High Court: Cause of action on foot of life loan not subsisting at time of borrower’s death

About this case:

• Citation:
  [2024] IEHC 41
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice David Nolan

Delivering judgment for the High Court, Mr Justice David Nolan opined: “I do not believe that the case for possession is statute barred and I respectfully adopt the views of Simons J. and MacGrath J. in the W.F. Shap (Ireland) line of cases all. The whole purpose of the loan facility was that the principal monies would not become payable until the death of the mortgagor.”

Background

The plaintiff sought possession of a property in Sligo which was formerly the home of a lady, now deceased. Her daughter was sued in her capacity as executrix of her mother’s estate.

On 22 November 2006, the plaintiff issued a life loan mortgage offer to the deceased secured by a first legal mortgage over the property. On 15 December 2006, the deceased signed her acceptance of the loan, and on 10 January 2007 she executed a mortgage deed over the property. On 7 February 2007, the mortgage was registered as a charge on the folio of the property.

The plaintiff advanced €60,000 to the deceased on foot of the loan, and less than a year later on 6 July 2008, she died leaving her daughter named as her executrix. On 30 May 2011, the plaintiff wrote to the solicitors for the deceased’s estate asking that an executor would be appointed. On November 2014, the plaintiff wrote to the defendant personally asking her to extract a grant of probate and sought possession of the property. 

The plaintiff wrote every year until 2019, when an administrator ad litem was appointed by the High Court that July to extract a grant of probate. On 23 September 2019, the plaintiff issued a special summons, and on 21 April 2021 the grant of probate was extracted by the administrator ad litem.

The defendant argued that pursuant to s.9(2) of the Civil Liability Act 1961, proceedings were required to be issued within two years, and as such the plaintiff was out of time. The defendant also argued that the plaintiff was guilty of laches, and that the interest charges on the loan were statute-barred pursuant to s.37(1) of the Statute of Limitations 1957.

The plaintiff argued that laches could only be raised where the defendant acted to her detriment by reason of the plaintiff’s delay in instituting proceedings. The plaintiff also relied upon clause 4(c) of the loan agreement where the deceased was asserted to have agreed that interest would continue to accrue “until the loan, interest and any other amounts are repayable in full”.

The plaintiff argued that the exact sums arising out of the loan were irrelevant to the possession application.

The High Court

Mr Justice Nolan considered clause 4(a) of the loan agreement, which stated that “the borrower should not be obliged to make any monthly repayment of principal, interest or any other amount payable during the term of the loan. The loan shall become due and payable on behalf of the earliest of the following (which shall be the due date): - (i) the death of the borrower and where there are two or more borrowers, the death of the last surviving borrower.”

Noting that the agreement of the parties that the loan became due and payable upon the deceased’s death on 6 July 2008, the judge observed that proceedings had not issued until over 11 years later.

The court turned to s.8 of the 1961 Act, which concerns actions subsisting against deceased persons and which states that “(2) No proceedings shall be maintainable in respect of any cause of action whatsoever which has survived against the estate of a deceased person unless either— (a) proceedings against him in respect of that cause of action were commenced within the relevant period and were pending at the date of his death, or (b) proceedings are commenced in respect of that cause of action within the relevant period or within the period of two years after his death, whichever period first expires.”

Mr Justice Nolan addressed the plaintiff’s claim that the appropriate limitation period was to be found in s.13 of the 1957 Act, “(2) The following provisions shall apply to an action by a person (other than a State authority) to recover land— (a) subject to paragraph (b) of this subsection, no such action shall be brought after the expiration of twelve years from the date on which the right of action accrued to the person bringing it or, if it first accrued to some person through whom he claims, to that person”.

The court observed that the central issue was whether the cause of action was subsisting at the time of the deceased’s death – if so, the plaintiff would be statute-barred. 

The court agreed with inter alia Mr Justice Garrett Simons in W.F. Shap (Ireland) DAC v. Fingleton [2020] IEHC 50 that “…the event which triggers the entitlement to serve a demand for the repayment of the principal monies will normally be the death of the mortgagor. An entitlement which is contingent on the death of the mortgagor is not, by definition, one which can be said to be ‘subsisting’ as of their date of death, or one which ‘survives’ their death. Rather, the entitlement only arises after the mortgagor’s death. Put shortly, any proceedings which were instituted prior to death would be premature.”

Finding that the proceedings were not statute-barred, Mr Justice Nolan then considered the defendant’s argument concerning laches. Noting that the defendant had not acted to her detriment by virtue of delay on part of the plaintiff, the judge continued that in circumstances where it the plaintiff knew of the deceased’s death since 2011 “there is a significant increase in the sums due by virtue of the interest that has accrued from the date of death of Mrs. Cunningham…The amount of interest substantially exceeds the original life loan. The defendant says that the opportunity to raise finances is now lost compared to the position had the proceedings been instituted at an earlier time.”

In the absence of any explanation for the “enormous delay” in the case, the court stated that “If it were not for other factors, I believe that it would be at least arguable that the defence of laches arises in this case. An opportunity of dealing with the case in a different way, from the plaintiff’s perspective, may have arisen. However, in their book on trusts Keogan, Mee and Wylie say that where “the Statute of Limitations 1957 provides for a relevant limitation period, there is no scope for the application of the equitable doctrine of laches”.

Proceeding to address the ‘interest’ argument, the court considered that whilst the case for possession was not statute-barred, there was “at least an arguable case that the defence of the statute of limitations arises in regard to the interest claimed.”

Conclusion

Accordingly, the High Court sent the matter to plenary hearing.

Bank of Ireland Mortgage Bank v. Teresa Gillespie [2024] IEHC 41