The Supreme Court ruled that a lender’s failure to comply with the mortgage arrears code can prevent a possession order only when the breach involves the code’s moratorium on starting repossession proceedings. The lender must provide appropriate evidence that it complied with that requirement. The ruling came in two cases stated from the High Court, which was hearing appeals from the Circuit Court.
In the case involving Gemma and Kevin Dunne, the Court answered questions about the legal effect of the Code of Conduct on Mortgage Arrears. It held that breaches of provisions other than the moratorium do not, by themselves, affect a lender’s entitlement to possession. The Court did not decide whether the lender had breached the moratorium in the Dunnes’ case; it addressed the legal questions referred to it.
The Dunnes had not taken part in the proceedings. Irish Life and Permanent sought possession of their lands at Silverhill, Kilcoursey, County Offaly, after they fell behind on a loan secured against the property. The Circuit Court refused possession in 2012, but the Supreme Court judgment records that the High Court judge considered the full loan principal had become due automatically under the mortgage terms after two missed monthly repayments. The Dunnes’ case reached the Supreme Court through a case stated by the High Court.
In the separate case involving Dylan Dunphy, the Supreme Court held that the full principal on his mortgage loan had become due before 1 December 2009, when the relevant statutory possession provision was repealed. The loan terms made the total debt immediately payable after two months of missed repayments. The Court found that Mr Dunphy had been in arrears for more than two months before the repeal date and that no further demand was required. It therefore answered the relevant question in the affirmative: the lender’s right to apply for possession under the repealed provision had vested by that date.
The Court did not decide whether a possession right could be treated as vested from the date a mortgage was created, before any default. It also did not answer the separate question of whether the lender could rely on a contractual right to possession without the statutory provision, because its ruling on the accrued right made that unnecessary.
In both cases, the Court confirmed that the High Court had jurisdiction to state a case even though the Circuit Court appeals had been heard without oral evidence. The judgment was delivered by Justice Clarke on 15 May 2015.