Rugby star loses bank challenge

Former rugby star Frankie Sheahan and his business partner, brother Joseph, have lost their High Court challenge against Bank of Ireland taking possession of a number of their property investments and appointing a receiver over them.

Ms Justice Iseult O’Malley held that the bank was entitled, under ‘contractual powers’ within the mortgage deeds, both to appoint a receiver to the Sheahan properties and take possession of those where there had been repayment default.

The judge, in a related decision, held that the bank had no statutory powers under the faulty Land and Conveyancing Law Reform Act as drawn up prior to Dec 1, 2009, to take possession or appoint a receiver.

The act, following a landmark ruling by Ms Justice Elizabeth Dunne striking down certain powers of banks to seize and sell property, had to be re-enacted. The afterthought provision applies only to mortgages created after the Dec 1 commencement date of the 2009 Act.

The faulty 2009 Act had accidentally repealed a section allowing banks to seize properties and appoint receivers. Judge Dunne, now a Supreme Court judge, had held it was not for the High Court to supply the omission of the Oireachtas.

Judge O’Malley said yesterday that Judge Dunne had decided that by virtue of repeal provisions in the faulty 2009 act, a lender who had not acquired a right to apply to court for possession before its Dec 1 commencement date could not apply thereafter.

Ross Maguire, for Frankie and Joseph Sheehan and their company MyMortgages Ltd, had asked Judge O’Malley to follow her colleague Judge Dunne’s finding because certainarguments had not been put before her.

The receiver, Michael McAteer, had sought reliefs, including an order restraining the borrowers from interfering with him.

Judge O’Malley, in her reserved judgment, said each of the mortgage deeds executed in respect of specified registered properties in Cork and Wicklow contained identical terms providing for the appointment of a receiver by the bank in the event the mortgage fell into arrears.

She said that on dates after Dec 1, 2009, the Sheahans had defaulted in making payments required under terms of the loan contracts and all of the monies due on each of the accounts was demanded in Nov 2011.

The loans were not repaid, and on Nov 6, 2012, the bank demanded possession. The property was not given up and the bank sought an order for possession.

Michael McDowell and Ronan Murphy, for Bank of Ireland Mortgage Bank and its receiver, sought time to consider the judgment.

Judge O’Malley made no specific orders and adjourned proceedings for mention on Oct 7.

In a statement issued after the judgment, the Sheahans’ barrister, Mr Maguire, said: “Bank of Ireland has failed in its attempt to overturn a previous High Court ruling regarding its right to repossess properties where a mortgage default occurred after Dec 2009.”

He added: “Our view is that the judgment could create major problems for lenders and in particular for Bank of Ireland. Its buy-to-let mortgages give very limited power to receivers and do not seem to include a power of sale. Where the bank has limited power to repossess and the receiver has no power to sell, the difficulties for the lender are obvious.”