GE Capital Woodchester Home Loans Ltd v Reade and Another (No 1)

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 22 August 2012
• Neutral Citation: [2012] IEHC 363
• Court: High Court
• Date: 22 August 2012

GE Capital Woodchester Home Loans Ltd v Reade

BETWEEN

G E CAPITAL WOODCHESTER HOME LOANS LIMITED

PLAINTIFF

AND

JOHN READE AND DYMPNA READE

DEFENDANTS

[2012] IEHC 363

[No. 237 SP/2010]

THE HIGH COURT

BANKING LAW

Charge

Mortgage - Possession of premises - Demand letter - Whether demand letter rendering principal sum due and owing - Equity - Estoppel - Whether conduct of plaintiff subsequent to demand consistent with principal sum being due and owing - Whether defence of undue influence available to defendant - Start Mortgages Ltd v Gunn [2011] IEHC 275, (Unrep, Dunne J, 25/7/2011); EBS Ltd v Gillespie [2012] IEHC 243, (Unrep, Laffoy J, 21/6/2012); Primor Ltd v Stokes Kennedy Crowley [1996] 2 IR 459; Barclay's Bank plc v O'Brien [1994] 1 AC 180; Bank of Nova Scotia v Hogan [1996] 3 IR 239; Bank of Ireland v Smyth [1995] 2 IR 459; CIBC Mortgages v Pitt [1994] 1 AC 200; Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773 and Ulster Bank (Ireland) Ltd v Roche [2012] IEHC 166, (Unrep, Clarke J, 29/3/2012) considered - Conveyancing and Law of Property Act 1881 (No 41), s 20 - Registration of Title Act 1964 (No 16), s 62 - Family Home Protection Act 1976 (No 27), s 3 - Proceedings dismissed (2010/237SP - Laffoy J - 22/8/2012) [2012] IEHC 363

GE Capital Woodchester Home Loans Limited v Reade

Facts The plaintiff sought an order pursuant to s. 62 of the Registration of Title Act, 1964 for the possession of the defendants' dwellinghouse. Arrears had built up on the account and the plaintiff had demanded possession of the property. A formal demand had been issued by the plaintiff that it would consider taking further action to recover the outstanding payments which could result in repossession of the property. A second letter was sent advising that the entire balance outstanding on the mortgage had fallen due and was owing and demanded vacant possession of the property. The second defendant contested the plaintiff's entitlement to possession of the property. The second defendant contended that she had felt pressurised into signing the mortgage papers and had had not been advised of the need to seek independent legal advice. At issue was whether when the default had occurred the plaintiff had in fact made a demand in accordance with the provisions of the charge so that all of the monies remaining unpaid became immediately due and payable to the plaintiff, so as to comply with section 62(7) of the 64 Act. A similar issue had arisen in Start Mortgages Ltd & Others v Gunn & Others [2011] IEHC 2011. It was also submitted that the plaintiff had not identified the detail of the default on the part of the defendants.

Held by Laffoy J in dismissing the claim: There was absolutely no doubt that there was clear evidence that an event of default had occurred before the proceedings had been instituted. The defendants had been told that they were in arrears on their mortgage and the amount of the arrears was specified. However, there was no demand for repayment of the entire balance; there was merely an assumption that it was due and owing. The evidence did not establish that repayment of the principal money had become due prior to the initiation of these proceedings, because of the absence of the demand for the entire balance as required. The precedent letter also relied upon by the plaintiff merely called in the arrears and did not constitute a demand for all the monies remaining unpaid as required by the charge. The protracted and costly legal process which had so far occurred had not been in the interest of either of the parties. There must be a better way of addressing mortgage arrears which would be in the interest of all the parties concerned.

REGISTRATION OF TITLE ACT 1964 S62

START MORTGAGES LTD v GUNN UNREP DUNNE 25.7.2011 2011/46/13101 2011 IEHC 275

REGISTRATION OF TITLE ACT 1964 S62(7)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S20

EBS LTD v GILLESPIE UNREP LAFFOY 21.6.2012 2012 IEHC 243

PRIMOR PLC v STOKES KENNEDY CROWLEY & OLIVER FREANEY & CO 1996 2 IR 459 1995/20/5287

BARCLAYS BANK PLC v O'BRIEN 1994 1 AC 180 1993 3 WLR 786 1993 4 AER 417

BANK OF NOVA SCOTIA v HOGAN 1996 3 IR 239 1997 1 ILRM 407 1997/1/74

BANK OF IRELAND v SMYTH 1995 2 IR 459 1995/15/3805

FAMILY HOME PROTECTION ACT 1976 S3(1)

