Ms Deirdre Ní Fhloinn:

I will return very quickly on the point raised by Deputy Ó Broin, and I thank him for his question.

The High Court decision mentioned by the Deputy was in the Grehan & Ors vMaynooth Business Campus Owners Management Company Limited, which I believe is the name of the decision. It was overturned by the Court of Appeal earlier this year. This year we had two similar decisions, one from the High Court in April in the Paddy Burke (Builders) Limited (In Liquidation and in Receivership) v Tullyvaraga Management Company & Ors case decided by Mr. Justice Denis McDonald; and one from Ms Justice Costello in the Court of Appeal in July overturning the decision in the Grehan Business Services case.

In this case in the High Court it had been found that a receiver in a multi-unit development, which was not a residential but a commercial development and where similar issues arose, there was an agreement with the original developer for the management company to take a transfer of what is called "the common areas" after the development had been completed. It was a condition of the transfer, however, that the development be completed. The management company said that it was not required to take over the common areas until the builder had completed the works and these works had not been completed because there were defects. That was successful in the High Court but was overturned in the Court of Appeal.

In the Paddy Burke case it was a residential multi-unit development and the management company had got an order in the Circuit Court under the Multi-unit Developments Act for the receiver to discharge the cost of remedial works from proceeds of sale. Often, a receiver is appointed in respect of the developer's interest, which is the block, the car parks, the outside areas, the corridors and the lifts, and it often also includes a number of apartments that the developer has retained, which they used to do in order to try to keep control of the management company. If a receiver is appointed in respect of that, it concerns quite a significant part of the development. With the receiver, the developer is still essentially the landlord because of how we sell apartments which is via long leasehold.

The court said in both cases that a receiver takes free of the management company's entitlement to require a development to be completed. There is a statutory provision in the Multi-unit Developments Act whereby the original developer can be ordered to complete a development in accordance with planning and building regulations which should be very good news except that the right by the management company, if such an order is received against a developer, is treated essentially as what is called an unsecured creditor. The lender who lent the money to finance the construction of the development can put in a receiver, extract whatever value they can by selling the remaining units, and can force the management company to take over the development in its defective state and not have to pay out from the proceeds of sale. These are two very significant decisions that really close off what management companies thought was an avenue of getting some moneyss from receivers.