Ryan v Danske Bank

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 29 April 2014
• Neutral Citation: [2014] IEHC 236
• Court: High Court
• Docket Number: [2014 No. 2996 P.]
• Date: 29 April 2014

BETWEEN

JAMES RYAN

PLAINTIFF

AND

DANSKE BANK A/S TRADING AS DANKSE BANK AND STEPHEN TENNANT

DEFENDANTS

[2014] IEHC 236

[2014 No. 2996 P.]

THE HIGH COURT

Injunctive Relief – Property – Receivers – Contractual Relationship – Bank – Loans – Mental Health – Consumer Protection – Arrears – Commercial Premises – Land – Private Residence

Facts: The plaintiff was the owner of two commercial unregistered premises. The first defendant bank had a mortgage over one of the premises and a first charge over the folio lands registered in November 2003. The bank also had the benefit of a mortgage/charge over the plaintiff”s private residence where he resided with his wife. The Bank by deed of appointment on the 28 ^th November 2013, appointed the second defendant receiver of the registered lands, and by separate deed of the 20 ^th January 2014, receiver of the unregistered premises. The plaintiff sought declaratory and injunctive relief and pleaded that the appointment of the second defendant as receiver over each of the commercial properties was void and of no effect. The matter came before the court on a motion for an interlocutory injunction restraining the second defendant from taking any steps as receiver of either premises, and for an order restraining the first defendant from carrying out any steps pursuant to various loan agreements. An undertaking had been given by the defendants pending the determination of the injunction application. The plaintiff who was in full-time employment from time to time suffered from severe anxiety and depression, conditions made worse with the death of his son. The plaintiff asserted that the bank was fully aware of his conditions. It was not disputed that the Bank had some knowledge of the plaintiffs depressive condition, although the extent of this and that it rendered the plaintiff incapable of dealing with some of his financial affairs at some of the times relevant to the proceedings, was in doubt. The plaintiff asserted on affidavit that the defendant knew from 2010 that he suffered from an illness and he stated that there had been imported into his contractual relationship with the bank an obligation to the part of the bank to behave towards him in a fair and equitable way. Specifically, it was argued that this obligation was imported from the Consumer Protection Code, the relevant one being the 2012 Code ("the Code"), and in particular clauses 2 and 8 thereof which, it was argued, imported an obligation on the part of the Bank to allow him an opportunity to deal with his acknowledged arrears. The plaintiff argued that during the period when he fell into arrears and without his knowledge or prior notice to him, a receiver was appointed over his properties at a time when he was attempting to deal with the arrears. He stated that the appointments where unlawful in the circumstances and that the Bank owes him a duty at common law and under the Code to fully engage with his proposals to remedy his financial situation.

