The High Court has clarified that where a mortgage expressly incorporates certain statutory rights and remedies, such rights and remedies will continue to be enforceable even in the event that the relevant legislation is subsequently repealed.

The clarification came in a judgment delivered by Ms Justice Laffoy in proceedings for possession brought by receivers appointed by Bank of Scotland and Irish Life & Permanent. Under the mortgage deeds, the banks had power to appoint a receiver at any time after the power of sale had become exercisable. Importantly, the deeds also provided that neither the power to appoint a receiver nor the receiver’s powers on appointment were dependent on statutory powers set out in the Conveyancing Act 1881. The defendants argued that because the relevant sections of the 1881 Act had been repealed by the Land and Conveyancing Law Reform Act 2009, the receivers had not been validly appointed and did not have power to take possession.

Ms. Justice Laffoy did not agree. She held that the fact that the relevant sections of the 1881 Act had been repealed could not vary the construction of the mortgages or impact on the contractual relationship created between the banks and the mortgagees.

The judge dismissed the argument that the Start Mortgages case, which has created serious difficulties for lending institutions, was relevant to the case before her. In that case, Ms Justice Dunne found that the repeal by the 2009 Act of certain sections of the Registration of Title Act 1964 had created a lacuna in the law regarding the enforcement of mortgages executed before 2009. Under the 1964 Act the registered owner of a charge could apply to court for possession of the charged property when repayment of the money secured by the charge had become due. As this provision has now been repealed, where monies become due and owing under a mortgage executed before December 2009, lenders have no statutory (as distinct from contractual) basis to apply for an order for possession, unless they have made a demand for repayment before 1 December 2009.

Judge Laffoy’s decision provides welcome clarification to lending institutions on the validity of the appointment of receivers following the Start Mortgages decision. However, the Start Mortgages decision has not been overruled and must still be considered when seeking an order for possession of registered land where the mortgage was in place prior to 1 December 2009.   

Contributed by Louise Butler.

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