Confirmation from the Court of Appeal that a receiver may be appointed over debtor's legal interest in property to satisfy outstanding judgment

Published 22 diciembre 2017

In ACC Loan Management Limited -v- Rickard [2017] IECA 245, the Court of Appeal ruled on two important aspects of the High Court's jurisdiction to appoint a receiver by way of equitable execution over the property of a judgment debtor. In a decision which will assist lending institutions and other creditors in assessing their enforcement options to satisfy outstanding judgments, the Court has eliminated some of the confusion which had existed in Irish law in respect of the circumstances in which a receiver may be appointed by way of equitable execution and has confirmed that:

• The High Court may appoint a receiver by way of equitable execution in respect of both legal and equitable interests in property;
• A receiver may be appointed over future debts and receipts owing to a judgment debtor where those receipts emanate from a clearly defined asset.

Generally speaking, the appointment of a receiver by way of equitable execution is a legal process by which a creditor will seek to enforce its judgment against certain property belonging to a debtor. It will usually arise in circumstances where, due to some impediment or hindrance attaching to the debtor's property, the ordinary execution mechanisms (including garnishee and instalment orders or an order of fieri-facias) are not available. As with other equitable reliefs, it operates as a discretionary remedy and the order of appointment will only be made where it is "just and convenient to do so."

Historical UK decisions which had been followed in this jurisdiction appeared to suggest that a receiver could only be appointed by way of equitable execution over property in which the debtor had an equitable and not a legal interest. The rationale underlying that approach was that an individual could not rely on an equitable remedy to move against an exclusively legal right in property. However, in Rickard, the Court of Appeal has now clarified the law on this point by concluding that a twenty-first century application of the statutory power to appoint a receiver by way of equitable execution should not preclude that receiver's appointment over a legal interest in the property of a judgment debtor.

Facts

In 2011, ACC Loan Management ["ACC"] obtained judgment against the appellant who farmed lands in County Meath. When that judgment remained unsatisfied, the Bank was granted an ex parte Order which provided for the appointment of a receiver by way of equitable execution over agricultural payments to which the appellant was entitled under the EU-operated Single Farm Payment Scheme. The appellant objected in 2015 when ACC sought to vary the terms of the receiver's appointment to allow for the continued receipt of payments under a revised EU payments system. In doing so, the appellant contended that the High Court's jurisdiction to appoint a receiver by way of equitable execution was restricted to those cases in which the debtor enjoyed an equitable (as opposed to legal) interest over the property in issue. The appellant also argued that any monies receivable under the replacement EU scheme constituted the payment of future wages, which as a matter of policy, ought to lie beyond the reach of a creditor.

Appointment of receiver over both legal and equitable interests

The Court examined the statutory basis of the jurisdiction for the appointment of receivers and the relevant rules of court. The Court could find no reason in principle why the appointment of a receiver by way of equitable execution should not also extend to include a debtor's legal interests in property. Having considered case law from both Ireland and England and Wales, Finlay Geoghegan J expressed doubt that the law had ever limited the appointment of a receiver by way of equitable execution to exclusively equitable interests. There was accordingly no legal obstacle to prevent the appointment of a receiver over either the legal or equitable interests of a judgment debtor in property. Hedigan J stressed the alternative nature of the High Court's jurisdiction to appoint a receiver by way of equitable execution and emphasised that there must be some special circumstance by which the usual execution mechanisms cannot apply. For the jurisdiction to apply therefore, an applicant must be in a position to demonstrate the existence of some hindrance by which the ordinary legal methods of enforcement are not available.

Future payments due to debtor

The Court went on to consider whether or not a receiver could be appointed in respect of future payments or receipts due to be received by a debtor. Finlay Geoghegan J concluded that there was no modern rule of law which prevented the appointment of a receiver by way of equitable execution over either future debts or monies due provided that those future receipts emanated from a clearly defined asset.

In this case, the defined asset in issue was the appellant's entitlement to receive payments under the EU scheme, which both sides had accepted constituted a legal entitlement in the form of a legal chose in action. By determining the question from the point of view the appellant's chose in action, the Court did not express a view on the broader issues as to the different classes of future debts or payments over which a receiver could be appointed. In particular, the Court did not specifically rule on the narrower question of the appointment of a receiver over a debtor's wages or salary but it would appear as if, as a matter of policy, these will continue to lie beyond the reach of a receiver.

Conclusion

The extent to which the Court of Appeal's ruling in Rickard will provide practical assistance to lending institutions and other judgment creditors remains to be seen. However, the Court's confirmation that equitable relief is available should serve as welcome news for any creditor who may be otherwise left frustrated with attempts to enforce an outstanding judgment against a debtor's property through the ordinary legal mechanisms.