The Supreme Court recently considered the implications where a bank fails to comply with the Code of Conduct on Mortgage Arrears (“the Code”). It reviewed a bank’s entitlement to obtain possession of a property if Code was not adhered to.

Details of the case

  • This case was referred to the Supreme Court for clarification on whether non-compliance by a bank with the Code affected its entitlement to an order for possession. The Code, which came into force on 1 January 2011, provides for a moratorium during which the bank must not commence possession proceedings.

​​Decision

  • The Supreme Court found that that where a bank breaches the Code by failing to abide by the moratorium before issuing proceedings, it will not be entitled to apply to court for possession of a mortgaged property.
  • Mr Justice Clarke further clarified that it is a matter for the bank to establish by appropriate evidence that it has complied with the Code. In addition, the Court found that a breach of any other section of the Code will not affect the bank’s entitlement to an order for possession.
  • In considering all aspects of the Code, the Court concluded that if it granted an order for possession where a bank had not abided by the Code’s moratorium, then the Court would be participating in an unlawful act. Moreover, it would be facilitating a bank in carrying out an act that is contrary to purpose of the Code.
  • The Court differentiated between the moratorium provision in the Code and other provisions contained in it. It was satisfied that there is nothing in the legislation that requires the court to determine whether the actions of the lender were reasonable or whether or not certain proposals should be accepted by the lender. The only determination that a Court should make is whether, as a matter of law and on the evidence, the conditions which entitle the relevant lender to possession have been shown to exist. Mr Justice Clarke stated that clear legislation would be required in order to confer on the Courts the right to adjudicate on the fairness of the lender’s behaviour and there would need to be specific criteria outlined in such legislation so that it could be applied by the Courts.
  • Finally, the Court confirmed that its decision was applicable, not just to mortgages that come within the Code that commenced on 1 January 2011, but to any similar provisions in the current or any future versions of the Code.

Irish Life and Permanent plc –v- Gemma Dunne and Kevin Dunne [2015] IESC 46