The High Court has directed the receiver of HSS (in receivership) to take possession of a Citywest property occupied by Graham Mason, ruling that his claimed interests did not take priority over Bank of Scotland’s earlier registered charge.
Mr Justice Clarke delivered the judgment on 28 October 2011 on an application by the receiver under section 316 of the Companies Act 1963. The receiver sought directions on his entitlement to possession of two HSS properties. Mason, who trades as Oxford Property Group and operates through Oxford Property Lettings Ltd, opposed the application concerning Unit 4a, The Shopping Village, Citywest, County Dublin. The other respondent, Patrick O’Connor of Swift Concepts Ltd, did not appear.
Mason’s account, which the judge assumed to be factually correct for the purpose of the application, was that he had provided property management and other services to HSS and related Mansfield interests. He said he was allowed into the property under a lease dated 7 December 2009, partly because money owed to him could not be paid. The lease was described as residential, but the parties did not dispute that Mason used the premises for business.
The amount HSS owed Mason was disputed. The receiver put it at about €15,000 based on company records; Mason claimed €174,335.52. The judge said that dispute would not ordinarily be resolved in an application of this kind. Mason also alleged that he had agreed to provide services to the receiver after the receivership began, and said security measures around the property had affected his business. The receiver disputed that any such services contract existed.
The judgment records that Bank of Scotland held a registered legal charge over the property under an earlier debenture. Its terms barred HSS from granting a tenancy or other right to occupy without the bank’s written consent. The judge concluded that any interest HSS purported to give Mason in breach of that covenant could not give him rights against the bank or take priority over its charge. For his pre-receivership debts, Mason was an unsecured creditor. Any valid claim for post-receivership services would concern payment, not a right to occupy the property.
The court held that section 316 allows directions and orders to protect parties’ legal rights in an insolvency, but does not allow the court to alter those rights on general grounds of fairness. It found Mason had shown no legal right to remain in the property and granted the receiver’s request for a direction as to possession, based on the bank’s priority.
The court did not decide the application concerning the second property. Although the judge said the same analysis appeared likely to apply, the receiver raised concerns about whether that part of the application was properly constituted, and it was adjourned.