Permenant TSB plc formerly Irish Life and Permenant plc v Davis & anor

Factual and Procedural Background

This case concerns an appeal against an order from the Circuit Court granting possession of a family home located at 18 The Avenue, Burkeen, Wicklow Town, Co. Wicklow (the property) to the plaintiff, a financial institution formerly known under a different name. The defendants, who were approved for a mortgage loan of €400,000 in 2007 with monthly repayments over a thirty-five year term, defaulted on repayments beginning August 2012. The plaintiff sought possession due to arrears exceeding €80,000 as of April 2014. The defendants executed a mortgage over the property, which included terms allowing the plaintiff to demand full repayment upon default of two monthly payments.

Prior to possession proceedings, the plaintiff engaged with the defendants under the Code of Conduct on Mortgage Arrears (CCMA), but classified them as non-cooperating after failure to provide requested financial information. The defendants represented themselves in earlier proceedings and opposed the possession order on several grounds, including challenge to the transfer of the loan and alleged estoppel based on prior communications.

The County Registrar initially granted possession with a six-month stay, followed by a Circuit Court order confirming possession with a nine-month stay. The defendants sought to set aside these orders unsuccessfully and appealed the Circuit Court order. The appeal also involved consideration of additional affidavits filed after the Circuit Court hearing, which the court found inadmissible except for certain legal submissions. The court was required to consider statutory obligations under consumer protection directives and relevant mortgage law.

Legal Issues Presented

1. Whether the plaintiff was entitled to an order for possession of the property given the defendants' mortgage default and compliance with statutory procedures.
2. Whether the defendants could validly challenge the transfer and securitisation of the mortgage loan as altering their contractual rights.
3. Whether the terms of the mortgage loan and related documents contained unfair terms under Council Directive 93/13/EEC and the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995.
4. Whether the Circuit Court and this court had an obligation to assess the fairness of the mortgage contract terms on their own motion.
5. Whether the granting of possession would be disproportionate or in breach of the defendants' rights under the Charter of Fundamental Rights of the European Union, particularly regarding respect for private and family life.
6. Whether additional evidence filed on appeal should be admitted and considered in relation to the appeal.

Arguments of the Parties

Appellant's (Defendants') Arguments

• The mortgage obligations were not transferable to the plaintiff due to the loan's securitisation, allegedly altering their contractual rights.
• The plaintiff was estopped from seeking possession based on a prior letter assuring no repossession proceedings would be initiated.
• The defendants challenged the admissibility and sufficiency of the plaintiff’s affidavits and procedural compliance.
• The defendants contended the mortgage terms were unfair under EU consumer protection law and that the courts failed to assess these terms appropriately.
• The defendants argued that possession would be disproportionate due to the impact on their health and wellbeing.
• New affidavits filed post-trial raised issues including alleged failure to apply tax relief, increased insurance premiums, and personal circumstances affecting liability.

