Governor and Company of The Bank of Ireland v McMahon & Anor

Factual and Procedural Background

This case concerns a claim by the Plaintiff, a banking institution, seeking repayment of a mortgage loan advanced to the Defendants. The loan was originally offered by a building society in April 2006 for €960,000 to purchase a property located at 1 Park Lodge, Castleknock, Dublin 15. The full amount was drawn down shortly thereafter. By 2011, repayments had fallen into arrears, escalating to approximately €120,000 by mid-2013. The Plaintiff issued a summary summons in June 2013 for the outstanding amount of around €970,000. Due to difficulties in serving the summons, substituted service was ordered in January 2014, and the Defendants entered an appearance as litigants in person.

Following a statutory transfer order in 2014, the Plaintiff was formally substituted as the claimant. The Defendants brought multiple motions seeking to set aside orders and for discovery, all of which were dismissed. The case proceeded to a hearing in July 2017, over four years after the summons was issued. The Defendants filed numerous affidavits raising numerous issues, which the court identified as largely unfounded or irrelevant.

Legal Issues Presented

1. Whether the Plaintiff is entitled to enforce repayment of the mortgage loan despite the Defendants’ allegations concerning securitisation of the loan.
2. Whether the Defendants’ claim that terms of the loan contract are unfair under the European Council Directive on Unfair Terms in Consumer Contracts 93/13/EEC is sustainable.
3. Whether the Defendants have a bona fide defence to the Plaintiff’s claim for repayment.
4. Whether procedural aspects such as summary judgment and concurrent possession proceedings violate the Defendants’ rights to a fair trial or constitutional protections.
5. Whether the Defendants’ allegations of breaches related to receivership and registration of title bear on the enforceability of the loan repayment claim.
6. Whether the European Communities (Cancellation of Contracts Negotiated Away from Business Premises) Regulations, 1989 apply to the mortgage contract.
7. Whether the Plaintiff owed a fiduciary duty to the Defendants in relation to the loan transaction.

Arguments of the Parties

Defendants' Arguments

• The Defendants alleged that the mortgage loan had been securitised and sold to a third-party entity, which they argued deprived the Plaintiff of title and the right to enforce the loan.
• They contended they never consented to any securitisation, rendering the loan unenforceable.
• The Defendants claimed the loan contract contained unfair terms under the European Council Directive on Unfair Terms in Consumer Contracts 93/13/EEC.
• They argued that concurrent possession proceedings in the Circuit Court and the current claim in the High Court were unfair and unconstitutional.
• They asserted that the summary judgment procedure violated their right to a fair trial and amounted to a “rush to judgment.”
• The Defendants alleged unlawful conduct and breaches by the Plaintiff related to the appointment and activities of a receiver over their property and breaches of the Registration of Title Act, 1964.
• They claimed the European Communities (Cancellation of Contracts Negotiated Away from Business Premises) Regulations, 1989 applied, arguing they were not provided with a cancellation notice and had served one, thus nullifying the debt.
• The Defendants argued the Plaintiff owed them a fiduciary duty to ensure the viability of their financial venture and accused the Plaintiff of reckless lending and financial mismanagement.
• They challenged the authenticity and evidentiary value of the Plaintiff’s affidavits and documents, demanding further proof and discovery.

Plaintiff's Arguments

• The Plaintiff asserted the loan was valid and repayable, with no bona fide defence presented by the Defendants.
• It was contended that the Defendants had expressly consented to any securitisation or transfer of the loan under the terms of the loan agreement.
• The Plaintiff maintained that securitisation, even if it occurred, did not affect its right to enforce the loan.
• The Plaintiff argued the Defendants failed to identify any specific unfair contractual term and relied on established case law rejecting such claims.
• The Plaintiff submitted that concurrent possession proceedings and this claim were procedurally appropriate and lawful.
• The Plaintiff denied any unlawful conduct related to receivership or registration of title and noted these issues were irrelevant to the claim.
• The Plaintiff argued that the European Communities (Cancellation of Contracts Negotiated Away from Business Premises) Regulations, 1989 did not apply to mortgage contracts entered into at the lender’s premises.
• It was stated that no fiduciary duty existed between the parties and that reckless lending claims are not recognised causes of action.
• The Plaintiff highlighted the Defendants’ repeated attempts to obstruct proceedings through voluminous affidavits, discovery applications, and adjournments, which the court viewed as abusive.

Table of Precedents Cited

Court's Reasoning and Analysis

The court conducted a detailed review of the Defendants’ numerous claims and submissions. It found the core claim by the Plaintiff to be straightforward and undisputed: the loan was advanced and remains unpaid. The Defendants’ efforts to complicate the matter were characterized as attempts to delay and frustrate proceedings.

Regarding securitisation, the court noted the absence of evidence supporting the Defendants’ assertion that the loan had been sold to a third party. Even assuming securitisation occurred, the loan agreement expressly empowered the lender to securitise and transfer the loan, with the Defendants’ irrevocable consent. The court relied on established case law confirming securitisation does not affect the lender’s right to enforce the loan.

The Defendants’ allegations of unfair contract terms under the European Council Directive were dismissed due to the failure to identify any specific unfair term or explain its unfairness. The court referenced relevant European Court of Justice jurisprudence but found it inapplicable on the facts.

The court rejected claims of procedural unfairness, including the suggestion that concurrent possession proceedings and summary judgment violated the Defendants’ rights, noting the lengthy delay caused by the Defendants’ own conduct and the extensive opportunities afforded to them by the court.

Allegations concerning receivership conduct and registration of title were deemed irrelevant to the claim and thus not considered.

Regulatory provisions relating to cancellation of contracts negotiated away from business premises were found inapplicable, as the mortgage contract was not concluded under such circumstances.

The court rejected the assertion of any fiduciary duty owed by the Plaintiff to the Defendants, emphasizing the absence of legal basis for claims of reckless lending.

Finally, the court criticized the Defendants’ litigation tactics as abusive and an attempt to delay the inevitable judgment, describing their approach as a “trial by telephone directory.”

Holding and Implications

The court’s final ruling was IN FAVOUR OF THE PLAINTIFF, granting judgment for the amount claimed in the loan repayment action.

The decision results in the Defendants being held liable for repayment of the outstanding loan balance. No broader legal precedent was established, as the ruling affirms existing principles regarding loan enforceability, securitisation, and procedural fairness. The court’s judgment underscores the inadmissibility of unfounded and dilatory tactics in mortgage enforcement proceedings.