Bank of Ireland Mortgage Bank v Neary
| Jurisdiction | Ireland |
| Judge | Mr. Justice Garrett Simons |
| Judgment Date | 15 March 2019 |
| Neutral Citation | [2019] IEHC 169 |
| Court | High Court |
| Docket Number | 2016 No. 2159 S. |
| Date | 15 March 2019 |
[2019] IEHC 169
THE HIGH COURT
Simons J.
2016 No. 2159 S.
Summary summons – Mortgage loan – Grounds of defence – Plaintiff seeking to recover monies pursuant to a mortgage loan granted to the defendants – Whether the first defendant had made out a prima facie case for the defence of the proceedings
Facts: The plaintiff, Bank of Ireland Mortgage Bank, sought to recover monies pursuant to a mortgage loan granted to the defendants. The first defendant, Mr Neary (the borrower), advanced three principal grounds of defence as follows. First, it was alleged that the letter of demand was ambiguous, and that the legal consequence of this was that the principal monies had not yet been called in. Secondly, it was alleged that the failure of the bank to produce letters setting out changes in the variable rate of interest throughout the years precluded enforcement. Thirdly, it was submitted that in circumstances where Mr Neary sought to surrender voluntarily his half share in the property, he should not be prejudiced by the alleged delay on the part of the plaintiff bank in enforcing its security against the second defendant, Ms McDonald.
Held by the High Court (Simons J) that the first defendant had failed to make out a prima facie case for the defence of the proceedings within the meaning of Aer Rianta c.p.t v Ryanair Ltd [2001] 4 IR 607 and Irish Bank Resolution Corporation Ltd v McCaughey [2014] 1 IR 749. Simons J held that there was no material factual dispute between the parties, and that none of the various grounds of defence had even a stateable legal basis.
Simons J held that he would grant the reliefs sought at paragraphs (1) and (2) of the notice of motion of 31 March 2017.
Reliefs granted.
The within proceedings are summary summons proceedings seeking to recover monies pursuant to a mortgage loan. The mortgage loan was granted to the first and second named defendants. At the time the mortgage loan was granted, the first and second named defendants were in an intimate relationship. It seems, however, that the relationship has since ended.
The application before me is confined to the position of the first named defendant, Mr. Michael Neary (hereinafter ‘ Mr. Neary’ or ‘ the borrower’).
Counsel on behalf of the borrower has advanced three principal grounds of defence as follows. First, it is alleged that the letter of demand is ambiguous, and that the legal consequence of this is that the principal monies have not yet been called in. Secondly, it is alleged that the failure of the bank to produce letters setting out changes in the variable rate of interest throughout the years precludes enforcement. Thirdly, it is submitted that in circumstances where Mr. Neary sought to surrender voluntarily his half share in the property, he should not be prejudiced by the alleged delay on the part of the plaintiff bank in enforcing its security against the second named defendant.
For the reasons which follow, I am not satisfied that Mr. Neary has made out a real or bona fide defence to the proceedings as required by Aer Rianta c.p.t v. Ryanair Ltd. [2001] 4 I.R. 607 and Irish Bank Resolution Corporation Ltd. v. McCaughey [2014] 1 I.R. 749.
The plaintiff bank issued a ‘mortgage loan offer letter’ to the defendants in or about 10 May 2007. The proposed loan was in the amount of €345,000, and was to be for a term of twenty years. The loan was to be secured by way of a mortgage on premises known as 48 Seaview, Kilcoole, Co. Wicklow. The General Conditions attached to the offer letter stated that where there are two or more borrowers, then each are joint and severally liable to the lender. It was also stated that the offer letter is regulated by the Consumer Credit Act 1995.
The rate of interest under the loan was to be variable. This was to be fixed by reference to the ECB Repo rate. This is provided for at ‘PART 4 – THE SPECIAL CONDITIONS’ of the offer letter as follows.
‘(a)(iii) The interest rate applicable to the Loan is a variable interest rate and may vary upwards or downwards. The interest rate shall be no more than 1.25% above the European Central Bank Main Refinancing Operations Minimum Bid Rate (“Repo Rate”) for the term of the Loan. Variation in interest rates shall be implemented by the lender not later than close of business on the 5th working day following a change in the Repo rate by the European Central Bank. Notification shall be given to the Borrower of any variation in interest rate in accordance with General Condition 6(b) of this Offer Letter. In the event that, or at any time, the Repo rate is certified by the Lender to be unavailable for any reason the interest rate applicable to the Loan shall be the Prevailing Home Loan Variable Rate.’
