Bank of Ireland Mortgage Bank v Butterly

JudgeMs. Justice Creedon
Judgment Date30 January 2018
Neutral Citation[2018] IEHC 49
Docket Number[2015 1665 S]
CourtHigh Court
Date30 January 2018

[2018] IEHC 49

[2015 1665 S]


Banking & Finance – Summary judgment – Non-payment of loan – Bona fide defence – Appointment of receiver

Facts: The plaintiff sought an order of summary judgment against the defendants for the residual amount. The plaintiff had appointed the receiver to collect the rent from the mortgaged property for the realisation of the amount of debt. The property was subsequently sold and the proceeds of the sale were applied against the loan account. The defendants argued that there was a settlement entered into by the defendants and the receiver. The plaintiff averred that the receiver was not a party to the proceedings and the defendants never made an application to remove the receiver on the ground that the receiver had acted improperly.

Ms. Justice Creedon granted an order for summary judgment to the plaintiff. The Court held that the defendants could not raise an issue concerning the acts of the receiver as the receiver was not a party to the proceedings. The Court held that the relevant letter, which the defendants had exhibited, did not exhibit an agreement between the parties as alleged by the defendants. The Court noted that the defendants had no real or bona fide defence.

JUDGMENT of Ms. Justice Creedon delivered on the 30th day of January, 2018

This concerns an application for summary judgment in the sum of €117,918.59 being taken by Bank of Ireland Mortgage Bank, the plaintiff, against Gerard Butterly and Emma Butterly, the defendants.


By letter dated the 11th September, 2007, (hereinafter the ‘letter of offer’), the plaintiff offered, and the defendants accepted, a loan in the total amount of €300,000, together with interest thereon, for a term of 25 years (hereinafter called ‘the loan’).


The loan was accepted on or about the 24th November, 2007 and the full amount of the loan was drawn down by the defendants on the 20th December, 2007.


For the first seven years, until 2014, the defendants were to make interest only repayments. Thereafter, capital and interest repayments would become due and owing.


It was a term of the loan that in the event of any repayment not being paid, the loan was to be repayable immediately, on demand.


A default occurred, and the plaintiff called in the amount outstanding (€302,185.89), by letter of demand dated 28th January, 2015. Said sum is inclusive of arrears of €951.43 outstanding as of the 28th January, 2015.


By letter dated the 14th August, 2015, the plaintiff's solicitors wrote to the defendants informing them that the sum outstanding on the loan as at the 7th August, 2015 was €304,245.23, which sum was inclusive of arrears of €11,856.87.


Proceedings were issued by summary summons on the 27th August 2015.


It is not disputed between the parties that payments of interest only were to be made by the defendants for the first seven years of the loan. Interest only payments were made as agreed until November 2011, when one payment was missed. In December 2011, payments recommenced. The missed payments from November 2011 remained on the defendants' loan account. In December 2014, the loan account went into further arrears and thereafter the arrears continued to accrue.


The plaintiff bank did appoint a receiver over the property at 51 Manydown Close, Dundalk Co. Louth on the 13th May 2015. The property was rented by the receiver. The property achieved a rental income of €700 per month. The rent for the months of May 2015 and June 2015 were paid by the tenant directly to the defendants. The receiver's office received the rent of €700 per month for the months of July 2015, August 2015, September 2015 and October 2015 and the tenant then vacated the property in November 2015 and no rent was received thereafter. The total rent collected by the receiver for the months from July 2015 to October 2015 inclusive was €2,800. The receiver's costs of €1,005.92 were deducted from the rent received and a balance of €1,794.08 was applied was applied against Loan Account 37045739 on the 16th February 2016.


The property was sold by the receiver in June 2016 and the proceeds of sale of €190,167.31 were applied against the loan account on the 27th and 28th of June, 2016. Prior to selling the property, two independent valuations were carried out by the plaintiff bank. The property was first inspected by REA Gunn on the 16th June 2015, which advised that the market value of the property was between €180,000 and €190,000. The property was then inspected by DNG Duffy on the 19th June, 2015, which advised that the market value of the property was between €185,000 and €195,000.


The first named defendant contends that in June 2015, he was invited to a meeting by an employee of the plaintiff bank, named Mr. Gerry Gill. He attended the meeting with his financial adviser, Mr. John Higgins. The defendant states that the meeting was organised ostensibly to discuss his and his wife's indebtedness in respect of his family home at Lordship, Dundalk Co. Louth. However, when he attended the meeting, the defendant contends that Mr. Gill was instead keen to discuss the property at 51 Manydown Close. The first named defendant contends that Mr. Gill indicated that if the defendants were agreeable to an extension of the interest only payments for twelve months, then the bank would remove the receiver, and the loan would be consolidated to allow for a further twelve month period of interest only payments. The defendant avers that he indicated his agreement to this and, relying on the representation made, instructed his financial adviser to write to Mr. Gill outlining the substance of what had been agreed. He exhibited a letter dated the 24th July, 2015, sent to Mr. Gerry Gill, Bank of Ireland, by Mr. John Higgins. The defendant contends that in agreeing to extend the interest period and instructing his financial adviser to crystallise that agreement in writing, he took steps on foot of the agreement, which he contends was subsequently reneged upon, by the bank. In the original pleadings the defendants put forward four grounds which he argued constituted a legitimate defence. At hearing, these grounds were reduced to two:

(1) That the receiver has failed to act appropriately in advertising the secured property, causing it to be sold at a gross undervalue and therefore, the amount of credit that has been afforded to the first and second named defendants is considerably less than it should be. In this regard, the defendants rely on the fact that the valuations exhibited in the affidavit were obtained within a very short time frame (both in June 2015) and that no updated evaluation was ever received, before the property was sold in June 2016. The defendants also state that an updated valuation sought by them on the 7th March, 2016, from Anthony McArdle, valued the property at €220,000.

(2) That at the aforementioned meeting, dated 10th June, 2015, an agreement arose to vary the terms of the defendants' loan and the plaintiff should now be estopped from seeking to recover judgment in the sums claimed. It is also noted by the defendants that Mr. Gill was no longer available to give evidence and that the bank cannot locate any notes on file of the meeting. An issue of fact therefore arises as to what arose at that meeting.


With regard to the defendants' contention that the receiver acted improperly, the plaintiff put forward the following arguments: -

(1) The receiver is not a party to these proceedings.

(2) No application was ever made by the defendants to remove the receiver.

(3) The counter claim is against the receiver and not the bank and a new counter claim against the receiver on foot of these proceedings is not good in law.


With regard to the alleged meeting on the 10th June, 2015, the plaintiff contends as follows: -

(1) That all of the affidavits before the court confirm that the bank never followed through with this agreement.

(2) Mr. Higgins commented in his letter to Mr. Gerry Gill dated the 24th July, 2015, that ‘ we were of theunderstandingthatyou were going to seek approvalfor the removal of the Receiver and that Mr. Butterly would recommence paying monthly interest only from January 2015 for a 12 month period.’ (Emphasis added). It is argued that the terminology used by Mr. Higgins here, to characterise the meeting, indicates that it did not give rise to a binding agreement, varying the terms of the loan.


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