The Supreme Court has dismissed Anthony and Miriam Freeman’s appeal against the dismissal of their claim over the appointment of a receiver to six investment properties securing their loans from Bank of Scotland.
In a judgment delivered by Ms Justice Dunne on 15 March 2016, the Court held that the Bank’s non-registration as owner of the mortgage charge did not invalidate its contractual power to appoint the receiver. The appeal concerned the validity of that appointment; it did not succeed.
The Freemans had borrowed from First Active Building Society to buy six investment properties between 1996 and 2006. In 2006, they refinanced with Bank of Scotland (Ireland) Limited, which advanced approximately €1.406 million against the properties. After the borrowers defaulted, the Bank appointed a receiver in November 2011. Bank of Scotland (Ireland) Limited had merged with Bank of Scotland plc in December 2010, transferring its assets and liabilities.
The High Court dismissed the Freemans’ claim after considering four issues: securitisation of the loans, alleged breaches of Central Bank codes, the effect of sections 64 and 90 of the Registration of Title Act 1964, and whether an interest calculation error contributed to the default. The appeal did not pursue the Central Bank codes or interest calculation issues. The Supreme Court said the cross-border merger transferred the charge and loan contracts to the Bank, and that securitisation and the Bank’s non-registration did not remove its contractual entitlement to appoint a receiver.
The Freemans also argued that the receiver’s sales could expose them to claims by buyers because the buyers’ title might be affected by the Bank’s non-registration. Four properties had been sold and their buyers registered as owners; registration of the buyers of the other two was pending. The Bank’s counsel accepted that there was “a blot” on the registered buyers’ title, though the Court said any difficulty for the four already registered buyers was uncertain and unlikely.
The Court distinguished the appointment of the receiver from the steps needed to register buyers and discharge the charge. It said the Bank needed to register as owner of the charge to enable registration of the remaining two buyers. The registration issue could create a problem for the Bank and buyers, but did not invalidate the receiver’s appointment or the charge. The Court dismissed the appeal.