Waterside Management Company Limited v Brendan Kelly and Asta Kelly
In a decision that will not be welcomed by creditors, Kearns P., in the High Court, set aside the appointment of a receiver by way of equitable execution over rental income due to judgment debtors from their properties. The debtors owed the creditor, a property management company, management charges of €9,684, coupled with the costs of obtaining judgment for that debt. The creditor had obtained the appointment of a receiver by way of equitable execution in the Circuit Court over the rental income flowing from the debtors’ properties.
The Court set aside the appointment of the receiver on the grounds that the appointment was neither just nor convenient, taking account of the amount due under the judgment debt, the prejudice to other parties with an interest in the properties, and the availability of other legal remedies to the judgment creditor to enforce the judgment. In so doing, Kearns P. quoted, but did not expressly approve, previous judgments which stated that the jurisdiction to appoint a receiver by way of equitable execution is a remedy which is confined to cases where the judgment debtor enjoys an equitable interest that cannot be reached by the ordinary legal process, and so does not apply in respect of assets over which the debtor has legal interest.
In this case, the judgment creditor had not exhausted all means of legal execution at their disposal before seeking equitable relief. This included a failure by the judgment creditor to seek a court-based examination of the judgment debtors’ means in aid of execution or to register a judgment debt or seek an instalment order (an order that the debt be paid in instalments).
Appointing a receiver by way of equitable execution to collect income from a judgment debtor’s assets, much like obtaining a garnishee or attachment order over debts due and owing, can be a powerful remedy for a creditor. Therefore the decision is disappointing for creditors as it suggests that they have to embark on other costly and often less effective means of execution before applying for the appointment of a receiver. Here the decision suggests that for a modest debt, the creditor should have referred the matter to the Sherriff or sought an instalment order or, perhaps, registered a judgment mortgage (when of course there may be no equity available in the premises). It is difficult to see good policy considerations for this approach.