High Court: Receiver’s appointment was validly ratified but he trespassed on property by breaking locks

About this case:

• Citation:
  [2024] IEHC 697
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice David Nolan

Delivering judgment for the High Court, Mr Justice David Nolan found: “I cannot follow the decision in Hafeez. It must be noted that Keane J. accepted that in a limited sense that the entry in that case had been forceable. But he came to the view that it was difficult to see how it was not peaceable. He added that he knew no contrary authority…However, the position is different now, there is authority, with which I concur.”

Background

The plaintiffs sought possession of the defendants’ property at Griffith Place, Waterford, consisting of a shop and dwelling. 

The defendants counterclaimed in respect of the appointment of the first plaintiff receiver by the second plaintiff, ACC Bank plc, and alleged that the receiver mismanaged the receivership, including conducting a 2016 sale of a second property at De Bruin Court, Waterford, and trespassed by breaking locks to gain entry to the shop.

The underlying mortgages were transferred from ACC, eventually being sold to Everyday Finance DAC, which was joined to the proceedings in 2024.

The High Court

Mr Justice Nolan considered that two important questions were raised by the defendants in their counterclaim — whether a bank could retrospectively ratify the appointment of a receiver years following the carrying out of his duties, and whether breaking a lock to a premises can be regarded as peaceable re-entry.

The defendants argued that in line with the decision in McPhilips, the requirement that a receiver be appointed in writing under hand of a person duly authorised by the bank to sign such documents on its behalf, in accordance with the mortgage terms had not been complied with.

The defendants suggested that the person who signed the receiver’s deed of appointment had no express authority to appoint a receiver on behalf of ACC at the time. The plaintiffs alleged that by resolution passed in 2015, ACC expressly ratified the person’s prior signing of instruments of appointment of receivers.

Mr Justice Nolan had regard to inter alia the decision in Brennan v O’Connell [1980] IR 13, which found that the defendants’ subsequent approval of an act of their agent constituted ratification by them of the contract, provided that at the time of their approval, the defendants knew of all facts which were known to their agent.

Finding ACC to be in a similar position to the defendants in Brennan, the High Court confirmed that “it seems to me that the steps taken by the bank on the 19th of August 2015, have retroactively ratified or rectified their position, or in other words, the steps taken by the bank since McPhillips has changed the consequences and notwithstanding that it may seem illogical and even at times unfair, I am bound by the case law”.

The court also considered the defendants’ complaint that the first plaintiff acted in breach of the Forcible Entry Act 1381. Mr Justice Nolan considered the body of jurisprudence on peaceable entry, including the judgment in ILG Limited and others v Aprilane Limited [2024] IEHC 420 in which Mr Justice Senan Allen expressed doubt that a landlord is entitled to cause damage, so long as it is no more than minimal and was sceptical of the argument that whether entry is forcible turns on the degree of force used or the extent of damage to a property.

The plaintiffs relied upon authorities including Hafeez v CPM Consulting Limited [2020] IEHC 536, in which the High Court rejected the argument that a landlord’s re-entry of a restaurant by changing the locks was not peaceable as the lock on the door had been forced.

Noting that s.14 of the Conveyancing Act 1881 clearly contemplates re-entry or forfeiture by a landlord by means other than by action, Mr Justice Nolan observed that “this is not re-entry under the Conveyancing Act 1881”.

The court considered a memo from an employee of the first plaintiff which noted that at 4.15am, he and five associates entered the defendants’ premises causing minor damage and noting that while changing the locks, there was no sign of an alarm.

Finding that the lock belonged to the defendants and formed part of their property, Mr Justice Nolan came to the view that what occurred was not peaceable entry but was forcible.

Being satisfied inter alia that Everyday was the legal owner of the mortgage and charge having regard to the conclusiveness of the Land Registry pursuant to s.31 of the Registration of Title Act 1964, Mr Justice Nolan granted an order for possession in its favour and was otherwise satisfied that the receiver was lawfully appointed and had not mismanaged the receivership.

However, the court refused to follow Hafeez and concluded that by breaking the lock, peaceable entry had not been obtained and that an unintentional but clear trespass had occurred. 

The defendants suggested that the trespass had a catastrophic effect on the health of the second defendant and their ability to continue to trade. However, the court could not ignore “the fact that the trespass took place in the middle of the night and lasted for two hours, with the premises being handed back at 6:00AM”.

In this regard, Mr Justice Nolan determined that whilst there had been a trespass, it was only “technical” in nature and that “it would be practically impossible to put a compensation value on that trespass and that justice will be done between the parties by an appropriate order for costs”.

Conclusion

Accordingly, the court invited the parties to make submissions as to the appropriate order to be made.

Coulston & Ors v Elliott & Anor [2024] IEHC 697