The High Court found that Stepstone Mortgage Funding Limited had not complied with the Central Bank’s mortgage arrears code in its possession case against Peter and Joan Fitzell. The court said the borrowers should have been given at least 20 business days to consider appealing the lender’s decision. It did not make a final order on possession, instead directing that it hear further submissions on the form of order.
Mrs Justice Laffoy delivered the judgment on 30 March 2012. Stepstone had brought proceedings seeking possession of the Fitzells’ home in County Kerry under a mortgage charge. The loan offer was for €100,000. The lender said arrears stood at €17,106.78 in November 2011.
The case concerned the lender’s letter of 29 November 2011. After reviewing the couple’s financial statement, Stepstone said it would not offer a repayment arrangement because they lacked sufficient disposable income. It said that, because possession proceedings had already begun, they were not entitled to the Mortgage Arrears Resolution Process or a right of appeal.
The Master of the High Court had declined to transfer the case for hearing on 6 December 2011 and directed the lender to correct what he considered a mistake about the borrowers’ appeal rights. Stepstone applied to set aside that decision and have the proceedings transferred to the Chancery Special Summons list. The borrowers did not appear at the hearing before Justice Laffoy.
The judge found the current code applied to existing arrears cases from 1 January 2011, including cases where legal proceedings had already started. She said an arrangement in place at the start of 2011 had broken down when the borrowers paid €300 rather than the agreed €600 that January. In those circumstances, the lender was required to review their case under the code’s arrears process. The court found they had not been given the required opportunity to consider an appeal against the lender’s decision.
Justice Laffoy said lenders seeking possession of a primary residence must demonstrate compliance with the code when the case comes before the court for hearing. On the evidence before her, Stepstone was not entitled to an order for possession because it had not complied. She noted that the Master’s function, if the case was ready for hearing, was to transfer it to the relevant court list, but that transfer would not have entitled the lender to possession on the evidence then before the court.
The judgment records a proposed next step, not a final possession order: the court said it would hear further submissions from Stepstone on the form of order, with the aim of limiting court time and legal costs.