The Governor and Company of the Bank of Ireland v McMahon

• Jurisdiction: Ireland
• Judge: Mr. Justice Binchy
• Judgment Date: 15 June 2018
• Neutral Citation: [2018] IEHC 455
• Court: High Court
• Docket Number: [2017 No. 125 C.A.]
• Date: 15 June 2018

[2018] IEHC 455

THE HIGH COURT

Binchy J.

[2017 No. 125 C.A.]

BETWEEN

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

PLAINTIFF/RESPONDENT

AND

PATRICK MCMAHON

AND

ANGELA MCMAHON

DEFENDANTS/APPELLANTS

Order for possession – Mortgage – European Charter – Respondent seeking order for possession – Whether the obligation in the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 to provide a contract in plain and intelligible language extends to a deed of mortgage which is completed pursuant to the requirements of the loan agreement itself

Facts: The defendants/appellants, Mr McMahon and Ms McMahon, appealed to the High Court from an order of the Circuit Court made on 26th April, 2017 whereby the Circuit Court (Judge Linnane) made an order for possession of the premises known as No. 1, Park Lodge, Laurel Lodge, Castleknock, Dublin 15 against the defendants, in favour of the plaintiff/respondent, the Bank of Ireland. The question that arose was whether the obligation in the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 to provide a contract in plain and intelligible language extends to a deed of mortgage which is completed pursuant to the requirements of the loan agreement itself. The appellants also contended that the procedure adopted by the respondent i.e. a civil bill for possession was contrary to article 6 of the European Convention on Human Rights as well as various provisions of the European Charter.

Held by Binchy J that, since it is not possible, in practicable terms, for a borrower to drawdown a mortgage loan without instructing a solicitor, it is clear that borrowers have the benefit of independent legal advice to explain any technical legal language, as well as the legal effect of the mortgage documentation generally. Binchy J held that to suggest that the Regulations or Council Directive 93/13/EEC apply to the deed of mortgage itself is an absurd proposition, which, if accepted, might undermine the domestic mortgage market. Binchy J held that, in so far as the appellants made arguments under the European Charter it was not adequately particularised to address in any meaningful way.

Binchy J held that, having considered all of the new arguments raised by the appellants on appeal, over and above those raised by them in the Circuit Court, he was satisfied that all such arguments, including any not expressly addressed in this decision, should be rejected. The respondent was in Binchy J's view entitled to the order which it sought in these proceedings and accordingly Binchy J dismissed the appeal and affirmed the order of the Circuit Court.

Appeal dismissed.

EX TEMPORE decision of Mr. Justice Binchy delivered on the 15th day of June, 2018

1 This is an appeal from an order of the Circuit Court made on 26th April, 2017 whereby the Circuit Court (Judge Linnane) made an order for possession of the premises known as No. 1, Park Lodge, Laurel Lodge, Castleknock, Dublin 15 against the defendants, in favour of the plaintiff. Judge Linnane handed down a detailed written decision in the matter on 26th April, 2017.

2 Following the filing of an appeal, the defendants/appellants (hereafter simply 'the appellants') filed three further affidavits dated 16th May, 2017 and two affidavits dated 19th June, 2017, together with exhibits. This gave rise to a replying affidavit of a Ms. Helen Dorris on behalf of the plaintiff/respondent (hereafter 'the respondent') on 30th June, 2017, and a further replying affidavit on behalf of the appellants on 20th July, 2017.

3 I have considered all of the pleadings in this matter, both those exchanged before and after the decision of Judge Linnane. I have considered the judgment of Judge Linnane and I am satisfied that her conclusions on all matters of fact and law, based upon the materials before her were correct. There is no need to repeat the conclusions of Judge Linnane which are set out with absolute clarity in her decision. At this point therefore I affirm the conclusions of Judge Linnane, and the purpose of this decision, from this point onwards, is to consider only whether this appeal against the order for possession made by Judge Linnane should be allowed by reason of any of the additional arguments advanced by the appellants on the hearing of the appeal, which were not advanced before Judge Linnane. These arguments are set out in the additional affidavits filed by the appellants, referred to above, following upon the order of the Circuit Court.

4 Before considering those arguments, I should add to the above that on 24th October, 2017, the respondent obtained judgment from this Court (Noonan J.) in respect of the full amount claimed by the respondent in respect of the same loan, breach of the terms of which have given rise to these proceedings. The precise amount of the judgment is not clear from the terms of the judgment, (because it simply states that the plaintiff is entitled to judgment in the amount claimed), but para. 4 of the judgment states that as of the date of the issue of the summary summons, the amount claimed was €970,000.00. The appellants say that this decision is under appeal, but as matters stand that judgment remains undisturbed and it is not open to the appellants in these proceedings to challenge their indebtedness to the respondent as found by another court.

5 I turn now to address the principal arguments made by the appellants on this appeal (i.e. only those arguments not advanced in the Circuit Court).

6 The appellants rely on a newly exhibited document which they describe as 'an auditor's report from Abacus Services' which is exhibited to the affidavit of Angela McMahon of 16th May, 2017. Apart from the fact that this is an attempt to introduce new evidence upon appeal, which is impermissible without the express permission of the court, the evidence is quite clearly hearsay evidence. The same evidence is referred to and described as such by Noonan J. in his decision of 24th October, 2017. Noonan J. considered that report to be inadmissible for the purposes of the application for judgment before him and I consider it likewise to be inadmissible in these proceedings.

7 In any case, that report concludes that the appellants were overcharged interest in the sum of €983.08, and rather than argue about that point the respondent agreed to waive that amount for the purposes of the application for judgment before Noonan J. Moreover, somewhat curiously, Abacus conclude that the appellants owe the respondent €1,292,523.00 as of the date of their report (12th December, 2016), whereas in her replying affidavit, Ms. Dorris states that, as of the date of the swearing of her affidavit of 30th June, 2017, the sum of €1,012,599.32 was due and owing by the appellants to the respondent.

8 The appellants argue that following the transfer of their loan by ICS to the respondent, the respondent should have issued a new demand letter. The demand letter relied upon by the respondent in the proceedings was one issued by ICS Building Society on 14th August, 2014, prior to the transfer of the appellants' loan by ICS to the respondent, which took effect on 1st September, 2014. In advancing their argument on this point, the appellants rely on the decision of Barrett J. in Start Mortgages Ltd. v. Hanley [2016] IEHC 320. However, it is far from clear if in that case a letter of demand was sent at all; it would appear not from a summary of the arguments made by Start Mortgages. In any case, that case was concerned with an application for summary judgment and Barrett J. merely concluded that the defendant had met the low threshold required to send the case forward to a full plenary hearing. Unlike in this case, it does not appear as though Start Mortgages contended that any letter of demand had been sent.

9 In reply to this point, the respondent submits that s. 34 of the Central Bank Act 1971 makes it clear that following the transfer of a business pursuant to s. 33 of the Act of 1971, such as occurred in this case when the business of ICS was transferred to the respondent, the transferee (in this case the respondent) enjoys all of the same rights and obligations as those previously enjoyed by the transferor. So therefore, there was no need for the respondent to issue a new letter of demand, as it was entitled to rely upon the letter of demand that had already been sent by ICS. I am satisfied that the respondent is correct in this argument. Section 34 of the Central Bank Act 1971 is clear in its intent, meaning and effect.

10 The appellants contend that the Circuit Court did not have jurisdiction to entertain these proceedings because the property that is the subject of this application did not have a rateable valuation and the appellants had not consented to the Circuit Court jurisdiction. The defendants further contended that the property is not a principal private residence and also...