The Judgment Mortgage (Ireland) Acts 1850 and 1858 allows a plaintiff who obtains judgment to register the judgment as a mortgage against the defendant’s land in respect of the debt due on foot of the judgment. (While these Acts were amended/repealed by the Land and Conveyancing Law Reform Act 2009 - enacted 1 December 2009-, similar provisions were carried over into the 2009 Act.) In summary, the procedure to be followed is as follows.
When judgment is entered, the judgment creditor swears an affidavit setting out, inter alia, the terms of the judgment and reciting that the judgment debtor is the owner of particular lands. Once the affidavit is sworn the judgment is converted into a mortgage by filing the affidavit in both the office of the particular court where judgment was obtained, and the Land Registry or Registry of Deeds (as appropriate). The Registrar of Deeds, or the Registrar of Title in the Land Registry, will send both parties a note confirming registration of the judgment mortgage. The effect of registration is provided for by section 7 of the1850 Act (now Section 116 of the Land and Conveyancing Law Reform Act 2009.) When judgment is validly registered as a judgment mortgage, registration has the effect of mortgage by deed over the judgment debtor’s beneficial interest at the time of registration of lands set out in the affidavit. Accordingly such a judgment creditor has special powers in relation to the property by virtue of section 19 of the Conveyancing Act 1881. These include a power to appoint a receiver, and a power of sale. The judgment mortgagee may well encounter difficulties in finding a third party buyer prepared to purchase in the absence of a well charging order issued by the court. The judgment creditor’s usual remedy, accordingly, is to seek a well charging order by institution of a mortgage suit.
Section 8 of the 1850 Act provides that a voluntary conveyance made with fraudulent intent after judgment is void as against the judgment creditor.
Section 51 of the Bankruptcy Act 1988 provides that a judgment mortgage is not effective if bankruptcy occurs within three months following registration of the judgment mortgage. As regards companies, pursuant to section 284(2) of the Companies Act 1963 a judgment mortgage is not effective if winding up occurs within three months of registration.
There appears to be a misconception that section 4 of the 1850 Act requires that a judgment mortgage must be ‘renewed’ every 5 years otherwise it becomes unenforceable against third parties. This is not the case. Indeed, Section 116 of the Land and Conveyancing Law Reform Act 2009 clarifies that there is no requirement to re-register a judgment mortgage.
The procedure to vacate a judgment mortgage requires lodgement by the judgment debtor of a document signed by the judgment creditor showing that the debt has been paid (a satisfaction piece).This is lodged in the appropriate court office. As regards unregistered land a satisfaction piece lodged with the Registrar of Deeds operates as a reconveyance of the land and the legal or equitable estate vests in the person in whom it would have vested had no registration of a judgment mortgage been effected. The cancellation of a judgment mortgage as a burden on registered land is effected by producing to the Land Registry a certificate of satisfaction of the judgment or a requisition by the judgment creditor for its discharge.
Registration of the judgment mortgage does not have any automatic immediate effect until the judgment creditor decides either(a) to force a sale as mortgagee pursuant to a mortgage suit, or (b) to claim entitlement to proceeds upon a sale by the judgment debtor. To this extent the judgment creditor is, broadly speaking, in the same position as an equitable mortgagee by way of deposit of title deeds to the extent that the judgment creditor has an estate in land which entitles him or her to payment through a court enforced sale. The jurisdiction in which to seek a well charging order is either in the High Court or the Circuit Court as appropriate. The District Court has no jurisdiction to hear such applications: it would appear that a well charging order with regard to a judgment mortgage relating to a District Court decree should be sought in the Circuit Court.
The right of action to enforce a judgment mortgage lasts 30 years for a State Authority and 12 years for everyone else. The relevant date is the date the judgment becomes enforceable, and not the date on which it is registered.
Registration against Joint Tenants
Ms Justice Laffoy held in the case of Judge Mahon & Others v Lawlor & Ors that the registration of a judgment mortgage against one of two joint tenants of registered land does not cause a severance. Her conclusion was that Mr Lawlor's interest in the lands ceased on his death and therefore the judgment mortgages which affected his interest also ceased. This position has now been confirmed by Section 30(3) of the Land and Conveyancing Law Reform Act 2009.
Statement of Amount of Decree and Costs
As the amount of the decree or judgment will appear on the perfected order of the court, there would seem to be little difficulty in stating the amount of the decree in the judgment mortgage affidavit. Where judgment has been obtained in the District Court the amount of costs must not exceed the amount of the decree. It has, however, been held that where the amount of costs is mis-stated, this will invalidate the judgment mortgage. So in Phillips v Kilkelly an affidavit which incorrectly stated that the costs order included some £5-13 in witness expenses was held to have invalidated registration of the judgment mortgage. When a judgment creditor obtains judgment, he or she may wish to register a judgment mortgage quickly. This is so as to preserve priority over other – later – encumbrances. It is also sensible to do so because if the judgment debtor becomes bankrupt, or, being a company is wound up, within three months of registration of the judgment mortgage, the registration will have no effect in the judgment debtor’s bankruptcy/liquidation. Once judgment is obtained, however, the amount of costs may not, as a practical matter, be immediately ascertained. In practice, (save in the District Court where scale costs apply) costs are only ascertainable where there is agreement reached as to the amount of costs recoverable, or where they are taxed in default of agreement. Accordingly, where costs are not agreed by the defendant, they must be taxed – a process which at least in the High Court (and including appeals from the Taxing Master’s decision) can take some considerable time.
Interest
As regards interest, in practice the effective requirement is to have the amount of interest ascertained as at the date of swearing the affidavit, or else abandon the claim for interest.
When a creditor takes a charge from a company and registers the charge pursuant to section 99 of the Companies Act 1963(as amended), whilst the chargee can, if it wishes, state the precise amount covered by the charge, there is no requirement to do so. It is sufficient, for example, to state that the charge secures ‘all sums and interest thereon’ or the like. The primary purpose of registration of a judgment mortgage is arguably not necessarily to inform an outsider of the amount of the judgment, but rather it is to inform outsiders that the judgment debtor’s property is encumbered.
Priority of Judgment Mortgages
As far as unregistered land is concerned, the general rule is that the judgment mortgage registered in the Registry of Deeds takes effect subject to all equities or interests affecting the land at the date of registration. Accordingly, a prior unregistered deed still has priority. As regards registered land, because a judgment mortgage is regarded as a voluntary transaction, by virtue of section 71(4) of the Registration of Title Act 1964 it is subject to the following:
(i) all registered burdens on the folio;
(ii) all section 72 burdens (burdens which affect registered land without registration);
(iii) all unregistered rights affecting the judgment creditor’s interests prior to registration of the affidavit.
The issue of the priority of judgment mortgages was addressed by the Supreme Court in Tempany v Hynes. In that case a majority of the Supreme Court took the view that a judgment mortgage registered against an owner of registered land who had entered into a contract to sell the land, attached to the beneficial interest retained by the judgment debtor for so long as the purchaser had not paid the full purchase price. When the purchaser paid the balance on completion, thereby becoming the full owner on registration of the transfer to him or her, the purchaser took title subject to the judgment mortgage.
If a judgment mortgage has been registered against your property and you need advice on your options for dealing with it please contact Jim Stafford on 01 661 4066 or by email: stafford@liquidation.ie