Bank must register as charge owner to enforce statutory powers over registered land despite contractual appointment rights.

THE SUPREME COURT

[Appeal No. 473/2013]

Clarke J.

Laffoy J.

Dunne J.

BETWEEN

TOM KAVANAGH AND BANK OF SCOTLAND PLC

PLAINTIFFS/RESPONDENTS

AND

PATRICK MCLAUGHLIN AND ROSEANN MCLAUGHLIN

DEFENDANTS/APPELLANTS

Judgment of Ms. Justice Laffoy delivered the 19th day of March, 2015

The issue

1. This judgment addresses one issue raised on the appeal. As regards the other issues, I am in agreement with the judgment

delivered by Clarke J.

2. In the interests of symmetry, I will use the same terminology as used by Clarke J. in his judgment. As outlined in paragraph 3.3

thereof, the issue being addressed in this judgment arises from the fact that BOS has not been registered as the owner of a charge

over registered land created by the McLaughlins in favour of BOSI, which charge was transferred to BOS at 23.59 hours on 31st

December, 2010 when the cross-border merger of BOSI into BOS by absorption took effect. The position of the McLaughlins is that, in

the absence of the registration of BOS as owner of the relevant charge on the relevant folio in the Land Registry, BOS is precluded

from enforcing that charge against the McLaughlins, including enforcement by way of the appointment of a receiver. While the

principal focus of the submissions on behalf of the McLaughlins was on a property over which they gave security to BOSI the title to

which is registered in the Land Registry, their argument also extended to other properties the title to which is unregistered and over

which BOSI also obtained security from the McLaughlins. However, it was acknowledged that the argument carried less weight in

relation to the properties the title to which is unregistered. Accordingly, the primary focus in this judgment will be on the secured

property the title to which is registered in the Land Registry.

3. As with the other issues addressed in the judgment of Clarke J., the legal issue addressed in this judgment has the potential to be

of significant importance well beyond the scope of this case, as it affects all securities over registered land acquired by BOS in

consequence of the cross-border merger. Nonetheless, it is useful to illustrate how the issue arises by reference to some of the

instruments on foot of which BOS claims that it has security over land from the McLaughlins and that it is entitled to enforce the

security.

Security documentation

4. By deed of mortgage and charge dated 18th July, 2005 made between the McLaughlins of the one part and BOSI of the other part

(the 2005 Mortgage) the McLaughlins mortgaged “Latona” in favour of BOSI. The title to “Latona” was unregistered title, the interest

mortgaged being a long sub-leasehold interest of which over 900 years of the term remained unexpired. The 2005 Mortgage was

registered in the Registry of Deeds on 16th February, 2006.

5. By deed of mortgage and charge dated 31st March, 2006 made between the McLaughlins of the one part and BOSI of the other

part (the 2006 Charge) the McLaughlins charged the property known as 40 Kerrymount Rise, Foxrock, then being all of the property

comprised in Folio 155547F County Dublin, in favour of BOSI. A copy of Folio 155547F among the papers put before the Court

disclosed that BOSI was registered as the owner of the 2006 Charge on Folio 155547F County Dublin on 19th April, 2006.

6. One of the two deeds of appointment dated 6th June, 2012 made by BOS by virtue of which the Receiver was appointed related to

the securities created by the 2005 Mortgage and the 2006 Charge. In the operative part of the deed of appointment BOS, which was

expressed to be acting in pursuance of the powers given to it under or pursuant to the 2005 Mortgage and the 2006 Charge and

pursuant to every other power conferred upon it by statute or otherwise, appointed the Receiver to be the receiver over the property

described in the schedule, namely, “Latona” and No. 40 Kerrymount Rise, Foxrock, which was described as “being part of the property

comprised within Folio 155547F County Dublin” (Emphasis in original). Further, it was provided in the deed of appointment that the

Receiver was to exercise all powers of a receiver given by the 2005 Mortgage and the 2006 Charge.

7. Both the 2005 Mortgage and the 2006 Charge were obviously based on the standard form of mortgage and charge used by BOSI.

Both were in precisely the same terms, save as to the date thereof and the description of the secured property therein. At the

commencement, BOSI was referred to as “the Bank” and it was stated that that expression included its successors and assigns.