General Condition 6(b) provides as follows.
‘The Lender shall give notice to the Borrower of any variation of the interest rate applicable to the Loan, either by notice in writing served on the Borrower in accordance with clause 1(c), or by advertisement published in at least one national daily newspaper. Such notice or advertisement shall state the varied interest rate and the date from which the varied interest rate will be charged.’
As discussed presently, one of the defences sought to be relied upon by Mr. Neary alleges that the bank has not proved compliance with the requirement to notify changes in the variable rate.
Condition 4(b) of the General Conditions provides as follows.
‘In the event of any repayment not being paid on the due dates or any of them, or of any breach of the Conditions of the Loan or any of the covenants or conditions contained in any of the security documents referred to in clause 2(a), the Lender may demand an early repayment of the principal and accrued interest or otherwise alter the Conditions of the Loan.’
The defendants accepted the loan agreement in or about 18 May 2007. The principal amount was drawn down on 1 June 2007.
The first and second named defendants are registered as the owners of the land under Folio 6482F County Wicklow. They are each registered as the full owner as tenant-in-common of one undivided half share. There is also a charge registered as a burden on the folio in favour of the plaintiff bank. These registrations are all dated 31 October 2007.
Unfortunately, the defendants fell into arrears. The precise history of default has not been set out on affidavit. As discussed presently, it seems that the loan had first fallen into arrears as early as September 2011. However, the within proceedings are grounded on letters of demand issued in January 2015 and November 2016. In circumstances where one of the principal grounds of defence is to the effect that the letter of demand of January 2015 was ineffective, it is necessary to set out the key paragraphs of same.
The letter of demand is dated 9 January 2015, and is addressed to Mr. Michael Neary at an address other than the mortgaged property. The letter is from Bank of Ireland Mortgages. The following information is set out at the start of the letter.
‘Account No. [Redacted]
Redemption Balance €337,283.51
Current Outstanding Arrears €96,538.93
Property at: 48 Seaview, Kilcoole, Co. Wicklow’
The first three paragraphs read as follows.
‘Despite previous correspondence you have failed to meet the instalment repayments due on your mortgage loan account(s) as detailed above. We have sent you previous requests and reminders about this and we have made every reasonable effort to agree an alternative arrangement with you to repay your mortgage loan account(s), without success.
We now call on you to pay us everything you owe under these mortgage loan account(s) within 10 business days of the date of this letter. This letter is a demand for early repayment of your mortgage loan account(s) under your mortgage loan offer letter(s) and Mortgage Deed and the total amount you now owe at the date of this letter is quoted above. Interest continues to accrue daily at the rate(s) applicable to your mortgage loan account(s).
Warning: If you do not pay us what you owe us under the above mortgage loan account(s) within 10 business days, including any interest that arises after the date of this letter, we can start legal proceedings against you to enforce our rights including, but not limited to, proceedings for repossession of the mortgaged property, appointment of a receiver over the property, and any other right of remedy we might have in respect of the debt outstanding.’
The solicitors acting on behalf of the plaintiff bank, Kane Tuohy Solicitors, subsequently wrote to Mr. Neary on 4 November 2016.
‘We act on behalf of the Bank.
By letter of demand dated 9th of January 2015, a copy of which is enclosed for your ease of reference, the Bank wrote to you seeking payment of the sum as referred to therein.
Notwithstanding, we are instructed that the sum due in respect of the Loan Account remains outstanding and that the total sum due as at the 26th of October 2016, to include continuing interest, was €343,393.03, which sum includes arrears of €133,058.84. Interest continues to accrue on the Loan Account.
The purpose of this letter is to inform you that unless the said sum of €343,393.03 is paid within seven (7) days from the date hereof, we are instructed to issue Judgment proceedings against you. In that event, we will rely on this letter to ground an Order for costs against you.
In the circumstances, please nominate Solicitors to accept service of proceedings, failing which, we will have no alternative but to serve you directly and shall do so without further notice.’
Mr. Neary places some significance on the fact that Bank of Ireland Mortgages had previously issued a...
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