High Court: Interim ruling made regarding repossession order questions for referral to Court of Appeal

About this case:

• Judgment:
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Proposing four questions which could be considered, Mr Justice Noonan was concerned that the transfer process was possibly “unprecedented” and gave rise to “potential unfairness”.

Tanager DAC brought the appeal from an order of the Circuit dismissing Tanager’s claim for an order for possession of the family home of Mr Rolf Kane in Clonsilla, County Dublin.

In an interim ruling in advance of the pronouncement of final judgment in the appeal, Mr Justice Noonan proposed four questions to be referred to the Court of Appeal pursuant to s. 38(3) of the Courts of Justice Act 1936.

Background

In 2006, Bank of Scotland (Ireland) Ltd (“BOSI”) offered a mortgage loan to Mr Kane which he accepted. Thereafter he executed a deed of mortgage and charge, and BOSI became registered on the folio as owner of the charge.

By cross-border merger pursuant to the European Communities (Cross-Border Mergers) Regulations 2008 of Ireland and the Companies (Cross-Border Mergers) Regulations 2007 of the United Kingdom, all of the assets and liabilities of BOSI including the mortgage and charge the subject matter of these proceedings transferred to Bank of Scotland Plc (“BOS”) on the 31st December 2010, and BOSI was then dissolved without going into liquidation.

In December 2013, BOS entered into a purchase deed with Tanager whereby BOS sold a portfolio of securities to Tanager which included Mr Kane’s mortgage.

The transaction closed in April 2014, and Tanager became registered as the owner of the charge previously registered in favour of BOSI.

Mr Kane allegedly fell into arrears on his mortgage repayments resulting in a demand for repayment and ultimately possession of the family home; thereafter a Civil Bill for possession was issued.

Appeal to the High Court

The primary issue in the present appeal was Mr Kane’s contention that because BOS never became registered as owner of the charge in issue, it was not entitled to transfer or assign the charge to Tanager. Tanager accordingly never acquired title to the charge and was thus not entitled to enforce it against Mr Kane. Insofar as Tanager has become registered as owner of the charge, Mr Kane contends that such registration was erroneous and a mistake on the part of the Property Registration Authority (“PRA”).

In response, Tanager contented that it was the registered owner of the charge and as s. 31 of the Registration of Title Act 1964 provides that the register is conclusive, it was not open to Mr Kane to challenge its title in the way he sought to do.

Kavanagh v McLaughlin

In the course of argument, both parties referred extensively to the judgment of the Supreme Court in Kavanagh v McLaughlin 3 I.R. 555.

In judgments delivered by Clarke J and Laffoy J, both made clear that the securities held by BOSI over the McLaughlins’ property, including registered land, passed to BOS.

The court held that the benefit of the underlying contracts which entitled the bank to appoint a receiver passed as a result of the cross-border merger to BOS and therefore the appointment of the receiver was valid.

Reference to Court of Appeal

Justice Noonan said “…it must be born in mind that the transfer from BOS to and subsequent registration as owner of the charge on folio took place as part of a process, and perhaps one that is unprecedented, which undoubtedly affected interests but in which he had no right to participate. To that extent, this might be seen as giving rise to a potential unfairness in now being precluded from raising that issue by s. 31, if indeed that is its effect, in proceedings where his family home is at stake”.

Considering the facts of the case, and that this appeal from the circuit court may not be appealed further, Justice Noonan held that it was “desirable that an appellate court should have the opportunity of ruling on this matter”.

Given that this was an application for an order for possession of Mr Kane’s family home and “that there may be many hundreds of other cases which will be directly affected by the outcome of this case”, Justice Noonan stated that there was clearly “an issue of considerable public importance involved”.

As such, Justice Noonan was of the opinion that a case should be stated “for the opinion of the Court of Appeal” pursuant to s. 38(3) of the Courts of Justice Act 1936.

Justice Noonan suggested that the questions referred might “include all or any of the following”: