Supreme Court Delivers Judgment on Circuit Court Jurisdiction

Some of our previous briefings have highlighted the conflicting High Court decisions as to whether certain possession cases can be heard in the Circuit Court. The conflicting views have been considered and finally determined by the Supreme Court in a judgment delivered on 12 December 2017.

In May 2015, Justice Murphy in the case of Bank of Ireland Mortgage Bank v Finnegan and Ward[1], held that the property, the subject of the proceedings, was not rated nor rateable. She held that the Circuit Court lacked jurisdiction to hear the bank’s claim. In a later High Court decision (Bank of Ireland v Hanley and Giblin[2]), Justice Noonan reached a different conclusion. He held that the Circuit Court in effect had an unlimited jurisdiction to deal with such matters. He held that establishing the rateable valuation of a property did not constitute an essential proof in such cases.

The issues raised in the two Bank of Ireland cases were subsequently put to Justice Baker in Permanent TSB plc v Langan, and she stated a case on the issues raised for the opinion of the Court of Appeal[3]. The Court of Appeal agreed with the judgment of Justice Murphy in Bank of Ireland Mortgage Bank v Finnegan and Ward. An appeal of the Court of Appeal decision was then brought by Permanent TSB.

The Supreme Court judgment was delivered by Chief Justice Clarke. The Supreme Court acknowledged that the High Court and the Court of Appeal had a difficult task in applying the existing legislation which defined the jurisdiction of the Circuit Court and noted that it was not surprising that differing decisions were delivered.

The Supreme Court examined the existing legislation and based on a literal interpretation of the relevant provisions, the Supreme Court held that the legislation confers jurisdiction on a general basis on the Circuit Court to hear property related cases, unless the property at issue comes within certain specified exclusions listed in the third column of the Third Schedule to the Courts (Supplemental Provisions) Act 1961. There are many exclusions listed in the Third Schedule, with the main one at the centre of all these cases being the exclusion relating to properties with a rateable valuation of more than €235.95.

The Supreme Court also considered the meaning of the words “rateable” and “rateable valuation”. In an important confirmation it was held that a property can have a “rateable valuation” notwithstanding the fact that it is not “rateable” (i.e. that it is not in fact subject to the payment of rates).

Chief Justice Clarke examined the Constitution to determine if there were any provisions which would require a different view to be taken. The Constitution contemplates the existence of Courts of “local and limited jurisdiction”. It was argued that an unlimited jurisdiction could not be conferred on the Circuit Court as the Constitution stated that its jurisdiction must be limited. Chief Justice Clarke considered the relevant provisions of the Constitution and held that the Constitution did not require him to depart from his literal interpretation of the relevant legislative provisions.

In his judgment, Chief Justice Clarke usefully summarised the proofs in relation to jurisdiction that are required in possession proceedings. He held that it is necessary for a plaintiff in these actions to establish jurisdiction. Jurisdiction can be established by producing a certificate of rateable valuation which shows that the property is rated below €253.95. Alternatively, jurisdiction may be demonstrated by producing evidence that the property does not have a rateable valuation.

In summary, the main points to highlight from the Supreme Court’s judgment are:

1. The Circuit Court has jurisdiction unless the rateable valuation of the property is above €235.95; and
2. If the rateable valuation is not above €235.95 the Circuit Court will have jurisdiction even if the property is not “rateable” or has no “rateable valuation”.

Whilst the judgment relates to a limited class of properties, it will provide a great level of comfort to lenders who had obtained orders for possession in reliance on the rateable valuation of a property which was not “rateable”. Those orders will be protected from challenge on jurisdictional grounds. 

The judgment, whilst a welcome end to the issue, will be of limited impact in future proceedings for possession. Properties which are the principal private residence of the borrower, or properties subject to mortgages created after 1 December 2009, are already subject to the mandatory jurisdiction of the Circuit Court by virtue of the Land and Conveyancing Law Reform Act 2013[4], and the Land and Conveyancing Law Reform Act 2009[5].

The uncertainty and apparent lacuna left open by the Court of Appeal’s decision in the Langan case had prompted the enactment of the Courts Act 2016[6] and the commencement of section 45 of the Civil Liability and Courts Act 2004[7]. The combination of both of these Acts was to confer jurisdiction on the Circuit Court where properties have a market value not exceeding €3,000,000.00. Whereas relying on the rateable valuation, or the absence thereof, of a property will, according to the Supreme Court’s judgment, require a plaintiff to provide proof of the position, there is a rebuttable presumption that the market value of a property does not exceed €3,000,000.00 and no proof of the market value is required unless that assertion is challenged. It is likely therefore that a lender will prefer to rely on the Courts Act 2016 rather than the Supreme Court’s judgment when asserting jurisdiction in future cases for possession.

For more information on our services please contact Declan Murphy, Raymond Lambe, Claire Colfer or your usual contact at OSM Partners.

[1] Bank of Ireland Mortgage Bank -v- Laura Finnegan and Christopher Ward; 20 May 2015; [2015] IEHC 304

[2] Bank of Ireland Mortgage Bank -v- Shane Hanley and Alan Giblin; 26 November 2015; [2015] No. 6 CA]

[3] Permanent TSB plc -v- David Langan; 28 July 2016; [2016] IECA 229

[4] Number 30 of 2013

[5] Number 207 of 2009

[6] Number 22 of 2016

[7] Number 31 of 2004