The High Court has dismissed a borrower’s challenge to the transfer of her loan and mortgage to Pentire Property Finance DAC, finding that her claim was bound to fail on the material before it. The court also ordered that the lis pendens registered against the lender and receiver be vacated.
The judgment, delivered by Ms Justice Costello on 25 September 2018, concerned a loan originally advanced by Bank of Scotland (Ireland) Ltd in 2006 and secured against a house in Straffan, Co Kildare. The borrower later lived in Surrey, England. Bank of Scotland plc transferred the loan and security to Pentire in 2015. After arrears accumulated, Pentire demanded repayment of €348,996.85 in October 2017 and appointed Tom Kavanagh as receiver. The receiver entered into a contract to sell the property at auction in April 2018.
The borrower argued that the 2014 sale arrangement between Bank of Scotland plc and CarVal Investors UK Ltd was unenforceable against her under section 26 of the UK Financial Services and Markets Act 2000. She said the subsequent novation to Pentire therefore did not validly transfer the loan, leaving Pentire without authority to appoint the receiver. She sought declarations and other relief, including damages.
The defendants applied to strike out the proceedings as disclosing no cause of action or as bound to fail, and sought to have the lis pendens vacated. The court noted that the loan and transfer documents were governed by Irish law. It found that, under the novation deed, Pentire replaced CarVal as a party to the purchase deed, and rejected the borrower’s argument that the deed also transferred rights from CarVal to Pentire.
The court said the borrower’s case depended on proving propositions of English law as facts through a suitably qualified expert. On the evidence before it, she had provided no credible basis for establishing that she was “the other party” to the purchase agreement for the purposes of section 26, or that novation could not avoid the provision’s effect. The court stressed that it was deciding a dismissal application, not resolving complex legal issues generally, but concluded this claim was one of the rare cases where it was appropriate to dismiss proceedings as bound to fail. It dismissed the claim under its inherent jurisdiction.
The lis pendens was also vacated. The court found that the borrower’s claims concerned enforcement of the loan and the receiver’s appointment, rather than a claim to an interest in land or a request to have the mortgage declared void. It held that the lis pendens should not have been registered and, in any event, there was no legal basis to keep it in place after the proceedings were determined.