The Court of Appeal has upheld a High Court decision that a mortgage charge over land in Belgooly, County Cork, was void against a company’s liquidator and creditors because it was not registered with the Companies Registration Office (CRO).
The judgment concerned a €400,000 loan made to Diamond Rock Developments Limited, which granted Joseph Leddin a mortgage over land as security on 8 June 2018. The mortgage was recorded as a burden on the land’s folio, but the required particulars were not delivered to the CRO within 21 days or at all.
The company entered voluntary liquidation after a special resolution on 14 February 2022, and Gerard Murphy was appointed liquidator. The appeal centred on section 409(1) of the Companies Act 2014, which makes a company charge void against a liquidator and any creditor unless it is registered in accordance with the statutory procedure.
Leddin argued that enforcement steps taken before the liquidation, including taking possession and seeking to sell the land, had transformed the security so the registration rule no longer applied. The Court of Appeal rejected that argument. It held that the charge remained the basis for the enforcement measures and could not be relied on while denying that the charge still existed.
The court also rejected reliance on statutory possession and sale rights under the Land and Conveyancing Law Reform Act 2009. Those rights could not be exercised against the liquidator or creditors where the underlying charge was void as against them. Recording the mortgage on the land folio did not replace the separate CRO registration requirement.
The court said non-registration did not void the debt itself, but it deprived the mortgagee of security against the liquidator and creditors. It concluded that the appellant’s continued occupation after the liquidator’s appointment had no legal basis against the liquidator. It also noted that the appellant had abandoned in the High Court a separate issue concerning a purported second charge, which had been treated as an unfair preference.
The Court of Appeal agreed that the trial judge had not erred in law, found there was no need to remit the matter for a plenary hearing, and affirmed the declarations and injunctions made in the High Court. The appeal was therefore dismissed in substance.