Fast track repossessions against Mortgage Holders New Circuit by l0v3


									          Fast track repossessions against Mortgage Holders:
                       New Circuit Court Rules
S.I. No. 264/2009 came into effect on 8 July 2009, and inserts a new Order 5B into the
Circuit Court Rules in relation to the repossession of lands. The new provisions render it
possible for the County Registrar to make an Order for Possession, and therefore make it
cheaper and easier for a lender to repossess land on foot of a legal mortgage or charge. The
implications for mortgage holders are therefore far-reaching and of serious concern. In
particular, borrowers must be aware of the limited time periods within which a defence to
such proceedings must be filed.

Order 5B applies where an entity seeks to recover possession of lands on foot of a legal
mortgage or charge, or seeks an order declaring the amount due on foot of a mortgage to be
well charged on land.

In the event that a lender elects to recover land on foot of the new provisions, instead of
initiating proceedings in the High Court, they will serve a Civil Bill and set out the particulars
of the relief claimed therein. This Civil Bill, together with a grounding affidavit, must be
served on each or any Defendant at least 21 days before the return date on the Civil Bill.

Any borrower in receipt of such a Civil Bill who intends to defend proceedings instituted
pursuant to these rules must enter an appearance within ten days of service of the Civil Bill
upon them. In addition to this they must file a replying affidavit to the Plaintiff’s affidavit.
The affidavit must be served at least four days before the return date.

The proceedings are heard in the main by way of affidavit. Certain exceptions to this are set
out in Order 5B, rule 6(1). There is also a right to cross-examination on the affidavits but a
notice of cross-examination must be filed in advance.

Of particular concern is the provision inserted at Order 5B, rule 7(1)(e). This states that the
County Registrar will have the power to make an order for possession on the return date
where an appearance has not been entered or where the replying affidavit does not disclose a
prima facie Defence. Therefore, in the event that a Defendant is not aware of the significance
of entering an Appearance or filing a robust replying affidavit, the County Registrar can
make an order for possession on the return date of the Civil Bill. Often, adjournments are
granted to Defendants appearing in person before the Master in similar proceedings in the
High Court, and it is notable that AIB and Bank of Ireland have indicated that they will not
pursue defaulting borrowers until at least 12 months arrears have accrued, so long as the
borrower has been co-operative and reasonable in their dealings with the lender.

It is only in the event that the County Registrar determines that there is a prima facie Defence
that the Civil Bill is transferred to the Judges List. Order 5B, rule 8(2) states that the Judge
may, when he considers it appropriate, adjourn the Civil Bill for plenary hearing. The
County Registrar does have the discretion to extend the time for filing affidavits and make
other directions as may be deemed fit.

Order 5B, rule 8(1) gives some latitude in that if it appears to a Judge or the County Registrar
that the determination of any issue is necessary, the Judge or County Registrar may, on
consent, settle such issue, and evidence as to any issue of fact may be given orally or by
affidavit to the Judge.

The difficulty with these rules is that it gives little or no time to a borrower to respond to a
Civil Bill for possession. If a mortgage holder is served with such a Civil Bill, they must act
immediately. There is very little time to negotiate a compromise with the Plaintiff and a
mortgage holder must be aware that they may be liable for the legal costs incurred by the
Plaintiff. If a lender enters into an agreement for the repayment of the outstanding debt, the
Financial Regulator has stated that they must put a stay on the legal proceedings if regular
payments as agreed are maintained.

Any decision of the Country Registrar may be appealed to the Circuit Court pursuant to
Order 18 rule 7 of the Rules. Such an appeal must be made within 10 days of the perfection
of the Order.

These new rules are very onerous on any borrower and the time limits are far too constrictive.
The philosophy behind the new provisions is motivated by the desire to limit borrower’s
exposure to costs, which may be significant where proceedings are initiated in the High
Court. However, the speedy manner with which cases are dealt with in the Circuit Court,
when compared with the High Court, means that borrowers will have less time to come up
with a satisfactory solution to temporary and longer-term financial difficulties.

For further information please contact Lorna McAuliffe –

This information is for guidance purposes only. It does not constitute legal or professional advice. Professional or legal advice should be
obtained before taking or refraining from any action as a result of the contents of this publication. No liability is accepted by Reddy
Charlton McKnight for any action taken in reliance on the information contained herein. Any and all information is subject to change.

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