# High Court finds receiver to be invalidly appointed and a trespasser



## Asphyxia

Bronte,

referring back to house sold for 60% of value thread which for some reason is now closed, I refer you to the High Court Decision of the 2/10/2015 in the case of Paul McPhilips V ACC loan Managment Ltd and Grant Thornton  ( 2015 )IEHC  591 where Justice Gregan ruled that the receivers in the case, Stephen Tennant and Paul McCleary were found to be invalidly appointed subject to mortgage deed and indeed found that Paul McPhilips can sue for damages for trespass on his property. I note that this case was taken in lay litigant albeit with the support of Ben Gilroy.

I now give you the findings of Judge John Gregan :-

*Conclusions*
166. In the circumstances I would make the following conclusions:



1. Mr. Stephen Tennant was not validly appointed as first receiver.
2. There was no valid deed of discharge in respect of Mr. Tennant.

3. Mr. McCleary was not validly appointed as receiver.

4. Mr. McCleary’s servants, or agents, represented themselves as agents of Mr. Tennant, not Mr. McCleary on 25th June, 2014.

5. ACC did not sell on the debt which Mr. McPhillips owed to it.

6. The mortgage did contain an express power to take possession of the property and/or express power of sale over the property.
167. In relation to the second set of proceedings:


1. Mr. McPhillips is entitled to damages for trespass to his property because the receivers were not validly appointed.
2. It is not necessary to give a declaration that the servants or agents of the receivers produced false documents.

3. Mr. McPhillips is entitled to a declaration that the receivers were not validly appointed.

4. I will hold over any issue of whether Mr. McPhillips is entitled to damages because an injunction had been wrongly granted.
FOOD FOR THOUGHT for the great unwashed.


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## Sarenco

This case related to the formalities of appointing and discharging receivers and not whether a receiver had discharged his duty to take reasonable steps to obtain the best price for a property where he exercises a power of sale.

I am attaching a link to a Irish Independent article on Ben Gilroy's activities for readers' information.

http://www.independent.ie/irish-new...d-of-putting-receivers-off-land-29569638.html


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## Rebuttal

Yes, the case highlights the rather troublesome matter of the LEGAL formalities for appointing receivers. What was the Judge thinking of.

I believe Ben Gilroy has been in court for trespass, now it's the turn of the receivers. Shoe is on the other foot so as to speak.


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## Sarenco

In this case, the Court simply re-iterated the common law position that a receiver must be appointed in accordance with the relevant security instrument and if not appointed in accordance with the terms of that instrument the receiver is not validly appointed.

Hardly groundbreaking.


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## Rebuttal

Where was the professionalism on the part of the receiver for not checking whether he was validly appointed, the only legal thing a receiver has to do really. Hardly rocket science. Next question is, did the receiver actually have sight of the security documents before he accepted his appointment. Let's not open that can of worms. Just thinking of the claim for professional negligence down in the courts, receiver cannot mount much of a defence methinks, maybe it will be settled without the need for a court case. ( usual scenario ). If you read the judgment in full, you get the impression that the receivership was a litany of errors and blunders from start to finish, hardly professional, in fact very unprofessional. This is somewhat publicly humiliating for a large company such as Grant Thornton. If I was fortunate enough to be CEO of a bank, I would think twice about employing this company, and if I did, I certainly would not be signing any indemnity bond with them.


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## Sarenco

Well the bank certainly made a costly mistake in not scrupously following the legal formalities relating to the appointment although I suspect this particular ruling will be appealed.


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## Rebuttal

How about all the other appointments of receivers by ACC bank in the last few years. If the receiver was appointed in the manner referred to in the case stated above, and there is no reason to think otherwise, are they lawful ? I think not. Oops. Cat out of the bag. Think of all the properties that have been sold by the receivers for ACC bank in the recent past, at knock down prices I might add. Groundbreaking it is not, it is just the breaking of a bank with respect to litigation and claim for damages. They have to appeal or go into liquidation, stark choice.


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## Sarenco

Structly speaking, ACC is actually a loan management company - it no longer holds a banking licence and is essentially winding up its operations.

