Stepstone Mortgage Funding Ltd v Fitzell

• Jurisdiction: Ireland
• Judge: Mrs. Justice Laffoy
• Judgment Date: 30 March 2012
• Neutral Citation: [2012] IEHC 142
• Docket Number: [2009 No. 1550 SP]
• Court: High Court
• Date: 30 March 2012

Stepstone Mortgage Funding Ltd v Fitzell

BETWEEN

STEPSTONE MORTGAGE FUNDING LIMITED

PLAINTIFF

AND

PETER FITZELL AND JOAN FITZELL

DEFENDANTS

[2012] IEHC 142

[No. 1550SP/2009]

THE HIGH COURT

LAND LAW

Mortgage

Code of conduct - Proceedings for possession - Repayment arrangement - Non-compliance - Application to transfer to chancery special summons list - No further repayment arrangement - Decision by lender no right to appeal - Finding by Master plaintiff in breach of code - Whether Master correct to refuse to transfer - Whether defendant entitled to appeal decision of plaintiff - Whether plaintiff in compliance with code - Whether plaintiff entitled to order for possession - Rules of the Superior Courts 1986 (SI 15/1986), O. 38, r 6 - Central Bank Act 1989 (No 16), s 117 - Possession refused (2009/1550SP - Laffoy J - 30/3/2012) [2012] IEHC 142

Stepstone Mortgage Funding Ltd v Fitzell

Facts The plaintiff company had issued a €100,000 loan to the defendants which was secured on their house. Arrears had arisen on the loan and the plaintiff brought proceedings seeking possession of the property. The plaintiff sought to have the matter transferred to the Chancery Special Summons list before the Master of the High Court. However the Master took the view that the plaintiff had committed an error in failing to inform the defendants that they had in fact a right to appeal in accordance with the Code of Conduct on Mortgage Arrears and adjourned the matter. The plaintiff issued the present motion seeking to set aside the order of the Master in refusing to transfer the matter and a declaration that the plaintiff had complied with the provisions of the Code. It was contended by the plaintiff that the Master had acted outside his jurisdiction in adjourning the matter.

Held by Laffoy J in refusing the plaintiff"s application: The core issue related to the 'Code of Conduct on Mortgage Arrears' issued by the Central Bank of Ireland pursuant to the Central Bank Act, 1989. Even though the defendants had reneged on agreements with the plaintiff regarding repayments, it would be premature to form a view as to whether the defendants were non-co-operating borrowers given that they had not been afforded the benefit of the Current Code as they should have been. The court did not agree with the proposition that in proceedings for possession of a primary residence a plaintiff bank did not have to demonstrate compliance with the Current Code. The function of the Master was to transfer the proceedings to the Chancery Special Summons list. However, that would not have availed the plaintiff given that on the basis of the evidence before the court they would not have been entitled to an order for possession.

REGISTRATION OF TITLE ACT 1964 S62(7)

CENTRAL BANK ACT 1989 S117

ZURICH BANK v MCCONNON UNREP BIRMINGHAM 4.3.2011 2011/50/14278 2011 IEHC 75

BRESLIN & SMITH BANKING LAW 2ED 2007 PARA 3.56

DONNELLY THE LAW OF CREDIT & SECURITY 2011 PARA 9.79

DONNELLY THE LAW OF CREDIT & SECURITY 2011 PARA 20.47

CENTRAL BANK ACT 1942 PART IIIC

CENTRAL BANK & FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004 S10(1)

CENTRAL BANK ACT 1989 S117(4)

CENTRAL BANK & FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004 SCHED 3

RSC O.38 r6

1 JUDGMENT of Mrs. Justice Laffoy delivered the 30th day of March 2012

1. Background to the application

2 2 1.1 The defendants are the owners of a dwelling house and adjoining lands at Ballyconry, Lisselton Cross, County Kerry (the Mortgaged Property), which is registered on Folio 29355 of the Register of Freeholders, County Kerry. It is accepted by the plaintiff that the Mortgaged Property comprises the defendants' primary residence. On 24 ^th September 2007, the plaintiff issued a letter of offer offering a loan of €100,000 secured on the Mortgaged Property to the defendants. The defendants signed the form of acceptance on 1 ^st October 2007. The loan was subsequently drawn down. By a deed of mortgage dated 8 ^th February 2008, made between the defendants of the one part and the plaintiff of the other part (the Charge), the defendants charged the Mortgaged Property as security for the monies advanced on foot of the letter of offer. While I note that the second borrower is named as "John" at the commencement, the Charge was executed by "Joan" Fitzell. On 6 ^th November 2009, the Charge was registered as a burden on Folio 29355, being described as "Charge for present and future advances repayable with interest". The plaintiff was registered as owner of the Charge on the folio at the same time.

