Mars Capital Finance Ireland DAC and Another v Gallagher and Another

• Jurisdiction: Ireland
• Judge: Mr Justice Rory Mulcahy
• Judgment Date: 10 April 2025
• Neutral Citation: [2025] IEHC 210
• Court: High Court
• Docket Number: Record No.: 2023/285 SP

Between:

Mars Capital Finance Ireland DAC and Hilary Larkin

Plaintiffs

and

Leonie Gallagher and Michelle Gallagher

Defendants

[2025] IEHC 210

Record No.: 2023/285 SP

THE HIGH COURT

Possession order – Statute barred – Arguable defence – Plaintiffs seeking an order for possession – Whether the defendants had made out an arguable defence

Facts: The plaintiffs, Mars Capital Finance Ireland DAC and Ms Larkin, sought an order for possession pursuant to s. 62(7) of the Registration of Title Act 1964 of a residential investment property in Dun Laoghaire (the Property), together with other related reliefs. The defendants, Mses Gallagher, were sued as joint administrators of the estate of Mr Gallagher, who remained the registered owner of the Property. Mr Gallagher (the deceased) died on 10 December 2014. The defendants resisted the application for possession on the basis that the claim was statute barred. They relied on the limitation period contained in s. 9(2) of the Civil Liability Act 1961. The defendants contended that the cause of action arose while the deceased was still alive and, accordingly, the proceedings were not maintainable because they were not commenced within two years of his death. They also contended that the first plaintiff had not established that it was the party entitled to seek possession of the Property. The plaintiffs argued that, for various reasons, their cause of action only arose after the deceased’s death. In addition, they contended that they had provided sufficient evidence that the first plaintiff was the party entitled to seek possession.

Held by Mulcahy J that the defendants had made out an arguable defence regarding the application of Clause 2.8 of the Mortgage. Although the defendants’ interpretation of Clause 2.8 had potentially anomalous consequences, particularly where the borrower has died, Mulcahy J held that they had made an arguable case that Clause 2.8 was applicable in this case and may have a bearing on the question of whether the proceedings had been brought within time. He acknowledged that, on the defendants’ interpretation, the clause could have the consequence that if a subsequent breach rendering a concession void caused the accrual of a cause of action to be fixed at the time of the original breach, that could have startling implications if, for instance, the subsequent breach occurred at a time when a cause of action grounded on the original breach would be statute barred. Be that as it may, he found that the defendants’ interpretation was not clearly wrong and provided them with an arguable basis for contending that the plaintiffs’ claim should have been brought within two years of the deceased’s death. Mulcahy J held that the defendants had identified an arguable basis for contending that section 9(2) of the Civil Liability Act 1961 rendered the proceedings statue barred and that, whether as a matter of law or fact, there was no subsequent acknowledgement such as to disapply the special time limit contained within that statutory provision.

Mulcahy J held that the defendants had made out an arguable case that the plaintiffs’ claim was statute barred. He held that the case fell between the two ends of the spectrum identified in Bank of Ireland Mortgage Bank v Cody [2021] IESC 26: the plaintiffs had not proven their claim, nor had the defendants established that they had an unanswerable defence. He held that, in the circumstances, the appropriate step was to adjourn the proceedings to plenary hearing.

Proceedings adjourned.

JUDGMENT ofMr Justice Rory Mulcahydelivered on 10 April 2025

Introduction

1 . In these proceedings, the plaintiffs seek an order for possession pursuant to section 62(7) of the Registration of Title Act 1964, as amended ( “the 1964 Act”) of a residential investment property in Dun Laoghaire (“ the Property”), together with other related reliefs. The defendants are sued as joint administrators of the estate of Robert Gallagher, who remains the registered owner of the Property. Mr Gallagher (“ the deceased”) died on 10 December 2014.

2 . The defendants resist the application for possession on the basis that the claim is statute barred. They rely on the limitation period contained in section 9(2) of the Civil Liability Act 1961. The defendants contend that the present cause of action arose while the deceased was still alive and, accordingly, the proceedings are not maintainable because they were not commenced within two years of his death. They also contend that the first plaintiff has not established that it is the party entitled to seek possession of the Property. The plaintiffs argue that, for various reasons, their cause of action only arose after the deceased's death. In addition, they contend that they have provided sufficient evidence that the first plaintiff is the party entitled to seek possession.