FAMILY HOME PROTECTION ACT 1976 S3

CIBC MORTGAGES PLC v PITT 1994 1 AC 200 1993 3 WLR 802 1993 4 AER 433

ROYAL BANK OF SCOTLAND PLC v ETRIDGE (NO 2) 2002 2 AC 773 2001 3 WLR 1021 2001 4 AER 449

ULSTER BANK IRL LTD v ROCHE & BUTTIMER UNREP CLARKE 29.3.2012 2012 IEHC 166

1 Judgment of Ms. Justice Laffoy delivered on 22nd day of August 2012.

The proceedings

2 1. These proceedings were initiated by special summons which issued on 1 ^st April, 2010, wherein the plaintiff sought an order pursuant to s. 62 of the Registration of Title Act 1964 (the Act of 1964) for possession of the premises registered on Folio 75768F County Galway which, as the evidence discloses, comprise a dwelling house known as 66, River Oaks, Claregalway, County Galway (the Property).

3 2. The proceedings were grounded on the affidavit of Steven Pickering, which was sworn on 9 ^th April, 2010. That affidavit and the documents exhibited in it proved the following facts:

4 (a) By a letter of offer of mortgage loan dated 2 ^nd November, 2006 the plaintiff offered the defendants a loan of €230,000 to be secured on the Property. The offer was accepted by the defendants and it is clear from the copy of the letter of offer exhibited that their execution of the form of acceptance was witnessed by a solicitor.

5 (b) By an Indenture of Mortgage and Charge dated 21 ^st December, 2006 made between the defendants of the one part and the plaintiff of the other part (the Charge), the defendants charged the Property, being the lands registered on Folio 75768F County Galway, in favour of the plaintiff. Once again, as the copy exhibited discloses, the execution of the Charge by the defendants was witnessed by a solicitor.

6 (c) In due course, the Charge was registered as a burden on Folio 75768F. What that folio discloses is that the defendants were registered as full owners of the Property on that folio on 28 ^th July, 2004. While on the folio the defendants are named as "John Reed and Dympna Reed", I am satisfied on the evidence that the defendants' surname is misspelt on the folio. Since 28 ^th July, 2004 the following charges have been registered on the folio:

7 (i) A charge for present and future advances, stamped to cover €88,000 repayable with interest, which was registered as a burden on 28 ^th July, 2004, Irish Nationwide Building Society being the owner of that charge. That charge was cancelled off the folio on 10 ^th July, 2006.

8 (ii) A charge for present and future advances repayable with interest, Start Mortgages Limited being registered as owner of that charge, was registered on 10 ^th July, 2006. On 15 ^th January, 2009 that charge was cancelled off the folio.

9 (iii) The Charge, which was described as a charge for present and future advances repayable with interest was registered and the plaintiff was registered as owner thereof on the folio on 15 ^th January, 2009.

10 (d) Mr. Pickering averred that there was due and owing for arrears on foot of the Charge at the date of the swearing of the grounding affidavit the sum of €56,141.91, which he averred equated to twenty seven months repayments, with the total sum then outstanding on the Charge amounting to €273,030.43. He exhibited a statement of the account. What that discloses is that the direct debits which were due on the account from January 2007 to September 2007, which varied in amount over that period but which were either slightly less or slightly more than €2,000 per month, were unpaid. Three payments of €200 each were made in the period from September to December 2007, twenty one payments of €800 each were made between January 2008 and September 2009, and six payments of €500 each were made between November 2009 and March 2010.

11 (e) Mr. Pickering exhibited two letters as evidence of the fact that the plaintiff had demanded possession of the Property. The first was dated 21 ^st December, 2009. It was headed "Formal Demand" and it issued directly from the plaintiff to each of the defendants. That letter stated that the defendants' mortgage account was "still showing" arrears of €50,493.64 and was then "7 payment/s in arrears". It was stated that unless the account was brought up to date immediately, the plaintiff would consider taking further action to recover the outstanding payments and this was likely to include engaging its solicitors in order to issue legal proceedings, which could result in repossession of the Property, the reference to re-possession being underlined. The second letter was dated 2 ^nd February, 2010 and was from the plaintiff's Solicitors to each of the defendants. Having stated that the mortgage was in arrears in the sum of €53,313.78 as at 2 ^nd February, 2010, the letter continued:

"The purpose of this letter is to advise you that as a result of your above default in your mortgage the entire balance outstanding on your mortgage account in the amount of €270,915.45 as at 2 ^nd February, 2010 has now fallen due and owing. We are instructed to demand within ten days from the date hereof vacant possession of our security … [the Property] for the purpose of sale as our client's power of sale has now arisen under the terms of your mortgage."

12 3. The first named defendant has never entered an appearance to the proceedings and did not appear on the hearing of the proceedings on 27 ^th July, 2012. I am satisfied, however, that the first defendant has been properly served with all relevant documents.

13 4. The second defendant entered an appearance on 20 ^th January, 2011 and contested the plaintiff's...