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Insolvency Update: Court of Appeal Provides Welcome Clarification for Judgment Creditors

09 August 2017

The Court of Appeal has helpfully confirmed that a judgment creditor can seek an order appointing a receiver by way of equitable execution where:

  • the debtor holds a legal or equitable interest in property;  and
  • execution against the property is not available at law by one of the usual methods, for instance via the sheriff or by a garnishee order.

There was previously doubt as to whether such a receiver could be appointed where the debtor held a legal, as opposed to an equitable interest, in property.

Interests over which a receiver by way of equitable execution clarified and expanded

In Acc Loan Management v Rickard & Anor.,[1] the Court of Appeal confirmed that the appointment of a receiver by way of equitable execution is available where:

  • a debtor owns a legal interest in property; and
  • there are difficulties with enforcement against that interest using the usual methods of execution at law.[2]

Prior to this, there was conflicting case law which suggested that the appointment of such a receiver was only available where the debtor held an equitable interest, as opposed to a legal interest, in the property.

In part it appears that the conflicting body of case law built up as a judgment given by Keane J. (as he then was) in the High Court in National Irish Bank v Graham,[3] had been cited to and/or considered by the courts as being a Supreme Court judgment.[4]

In Rickard, the Court was satisfied that when exercising the jurisdiction conferred by section 28(8) of the Supreme Court of Judicature (Ireland) Act 1877 and the Rules of the Superior Courts, the courts were not precluded from appointing a receiver by way of equitable execution against a legal interest in property of a judgment debtor.

Accordingly, the Court was content that it was appropriate to appoint a receiver by way of equitable execution over payments to which the debtor might become entitled pursuant to the Basic Farm Payment Scheme.

Comment

The Court expressly refrained from dealing with whether a receiver by way of equitable execution can be appointed to receive sums payable to a judgment debtor on foot of an award of damages and implicitly endorsed the traditional position that a receiver by way of equitable execution cannot be appointed over a person’s future salary or earnings. Rather, the court found that payments to which a debtor might become entitled pursuant to the Basic Farm Payment Scheme should not be equated with salary or wages.

This judgment will be welcomed by creditors as it clarifies and strengthens the law regarding execution in Ireland.

 

[1] Court of Appeal, Finlay Geoghegan J., 31 July 2017 (no neutral citation available).

[2] For instance by way of a writ of fieri facias (an order for the sheriff to seize goods) or a garnishee order

[3] [1994] 1 I.R. 215.

[4] See Start Mortgages v Doheny  [2014] IEHC 656. 

 


The content of this article is provided for information purposes only and does not constitute legal or other advice. 

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