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New Legal Difficulty for Banks

By: Pat Mullins | Posted on: 04 Aug 2015

New Legal Difficulty for Banks

The Land and Conveyancing Law Reform Act, 2013, cleared the way, to allow banks to seek Orders for Possession of Properties, in the Circuit Court. The process involved, in the Circuit Court, is far less troublesome, for the banks, than would be case in the High Court. However, a jurisdictional problem has arisen, with respect to mortgages which were created, before the 1st of December, 2009, being the commencement date of the Land and Conveyancing Law Reform Act, 2009. The matter came to head, in a decision of the High Court, in the case of Bank of Ireland Mortgage Bank –v- Laura Finnegan and Christopher Ward. This matter was presided over by Ms. Justice Murphy, who delivered Judgment in the matter on the 20th of May, 2015. These proceedings concerned a mortgage, which was dated the 23rd of June, 2006. On the 10th of October, 2012, the bank issued a Civil Bill, seeking possession of the property, in the Circuit Court. There was no major issue, with respect to the non-repayment of the mortgage, and the level of arrears. The only issue, which arose, was a requirement that for the Circuit Court to have jurisdiction, the relevant property, had to have a rateable valuation of less than €253.95. The Valuation Act of 2001, became law on the 2nd of May 2002. This Act ended the process of creating a rateable valuation for domestic properties. In this particular case, the Court held that the Defendants’ dwelling, which was constructed after the 2nd of May 2002, was neither rated, nor rateable. In effect, the Court held that the Circuit Court’s jurisdiction, based on rateable valuation, was abolished, with respect to domestic premises, constructed after the 2nd of May, 2002, being the date of commencement of the Valuation Act, 2001. This legal position remained in place, until the passing of the Land and Conveyancing Law Reform Act, 2009. The jurisdiction of the Circuit Court, in mortgage suits is no longer dependent upon rateable valuation. Section 101(5) provides:- “Where an application under Section 97(2) or Section 100(3) concerns property which is subject to a housing loan mortgage the Circuit Court shall have exclusive jurisdiction to deal with the application and the application shall not be made to the High Court”. This new provision, came into effect on the 1st of December, 2009, but only applies to housing loans created after the 1st of December, 2009. In this particular case, the Defendants’ mortgage, which was created in 2006, was unaffected by the passing of the Land and Conveyancing Law Reform Act, 2009. Subsequently, in 2013, the Oireachtas enacted Section 3 of the Land and Conveyancing Law Reform Act, 2013, which extended the jurisdiction of the Circuit Court to mortgages created before the 1st of December 2009. The latter provision did not come into effect until the 31st of July, 2013. The proceedings which were before the Court, commenced in October, 2012, and were, therefore, unaffected by that provision. In effect, the High Court held that as the Defendants’ dwelling was neither rated nor rateable, by reason of the operation of the Valuation Act, 2001, the Circuit Court had no jurisdiction to hear the bank’s claim. In this particular case, the High Court dismissed the application of the Bank of Ireland, for an Order seeking possession of the property. It is submitted, that in any such proceedings, it is open to the bank to simply re-issue the proceedings under the new legislation (if applicable) in the Circuit Court, or in any event, in the High Court. It is clear that there are a substantial number of such cases in existence, which are grinding to a halt, by virtue of the effects of the decision Ms. Justice Murphy in these proceedings.

 

 

Patrick Mullins Solicitor

Partner

BDM Boylan Solicitors

Clarke’s Bridge House

Hanover Street

Cork

Ph: 021 4313333

pmullins@bdmboylan.ie

www.bdmboylan.ie