A shortcut to an Order for Sale?

Author: Treasa Walsh and Susie Higgins

June 11, 2018

McDowell Purcell represented a creditor in a recent application to the High Court where Justice Costello granted an Order for Sale on foot of an equitable charge held by the applicant, over properties of the respondent who had been adjudicated a bankrupt.

Application

The creditor issued proceedings pursuant to Order 76 of the Rules of the Superior Court which provides for an application for sale by a person claiming to be a mortgagee of, or having any charge or lien upon, any property of a bankrupt. The Rules provide that the Court may order the property to be sold in such manner as it sees fit provided the application is made on notice to the Official Assignee.

In this instance the creditor’s charge had not been registered on the relevant properties. Notwithstanding the creditor was in a position to prove its right as lawful mortgagee over the properties based on its equitable charge and/or lien.

Adding a further complication, the respondent had been discharged from bankruptcy when the motion issued. However, as his properties remained vested in the Official Assignee and in the estate for bankruptcy, we were permitted to proceed with the application in the bankruptcy list.

Order for Sale

Upon consultation with the Property Registration Authority, the format of the Order for Sale and the Transfer was agreed so that the PRA could proceed with registration of the properties to the ultimate transferee/purchaser pursuant to the Land Registration Rules 2012.

Accordingly, the Court granted an Order for Sale of the properties pursuant to the creditor’s equitable charge/lien and appointed a specified nominee to affect the sale of the properties and execute all necessary documents in order to do so.

By utilising the provisions under the Bankruptcy Rules and the Land Registration Rules, the creditor effectively circumvented lengthy and costly special proceedings and enforcement of the resultant Order, through the Examiner’s office.

Although such an application can only be made when a borrower has been adjudicated a bankrupt and the properties have not already been dealt with in the bankruptcy, it was an effective tool to enforce the rights of a mortgagee in these circumstances.

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