In any event, I have no idea whether the appointment of any other receivers by ACC were invalid. This might or might not be a wider problem for ACC.


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## Rebuttal

Yes, I am aware of same, just keeping post simple for viewers, but on the face of it, it appears that ACC loan management ltd will have problems with respect to legal actions on the past invalid appointment of receivers over their securities.


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## Rebuttal

Sarenco said:


> In this case, the Court simply re-iterated the common law position that a receiver must be appointed in accordance with the relevant security instrument and if not appointed in accordance with the terms of that instrument the receiver is not validly appointed.
> 
> Hardly groundbreaking.



I agree with you in this regard, and because of this I find it difficult to comprehend how any appeal will succeed.


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## Sarenco

Rebuttal said:


> I agree with you in this regard, and because of this I find it difficult to comprehend how any appeal will succeed.



Well I guess ACC would seek to argue that the receivers were in fact properly appointed.  

The case turned on whether the requirement in the security document to appoint the receiver by writing under hand could be satisfied by affixing the company seal to the deed of appointment and having two authorised signatories attest to same.  I know a lot of practioners were surprised at the ruling.


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## Rebuttal

I believe these parts of the judgment are very pertinent.




_General Sealing and Signing Authority
The seal of the Bank may be affixed to any document which is required to be sealed by the Bank in the ordinary course of business in the presence of the Chief Executive or the Secretary._

_Any document which is required to be signed under hand on behalf of the Bank in the ordinary course of business may be signed on behalf of the Bank by the Chief Executive or the Secretary, or the Law Agent”. (Emphasis added)._

It is noteworthy that the internal memorandum prepared for the Board of Directors by Ms. Glynn as Company Secretary, specifically distinguishes between


(a.) documents under seal and 
(b.) documents which are required to be signed under hand on behalf of the Bank

105. It is also noteworthy that it sets out different persons who should have the Bank’s authority to witness the affixing of the company’s seal, (of whom there are six) and persons who should have the Bank’s authority to sign documents under hand, (of whom there are only three).
106. Thus, in respect of documents which are required to be executed under seal, it sets out that the seal of the Bank may be affixed to particular types of documents and also provides that the seal may be affixed in the presence of any one of six persons.

107. However, in relation to any document which is required to be signed under hand, on behalf of the Bank, in the ordinary course of business, these documents may only be signed on behalf of the Bank by the Chief Executive, or the Secretary, or the Law Agent. It is only these three persons who have the authority on behalf of the Bank to sign documents under hand, on behalf of the Bank.


And then,


140. Thus the Bank has authorised 6 different people to witness the affixing of the seal of the company to certain deeds. However the Bank has only authorised three specific people to put its signature to documents which are required to be in writing under its hand. These are the Chief Executive Officer, the Secretary and the Law Agent.

141. On the facts of the present case, the deeds of appointment were not signed by one of these three duly authorised people.

142. Therefore the documents appointing the receiver, although “in writing”, were not “under its hand” i.e. were not signed by a person duly authorised to sign such documents.

143. In these circumstances, it must follow that the deeds appointing the receivers were not “by writing under its hand” as required by the deed of mortgage/ charge.

It must therefore follow that the two deeds of appointment were invalid. (Given that the deed of appointment of Mr. Tennant was invalid, it arguably follows that his deed of discharge was not necessary).

I believe the memo and articles of association of ACC bank speak for themselves, Justice Gregan merely applied same.


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## Dermot

Are ACC the only Bank likely to have "cocked up in the scenario outlined above in the appointment of Receivers" or are other Banks likely to have made mistakes in this regard.

How do you find out who the authorised persons in a Bank are  for signing documents appointing a receiver to a property?.


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## Rebuttal

Dermot said:


> Are ACC the only Bank likely to have "cocked up in the scenario outlined above in the appointment of Receivers" or are other Banks likely to have made mistakes in this regard.
> 
> How do you find out who the authorised persons in a Bank are  for signing documents appointing a receiver to a property?.



