Permanent TSB Plc formerly Irish Life and Permanent Plc v Davis

• Jurisdiction: Ireland
• Judge: Mr. Justice McDermott
• Judgment Date: 28 March 2019
• Neutral Citation: [2019] IEHC 184
• Date: 28 March 2019
• Court: High Court
• Docket Number: [2016 No. 2 C.A.]

BETWEEN

PERMANENT TSB PLC FORMERLY IRISH LIFE AND PERMANENT PLC

PLAINTIFF

AND

JARON DAVIS

AND

HELENA DAVIS

DEFENDANTS

[2019] IEHC 184

McDermott J.

[2016 No. 2 C.A.]

[2014 No. 303]

THE HIGH COURT

CIRCUIT APPEAL

Vacant possession – Unfair terms of contract – Proportionality – Plaintiff seeking order for possession – Whether the making of an order for possession would be disproportionate

Facts: The second defendant, Mrs Davis, appealed to the High Court from an order of the Circuit Court (Judge Reynolds) made on 13th May, 2015, granting vacant possession of 18 The Avenue, Burkeen, Wicklow Town, Co. Wicklow (the property), the family home of the defendants, to the plaintiff, Permanent TSB plc. A stay was placed on the order for nine months. It was claimed that the court had not been furnished with all relevant documentation to assess whether in fact the terms of the mortgage loan contract and the mortgage deed and charge or any one of them were unfair and consequently whether the contract of loan was void. It was also submitted that the terms and conditions concerning the variable interest rate were unfair because they permitted the lender to alter the terms of the contract price unilaterally without a valid reason specified in the contract contrary to what was deemed to be an unfair term under paragraph 1(j) of the Annex referred to in Article 3.3 of Council Directive No. 93/13/EEC of 5 April 1993 as transposed by the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 (S.I. No.27 /1995). It was claimed that the granting of the order for possession was and would be in breach of the defendants’ rights under Article 7 of the Charter of Fundamental Rights of the European Union.

Held by McDermott J that he was not satisfied that the plaintiff had failed to place before the court the documents necessary for it to discharge its obligations under Case 415/11 Mohamed Aziz v Caixa d’Estalvis de Catalunya (14th March 2013). McDermott J was satisfied that the core terms did not fall within the scope of the directive or regulations by reason of Article 4 of the directive and that the terms relating to variable interest rate were standard core terms of such contracts. Even if they did, when considered under the criteria set out in the directive and the Annex McDermott J was not satisfied that those terms and conditions could be regarded as unfair. McDermott J was not satisfied that the making of an order for possession in this case would be disproportionate notwithstanding the fact that the property was a family home; the plaintiff had made significant efforts over a number of years to explore the alternatives with the defendants but there was no realistic alternative to the granting of the order. McDermott J was satisfied to grant the relief sought.

McDermott J held that it was appropriate to grant a further four months stay on this order to enable the defendants to find alternative accommodation having regard to their personal and financial situation as set out in the affidavits and which McDermott J considered fair and proportionate in the circumstances.

Relief granted.

JUDGMENT of Mr. Justice McDermott delivered on the 28th day of March, 2019

1 This is an appeal from an order of Circuit Court (Her Honour Judge Reynolds as she then was) made on 13th May, 2015 granting vacant possession of 18 The Avenue, Burkeen, Wicklow Town, Co. Wicklow (the property), the family home of the defendants to the plaintiff. A stay was placed on the order for nine months.

2 The defendants were approved for a loan for the purchase of the property by the plaintiff on 7th June, 2007 in the amount of €400,000. They agreed to monthly repayments of €2,016.20 over a thirty-five year term. The loan to be advanced under the terms and conditions of a Letter of Approval and General Mortgage Loan Approval Conditions was accepted by the defendants on 13th June, 2007 and the money was drawn down on 25th June.

3 The defendants executed an Indenture of Mortgage and Charge in favour of the plaintiff on 26th June over the property. The defendants agreed to repay the loan advanced with interest and accepted this as a primary obligation under clause 2 of the mortgage conditions. Clause 4 provides that the loan is a variable interest loan which may be changed on notice to the borrowers. It was a term of the mortgage agreement that the whole of the monies outstanding for the time being on the security of the mortgage would become immediately payable to the plaintiff if the defendants defaulted in making two monthly repayments. These documents were exhibited by the plaintiff. The first named defendant is registered as the sole owner of the property on which the mortgage and charge is registered as a burden in Folio No. 30625F for the County of Wicklow.

