Bank of Ireland Mortgage Bank UC and Another v Hade and Another

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 07 December 2023
• Neutral Citation: [2023] IECA 292
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record Number: 2023/32 & 2023/45 Court of Appeal Record Number: 2023/31 & 2023/46 High Court Record Number: 2014/4328P

Between/

Bank of Ireland Mortgage Bank U.C.

Plaintiff/Respondent

and

Niall Hade and Joyce Hade

Defendants/Appellants

Between/

Niall Hade

Plaintiff/Respondent

and

Bank of Ireland Mortgage Bank UC and Michael McAteer

Defendants/Appellants

[2023] IECA 292

Costello J.

Noonan J.

Butler J.

Court of Appeal Record Number: 2023/32 & 2023/45

High Court Record Number: 2014/1416S

Court of Appeal Record Number: 2023/31 & 2023/46

High Court Record Number: 2014/4328P

THE COURT OF APPEAL

CIVIL

JUDGMENT of Ms. Justice Costello delivered on the 7 ^th day of December 2023

Introduction

1 . On 21 December 2022 in proceedings entitled Bank of Ireland Mortgage Bank UC v. Niall Hade and Joyce Hade, Record No. 2014/1416S (“ the summary proceedings”) the High Court (Barr J.) granted judgment against the defendants ( “the Hades” or “Mr. Hade” or “Mrs. Hade” as appropriate) jointly and severally in the sum of €2,026,640.09 and awarded judgment against Mr. Hade in the sum of €1,412,210.09. He dismissed the Hades' counterclaim against the plaintiff ( “the bank”) and made no order as to costs on the claim or the counterclaim. The Hades appealed in respect of the dismissal of their counterclaim and the judgment sums entered against them and the bank appealed against the order for costs.

2 . The summary proceedings were heard together with plenary proceedings entitled Niall Hade v. Bank of Ireland Mortgage Bank U.C. & Michael McAteer, Record No. 2014/4328P (“ the plenary proceedings”). The High Court rejected Mr. Hade's claim against the bank. The trial judge held that the second named defendant, ( “the Receiver”) had acted unlawfully in repossessing and then selling certain properties. He held that it was appropriate to award exemplary damages against the Receiver to mark the court's displeasure at his behaviour in the sum of €550,000. He granted Mr. Hade a declaration that the Receiver was not entitled to possession of two properties without an order of the Circuit Court whilst placing a stay on the declaration for six months to enable the Receiver to bring the necessary application before the Circuit Court. He made no order as to costs in respect of the plenary proceedings. The Receiver appealed against the award of exemplary damages and the refusal to award him any costs in respect of the action. The bank appealed the order for costs in circumstances where Mr. Hade's action against the bank was dismissed and Mr. Hade appealed against the refusal of his claims against the bank and the Receiver.

3 . The various appeals and cross appeals were heard together and, as in the High Court, will be dealt with in one judgment.

Background

4 . The disputes have their origin in two loan agreements entered into in 2006 and 2007. By letter dated 6 June 2006 the bank offered Mr. Hade a loan of €2,700,000 for a period of 25 years. The first 60 instalments were to be interest only. Thereafter the repayments were of capital and interest. The loan was described as a repayment loan. The loan was to be secured over 8 properties: 4 and 5, Taobh Na Coille, Firhouse; 24, Kingswood 1, Tallaght; 107, Jervis Place, Dublin 1, 92, Moy House, IFSC, 72 and 72A, Virginia Heights, Tallaght and 51D,

Belgard Square, Tallaght. Clause 4(b) of the General and Special Conditions provided that in the event of any repayment not being paid on the due dates that the bank may demand an early repayment of the loan. The letter stated that it was “regulated by the Consumer Credit Act 1995” and included Consumer Credit Act Notices and a statement that the payment rates “on this housing loan” may be adjusted by the lender from time to time. Mr. Hade accepted the offer on 9 June 2006

5 . On 22 June 2006 the bank issued a second letter to Mr. and Mrs. Hade in identical terms save that the addresses of three of the properties to be mortgaged were amended to read 752 and 752A, Virginia Heights and 51E, Belgard Square, Tallaght. Mrs Hade was added as a coborrower because she was a co-owner of some of the properties. The letter of offer was accepted by the Hades on 26 June 2006. Thus, the first offer to Mr. Hade was replaced by an offer to Mr. and Mrs. Hade jointly. The loan was drawn down in August 2006. The second loan offer was made on 7 September 2007 and was also described as a mortgage loan offer. This was to Mr. Hade alone and offered him the sum of €1,237,000 to be repaid over 25 years. The first 60 instalments were interest only repayments and the remaining 240 instalments were capital and interest repayments. The property to be mortgaged comprised four units at 24, St. Maelruns Park, Old Bawn in Tallaght. The letter of offer included the same Clause 4(b) quoted above and also stated that the offer letter is regulated by the Consumer Credit Act, 1995 and included the identical Consumer Credit Act notices. The letter of offer was accepted by Mr. Hade on 11 September 2007 and the monies were duly advanced thereafter.

