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Rateable Valuation Issues arising from Repossession Proceedings in the Circuit Court

The Court of Appeal in Permanent TSB PLC v David Langan has given its long-awaited Judgment on two conflicting High Court decisions regarding the jurisdiction of the Circuit Court to hear repossession proceedings in the first instance. The Judgement was delivered by Mr. Justice Gerard Hogan on the 28th July 2016 and it was unanimously held that the Circuit Court no longer has jurisdiction to hear repossession cases where the property is defined as not rateable within the meaning of the Valuation Act 2001. The initial confusion stems from two different High Court decisions in Bank of Ireland Mortgage Bank v Finnegan and Bank of Ireland Mortgage Bank v Hanley respectively. 

Bank of Ireland Mortgage Bank v Finnegan involved a Circuit Court Appeal of a possession Order in which the rateable valuation of the property was relied upon to ground the jurisdiction of the Circuit Court to hear the case. The High Court, in upholding the appeal held that the Circuit Court did not have the jurisdiction to hear repossession cases where the property involved is not rateable. However, in Bank of Ireland Mortgage Bank – Hanley the opposite conclusion was reached and it was held that the jurisdiction of the Circuit Court remains even in circumstances where the property involved is not rateable because establishing the rateable valuation of a property should not be one of the essential proofs required to succeed in possession cases.

In Permanent TSB PLC v David Langan the Plaintiff Bank were successful in obtaining Orders for Possession in the Circuit Court in relation to six domestic dwellings after the Defendant had defaulted on repayments on Mortgages taken out in February 2008. The Defendant argued the Circuit Court did not have jurisdiction to hear this matter as all six properties in his case were constructed after 2002 and, under the Valuation Act 2001, were defined as not rateable. The Defendant appealed this to the High Court before Ms Justice Marie Baker who further stated a case to the Court of Appeal for clarification. The central issue before the Court of Appeal was whether the Circuit Court has jurisdiction to hear proceedings brought by a Mortgagor for possession orders, where the property in question is defined as not rateable under the Valuation Act 2001.

The Court of Appeal decided that for the Circuit Court to hold jurisdiction to hear repossession cases the property in question must have a rateable valuation. This corresponds with the relevant legislation including Section 22 (1) of the Courts (Supplemental Provisions) Act 1961 and the Third Schedule to the 1961 Act which holds that the Circuit Court has jurisdiction where the property in question is rateable. The effect of this Judgement is that properties constructed after 2002 which are defined as unrateable and where the mortgage is entered into prior to the 1st of December 2009 and where the proceedings were issued before the 31st of July 2013 will now need to be issued before the High Court and not the Circuit Court.

Going forward, unless the property in questions falls within one of the exceptions created by the Land & Conveyancing Law Reform 2009 Act or the Land and Conveyancing Act 2013, proceedings must be brought before the High Court. The 2009 Act conferred jurisdiction on the Circuit Court to hear possession proceedings regardless of rateable valuation but that jurisdiction only applies to mortgages for housing loans created after that date and does not apply retrospectively.

The Land and Conveyancing Act 2013 further extended the Circuit Court’s jurisdiction to hear cases where mortgages for principal private residences were created before the 1st December 2009 but this relevant provision only came into effect from the July 31st 2013. One of the major disadvantages of High Court proceedings is the cost implication for both parties, particularly in circumstances where the Court finds in favour of the lending institutions and costs are awarded against the Defendants as is often the case. Arguably, this decision also deprives parties of access to local courts in the manner which the Constitution actually intended. Perhaps most worryingly, the Judgment may have “even more serious consequences” as the general jurisdiction of the Circuit Court to deal with property disputes “is, at least, now open to question”.

This decision was intended to provide clarity on the uncertainty created by the two High Court decisions in Finnegan and Hanley and whilst same has been provided, it is clear that the repercussions of this decision in its entirety remain to be seen. Mr. Justice Gerard Hogan giving the Judgement most appropriately summed up the potential effect this decision could have when he said, "There is no doubt that these conclusions are likely to lead to consequences which are both unfortunate and unintended". Similarly, it is yet to be determined if this decision could open the floodgates in relation to borrowers appealing Orders for Possession already granted by the Circuit Court prior to this decision, in relation to properties that would now fall within the remit of this decision.

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