You can request the authorised signature list from the particular bank in question that was in operation when the receiver was appointed. In your application be as precise as possible, ie look up the memo and articles of association of the bank. Each bank has its own set of rules regarding authorised signatories which the executive board of the bank publishes as an internal memo. Some banks give unlimited power of attorney to two signatories, others like ACC differentiate between the signatories that can sign under hand and under seal, other banks have a pecking order of authorised signatories like category 1 and 2 and in these cases a category 1 signature must accompany the other  authorised signatory for the signing of the deed to be binding etc, etc.


The answer to your question is yes, other bank's are likely to have cocked up with regard to the signatory requirements for the validation of the deed of appointment of the receiver. The bank's expect the borrower to roll over and play dead, because they receive this official looking piece of paper. ( usually two a4 sheets of paper stapled together ). Some became blasé about the legal importance of the correct signatory requirements.


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## Sarenco

Dermot said:


> Are ACC the only Bank likely to have "cocked up in the scenario outlined above in the appointment of Receivers" or are other Banks likely to have made mistakes in this regard.



Hi Dermot,

It’s certainly a possibility that other banks have made similar mistakes, although I would be very surprised if it’s a widespread problem.  In the case of major receiverships, it’s standard practice for the receiver to obtain a letter from his lawyers confirming the validity of his appointment and the scope of his powers.

If in doubt, the first thing you would look at is the mortgage document itself.  Sometimes the mortgage will provide that the appointment must be made under seal *or* under the hand of a duly authorised officer or employee of the relevant bank.  Alternatively, the wording might be more specific and provide that the bank may make the appointment without notice by writing under the hand of any director, general manager, assistant general manager or secretary for the time being of the relevant bank or any person authorised by any one of them in writing to appoint a receiver.  There really is no standard wording.

You would then look at the receiver’s deed of appointment to establish whether, on the face of it, the appointment has been made in accordance with the terms of the mortgage document itself.  Depending on the circumstances, this may well prompt a mortgagor to make further investigations.


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## Rebuttal

I agree with Sarenco, but you must write to the bank requesting their list of authorised signatories and compare same with the authorised signatories of the bank on the deed of appointment of the receiver, having regard to the bank's memo and articles of association and the specific signatory requirements of the particular bank.


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## Gerry Canning

Asphyxia.

Are there a few (simple) pointers on receiver to be validly  appointed ?

When (validly) appointed are there some simple actions they must do to be (legal)?

{Reason I ask is that I find legal jargon etc very heavy}


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## Asphyxia

The best way to attack a deed of appointment of a receiver is to see if the receiver is validly appointed. This can be done by researching the relevant financial institutions memorandum and articles of association. Most large financial institutions have a board of directors, which in turn appoint an executive board. The executive board control the day to day running of the organisation. The executive board issue orders regarding a plethora of matters, including, the requirements of authorised signatories that legally bind the bank in commercial dealings, deeds, contracts, etc. It is these executive orders which if broken or disregarded can void the appointment of the receiver. For example, an executive order of a bank states that two authorised signatories with power of attorney are necessary to sign a deed in order to bind the bank into contract with the receiver and on investigation it transpires that only one of the authorised signatories has power of attorney, then the deed of appointment of the receiver is invalid, as the banks own executive orders have been breached. I hope this clarifies things.


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## Sarenco

The mortgage document itself will set out how a receiver can be appointed.  This varies from document to document. 

Sometime the mortgage document will provide that specified officers of the lender can make the appointment under hand (by simple signature) or the document may require the appointment to be executed under seal and the bank's constitutive documents will specify who may attest to the affixing of the company seal to a document.

Irish companies only have one board of directors.  However, the majority of the directors of an Irish credit institution must be independent non-executive directors.


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## Black_Adder

What drives the Master insane is that in his view the process and procedures are there.
The Banks are casual about this and why wouldn't they be?
As costs follow events, individuals are fearful taking cases. 
Few have courage. 
I can see no fear in Banks .


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## Mr Holmes

Black_Adder said:


> What drives the Master insane is that in his view the process and procedures are there.
> The Banks are casual about this and why wouldn't they be?
> As costs follow events, individuals are fearful taking cases.
> Few have courage.
> I can see no fear in Banks .



