ICS Building Society v Paul Lambert
| Jurisdiction | Ireland |
| Judge | Ms. Justice Iseult O'Malley |
| Judgment Date | 02 May 2014 |
| Neutral Citation | [2014] IEHC 581 |
| Judgment citation (vLex) | [2014] 5 JIC 0209 |
| Court | High Court |
| Date | 02 May 2014 |
[2014] IEHC 581
THE HIGH COURT
CENTRAL BANK ACT 1989 S117
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 CHAP 1
CENTRAL BANK ACT 1942 PART IIIC
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 2
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 10
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 12
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 21
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 22
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 24
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 26
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 28
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 27
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 30
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 31
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 32
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 33
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 37
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 39
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 42
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 46
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 47
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 48
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 50
STEPSTONE MORTGAGE FUNDING LTD v FITZELL 2012 2 IR 318 2012/43/12851 2012 IEHC 142
IRISH LIFE & PERMANENT PLC v DUFF UNREP HOGAN 31.1.2013 2013/26/7742 2013 IEHC 43
ZURICH BANK v MCCONNON UNREP BIRMINGHAM 4.3.2011 2011/50/14278 2011 IEHC 75
CONSUMER CREDIT ACT 1995
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 35
CENTRAL BANK OF IRELAND CODE OF CONDUCT ON MORTGAGE ARREARS 2010 PROVISION 41
BRESLIN & SMITH BANKING LAW 2ED 2007 PARA 3.56
MCGUINNESS v ALLIED IRISH BANKS PLC UNREP GILLIGAN 27.2.2014 2014 IEHC 191
CAMPUS OIL LTD & ORS v MIN FOR INDUSTRY & ORS (NO 2) 1983 IR 88 1984 ILRM 45
Banking - Mortgage - Mortgage Code - Status of Code - Application to parties
Facts: The circuit court granted the plaintiff/respondent (‘ICS’) an order for possession relating to property belonging to the defendant. The defendant (‘the appellant’) appealed against the order in this case raising issues in relation to the Code of Conduct for Mortgage Lenders (‘the code’) applicable to lending institutions when dealing with mortgage arrears and the Mortgage Arrears Resolution Process (‘MARP’). The appellant was a solicitor with his own practice and the ICS lent him a sum of money to purchase a property as a residential investment. The appellant had fallen into arrears and the ICS demanded full repayment of the sum and vacant possession of the property.
Held by O'Malley J: The court held that the legal status and the effect of the code had not yet been determined. The court said that the Code could not be given the same status as legislation. Instead, the court said the Code created an area of discretion. The Code permitted the court to adjourn a matter to allow a borrower to avail of opportunities provided by the Code. The court determined whether or not to exercise this discretion by examining the purpose of the Code. The Code was only applicable to borrowers in arrears where a mortgage was secured on their primary residence. The Code sets out the process to be followed before a residence can be repossessed to ensure that borrowers only lose their homes as a last resort.
By virtue of the Code, lenders are obliged to make all reasonable efforts to reach an alternative solution. The appellant alleged ICS did not do this. Before the court could attempt to assess the reasonableness of a solution for either party it needed to be made aware of the borrowers full financial position. The Code also required the co-operation of the borrower to disclose his financial position. Despite this, the defendant failed to give the plaintiff an accurate picture of his financial situation. The court held that the plaintiff/respondent had lawfully and properly brought proceedings in this instance and the level of contact by the plaintiff with the defendant was not unreasonable or inadequate.
The court was unsure whether to take into consideration, as part of the Code”s process, the open offers made by both parties in relation to the appropriate alternative to repossession. The plaintiff asked the defendant to delay repossession and submitted that he had informed ICS he would repay the mortgage arrears with funds he was to receive from an on-going defamation action. The court stated that it was not unreasonable for ICS to refuse to commit itself to such an offer. The court determined that there was no basis to exercise its limited discretion in favour of the defendant.
This is an appeal against an order of the Dublin Circuit Court, made on the 19 th November, 2012, granting to the plaintiff/respondent ("ICS") an order for possession relating to a property belonging to the defendant/appellant ("the appellant"). The issues raised concern provisions of the Code of Conduct for Mortgage Lenders ("the Code") applicable to lending institutions when dealing with mortgage arrears and the Mortgage Arrears Resolution Process ("MARP").
The appellant is a solicitor with his own practice.
On foot of a mortgage dated the 22 nd November, 2006 ICS lent to the appellant the sum of €450,000. The mortgaged property was a house known as 9 Dunbo Hill, Howth in County Dublin. At that time the appellant resided in 7 Dunbo Hill, which was his mother's house, and it is accepted that No. 9 was bought as a residential investment.
It seems to be agreed that the purpose of the loan was, in part, to discharge the then current mortgage on No. 9, which was with First Active. The balance was to be used to aid the purchase of two further residential properties, in Ballymun and Balbriggan. The repayments were to be interest-only for the first seven years - this period expired in November, 2013.
The loan was not in fact used to discharge the First Active mortgage. Furthermore, the appellant's firm acted as solicitor in the transaction and undertook to lodge the title documents with ICS - it appears that this undertaking was not honoured.
At some stage in early 2008 the appellant began to fail to meet his monthly repayments and fell into arrears. ICS, relying on the terms of the mortgage, made demand for full repayment by letter dated the 20 th October, 2008. On the 12 th November, 2008 it demanded clear vacant possession of the property.
On the 12 th October, 2010 ICS issued a Civil Bill for possession, returnable for the 7 th December of that year. The claim, when it eventually came on to be heard, was grounded on three affidavits - one from Colette Finneran, Supervisor of the Collections Department in ICS (sworn on the 23 rd September, 2010), one from Fiona Cassidy, Manager in the ICS Arrears Support Unit (sworn on the 15 th October, 2012) and the affidavit of service.
Ms. Finneran exhibited the mortgage documentation, the demands (to which no reply was received) and the statement of the appellant's account. She averred that the defendant lived at No. 7 Dunbo Hill, that No. 9 was a residential investment and that she was not currently aware of any other person in actual possession of the property. She further averred that in these circumstances the Code had no application.
At the time of swearing the affidavit the monthly instalments were €715.50. The statement of account shows a number of missed payments but also a number of payments made on various dates in 2008, 2009 and in January, 2010. During 2009 the payments were generally higher than the required monthly instalment and the arrears reduced accordingly but no payments at all were made from the end of January 2010 until the closing of the account in September of that year. As of the date of swearing that affidavit the arrears, according to Ms. Finneran, amounted to €10,842.58.
The affidavit of service was sworn by a Mr. Francis Craven, who said that he attended at No. 9 on the 25 th October, 2010 and found it "vacant and unoccupied with all the appearances of having been empty for some time." He served the civil bill on the appellant next door in No. 7.
Ms. Cassidy's affidavit was sworn, as noted, in October, 2012. As of that date, the monthly instalment payable by the defendant was €623.92 and the current arrears amounted to €19,282.57. She exhibited an up-to-date copy statement of the defendant's loan account and, based on the figures therein, averred that the defendant was
"clearly not in any position to sustain, let alone repay, his mortgage debt herein."
With reference to the applicability of the Code of Conduct for Mortgage Lenders (first published by the Financial Regulator in 2009) Ms. Cassidy averred to the following facts:
· At the time of the loan application, the appellant had represented that he lived in No. 7 with his parents and that No. 9 was an investment on his part. The Code would have had no application to such a loan.
· On the 7 th September, 2010 the appellant told ICS in a telephone conversation that he had secured a tenant for the property.
· In June 2012 a summons...
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