About this case:

• Citation:
  [2023] IEHC 663
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Garrett Simons

Delivering judgment for the High Court, Mr Justice Garrett Simons determined that “The only basis upon which the court can be satisfied that a right to take possession has arisen on the facts is to examine the terms of the mortgage” and that proof of the right “can normally only be established by producing a copy of the mortgage deed… because the inherent right to possession… may well be constrained by the terms of the mortgage deed”.

Background

On 6 July 2006, the appellant entered a loan agreement with First Active plc, which was secured by a mortgage dated 25 January 2001 over his lands in Youghal, Co Cork. The lands were his principal private residence.

Title to the lands was unregistered and the mortgage pre-dated the commencement of the Land and Conveyancing Law Reform Act 2009. The respondent issued proceedings seeking possession of the lands on 7 December 2018.

The respondent did not put a copy of the mortgage deed before the Circuit Court, instead simply exhibiting of the memorial which was filed at the registry of deeds at the time that the mortgage deed was registered. Whilst the appellant did obtain legal representation in the course of the proceedings before the Circuit Court, on the date of the hearing it appears that the appellant was not represented.

On 12 December 2019, the respondent applied successfully to amend its endorsement of claim in circumstances where there was an error in the enumeration of the balance on the loan account. The appellant filed two affidavits in the course of the proceedings.

The appellant’s first affidavit made a legal submission in respect of the evidential burden in summary proceedings as per Bank of Ireland Mortgage Bank v O’Malley [2020] 2 ILRM 42. The second affidavit was filed in support of the appellant’s application for discovery, in which he sought a full set of accounts of the calculations of interest rates, all contracts signed by him, and a copy of the mortgage indenture or mortgage deed.

An order for possession of the lands was made by the Circuit Court on 6 April 2022, with the appellant filing an appeal against that order to the High Court. The appellant subsequently obtained legal representation, and the appeal was eventually heard by Mr Justice Simons on 27 November 2023.

The High Court

The respondent submitted that it was unnecessary to exhibit the mortgage deed where the memorial had been exhibited, and that the mortgagee pursuant to a mortgage created prior to the commencement of the 2009 Act enjoys an “inherent right” to possession.

The respondent made further submissions including that whereas the precise terms of the mortgage deed were not available to the court, it was “more than probable” that they, in the normal manner, allowed the respondent to remain in possession as long as he repaid his secured lending on the agreed terms.

Mr Justice Simons considered that the mortgage took the form of an old-style mortgage rather than a legal charge pursuant to the Registration of Title Act 1964 or the 2009 Act.

The court observed that “as a matter of strict legal theory, a mortgagee under an old-style mortgage does enjoy a right of possession. This is because the mortgage will have been created by conveying an estate in the lands to the mortgagee subject to the equity of redemption. In practice, however, the right to possession will have been qualified by agreement. In most modern deeds of mortgage, the mortgagee’s right to possession is confined to circumstances where an event of default, as defined under the mortgage, has occurred.”

Highlighting that an essential proof in an application for possession is to establish that the moving party has a right to take possession of the lands, Mr Justice Simons noted that in the case of unregistered land subject to a pre-1 December 2009 mortgage, that proof “can normally only be established by producing a copy of the mortgage deed… because the inherent right to possession… may well be constrained by the terms of the mortgage deed. Similarly, the powers otherwise available under the Conveyancing Act 1881 only apply if an as far as a contrary intention is not expressed in the mortgage deed.”

The court emphasised that necessity of proving the terms of the mortgage deed is consistent with the approach under Practice Direction CC17 “Proceedings for possession or sale on foot of a mortgage.”

Finding it unnecessary to consider the circumstances, if any, in which it might be permissible in the case of a missing or lost mortgage deed, for a mortgagee to rely on secondary evidence to prove the terms of the mortgage, Mr Justice Simons recognised that the respondent had not averred that the mortgage deed was lost or otherwise unavailable, choosing instead to “rely on its having exhibited the memorial as sufficient proof… there is no indication as to what the terms of the mortgage are in respect of the right to possession and power of sale”.

The court decided that the respondent failed to establish that the mortgagee’s right to possession had arisen under the mortgage, rejecting the respondent’s submissions that the court should infer that the mortgage deed allowed the mortgagee to enter into possession where there are significant arrears, and that there was an obligation on the appellant to tender evidence negating the contention that a right to possession had arisen.

The court also rejected an attempt to distinguish O’Malley on the basis that it involved an application for summary judgment in debt proceedings, stating that “the two types of proceedings are analogous in that both seek to obtain substantive relief on a summary application” and noting the test in Bank of Ireland Mortgage Bank v. Cody [2021] 2 IR 381, that “a court hearing a claim for summary judgment, whether… for debt or for summary possession, must be satisfied that the plaintiff has established its claim and that the defendant has not put forward a basis for a credible defence either on the facts or on the law”.

Conclusion

Accordingly, Mr Justice Simons allowed the appeal, set aside the order for possession made by the Circuit Court, and dismissed the proceedings.

As a final comment, the court reiterated that this judgement concerns old-style mortgages in respect of unregistered land, but that different considerations may arise in the case of unregistered land created after 1 December 2009, and (ii) mortgages of registered land “of any vintage”.

Promontoria (Finn) Ltd v Flavin [2023] IEHC 663