8. The appointment of a receiver and his powers were dealt with in Clause 9 of the 2005 Mortgage and the 2006 Charge. Clause 9.1

provided that at any time after the power of sale had become exercisable BOSI might from time to time appoint any person to be

receiver and manager of the secured assets, meaning, respectively, the property mortgaged by the 2005 Mortgage and the property

charged by the 2006 Charge. The point in time at which the power of sale became exercisable was governed by Clause 8.1, which

provided that the power of sale was exercisable at any time “after the occurrence of an Event of Default or where the Secured

Obligations have otherwise become due and payable”. The “Secured Obligations” were defined in Clause 1 as meaning all monies,

obligations and liabilities therein covenanted to be paid or discharged by the McLaughlins. “Event of Default” was defined in the same

clause as meaning “the happening of an event under any loan agreement, facility letter or other arrangement with the Bank whereby

the Secured Obligations become immediately due and payable”. On the basis of the upholding by Clarke J. in his judgment (at para.

8.6) of the finding of the trial judge rejecting the argument advanced on behalf of the McLaughlins that an “Event of Default” had not

occurred before the Receiver was appointed, the position is that the power of sale was exercisable when the Receiver was appointed.

The powers conferred on the Receiver were set out in Clause 9.4. It was provided that he had and was entitled to exercise all powers

conferred by the Conveyancing Act 1881 in the same way as if he had been duly appointed thereunder. It was provided that,

furthermore, and without limiting those powers, he had the powers itemised in the remainder of Clause 9.4, which were very

comprehensive and covered, inter alia, taking possession of the secured assets, managing and carrying on a business, and selling the

secured assets. In other words, as a matter of contract as between the McLaughlins and BOSI, the successors and assigns of BOSI

were entitled to confer a wide range of powers, which were itemised in Clause 9.4, on the Receiver.

Judgment of trial judge

9. The trial judge dealt with the argument advanced on behalf of the McLaughlins based on the failure to register the charges in the

name of BOS in paras. 23 and 24 of his judgment. His starting point was Article 14(3) of the Directive, which is quoted in the

judgment of Clarke J. (at para. 6.7). He then considered Regulation 19 of the Irish Regulations and he quoted Regulation 19(2), which

was incorrectly referred to as Regulation 19(1). He then stated:

“Essentially what is contended is that under the regime established by the Registration of Title Act 1964, in relation to

registered land that powers or rights are vested in the owner of a registered charge. They say that the concept of

registered charge is undoubtedly a charge registered in the name of some entity and in this case, Bank of Scotland

Ireland. They say that must be so as the purpose of the land register is to provide conclusive evidence of the title of the

owner of the land as appearing on the register and of any right, privilege, appurtenance or burden as appearing thereon,

drawing attention of s. 31(1) of the Registration of Title Act 1964 . . .”

The trial judge, having quoted s. 31(1), then went on to quote the terms of a legal notice issued by the Property Registration

Authority entitled “Bank of Scotland (Ireland) Limited – Legal Office Notice No. 1/2011”.

10. Legal Office Notice No. 1/2011 addressed two different scenarios. One was a change of name by virtue of which BOSI became

known as BOSI in 2007. That has no relevance for present purposes. The other was the consequences of the cross-border merger.

Having excised the provisions in relation to the change of name, Legal Office Notice No. 1/2011, as quoted by the trial judge, stated

as follows:

“Pursuant to [the Irish Regulations], Bank of Scotland (Ireland) Limited ('BOSI') merged with BOS on the 31st December

2010, at 23.59 hrs and all the assets of BOSI did vest in BOS. BOSI was thereby dissolved. Henceforth the following

practices will apply.

(1) Discharges by BOS of BOSI . . . charges will be acted upon and the relevant charge cancelled, as if the

discharge was by BOSI . . .

(2) Charges dated on after the 1st January 2011 must be in the name of BOS.

(3) Charges prior to the 1st January 2011, in the name of BOSI, . . . may be registered in the name of BOS.

(4) On application by BOS in any particular case, it may be registered in substitution for BOSI . . . as owner of

individual charges, on payment of a fee of €40.”

11. The trial judge then recorded the position adopted by the Receiver and BOS in the High Court as follows:

“On the other hand the plaintiffs say that following the making of the transfer order [BOS] has stepped into the shoes of

[BOSI] which was absorbed and ceased to exist. In those circumstances it says that s. 64 of the Registration of Title Act

1964 is concerned with transfer of charges and changes of ownership has no application. The position adopted by the

plaintiff – which has received support from Mr. John Murphy in the Property Registration Authority where he has worked

since 1980 – is that their interpretation of the [Irish Regulations] is that all mortgages passed to [BOS].

