Locations
Following the recent appointment by the High Court of a bank official as receiver by way of equitable execution, Mark Woodcock examines the effectiveness of this execution remedy for lending institutions. The recent appointment by the High Court of a bank official as receiver by way of equitable execution has highlighted the effectiveness of this execution remedy for lending institutions. This is a procedure whereby a judgment creditor like a bank, may appoint a receiv...
Following the recent appointment by the High Court of a bank official as receiver by way of equitable execution, Mark Woodcock examines the effectiveness of this execution remedy for lending institutions. The recent appointment by the High Court of a bank official as receiver by way of equitable execution has highlighted the effectiveness of this execution remedy for lending institutions. This is a procedure whereby a judgment creditor like a bank, may appoint a receiver over specific property held by or due to be received by the debtor. This remedy is only available to creditors where the ordinary methods of execution are not available or are unlikely to be successful. Target property The appointment of a receiver by way of equitable execution will only be granted over the following property: [table id=2 /] Although the Circuit Court has jurisdiction to appoint a receiver by way of equitable execution the application is usually made in the High Court. The most prudent course of action is to bring an ex-parte application to appoint a receiver if there is a risk that the debtor may dispose of the assets if notified of the application. If there is no risk to the assets targeted, a motion should be brought before the High Court on notice to the debtor. In either event, the affidavit grounding the application for an order appointing a receiver should contain at least the following details:
- The date and particulars of the judgment
- Evidence of attempts to satisfy the judgment and of the fact that it remains unsatisfied
- Evidence that an application for a garnishee order is unavailable or inapplicable
- Evidence that the debtor is in receipt of periodic payments or has a lump sum payment due or has an equitable interest in property which could have been seized if the debtor held a legal interest
- The written consent of the proposed receiver and an affidavit of suitability from an independent person
- The estimated costs of the receivership
If the Court is satisfied with the evidence outlined above it will grant a conditional order for the appointment of a receiver by way of equitable execution and adjourn the application to allow the creditor notify the debtor of the conditional order and make whatever submissions the debtor deems appropriate. If there is no objection from the debtor or his/her submissions are unsuccessful, the Court may make the order absolute after which time the appointment of the receiver takes legal effect. Effect of appointment of receiver The order does not usually transfer the specified property to the creditor or indeed the receiver but it does prevent the debtor from dealing with the property. The receiver’s role is then to collect the specified property. When it has been collected the receiver must make an application to the High Court for liberty to pay the creditor the property realised less a deduction of the costs of the receivership. The process can be completed in the relatively short time of four to six weeks at a cost of €4,000 - €6,000 depending on how vigorously it is contested by the debtor. The process has been available to judgment creditors for more than a century but appears to have been relied on sparingly in the past. The recent appointment by the High Court will be a helpful reminder to banks and demonstrate how useful a remedy it can be.