Shane McCarthy of KPMG (the Plaintiff) was appointed as receiver by ACC Loan Management Limited (ACCLM) over certain properties belonging to Greg Langan & David Langan, the first and second named defendants.
The Plaintiff issued a plenary summons claiming a number of injunctions restraining David Langan and the third named defendant, Mr. Gilroy (the Defendants) from impeding or obstructing the Plaintiff in his efforts to sell the properties over which he was appointed receiver.
The Defendants contested the validity of the charges over the properties and the validity of the Plaintiff's appointment as receiver but acquiesced in the making of interlocutory orders on the basis that the action would be brought swiftly to trial. The loans and security were subsequently transferred by ACCLM to Cooperative Rabobank U.A with the deed of appointment of receiver duly novated. The sales of the properties eventually were effected by mortgagee as mortgagee in possession due to subsequent judgement mortgages appearing.
The issue to be determined by the Court was the validity of the Plaintiff's appointment as receiver. If the receiver was not validly appointed, an issue might then arise as to what, if any, loss was suffered by the Defendants because of the making of the interlocutory orders.
The deeds of charge were in standard printed form, each provided (emphasis added):-
"At any time …any person to be receiver and manager or receivers and managers (herein called "Receiver")…"
The deeds of appointment did not expressly appoint the receiver also as manager (noting the deeds of charge only allowed for appointment as receiver and manager and not merely as receiver). The deeds of appointment stated as follows (emphasis added):-
"do hereby appoint Shane McCarthy of KPMG… (the "Receiver") to be receiver of all the assets of the Chargor referred to and comprised in and charged by the Security Document"
The Court was otherwise satisfied as to due execution of the deeds of appointment.
Both sides relied on the following authorities:
- The Merrow Limited v Bank of Scotland  IEHC 130 and McCleary v McPhillips  IEHC 591, both of which turned on the execution of the relevant deed of appointment as either expressly required by seal or under hand; and
- McCarthy v Moroney  IEHC 379, which was a decision on an interlocutory motion only, the plaintiffs arguing it was distinguishable and that the decision was wrong.
The Court clarified that in the latter case, Mr Justice McDonald did not actually decide the substantive issue (and so his decision was not distinguishable or wrong) but rather applied the Maha Lingham test on application for an order of mandatory relief. The Maha Lingham test acknowledges that a higher threshold will have to be met by an applicant seeking mandatory relief. Mr Justice McDonald said that he was not convinced that the plaintiff had made out a sufficiently strong case that he had been validity appointed as receiver and so declined the relief. Whilst observing that the plaintiff might have an uphill struggle at trial, Mr Justice McDonald made it very clear that the plaintiff may ultimately succeed.
The issue was also raised in the Supreme Court in the decision in Charleton v Scriven  IESC 28. Mr Justice Clarke (with whom Mr Justices O'Donnell and O'Malley agreed) considered the decision in McCarthy v Moroney. In a nuanced decision Mr Justice Clarke said
"..it is arguable that the appointment of the Receivers in the form in which occurred in this case was, as a matter of construction of the documents concerned, an appointment as both receivers and managers, having regard to the way in which the term "Receiver" was defined in the mortgage deeds themselves".
The Court viewed that the description of an appointee as "receiver" or "receiver and manager" is not something that can be dismissed as mere nomenclature, or terminology, or drafting technique or labelling. The correct approach is to construe the documents as a whole (both the deeds of appointment and the deeds of charge), rather than to focus on the use or omission of any particular word or words.
The deed of appointment is to be examined as to what it does, in addition to what it says. The deed of appointment refers to the appointee as the "Receiver", which is the very description applied by the deed of charge to a receiver and manager. The deed of appointment also confers on the appointee the powers conferred by the security document and by law and so therefore is a receiver and manager.
In conclusion, the appointment of the receiver was valid, he was appointed by the valid exercise of a power to appoint a receiver and manager and was invested with the powers of a receiver and manager. The omission from the deeds of appointment of the words "and manager" was not fatal.
This judgment is currently under appeal.