12. Mr. Murphy, who is an examiner of titles in the Property Registration Authority, testified in the High Court. The trial judge recorded

some of his testimony and made the following observations (in para. 24):

“So far as para. 4 of the legal notice is concerned, he said that this provided an option in an individual case but that it

was not a mandatory requirement. The attitude taken by the Property Registration Authority is not determinate of the

issue but nonetheless, is of a considerable significance. It is, after all, the body that is primarily concerned with the

integrity of the Register. It seems to me that the approach taken by the Property Registration Authority accords with

common sense. It reflects the fact that [BOSI] has ceased to exist and in the space where [BOSI] once stood now

stands [BOS]. Accordingly, I am satisfied that the arguments raised by the [McLaughlins] in relation to the non-

registration of the charges in the name of [BOS] fail.”

The last sentence in that quotation is the finding of the trial judge on the issue to which this judgment relates. While not articulated

in these terms, I understand it to be a finding that BOS can enforce a security acquired by it from BOSI under the cross-border

merger over registered land notwithstanding that BOS is not the registered owner of the relevant charge on the relevant folio.

Evidence of understanding of Property Registration Authority

13. Before outlining the submissions made on behalf of the parties on the appeal, it is convenient at this juncture to refer to some of

the testimony of Mr. Murphy. In the course of his evidence Mr. Murphy confirmed that the Interim Chief Executive of the Property

Registration Authority had written to the solicitors on record for the Receiver and BOS on this appeal in terms which stated as

follows:

“I confirm that as a consequence of the merger of [BOSI] with [BOS] and in accordance with Regulation 19(1)(g) and (h)

all mortgages registered with PRA to which BOSI is a party should be construed as if BOS had been a party thereto and all

references to BOSI should be construed as references to BOS.

It is confirmed that BOS is in the same position as a transferee in s. 64(4) of the Registration of Title Act in relation to

BOSI mortgages and purchasers and receivers appointed by BOS pursuant to BOSI charges will be registered without any

requirement for re-registration of BOS.”

Mr. Murphy confirmed that it would be inconvenient and very time consuming for the Property Registration Authority if it had to re-

register BOS as the owner of each charge created by BOSI in relation to registered lands. That is undoubtedly the case. Mr. Murphy,

however, made it clear that the position adopted by the Property Registration Authority was its interpretation of the law and that it

was its practice based on its understanding of the law. That practice, it appears from the evidence, is based on the understanding of

the officials in the Property Registration Authority of the effect of Regulation 19(1)(g) and (h) of the Irish Regulations.

14. Regulation 19 of the Irish Regulations deals with the consequences of a cross-border merger. Although paragraph (1) is quoted in

part in the judgment of Clarke J. (at para. 6.8) it is useful to reiterate that part in quoting sub-paragraphs (g) and (h) relied on by the

Property Registration Authority. Paragraph (1) provides as follows:

“Subject to paragraph (2), the consequences of a cross-border merger are that, on the effective date –

(a) all the assets and liabilities of the transferor companies are transferred to the successor company,

(b) . . .

(c) the transferor companies are dissolved,

(d) . . .

(e) . . .

(f) . . .

(g) every contract, agreement or instrument to which a transferor company is a party shall, notwithstanding

anything to the contrary contained in that contract, agreement or instrument, be construed and have effect as if –

(i) the successor company had been a party thereto instead of the transferor company,

(ii) for any reference (however worded and whether express or implied) to the transferor company there

were substituted a reference to the successor company, and

(iii) any reference (however worded and whether express or implied) to the directors, officers,

representatives or employees of the transferor company, or any of them, were, respectively, a

reference to the directors, officers, representatives or employees of the successor company . . .,

(h) every contract, agreement or instrument to which a transferor company is a party becomes a contract,

agreement or instrument between the successor company and the counterparty with the same rights, and subject

to the same obligations, liabilities and incidents (including rights of set-off), as would have been applicable thereto

if that contract, agreement or instrument had continued in force between the transferor company and the

counterparty, and any money due and owing (or payable) by or to the transferor company under or by virtue of any

such contract, agreement or instrument shall become due and owing (or payable) by or to the successor company

instead of the transferor company, and . . .”