3 . For the reasons set out below, I am satisfied that the defendants have made out an arguable defence to the plaintiffs' claim and that it would not be appropriate to grant the plaintiffs relief in summary proceedings. I propose, therefore, adjourning these proceedings to plenary hearing and providing directions for the exchange of pleadings.

Background

4 . By letter dated 6 December 2007, Irish Life & Permanent plc (“ ILP”) offered the deceased a loan facility (“ the Facility”) in the amount of €428,820.00 for the purpose of assisting in the purchase of the Property. The Facility was to be secured by a first legal charge over the Property. On 12 December 2007, the deceased accepted the loan offer. He drew down the Facility on 18 December 2007. On 20 December 2007, he executed an indenture of mortgage and charged the Property with the repayment to ILP of all sums which were or might become payable in respect of the Facility (“ the Mortgage”). On or about 29 June 2012, ILP changed its name to Permanent TSB plc. None of the foregoing is disputed.

5 . It is also agreed between the parties that on or about 16 September 2011 defaulted in the making of payments due under the Facility and continued to default thereafter. It is further agreed that as a consequence, the entitlement of ILP to seek possession of the Property under the Mortgage was triggered without the necessity for any prior demand by ILP, i.e. the lender's cause of action first arose while the deceased was alive.

6 . However, the plaintiffs contend that in or about July 2013, the deceased agreed with Permanent TSB plc to vary the terms of the loan, by which agreement arrears were capitalised and new instalments agreed. This, they argue, nullified the cause of action then existing. They further contend that the deceased abided by the terms of this new arrangement until the date of his death, and that it wasn't until after his death that there was default in this new arrangement. On the plaintiffs' case, therefore, there was no cause of action subsisting at the date of the deceased's death. The defendants contend that the plaintiffs haven't proved the alleged agreement to vary the loan, or that, if there was such an agreement, that there was no default by the deceased, and that the plaintiffs have not, therefore, established that there was no cause of action existing at the date of the deceased's death.

7 . On or about 26 January 2015, the second defendant wrote to the Permanent TSB, Deceased Mortgages Department. The letter referred to the account number for the Facility and to the Property. It was in the following terms:

“ Dear Ms …,

Further to our telephone conversation this morning, I am writing to confirm that my father Robert Gallagher passed away suddenly on the 10 ^th December 2014. You might kindly update your systems to reflect same.

I can further confirm that he died intestate and that I am acting on behalf of the estate until such a time that Administrators are appointed and Probate is granted. As you are aware we require details of all outstanding loans and liabilities to progress to this point. You might please forward these in due course…”

8 . The plaintiffs contend that this letter constituted an acknowledgement of the deceased's debt for the purpose of the Statute of Limitations 1957, as amended (“ the Statute”) and, accordingly, that their cause of action arose on that date. In her first affidavit, the second defendant denies that this was an acknowledgement of the debt the subject of these proceedings. She avers:

“ I did not know what debts my late father had. I had ascertained that he held a number of bank accounts with different financial institutions and I set about writing to each such institution to notify them of his death, and to inquire what assets or liabilities (as the case may be) he had with each. In the case of Permanent TSB, I was aware that there was a loan account in my late father's name. As stated in the letter, I needed to ascertain what liabilities he might have in order to apply for a grant of letters of administration.”

9 . On or about 7 February 2020, Permanent TSB plc transferred and assigned to Start Mortgages DAC (“ Start”) its interest in the Facility and the Mortgage.

10 . On 24 March 2022, Start appointed the second plaintiff as receiver over the Property. The plaintiffs allege that the defendants have interfered with the receivership and seek certain orders in respect of that alleged interference.

11 . As of 25 September 2023, the plaintiffs allege that there is €469,652.38 due and owing on foot of the Facility.

12 . On 24 February 2025, the High Court (Cregan J) made an order ex parte substituting the first plaintiff, Mars Capital Finance Ireland Designated Activity Company, as first named plaintiff for Start on the basis that Start's interest in the Facility and Mortgage had been transferred to the first plaintiff. Such an ex parte order is open to challenge in substantive proceedings, and the defendants contend that the evidence of a purported...