I agree with you in this regard, however I expect significant fallout from the judgement, indeed the very fact of Danske bank attempting to import extra powers ( informing the borrower that the receiver is attorney for the mortgagor ) within a deed of appointment of a receiver that are not contained within the mortgage debenture could render such receivership appointments void ab initio, see the Masters comments on the matter below:


“It is noted that the receiver… is agent of the mortgagor and, so far as is necessary (?), shall be attorney of the mortgagor and the mortgagor alone shall be responsible for his acts.”
This recital does not tally with the legal position in this case. There is no question of the receiver enjoying the status of attorney for the mortgagor, and neither is he the agent of the mortgagor if he exercises the mortgagee’s power of sale, which power is not listed in the 1881 Act. The recital is, in short, an actionable misrepresentation on the part of the plaintiff bank. It was rather late in the day for the bank to try unilaterally protect its position. If the receiver’s actions have unlawfully caused the defendants loss, the bank, as the receiver’s principal, will be liable.


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## Black_Adder

Mr Holmes
I am aware of a case that is winding its way forward involving a particular bank. The jist is they appointed a Receiver prior to the accounts going two payments into arrears when in fact fact it was 1.7 payments. Did not contact all the borrowers. Trespassed. Changed the locks and sold the properties. The only issue for the litigant is that the law is far from certain regardless of the merits. He seems determined to teach the Bank a write off.


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## Mr Holmes

Black_Adder said:


> Mr Holmes
> I am aware of a case that is winding its way forward involving a particular bank. The jist is they appointed a Receiver prior to the accounts going two payments into arrears when in fact fact it was 1.7 payments. Did not contact all the borrowers. Trespassed. Changed the locks and sold the properties. The only issue for the litigant is that the law is far from certain regardless of the merits. He seems determined to teach the Bank a write off.



Black_Adder,

The following case law may be of assistance to the litigant, _Windsor Refrigerator Co. Ltd. v. Branch Nominees Ltd_ [1961] 1Ch. 375., basically, the upshot is that the appointment of a receiver should be in strict compliance with the mortgage deed, any deviation from the mortgage deed and the deed of appointment is void.


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## Mr Holmes

Just to explain to readers what a recital is within a deed, in legal terms : a recital is a formal statement or setting forth of some matter of fact, in any deed or writing, in order to explain the reasons upon which the transaction is founded. So, if a recital is found to be a lie ( misrepresentation ) and is not based on a matter of fact, it brings the whole deed into disrepute, so that, in this particular case, the very deed of appointment of the receiver could be found by a court to be void, the result of which, has obvious serious consequences for the bank in question.


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## Micky

Rebuttal said:


> Sarenco,
> 
> In relation to the subtle differences in Danske bank executive orders between branches operating in Denmark and Danske branches abroad, an example of same,  and with regard to the subject matter of this thread, would be the authorised signatory requirements that bind the bank.
> 
> In Denmark the minimum that is required for this action is two authorised signatories with POA. With regard to Danske branches operating abroad, you require the same two authorised signatories with POA, with the proviso, that one of the signatories must be a category 1 signatory. When Danske bank produce an authorised list of authorised signatories for branches operating abroad, they also provide a sub category of signatories, category 1,2 and 3. This is just one example of executive orders nuances between Danske bank in Denmark and Danske bank operating abroad. Hope this clarifies matters.




Where could one find a list of "authorised signatories" of Danske Bank for say the year 2013?


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## Mr Holmes

Micky said:


> Where could one find a list of "authorised signatories" of Danske Bank for say the year 2013?





There is a register in Denmark where this info can be accessed, but you must be able to understand Danish to navigate the register. My advice to you would be to simply write to Danske bank and ask them for the list of authorised signatories with special power of attorney to bind the branch in Ireland for 2013. Have receivers been appointed by the bank over your properties ?


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## Dermot

Mr Holmes. Have you any idea on the list of persons authorised to appoint a receiver in the case of ICS/BoI repossessions?.


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## Black_Adder

ICS is now BoI btw.


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## Dermot

Black_Adder said:


> ICS is now BoI btw.



Sorry if I was not clear.  The mortgages were taken out with ICS before BoI took over ICS.


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## Mr Holmes

Dermot said:


> Mr Holmes. Have you any idea on the list of persons authorised to appoint a receiver in the case of ICS/BoI repossessions?.



