A bank was entitled to appoint a receiver to take possession of the Diep Le Shaker restaurant on Dublin's Pembroke Lane over default on a €1.16 million mortgage secured on the premises, the High Court has ruled.

The mortgage was granted by Permanent TSB to Arthur and Christine ffrench O'Carroll in March 2008 and was provided on an interest-only basis with payments of €5,722 a month.

The ffrench O’Carrolls subsequently defaulted on the repayments. In December 2010, PTSB sent a letter of demand to them for arrears.

The letter stated that if they did not hand over rental income, it would appoint a receiver to collect that rent from the restaurant and from property in the South Circular Road over which there was also a mortgage.

In October 2011, PTSB demanded repayment of the loan within 10 days along with repayment of another loan on the South Circular Road properties which now had an outstanding amount of €2.4 million.

The bank appointed a receiver in 2011 to take possession of the restaurant.

In February 2015, the original receiver’s appointment was terminated and a new receiver appointed by PTSB.

Four months later, in June 2015, PTSB sold the loan to Havbell which then appointed its own receiver.

Proceedings

The ffrench O’Carrolls brought proceedings against PTSB, Havbell, and all three receivers while Havbell and its receiver counter-claimed against them.

It was claimed the bank had no entitlement to appoint a receiver because no valid demand had been made for repayment of the entire debt when it wrote its December 2010 letter of demand for the arrears.

The bank argued, once there was default on the mortgage, the security became immediately enforceable and it had a contractual right to appoint a receiver.

The matter came before Ms Justice Una Ní Raifeartaigh via an application to decide issues of law.

In her answers to those questions, she found the 2008 mortgage became immediately enforceable on the occurrence of default on repayments as contained in a clause in the mortgage document.

She also found the bank had a contractual right to appoint a receiver without first demanding repayment of the money secured by the mortgage.