15. As is clear, paragraph (1) of Regulation 19 is expressly subject to paragraph (2). Paragraph (2) provides:

“The successor company shall comply with filing requirements and any other special formalities required by law (including

the law of another EEA State) for the transfer of the assets and liabilities of the transferor companies to be effective in

relation to other persons.”

As is recorded in the judgment of Clarke J. (at para. 6.7), Article 14 of the Directive deals with the consequences of cross-border

mergers. Paragraph (2) of Regulation 19 reflects Article 14(3), which provides as follows:

“Where, in the case of a cross-border merger of companies covered by this Directive, the laws of the Member States

require the completion of special formalities before the transfer of certain assets, rights and obligations by the merging

companies become effective against third parties, these formalities shall be carried out by the company resulting from the

cross-border merger.”

Submissions on behalf of the McLaughlins

16. On the hearing of the appeal counsel for the McLaughlins relied primarily on the written legal submissions which had been put

before the Court in July 2014 on behalf of the McLaughlins. Those submissions, which I propose to summarise, are clear and succinct.

17. First, there was reliance on Article 14(3) of the Directive and Regulation 19(2) of the Irish Regulations. Secondly, Legal Office

Notice No. 1/2011 was referred to, with emphasis on the word “may” where it appears in para. 3 and on Mr. Murphy’s evidence as to

the understanding of the Property Registration Authority as to the effect of Regulation 19(1)(g) and (h). It was submitted that the

trial judge was correct in his conclusion that the attitude taken by the Property Registration Authority was not determinative of the

issue, but it was submitted that its view was premised on an incorrect proposition that the consequences of the merger were

governed by the Irish Regulations when, in fact, the merger was approved under the relevant transposing legislation in the United

Kingdom. In that context, Regulation 17(3) of secondary legislation in the United Kingdom which transposed the Directive, the

Companies (Cross-Border Mergers) Regulations 2007 (the U.K. Regulations) was cited. That provision is, in substance, the same as

Regulation 19(2) of the Irish Regulations in that it provides as follows –

“The transferee company must take such steps as are required by law (including the law of another EEA State) for the

transfer of the assets and liabilities of the transferor companies to be effective in relation to other persons.”

Thirdly, it was submitted that, even if the relevant securities transferred ipso iure to BOS, which, of course, was in issue on the

appeal, a further question arose, namely, whether, following the transfer of assets, enforcement of the 2006 Charge against the

McLaughlins was possible in the absence of the registration of BOS as the owner of the charge. Fourthly, that question led to a

consideration of a number of sections of the Registration of Title Act 1964 (the Act of 1964), in particular, s. 31(1), s. 62(3), s. 62(6)

and s. 64, some of which will be discussed later. Finally, as regards the secured properties the title to which is unregistered, while, as

I have already recorded, conceding that the argument carries less weight, reliance was placed on s. 38 of the Registration of Deeds

and Title Act 2006 (the Act of 2006) and, in particular, subs. (2) which is to the effect that a deed which is not registered in the

Registry of Deeds in the manner prescribed “is void against a registered deed affecting the land concerned”.

Submissions on behalf of the Receiver and BOS

18. Counsel for the Receiver and BOS submitted that BOS is not obliged to take any further steps to ensure that it can effectively

rely on the security it holds over 40 Kerrymount Rise, the title to which is registered in the Land Registry. As regards the securities

the title to which is unregistered property, it was submitted that the invocation of s. 38 of the Act of 2006 did not assist the

McLaughlins because that section is concerned with priority only and is not in any sense the equivalent of s. 64 of the Act of 1964.

That submission is correct to the extent that s. 38 is, indeed, concerned with priority.

19. In support of their contention that it is not necessary for BOS to take any further steps as a pre-requirement to enforcing the

securities transferred to it by the cross-border merger, the Receiver and BOS relied on Regulation 19 of the Irish Regulations,

submitting that there is no requirement to make a further application to the Land Registry or the Registry of Deeds in order to be

entitled to enforce the security, because following the making of what was referred to as the transfer order, BOS stepped into the

shoes of BOSI. Reliance was also placed on Mr. Murphy’s evidence as to the understanding of the Property Registration Authority and

also on the effect of Legal Notice No. 1/2011, which was interpreted as creating a permission, but not an obligation, to have BOS

substituted for BOSI as the owner of the transferred charge on the relevant folio. Further reliance was placed on the second

paragraph of the letter from the Interim Chief Executive of the Property Registration Authority quoted at para. 13 above. While it was

