Bank entitled to possession pursuant to “life long loan”

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27 February 2024

A recent Judgement of Mr Justice Nolan found that Bank of Ireland Mortgage Bank (the Bank) is entitled to possession of the home of a Co Sligo woman who borrowed €60,000 against the property shortly before her death in July 2008.

The key facts

In December 2006, Brigid Cunningham entered into a life loan facility with the Bank, on terms that the life loan would be secured by a first legal mortgage or charge over her property which consisted of a rural detached cottage and six acres of farmland. Mrs Cunningham died in July 2008.

In 2011 the Bank commenced sporadic correspondence with Mrs Cunningham’s estate, calling on the estate to make a full repayment on the loan. In 2019, the Bank commenced proceedings against Mrs Cunningham’s estate seeking possession of the property.

The estate opposed the possession order claiming the Bank had waited too long to bring an action in respect of the property and that the Bank’s action should be dismissed as it was statute barred under the Civil Liability Act 1961. In addition, it was claimed that the interest charged on the loan was also statute barred.

The Bank rejected these claims and argued that under the terms of the life loan no repayments were expected during Mrs Cunningham’s lifetime, and that it only became due and payable after her death therefore the claim was within time.

Decision

Mr. Justice Nolan noted that the main issue in this case was a potential conflict between the provisions of Section 9 of the Civil Liability Act, 1961 and Section 13 of the Statute of Limitations Act, 1957. If the former applies, then a two-year limitation period is applicable and the case is statute barred, while if it is the latter, the appropriate limitation period is twelve years, in which case the case is not statute barred.

The judge noted that the 1961 Act provides at section 8 that a cause of action shall survive the death of a person and section 9 provides that any proceedings in respect of any such cause of action must be commenced within two years of the date of death. The court observed that the central issue was whether the cause of action was subsisting at the time of the deceased’s death.

The court reviewed previous cases W.F. Shap (Ireland) DAC v. Fingleton [2020] IEHC 50 and W.F. Shap (Ireland) DAC v. Duane (unreported 5 February 2020), quoting Simmons J in the former case:

The essence of these financial products is that the event which triggers the entitlement to serve a demand for the repayment of the principal monies will normally be the death of the mortgagor. An entitlement which is contingent on the death of the mortgagor is not, by definition, one which can be said to be ‘subsisting’ as of their date of death, or one which ‘survives’ their death. Rather, the entitlement only arises after the mortgagor’s death. Put shortly, any proceedings which were instituted prior to death would be premature.”

The court found that the cause of action did not subsist at the date of death and that therefore the 12-year limitation period provided for by section 13(2) of the Statute of Limitations Act 1957 was relevant. A key issue that impacted the decision of the court was the fact that the proceedings were seeking an order for possession, rather than attempting to reclaim a debt.

However, Justice Nolan did find that there was an arguable case that the statute defence may be applicable in respect of the interest claimed due to the significant increase since Mrs. Cunningham’s death, or shortly thereafter, to the present day. Accordingly, the High Court sent that matter to plenary hearing.

If you would like an assessment of a claim, you can use the online form available here without obligation or alternatively you can use the automatic claim calculator.

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