KBC Bank Plc v Beades

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 17 February 2021
• Neutral Citation: [2021] IECA 41
• Date: 17 February 2021
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No. 2018/378

BETWEEN/

PEPPER FINANCE CORPORATION (IRELAND) DAC

PLAINTIFF

- AND –

JERRY BEADES

APPELLANT

[2021] IECA 41

Whelan J.

Noonan J.

Haughton J.

Court of Appeal Record No. 2018/378

High Court Record No. 2006/623 SP

THE COURT OF APPEAL

JUDGMENT of Ms. Justice Máire Whelan delivered on the 17 ^th day of February 2021

Introduction

1 This is an appeal from an order of Costello J. made in the within proceedings on 25 July 2018 which was perfected on 23 August 2018 made for the reasons stated in her judgment of 29 June 2018.

2 The title page of this judgment reflects the most up-to-date details of the parties in the underlying High Court proceedings as recorded by the Central Office of the High Court. This should not be taken as a pre-judgment of the issues discussed herein or of any potential future appeals brought by the appellant. For the purposes of the substance of this judgment, “the respondent” refers to KBC Bank Ireland plc.

Background

3 The judgment sets out the factual background in detail and key facts. Briefly put, by letter dated 20 May 2003 IIB Homeloans Ltd. (formerly Irish Life Homeloans Ltd., hereinafter “IIB Homeloans”) approved facilities in favour of the appellant amounting to €1,200,000 secured on the properties 31 Richmond Avenue, Fairview, Dublin 3 and 21 Little Mary Street, Dublin 1 (hereinafter “the mortgaged properties”) subject to certain special and standard conditions.

4 The special conditions attached to the loan offer letter included the following: -

“147. The Applicant(s)’ attention is drawn to clause 11(iii) of the Mortgage Indenture. The Applicant(s) hereby acknowledges the Lender's right, without further consent from or notice to the Applicant(s) to transfer the benefit of this Letter of Offer, the mortgage loan and the Lender's mortgage security (including any insurance policy or policies of life or endowment term assurance) over the property to any person, company or corporation on such terms as the Lender may think fit, without any further consent from or notice to the Applicant(s) or any other person, or any consequential assurance or reassurance or release under such scheme whereupon all powers and discretions of the Lender shall be exercisable by the transferee.”

5 The said special condition also provided as follows: -

“…The Applicant(s) hereby irrevocably and unconditionally authorises the Lender, for the purpose of or in connection with any proposed transfer, assignment, disposal, sub-mortgage, sub-charge, trust or arrangement of this agreement, to disclose to the proposed transferee and every person proposing to participate in or promote or underwrite or manage any such transfer or securitisation scheme and to disclose to every person to whom the Lender is obliged thereunder to make disclosure, details of this agreement including, without prejudice to the generality of the foregoing any information and documentation in the Lender's possession in relation to the Borrower, the mortgage loan and the Lender's mortgage security over the Mortgaged premises and so far as such information constitutes personal data within the meaning of the Data Protection Act, 1988, this authority shall be consent for the purposes of section 8(h) of the said Act.”

6 By an indenture of mortgage dated 12 June 2003 between IIB Homeloans of the one part and the appellant of the other part, all monies then owing or which should thereafter become owing were, with interest, costs and charges secured upon the mortgaged properties for the benefit of IIB Homeloans. Significantly, since the title was unregistered the appellant granted and conveyed the mortgaged premises held in freehold tenure to the lender in fee simple subject to the proviso for redemption contained in the indenture. A memorial of the said mortgage was registered in the Registry of Deeds on 1 August 2006.

The proceedings

7 Arising from certain defaults by the appellant, on 29 November 2006 proceedings were instituted by IIB Homeloans by way of special summons seeking possession of the mortgaged properties pursuant to the terms of the mortgage. Possession was sought on foot of the mortgage indenture of 12 June 2003 and pursuant to O. 54, r. 3 of the Rules of the Superior Courts (“RSC”) which rule provided: -

“Any mortgagee or mortgagor, whether legal or equitable, or any person entitled to or having property subject to a legal or equitable charge, or any person having the right to foreclose or redeem any mortgage, whether legal or equitable, may take out a special summons for relief of the nature or kind specified in Order 3(15).”

8 The special summons proceedings were fully defended by the appellant and ultimately on 23 June 2008 Dunne J. in the High Court granted IIB Homeloans an order for possession of the two mortgaged properties.

