Start Mortgages Designated Activity Company v Doyle and Another

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice Barry O'Donnell
• Judgment Date: 26 September 2024
• Neutral Citation: [2024] IEHC 561
• Docket Number: [2023/161CA]

Between:

Start Mortgages Designated Activity Company

Plaintiff / Respondent

and

Andrew Doyle and Linda Doyle

Defendant / Appellants

[2024] IEHC 561

[2023/161CA]

THE HIGH COURT

Possession order – Mortgage agreement – Unfair terms – Appellant appealing against an order for possession – Whether the terms of the mortgage agreement constituted unfair terms

Facts: The second defendant/appellant, Ms Doyle, appealed to the High Court against an order for possession that was granted by the Circuit Court in July 2023. The defendant sought to oppose the application on the following grounds: (i) the claim of the plaintiff/respondent, Start Mortgages DAC, ‘falls foul’ of the test set down in Bank of Ireland Mortgage Bank v O’Malley [2019] IESC 84; (ii) the plaintiff’s proofs were not in order and did not establish entitlement on the part of the plaintiff to seek the relief sought; (iii) the plaintiff contravened s. 29 of the Central Bank Act 1997 by operating as a regulated business without the necessary authorisations, which, in turn, provided grounds for a counterclaim as against the plaintiff pursuant to s. 44 of the Central Bank (Supervision and Enforcement) Act 2013; (iv) the defendant was overcharged interest and as such the plaintiff’s actions amounted to a breach of consumer protection legislation; and (v) the terms of the mortgage agreement constituted unfair terms under the Unfair Terms Directive and 1995 Regulations.

Held by O’Donnell J that the defendant’s argument that the decision of Simons J in Promontoria (Finn) Ltd v Coleman Flavin [2023] IEHC 663 is authority for the proposition that summary judgment and summary possession proceedings are analogous, and thus the principles set out in O’Malley are applicable to summary possession proceedings with equal force, was incorrect and grounded on a profound misapprehension of the critical differences between the two forms of proceedings. O’Donnell J held that the question of whether the principal sum has become due and owing in a mortgage case such that under the contractual arrangement the power to seek possession has arisen and is exercisable will depend on the particular terms of the contract; in this case, the powers arose and were exercisable because of the nature and extent of the default and not by reason of the precise calculation of the default. He noted that it was not contested that there had been a substantial default. He held that at the time the application for an order for possession was heard and determined by the Circuit Court, the plaintiff had been authorised as a “credit retail firm”; as Simons J emphasised in Start Mortgages DAC v Kavanagh [2023] IEHC 452, “[a] “credit retail firm” is entitled to take such steps as may be necessary for the purposes of enforcing a credit agreement. In circumstances where the “credit retail firm” holds legal title to same, these steps would extend to the pursuit of legal proceedings to enforce a credit agreement”. O’Donnell J held that any dispute about whether the plaintiff miscalculated or overcharged the interest on the principal sum did not affect the right to possession where the extent of that default was so extensive prior to the commencement of the proceedings. The High Court could not identify any unfairness in the agreement.

O’Donnell J dismissed the appeal.

Appeal dismissed.

Judgment of Mr Justice Barry O'Donnell delivered on the 26 ^th day of September 2024

INTRODUCTION

1 . This judgment concerns an appeal against an order for possession that was granted by the Circuit Court in July 2023. The proceedings were commenced by way of a Civil Bill for Possession on 16 January 2015. The plaintiff sought an order for the possession of the lands and premises comprised in Folio 49533F County Dublin, more commonly known as 9A Riversdale Crescent, Clondalkin, Dublin 22. On 20 July 2023, His Honour Judge O'Connor made the order sought by the plaintiff. As the first defendant unfortunately passed away in 2020, the second defendant engaged with the proceedings thereafter and is the appellant in these proceedings.

2 . There was very limited controversy about the central facts in the case. The position of the plaintiff as set out in the Civil Bill for Possession was that a letter of loan offer dated 10 October 2008 was accepted by the defendants, and they borrowed €340,000. The loan was secured by a charge in favour of the plaintiff, which was registered on the folio on 23 April 2009. Both the acceptance of the loan offer and the mortgage / charge had been executed by the defendants in the presence of their solicitor.

3 . Clause 9 of the mortgage deed confirmed that the plaintiff was entitled to exercise its powers under the mortgage upon the occurrence of events of default. Clause 8 of the deed set out the plaintiff's powers, which included a power to take possession. The defendants defaulted in their agreed repayments. As of 7 October 2014, the total debt claimed as owing by the plaintiff was €375,505.50. In October 2014, the plaintiff wrote letters calling for the repayment of the debt and for possession of the property, and these proceedings were commenced in January 2015.

