Re Farnol Eades Irvine & Co Ltd  1 Ch 22
No valid objection to action of foreclosure by debenture-holder
The plaintiff was a debenture-holder who claimed, inter alia, forpayment of the amount secured, foreclosure or sale and appointment of a receiver and manager of the company. The plaintiff had made no application under the Courts (Emergency Powers) Act 1914 to bring or proceed with the action and the defendants objected that such an application had not been made.
The defendants argued that the object of the Act would be defeated if a motion such as that raised by the plaintiff could be brought in open Court without a previous application by the plaintiff under the Act. The Act provides that such a previous application is required to be made in chambers in order to avoid publicity affecting the credit of the defendants.
The Court dismissed the defendant’s objections and granted the orders sought by the plaintiff. The word “foreclose” as it appeared in the Act means to destroy the equity of redemption which had previously existed. But a proper construction of the Act did not lead to the conclusion that a person is prevented from issuing a writ or summons for foreclosure. All that the Court does in an action under the Act is to direct an account of what is due and provides that if it is not paid within a specified time, then the equity of redemption shall be foreclosed. Having considered the intention of the Act, the Court found that there was no reason to prevent a man from taking steps to obtain an order of foreclosure from the Court.