Under legislation* which has now been repealed, the owner of a charge over registered land could apply to court for an order for possession of that land, when payment under the charge became due. Whilst new legislation similar to the repealed legislation was enacted in 2009, it only applies to charges created after 1 December 2009 thereby apparently creating a gap in the law for charges created before that date.
In the high-profile Start Mortgages case**, the judge ruled that the owner of a charge over registered land that was created before 1 December 2009 could apply to court for an order for possession of that land, in circumstances where:
- Repayment of the money became due before 1 December 2009
- A demand for repayment of the principal monies had been made before 1 December 2009
In particular, and on the facts of one of the four test cases that came before the judge in the Start Mortgages case (which concerned a one year term loan, the repayment date of which had passed), the judge ruled, notwithstanding that the repayment date had passed, as the demand was made after 1 December 2009, the lender could not apply for an order for possession.
In a seeming departure from the ruling delivered in the Start Mortgages case, the High Court recently appeared to set out a different test in EBS Limited v Gillespie, to establish the circumstances in which the owner of a charge of registered land that was created before 1 December 2009 can apply to court for an order for possession of that land:
- Repayment under the charge became due before 1 December 2009
- The lender is the registered owner of the charge
- The application has been made in good faith, with a view to realising the security
- The power of sale had arisen and was exercisable in accordance with the terms of the charge
In contrast to the Start Mortgages case, the judge in the Gillespie case specifically ruled that, having regard to the provisions of the charge, there was no requirement on EBS to have issued a demand for repayment of the principal monies to Mr Gillespie. Having satisfied the four elements of the test, the judge ruled that EBS could apply for an order for possession.
It may be the case that the ruling given in the Gillespie case differs from the ruling given in the Start Mortgages case because of the specific terms of the individual charges. Nevertheless, it remains debateable what circumstances will allow the owner of a charge over registered land to apply for an order for possession of that land.
The Start Mortgages decision has been appealed to the Supreme Court, but the appeal may not be heard for some time. In the interim it is important to closely consider the terms of any charge created before 1 December 2009 over registered land in order to establish whether the owner of that charge will be successful in obtaining an order for possession.
* Section 67(2) of the Registration of Title Act 1964
** Start Mortgages Ltd & Ors v Gunn & Ors IEHC 275
Contributed by Eibhlín O’Donnell.
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