Dermot, on the 1st September 2014 the assets and liabilities of the ICS were transferred from the ICS Building Society to Bank of Ireland pursuant to statutory instrument  257/2014, therefore the authorised signatories of Bank of Ireland can now be used to appoint a receiver over a property that was originally mortgaged with the ICS. What is your current position with regard to the BOI ?


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## Dermot

Mr Holmes said:


> What is your current position with regard to the BOI ?




Very briefly the receivers have been appointed to my friends RIP's.  Just wanted to see if the appointment of the receiver was signed by an authorised signatory.  I started a thread since closed on the my friends problems which is alluded to in the  opening post on this thread.


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## Mr Holmes

Dermot said:


> Very briefly the receivers have been appointed to my friends RIP's.  Just wanted to see if the appointment of the receiver was signed by an authorised signatory.  I started a thread since closed on the my friends problems which is alluded to in the  opening post on this thread.


Is your friend fighting summary judgment by BOI ?


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## Dermot

No he is not. Hoping to do some type of deal on PPR which is not very likely to succeed


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## Mr Holmes

Has summary judgment already been granted ?


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## Carl O' Vian

Mr Holmes said:


> Have other readers any queries in relation to lpa receiverships ?



Hi Mr. Holmes,

I'm defending against summary judgement that B o I are seeking after they sold my properties at 60% of market price which left significant Negative Equity. I'm of the view that the receivership appointment is invalid, for several reasons which I list as questions below. I would welcome your opinion on the below. Unfortunately I'm struggling to get any representation and have had to plough on myself in the absence of same

Q 1: I've gotten copies of the Deeds of Charge, neither of which are signed or sealed. Does the absence of same make the same Deeds of charges void?
Q 2: If they are void, presumably the receivership appointment would be void also?
Q 3: The receivership appointment seems to have been made from the same Deeds of Charge which references Sect 24 of the 1881 Conveyancy Act. The receivership appointment documents seem to be made by seal, (seal is not visible) witnessed by an individual described as Authorised Signatory and further witnessed by another. The Authorised signatory however is not the Secretary but an Assistant Secretary? Does that also invalidate the appointment?
Q 4: In terms of remedy, if the Deeds of Charge are defective does that have the meaning that the powers of the 1881 Act are not applicable in terms of potentially seeking restoration of the property to my ownership by Sect 74 of the Land Conveyancing Act 2009 and damages etc?

Thanks


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## Mr Holmes

Carl O' Vian said:


> Hi Mr. Holmes,
> 
> I'm defending against summary judgement that B o I are seeking after they sold my properties at 60% of market price which left significant Negative Equity. I'm of the view that the receivership appointment is invalid, for several reasons which I list as questions below. I would welcome your opinion on the below. Unfortunately I'm struggling to get any representation and have had to plough on myself in the absence of same
> 
> Q 1: I've gotten copies of the Deeds of Charge, neither of which are signed or sealed. Does the absence of same make the same Deeds of charges void?
> Q 2: If they are void, presumably the receivership appointment would be void also?
> Q 3: The receivership appointment seems to have been made from the same Deeds of Charge which references Sect 24 of the 1881 Conveyancy Act. The receivership appointment documents seem to be made by seal, (seal is not visible) witnessed by an individual described as Authorised Signatory and further witnessed by another. The Authorised signatory however is not the Secretary but an Assistant Secretary? Does that also invalidate the appointment?
> Q 4: In terms of remedy, if the Deeds of Charge are defective does that have the meaning that the powers of the 1881 Act are not applicable in terms of potentially seeking restoration of the property to my ownership by Sect 74 of the Land Conveyancing Act 2009 and damages etc?
> 
> Thanks




Carl O'Vain,

Q1. By deeds of charge I am presuming you mean the debenture. Is the debenture signed by you ? If the debenture is not signed by you, the bank could have a problem. The mortgage deed ( debenture ) should have been signed by you, most likely in the presence of the solicitor, employed by you, that was involved in the conveyance of the property. It is not necessary for the bank to sign the mortgage deed at the time of drawdown of the mortgage. They may sign the deed later on, for example, when they are registering their interest in the property with the land registry. In relation to the seal, sometimes photocopies of photocopies tend to remove any trace of a seal, especially if the seal is white. You are entitled to inspect the original mortgage documentation for an appropriate fee. ( usually at the offices of the bank's solicitor )

