Mortgage Arrears Debt: Relying on the Rateable Valuation of a property to bring proceedings in the Circuit Court

By Darryl Broderick and Stephanie Couglan
21st April 2016

Mortgage Arrears Debt: Relying on the Rateable Valuation of a property to bring proceedings in the Circuit Court
The decision of Judge Murphy of the High Court in a judgement delivered on 20th May 2015 in the case of Bank of Ireland Mortgage Bank v. Finnegan & Ward, began what is now an unfinished debate on using the rateable valuation of a residential property to ground jurisdiction in the Circuit Court. The issue is of particular importance to the hundreds of possession cases which are currently being processed in Circuit Courts in every county in the jurisdiction. The Circuit Court currently has jurisdiction to hear claims involving land where the rateable valuation of the land does not exceed €253.95.

Bank of Ireland Mortgage Bank v. Finnegan & Ward – Judge Murphy Decision
The Finnegan & Ward case involved a Circuit Court Appeal of a possession order in which the rateable valuation of the residential property in question was relied on to ground jurisdiction in the Circuit Court. Prior to this case, the Courts had either not sought evidence of rateable valuation at all or where they did, it was accepted that a letter from the Local Authority or Valuation Office to the effect that the property was not rateable but if it were its value would not exceed €253.95, was satisfactory proof of same. Judge Murphy, in her decision, discounted the use of such letters as the basis for proving rateable valuation which left lending institutions in a difficult situation, with a number of proceedings having to be struck out and re-issued in the High Court instead.

Subsequent to the decision of Judge Murphy, lending institutions began obtaining Certificates of Rateable Valuation or Extracts from the Valuation List in respect of properties that were rateable, and in respect of properties built after the commencement of the Valuation Act 2001 (the “Act”) [which came into force on 2nd May 2002], and which were not rateable, began making applications pursuant to Section 67 of the Act which is entitled “valuation for certain purposes of property falling within Schedule 4.” Schedule 4 of the Act refers to “relevant property not rateable” and includes any domestic premises built after the enactment of the Act.

Pursuant to Section 67 of the Act, an application can be made to have a domestic premises valued and determined as if the property were rateable under the Act and the section provides that a Certificate stating the value of the property referred to in that subsection shall issue.

Bank of Ireland Mortgage Bank v. Shane Hanley and Alan Giblin – Judge Noonan decision
The issue of rateable valuation came before the High Court again in November 2015, this time before Judge Noonan, again by way of a Circuit Court appeal of a possession order, in the case of Bank of Ireland Mortgage Bank v. Shane Hanley and Alan Giblin. Ronan Daly Jermyn successfully acted for Bank of Ireland Mortgage Bank in that case. Judgment was delivered on 26th November 2015 when Judge Noonan reluctantly departed from the decision of Judge Murphy in Finnegan & Ward and found that:

1. The burden falls on the Defendant to prove that the rateable valuation of property exceeds the jurisdiction of the Circuit Court and the risk lies with the Plaintiff, if on Appeal, it transpires that the Circuit Court did not have jurisdiction.
2. In respect of properties built post the commencement of the Act that fall into the category of “not rateable”, that their rateable valuation can never exceed the jurisdiction of the Circuit Court and therefore the Circuit Court always has jurisdiction in respect of claims involving such properties.
3. As regard Certificates obtained pursuant to Section 67 of the Act, Judge Noonan said “this document is clearly hearsay evidence and would not in the normal way be admissible in the absence of evidence from the person who created it …… the bank is not entitled to rely on the purported S. 67 certificate in this case”.

Further Judgments on the Issue
The issue of what some regarded as two conflicting High Court judgments was the subject of much discussion and it was anticipated that a third Judgment on the same issue would be handed down by Judge White of the High Court in January 2016, in the case of Ulster Bank Ireland Limited v. Tighe. However, prior to that Judgment being handed down, Judge Baker (also of the High Court), who was also dealing with the same issue in the case of Permanent TSB v. David Langan, indicated an intention to state a case on the issue to the Court of Appeal. In the circumstances, Judge White in the matter of Ulster Bank Ireland Limited v. Tighe, declined to give judgement.

The issue of rateable valuation is now the subject of a case stated by Judge Baker to the Court of Appeal in the matter of Permanent TSB Plc v. David Langan. This decision is eagerly awaited so that there is complete clarity on the law but in all likelihood it will not be handed down until at least October 2016. This lack of clarity is particularly unhelpful for financial institutions where orders for possession are statistically difficult to obtain due to the emotive nature of such cases. While it may not be readily apparent, the lack of clarity is also prejudicial to Defendants in possession cases as it can prolong the cases or drive the cases into the High Court, both of which scenarios serve to add to the costs which ultimately may be borne by the borrower Defendants.

If you have any queries in relation to the content of this update, please contact:
Darryl Broderick, Partner, darryl.broderick@rdj.ie, +353 21 4802767
Stephanie Coughlan, Solicitor, stephanie.coughlan@rdj.ie, +353 91 895331