Bank of Ireland Mortgage Bank v George Raymond

• Jurisdiction: Ireland
• Judge: Mr. Justice Garrett Simons
• Judgment Date: 29 October 2021
• Neutral Citation: [2021] IEHC 665
• Court: High Court
• Docket Number: 2019 No. 143 CA

Between

Bank of Ireland Mortgage Bank

Plaintiff

and

George Raymond

Ruth Raymond

Defendants

[2021] IEHC 665

2019 No. 143 CA

THE HIGH COURT

CIRCUIT APPEAL

Order for possession – Loan agreements – Assessment of educational needs – Defendants appealing against an order for possession granted by the Circuit Court – Whether an order for possession should be granted, on a summary basis, by reference to the first loan alone

Facts: The defendants, Mr and Ms Raymond, appealed to the High Court against an order for possession granted by the Circuit Court pursuant to s. 62(7) of the Registration of Title Act 1964. The application for possession was grounded on two separate loan agreements said to have been entered into between the plaintiff, Bank of Ireland Mortgage Bank, and the defendants. The defendants accepted that the principal sum under the first loan agreement was payable. It was said that the second loan agreement had been entered into under duress, and that it was unenforceable as against the second defendant. One of the issues which arose for determination in the proceedings was whether an order for possession should be granted, on a summary basis, by reference to the first loan alone, notwithstanding that the bank’s entitlement to rely on the second loan was something which might only be determined by plenary hearing.

Held by Simons J that the principal money borrowed pursuant to the loan agreement of 27 October 2005, and secured upon the registered charge, had become due; the “proofs” for an application under s. 62(7) of the 1964 Act had thus been met. In the absence of any evidence that the second defendant had the financial capability to discharge the arrears under this loan, Simons J held that there was no basis for the court to exercise its discretion under s. 7 of the Family Home Protection Act 1976. Simons J concluded that the bank’s entitlement to rely on the second loan agreement dated 28 June 2006 could not be determined without a plenary hearing. Simons J held that the second defendant had put forward sufficient evidence to make out a prima facie case of undue influence. Simons J held that the bank’s entitlement to apply for an order for possession in respect of the first loan was not adversely affected by the existence of a dispute as to the enforceability of the second loan. Simons J held that the order for possession could be grounded on the first loan alone. Simons J held that there was no need to refer the question of the enforceability of the second loan to plenary hearing. Simons J proposed granting an order for possession pursuant to s. 62(7) of the 1964 Act. Simons J held that the order was grounded on the first of the two loan agreements secured on the registered charge. Simons J held that a stay of six months would be placed on the order to allow the second defendant time to arrange alternative accommodation. Simons J held that it was neither necessary nor appropriate, for the purpose of the application, for the court to make any finding as to whether the plaintiff was entitled to rely on the second loan agreement as against the second defendant. Simons J’s judgment did not address the question as to whether the plaintiff would be entitled to apply the proceeds of any sale of the mortgaged property in discharge of the monies due under the second loan agreement. Simons J held that if and insofar as a dispute subsisted in that regard following a sale of the mortgaged property, it would have to be resolved in separate proceedings.

Simons J’s provisional view was that the appropriate order was that each party should bear their own costs. The court had found that the plaintiff’s entitlement to rely on the second loan agreement as against the second defendant could not be resolved on a summary application based on affidavit evidence alone. Simons J noted that this issue took up most of the time in the hearing and most of the written legal submissions, and would have had a material impact on the level of costs.

Order for possession granted.

Appearances

Nevan Powell for the plaintiff instructed by Fieldfisher Solicitors

Clare O'Shea for the second named defendant instructed by Amoss Solicitors

JUDGMENT of Mr. Justice Garrett Simons delivered on 29 October 2021

INTRODUCTION

1 This matter comes before the High Court by way of an appeal against an order for possession granted by the Circuit Court. The order had been made pursuant to section 62(7) of the Registration of Title Act 1964.

