19 December 2023

Receiver Not Liable For Exemplary Damages



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The Court of Appeal, in a judgment delivered on 7 December 2023, has overturned a decision of the High Court awarding €550,000 in exemplary damages against a receiver...
Ireland Insolvency/Bankruptcy/Re-Structuring
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The Court of Appeal, in a judgment delivered on 7 December 2023, has overturned a decision of the High Court awarding €550,000 in exemplary damages against a receiver on the basis of the High Court's finding that the receiver had taken possession of, and sold, certain properties without obtaining a court order.

The Court of Appeal disagreed with the conclusion of Mr Justice Barr in the High Court that section 98 of the Land and Conveyancing Law Reform Act 2009 (the "2009 Act") required the receiver to obtain a court order before taking possession of the relevant properties, as that section applies to a mortgagee taking possession only.

The receiver did not dispute the finding of the High Court that he was required under section 100 of the 2009 Act to obtain a court order in order to sell the relevant properties.

The Court of Appeal held however, that in order to award exemplary damages against the receiver, the receiver should have been, but had not been, given an opportunity to oppose the issue of exemplary damages, including leading evidence and addressing the court in relation to the issue. The Court of Appeal also found that the receiver's conduct fell well short of the type of action that would attract an award of exemplary damages on the basis that (1) the receiver was in lawful possession of the properties, (2) the plaintiffs did not suffer any loss as a result of the receiver's actions, (3) the uncontroverted evidence was that the receiver was acting on foot of legal advice, and (4) the High Court judge had not considered the fact that section 105 of the 2009 Act provides for damages in the event of the improper exercise of a power of sale under Chapter 10 of the 2009 Act in deciding whether exemplary damages were appropriate.

While the Court of Appeal did not exclude the possibility of exemplary damages against a receiver in other circumstances, its judgment should allay some of the concerns to which the High Court decision may have given rise amongst insolvency practitioners.

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.

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