recognised that the lex situs, in this case the law of Ireland, applies to security over immovables, it was suggested that, even absent

the provisions of Regulation 19, the provisions of the Directive and the U.K. Regulations could also have the effect that BOS stands in

the shoes of BOSI in relation to the ownership of the charges and that re-registration is unnecessary. It was suggested that the

provisions of the Act of 1964 relied on by the McLaughlins are directed to situations in which a transferor and a transferee exist

before and after the transaction and once again it was pointed out that BOSI no longer exists to effect a transfer for registration,

which undoubtedly is the case. Finally, the Receiver and BOS cited a passage from the judgment of the High Court (McGovern J.) in

Freeman v. Bank of Scotland Plc [2014] IEHC 284 in which an argument made by the plaintiffs in that case in reliance on s. 64 and s.

90 of the Act of 1964 was rejected, McGovern J. stating that there was no requirement to execute an instrument of transfer in that

case, as the transfer occurred by operation of law, and, as there was no instrument of transfer, s. 90 had no application.

20. While the foregoing is a summary of the various bases on which it was submitted on behalf of the Receiver and BOS that there is

no requirement that the 2006 Charge be registered in the name of BOS as the registered owner thereof on the folio for it to be

effective and enforceable, the validity of the appointment of the Receiver was contended for on a narrower basis. It was submitted

that, as was held in the Freeman case, in any event, BOS had a contractual entitlement to appoint the Receiver independently of the

provisions of the Act of 1964.

Discussion

21. There is no doubt that, when the cross-border merger of BOSI and BOS took effect just before midnight on 31st December, 2010

following the order of the Scottish Court of Session made on 10th December, 2010 by Lord Glennie approving the completion of the

merger, the securities held by BOSI over the McLaughlins’ property, including the security over 40 Kerrymount Rise, the title to which

is registered, passed to BOS. Thereafter BOSI ceased to exist. It is significant that the sequence was that the transfer took place by

operation of law first and then BOSI ceased to exist. However, the issue in these proceedings is whether, having regard to the

provisions of Irish law, given that the lex situs applies, BOS could enforce the securities in question without further action.

22. It is important to emphasise that the only reliefs granted by the High Court in these proceedings by the order dated 16th October,

2013 were:

(a) a declaration that the Receiver is validly appointed as a receiver to BOS, obviously meaning, although this is not spelt

out in the order, over the secured assets, the only declaratory relief sought by the Receiver in the pleadings being a

declaration that he stands validly appointed “as Asset Receiver” over, inter alia, 40 Kerrymount Rise and “Latona”; and

(b) a money judgment in favour of BOS against the defendants.

On the appeal, the McLaughlins seek to have both elements of that order discharged. Accordingly, as things stand, the Court has only

to determine the registration of title issue insofar as it bears, if at all, on whether the appointment of the Receiver was a valid

appointment.

23. The provisions of the Act of 1964 which govern charges are principally contained in ss. 62 to 67 inclusive. Some of those

provisions have been amended by the Land and Conveyancing Law Reform Act 2009 (the Act of 2009), which was in force when the

cross-border merger took place just before midnight on 31st December, 2010.

24. Section 62 deals with the creation and effect of a charge on registered land. Sub-section (1) provides that a registered owner

may, subject to the provisions of the Act of 1964, charge the land with payment of money and it further provides that “the owner of

the charge shall be registered as such”. Sub-section (2), which has been amended by the Act of 2009, deals with the form of the

charge and also provides that “until the owner of the charge is registered as such, the instrument shall not confer on the owner of

the charge any interest in land”. Sub-section (6) is the provision which is of most significance for present purposes. In its original

form it provided:

“On registration of the owner of a charge on land for the repayment of any principal sum of money . . ., the instrument of

charge shall operate as a mortgage by deed within the meaning of the Conveyancing Acts, and the registered owner of

the charge shall, for the purpose of enforcing his charge, have all the rights and powers of a mortgagee under a mortgage

by deed, including the power to sell the estate or interest which is subject to the charge.”

The Act of 2009 amended that provision and substituted –

(a) for the words “mortgage by deed within the meaning of the Conveyancing Acts”, the words “legal mortgage

under Part 10 of the [Act of 2009]”;and

(b) for the words “under a mortgage by deed”, the words “under such a mortgage”.

