Clarification on appointment of receiver under seal of the bank

Wednesday, 20 April 2016

Ken Fennell v Ben Gilroy & Ors Unapproved Judgement of Gilligan J, High Court, 20 April 2016 (Record No. 2016/948P)

In this case it was held that a deed of appointment of a receiver executed by the bank under its seal was sufficient to also constitute a document executed by the bank “in writing under its hand” and thus satisfy the requirements of section 24 of the Conveyancing Act 1881.  As the relevant mortgage in this case had contractually incorporated and varied the statutory power afforded by that section, any appointment of a receiver by the bank was required to be done “under its hand”.

Gilligan J. determined that where the deed of appointment is a written document and has endorsed on it the signature of a person who has been duly authorised by the bank, then that will be sufficient to satisfy the requirement for the deed to be made “under hand”. 

Background

The receiver applied for an injunction to prevent the occupants of a secured property interfering with the receiver's powers of entering and taking possession of the property.   The Defendant sought to rely on the July 2015 decision of Cregan J, in McCleary v McPhillips & ors [2015] IEHC 591, where the deed of appointment was deemed to be invalid as it had not been signed by authorised signatories.  In the McCleary case the relevant mortgage also required the deed of appointment of the receiver to be made “under hand”. However, in that case only a limited number of people had been authorised to execute deeds of appointment, none of which had signed the relevant deed of appointment.

In Fennell –v– Gilroy, the Court was satisfied that the signatories had been authorised to sign the deeds of appointment and the fact that a seal had also been affixed did not affect its validity under the provisions of section 24 of the 1881 Conveyancing Act. In any event, the bank had subsequently passed a resolution ratifying the execution of deeds of appointment executed by any employee, authorising any deeds of appointment which were executed prior to the date of the resolution.  On that basis, Gilligan J. upheld the validity of the deed of appointment.

Implications 

This decision clarifies the law of valid execution of deeds of appointment of receivers pursuant to the provisions of section 24 of the Conveyancing Act 1881, which will be well received by financial institutions.

For further information, contact John Fitzgerald from the ByrneWallace Restructuring & Insolvency team.