Bank of Ireland Mortgage Bank v Raymond & Anor (Approved)

Factual and Procedural Background

This case arises from an appeal to the High Court against an order for possession granted by the Circuit Court pursuant to section 62(7) of the Registration of Title Act 1964. The Plaintiff, a mortgage bank, sought possession of a family home owned by the Defendants, a separated married couple. The Plaintiff's application is based on two loan agreements secured by a legal charge over the family home: the first loan, which the Defendants accept is payable, and a second loan, the enforceability of which the second Defendant contests on grounds of duress and undue influence.

The Defendants entered into the first loan agreement in 2005 for €200,000 and the second loan agreement in 2006 for €800,000. The second loan was intended to fund the purchase of a development site, which lacked planning permission, and was initially sought to be secured on that site, but was instead secured by an equity release on the family home. The second Defendant asserts she signed the second loan agreement under duress after aggressive conduct by the first Defendant, and that she did not benefit from the loan. The Plaintiff disputes these claims and submitted a document purportedly signed by the second Defendant, which she denies authenticity of.

The Circuit Court granted the order for possession based solely on the first loan, placing a two-year stay on possession and adjourning costs. The High Court appeal concerns whether possession can be granted based on the first loan alone despite the dispute over the second loan, and whether the second loan's enforceability requires a plenary hearing.

Legal Issues Presented

1. Whether an order for possession can be granted on a summary basis relying solely on the first loan agreement, notwithstanding the dispute over the second loan agreement.
2. Whether the bank's entitlement to rely on the second loan agreement can be determined without a plenary hearing given allegations of undue influence and duress.
3. The applicability and effect of section 7 of the Family Home Protection Act 1976 in exercising the court's discretion on possession proceedings.

Arguments of the Parties

Plaintiff's Arguments

• The principal sum under the first loan agreement is due and undisputed, entitling the Plaintiff to possession.
• The dispute over the second loan agreement is irrelevant to the application for possession, which is a summary proceeding focused on whether the principal money secured by the charge is due.
• The Plaintiff has not waived reliance on the second loan but submits that possession can be granted on the first loan alone without converting the possession proceedings into a debt determination.
• The Plaintiff referred to case law supporting the proposition that possession can be ordered even if part of the secured debt is disputed.

Defendant's Arguments

• The second Defendant challenges the enforceability of the second loan agreement on grounds of duress and undue influence, asserting she was coerced into signing without benefit or independent legal advice.
• The second Defendant contends that the Plaintiff's entitlement to rely on the second loan cannot be resolved on affidavit evidence alone and requires a plenary hearing with oral evidence and cross-examination.
• The second Defendant suggests that the dispute over the second loan's enforceability is material and should prevent summary possession based solely on the first loan.
• The second Defendant also raises the relevance of section 7 of the Family Home Protection Act 1976 regarding the court's discretion to adjourn possession proceedings to allow payment of arrears.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by considering whether the dispute over the second loan agreement could be resolved on affidavit evidence in summary possession proceedings. Applying the test from the Supreme Court in Bank of Ireland Mortgage Bank v. Cody, the Court found that the second Defendant had presented sufficient evidence to establish a prima facie case of undue influence and duress, including allegations of abusive conduct by the first Defendant and lack of independent legal advice. The Court noted factual disputes, such as the authenticity of a document purportedly signed by the second Defendant, which required oral evidence and cross-examination, thus necessitating a plenary hearing for the second loan's enforceability.

However, the Court distinguished the second loan dispute from the entitlement to possession based on the first loan. It held that under section 62(7) of the Registration of Title Act 1964, possession may be granted if the principal money secured by the charge has become due, regardless of disputes over other secured loans. The Court relied on established authorities confirming that possession can be granted on undisputed parts of a secured debt. Since the first loan principal was undisputed and due, possession could be granted on that basis alone.

The Court further considered the discretion under section 7 of the Family Home Protection Act 1976 to adjourn possession proceedings to allow payment of arrears. It found no evidence that the second Defendant had the financial capacity to pay arrears under the first loan, thus no basis existed to exercise discretion in her favor. The Court did not need to resolve whether the section applies when both spouses are parties to the charge.

Finally, the Court emphasized that no findings were made regarding the Plaintiff's entitlement to rely on the second loan agreement for purposes other than possession, leaving such issues to be resolved in separate proceedings if necessary.

Holding and Implications

The Court GRANTED an order for possession pursuant to section 62(7) of the Registration of Title Act 1964 based solely on the first loan agreement, as the principal sum under that loan was due and undisputed. A stay of six months was imposed to allow the second Defendant time to arrange alternative accommodation.

The Court held that the Plaintiff's entitlement to rely on the second loan agreement against the second Defendant could not be determined on summary application and requires a plenary hearing due to credible allegations of undue influence and duress. However, this dispute does not affect the Plaintiff's right to possession based on the first loan.

The decision directly affects the parties by confirming the Plaintiff's right to possession on the first loan alone without resolving the second loan's enforceability in these proceedings. No new precedent was established beyond applying existing principles on possession and undue influence in the context of multiple secured loans.