4 At the time of the application for the order for possession the defendants had defaulted on repayments since 24th August, 2012. There were outstanding arrears of €80,911.03 on 24th April, 2014 at the time of the swearing of the verifying affidavit of Ms. Niamh McGee.

5 By letter dated 10th March, 2014 the plaintiff through its solicitors demanded that the defendants repay all sums then due and owing together with interest accrued thereon and warned that in default thereof, the plaintiff would seek possession of the property by court order. As of the 24th April, 2014 the sum of €465,985.77 was said to be due and owing to the plaintiff. The plaintiff therefore claimed that the repayment of the principal monies secured under the charge became due as a result of which it was entitled to an order for possession of the property.

6 By letter dated 26th March, 2014 the plaintiff through its solicitors wrote to the defendants requesting that they deliver vacant possession of the property in default of which proceedings would issue seeking an order for same. Though clause 6 provided that the mortgagor had a right without prior notice to the borrowers to enter into possession of the property this could not be effected without a court order under s.97 of the Land and Conveyancing Law Reform Act, 2009 (which I am satisfied applies to this case).

7 In a further affidavit dated 28th January, 2015 Ms. McGee deposes that the plaintiff was in compliance with the Code of Conduct in Mortgage Arrears (CCMA). The plaintiff operated an Arrears Support Unit (ASU) and a Mortgage Arrears Resolution Process (MARP) as required under the CCMA. The plaintiff also claims that it has at all times actively encouraged the defendants to engage with it in respect of their financial difficulties. On 5th December, 2013 under para. 28 of the CCMA, the plaintiff wrote to the defendants advising that they were at risk of exiting the MARP and requesting that they complete an enclosed standard financial statement (SFS) and thereby provide relevant up to date information about their financial circumstances. However, the defendants failed to respond to this correspondence and did not furnish the plaintiff with the completed SFS at that time.

8 On 10th January, 2014 the plaintiff wrote to the defendants advising them that they had been classified under para. 29 of the CCMA as ‘non-cooperating’ thereby placing them outside the protection of the MARP and advising of their right to appeal this decision. Thereafter, the defendants, in the plaintiff's view, failed to maintain ‘constructive engagement’ with the plaintiff. The plaintiff maintains that it has at all times kept in regular written contact with the defendants and made every reasonable effort to put in place an alternative repayment arrangement with them which has not led to a successful outcome.

9 A replying affidavit was sworn by Mrs. Helena Davis, the second defendant on 5th February, 2015. The defendants were not legally represented in the Circuit Court proceedings or in this court. Mrs. Davis represented the defendants” interests and appeared in person before the County Registrar and the learned Circuit Court Judge to make representations on their behalf. In her affidavit the second defendant opposed the plaintiff's application on a number of grounds. It was claimed that the obligations under the mortgage and loan were not transferrable to the present plaintiff. I am not satisfied that this constitutes a ground of defence in this case: the plaintiff simply changed its name as per the Certificate of Incorporation on change of name dated 29th June 2012 which was exhibited. This did not involve any variation of the terms and obligations of the parties under the mortgage loan agreement or the indenture of mortgage.

10 It was acknowledged in the affidavit that the defendants had financial difficulties and had been in default. In or about March, 2008 the first named defendant's company ceased trading. His income ceased. The second defendant continued to work and pay the mortgage from her earnings but the couple began to struggle financially. The second defendant sought to embark on a new business venture but this was unsuccessful. She kept the plaintiff informed of their difficulties and her business plans. She held a number of meetings from time to time with the plaintiff's officials including Mr. Jody Lynch whom she found very helpful. In or about March, 2008 she was earning €3,000 per month. If she paid the monthly mortgage the couple would be left with a significant shortfall in their family outgoings. She was given a moratorium of three months in order to enable her to work out a solution with the plaintiff. She paid what she could over that period.

11 In 2012 payments became extremely difficult because her business collapsed and her husband was unemployed and ill. She continued to work with Mr. Lynch to seek a solution.

12 In the meantime, the defendants also made representations to a senior politician who wrote a letter making representations on their behalf to Ms. Gillian Bowler the then...