The High Court ruled that neither Stephen Tennant nor Paul McCleary was validly appointed receiver over a petrol station and adjoining premises in Shercock, Co Cavan, because ACC Bank did not follow the method of appointment required by the mortgage. The court also found the deed discharging Tennant invalid and held that McPhillips was entitled to damages for trespass because the receivers were not validly appointed.
Mr Justice Cregan delivered the judgment on 31 July 2015 in two linked proceedings. McCleary had sought possession and injunctions after his agents were prevented from taking control of the property on 25 June 2014. McPhillips brought separate proceedings challenging the receivers’ appointments and seeking other relief.
The mortgage allowed the bank to appoint a receiver “by writing under its hand”. The bank’s evidence was that six people were authorised to witness its seal on certain documents, while only its chief executive, secretary or law agent could sign documents required to be made under the bank’s hand. The deeds appointing Tennant and McCleary were executed under seal, with the seal witnessed by people who were authorised to witness it but not to sign under hand on the bank’s behalf.
The judge rejected the receiver’s argument that execution under seal necessarily met the mortgage’s requirement. He concluded that the appointment deeds did not comply with the contract and were invalid. He also found the deed discharging Tennant invalid. He noted that, because Tennant’s appointment was itself invalid, his discharge may not have been necessary.
The judgment also recorded serious communication errors by the receivers’ team. McPhillips had not been told that Tennant was discharged or that McCleary had been appointed, and correspondence was mistakenly sent in Tennant’s name after his discharge. On 25 June, agents showed McPhillips a copy of Tennant’s appointment deed while seeking possession. The judge found they represented themselves as Tennant’s agents, not McCleary’s. However, he found that they had not entered the property: they were on a public petrol-station forecourt, which did not amount to trespass by the agents themselves.
The court found no evidence that ACC had sold the debt and was satisfied that the mortgage contained express powers to take possession and sell the property. It held that McPhillips was entitled to damages for trespass because the receivers were not validly appointed, and to a declaration that they were not validly appointed. The judge said no declaration about false documents was necessary. He held over the question of damages for the earlier interlocutory injunction; the judgment does not determine that claim.