“A Mortgage in Name Alone”: The Supreme Court affirms that a loan negotiated on the security of a (void) family-home charge remains a “housing loan” and may be recovered from an unjustly-enriched non-signatory spouse – Commentary on Bank of Ireland Mortgage Bank v. Murray [2025] IESC 24

1. Introduction

The Supreme Court of Ireland has delivered an important judgment clarifying two recurring problems in retail banking and family-home litigation:

When does a loan cease to be a “housing loan” under the Consumer Credit Act 1995 (as amended) (CCA 1995) if the security that was contemplated is subsequently declared void?
Can a lender who already holds a judgment for the full contractual debt against one spouse (the signatory) also recover the same money, in unjust enrichment, from the other spouse who never signed any loan documentation yet benefited from the advance?

In Bank of Ireland Mortgage Bank v. Murray the Supreme Court answered both questions in favour of the Bank. Ms Justice Dunne (for the majority) held that:

A loan remains a “housing loan” once the parties’ agreement contemplated credit on the security of a mortgage, even if the mortgage later proves void. It does not convert into an ordinary “credit agreement” subject to Part III of the CCA 1995.
Because the non-signatory husband (Mr Murray) received significant benefits, the Bank could sue him in restitution. Neither the statutory regime, nor the “leap-frogging” principle, nor the defences of change of position or “no knowing receipt” barred recovery.

2. Summary of the Judgment

The Court (Dunne J.; Woulfe and Hogan JJ. dissenting) dismissed Mr Murray’s appeal and confirmed the High Court and Court of Appeal orders granting personal judgment against him for €132,355.63 (principal only) plus costs. Core findings were:

The 2007 loan of €200,000, although unsecured in law owing to forged signatures on the family-home charge, was nonetheless a “housing loan”. Thus the stringent execution requirements in Part III of the CCA 1995 (cooling-off period, signed written contract, etc.) never applied.
Mr Murray had no contract with the Bank, so he could not invoke statutory protections reserved for parties to credit agreements.
The Bank, having advanced funds under a mistake of fact (believing both spouses had executed the security) was entitled to restitution. All four Dublin Corporation v. BATU elements—enrichment, at the Bank’s expense, unjust factors, and no bar to restitution—were satisfied.
Defences failed:
- No knowing receipt: the husband knew large “exceptional” payments were being made from the joint account and wilfully closed his eyes to their source.
- Change of position: he proved no detrimental reliance; mere expenditure of the loan proceeds is insufficient.
- Leap-frogging / risk allocation: unlike Costello v. McDonald, there was no contractual regime allocating risk solely to the signatory wife; the Bank’s mistake, not a conscious allocation, explained the absence of a contract with the husband.
- Public policy: negligent internal banking practice is not the sort of illegality that bars restitution.

3. Detailed Analysis

3.1 Precedents Cited and their Influence

Dublin Corporation v. Building & Allied Trade Union [1996] 1 IR 468 – Irish locus classicus on unjust enrichment; four-part test adopted by Dunne J.
Wilson v. Secretary of State for Trade & Industry [2004] 1 AC 816 – consumer credit non-compliance; distinguished because Mr Murray had no agreement.
Costello v. McDonald [2012] QB 244 & Pan Ocean Shipping (The Trident Beauty) [1994] 1 WLR 161 – “leap-frogging” prohibition; explained as context-dependent, not a rigid rule.
Haugesund Kommune v. Depfa ACS Bank [2012] QB 549 – restitution despite ultra vires contract; cited to show public-policy bars arise only where statute expressly or impliedly excludes recovery.
English Chancery decisions on “no knowing receipt”: Primlake & Stanbridge; distinguished on their facts.