9 The appellant appealed the orders on or about 16 July 2008 to the Supreme Court. There were significant delays in the said appeal being progressed. The appellant lodged a certificate of readiness with the Supreme Court Office in February 2010. The appeal came on for hearing in April 2014 and judgment was delivered on 12 November 2014. The Supreme Court dismissed the appeal and affirmed the order of the High Court dated 23 June 2008.

Leave to issue execution order

10 About six months following dismissal of the appeal by the Supreme Court, IIB Homeloans brought an application to the High Court seeking leave to issue an execution order pursuant to the order for possession of 23 June 2008. Leave to issue execution was granted on 18 May 2015 and on foot of same, an execution order issued on 3 July 2015. The order for possession issued to the Sheriff of the City of Dublin for recovery of possession of the two mortgaged properties on 22 September 2015.

11 The evidence was that in or about the year 2015, subsequent to the conclusion of the Supreme Court appeal, it first became apparent to the mortgagee that both mortgaged properties were in occupation and possession of third parties. In the case of 31 Richmond Avenue, same had been subdivided into seven residential units, all of which were occupied. In respect of 21 Little Mary Street, Dublin 1, it comprised three residential units which were occupied together with part of the premises occupied by an organisation. In those circumstances IIB Homeloans did not proceed to enforce the execution order at that time. It appears the mortgagee hoped that the rental income would be applied to discharge the debt.

12 Over the ensuing years there was limited contact between the appellant and IIB Homeloans or its successor, although the appellant in the months of November and December 2017 made contact and also attended at the offices of KBC Bank Ireland plc to raise issues over alleged overcharging, imposition of additional charges and alleged breaches of the consumer codes.

13 By a notice of motion issued on 25 October 2017 liberty to issue execution of the possession order was sought. In addition an order was sought amending the title of the plaintiff from IIB Homeloans to KBC Bank Ireland plc. The appellant opposed the application.

The judgment

14 In her judgment Costello J. noted at para. 9 that the properties remained occupied and the appellant received rental income from both which he did not remit to the respondent. She found that as of 30 January 2018 the total sum due and owing by the appellant was €2,068,765.17. The last payment made by the appellant on the loan account was in the month of February 2008.

15 The judgment traced the factual, procedural and statutory process resulting in the acquisition by KBC Bank Ireland plc of the mortgagee's interests and rights, noting that by special resolution dated 2 October 2008, IIB Homeloans changed its name to KBC Mortgage Bank and a certificate of incorporation on the change of name was issued by the Companies Registration Office on 24 October 2008. Thus the change of name took effect over one year and ten months subsequent to the institution of the 2006 proceedings. The judgment outlined the statutory process whereby KBC Mortgage Bank entered into a scheme of transfer pursuant to s. 33 of the Central Bank Act 1971, as amended, which was duly approved on 3 April 2009 by the Minister for Finance pursuant to s. 33 of the Central Bank Act and under and by virtue of S.I. No. 125 of 2009 whereby the business of KBC Mortgage Bank was transferred to KBC Bank Ireland plc.

16 At para. 8 the trial judge noted:-

“…In November 2017 the defendant contacted the plaintiff to complain about alleged overcharging in respect of his loan and additional charges in breach of the consumer codes at the Central Bank and on the 29th December, 2017 he attended at the office of KBC Bank Ireland Plc at Sandwith Street, Dublin 2 apparently without prior arrangement or notification and he was unable to meet with the persons dealing with this matter on behalf of KBC Bank Ireland Plc. The defendant complained in his affidavit of 9th January, 2018 that the plaintiff never invited nor engaged with him for any form of resolution.”

17 The judgment noted the appellant's contention that S.I. No. 125 of 2009 had not effected a transfer of the order for possession made in the proceedings in June 2008 and that the original and existing plaintiff, IIB Homeloans, had not proved that the order for possession had been transferred to the intended plaintiff, KBC Bank Ireland plc. The court noted that the main ground upon which the appellant opposed the grant of leave to issue an execution order was his contention that an order for possession was not assignable and that the order for possession in the instant case had not been assigned. Reliance had been placed on the decision of the English Court of Appeal in Chung Kwok Hotel Co. Ltd. v. Field [1960] 1 W.L.R. 1112.

18 The trial judge observed at para. 15: -

“…There is no question of the order for possession being...