The important point to be noted in relation to subs. (6) is that the power to enforce a charge is conferred on “the registered owner of

the charge”. The consequences of a sale of registered land the subject of a charge by the registered owner of the charge are set out

in subsequent provisions of s. 62 (subs. (9) and (10), in particular). Such consequences are dependent on the land being sold and

transferred by the registered owner of the charge.

25. Section 64 deals with the transfer of a charge. Sub-section (1) empowers the registered owner of a charge to transfer the

charge to another person as the owner thereof, and provides that the transferee shall be registered as the owner of the charge. Sub-

section (2), which has been amended by the Act of 2009, stipulates the form of the transfer but also, consistent with s. 62(2), it

provides that “until the transferee is registered as owner of the charge, that instrument shall not confer on the transferee any

interest in the charge”.

26. Section 90 of the Act of 1964, which was referred to in the judgment in the Freeman case, confers powers on a person on whom

the right to be registered as owner of the charge has devolved in prescribed circumstances, for instance, by reason of an instrument

of transfer made in accordance with the provisions of the Act of 1964, to transfer or charge the charge before he himself is registered

as the owner of the charge, subject to certain qualifications. I am satisfied that s. 90 has no application to the issue of the

entitlement of BOS, as successor to BOSI, to enforce the security which was transferred to it by operation of law on the cross-border

merger against the McLaughlins.

27. Bearing in mind that the only issue which was determined in the High Court and, consequently, the only issue which arises on the

appeal, in relation to enforcement of the securities given by the McLaughlins to BOSI which are now vested in BOS is whether BOS

was entitled to appoint the Receiver, it is appropriate to consider that issue first by reference to the narrow argument advanced on

behalf of BOS and the Receiver, namely, that BOS had a contractual entitlement to appoint a receiver independently of the provisions

of the Act of 1964. Having regard to the terms of Clause 9.1 of the 2006 Charge, which has been quoted earlier, as a matter of

contract between BOS, a successor in title of BOSI, and the McLaughlins, BOS unquestionably had power to appoint a receiver

independently of the powers conferred by the Act of 1964. There is nothing in the Act of 1964 which limits or restricts the

contractual power to appoint a receiver once it is exercisable. Accordingly, I am satisfied that the fact that BOS is not registered on

the relevant folio as the owner of the 2006 Charge did not prevent it appointing the Receiver as Receiver over the registered property

secured by that charge. To the extent that the fact that BOS was not registered as owner of the 2006 Charge forms the basis of the

argument that the Receiver was not validly appointed, the McLaughlins fail in their appeal against the finding of the trial judge that

their arguments in relation to non-registration of the charges failed to establish that the Receiver was not validly appointed. However,

that conclusion goes no further than affirmation that the Receiver was validly appointed. It does not address how the Receiver might

make title to the registered property the subject of the 2006 Charge, if he decided to sell that property, nor does it address whether

BOS could effectively exercise its power of sale and give good title to a purchaser without being registered as owner of the charge.

28. While the conclusion reached in the next preceding paragraph resolves the registration issue insofar as it is raised on the appeal

as a challenge to the validity of the appointment of the Receiver, I consider that, given the observations made by the trial judge,

particularly in paragraph 24 of the judgment, in which he implicitly accepted the approach adopted by the Property Registration

Authority, thus concluding that the registration of BOS as owner of a charge is not necessary to enable BOS, a successor of BOSI, to

exercise its statutory powers, it is appropriate to address the broader arguments advanced on behalf of the McLaughlins.

29. The relevant provisions of s. 62 and s. 64 of the Act of 1964 which apply to the enforcement of a charge over registered land are

mandatory. In s. 62(2), it is expressly provided that an instrument such as the 2006 Charge “shall not confer” on the owner of the

charge any interest in the land until the owner is registered as such. Similarly, in the case of the transfer of a charge, subs. (2) of s.

64 provides that the instrument of transfer “shall not confer” on the transferee any interest in the charge until the transferee is

registered as owner of the charge. While that provision is not of relevance in this case because the transfer took effect by operation

of law, it is consistent with the crucial requirement for enforcement of a charge on registered land imposed by an Act of the

Oireachtas. That requirement is contained in subs. (6) of s. 62 and it is that the owner of the charge be registered as such and,

when registered, subs. (6) provides that the owner “shall, for the purpose of enforcing his charge, have all the rights and powers of a

mortgagee”. Insofar as BOS has not applied to be substituted for BOSI on the relevant folios in accordance with para. (4) of Legal

Office Notice No. 1/2011, it is BOSI which is registered on the relevant folios as the owner of the charges on registered land

transferred to BOS with effect from just before midnight on 31st December, 2010. BOS is not registered as owner of the said charges

and, accordingly, in my view, BOS does not meet the requirement of s. 62(6) and cannot exercise the powers conferred by that sub-

section or avail of the protections afforded by subs. (9) and (10) of s. 62.

