The Court of Appeal has overturned a €550,000 exemplary damages award against a receiver in a dispute over property loans, ruling that the receiver had not been given fair notice that such damages were being claimed. It also found that his conduct in selling three properties without court sale orders did not justify exemplary damages in this case.
The appeal concerned two proceedings heard together: the bank’s claim for repayment of loans and Niall Hade’s claim against the bank and receiver. The High Court had entered judgment for the bank against Niall and Joyce Hade jointly and severally for €2,026,640.09, and against Niall Hade alone for €1,412,210.09. It dismissed the Hades’ counterclaim and Niall Hade’s claim against the bank. The Court of Appeal upheld those decisions.
The bank had appointed the receiver over 12 properties provided as security after the borrowers fell into arrears. The High Court found that the receiver unlawfully took possession of five properties covered by mortgages executed in December 2009, and sold three of them without court orders. It awarded Niall Hade €550,000 in exemplary damages. The receiver appealed.
The Court of Appeal held that the receiver did not need court orders to take possession. It interpreted section 97 of the Land and Conveyancing Law Reform Act 2009 as applying to a mortgagee, not a receiver. The receiver had obtained possession either by agreement with tenants or through the tenancy board process, and was not a trespasser.
The receiver accepted that he was required to obtain court orders before selling the three properties and had failed to do so. But the Court of Appeal said exemplary damages had not been claimed in the pleadings or raised at trial. The receiver had no opportunity to address whether such damages should be awarded or what amount might be appropriate. The court held that this denied him fair procedures. It also found the sales had not been shown to be at an undervalue and that the Hades had suffered no direct financial loss from the sales. The receiver had sought legal advice before selling, though it proved mistaken on the need for court orders.
The court allowed the receiver’s appeal and set aside the exemplary damages award. It dismissed the Hades’ appeals concerning the loan judgments and their claims against the bank and receiver. It also allowed the bank’s appeal on costs, awarding the bank its High Court costs in both proceedings, to be assessed if the parties could not agree. The orders were to be amended to include the bank’s full name, Bank of Ireland Mortgage Bank Unlimited Company.