High Court: Couple owing almost €1m to BOI criticised for attempted trial by telephone directory

About this case:

• Judgment:
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In a heavily critical judgment, Mr Justice Noonan emphasised that there was no tort of reckless lending, and found that the couple had no bona fide defence.

Background

In April 2006, ICS Building Society offered a mortgage loan to Patrick and Angela Mc Mahon of €960,000 for a term of 25 years.

Repayments fell into arrears in 2011, and by 2013 this grew to almost €120,000.

Subsequently, ICS Building Society demanded repayment of the full amount of the loan, and in June 2013, a summary summons was issued seeking the outstanding €970,000.

In 2014, the Minister for Finance, under the powers granted to him pursuant to s. 33 of the Central Bank Act 1971 (as amended) made an order entitled the Central Bank Act 1971 (Approval of Scheme of Transfer between ICS Building Society and the Governor and Company of the Bank of Ireland) Order 2014 transferring all assets and liabilities of ICS Building Society to the Governor and Company of the Bank of Ireland.

An order was then made to name the Governor and Company of the Bank of Ireland as plaintiff in the present application.

Sitting in the High Court, Justice Noonan opened his judgment by stating that the present case represented “a simple claim” by the Bank for repayment of a loan “despite the very best efforts of the McMahons to make it an extremely complex one”.

Isaac Wunder order

The Court heard that the McMahons sought to challenge this order, but that this and various other applications brought by them were dismissed. Indeed, previous proceedings brought by the McMahons were struck out and described as “frivolous and vexatious”, receiving “fairly trenchant criticism… for wasting court time”, and resulting in an Isaac Wunder order made against them.

With regards to the present application, Justice Noonan explained that the McMahons raised a “multitude of issues”, many of which were described as “non-issues that require no analysis” by the Court.

Securitisation

One of the main themes explored at length by the McMahons was the issue of securitisation of their loan.

Apparently without any evidence other than “a mere assertion by the McMahons”, they alleged that their loan was part of a bundle of securities sold by Bank of Ireland to an entity known as Kildare Securities Ltd in 2008; and that the Bank lost its title to the loan and could no longer enforce it against them.

They also argued that they never consented to the securitisation of their loan and this also rendered it non-recoverable.

Considering Freeman v. Bank of Scotland IEHC 284, and Wellstead v. Judge Michael White IEHC 438; Justice Noonan stated “not only is there no basis for a complaint by the McMahons about securitisation of their loan, even if it occurred… it is clear from the terms of the loan document that the McMahons expressly gave their consent to any such securitisation” as Part 3 of the loan agreement included a condition entitled “Securitisation and Collateralisation” expressly empowering the lender to securitise the loan.

Justice Noonan said it was “clear beyond doubt” that the McMahons were not entitled to make any complaint based on any alleged securitisation of their loan.

Unfair terms

The McMahons alleged violation by the Bank of the European Council Directive on Unfair Terms in Consumer Contracts 93/13/EEC.

The McMahons complained that the terms of their contract with the Bank were unfair and thus unenforceable – their reliance on AIB v. Counihan IEHC 752 was rejected in this regard. Furthermore, Justice Noonan stated that Aziz v. Caixa d’Estalvis De Catalunya (Case C-415/11) did not assist the McMahons.

Possession proceedings

The Bank instituted possession proceedings in the Circuit Court – which the McMahons complained was unfair and unconstitutional since they must fight the Bank in two courts at the same time

Emphasising that the causes of action were “entirely different”, and that it was less onerous on the McMahons for the possession proceedings to be heard in the Circuit Court rather than the High Court; Justice Noonan stated that there was “no conceivable basis” for the suggestion that this was “unfair, oppressive or still less unconstitutional”.

Rush to judgment

In similar vein, the McMahons argue that the summary judgment procedure in this court constitutes a violation of their right to a fair trail under the European Convention on Human Rights and amounted to a “rush to judgment”.

Noting that, due to delay orchestrated by the McMahons, it had already taken “over four years for the proceedings to get to this point” and that they had “already been before the court on some sixteen different occasions” – Justice Noonan stated that this point was devoid of any merit, and “to put it mildly, ironic”.

Doorstep selling

The McMahons also place reliance on the terms of the European Communities (Cancellation of Contracts Negotiated Away from Business Premises) Regulations, 1989 (S.I. No. 224/1989) – aka “doorstep selling”.

Again criticising the McMahons, Justice Noonan stated that no realistic suggestion could be made by the McMahons that they entered into this mortgage with the lender in some form of doorstep selling arrangement; and that the Regulations had no application.

No bona fide defence

Finally, Justice Noonan stated that the Bank owed no fiduciary duty to the McMahons, and furthermore, despite the “well-trodden road” by previous defendants – “there is no tort of reckless lending”.

Justice Noonan stated that he was “perfectly satisfied” that the McMahons had “no bona fide defence to this claim and certainly not one which could be described as approaching the standard of amounting to a fair or reasonable probability of having such defence”.

Describing the tactics adopted by the McMahons as “an attempted trial by telephone directory”, Justice Noonan found that the bank was entitled to judgment in the amount claimed.