6 . The purpose of the 2006 loan was stated to be to enable the Hades to refinance certain borrowings on their family home and a number of other properties and to purchase some additional properties. The purpose of the 2007 loan was to purchase four properties in the name of Mr. Hade.

7 . The bank's internal documents referred to the purpose of the 2006 loan as including the purchase of investment properties. In an internal bank memorandum described as a Business Link Credit Application – Commercial/Mid-corporate Mr. Hade's main activities as described as “Property Investment and Refugee Accommodation”.

8 . As a condition of the 2006 loan the Hades were required to mortgage the properties set out in the letter of 22 June 2006 in favour of the bank. On 8 June 2006 Mr. and Mrs. Hade executed a mortgage and charge in favour of the bank in respect of 752A, Virginia Heights and 752, Virginia Heights. On 24 August 2006 the Hades executed a mortgage and charge in favour of the bank over Apartment 51E, Belgard Square, Tallaght. For reasons which are not explained in the judgment, the Hades did not execute mortgages over 4 and 5, Taobh na Coille; 29 Kingswood Heights; 107, Jervis Place or 92, Moy House as they had agreed when they accepted the 2006 loan until December 2009.

9 . As required by the 2007 loan, on 30 October 2007 Mr. Hade executed a mortgage and charge in favour of the bank in respect of the premises formerly known as 24 St. Maelruns Park and now known as 24, 24A, 24B and 24C, St. Maelruns Park.

10 . On 17 December 2009 the Hades remedied their default and executed documents described as housing loan mortgages in favour of the bank in respect of 92, Moy House; 4 and 5, Taobh Na Coille. On the same day Mr. Hade executed a document in identical terms in favour of the bank in respect of Apartment 107, Jervis Place and 29, Kingswood Heights, Tallaght. The terms of these charges will be considered below.

11 . The Hades and Mr. Hade fell into arrears in respect of their repayments on both the 2006 and the 2007 loans before the interest only repayment period had elapsed. The bank statements for the 2006 account shows arrears in excess of €40,000 had accrued in late 2008 and that the account was in arrears from September 2008, though the arrears were significantly reduced in 2010 when they were brought below €5,000. By June 2010 they started to increase and on 4 August 2011 they stood at €13,647.77. Mr. Hade's sole account went into arrears also and by 2008 they stood at just under €15,000. As of 30 June 2011 they amounted to €33,801.80.

12 . There were various contacts between the parties seeking to address the arrears situation but by August 2011 there were significant arrears owing on both accounts and this had been the case for a number of years. As the trial judge held, this coincided with the end of the interest only period on the 2006 account.

13 . The bank decided to call in the two loans and letters of demand were sent to the Hades in respect of each of the accounts on 1 September 2011 demanding immediate repayment of principal and interest due in respect of each account. The letter in respect of the 2006 account was addressed to Mr. and Mrs. Hade. It called for immediate payment of the principal and interest due on the account in the sum of €2,727,165.09. The letter referred to Clause 4(b) of the General Conditions of the Letter of Offer and stated that it constituted a demand under Clause 4(b). The Hades were informed that:

“In the event that you fail to pay the amount demanded in accordance with this letter within the next 10 days, the Bank will proceed to enforce its security including by way of exercising its powers to sell the properties as specified above and to take any other legal action against you, as the Bank deems to be expedient.”

14 . A letter of demand also dated 1 September 2011 in similar terms was sent to Mr. Hade in respect of the 2007 account calling for the immediate payment of the sum of €1,285,466.47 and referring to Clause 4(b) and giving notice that the bank would proceed to enforce its security.

15 . The Hades were unable to repay the sums claimed by the bank and the bank proceeded to appoint Mr. McAteer as Receiver over all twelve properties which had been provided as security for the loans. He was appointed as Receiver over the properties on diverse dates between 17 November 2011 and 22 February 2013.

16 . The Receiver experienced difficulties with this receivership. While some tenants delivered up possession voluntarily, in other instances he was required to go through the PTRB procedure to obtain orders enabling him to repossess the premises. Sometimes the Hades sought to collect the rent directly from tenants or purported to create tenancies over properties in respect of which he had been appointed receiver. He asserted that they changed the locks on some of the properties. At one point, Mr. Hade purported to transfer title to some...