Bank of Ireland v Lynch; Bank of Ireland v Lynch and Another

• Jurisdiction: Ireland
• Judge: Ms Justice Bolger
• Judgment Date: 24 April 2023
• Neutral Citation: [2023] IEHC 199
• Docket Number: [Record No 2017/2593 S.]
• Court: High Court

Between

The Governor and Company of the Bank of Ireland

Plaintiff

and

Paul Lynch

Defendant

Between

The Governor and Company of the Bank of Ireland

Plaintiff

and

Paul Lynch and Anne Lynch

Defendants

[2023] IEHC 199

[Record No 2017/2593 S.]

[Record No 2018/3 S.]

THE HIGH COURT

Summary judgment – Motion to amend – Defence – Plaintiff seeking summary judgment – Whether the defendants had disclosed an arguable defence

Facts: The defendants, Mr and Ms Lynch, took out a loan to purchase two investment rental properties. The facility letter of 28 October 2005 referred to interest only repayments for three years and thereafter 214 monthly instalments of interest and principles. However, the defendants claimed that they had a verbal agreement with the predecessor of the plaintiff, the Bank of Ireland, that their repayments would be interest only for the entirety of the mortgage and would be paid from the rental income on the properties. They claimed the agreement was premised on the value of the apartments rising but said there was no discussion about what would happen if their values decreased. Shortly after the three years of interest only repayments, the loan went into arrears. The defendants continued to discharge the interest from the rental income. Around that time the defendants: (1) acknowledged that the loan went into arrears and made proposals for what was referred to in their correspondence as their debt; and (2) expressly accepted an offer by the plaintiff to allow a short period of interest only repayments after which the defendants acknowledged they would make repayments of interest and principle. A Mortgage Form of Authority dated 16 February 2012 was signed by the first defendant confirming that agreement. The plaintiff applied to the High Court seeking to: (1) amend the proceedings to particularise the claim in the light of the decision of the Supreme Court in Bank of Ireland Mortgage Bank v O’Malley [2019] IESC 84; and (2) enter final judgment on the basis that the defendants had no bona fide defence to the proceedings.

Held by Bolger J that, applying Havbell DAC v Harris [2020] IEHC 147, the amendments sought were in the interest of justice and would ensure the real issues in controversy between the parties were before the court. Bolger J held that they did not seek to change the plaintiff’s case but simply sought to particularise the figures. Bolger J, having had regard to Ulster Bank Ireland Ltd v O’Brien & ors [2015] IESC 96, found that at no time had the defendants identified any evidence they intended to call by way of witnesses or discovery. Bolger J noted that they had not identified any person with whom they said they had a verbal agreement or any intention to scope out an evidential basis for their claims. Bolger J noted that at no time had they disputed that they borrowed the money and knew that interest would be charged on it. Bolger J noted that their dispute related to the basis on which they said they agreed to repay the loans, what they claimed was their right to have their proposals accepted by the plaintiff and the plaintiff’s obligation to retain the property pending its value recovering in an improving market. Bolger J found that none of those claims had any basis in law and they did not identify an arguable defence to the defendants’ failure to repay the debts that they had acknowledged. Insofar as the defendants claimed to rely on a defence based on a tort of reckless lending, Bolger J held that no such tort exists, as per Osbourne v KBC Bank Ireland Plc ? neither did any right arise from the defendants’ asserted non-compliance with the Bank’s Code of Conduct on Mortgage Arrears, which entitles a borrower to make a complaint to the Central Bank (as per Bank of Ireland v McMahon & McMahon [2018] IEHC 455) but does not give rise to a defence in a case of an unpaid loan. Bolger J found that none of the defendants’ assertions had any credible basis in fact or in law and could not equate to an arguable defence or a defence that could realistically improve at trial with the benefit of oral evidence and/or discovery.

Bolger J allowed the plaintiff’s applications both to amend the proceedings and to enter judgment against the defendants in the terms of the notices of motion.

Application granted.

Counsel for the plaintiff, Nevan Powell BL.

The first named defendant represented himself.

JUDGMENT of Ms Justice Bolger delivered on the 24 ^th day of April 2023

1 . The plaintiff has brought two applications in relation to a loan taken out by the defendants in October 2005 to (1) amend the proceedings to particularise the claim in the light of the decision of the Supreme Court in Bank of Ireland Mortgage Bank v. O'Malley [2019] IESC 84, [2020] 2 I.L.R.M. 423, and (2) enter final judgment on the basis that the defendants have no bona fide defence to the proceedings.

Background

2 . The defendants took out a loan to purchase two investment rental properties. The facility letter of 28 October 2005 refers to interest only repayments for three years and thereafter 214 monthly instalments of interest and principles. However, the defendants claim that they had a verbal/gentleman's agreement with the plaintiff's predecessor that their repayments would be interest only for the entirety of the mortgage and would be paid from the rental income on the properties. The defendants proffered no evidence to corroborate their claims and did not identify the persons with whom they had this agreement. They claimed the agreement was premised on the value of the apartments rising but said there was no discussion about what would happen if their values decreased. The first named defendant in his submissions to the court suggested that this would “have worked out”. There is a lack of commercial reality to the defendants' version of the terms of their loan...