3.2 The Court’s Legal Reasoning

a) Statutory Classification – “Housing loan” vs “Credit agreement”

“That which started as a housing loan does not thereafter become a credit agreement by reason of some defect in the creation of the security.” (Dunne J., para 83)

The definition in s.2 CCA 1995 refers to “an agreement for the provision of credit … on the security of a mortgage”. The majority stressed the forward-looking word “for”: the contract’s objective nature governs, not the eventual success of the security. To hold otherwise would compel lenders to comply simultaneously with two mutually exclusive statutory regimes whenever a mortgage might later prove defective—an outcome the Court labelled “nonsense”.

b) Unjust Enrichment Elements Applied

Enrichment: Joint-account payments for tax liabilities, house refurbishments, site purchases and pension top-ups directly benefitted Mr Murray.
At the Bank’s expense: Funds advanced under the mistaken belief of a valid joint mortgage.
Unjust factor: Mistake of fact—the Bank believed Mr Murray was a co-borrower.
No bar to restitution: Defences analysed below failed; public-policy considerations did not override the claim.

c) Defences Considered

Change of Position: Requires causative, extraordinary detriment. Mr Murray could point to none; enjoying loan-funded spending is not enough.
No Knowing Receipt: Reckless indifference equals knowledge; the husband’s deliberate failure to examine statements sufficed.
Leap-frogging / Contractual Risk Allocation: Because the Bank never intended to contract with only one spouse, contractual allocation doctrine did not apply.
Public Policy / Illegality: Although the Bank acted negligently (the branch manager witnessed a signature he did not see), there was no statutory prohibition or serious moral turpitude warranting a bar.

3.3 Likely Impact of the Decision

Narrowing of Part III CCA 1995: Borrowers cannot invoke consumer-credit technicalities where the original bargain was a mortgage transaction, even if the charge is later void (e.g., for lack of spousal consent under the Family Home Protection Act 1976).
Increased Restitution Exposure for Non-signatory Spouses: Banks may pursue unjust-enrichment claims where forgery or fraud induces the advance and the recipient spouse benefits.
Operational Standards for Lenders: Although negligence did not defeat recovery, the dicta underline that branch procedures must ensure physical attendance or robust ID verification to avoid repeats.
Clarification of “Leap-frogging” Rule: The Court adopts the nuanced academic view that the rule is not absolute; it depends on the parties’ true contractual risk allocation.

4. Complex Concepts Simplified

4.1 Housing Loan vs Credit Agreement

Think of the CCA 1995 as having two lanes:

Lane A – Housing loans: mortgages for home purchase, improvement, or equity-release; primarily governed by Part IX (valuation reports, insurance, APR rules).
Lane B – Credit agreements: unsecured or other consumer credit; subject to Part III (mandatory written form, 10-day cooling-off).

The Court says you choose your lane when the agreement is made. If you enter Lane A, you stay there—even if your “vehicle” (the security) later breaks down.

4.2 Unjust Enrichment Basics

A four-question test (from Dublin Corporation v. BATU):

Did the defendant gain a benefit?
Was that at the plaintiff’s expense?
Is the enrichment “unjust” (mistake, duress, failure of consideration, etc.)?
Is there any reason (defence, statute, policy) to deny restitution?

4.3 Change of Position Defence

The defendant must show (i) a causal link between receipt of the money and (ii) a detrimental alteration in his situation making repayment inequitable (e.g., irrevocable spending he would never have undertaken). Ordinary consumption or voluntary ignorance will not do.

4.4 “Leap-frogging”

A shorthand for barring claims that would bypass (“leap over”) the claimant’s existing contract with an intermediate party. It applies only where enforcing restitution would contradict the risk allocation the parties actually agreed.

5. Conclusion / Key Takeaways

Substance over security: A loan negotiated as a mortgage loan stays a mortgage loan, even if the security collapses.
Statutory shields are contract-specific: Non-signatory spouses cannot rely on CCA 1995 formalities to block recovery.
Restitution is robust: Where a bank advances money under a mistake and the defendant knowingly benefits, courts will compel repayment despite bank negligence.
Defence thresholds are high: Change of position, no-knowledge, or policy arguments must demonstrate real injustice, not mere inconvenience.
Operational lesson for lenders: Verify signatures in person; negligence may not forfeit legal rights, but it does invite costly litigation.

By firmly reconciling consumer-credit regulation with restitutionary principles, Bank of Ireland Mortgage Bank v. Murray stands as a significant authority on the intersection of family-home law, statutory consumer protection, and the ever-expanding law of unjust enrichment.