WF Shap (Ireland) Ltd v Fingleton (as administrator Ad Litem of the estate of Laurence Johnson Deceased)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Garrett Simons |
| Judgment Date | 10 January 2020 |
| Neutral Citation | [2020] IEHC 50 |
| Docket Number | 2018 No. 271 SP |
| Court | High Court |
| Date | 10 January 2020 |
[2020] IEHC 50
Garrett Simons J.
2018 No. 271 SP
THE HIGH COURT
Order for possession – Mortgage – Limitation period – Plaintiff seeking an order for possession – Whether the proceedings had been brought within time
Facts: The plaintiff, WF Shap (Ireland) DAC, applied to the High Court for an order for possession. The right to possession was said to arise under a mortgage which had been entered into between the late Mr Johnson (the deceased) and Seniors Finance Ireland Ltd. The proceedings were taken as between the plaintiff, the lawful assignee of the mortgagee’s interest, and the defendant, Mr Fingleton, the administrator ad litem of the deceased’s estate. The loan underlying the mortgage was described as a “lifetime loan” or a “reverse mortgage”. The application for possession was predicated, primarily, on the provisions of s. 62(7) of the Registration of Title Act 1964. Reliance was also placed, in the alternative, on a contractual right to possession. The central question to be addressed in the High Court’s judgment was whether the proceedings had been brought within time. The answer to this question turned on whether or not the proceedings were subject to the two-year limitation period applicable to certain causes of action against a deceased person’s estate (s. 8 of the Civil Liability Act 1961).
Held by Simons J that under the terms of the mortgage of 17 October 2007, the making of a demand for the repayment of the principal monies was a condition precedent to the accrual of the right to apply for possession of the mortgaged lands. Therefore, Simons J held that the principal monies did not become payable automatically on the death of the mortgagor; rather, a further step, i.e. the making of demand, was required. Simons J held that where the making of demand is required under the mortgage deed before the repayment of the principal monies secured by the charge has become due, then the cause of action cannot be said to have accrued until such demand has been made, having applied Governor and Company of the Bank of Ireland v Matthews [2018] IEHC 335. Simons J found that, on the facts of the case, no demand had been made prior to the date of death, and, accordingly, the action to recover the lands was not subsisting as of that date. Consequently, Simons J held that the proceedings were not subject to the two-year limitation period under s. 9(1)(b) of the 1961 Act; the proceedings were, instead, subject to a twelve-year limitation period, and were instituted well within time. Simons J was satisfied that the conditions for the making of an order for possession under s. 62(7) of the 1964 Act (as applied by the transitional provisions of the Conveyancing and Land Law Reform Act 2013) had been fulfilled.
Simons J held that an order for possession of the lands would be made pursuant to s. 62(7).
Application granted.
This matter comes before the High Court by way of an application for an order for possession. The right to possession is said to arise under a mortgage which had been entered into between the late Laurence Johnson ( “the Deceased”) and Seniors Finance Ireland Ltd. The proceedings are taken as between the lawful assignee of the mortgagee's interest, WF Shap (Ireland) DAC, and the administrator ad litem of the Deceased's estate. The loan underlying the mortgage is what is described colloquially as a “lifetime loan” or a “reverse mortgage”.
The application for possession is predicated, primarily, on the provisions of section 62(7) of the Registration of Title Act 1964. Reliance is also placed, in the alternative, on a contractual right to possession.
The central question to be addressed in this judgment is whether the proceedings have been brought within time. The answer to this question turns on whether or not the proceedings are subject to the two-year limitation period applicable to certain causes of action against a deceased person's estate. (Section 8 of the Civil Liability Act 1961).
The Deceased, the late Laurence (otherwise Lawrence) Johnson, had been registered as the full owner of lands at 36 Assumpta Park, Limerick on 23 September 2005.
By letter dated 5 April 2007, Seniors Finance Ireland Ltd. offered to advance the sum of €52,700 to the Deceased. It was a pre-condition to the drawdown of the principal monies that the Deceased execute a deed of mortgage over the premises at 36 Assumpta Park, Limerick. The terms and conditions specified in the letter of offer of 5 April 2007 stated 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. The principal monies would, instead, become due and payable on the happening of any one of eight specified events. These included, relevantly, the death of the Deceased.
The Deceased entered into a loan agreement, on the terms and conditions specified, with Seniors Finance Ireland Ltd. on 20 June 2007.
The loan agreement underlying the mortgage is what is described colloquially as a “lifetime loan” or “reverse mortgage”. These financial products are designed to allow elderly homeowners to borrow against the value of their home, with the intention that the principal monies will be paid out of their estate following their death.
The key feature of such financial products is that the principal monies are not repaid by way of regular instalments as in the case of a conventional mortgage loan. Rather, it is envisaged that the entire of the principal monies will be repaid (together with interest) on the happening of certain events, including the death of the borrower or the sale of the mortgaged property.
The Deceased duly executed a mortgage and charge ( “the Mortgage”) in favour of Seniors Finance Ireland Ltd. on 17 October 2007. The “Mortgaged Property” had been identified in the Mortgage by reference to the dealing number which had been allocated by the Land Registry. An affidavit has been filed confirming that the Mortgaged Property is the same as the lands which are now comprised in Folio 58695F of County Limerick ( “the Folio”).
The Mortgage was subsequently registered on the Folio as a charge against the lands on 14 November 2007.
Insofar as relevant to the point in respect of the limitation period, the key provisions of the Mortgage are as follows.
“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) on the happening of any event of default other than an event specified in paragraph (i) of sub- clause 7.1 hereof; 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) if the Mortgaged Property shall be compulsorily acquired or purchased;
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 or on behalf of the Mortgagee by any law agent or solicitor, secretary, manager or other officer of 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.”
The events of default are defined at Clause 7.1. Insofar as relevant to these proceedings, same read as follows.
“7 EXERCISE OF MORTGAGEE'S POWERS
7.1 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 series of events are then set out, including, for example, breach of covenant, and the conveying or transferring of the Mortgaged Property without prior consent in writing.
For the sake of completeness, it should be noted that Clause 7.1(i), which appears to be excluded by Clause 1.2 (set out earlier), reads as follows.
“(i) 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;”
Clause 6.1 provides, in brief, that the Mortgagee may enter into possession of the mortgaged property at any time after the execution of the Mortgage. Clause 6.2 provides that the mortgagee shall have the statutory powers conferred on mortgagees by the Conveyancing Acts, and goes on to provide, inter alia, that the secured moneys shall be deemed to have become due, within the meaning and for all purposes of the Conveyancing Acts, on the execution of the Mortgage.
The mortgagee's interest under the Mortgage has since been transferred from Senior Finance Ireland Ltd. to WF Shap Ireland DAC (“WF Shap”) by deed of assignment and transfer dated 8 July 2016. The latter's ownership of the charge was subsequently registered on the Folio on 30 September 2016.
The Deceased died intestate on 2 December 2015. Under the terms of the Mortgage, the death of the mortgagor represented an event of default. On the...
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