Healy v Stepstone Mortgage Funding Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Hogan
• Judgment Date: 19 March 2014
• Neutral Citation: [2014] IEHC 134
• Judgment citation (vLex): [2014] 3 JIC 1901
• Date: 19 March 2014

[2014] IEHC 134

THE HIGH COURT

[No. 11503 P./2013]

Healy v Stepstone Mortgage Funding Ltd

BETWEEN

THOMAS HEALY

PLAINTIFF

AND

STEPSTONE MORTGAGE FUNDING LIMITED

DEFENDANT

RSC O.28 r18

ICS BUILDING SOCIETY v GRANT UNREP 26.1.2010 2010/23/5653 2010 IEHC 17

MCCONNON v PRESIDENT OF IRELAND 2012 IR 449

T (R) v P (V)(ORSE T (V)) 1990 1 IR 545

CONSTITUTION ART 50.1

MCKINLEY v MIN FOR DEFENCE 1992 2 IR 333

CONSTITUTION ART 15.2.1

MESKELL v CORAS IOMPAIR EIREANN (CIE) 1973 IR 121

HANRAHAN v MERCK SHARP & DOHME LTD 1988 ILRM 629

HERRITY v ASSOCIATED NEWSPAPERS LTD 2009 1 IR 326

SULLIVAN v BOYLAN CONTRACTORS LTD & MCCARTAN (NO.2) UNREP HOGAN 12.3.2013 2013 IEHC 104

KENNEDY v GIBBONS UNREP HOGAN 20.2.2014 2014 IEHC 67

High court - Mortgage - Security - Validity - Misrepresentation - Negligence - Reckless lending - Law of torts - Mortgage contract - Charge on property - Common law - Reasonable cause of action - Rules of the Superior Courts - Constitution of Ireland

Facts: The plaintiff was a customer of the defendant, having taken out a mortgage of €120,000 in respect of a property in Co. Westmeath. In these proceedings, the plaintiff sought damages from the defendant on the basis of negligence and misrepresentation. It was said that the defendant had broken ‘serious liquidity laws which has caused the financial collapse’ and followed ‘reckless lending procedures’. As a result, it was argued that mortgage contract was void and that a declaration should be made directing that any liens or charges registered on the Co. Westmeath property otherwise secured by the mortgage be removed.

By a notice of motion dated the 13th January 2014, the defendant applied to have the substantive proceedings struck out pursuant to both O. 28, r. 18 of the Rules of the Superior Courts and the Court”s inherent jurisdiction on the ground that they disclose no reasonable cause of action.

Held by Hogan J. that although the plaintiff”s claim rested entirely on the assumption that there existed a tort of reckless lending, it was clear from common law that this was not the case. The cases of ICS Building v. Grant [2010] IEHC 17 and McConnon v. President of Ireland [2012] IEHC 184, [2012] I.R. 449 were cited in this regard. It was further held that whilst the common law method naturally allowed incremental change and development, it was not open to the Courts to invent entirely new categories of torts without a legislative basis because Article 15.2.1 of the Constitution of Ireland made it clear that such a function was to be carried out by the Oireachtas. It was also noted that there was no evidence to suggest that a tort of reckless lending existed prior to the enactment of the Constitution.

It was further held that the Court can generally only develop the law of torts where the body of law is shown to be basically ineffective to protect constitutional rights in a particular case. It was clear, however, that this did not apply to the present case. As a result, it was said that the proceedings were entirely unsustainable in law, and an order was made striking out the claim pursuant to the inherent jurisdiction of this Court.

1 1. The plaintiff is a customer of the defendant mortgage company ("Stepstone") having taken out a mortgage in September 2007, of €120,000 in respect of a property in Co. Westmeath. As it happens, the plaintiff has fallen somewhat behind in his mortgage payments and in 2013 Stepstone commenced separate proceedings in respect of these arrears. Those separate proceedings are not before me and I refrain from expressing any view in respect of them.

2 2. In these present proceedings, however, the plaintiff has sued Stepstone for what is described as "gross negligence and misrepresentation" which it is claimed has been orchestrated "by the mortgage company. The general endorsement of claim contends that Stepstone broke "serious liquidity laws which has caused the financial collapse" and it claims that by reason of this conduct the mortgage contract is "seriously flawed". The plaintiff also claims damages for "reckless lending procedures" by Stepstone and it seeks a declaration that any liens or charges registered on the folio of the plaintiff's family home otherwise secured by the mortgage be removed.

3 3. By motion dated the 13 ^th January, 2014, Stepstone applied to have these proceedings struck out pursuant to both Ord. 28, r. 18 and the Court's inherent jurisdiction on the grounds that they disclose no reasonable cause of action. I have already ruled in Stepstone's favour on this point and now give my reasons for this conclusion.

4 4. In essence the...