Patrick Harrold v Nua Mortgages Ltd

• Jurisdiction: Ireland
• Judge: Kearns P.
• Judgment Date: 16 January 2015
• Neutral Citation: [2015] IEHC 15
• Court: High Court
• Date: 16 January 2015

[2015] IEHC 15

THE HIGH COURT

[NO.11402P/2012]

Harrold v Nua Mortgages Ltd

BETWEEN

PATRICK HARROLD

PLAINTIFF

AND

NUA MORTGAGES LIMITED

DEFENDANT

RSC O.19 r28

BARRY v BUCKLEY 1981 IR 306

LAWLOR v ROSS & MENNOLLY HOMES LTD & MENNOLLY PROPERTIES LTD UNREP SUPREME 22.11.2001 2001/14/3826

HEALY v STEPSTONE MORTGAGE FUNDING LTD UNREP HOGAN 19.3.2004 2014 IEHC 134

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

MCCANNON v PRESIDENT OF IRELAND 2012 IR 449

MCCARTHY & ORS v BANK OF SCOTLAND PLC & COTTER UNREP HOGAN 2.7.2014 2014 IEHC 340

DEMPSEY & ORS v ENVISION CREDIT UNION & ORS 2006 BCSC 750 2006 BCJ NO 1073

FREEMAN v BANK OF SCOTLAND (IRL) LTD & ORS UNREP GILLIGAN 31.5.2013 2013/20/5873 2013 IEHC 371

MEADS v MEADS 2012 ABQB 571

KEARNEY v KBC BANK IRELAND PLC & REYNOLDS UNREP BIRMINGHAM 16.5.2014 2014 IEHC 260

WELLSTEAD v JUDGE WHITE & FETHERSTONHAUGH UNREP PEART 25.11.2011 2011/49/13927 2011 IEHC 438

BURKE v JUDGE O'HALLORAN & ORS 2009 3 IR 820

O'N (J) v MCD (S) & ORS UNREP BIRMINGHAM 22.3.2013 2013/42/12133 2013 IEHC 135

KENNY v TRINITY COLLEGE UNREP FEENEY 15.4.2011 2011/30/8366 2011 IEHC 202

SALTHILL PROPERTIES LTD & CUNNINGHAM v ROYAL BANK OF SCOTLAND PLC & ORS UNREP CLARKE 30.4.2009 2009/52/13214 2009 IEHC 207

KBC BANK IRELAND PLC v BCM HANBY WALLACE (A FIRM) UNREP SUPREME 25.6.2013 2013 2 ILRM 297 2013/27/8090 2013 IESC 32

MCCAUGHEY v ANGLO IRISH BANK CORP LTD & MAINLAND VENTURES CORP 2012 4 IR 417

CARTWRIGHT MISREPRESENTATION MISTAKE & NON-DISCLOSURE 2ED

OAKS v TURQUAND & HARDING 1867 LR 2HL 325

CONSUMER PROTECTIONS ACT 2007

CONSUMER CREDIT ACT 1995

FREEMAN v BANK OF SCOTLAND PLC & ORS UNREP MCGOVERN 29.5.2014 2014 IEHC 284

Banking – Mortgages – Lending practices – Plaintiff claiming defendant”s practices were reckless – Application by defendant to have claim stuck out as vexatious

Facts: The plaintiff had taken a loan from the defendant secured on a property. Having defaulted on the loan, receivers were appointed. The plaintiff contended the defendant”s lending practices were unsound, and sought damages. The defendant now sought to have that claim struck out as frivolous and vexatious.

Kearns P stated that the Courts had explicit jurisdiction to strike out frivolous claims, as well as possessing an inherent jurisdiction. Having heard submissions from the parties, Kearns P was sympathetic to the unlucky circumstances the plaintiff found himself in but was satisfied that the claim was without merit and should be struck out. KBC v. Hanby Wallace [2013] IESC 32 distinguished.

1 JUDGMENT of Kearns P. delivered on the 16th day of January, 2015

2 By notice of motion dated 13 ^th June 2014 the defendant seeks an order pursuant to the inherent jurisdiction of the Court or in the alternative an order pursuant to Order 19 rule 28 of the Rules of Superior Courts dismissing the plaintiff's claim on the grounds that the statement of claim and plenary summons fail to disclose any reasonable cause of action against the defendant and are bound to fail. Alternatively, an order is sought pursuant to Order 19, rule 28 dismissing the plaintiff s claim on the grounds that it is frivolous and vexatious.

3 The plaintiff's claim is for damages arising out of a number of allegations against the defendant including that he has suffered loss and damage due to the alleged reckless lending practices of the defendant, that he was coerced into signing a mortgage agreement, that he was misled by the defendant in relation to the nature of the agreement and the source of the finance, that the defendant was insolvent at the relevant time and was therefore in breach of licensing requirements, and that the defendant engaged in excessive securitisation and breached a number of regulatory requirements.

