Seniors Money Mortgages [Ireland] DAC v Fingelton

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Rory Mulcahy
• Judgment Date: 12 July 2024
• Neutral Citation: [2024] IEHC 423
• Docket Number: Record No.: 2020/1 SP

Between:

Seniors Money Mortgages (Ireland) DAC

Plaintiff

and

Donal Fingleton (As Administrator Ad Litem of the Estate of the Late Elizabeth Murphy Deceased)

Defendant

[2024] IEHC 423

Record No.: 2020/1 SP

THE HIGH COURT

JUDGMENT of Mr. Justice Rory Mulcahy delivered on 12 July 2024

Introduction

1 . These summary proceedings concern a type of loan commonly referred to as a “lifetime loan” or “reverse mortgage”. The essential feature of this type of loan is that no repayments are due on the loan until the death of the borrower but that the entirety of the loan, together with interest, becomes repayable following the borrower's death. In this application, the plaintiff seeks an order for possession of a residential property in Sligo on foot of a Deed of Mortgage and Charge dated 22 March 2007 (“ the Mortgage”). There is no dispute that there are sums due and owing on foot of a loan given to the late Elizabeth Murphy (“ the Deceased”) and that the Sligo property was given as security for the loan. Nor is there any dispute that the plaintiff is the lawful assignee of both the loan and the security and is, prima facie, entitled to possession under the terms of the Mortgage.

2 . The court, however, raised two issues during the course of hearing the plaintiff's application. The first related to the manner in which interest has been calculated on the loan, the plaintiff having continued to apply interest to the loan after the death of the Deceased up to the date of the hearing. The second issue concerned the fact that, as became apparent, the demand made for repayment of the loan facility sought a sum in excess of the amount then due and owing.

3 . In respect of the first of those issues, two matters arise for consideration. First, whether the court should concern itself with the balance due on the loan where it is clear that there has been default in discharging the loan. And second, if so, whether the provisions in the loan regarding how interest is to be calculated can be regarded as unfair contract terms within the meaning of Directive 93/13/EEC on unfair terms in consumer contracts (“ the Directive” or the implementing regulations, the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995, SI 27/1995.

4 . In respect of the letters of demand, the question raised was whether a demand for a sum significantly in excess of the sum due and owing can be regarded as a valid demand sufficient to trigger the plaintiff's entitlement to seek possession.

Factual Background

5 . By letter dated 19 February 2007, Seniors Finance Ireland Ltd (a company unrelated to the plaintiff herein) offered to advance the sum of €46,000 to Ms Elizabeth Murphy, the Deceased. It was a pre-condition to the making of the loan that the Deceased execute a Deed of Mortgage over the property the subject of these proceedings.

6 . The terms of the loan offer made clear that the Deceased would not be obliged to make any monthly repayment of principal, interest or any other amount during the term of the loan, rather monies due on foot of the loan would become due and payable on the happening of one of a number of events including, relevantly, the death of the Deceased. The Deceased executed the loan agreement on 7 March 2007. I will address below the terms of the loan offer regarding the calculation of interest.

7 . The Deceased executed a mortgage and charge (“the Mortgage”) in favour of Seniors Finance Ireland Ltd on 22 March 2007. The property was unregistered land and the mortgage was registered in the Registry of Deeds in April 2007.

8 . Clauses 1.2 and 1.3 of the Mortgage provide that:

“ 1.2 All moneys remaining unpaid by the Mortgagor to the Mortgagee and secured by this Mortgage shall immediately become due and payable on demand to the Mortgagee on the occurrence of any of the following events that is to say:

(a) …. or

(b) on the death of the mortgagor or where two or more persons constitute the mortgagor the death of the survivor of such persons; or

(c) ….;

and the Mortgagor hereby further covenants with the Mortgagee to pay to the Mortgagee forthwith the sum so demanded together with further interest thereon at the rate applicable to the relevant secured loan from time to time and at any time until the same shall have been repaid in full and shall be payable after as well as before any judgment or order of the Court.

1.3 The demand herein referred to shall mean a demand for payment of the secured moneys made by the Mortgagee … upon the Mortgagor and such demand in case of moneys due or owing on current account may be made at any time and in other cases may be made when or at any time after the Mortgagee becomes entitled to call for payment of the moneys and separate demands may be made in respect of separate accounts at different times.

