court

Waterside Management Company v Brendan Kelly and Asta Kelly.

This recent interesting case before the President of the High Court, Nicholas Kearns, found that where a judgment debtor does not hold an equitable interest in a property a receiver by way of equitable execution cannot be appointed.

Background:

The Plaintiff is the Management Company of an apartment complex and obtained judgement against the Defendants for outstanding management fees.

Difficulties were encountered in enforcing the judgment and the management company looked for the appointment of a receiver by way of equitable execution over rents due from 5 apartments owned by the Defendants.  The Circuit Court made an order appointing a receiver by way of equitable execution over as much of the rent from the properties as would satisfy the judgment.

Arguments made in the High Court Appeal:

 Mr. & Mrs. Kelly argued:

  • A receiver by  way of equitable execution should not have been appointed over the rents due from the apartments. This remedy should only be available where the      judgment debtor holds an equitable interest in the receivership property.  The debtors held a legal interest in the property.
  • The management company failed to exhaust all means of legal execution at their disposal before seeking equitable relief.
  • The Circuit Court Order would have made the receiver a landlord over the properties, for the purposes of legislation. It was argued the receiver did not have      the intention or ability to carry out these duties.
  • Appointment of a receiver would violate their right to earn a livelihood.

 Management company:

  • When appointing a receiver by way of equitable execution the Court must consider whether is it “just and convenient to do so”.
  • The duty of the  party seeking to appoint a receiver by way of equitable execution is to exhaust legal methods of execution only insofar as is reasonable in the      circumstances.
  • Other orders,  such as an instalment order or a judgment mortgage, would have been ineffective.

Conclusion

The most important issue to be taken from this appeal is that the appointment of a receiver by way of equitable execution may be reserved to circumstances where the debtor holds an equitable interest in property which is not capable of being attached by the ordinary processes of enforcement.

Because of the small sum involved the appointment of a receiver by way of equitable execution over the rents payable would be extremely prejudicial to others with an interest in the property. Kearns P was of the belief that the appointment of a receiver could not be deemed “just and convenient” in this case.

Sinead McNamara is Managing Partner at the firm FitzGerald Solicitors and is head of the conveyancing department at FitzGerald Solicitors which is located at 6 Lapps Quay, Cork

FacebookEmailLinkedInGoogle+Twitter

Leave a reply