2 The application for possession is grounded on two separate loan agreements said to have been entered into between the plaintiff bank and the defendants. The unusual feature of the case is that the defendants accept that the principal sum under the first loan agreement is payable. It is only the enforceability of the second loan agreement that is challenged. It is said that the second loan agreement had been entered into under duress, and that it is unenforceable as against the second named defendant.

3 One of the issues which arises for determination in these proceedings is whether an order for possession should be granted, on a summary basis, by reference to the first loan alone, notwithstanding that the bank's entitlement to rely on the second loan is something which might only be determined by plenary hearing.

FACTUAL BACKGROUND

4 The first and second named defendants are married, but have been legally separated since 23 February 2013. For ease of exposition, the defendants will be referred to in this judgment as “ the husband” and “ the wife”, respectively.

5 The husband and wife are the registered owners of property at Delgany, Co. Wicklow. This property had been occupied by the couple as their family home. It is now occupied by the wife alone.

6 Insofar as relevant to these proceedings, the husband and wife are said to have entered into two loan agreements with Bank of Ireland Mortgage Bank (“ the bank”). The two loan agreements are said to be secured by way of a legal charge on the family home (“ the mortgaged property”). The legal charge is dated 18 November 2005, and had been registered against the title of the mortgaged property on 24 February 2006 as a charge for “ present and future” advances repayable with interest. The legal charge had been entered into prior to the second loan agreement.

7 The first loan agreement is said to have been for a principal sum of €200,000. The loan agreement appears to have been signed on 27 October 2005 (“ the first loan”).

8 The second loan agreement is said to have been for a principal sum of €800,000. The loan agreement appears to have been signed on 28 June 2006 (“ the second loan”). The purpose of the second loan had been to purchase a development site. The development site did not have the benefit of planning permission. It appears from the email correspondence between the husband and the bank that the original intention had been that the purchase of the development site would be funded by way of a loan secured on the development site itself. The loan application has not been exhibited, but it appears that the initial request for a loan had been made by the husband and his business partner; and that the wife had not been a co-applicant.

9 It further appears that officials within the bank had suggested that the purchase be funded instead by way of an equity release secured on the husband and wife's family home. (See email of 8 June 2006 exhibited in the wife's first affidavit).

10 The wife maintains that she only entered into this second loan agreement under duress. The wife has averred that she had no involvement with her husband's finances and no access to any of his bank accounts. She further avers that she had been named as a joint borrower despite never having applied for the loan and having had no prior contact with the bank in respect of same. The events leading up to her signing the loan agreement are described as follows (at paragraph 15 of the wife's affidavit of 28 January 2016):

“[…] I say that the First Named Defendant presented the Loan Agreement to me in our family home one evening without any third-party present. I say that the First Named Defendant demanded that I sign it. I say that I refused to do so and told him that I was not prepared to risk losing my family home for any of his deals. I say that the First Named Defendant lost control; he became extremely angry and aggressive towards me. I say that such was the level of the First Named Defendant's aggression that I feared for my life. I say that I felt as though I have no option but to sign the 2006 Loan Agreement. I say that I executed the document under extreme duress.”

11 The bank has filed an affidavit in reply which exhibits what is said to be a copy of a document headed up “ Disclaimer Form Mortgage Protection Assurance”. This copy document bears a signature which purports to be that of the wife, which signature appears to have been witnessed by a bank official.

12 The wife, in a further affidavit of 5 May 2017, has averred that she has never seen this document; that none of the handwriting in that document is her own; and that she does not recall ever having attended before the named bank official for the witnessing of the making of signatures.

13 The bank's deponent also “ notes” from certain (unspecified) bank files that the defendants informed the bank, when seeking the loan facilities at issue, that the loans were sought to purchase and develop the development site which was to be divided into three subsites whereon it was intended that the defendants and the husband's business partner would take one site each as their respective family homes, and the third site would be sold for profit.

14 The purchase of the development site was completed in the joint names of the husband and his business partner. The wife did not have any legal interest in the development site. The wife maintains that she...