Supreme Court upholds PTSB claim on repossessions

The Supreme Court, in a decision with significant implications for many cases, has upheld a bank's claim that the Circuit Court had jurisdiction to make possession orders for six domestic properties.

A five-judge Supreme Court, in a judgment on Tuesday answering legal questions of general public importance raised in an appeal by Permanent TSB, ruled the Circuit Court had jurisdiction to deal with possession proceedings such as those brought by PTSB.

The Chief Justice, Mr Justice Frank Clarke, giving the unanimous judgment, said the Circuit Court had jurisdiction to hear possession proceedings in cases where a relevant property was shown to have either a rateable valuation of not exceeding €253.95 or no rateable valuation at all.

The appeal arose after PTSB got orders in February 2015 from the Circuit Court for possession of six properties, all domestic dwellings, after David Langan defaulted on repayments under a mortgage of February 2008 with PTSB.

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Conflicting decisions

Mr Langan appealed to the High Court where Ms Justice Marie Baker referred legal issues to the Court of Appeal for determination, two other High Court judges having given conflicting decisions as to whether the Circuit Court had jurisdiction to make possession orders.

The core legal issues centred on whether, if a property is not rateable under the Valuation Act 2001, the Circuit Court had jurisdiction to hear proceedings brought by a mortgage lender for possession orders. The Act, which became law in May 2002, abolished rates on domestic dwellings.

The Land and Conveyancing Law Reform Act 2009, which came into effect on December 1st, 2009, conferred a new jurisdiction on the Circuit Court in mortgage cases which was not dependent on rateable valuation but that jurisdiction applied to mortgages for housing loans created after that date.

The Land and Conveyancing Act 2013, effective from July 31st, 2013, extended the Circuit Court’s jurisdiction to mortgages for principal private residences created before December 1st, 2009.

Mr Langan argued the Circuit Court had no jurisdiction as all six properties in his case were constructed after 2002 and, under the Valuation Act 2001, were not rateable.

In July 2016, the Court of Appeal, in a judgment involving what the court described as “unfortunate and unintended” consequences for other cases, found the 2001 Act specially provided that domestic dwellings, with minor exceptions, shall not be “rateable”. Apartments and mixed-use premises are rateable in some limited circumstances, it said.

When, under the 2001 Act or otherwise, a property is not rateable, the Circuit Court’s jurisdiction to make possession orders under the Courts Supplemental Provisions Act 1961 is excluded and the Circuit Court also has no jurisdiction if the property does not have a rateable valuation of more than €253.95, the appeal court found.

Additional costs

The judgment meant possession proceedings which did not fall within exceptions created by the Acts of 2009 and 2013 would have to be brought in the High Court rather than the Circuit Court, creating additional costs for litigants. It also raised issues about the general jurisdiction of the Circuit Court to deal with property disputes.

Cases potentially affected by the Court of Appeal findings arose where a dwelling was built after May 2002, the mortgage was entered into before December 1st, 2009, and repossession proceedings were initiated before July 31st, 2013.

The Supreme Court agreed to hear PTSB’s appeal over the Court of Appeal judgment on grounds it raised legal issues of general public importance.

Giving the Supreme Court judgment, the Chief Justice stressed there was an important distinction between whether a property was “rateable” as that term is used in a technical fashion in the Valuation Act 2001, and whether a property had a “rateable valuation”.

The relevant jurisdiction of the Circuit Court is not excluded because a property is either not rateable under the 2001 Act or does not have a rateable valuation, he said. The Circuit Court has jurisdiction in all relevant cases provided the property does not have a rateable valuation of more than €253.95.

A plaintiff must establish jurisdiction either by showing the relevant property has a rateable valuation of not more than €253.95 or showing the property has no rateable valuation at all, he said. That could be done by producing a certificate of rateable valuation or by producing admissible evidence the property concerned does not in fact have a rateable valuation.