30. Further, in my view, neither the invocation of sub-paragraphs (g) and (h) of Regulation 19(1) of the Irish Regulations, nor the

corresponding provisions of the U.K. Regulations nor any provision of the Directive, obviates the mandatory statutory requirement of

registration as owner of the charge before the powers and protections afforded by s. 62 can be availed of. It is convenient to

illustrate that by reference to the application of Regulation 19 to the 2006 Charge. Unquestionably, by virtue of sub-paragraph (a) of

Regulation 19(1), the 2006 Charge did pass from BOSI to BOS and then, by virtue of sub-paragraph (c), BOSI ceased to exist.

However, paragraph (1) of Regulation 19 is expressed to be subject to paragraph (2) thereof. Paragraph (2) is concerned with the

effect of the cross-border merger on persons other than the transferor company and the successor company, that is to say, on third

parties, such as the McLaughlins, and, as has been stated earlier, it reflects Article 14.3 of the Directive. Paragraph (2) provides that

for the transfer of assets to be effective in relation to third parties, such as the McLaughlins, the successor company, in this case

BOS, must comply with any special formalities required by law. Sub-paragraphs (g) and (h) of paragraph (1), which have been quoted

earlier, must be read subject to the mandatory requirement of paragraph (2). It is true to say that the effect of sub-paragraphs (g)

and (h) in this case was to put BOS in the shoes of BOSI as regards its contractual arrangements with the McLaughlins. To put it

another way, sub-paragraphs (g) and (h) novate (without using that word in any technical sense) the contractual arrangement which

had existed between the McLaughlins and BOSI, which is now a contractual arrangement between the McLaughlins and BOS.

However, the special formalities required by the law of this jurisdiction to enforce the security must be complied with in accordance

with paragraph (2).

31. The manner in which legislative provision has been made for the transfer of securities in the context of the transfer of business

between lending institutions clearly suggests that, if the provisions of the Act of 1964 to which reference has been made above are

left in place unaltered, they must be complied with. I propose illustrating this by reference to Part III of the Central Bank Act 1971

(the Act of 1971), which deals with transfers between licensed banks. Section 33 makes provision for ministerial approval of the

transfer by a licensed bank of the whole or part of its business to another licensed bank. Section 33(1)(d) provides that, if the

Minister approves of the scheme under s. 33, the provisions of s. 34 to 39 and 42 of the Act of 1971 shall, if, and to the extent only

that, the scheme so provides have effect in relation to the transfer. Section 35 deals with transfer of any security. In s. 32,

“security” is defined as including a mortgage, charge, debenture and suchlike. Section 35 provides in part:

“Any security held by the transferor in connection with the business agreed to be transferred as security for the payment

of the debts or liabilities . . . of any person at any office or branch of the transferor shall be transferred or deemed to be

transferred on the transfer date and be held by and be available to the transferee as security for the payment of such

debts and liabilities to the transferee . . .”

In other words, in the same way as Article 14 and the relevant regulations of the Irish Regulations and the U.K. Regulations effect a

transfer, s. 35 effects a transfer of the security.

32. Section 36, which is the significant provision for present purposes, then deals with the rights and obligations in relation to

transferred securities and provides in part:

“The transferee shall, in relation to any security transferred or deemed to have been transferred to the transferee in

accordance with or by virtue of the provisions of section 35 of this Act and the moneys thereby secured in accordance

with those provisions, be entitled to the same rights and priorities and subject to the same obligations and incidents as

the transferor would have been entitled and subject to if the same had continued to be held by the transferor, and in

relation thereto the following provisions shall have effect –

(a) the transfer of any such security effected or deemed to be effected by section 35 of this Act shall not require

registration under or in pursuance of the Registration of Deeds Act, 1707, the pre-Union Irish statute 33 Geo. 2, c.

14 (Ir.), the Registration of Title Act, 1964 , or section 99 of the Companies Act, 1963 , but shall operate for the

purposes of those Acts as if it were made by deed duly registered on the transfer date under or in pursuance of

whichever of those Acts may be applicable thereto.”

