Start Mortgages Designated Activity Company v Flanagan

• Jurisdiction: Ireland
• Judge: Ms. Justice Siobhán Phelan
• Judgment Date: 07 November 2023
• Neutral Citation: [2023] IEHC 667
• Court: High Court
• Docket Number: [Record No. 2023/5 CAT]

Between:

Start Mortgages Designated Activity Company

Plaintiff / Respondent

and

John Flanagan

Defendant / Appellant

and

Rebecca Flanagan

Notice Party

[2023] IEHC 667

[Record No. 2023/5 CAT]

THE HIGH COURT

Order for possession – Credible defence – Statute barred – Respondent seeking an order for possession – Whether the appellant had identified a credible defence

Facts: The defendant/appellant, Mr Flanagan, appealed to the High Court against an order for possession made in the Circuit Court (Judge Comerford) on the 1st of June, 2022 in respect of a property comprised in folio 44761F of the Register for County Clare commonly known as Ballyvarra Lodge, Doolin, County Clare. The broad basis for the defendant’s case in defending the application for an order for possession appeared to be: (i) that the notice party, the defendant’s spouse, had an interest in the property which was not subject to charge and which meant that an order for possession should not be made; (ii) that the plaintiff/respondent, Start Mortgages DAC, was precluded from maintaining proceedings having agreed a voluntary assisted sale; (iii) that the plaintiff was obliged to propose an alternative payment schedule having induced the payment of sums towards the mortgage on the understanding that a proposal would be forthcoming; (iv) that the plaintiff was not entitled to an order for possession because it had no contractual relationship with the defendant and had not established loss as it had not provided evidence of what it paid for the debt; and (v) that the claim was statute barred.

Held by Phelan J that, applying Bank of Ireland Mortgage Bank v Cody [2021] 2 IR 381, a prima facie case for an order for possession had been shown by the plaintiff based on the undisputed evidence in the case adduced. She was satisfied as to the evidence of formal demand rendering the monies due and payable with the result that the power of sale became exercisable. She was satisfied that the evidence adduced on affidavit by the plaintiff established as a matter of law that it was the registered owner of the charge and that the principal money borrowed pursuant to the loan agreement entered into in 2006, and secured upon the registered charge, had become due prior to its acquisition of the charge. Accordingly, she held that the “proofs” for an application under s. 62(7) of the Registration of Title Act 1964 had been met. She held that the defendant’s claim that the notice party had an interest in the property which was not subject to charge was untenable in the face of the specific terms of the family home declaration and consent of spouse forms executed by the notice party with the benefit of legal advice. Phelan J noted that the defendant had not proceeded to sell the property on a voluntary basis or to make any proposal over the many years that had followed since the voluntary assisted sale agreement was entered into. In the circumstances, she saw no merit in the defence based on a failure to go ahead with a voluntary assisted sale. Having made no payments whatsoever since 2015, making no proposal to do so and being substantially in arrears, she was satisfied that there was no merit to the attempted reliance on the plaintiff’s consideration of an alternative payment schedule in 2016 and refusal to offer one as capable of providing any type of defence. She held that the plaintiff was entitled to an order for possession as a matter of law arising from the legal transfer to it of the charge on the defendant’s registered property in circumstances of an established default in payments due to the Bank of Scotland (Ireland) Ltd under the terms of a loan agreement. She held that there was no requirement for the plaintiff to have a direct contractual relationship with the defendant to ground such an entitlement where it was established that the plaintiff was the owner of the charge and there was no requirement to demonstrate loss for the plaintiff’s claim to become actionable. She held that the proceedings issued within six years of a default in payments under a loan agreement. She noted that it was only following upon the making of the demand for payment in 2011 that the facts were in place which, if proved, would have given rise to an entitlement to judgment. Therefore, she held that the cause of action only accrued on that date.

Phelan J held that no credible defence had been identified by the defendant and the plaintiff was entitled to an order for possession.

Appeal dismissed.

RULING of Ms. Justice Siobhán Phelan, delivered on the 7 ^th day of November, 2023

INTRODUCTION

1 . This matter comes before me on appeal against an Order for Possession made in the Circuit Court (His Honour Judge Comerford) on the 1 ^st of June, 2022 in respect of a property comprised in folio 44761F of the Register for County Clare commonly known as Ballyvarra Lodge, Doolin, County Clare. This property is registered in the sole name of the Defendant/Appellant (hereinafter “the Defendant”) but is occupied as a family home by his spouse and children.

