The Supreme Court has given leave to Permanent TSB to appeal the decision of the Court of Appeal in Permanent TSB plc v Langan [2016] IECA 229, which held that the Circuit Court had no jurisdiction to grant orders for possession of residential investment properties as they were "not rateable" under Section 15 of the Valuation Act 2001 (the 2001 Act) and were not covered by the Land and Conveyancing Law Reform Acts, 2009 and 2013.

The Supreme Court granted leave to appeal in circumstances where it was satisfied that the decision of the Court of Appeal involved a matter of general public importance.

Permanent TSB v Langan

The decision of the Court of Appeal in Langan followed two conflicting High Court decisions on the issue. In May 2015, Murphy J in Bank of Ireland Mortgage Bank v Finnegan and Ward [2015] IEHC 30 held that as the property in that case was not rated nor rateable, the Circuit Court lacked the necessary jurisdiction to hear the bank's claim. However, Noonan J in Bank of Ireland v Hanley and Giblin [2015] IEHC 738 held that establishing the rateable valuation of a property did not constitute an essential proof in order for a bank to succeed in its claim for possession. Given these two conflicting decisions, Baker J in Langan stated a case to the Court of Appeal for clarification.

The first question stated by Baker J was:

"If a property is not rateable by virtue of the Valuation Act 2001 is the jurisdiction of the Circuit Court in respect of proceedings for possession of a dwelling brought by a mortgage lender thereby excluded?"

The Court reviewed the legislation establishing the Circuit Court and concluded that the current jurisdiction of the Circuit Court to deal with matters relating to land is confined to those cases where the property is "rateable" and the rateable valuation does not exceed €253.95. If the property is not rateable the Circuit Court has no jurisdiction to hear the proceedings.

Section 15 of the 2001 Act provides that, subject to minor exceptions, domestic dwellings "shall not be rateable". As the properties in the case before the Court were domestic dwellings, albeit residential investment properties, they were not rateable.

The Court noted that since the enactment of Part 10 of the Land and Conveyancing Law Reform Act 2009 (the 2009 Act) the Circuit Court's jurisdiction in respect of mortgage suits was not dependent on rateable valuation but this only applied where the mortgage was created after 1 December 2009. The Land and Conveyancing Law Reform Act 2013 (the 2013 Act) extended this jurisdiction to mortgages in respect of principle private residences created before 1 December 2009. This remedied some of the issues left by the 2009 Act but a gap remained in that the 2013 Act had no application where a property was not a principle private residence.

Accordingly, the Court held that where the defendant has put the jurisdiction of the Circuit Court at issue, that Court is not entitled to proceed to judgment in respect of a domestic dwelling which has been rendered unrateable by the 2001 Act, unless the case in question comes within either Part 10 of the 2009 Act or Section 3 of the 2013 Act.

The Court did acknowledge the difficulties the judgment would cause in circumstances where proceedings would have to be commenced in the High Court rather than the Circuit Court including the additional costs for litigants and the fact that the parties would be deprived of access to local courts.

The Court also noted that the judgment would have even more serious consequence in that the general jurisdiction of the Circuit Court to deal with property disputes (ie other than those concerning applications for possession) concerning domestic dwellings was now open to question.

Finally, the Court referred to the fact that the Oireachtas had, to some extent, already anticipated these difficulties with the enactment of Section 45 of the Civil Liability and Courts Act 2004. That Section - which has not yet been commenced - provides for a system of jurisdiction for the Circuit Court based on the market value of the property concerned and it may be that the judgment in this case will provide the impetus to the government to commence that particular section.

Courts Bill 2016

In the meantime, the Government has published the Courts Bill 2016 which is primarily intended to deal with the consequences of the ruling of the Court of Appeal in Langan.

The Government is concerned that the Court of Appeal ruling has the potential to seriously disrupt the operation of the courts by requiring a range of property-related court proceedings to be taken in the High Court rather than the Circuit Court, thereby increasing court-related costs for the parties and delays in the determination of cases.

The Government is also concerned that the ruling also has the potential to disrupt the operation of measures unrelated to court jurisdiction which rely on the availability of a rateable valuation threshold.

It is intended that enactment of the Bill will be accompanied by the making of commencement orders which will bring provisions originally enacted in the Civil Liability and Courts Act 2004 into operation, (i.e. sections 45, 46, 47, 48, 50, 51, 52, and 53). These sections contain provisions which determine the Circuit Court’s jurisdiction on the basis of a property’s market value rather than its rateable valuation: where the market value is less than €3,000,000, the Circuit Court will have jurisdiction. Otherwise, the proceedings will be heard in the High Court. The delay in commencing these provisions to date appears to have been related to the delayed rollout of the new valuation system under the 2001 Act.