BACKGROUND

4 By letter dated 18 ^th June 2007, the plaintiff and his wife were offered a loan facility by the defendant in the sum of €256,500 for a term of 40 years. The loan was secured on a property at Middle Drumrooske, Donegal Town, County Donegal. On 25 ^th June 2007 a deed of mortgage and charge was entered into in respect of the property. Subsequently, the plaintiff defaulted on his repayment obligations and joint receivers were appointed over the secured property by deed of appointment dated 4 ^th October, 2012.

5 By plenary summons dated 12 ^th November, 2012 the plaintiff states that " the bank broke serious liquidity laws which has caused the financial collapse. But for this action and knowledge of same I would or could have made different decisions about my financial affairs". He asserts that the bank engaged in excessive securitisation and reckless lending and that his health and relationships have suffered as a result. The plaintiff claims €1,000,000 in damages and an order declaring that the mortgage agreement is null and void.

6 In his statement of claim the plaintiff says that " the defendant did not possess the money it claims it loaned out thus rendering the defendant a third party only", He asserts that he was cajoled into the agreement and was offered no independent legal assistance. The plaintiff contends that the defendant misled him in relation to its financial position and that the bank was insolvent at the time of the agreement but "created the alleged money out of thin air on a computer keyboard". A number of other claims are set out including that the defendant did not hold a valid licence to trade on the date of the signing of the alleged agreement, that the defendant ignored warnings from the United States markets in relation to the risks involved in the transaction, that no proper risk assessment was carried out, and that the bank is a mere servicing agent for another body and therefore has no legal right to any monies from the plaintiff.

7 The plaintiff states that he was originally offered €110,000 from the bank which he declined. He states that the bank subsequently offered €256,500 through an agent called 'Moneypenny' and accepted falsified financial statements in the name of the plaintiff in order to arrange this loan and to profit by way of commission and ultimately repossession of the property.

8 The proceedings have been before the Court on a number of previous occasions where the parties were seeking directions. The defendant issued a motion to strike out the proceedings on 13 ^th June 2014.

JURISDICTION TO DISMISS

9 Order 19, rule 28 of the Rules of Superior Courts provides -

"The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgement to be entered accordingly, as may be just."

10 The Court also possesses an inherent jurisdiction to strike out proceedings. This well established position was confirmed in Barry v. Buckley [1981] IR 306 where Costello J. stated that the "jurisdiction exists to ensure that an abuse of the process of the courts does not take place" and where a claim is bound to fail "it would be a proper exercise of its discretion to strike out proceedings whose continued existence cannot be justified and is manifestly causing irrevocable damage to the defendant."

11 It is well established that this jurisdiction is one which should be used sparingly and right of access to the courts should be preserved wherever possible. In Lawlor v. Ross (Unreported, Supreme Court, 22 ^nd November 2001) Fennelly J. stated that "the Court should be willing to assume in favour of the Plaintiff that an appropriate amendment of the pleadings might save his case"

SUBMISSIONS OF THE DEFENDANT

12 Counsel for the defendant submits that the existing jurisprudence makes clear that there is no tort of 'reckless lending' in this jurisdiction. In Healy v. Stepstone Mortgage Funding Limited [2014] IEHC 134 Hogan J. considered this issue and previous decisions of the court in the following terms -

13 2 "4. In essence the plaintiff's claim is that there exists in law a tort of reckless lending. It is however, absolutely clear that there is no such common law tort of reckless lending. The matter has, in any event, been put beyond doubt by two recent decisions of this Court that have considered the matter in some detail.

14 5. In ICS Building v. Grant [2010] IEHC 17, Charleton J. stated:

15 '… the argued for tort of reckless lending does not exist in law as a civil wrong. It is not within the competence of the court to invent such a tort. Oireachtas could, if it saw fit, pass a law creating such a civil wrong. It is difficult to imagine the parameters of such a law since those who seek a loan will have different views to what should be borrowed, and if a loan is badly made by a bank, how can the issue of contribution be escaped from by the borrower who sought the money in the first place. Defining that civil wrong would tend to remove the presumption of arms length dealing as between borrower and bank and replace it with a new relationship based on a duty of nurture that other common law countries do not see it as their duty to put into the marketplace as any argued-for law as to reckless lending does not appear in the works on tort that I have consulted from other common law jurisdictions.'

16 6. These views were followed in McConnon v. President of Ireland [2012] IEHC 184, [2012] I.R. 449 at 446 where Kelly J. stated, 'such a tort does not exist as a civil wrong in Irish law'."

17 Hogan J. concluded:-

"It follows, therefore, that there is simply no tort of reckless lending which is known to the law."

18 In light of this, counsel for the defendant submits that this aspect of the plaintiff's claim discloses no reasonable cause of action and therefore...