Wise Finance Company Ltd v Lanigan

• Jurisdiction: Ireland
• Judge: FENNELLY J
• Judgment Date: 21 January 2004
• Neutral Citation: [2004] IESC 4
• Docket Number: Record No. 342/00
• Court: Supreme Court
• Date: 21 January 2004

[2004] IESC 4

THE SUPREME COURT

Keane C.J.

McGuinness J.

Fennelly J.

Record No. 342/00

WISE FINANCE CO LTD v. LANIGAN

BETWEEN

THE WISE FINANCE COMPANY LIMITED

Plaintiff/Appellant

and

JOHN LANIGAN

Defendant/Respondent

Citations:

REGISTRATION OF TITLE ACT 1964 S62(7)

Synopsis:

LAND LAW

Credit and security

Enforcement of security - Contract - Order of possession - Discrepancies between loan offer and deed of charge - Construction of terms of loan - Whether evidence of demand - Whether plaintiff entitled to order of possession - Registration of Title Act, 1964 (342/2000 - Supreme Court - 21/1/2004)

Wise Finance v Lanigan

Facts: The plaintiff sought an order of possession by special summons over lands in respect of monies advanced to the defendant. The plaintiff had advanced a sum of 21,2350 in sterling to the defendant and a default in the repayment of the monies had occurred. The plaintiff initiated a claim which was dismissed by McCracken J in the High Court on the grounds of discrepancies occurring between the terms of the loan transaction and terms of the deed charge. The plaintiff appealed to the Supreme Court submitting that despite the discrepancies, the advance still fell within the definition of ‘general indebtedness’. The defendant contended that although there was an obligation to pay ‘general indebtedness’ there had not been a sufficient demand to satisfy the terms of the deed of charge.

Held by the Supreme Court (Keane CJ delivering judgment; McGuinness J and Fennelly J agreeing) in dismissing the appeal. There was a difficulty for the plaintiff in that the deed of charge referred to a sum in Irish punts even though the loan had been made in sterling. In addition the loan agreement referred to ‘no instalments’ whereas the deed of charge referred to ‘agreed instalments’. However the deed of charge was drafted so that it included either ‘the loan’ or ‘general indebtedness’. Despite this there was no evidence that a prior demand for payment had been made, which was required in order to issue an order for possession and the plaintiff’s claim must fail.

Reporter: R. F.

1 JUDGMENT delivered on the 21st day of January, 2004 by FENNELLY J .

FENNELLY J

2 The Plaintiff/Appellant (hereinafter "the appellant"), in a Special Summons issued in May 2000, claimed possession, pursuant to section 62(7) of the Registration of Title Act,1964, of certain lands at Jerpoint, County Kilkenny. This followed default in repayment of monies advanced by the appellant to the Defendant/Respondent (hereinafter "the respondent"). By a registered indenture of charge (hereinafter "the deed of charge"), dated 25th February 1997, the Respondent had charged the lands with "secured monies" due to the appellant. McCracken J dismissed the application on the ground of two discrepancies between the terms of the deed of charge and references to the underlying loan transaction under which the advances had been made. The relevant statutory provision is as follows:

"62(7) When repayment of the principal money secured by the instrument of charge has become due, the registered owner of the charge or his personal representative may apply to the court in a summary manner for possession of the land or any part of the land, and on the application the court may, if it so thinks proper, order possession of the land or the said part thereof to be delivered to the applicant and the applicant, upon obtaining possession of the land or the said part thereof, shall be deemed to be a mortgagee in possession."

3 Before referring to the terms of the deed of charge, it will help to refer to the underlying financial transaction giving rise to the deed of charge and in turn to the present claim. On 6th February 1997 the appellant addressed a letter of commitment to the respondent, accepted by him in writing on 10th February. The terms of the offer were summarised on page one of the letter as follows:

"1. Amount of credit advanced	:	£21,250.00
2. Period of Agreement	:	3 calendar months
3. Number of Repayment Instalments	:	No instalments due
4. Amount of each instalment	:	Optional repayment prior to due date
5. Total amount repayable	:	£25,000.00
6. Cost of this Credit	:	£3,750.00
7. APR	:	26.7%"

4 It will be noted that there is no indication as to whether the amounts of £25,000, £21,250 and £3,750 are denominated in Irish pounds or pounds sterling. The interest rate was stated to be 2% per month, but this was to become 3% per month in the event of the loan not being repaid within three months. The letter also permitted the appellant, at its sole discretion, to advance the funds "in Irish Punts or Sterling,"the respondent being bound to repay in the currency of the advance. The deed of charge was executed on 25th February 1997. The appellant availed of the option to make the advance in sterling. On 28th February 1997, it advanced the sum of £21,250 in pounds sterling divided into two cheques, respectively for £20,627.43 to the respondent's solicitors and £622.57 to another firm of solicitors relating to the stamping and registration of the charge.

5 The amount of the advance was not repaid within the three-month term. By early 2000, the appellant contended that a sum of £60,898.47 was due and that this sum would have to be paid in order to redeem the mortgage or charge. By a letter of 18th February 2000 from its solicitors, the appellant formally wrote to the respondent demanding possession of the lands within seven days. The letter continued:"In the alternative, you may pay the said sum of Stg£60,898.47 to our client within the said period of seven days."

6 I now turn to the terms of the deed of charge. Clause 9 of the deed provides that respondent charges the lands"with payment to [the appellant] of the secured monies." This latter term is defined to mean "all monies and liability which [the Respondent] covenants to pay to [the appellant]…"(emphasis added in each case). The covenants, therefore, form the essential link between the security effected and the monies advanced.

7 The appellant, in order to succeed in his claim, must, therefore, show that the respondent had covenanted to pay the particular sums claimed to be"secured monies."

8 Two covenants are relevant. Firstly, under paragraph 1(a), the respondent covenanted to"repay to [the appellant] the loan with interest thereon at the appropriate rate from the commencement date by the agreed instalments the first of such payments having been made or to be made on the initial specified day and subsequent payments having been made and/or to be made at regular successive intervals of one month during the term ...."(emphasis added). This covenant relates to the repayment of a specific loan, which I will shortly explain. There is, however, a second possibly relevant covenant. The...