In the Circuit Court decision of The Governor and Company of the Bank of Ireland v Patrick Mc Mahon and Angela Mc Mahon, Ms Justice Linnane dealt with a number of defences put forward by the defendants to include the following:
1. Failure to serve proceedings on the defendants’ adult children who resided at the secured property.
The defendants claimed that the bank was not entitled to an Order for possession of the secured property in circumstances where their 22 year old son who was living at the secured property was not served with a copy of the proceedings.
Judge Linnane was of the view that it has never been the practice in a claim for possession to serve such proceedings on children of borrowers, over the age of eighteen. “From a practical point of view how is a plaintiff to know whether such children reside there?” Judge Linnane distinguished her findings in this case to proceedings involving tenants in a buy to let property who must be made aware that there are proceedings in being.
The proceedings in question arose on foot of a Civil Bill dated 6 January, 2015 and as such it was not subject to either of the new Circuit Court rules under Order 5 B RCC or practice direction CC17 which commenced post August 2015. The Court did not make any distinction between proceedings issued pre/post August 2015 therefore it is yet to be seen if this judgement can be relied upon for proceedings issued post August 2015.
2. The plaintiff bank cannot issue possession proceedings in the Circuit Court at the same time as issuing judgment proceedings in High Court.
Judge Linnane stated “It is my understanding that it is well recognised a legal mortgagee is entitled to bring such separate proceedings for a monetary sum at the same time as proceedings to enforce security held.”
3. Error on the part of the bank in respect of amounts due and owing.
The defendants put forward an argument that the bank overcharged them in the sum of €80,000 without any evidence to support this assertion. Judge Linnane stated “It is not disputed that the last payment made by them was in July 2013 so there has been an extensive default here. This is not a claim for a liquidated amount but a claim for possession and a dispute in relation to the precise amount outstanding does not provide a defence once a default has been established giving the right to enforce security held.”
4. The Bank was at fault for engaging in reckless lending.
The defendants claimed that the plaintiff was negligent regarding the financial crash in 2008. Judge Linnane indicated that there is no tort known in law as reckless lending. “The defendants applied for loan facilities, they accepted the terms upon which the loan facility was offered and the defendants had a solicitor acting for them at the time the security for the loan facility was executed.”
5. The defendants asserted that their contract with the bank was unfair pursuant to the Unfair Terms in Consumer Contracts Directive 93/13EEC.
The defendants asserted that the terms in the loan offer referring to securitisation and the transfer of their loan were unfair. The defendants argued that they did not give their written informed consent to the Bank. Judge Linnane held that securitisation did not take place but even if it did, it did not affect the plaintiff’s right to enforce the security held. The Court found that the terms of the loan offer provided for the transfer from the previous mortgagee to the plaintiff and the defendants signed their acceptance to the terms. The Court also noted that the Charge executed by the defendants, in the presence of their solicitor at that time, dealt with this. Judge Linnane said that there is an onus on a person who signs a document to read it before doing so.
This judgment is currently under appeal in the High Court and is due to be heard early next year.
Interestingly Judge Linnane further considered whether certain terms contained in a contract were unfair pursuant to the Unfair Terms in Consumer Contracts Directive 93/13EEC in the more recent case of Bank of Ireland Mortgage Bank v Peter Mahon and Carol Woods. In that case Judge Linnane determined that none of the specific terms relied upon by the defendants were unfair, referring to a passage opened by Counsel for the plaintiff from an article by Eoin Martin published in the Commercial Law Practitioner 2017, 24 (4) 71-29 regarding Unfair terms in Consumer Loan Contacts which states: “mortgagors are almost always represented by solicitors when executing mortgage deeds…..All borrowers understand that the fundamental essence of mortgage agreements is that if scheduled loan repayments are missed, the secured asset may be repossessed…..The sad reality is that the overwhelming majority of repossession cases turn simply on that fundamental principle. In the absence of reliance on unusual or unconventional terms, the potential impact of the UTCC Directive is largely academic.”
Both written judgments are extremely helpful for practitioners representing plaintiffs in possession proceedings as Judge Linnane addresses some defences commonly raised by lay litigants.
A link to the judgement of The Governor and Company of the Bank of Ireland v Patrick Mc Mahon and Angela Mc Mahon can be found here.
A link to the judgement of Bank of Ireland Mortgage Bank v Peter Mahon and Carol Woods can be found here.