The High Court dismissed an application by Brian Cunningham and Keelgrove Properties Limited seeking to challenge a mortgage, a receiver’s appointment and the sale of company property on Moore Lane, Dublin. Ms Justice Murphy held that section 316 of the Companies Act 1963 was not an appropriate procedure for deciding most of the substantive disputes raised. She did not determine whether the 1997 mortgage had been validly executed.
Keelgrove had been in receivership since December 2012. Bank of Scotland appointed Tom Kavanagh as receiver under a 1997 mortgage debenture over properties at 17, 18 and 19 Moore Lane. The receiver sold the properties to Kendlebell Mid-West Limited for €550,000, with a further €50,000 obtained for a nearby Moore Street plot. Kendlebell took possession in May 2014.
Cunningham argued that he was not a company director when he signed the mortgage, so it had not created a valid legal mortgage. He also alleged that the receiver failed to notify the company of the sale or obtain the best price, and that Kendlebell’s entry was invalid because he occupied the premises under an oral tenancy. The receiver disputed those claims, saying Cunningham had not responded to a January 2013 letter inviting him to provide information about occupants or leases. The court noted that the parties’ accounts of the alleged tenancy and the taking of possession were disputed.
The judge said section 316 allows directions about a receiver’s performance of duties, but is not an alternative to substantive proceedings for deciding legal rights or challenging the validity of the receiver’s appointment. Challenges to the mortgage’s execution, the receiver’s appointment and the resulting sale depended on that challenge and were outside the scope of this application. The court also said any dispute between Kendlebell and Cunningham over a tenancy or possession belonged under landlord-and-tenant law.
The judge separately held that Keelgrove itself was not among the parties authorised to apply under section 316, so the company lacked standing. Cunningham, as a member and claimed creditor, had potential standing, but had not provided evidence that a receiver’s act or omission unfairly prejudiced his rights. The court said that even if the legal mortgage were invalid, the company had agreed to provide security for the bank’s advances and, at a minimum, an equitable mortgage remained. It also found no evidence supporting the claims that the receiver acted improperly or failed to obtain the best price.
The court dismissed the application. Its ruling did not decide the mortgage’s validity, the alleged tenancy or whether Kendlebell’s manner of taking possession was lawful.