Muintir Skibbereen Credit Union -v- Crowley & Anor
A recent decision of the Court of Appeal saw the first occasion upon which the principles governing the possible partition and sale of a family home under section 31 of the Land and Conveyancing Law Reform Act, 2009 (“the Act”) were considered by that Court.
The decision involved an appeal by Muintir Skibbereen Credit Union (“the Credit Union”) of two separate High Court decisions of Mr. Justice Michael White refusing to grant well charging orders and orders for sale of the family homes of the Respondents, Cornelius Crowley and Brendan Hamilton, under section 31 of the Act. The Credit Union sought the orders for sale so as to satisfy two separate judgment debts of approximately €562,500 each (obtained against the Respondents in October 2011) registered as judgment mortgages on each of the properties. The properties were jointly held with the Respondents’ wives, Ms. Crowley and Ms. Hamilton. The commercial loans giving rise to the judgment debts were unsecured and accordingly, neither spouse signed any documentation providing the family homes as security and neither were involved in their husbands’ loan applications. In refusing the orders, Mr. Justice White also took into account the personal circumstances of Ms. Crowley and Ms. Hamilton.
Section 31 of the Act grants jurisdiction to the High Court to order partition or sale of land and provides that any “person having an estate or interest in land which is co-owned whether at law or in equity may apply to the court” for an order, including, inter alia, for partition of the land amongst co-owners and for sale of the land and distribution of the proceeds of sale as the court directs. A “person having an estate or interest in land” includes “a mortgagee or other secured creditor” and “a judgment mortgagee”. Section 31(3) grants the High Court a wide discretion in considering such applications.
The decision of Mr. Justice Gerard Hogan
While Mr. Justice Gerard Hogan found that the Credit Union was entitled to the well charging orders, he ultimately dismissed the appeal. He noted that while the Family Home Protection Act, 1976 (“the 1976 Act”) did not in a strict sense have any application to this case, section 31(5) of the Act gave a clear indication that the Court’s discretion should be exercised consistently with the objectives of the 1976 Act. Mr. Justice Hogan held that the objectives of the 1976 Act would be “seriously compromised” if the family homes were sold by court order, despite the wives having played no part in the loans and importantly, having never had the opportunity to give prior consent to the loan transactions. Notably, Mr. Justice Hogan remarked that it would have been different if the wives were parties to or had consented to the transactions in the first place. The Credit Union made submissions in relation to High Court case law in which the prospect of the sale of a family home was examined, in a situation where the net equity remaining from the proceeds of sale would be sufficient to enable an “innocent spouse” to purchase another property. However, Mr. Justice Hogan did not give any concluded view as to whether this is a relevant consideration in a section 31 application and noted that in any event, the Court could not interfere with the findings of Mr. Justice White that given the serious debt of each of the Respondents, the net equity which would be available to the wives on the sale of the family homes would not be sufficient to facilitate the purchase of “alternative accommodation”.
While the decision is a welcome illustration of the principles governing section 31 applications and the Court’s wide discretion in considering same, the particular circumstances of this case left some potential considerations untested. Overall, the decision is a timely reminder for lending institutions and their legal advisors regarding the scope and application of the 1976 Act. While the decision is unlikely to be welcomed by financial institutions, it does provide some clarity on matters that should be considered before pursuing judgment proceedings or at the very least before seeking to enforce a judgment.