3 3 1.2 By letters, which were dated 9 ^th January 2008 to each of the defendants, although obviously intended to be dated 9 ^th January 2009, the plaintiff's solicitors, A.C. Forde & Company, having set out that at 8 ^th January 2009 the arrears due on foot of the Charge amounted to €4,310.19 and the total balance due as of that date was €103,652.64, and having referred to the terms of the Charge, the defendants were called upon to repay the amount outstanding within ten days. Those letters were followed up by letters of 23 ^rd February 2009 from the plaintiff's solicitors calling on each of the defendants to deliver vacant possession of the Mortgaged Property and threatening that these proceedings for possession, with a view to a sale on foot of the Charge, would issue.

4 4 1.3 In fact, the special summons did not issue until 16 ^th December 2009. On the special summons the plaintiff claimed an order, pursuant to s. 62(7) of the Registration of Title Act 1964 (the Act of 1964), for possession of the Mortgaged Property. I am satisfied that the repeal of subs. (7) of s. 62 of the Act of 1964 by the Land and Conveyancing Law Reform Act 2009, which became effective on 1 ^st December 2009, is not an impediment to the plaintiff prosecuting these proceedings to finality. This special summons was grounded on the affidavit of Nicky Langton, an official of the plaintiff, sworn on 8 ^th January 2010.

5 5 1.4 The matter was returnable before the Master of the High Court on 13 ^th April 2010. No appearance has been entered at any time on behalf of the defendants. The matter was adjourned from time to time in the Master's Court because there was certain engagement between the plaintiff and the defendants, which is outlined in a further affidavit of Nicky Langton (the Compliance Affidavit) sworn on 6 ^th December 2011. However, by the end of November 2011, the plaintiff had decided to proceed with the claim for possession and its solicitors so advised the defendants.

6 6 1.5 The matter was next in the Master's Court on 6 ^th December 2011. What happened on that occasion is outlined in the affidavit of Peter Kelly, a solicitor in A.C. Forde and Company, which grounds the application now before the court and which was affirmed on 26 ^th January 2012.

7 7 1.6 Mr. Kelly averred that on each occasion previous to 6 ^th December 2011, the matter had been adjourned "as various discussions and arrangements" had been in place between the plaintiff and the defendants. At no time had the defendants appeared in court when the matter was listed. However, on 6 ^th December 2011, counsel appeared on behalf of the defendants, although no appearance had been entered by solicitors on behalf of the defendants. He informed the Master that he was seeking a short adjournment to allow solicitors to enter an appearance. Counsel for the plaintiff sought that the matter be transferred to the Chancery Special Summons list and outlined the arrears position to the Master. Among the documents handed to the Master was a letter dated 29 ^th November 2011, from the plaintiff's solicitors to the defendants, which was the letter in which the defendants were advised that the plaintiff intended proceeding with the claim for possession. Mr. Kelly's evidence of what happened next was that the Master opened the letter and stated, referring to a passage which I will quote later, that the position adopted by the plaintiff was incorrect and that the defendants had a right to appeal. The Master further directed that the plaintiff write to the defendants to rectify the mistake, as he perceived it, and to inform the defendants that they had in fact a right to appeal. The Master then adjourned the matter to 7 ^th February 2012, on the basis that the plaintiff had misinformed the defendants of their rights.

8 8 1.7 Apparently, no formal order reflecting the Master's refusal to accede to the plaintiff's application that the proceedings be transferred to the Chancery Special Summons list and adjourning the matter in the Master's Court was perfected. However, on 12 ^th December 2011, the plaintiff issued the motion which initiated the application to which this judgment relates, in which the following relief is sought:-

9 (a) an order setting aside the order of the Master of the High Court of 6 ^th December 2011 refusing to transfer the matter to the Chancery Special Summons list on the basis that the plaintiff had not complied with the provisions of the "2011 Code of Conduct on Mortgage Arrears" and substituting for the same an order transferring the proceedings to the Chancery Special Summons list for hearing of the Special Summons;

10 (b) a declaration that plaintiff has complied with the provisions of the Code of Conduct on Mortgage Arrears; and

11 (c) if appropriate, a direction that the appeal from the Order of the Master be treated as the hearing of the proceedings proper.

12 9 1.8 On the hearing of the application, the Court was informed that since 6 ^th December 2011 the proceedings have been adjourned in the Master's Court from time to time, and there has been no appearance on behalf of the defendants on any occasion. This application to this Court came via the Chancery Special Summons list, where it had been returnable on 23 ^rd January 2012. I...