Q2, If the debenture is in fact void, then, yes, the appointment of the receiver is most likely void also. However, there have been cases, were there was no express power to appoint a receiver in the debenture and the bank utilised the statutory power to appoint same. You must have received the deeds of appointment of the receiver, if the appointment was made from the debenture, the appointment must be made in strict compliance with the terms as set out in the debenture, otherwise the said appointment is invalid.

Q3, Request the the memo and articles of association of BOI applicable, on the date the receiver was appointed. Look also for the list of authorised signatories applicable, with the power to bind the bank on that date. If the person who signed the deed of appointment of the receiver is not so authorised by the bank, then the appointment may be found to be invalid.

Statutory provisions as they currently stand,

Section 64 of the Land and Conveyancing Law Reform Act 2009 abolishes the need for sealing by an individual (but not for companies) and abolishes the rule that authority to deliver a deed has to be given in the deed. A document is identified as a deed by using the appropriate description or wording e.g. Assignment, Conveyance, Charge, Deed, Indenture, Lease, Mortgage, Surrender or other appropriate heading.

The Act sets out the specific requirements for execution as follows: The deed is to be executed in the following manner:


If made by an individual, signed by the individual in the presence of a witness who attests the signature or signed by a person at the individual’s direction given in the presence of a witness who attests the signature, or the individual’s signature is acknowledged by him or her in the presence of a witness who attests the signature.
If made by a company registered in the State, it is executed under the seal of the company in accordance with its Articles of Association.
If made by a body corporate registered in the State other than a company, it is executed in accordance with the legal requirements governing execution of deeds by such body corporate.
If made by a foreign body corporate, it is executed in accordance with the legal requirements governing execution of the instrument in question by such a body corporate in the jurisdiction where it is incorporated.
Delivered as a deed by the person executing it or by a person authorised to do so on that person’s behalf”.
Any deed executed under this section has effect as if it were a document executed under seal.




did the BOI instigate enforcement proceedings prior to 2014, this is important as the Company Act 2014 changed the rules regarding company seal and persons authorised to bind the company.

Q4. The house has been sold to a third party, so you will not be able to seek restoration of the property, however the court, if they find in your favour, can adequately compensate you for your loss regarding same.

I would find it highly unusual for a debenture to be void, however given the rush to lend money during the property boom, anything is possible.


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## Mr Holmes

Carl,

Did BOI sell your property or did the receiver ?


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## Flanno

Asphyxia said:


> The best way to attack a deed of appointment of a receiver is to see if the receiver is validly appointed. This can be done by researching the relevant financial institutions memorandum and articles of association. Most large financial institutions have a board of directors, which in turn appoint an executive board. The executive board control the day to day running of the organisation. The executive board issue orders regarding a plethora of matters, including, the requirements of authorised signatories that legally bind the bank in commercial dealings, deeds, contracts, etc. It is these executive orders which if broken or disregarded can void the appointment of the receiver. For example, an executive order of a bank states that two authorised signatories with power of attorney are necessary to sign a deed in order to bind the bank into contract with the receiver and on investigation it transpires that only one of the authorised signatories has power of attorney, then the deed of appointment of the receiver is invalid, as the banks own executive orders have been breached. I hope this clarifies things.


That's a great post very clear to understand The AIB receiver's took my properties without valid paper signed by the bank.
Asphyxia I would love to have a chat with you sometime about the above.
Peter Flanagan


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## dubliner2k15

Mr Holmes said:


> Have any of your properties been sold as part of project circle?



Do you have any other info on the project circle case? My parents had a property sold in the portfolio. We are unsure what is the next steps to deal with the situation since Cerebus now owns the residual debt.


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## Brendan Burgess

I have moved Shelley's report that the High Court upheld the appointment by BoI of a Receiver to his property: 

http://www.askaboutmoney.com/threads/high-court-finds-appointment-of-receiver-valid.201910/


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