The Court of Appeal has rejected three appeals by borrowers who argued that loans used to buy sites and build homes were not “housing loans” under the Consumer Credit Act 1995 because the houses did not exist when the loan agreements were made.
The appeals were brought by Donal Hurley, Shane and Barbara Mooney, and Simon Kelleher against Pepper Finance Corporation (Ireland) DAC. The court upheld the High Court’s decision to strike out their proceedings as disclosing no reasonable cause of action and being bound to fail.
The borrowers sought declarations that their loans and related mortgages were unenforceable. They relied on section 38 of the 1995 Act, which prevents enforcement of a credit agreement that fails to meet certain requirements. Their agreements did not include a written statement about a consumer’s right to withdraw within ten days. That requirement, however, applied to credit agreements other than housing loans.
The loans, made between 2000 and 2003, funded both site purchases and construction. In each case, the house was not complete when the loan agreement was made. The borrowers argued that a loan could not be a housing loan unless a house already existed. Pepper argued that the loans qualified because they enabled the borrowers to provide a house through construction.
In a judgment delivered on 18 April 2024, Ms Justice Butler said the earlier statutory definition did not require a house to exist when the loan agreement was made. In that context, “provide” had a broader meaning than “purchase” and included building a house. The court said the later 2004 amendment, which expressly covered loans to construct homes, did not establish that construction loans were excluded under the earlier wording.
The Court of Appeal also considered whether the legal issue could properly be decided on a strike-out motion rather than at trial. It said the jurisdiction should be exercised cautiously, but found the issue was a sufficiently straightforward question of statutory interpretation. Pepper had accepted the borrowers’ factual account, discovery had been completed, and the borrowers had not identified further evidence that could change their case. The court said the respondent bore the burden of showing the proceedings were bound to fail.
The court concluded that the loans were housing loans, so the relevant Part III requirements did not apply. The appeals were rejected, leaving the High Court strike-out decisions in place. The court proposed that Pepper receive costs, with separate paperwork costs for each appeal and one set of written-submission and hearing costs to be taxed jointly and severally against the appellants. The appellants were given 14 days to submit written arguments for a different costs order; Pepper would then have 14 days to respond. The judgment does not state the final costs order.