The High Court dismissed Anthony and Miriam Freeman’s claim against Bank of Scotland plc, a receiver and a property company, rejecting their challenges to the receiver’s appointment and the handling of sales of their investment properties.
Mr Justice Brian J. McGovern delivered judgment on 29 May 2014 in proceedings arising from loans used to refinance six properties. The Freemans borrowed €1.406 million from Bank of Scotland (Ireland) Ltd in 2006, secured against the properties. After the lender’s 2010 cross-border merger with Bank of Scotland plc, the bank appointed a receiver over the properties in November 2011 following loan defaults.
The case had been narrowed before trial. In 2013, Mr Justice Gilligan struck out most of the Freemans’ claims, allowing issues concerning securitisation and alleged non-compliance with Central Bank codes to proceed. An amended pleading also raised whether an interest-calculation error contributed to the defaults. The bank withdrew its objection to a further argument under the Registration of Title Act 1964, and the court considered it.
The judgment found that five of the six loans had been securitised at some point. The court held that the Freemans had agreed to securitisation in their loan documents, that it did not change their repayment obligations, and that the bank held legal title to the charges when the receiver was appointed. By November 2013, the loans still in the securitisation pool had been released back to the bank. The court rejected the argument that securitisation or the merger prevented the bank from appointing a receiver under its contractual powers.
The judge also rejected the claims based on the Central Bank’s voluntary Code of Practice on the Transfer of Mortgages, finding no breach had been established. On the registration issue, he concluded that the transfer resulting from the merger took place by operation of law and that section 90 of the 1964 Act did not apply.
The bank accepted that interest had been incorrectly calculated on three loan accounts. It corrected the calculations and credited €20,735, including interest on the overcharge. The Freemans argued that without the overcharging they would not have fallen into arrears. The judge rejected that argument, citing evidence that they had received a surplus of more than €546,000 after refinancing and did not use it to reduce the principal or support the property business.
The court also found no cause of action against the receiver over the property sales. It preferred the receiver’s evidence about the sale process and found he had acted prudently in a falling market. The judgment dismissed the Freemans’ claim against all defendants.