear distinction between the impact of the repeal of section 62(7) of the 1964 Act which confers a statutory entitlement (as explained above) as found by Ms. Justice Dunne in the Start Mortgages case and the impact, if any, of the repeal of the 1881 Act, on security documents which have incorporated statutory provisions (such as the right to appoint a receiver or sell as mortgagee in possession pursuant to the 1881 Act) in force at the time of creation of the security as part of the terms of the contract, with or without variation.
Ms. Justice Laffoy held that the ascertainment of the rights and liabilities of the parties to the security document is a matter of construction of the document and the repeal of the statutory provisions does not impact on the enforceability by the parties of such rights. While the Lynch case represents a welcome clarification of the potential impact of the Start Mortgages case, it does not deal with all of the concerns arising as a consequence of the Start Mortgages case.