The Court of Appeal has dismissed an appeal by Desmond and Mary Grogan over a Dublin mortgage loan and ruled that AIB Mortgage Bank’s claim for a further €103,716.21 in interest should not have been sent to a full plenary hearing.
The decision leaves the bank successful on a total claim of €563,510.82, comprising €459,794.61 in outstanding capital and €103,716.21 in interest.
The Grogans borrowed €1.1 million in 2004 under a 20-year mortgage secured on a residential property in Dublin. The loan initially carried a tracker rate comprising the European Central Bank’s main refinancing operations rate plus a 0.95% margin. Repayments stopped after June 2014.
The High Court had granted summary judgment for the remaining capital but allowed the borrowers to contest the interest element at a plenary hearing. Their argument was that the ECB’s Main Refinancing Operations Minimum Bid Rate referred to in the loan documentation ceased to exist in October 2008, meaning the bank could not lawfully charge interest thereafter.
Ms Justice Caroline Faherty, with Ms Justice Pilkington and Mr Justice Meenan agreeing, rejected that argument. The court relied on earlier Court of Appeal authority holding that the ECB’s main refinancing rate did not disappear when the ECB changed from a variable-rate tender procedure to a fixed-rate procedure during the financial crisis. The Grogans had produced no expert evidence capable of establishing a genuine defence on that issue.
The court also upheld the High Court’s judgment for the capital sum. The borrowers did not dispute drawing down the loan, making no repayments after June 2014 or the calculation of the remaining principal. Alleged overcharging on other loan accounts did not provide a defence to repayment of this loan’s capital.
A separate attempt to have the proceedings dismissed for delay also failed because the borrowers had given the bank no advance notice of that application, depriving it of an opportunity to respond with evidence.
The appeal was dismissed and AIB Mortgage Bank’s cross-appeal allowed. The court provisionally proposed awarding the bank its costs unless a different order is sought within 21 days.