BACKGROUND

2 . There is very little dispute of fact in these proceedings. It is not in dispute that in October, 2006, Bank of Scotland (Ireland) Limited made a loan facility available to the Defendant on certain terms and conditions. The sum advanced was €350,000.00. The loan agreement provided for monthly repayments for a 25-year term secured against the Defendant's property at Ballyvarra, Doolin in the County of Clare then valued at €750,000.00. It was a condition of the loan offer that a solicitor confirm that the title to the secured property was in the sole name of the Defendant and that his wife obtain independent legal advice in relation to the purpose of the loan and sign a Deed of Consent and Confirmation of Spouse. The Defendant and his wife were also required to make a statutory declaration confirming that the property was a family home withing the meaning of the terms of the Family Home Protection Act, 1976 (as amended by the Family Law Act, 1995).

3 . Under the terms and conditions agreed the Defendant agreed to pay the Plaintiff on demand the “ secured monies” and agreed that a failure to pay any sums due constituted an event of default. Separately, the Defendant agreed to the Bank's right to transfer its security.

4 . The Notice Party, as the Defendant's wife, signed the “Consent and Confirmation of Spouse” form on the 11 ^th of December, 2006 and her signature was witnessed by a solicitor. In this form, she confirmed her consent to the granting of a charge in consideration of the advancement of banking facilities to the Defendant. She separately signed confirmation that she had taken or had been afforded the opportunity to take independent legal advice and her signature in this regard was also witnessed by a solicitor.

5 . By way of security for the said loan facility, the Defendant executed a Mortgage and Charge in favour of the Bank of Scotland (Ireland) Limited on the 11 ^th of December, 2006 in respect of property registered in the Defendant's name as comprised in folio 44761F of the Register for County Clare. The Mortgage and Charge was registered as a burden on folio 44761F of the Register for County Clare in June 2008 and the Bank of Scotland (Ireland) Limited was registered as owner of the charge.

6 . The Defendant defaulted in the terms of the loan facility and failed to make repayments as agreed as a result of which arrears accumulated. By letter dated the 8 ^th of April, 2011, the Bank of Ireland Scotland demanded that the Defendant repay to it all sums then due and owing together with interest thereon in default of which it would proceed to seek possession of the property. The Defendant was subsequently called upon in writing to deliver vacant possession of the mortgaged property in May, 2013. By July, 2013, the Bank of Ireland Scotland claimed to be owed €375,585.22 on foot of the loan agreement.

7 . These proceedings commenced in 2013 in the name of the Bank of Scotland PLC as Plaintiff and successor in title to the Bank of Ireland Scotland (Ireland) Limited on foot of a cross-border merger pursuant to the European Communities (Cross-Border Mergers) Regulations 2008. The Bank sought to recover possession of the property pursuant to s. 67(2) of the Registration of Title Act, 1964 (hereinafter “the 1964 Act”). An application for summary judgment was brought grounded on affidavit of one Lauren Bailey who averred that the Bank did not know of anyone other than the Defendant in possession in the property even though the Defendant's wife had executed a consent under the Family Home Protection Act, 1976 for the purpose of the loan. It was subsequently accepted by the Bank that the Defendant's spouse occupied the property.

8 . Subsequently, in 2015, the Bank transferred its mortgage loan agreement with the Defendant to Start Mortgages Limited assigning its interest in the debts the subject of the within proceedings. Start Mortgages Limited were then substituted as Plaintiff in the proceedings by order of County Registrar dated the 13 ^th of November, 2015.

9 . In September, 2016, the Plaintiff offered an Assisted Voluntary Sale Agreement to the Defendant whereby the Defendant agreed, inter alia, to dispose of the Property in full and final settlement of the mortgage loan account. The offer was conditional on the Defendant selling the property and applying the sale proceeds to the loan facility within six months of acceptance of the terms. The terms of the Assisted Voluntary Sale agreement were accepted by the Defendant in writing on the 28 ^th of September, 2016 who thereby agreed, inter alia, to facilitate a valuation of the property. It was provided that the offer could be terminated if the sale did not complete within six months or if there was a failure to comply with any terms of the offer. The offer was withdrawn in December, 2016 purportedly...