Receivers are plagued by the registration of lis pendens on lands over which they have been appointed. There is increasing frustration on the part of receivers as the bar to removing a lis pendens is considerably higher than that required to register it.
Registering a lis pendens
Literally meaning “litigation pending”, a lis pendens may be registered against a property under Section 121 of the Land and Conveyancing Law Reform Act 2009 (the 2009 Act), where Circuit or High Court proceedings have issued concerning an estate or interest in land. The proceedings must be issued but not necessarily served. Once proceedings are issued, the relevant forms completed and stamp duty paid, the lis pendens may then be registered on the property.
A registered lis pendens makes it difficult for the property to be sold, and in effect sterilises the property until such time as the lis pendens has been removed. It is an effective tool in obstructing a receiver exercising his powers over the property.
Options for receivers
If receivers are being obstructed in exercising their powers, they often are required to issue proceedings which include seeking interlocutory injunctive relief. These proceedings can include an application to vacate a lis pendens which was registered to obstruct the receiver in the sale of the property. Injunctive proceedings require the issuing and serving of a plenary summons, a notice of motion and grounding affidavit. In addition, the receiver will be required to give undertakings to the court as to damages. This is in stark contrast to what is required to register the lis pendens in the first place. Furthermore, the registration of a lis pendens is guaranteed to be effective, whereas an interlocutory injunction, even if successful, may still require further action to be taken in circumstances where a party refuses to comply.
A court application under section 123 of the 2009 Act is required to remove a lis pendens, unless it is removed with the consent of the registering party.
Court of Appeal decision
In the recent Court of Appeal decision of O’Connor v Cotter & Another, proceedings challenging the appointment of a receiver were dismissed. The court concluded that the issue had already been raised in earlier proceedings in 2012 which resulted in the vacating of the lis pendens. Following the dismissal of the 2012 proceedings, the plaintiff issued separate proceedings solely against the receiver in 2015. He did not serve the proceedings but registered a lis pendens on the property which was clearly done to frustrate the receiver’s ability to sell. On becoming aware of the proceedings, the receiver issued a motion in the High Court and was successful in having the proceedings dismissed which was upheld by the Court of Appeal.
The decision in this case is welcome and it may give some comfort to receivers in dealing with litigation that would appear to be issued for the sole purpose of registering a lis pendens. Where a receiver has been successful in removing a lis pendens for a party to simply issue fresh proceedings, but not serve them, so that a lis pendens can be registered is clearly an abuse of process. It will hopefully put a stop to the practice of issuing proceedings without foundation so as to prevent the property being sold by a receiver.