The combined effect of s. 35 and s. 36 is that the transfer is effected by operation of law and, in the case of a charge over

registered land, the transferee is expressly relieved of the statutory obligation under the Act of 1964 to become registered as owner

of the charge. 33. An example of the operation of ss. 35 and 36 in the recent past was the Central Bank Act 1971 (Approval of

Scheme of National Irish Bank Ltd. and Danske Bank A/S) Order 2007 (S.I. No. 29 of 2007), whereby the Minister for Finance approved

a scheme for transfer of the banking business of National Irish Bank Ltd. to Danske Bank A/S, wherein it was provided that, on and

from 1st April, 2007, the assets and liabilities in relation to the business would be transferred to and vested in Danske Bank A/S. In

relation to that transfer, the Property Registration Authority was entitled to have regard to s. 36 of the Act of 1971 as is mentioned

in Legal Office Notice No. 4 of 2013, which is on the website of the Property Registration Authority, as outlined in the judgment of the

High Court in Maloney v. O’Shea and Anor. [2013] IEHC 354 (at para. 10).

34. Provisions similar to ss. 35 and 36 of the Act of 1971 are to be found in other relatively recent Acts of the Oireachtas as outlined

in Deeney on Registration of Deeds and Title in Ireland (Bloomsbury Professional Limited 2014) at para. 21.19. In some cases para. (a)

of s. 36 of the Act of 1971 is replicated verbatim, for example, in s. 51 of the Trustee Savings Banks Act 1989, while in others the

substance of s. 36(a) is applied. The most recent provision of that type is s. 107 of the National Asset Management Agency Act

2009, which provides in subs. (1):

“Where a bank asset has been acquired by NAMA or a NAMA group entity –

(a) notwithstanding anything in any Act listed in subsection (2) or any other Act that provides for the registration

of assets, security or details of them, NAMA or the NAMA group entity is not required to become registered as

owner of any security that is part of the bank asset,

(b) notwithstanding sections 62 and 64 of the Registration of Title Act 1964 , NAMA or the NAMA group entity has,

in relation to any such charge, the powers of a mortgagee under a mortgage by deed, even though NAMA or the

NAMA group entity is not registered as owner of any such charge,

(c) NAMA or the NAMA group entity has the powers and rights conferred on the registered owner of a charge by the

Registration of Title Act 1964.”

The Acts referred to in subs. (2) of s. 107 include the Registration of Deeds and Title Acts 1964 and 2006.

35. Having regard to the foregoing, I am satisfied that, absent any specific statutory provision relieving BOS from the mandatory

obligation of becoming registered as owner of a charge in respect of which it wishes to exercise any of the powers conferred, or to

avail of any of the protections afforded, by s. 62 of the Act of 1964, it must become registered as the owner of the relevant charge

on the relevant folio, if it wishes to exercise the statutory powers conferred by the Act of 1964.

Summary of conclusions

36. As regards the appointment of the Receiver, which is the only act of enforcement of the security vested in BOS over the property

of the McLaughlins the title to which is registered in the Land Registry which is in issue on the appeal, I am satisfied that, as a matter

of contract, under the terms of the 2006 Charge BOS had power to appoint the Receiver, independently of the provisions of the Act

of 1964, and that the Receiver was validly appointed notwithstanding that BOS is not registered as owner of the 2006 Charge.

37. As regards any further steps which require to be taken to enforce the 2006 Charge, for the reasons set out above, I have come

to the conclusion, that, notwithstanding the manner in which the 2006 Charge became vested in BOS, if BOS wishes to avail of the

statutory rights conferred by s. 62 of the Act of 1964 to enforce the 2006 Charge, it must comply with the requirement that it be

registered as owner of the charge. That conclusion, which is obiter, is based on the absence of any legislation relieving a transferee

in the position of BOS of the obligations imposed by s. 62.

38. As regards the security held by BOS from the McLaughlins over property the title to which is unregistered, for example, the

security created by the 2005 Mortgage, no view is or could be expressed as to the effect of the absence of a provision relieving a

transferee in the position from consequences in relation to priority of non-registration of a transfer in the Registry of Deeds partly

because of the paucity of evidence as to the title position in relation to the secured properties before this Court but also because of

the absence of submissions as to the effect of non-registration of a transfer in the Registry of Deeds.