The Validity of Security

Banking and Corporate Lending

27 February 2017 by Alban O'Callaghan, Trainee Solicitor
The Validity of Security

On the 9th of February 2017 the Court of Appeal gave Judgement on an issue concerning the non-registration by a Bank of a lien arising from an equitable deposit of title deeds, in accordance with Section 73 of the Registration of Deeds and Title Act 2006 (“the 2006 Act).

The Bank had failed to register its lien within the required 3 year period and it was argued by its customer appealing against an Order made in the High Court in favour of the Bank, granting a Well Charging Order and Order for Sale over the secured properties, that therefore, the security had lapsed and could not be enforced. The Bank’s position was, that the non-registration did not affect the validity of the security held, but rather affected the order of priority with other encumbrancers. In effect, other encumbrancers, not being on notice of the Bank’s security because of its non-registration, would achieve priority if their security was registered prior to the Bank’s security.

It was pointed out to the Court that there was nothing within the 2006 Act to suggest that the security was invalid if not registered within the 3 year period.

After deliberation, the 3 judge Court found that the non-registration of the Bank’s security within the required 3 year period did not render the security invalid but did have application in so far as other encumbrancers were concerned in dealing with the order of priority. In the present case the Bank’s lien had been registered following the expiry of the 3 year period and prior to the registration of any other security on the properties. The appeal was unanimously dismissed with costs.

Copyright © Alban O’Callaghan, McKeever Solicitors, 27 February 2017.

This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information please contact Gerard Walsh or Alban O’Callaghan.

Key Contacts

Gerard H. Walsh
Partner

IFSC, Dublin
Gerry has advised extensively on all aspects of Financial Services (including Insurance), Corporate and Private Client Litigation for over 30 years.

T: +353 (0)1 670 2990

F: +353 (0)1 670 2988

E: gwalsh@mckr.ie

Alban O'Callaghan
Trainee Solicitor

IFSC, Dublin
Alban holds a Masters in Law from University College Dublin and is due to complete his solicitor training in 2017. His background is in the commercial banking sector.

T: +353 (0) 1 670 2990

F: +353 (0) 1 670 2988

E: aocallaghan@mckr.ie