About this case:

• Citation:
  [2024] IEHC 329
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Garrett Simons

Delivering judgment for the High Court, Mr Justice Garrett Simons warned that “this judgment says no more than that the second named defendant has demonstrated, on the basis of the limited materials before the court to date, that there are credible grounds for defending the proceedings. The judgment does not say that the potential defence is necessarily a strong one. Rather, the point is that the legal and factual issues raised by the second named defendant are sufficiently weighty to preclude the case being determined in a summary or peremptory manner.”

John Donnelly SC and Shaula Connaughton Deeny appeared for the plaintiff, instructed by Ivor Fitzpatrick & Company Solicitors. Gavin Mooney SC and Patricia Hill appeared for the second named defendant, instructed by Cullen & Co. Solicitors.

Background

On 1 February 2022, an order for possession of registered lands in Co Kildare was made in favour of the plaintiff by the Circuit Court pursuant to s.62(7) of the Registration of Title Act 1964. The second defendant brought a de novo appeal before the High Court alleging undue influence by the first defendant and that the plaintiff had not met the proofs required to obtain the order.

The High Court

Mr Justice Simons firstly considered that a successful application pursuant to s.62(7) of the 1964 Act requires the moving party to demonstrate that it is the owner of the relevant charge in the Land Registry and that in relation to the secured debt, the ‘principal money’ has become due and owing.

Having perused the folios relating to the lands in question, the judge noted that the original charges in favour of the Governor and Company of the Bank of Scotland were clearly identified by entries in the folios. The court found that in each instance, a second entry indicated that Bank of Scotland plc was the owner of the charge referred to at the earlier entry, with a third entry referring to Start Mortgages Ltd as the owner of the charge registered at the entry number referring to Bank of Scotland plc.

Noting that there was “no charge at the second entry” but rather a cross-reference to the first entry, Mr Justice Simons stated that it would be necessary to have the folios amended as it is essential that each folio entry be precise and accurate.

The court focused on s.31 of the 1964 Act, which provides that the register shall be conclusive evidence of any right, privilege, appurtenance or burden appearing thereon.

Considering that the correctness of the register could not be challenged by way of defence in summary proceedings as per Tanager DAC v. Kane [2018] IECA 352, [2019] 1 I.R. 385 and Bank of Ireland Mortgage Bank v. Cody [2021] IESC 26, [2021] 2 I.R. 381, the judge considered that: “Just as a charge holder is entitled to rely on the express terms of the folio when seeking an order for possession, so too is the owner of the lands. Here, neither folio establishes in unequivocal terms that Start Mortgages DAC is the registered owner of the two charges originally granted in favour of the Governor and Company of the Bank of Scotland.”

Turning to the second proof required, the court outlined: “The usual way in which a creditor establishes that the principal money secured by the instrument of charge has become due is to exhibit: (i) the loan agreement itself; (ii) the demand for repayment (if this is a prerequisite to the principal money becoming due and owing); and (iii) a statement of account which indicates that an event of default, which triggers the obligation to repay the principal money, has occurred and has not been remedied.”

Mr Justice Simons pointed out that as the loan agreement had been entered into with the Governor and Company of the Bank of Scotland, it was also necessary to demonstrate the chain of title leading to the transfer of the debt to the plaintiff.

Highlighting that the transfer documentation exhibited was heavily redacted so as to obscure a number of operative clauses, as opposed to minor redactions to protect commercially sensitive data or the privacy of third parties, the court found:

On that basis, the court decided that the interests of justice required the matter to go to plenary hearing, where the parties could put forward whatever further evidence they wished.

The court also considered the second defendant’s allegations that she had been unduly influenced to sign the loan documentation in circumstances where she was at risk of physical assault by the first defendant, where she did not know what she was signing, did not obtain independent legal advice and where the witness to the mortgage and charge was her husband’s personal solicitor.

In support of this contention, the second defendant exhibited medical records which indicated that in 2005, her husband had entered care in a mental health institution following a violent incident in the family home. The plaintiff queried purported inconsistencies in the second defendant’s affidavits, highlighting inter alia that the second defendant had held negotiations in 2013 with the then-loan servicer despite her averment that she was not aware of the mortgage and charge until 2016.

The plaintiff also submitted that its predecessors in title were not on notice of the alleged undue influence, with counsel indicating that the concept does not apply with the same force to joint borrowers as it does to loans where one spouse is merely a surety for the debt.

Relying upon ACC Bank plc v. Walsh [2017] IECA 166, Mr Justice Simons opined that “it is doubtful whether there is any bright line rule to the effect that a co-borrower falls to be treated differently… there is arguably some equivalence between a spouse who is unduly influenced to join in a loan application from which they are to derive no benefit, and a spouse who is unduly influenced to provide a guarantee for a primary loan from which they will derive no benefit”.

The court stated that the necessity to consider the specific circumstances leading to the formation of a loan agreement means that it will “rarely be appropriate” to rule upon a defence of undue influence based on affidavit evidence alone.

Having regard to inter alia the fact that the loan was a commercial borrowing secured on the family home, that the loan monies were used to redeem a charge in favour of a company and that the balance of the monies were paid to a different company, the court accepted that the second defendant had established credible grounds for a defence based on undue influence and had identified a stateable case that the plaintiff’s predecessors were ‘on inquiry’ of same where they appeared to have failed to ensure that she had the benefit of independent legal advice.

Conclusion

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

Start Mortgages DAC v Ramseyer & Anor [2024] IEHC 329