Appellee's (Plaintiff's) Arguments

• The plaintiff maintained that the mortgage loan and charge were valid and enforceable, including after the change of company name and securitisation.
• The plaintiff asserted compliance with the CCMA and that it had made reasonable efforts to engage with the defendants.
• The plaintiff denied any estoppel arising from prior correspondence, emphasizing that possession proceedings commenced only after CCMA processes concluded.
• The plaintiff argued that the mortgage terms were standard, clear, and did not constitute unfair terms under the Directive or Regulations.
• The plaintiff contended the new evidence was inadmissible on appeal and did not raise valid defences.
• The plaintiff submitted that possession was justified and proportionate given the defendants’ default and efforts made to find alternatives.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Wellstead v Judge White & Ors [2011] IEHC 438	Validity of mortgage loan securitisation and its effect on borrower rights	Confirmed that securitisation does not alter the borrower's obligations or rights against the mortgagee; plaintiff's securitisation did not invalidate the claim.
Kearney v KBC Bank Ireland Plc. and Reynolds [2014] IEHC 260	Consideration of mortgage loan terms and securitisation	Supported the principle that securitisation is common and does not affect enforcement rights.
Harrold v Nua Mortgages Limited [2015] IEHC 15	Mortgage enforcement and borrower rights	Referenced in support of enforcement procedures and borrower protections.
Danske Bank v Scanlon [2016] IEHC 118	Mortgage securitisation and contractual obligations	Reaffirmed that securitisation does not affect borrower obligations under mortgage contracts.
Kearney v Bank of Scotland and Horkan [2015] IECA 32	Admissibility and sufficiency of affidavit evidence in mortgage proceedings	Applied to admit affidavits despite alleged irregularities in form.
Mohamed Aziz v. Caixa d'Estalvis de Catalunya (Case 415/11)	Court obligation to assess unfair contract terms under Directive 93/13/EEC	Confirmed that courts must assess unfair terms even if not raised by parties; court applied this obligation on appeal.
Allied Irish Banks PLC v. Counihan and Counihan [2016] IEHC 752	Application of consumer protection laws to mortgage contracts	Supported court’s role in examining mortgage terms under unfair terms legislation.
EBS Limited v. Kenehan and Ryan [2017] IEHC 604	Unfair terms in consumer contracts and mortgage enforcement	Referenced regarding assessment of fairness in mortgage contracts.
Ulster Bank Ireland Limited v Costelloe [2018] IEHC 289	Consumer protection and unfair contract terms	Supported principles governing court’s assessment of mortgage contract fairness.
Permanent TSB PLC v Fox [2018] IEHC 292	Unfair terms in mortgage contracts	Referenced in relation to court’s assessment obligations under Directive 93/13/EEC.
AIB Mortgage Bank v Cosgrove [2017] IEHC 803	Definition of main subject matter of contract and mortgage terms	Confirmed that repayment terms and security provisions are main subject matter not subject to unfairness assessment.
Allied Irish Banks plc v O'Donoghue [2018] IEHC 599	Interpretation of mortgage contract terms	Confirmed clarity and understanding of mortgage terms by parties.
Start Mortgages Limited and others v Gun and others [2011] IEHC 275	Requirements for possession order under mortgage law	Set out conditions for granting possession including default, notice, and compliance with CCMA.
Secured Property Loans Limited v Flood [2011] IEHC 189	Mortgage possession orders and procedural fairness	Referenced for procedural requirements in possession proceedings.
Bank of Ireland v Smyth [1993] 2 I.R. 102	Discretion of court to refuse possession on sympathetic grounds	Clarified that court may not refuse possession solely on sympathetic grounds if proofs are established.

Court's Reasoning and Analysis

The court conducted a thorough examination of the mortgage loan documents, the history of the defendants' engagement with the plaintiff, and compliance with the Code of Conduct on Mortgage Arrears (CCMA). It found that the plaintiff had fulfilled its obligations to engage with the defendants and that the defendants had defaulted on repayments for an extended period. The court rejected the defendants' argument that the mortgage obligations were not transferable, noting that the plaintiff had merely changed its name and that securitisation did not affect the enforceability of the mortgage.

Regarding the alleged estoppel based on prior correspondence, the court concluded that the letter relied upon did not constitute a legally binding undertaking to forgo possession proceedings. The court also assessed the mortgage terms under the Council Directive 93/13/EEC and related Regulations, determining that the core terms—repayment obligations secured by the family home and variable interest rate provisions—were clearly stated, standard in nature, and did not constitute unfair terms. The court emphasized that the main subject matter of the contract is excluded from unfairness assessment and that the variable interest rate terms were not unfair given the contractual safeguards and regulatory context.

The court considered the defendants' personal circumstances and the potential impact of possession on their health and wellbeing. It acknowledged the serious difficulties faced by the defendants but held that the court's role was to assess the contractual rights and remedies rather than to refuse possession solely on sympathetic grounds. The court recognized its discretion under s.97 of the Land and Conveyancing Law Reform Act, 2009 to impose conditions or stays but found no basis to deny possession given the evidence.

The court declined to admit new evidence filed on appeal due to lack of good reason for its late submission and found that the evidence did not raise a credible defence. The court concluded that the plaintiff was entitled to possession, but granted a further stay of four months to allow the defendants reasonable time to secure alternative accommodation.

Holding and Implications

The court UPHELD the order granting possession of the property to the plaintiff. The possession order was confirmed, subject to a further stay of four months to enable the defendants to find alternative accommodation.

The decision directly affects the parties by permitting the plaintiff to enforce its mortgage security through possession due to the defendants' default. No new legal precedent was established; rather, the court applied established principles regarding mortgage enforcement, consumer protection under EU law, and the court’s discretion in possession matters. The ruling underscores the balance courts maintain between protecting contractual rights of lenders and considering the personal circumstances of borrowers within statutory frameworks.