Brothers challenge validity of Bank of Ireland receiver
A legal dispute concerning whether Bank of Ireland was entitled to appoint receivers over 17 properties of former Irish rugby star Frankie Sheahan and his brother Joseph has opened before the High Court.
The brothers have challenged the validity of Bank of Ireland Mortgage Bank’s appointment last year of chartered accountant Michael McAteer as receiver over the properties. The appointment came after B of I demanded that loans on the properties be repaid in full after the borrowers defaulted on mortgage repayments.
Mr McAteer is seeking orders against Frankie Sheahan restraining him from interfering with the receiver in dealing with the properties in Cork and Wicklow. All were bought with B of I Mortgage Bank loans before being rented out by the Sheahans and their company.
Frankie Sheahan, mymortgages.ie, a company of which he is a director and employee and Joseph Sheahan have challenged the bank’s power to appoint a receiver.
Separately, B of I Mortgage Bank is seeking possession of a property owned by Frankie Sheahan at Old Quarter, Ballincollig, Co Cork. That is also being contested by Ross Maguire SC, for Mr Sheahan.
The bank and the receiver say they are entitled to the orders for possession and insist the receiver’s appointment is valid. A 2011 High Court judgment concerning a 2009 law designed to streamline repossessions is at the centre of the case.
Repossessions ground to a halt after Ms Justice Elizabeth Dunne, in the case of Start Mortgages v Gunne, identified a loophole in the 2009 Land and Conveyancing Reform Act. That Act came into force in December 2009 and repealed previous legislation concerning repossessions.
Ms Justice Dunne found no transitional provisions were included in the 2009 Act relating to mortgages completed to December 1st, 2009. Under the 2009 Act, applications by lenders for possession orders for properties mortgaged before December 1st 2009 must be discontinued where no prior demand was made.
The Sheahans say Ms Justice Dunne’s decision means the bank cannot appoint receivers over their properties but B of I, represented by Ronan Murphy SC, argued that Ms Justice Dunne’s decision does not apply to this case. To find otherwise would mean the property rights of secured lenders being interfered with in an unconstitutional manner, he argued.
The Attorney General has been joined to the proceedings which opened yesterday before Ms Justice Iseult O’Malley.
She is being asked to decide certain preliminary questions of law including whether the bank’s power to appoint a receiver was covered after the 2009 Act was enacted. The court has also been asked to decide if the terms of the mortgages in this case gave the bank powers to appoint receivers, whether the appointments of the receiver are valid and if the the bank’s power to apply for possession of the Ballincollig property was covered after the 2009 Act came into force.
The hearing continues.