A number of recent High Court decisions suggest an increase in the number of interlocutory applications being brought by receivers seeking to obtain vacant possession of the properties over which they have been appointed.
In Ferris v Meagher & Anor IEHC 380, McCann v Morrissey & Ors IEHC 288 and Maloney v O’Shea & Anor IEHC 354 the High Court granted interlocutory injunctions restraining the borrowers and the occupants of certain mortgaged properties from obstructing the receivers appointed over those properties from taking possession.
A common feature of these cases was that the borrowers had purported to grant a leasehold interest in the secured property to a company with which they were connected in some way (e.g. as a director or sole shareholder) without the prior written consent of the mortgagee as required by the terms of the underlying mortgage.
A mortgagee is not bound by a lease which is created by a borrower without the consent in writing of the mortgagee, where the mortgage deed expressly requires that such consent be obtained.
In Ferris v Meagher & Anor the receiver of a premises at Charlemont Street sought an interlocutory injunction restraining John Meagher (the borrower and purported landlord of the premises) and Echoforde Ltd (the purported tenant) from preventing, impeding or obstructing him from taking possession of the premises. The receiver argued that the purported lease was void as the bank had not given written consent to its creation as required under the relevant mortgages.
While the application was contested by Echoforde Ltd, it was not disputed that the lease had been created without the prior written consent of the bank. Birmingham J found that the receiver had established a prima facie case for possession. As the defendants had failed to establish any arguable defence, the judge found that Echoforde Ltd had no entitlement to remain in occupation and was a trespasser on the property. Accordingly, he granted the interlocutory orders sought against both defendants. The decision is under appeal to the Supreme Court.
Contributed by: Craig Sowman
