Allied Irish Plc v Buckley

• Jurisdiction: Ireland
• Judge: Mr. Justice Garrett Simons
• Judgment Date: 25 February 2019
• Neutral Citation: [2019] IEHC 97
• Docket Number: 2017 No. 607 SP
• Court: High Court
• Date: 25 February 2019

[2019] IEHC 97

THE HIGH COURT

Simons J.

2017 No. 607 SP

BETWEEN

ALLIED IRISH BANK PLC

PLAINTIFF

AND

SEAN BUCKLEY

DEFENDANT

Order of possession – Primary residence – Code of conduct – Plaintiff seeking an order of possession – Whether the plaintiff was required to demonstrate compliance with the Central Bank’s Code of Conduct on Mortgage Arrears

Facts: The plaintiff, Allied Irish Bank Plc, sought an order of possession in respect of registered land in Templemore, County Tipperary. The plaintiff bank maintained that it was not required to demonstrate compliance with the Central Bank’s Code of Conduct on Mortgage Arrears in circumstances where it was not seeking possession of the primary residence of the defendant, Mr Buckley. Conversely, the defendant contended, first, that it was sufficient to trigger the Code of Conduct that the mortgage upon which the application for possession was grounded was secured by a primary residence, and, secondly, that in any event the case as pleaded did actually seek possession of his primary residence.

Held by the High Court (Simons J) that the plaintiff bank was obliged to comply with the Code of Conduct prior to the institution of the proceedings.

Simons J held that, in circumstances where it did not appear to be disputed by the plaintiff bank that the Code of Conduct was not complied with, he would refuse the application for possession and dismiss the proceedings.

Application refused.

JUDGMENT of Mr. Justice Garrett Simons delivered on 25 February 2019

INTRODUCTION

1 The within proceedings present a short point of law in respect of the Central Bank's Code of Conduct on Mortgage Arrears (‘ the Code of Conduct’). Specifically, the proceedings concern the criteria which trigger the application of the Code of Conduct. In brief outline, the plaintiff bank maintains that it was not required to demonstrate compliance with the Code of Conduct in circumstances where it is not seeking possession of the defendant's primary residence. Conversely, the defendant contends, first, that it is sufficient to trigger the Code of Conduct that the mortgage upon which the application for possession is grounded is secured by a primary residence; and, secondly, that in any event the case as pleaded does actually seek possession of his primary residence.

2 For the reasons set out in more detail below, I have come to the conclusion that the plaintiff bank was obliged to comply with the Code of Conduct prior to the institution of the within proceedings. In circumstances where it does not appear to be disputed by the plaintiff bank that the Code of Conduct was not complied with, I refuse the application for possession and dismiss the proceedings.

FACTUAL BACKGROUND

3 The within proceedings seek an order of possession in respect of registered land in Templemore, County Tipperary. The proceedings were instituted by way of Special Summons on 8 December 2017.

4 The defendant, Sean Buckley, is registered as having possessory title to the lands under Folio 37564 County Tipperary. Two charges are registered on the folio as burdens in favour of AIB Mortgage Bank, and Allied Irish Bank plc, respectively. It is stated in the grounding affidavit of Brian McGuinness sworn herein on 6 December 2017 that AIB Mortgage Bank has since transferred all of its interest in the mortgage, and all of its interest in the mortgaged property, to Allied Irish Bank plc. No issue has been taken by the defendant as to this transfer. The proceedings were issued in the sole name of Allied Irish Bank plc (‘ the plaintiff bank’).

5 The defendant has averred that the lands the subject of Folio 37564 include what he has described variously as his ‘principal private residence’ and his ‘family home’. The defendant has also averred that there was no compliance with the Central Bank's Code of Conduct on Mortgage Arrears. The defendant's position is set out as follows in his affidavit of 20 July 2018.

‘8. I reside on Folio 37564 County Tipperary and this Folio contains my principal private residence within the meaning ascribed thereto by the Code of Conduct on Mortgage Arrears. As appears from the Plaintiff's grounding affidavit, at no stage was the above property dealt with in accordance with the Code of Conduct on Mortgage Arrears and I was not afforded any of the rights which accrue to a borrower.

9. I am further advised that as a matter of law the Plaintiff is obliged to demonstrate compliance with the moratorium period contained in the mortgage arrears process and as the Plaintiff cannot do so this is fatal to the possession application.’

6 The Special Summons does not draw any distinction between that part of the folio lands which are the defendant's primary residence, and the balance of the lands. Rather, the schedule of lands in the Special Summons simply provides as follows.

‘ALL THAT AND THOSE the property comprised in Folio 37564 of the Register County Tipperary.’

7 In the grounding affidavit of Brian McGuinness, however, there is an attempt to draw a distinction between the primary residence and the balance of the lands. This reflects the language used in the letter of demand of 21 November 2017. See paragraph 23 of the affidavit as follows:

‘23. As can be seen of the demand for vacant possession of 21 November, 2017, the Plaintiff seeks possession of part of the lands contained in Folio: 37564 County Tipperary and excluding the family property.’

8 The plaintiff bank has sought to elaborate upon its position and, in particular, its intention to distinguish between the primary residence and the balance of the lands in the further affidavit of Brian McGuinness filed in the proceedings on 8 October 2018.

‘4. Clause 7.1 of the AIB Mortgage Conditions (2006 Edition) which conditions are incorporated into the Mortgage deed dated 20 January 2009 makes reference to the Plaintiff being entitled to enter into possession of the Mortgage Property or any part thereof. I beg to refer to true copy of the said AIB Mortgage Conditions upon which marked with the letters and number ‘BMCG1’ I have signed my name prior to the swearing hereof.

5. The Plaintiff can produce if required by the Court a map showing the exact portion of Folio 37564 of the Register of County Tipperary which it is seeking an Order for Possession in respect of. In order to do so, the Plaintiff will require the consent and assistance of the Defendant with regards access to the lands in seeking to have this map prepared and drawn up.’

9 The full text of 7.1 of the AIB Mortgage Conditions (2006 Edition) reads as follows.

‘7.1 At any time after the execution of the Mortgage, a Lender may without any further consent from or notice to the Mortgagor or any other person enter into possession of the Mortgaged Property or any part thereof or into receipt of the rents and profits of the Mortgaged Property or any part thereof.’

10 Finally, for the sake of completeness, it should be noted that the plaintiff bank subsequently issued a separate notice of motion seeking an order for inspection. It was agreed at the hearing before me on 11 February 2019 that the bank's motion should await the outcome of the ruling by the court on the defendant's objection that the Code of Conduct has not been complied with. The rationale here being that if the court were to decide this first issue in favour of the defendant, then the proceedings would be at an end and the question of inspection would not arise.

CENTRAL BANK'S CODE OF CONDUCT (2013 VERSION)

11 The parties were in agreement that—insofar as the Code of Conduct might have any application to these proceedings—it is the 2013 version which is relevant.

12 The Code of Conduct was issued by the Central Bank pursuant to section 117 of the Central Bank Act 1989. The Code of Conduct is stated to be...