A number of recent High Court cases have highlighted the difficulties being faced by receivers in taking possession of agricultural lands. This is a critical issue for receivers who are being faced with mounting costs and delay as a result of the actions of uncooperative borrowers and / or their agents. The cases have highlighted the potential need for greater judicial resources and better and more vigorous case management.
Receivers appointed over agricultural lands are increasingly resorting to the High Court in order to:
- obtain injunctive relief to prevent borrowers, or individuals allied to borrowers, from obstructing them in carrying out their day-to-day duties; and
- obtain orders confirming that they are entitled to possession of and can sell the lands.
In practical terms, receivers appointed over agricultural lands often require some degree of co-operation or acquiescence from the borrowers in order to:
- carry out an initial inspection of the lands for the purpose of obtaining an accurate valuation;
- allow for inspections by interested buyers; and
- market the lands for sale with the ability to assure any prospective purchaser that vacant possession can be provided.
Where an individual borrower disputes the validity of the receiver's appointment or refuses to submit to the receiver taking possession of the property, the receiver is left with little alternative but to issue proceedings to protect the bank's position.
Whilst there have been some disputes involving points of genuine legal controversy, many of these cases coming before the High Court are simply driven by acts of stubborn defiance by borrowers, who are disenchanted at the unhappy change in their economic circumstances.
When faced with obstruction, a receiver usually issues a plenary summons and motion seeking injunctive relief. The motion for injunctive relief will usually be fixed for a date within 4 – 6 weeks depending on the capacity of the Chancery List, which is the forum for such proceedings. The Chancery List has been under significant pressure for the past number of years given the volume of cases coming before it. Therefore, if injunction proceedings are defended by the borrower, it can be a number of months before the application is heard and it can be some time after that before a decision is given by the court.
Even where an injunction is granted, the receiver may still be faced with obstruction from the borrower or his agents. In such cases, the receiver can bring a motion for attachment and committal against the offending parties. The seriousness of the application, that is the fact that the defendants to the motion can ultimately be imprisoned if found to be in contempt of court, means that considerable time and effort must be spent by the receiver in preparing the application.
Recent experiences in the High Court point to a marked reluctance on the part of the judiciary to sanction parties in breach of interlocutory orders unless the breaches are serious and considerable time has passed in which the offending party has failed to purge their contempt.
In the ongoing case of Maloney v O'Shea 1, the receiver was appointed over approximately 31 hectares of agricultural lands in County Kildare in 2012 by Danske Bank. The receiver instituted proceedings against the borrower in May 2013 and obtained an injunction restraining him from interfering with the receivership in July of that year. The borrower failed to comply with those orders and subsequently spent 15 days in jail for contempt.
The receiver was compelled to make a further application to the High Court in May 2015 seeking further orders after he and his staff were subjected to intimidation, verbal abuse and threats when he visited the secured lands.
Mr. Justice Gilligan directed that the borrower hand over possession of the lands or he would again be committed for contempt. The case, which has been ongoing for over two years, underlines the time and cost burdens increasingly being faced by receivers in such matters.
If the situation is to improve for receivers and banks, greater judicial resources and, crucially, better and more vigorous case management is needed. Such improvements would not undermine access to justice for borrowers. Rather, they would resolve issues faster, with a resulting reduction in legal costs and other costs associated with delay, all of which are almost invariably charged to the borrowers.
1 Maloney v O'Shea (Record No. 2013 / 4620 P)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.