4 . Following the commencement of the proceedings there was an extensive exchange of affidavits. The central argument of the second defendant was that there had been overcharging. That allegation was rejected by the plaintiff; but its main response was that, in an application such as this, the critical proof was default in the defendants' obligations. Here, the evidence was that there had been extensive defaults prior to the issue of the proceedings; and by July 2023, the overall debt was €540,157.14, of which €225,515.21 comprised arrears.

5 . As required by the relevant legislation, the appeal was heard by way of a de novo hearing, and the second defendant sought to oppose the application on grounds which can be summarised as follows:

• i. That the plaintiff's claim ‘falls foul’ of the test set down by the Supreme Court in Bank of Ireland Mortgage Bank v. O'Malley [2019] IESC 84;

• ii. That the plaintiff's proofs were not in order and did not establish entitlement on the part of the plaintiff to seek the relief sought herein;

• iii. That the plaintiff contravened section 29 of the Central Bank Act, 1997, as amended, by operating as a regulated business without the necessary authorisations, which, in turn, provided grounds for a counterclaim as against the plaintiff pursuant to section 44 of the 2013 Act;

• iv. That the defendant was overcharged interest and as such the plaintiff's actions amount to a breach of consumer protection legislation; and

• v. That the terms of the mortgage agreement constitute unfair terms under the Unfair Terms Directive and 1995 Regulations.

HAS THE PLAINTIFF'S PRIMA FACIE CASE FOR AN ORDER FOR POSSESSION BEEN MADE OUT?

6 . The legal principles applicable to the issues in this case are clear and well established. In Bank of Ireland Mortgage Bank v. Cody [2021] 2 IR 381, the Supreme Court reiterated the nature of the statutory jurisdiction conferred by s. 62(7) of the Registration of Title Act, 1964 for summary disposal of an action seeking possession of registered land as follows:

“49. The owner of a charge who seeks to obtain possession pursuant to s. 62(7) has to prove two facts:

(a) That the plaintiff is the owner of the charge;

(b) That the right to seek possession has arisen and is exercisable on the facts.”

7 . In the recent case of Start Mortgages DAC v. Clarke [2024] IEHC 310, Heslin J. considered very similar arguments to those being advanced by the second defendant in this case. The four aspects to the defendants' claim in Clarke were as follows; (1) The plaintiff's claim ‘falls foul’ of the test laid down by the Supreme Court in Bank of Ireland Mortgage v. O'Malley [2019] IESC 84; (2) The plaintiff's proofs were not in order; (3) The terms of the plaintiff's letter of offer were unfair; and (4) Overcharging of interest created a set off which gives rise to a defence.

8 . In Clarke, the proceedings concerned an appeal against an order for possession made in the Circuit Court. First, Heslin J., citing the decision of Woulfe J. in Start Mortgages DAC v. Ryan [2021] IEHC 719 at para. 21, set out the burden of proof resting on a plaintiff in an application of this type:-

“21. At para. 49 of her judgment in Cody, Baker J stated that the owner of a charge who seeks to obtain possession pursuant to s.62(7) of the 1964 Act has to prove two facts: (a) that the Plaintiff is the owner of the charge; and (b) that the right to seek possession has arisen and is exercisable on the facts. The summary process is facilitated by the conclusiveness of the Register as proof that the Plaintiff is the registered owner of the charge and this is a matter of the production of the Folio, and, as the Register is by reason of s.31 of the 1964 Act conclusive of ownership, sufficient evidence is shown by that means: see the discussion in the Court of Appeal judgment in Tanager DAC v. Kane [2018] IECA 352. That judgment held that the correctness of the Register cannot be challenged by way of defence in summary possession proceedings, and that a Court hearing an application for possession pursuant to s.62(7) of the 1964 Act is entitled to grant an order at the suit of the registered owner of the charge, or his or her personal representative, provided it is satisfied that the Plaintiff is the registered owner of the charge and the right to possession has arisen and become exercisable.

[emphasis added by Heslin J.]

22. Order 5B requires a Plaintiff to establish a prima facie case on the affidavit evidence for an order for possession, and it is then necessary for the Defendant to proffer evidence or argument sufficient to establish a credible defence…” [emphasis added]

9 . Heslin J. continued by identifying four questions in order to determine...