The decision in Start Mortgages & Others v Gunn & Others created certain doubts about the enforceability of mortgages created prior to 1 December 2009 where a formal demand for the principal monies due under that mortgage had not been made prior to 1 December 2009. This arose from the repeal of certain sections of the Conveyancing Act, 1881 (the “1881 Act”) and the Registration of Title Act, 1964 (the “1964 Act”) when the Land and Conveyancing Law Reform Act, 2009 (the “2009 Act”) was commenced on 1 December 2009.
The first of these cases is EBS Limited v Gillespie in which the Court held that the lender had to show that repayment of the principal monies secured by the mortgage had become due prior to 1 December 2009, but, that depending on the wording of the mortgage document (i.e. the contractual terms), it is not always necessary for a formal demand of the monies to have been made, prior to 1 December 2009, for a lender to have acquired its rights to enforce under the 1881 Act and the 1964 Act.
Similarly to Start Mortgages, the lender in this case had been seeking an order for possession under Section 62 (7) of the 1964 Act, which had been repealed by the 2009 Act. However, in this case, the mortgage incorporated terms which provided that, among other things, the monies became due upon a default in repayments whether or not a demand had been served. A default in repayments had occurred prior to 1 December 2009 and the Court held that this meant that the rights of the lender to seek possession under the 1964 Act had been acquired then. This decision should provide certain comfort for lenders where they are seeking to enforce a mortgage created before 1 December 2009 and a demand wasn’t made prior to that date, provided that the mortgage incorporates provisions along similar lines.
The second case is McEnry v Sheahan in which the Court held that the lender had acquired the right to appoint a receiver under the 1881 Act under a mortgage created prior to 1 December 2009 at the time the mortgage was created and the right survived the repeal of the 1881 Act. In this case the borrower challenged the appointment of the receiver (the plaintiff) in April 2011 on the basis that the right to appoint a receiver under the mortgage, which had been created prior to 1 December 2009, had been repealed by the 2009 Act.
The Court rejected the argument of the borrower and upheld the appointment of the receiver differentiating its reasoning from the reasoning in Start Mortgages on the basis that the right to appoint a receiver under the 1881 Act was a substantive right that had been acquired when the mortgage had been created and therefore survived the repeal whereas the right to seek an order for possession under the 1964 Act was a procedural right which did not. This decision may also provide additional comfort if the same reasoning can be applied to the right of a lender under the 1881 Act to “overreach” or sell free from subsequent charges which was also repealed in relation to unregistered land by the 2009 Act.