Held by Justice McDermott in light of Ulster Bank v. Healy 2014 IEHC 96 that the plaintiff was a personal consumer and entitled to the protection of the Code. In respects of the argument that there had been an imported obligation on the part of the Bank to allow the plaintiff an opportunity to deal with his acknowledged arrears, Justice McDermott reasoned that the codes issued by the central bank could not be said to have the effect that the obligations created on licensed banks are justiciable by borrowers. He stated that the requirements of compliance are ones to which the court could would have regard to in the exercise of its discretionary power in making orders for possessions of secured premises. It was further reasoned that non-compliance with a relevant code would at best offer a defence to a borrower in an individual case, although the extent to which that may be so must be seen in light of the judgment of Birmingham J. in Zurich v. McConnell where the Judge pointed to the fact that breach of a code was not expressed to make a loan null and void. Thus, Justice McDermott reasoned that breach of a code did not offer a borrower a substantive basis on which relief may be sought, nor offer a justiciable cause of action to a plaintiff at common law. Moreover, in determining that no fiduciary or special relationship existed between the plaintiff and the Bank, Justice McDermott further reasoned that no terms could be implied into the contractual nexus between the plaintiff and the Bank in the absence of a special relationship. In respects of the plaintiffs argument that the Bank owed him a duty of care not to appoint a receiver or seek to enforce its security without giving him an opportunity to be heard and to deal with his arrears, Justice McDermott consulted the applicable case-law and in adopting the analysis of Hoffman J. in Shamji & Ors v. Johnson Matthey Bankers Limited & Ors [1986] BCLC 278 reasoned that he was not persuaded that the plaintiff could show that a duty of care arose in the choice by the Bank to appoint a receiver. He also found that the Bank had an express contractual right to appoint a receiver and that no equitable principles came into play. In respects of the suggestion that the Bank was engaged in bad faith in appointing a receiver and that it was not for the purpose of realising its security, Justice McDermott found no evidence that the Bank had appointed the receiver for reasons other than the acknowledged arrears in the plaintiff's loans. Accepting that the Bank had engaged with the plaintiff and that there where gaps in communication, Justice McDermott could find no evidence of bad faith and reasoned that the loans had fallen into such arrears that the express statutory power to appoint a receiver. The plaintiff also asserted that certain rights were imported into his contractual arrangement with the Bank by the European Convention on Human Rights Act 2003. Acknowledging the established principle emanating from McD. v. L. [2009] IESC 71 where Murray C.J. made it clear that the Convention itself was not directly applicable in Irish law and that consequently no claim could be made before the court in Ireland for a breach of any provision of the Convention, Justice Dermott reasoned that the plaintiff had not made out an arguable prima facie case that he had rights under the Convention which were capable of being protected and ought to be preserved by way of interlocutory injunctive relief. In light of these findings, Justice McDermott found it impossible to accept the argument advanced by counsel for the plaintiff that the contractual relationship between the plaintiff and the Bank did and must be understood to have contained such rights and principles on which this action was grounded. In the circumstances, he reasoned that the plaintiff had not made out a bona fide or arguable case that there could be imported into the relationship between the plaintiff and the Bank, the high standards which he sought to import, namely standards which required the Bank to act in his interest, to properly consult him and reasonably engage with him in the management of the arrears and the enforcement of the securities. Accordingly he refused to make the injunctions sought.

Ms. Justice Baker

JUDGMENT of Ms. Justice Baker delivered the 29th day of April, 2014

1 1. The plaintiff is the owner of two commercial unregistered premises known as Franciscan Hall situated at 1 Henry Street and 2 Sarsfield Street, Limerick, and registered lands comprised in Folio 47241F County Kerry with an address at 31 Gortamullen, Kenmare Holiday Village, Kenmare, Co. Kerry. The first defendant bank ("the Bank") has the benefit of a mortgage over the premises at Franciscan Hall created on the 27th January 2003, and a first charge over the folio lands registered on the 12th November, 2003. The Bank also has the benefit of a mortgage or charge over the plaintiff”s principal private residence at the Cottage Lemonfield, Crecorca, Co. Limerick where he resides with his wife Susan Halvey.

2 2. The Bank by deed of appointment made on the 28th November 2013, appointed the second defendant receiver of the registered lands, and by separate deed of 20th January 2014, receiver of the unregistered premises.

3 3. In these proceedings the plaintiff seeks declaratory and injunctive relief and pleads that the appointments of the second defendant as receiver over each of the commercial properties are void and of no effect. The matter comes before me on a motion for an interlocutory injunction restraining the second defendant from taking any steps as receiver of either premises, and for an order restraining the first defendant from carrying out any steps pursuant to various loan agreements. An undertaking has been given by the defendants pending the determination of the injunction application.

4 Facts

5 4. The plaintiff is 45 years of age and he and his wife are employed as full time lecturers. He is the sole legal owner of the relevant lands and premises. It was stated in argument that he is 20 years from retirement and the matters which gave rise to the financial difficulty in which he has temporarily found himself are matters he can resolve over time in the course of his working life. His loans with the Bank, in the case of the loans secured on the commercial properties, were performing until August 2013, and until October 2013 in the case of the loans secured on his principal private residence.

6 5. The plaintiff has from time to time suffered from severe anxiety and a depressive illness and he asserts that the Bank was fully aware of this. It is not seriously disputed that the Bank had some knowledge of the plaintiffs depressive condition, although the exact extent of this and that it rendered the plaintiff incapable of dealing with some of his financial affairs at some of the times relevant to these...