The High Court has struck out a mortgage customer’s claim against Stepstone Mortgage Funding Limited, ruling that Irish law does not recognise a tort of reckless lending.
In a judgment delivered on 19 March 2014, Mr Justice Hogan said the proceedings were “completely unsustainable in law” because they depended on the existence of that tort. He made the order under the court’s inherent jurisdiction.
Thomas Healy had taken out a €120,000 mortgage with Stepstone in September 2007 for a property in Co. Westmeath. The judgment says he had fallen behind on repayments. Stepstone began separate proceedings over those arrears in 2013, but Hogan said they were not before him and he expressed no view on them.
In the case before him, Healy alleged gross negligence and misrepresentation, and claimed Stepstone had used reckless lending procedures and broken liquidity laws. He argued that the mortgage contract was flawed and sought damages and a declaration that liens or charges registered on the folio of his family home be removed.
Stepstone applied in January 2014 to have the proceedings struck out on the ground that they disclosed no reasonable cause of action. Hogan said he had already ruled for Stepstone and gave his reasons in the judgment.
The judge relied on earlier High Court decisions, including *ICS Building v Grant* and *McConnon v President of Ireland*, which had concluded that reckless lending was not a civil wrong in Irish law. He said courts could develop existing common law in some circumstances, but had no authority to invent entirely new categories of tort, a matter reserved to the Oireachtas.
Hogan also rejected the possibility that reckless lending could be treated as an established pre-1937 common law tort. He said there was no example of such a claim, or anything like it, being recognised before the Constitution came into force on 29 December 1937.
The order struck out the claim in these proceedings. The judgment does not determine the separate arrears case.