9 . Clause 6.1 of the Mortgage confers an entitlement on the mortgagee to possession:

At any time after the execution of this Mortgage the mortgagee may without any further consent from or notice to the Mortgagor or any other person enter into possession of the Mortgaged Property or any part thereof or into receipt of the rents and profits of the Mortgaged Property or any part thereof.

10 . That power is subject to the provisions of Clause 7 of the mortgage which provide, in relevant part, as follows:

The Mortgagee shall not exercise any of the powers provided for in clause 6 hereof or conferred by statute until any of the following events shall occur:

(a)…

(b)…

default is made in complying with the demand made under sub-clause 1.2 of this Mortgage in consequence of:

(i) the death of the mortgagor or where two or more persons constitute the mortgagor the death of the survivor of such person; or (ii) the compulsory acquisition of the Mortgaged Property.

11 . The Deceased died on 20 March 2018. As noted above, under the terms of the Mortgage, the death of the mortgagor represented an event of default. However, the right of the mortgagee to possession of the land did not arise automatically on the death, rather a subsequent demand for repayment was required. A demand for repayment was made on 14 May 2019 addressed to the “LPR of Elizabeth Murphy Deceased” in the sum of €133,909.78.

12 . The plaintiff's predecessor in title then took steps to have an administrator ad litem appointed pursuant to section 27(4) of the Succession Act 1965 for the purposes of substantiating proceedings proposed to be taken by the plaintiff. Donal Fingleton, Solicitor, was given liberty to apply to extract a grant of letters of administration ad litem by order of the High Court (Allen J) dated 16 December 2019. Following his appointment, a further letter of demand was sent to the administrator on 17 December 2019 making a further demand for the sum of €133,909.78.

13 . A further letter was sent to the administrator on 24 December 2019 noting the default in repayment of the sum demanded and seeking vacant possession of the property.

The Proceedings

14 . The proceedings commenced by way of Special Summons on 3 January 2020 in the name of WF Shap Ireland DAC, the successor in title to the original mortgagee, Seniors Finance Ireland Ltd. An Order was made on 15 November 2021 substituting Finance Ireland Credit Solutions DAC for WF Shap Ireland DAC, following the assignment of the loan and mortgage to the latter company. A further Order was made on 12 December 2022 substituting the plaintiff for Finance Ireland Credit Solutions DAC, following a further assignment of the loan and mortgage to the plaintiff.

15 . The proceedings came on for hearing in the Chancery Special Summons List on 15 January 2024. Ms Olivia Murphy, the daughter of the Deceased, had been put on notice of the proceedings in circumstances where she is in occupation of the property the subject matter of these proceedings and would appear to be the main beneficiary of the Deceased's estate. Ms Murphy delivered an affidavit which set out the circumstances of her engagement with the plaintiff since the death of her mother, and which also highlighted the difficulty she would face in obtaining alternative accommodation. She noted the extent to which the interest due on foot of the loan had increased since the time of her mother's death. Ms Murphy made submissions on a subsequent date in which she provided an important portrait of her mother and the circumstances in which she took out the loan, the subject of the proceedings. She made clear that she was not disputing the validity of the loan or mortgage or, indeed, the plaintiff's entitlement to possession. She was very concerned, however, about the sums said to be owing in respect of the loan and the impact that that might have on her and her ability to find alternative accommodation once the property was sold by the plaintiff to discharge the loan balance.

16 . The administrator ad litem also filed an affidavit in the proceedings. The administrator had been appointed solely for the purpose of substantiating the proceedings and he conducted the proceedings appropriately in light of the scope of his appointment. He identified that it might have been possible to argue that possession proceedings were statute barred in light of the provisions of the Civil Liability Act 1961, as amended, but acknowledged that in light of the decision of the High Court (Simons J) in WF Shap Ireland DAC v Fingleton [2020] IEHC 50, that defence was not available. Section 9(2)(b) of the 1961 Act requires that where a cause of action is subsisting at the time of a person's death, any proceedings relating thereto must be taken within two years of the date of death. However, Simons J concluded that the cause of action was not subsisting at the date of death, since the entitlement to possession was not triggered until a demand for payment was made, either on foot of an event of default, or, in that case (as in this), the death...