Judgment creditors lose out in circumstances where judgment mortgages are registered against one co-owner of registered property
The recent Supreme Court decision in Irwin v- Deasy [2011] IESC 15 has provided much needed certainty in respect of judgment mortgages over registered land which were registered prior to 1 December 2009. It has major ramifications for co-owners of land where a judgment mortgage is registered against one of the co-owners only.
The Supreme Court affirmed the decision of the High Court which held that the courts do not have jurisdiction to order a sale of registered co-owned land instead of partition on foot of a judgment mortgage which is registered against one of the co-owners only. Partition is the physical division of land between co-owning parties.
The decision has created a distinction between registered and unregistered land in that the courts do have the power to make an order for sale (instead of partition) in respect of the latter but not the former.
By way of background, the Plaintiff in this case was the Collector General of the Revenue Commissioners who had debts owing to it from the First named Defendant. The spouse of the First Named Defendant was later joined to the proceedings as co-owner of the property over which the charges were registered. The property concerned was not a family home.
In the High Court, Judge Laffoy held that the Plaintiff did not have sufficient interest to order a sale of the lands in lieu of partition where the judgment mortgage was registered against the interest of only one co-owner in registered land. The Court distinguished between judgment mortgages over registered land and unregistered land and noted that a judgment mortgage operates only as a charge in respect of registered land and therefore a judgment mortgagee has no entitlement to an estate or interest in possession.
The court reasoned that the legislature intended to create this distinction and this was evidenced by two statutory provisions. Firstly, Section 71(4) of the Registration of Title Act 1964 states that a creditor has rights and remedies available to them for the enforcement of a charge as the court may confer on them. Finnegan J was of the opinion that the provision, which only applies to registered land, did not give the court the power to make an order for partition or an order for sale in lieu of partition at the suit of a judgment mortgagee of registered land. He reasoned that if the legislature had wanted the courts to have such power, they would have expressly stated it in the legislation.
Secondly, Section 7 of the Judgment Mortgage (Ireland) Act 1850 [which only applies to unregistered land] provides that registration of a judgment mortgage shall have the effect of a mortgage. This is different to the remedies available to the holder of a simple charge because here an order for sale in lieu of partition is possible. When the 1964 and 1850 Acts are read in conjunction with one another, it becomes clear that the legislature intended for there to be such a distinction. Notwithstanding this, the court stressed that an order for sale in respect of un-registered land would only be made where the court was satisfied that a sale would be more beneficial for the parties interested than a partition.
The decision in Irwin –v- Deasy only affects judgment mortgages registered before 1 December 2009 because on that date, the Land and Conveyancing Law Reform Act 2009 came into effect. The decision affects co-owners of property where a judgment mortgage is registered against one co-owner only. It means that creditors who have registered judgment mortgages against only one of the owners of a property and are seeking the sale of the property to enforce its judgment are unable to do so.
It is important to note that the decision does not affect co-owners of unregistered land and therefore, judgment creditors with judgment mortgages registered against unregistered land are deemed to have sufficient interest to seek an order for a sale of co-owned property in lieu of partition.
The 2009 Act has greatly simplified property law, including with regard to how judgment mortgages affect co-owned land.
Section 31 of the 2009 Act applies to both registered and unregistered land and provides that any person having an interest in land that is co-owned (including a judgment mortgagee) may apply to court for:
• An order for partition;
• An order for the sale of the property in lieu of partition; or
• Any other order that the court deems just and equitable.
Since this provision deals with co-owned land, it is clear that Irwin v Deasy has no bearing on judgment mortgages registered after 1 December 2009. In short, under the 2009 Act a creditor who has obtained a judgment mortgage against co-owned land may apply to the court for the sale of it regardless of whether the land is registered or un-registered.
Laura McNally, Trainee Solicitor, Hayes Solicitors Jackie Buckley, Partner, Hayes Solicitors