The High Court has dismissed proceedings against Bank of Scotland plc over its 2015 transfer of two loans held by Michael and Kathleen Leahy, finding their claim against the bank had no reasonable cause of action.
In a judgment delivered on 5 April 2019, Mr Justice Garrett Simons granted the bank’s application under Order 19, rule 28. He also directed that the pleas against the bank in the second amended Statement of Claim be struck out. The application concerned the case against the first defendant only; the judge expressed no view on the claims against the other defendants.
The loans were made in 2004 by Bank of Scotland (Ireland) Ltd. One was for €600,000 and the other for €140,000. They related to commercial premises at Kilkenny Street, Castlecomer, comprising nine completed units, two shell units and two apartments. Bank of Scotland plc succeeded to the original lender’s interest following a merger in 2010.
The loans were transferred to Pentire Property Finance Ltd. on 20 April 2015. The plaintiffs argued that the transfer to an unregulated entity changed their contractual relationship and removed protections under Central Bank codes. They also alleged that an agreement in principle to buy the loans had been reached with a Certus employee in 2014, but confirmed that they were no longer pursuing that claim.
The bank applied to have the proceedings against it struck out as frivolous or vexatious, or as disclosing no reasonable cause of action. The court held that the loan conditions expressly allowed the bank to transfer its rights and obligations without the borrowers’ consent. It also found no statutory prohibition on transferring loans to an unregulated entity. The 2015 legislation, which came into force on 8 July 2015, required credit servicing to be carried out by an authorised firm or by an authorised credit holder; it did not retrospectively invalidate earlier transfers.
The judge further found that no steps to enforce the security were taken during the period between the loan transfer and the legislation’s commencement. A receiver was appointed over the property on 19 February 2016, after the legislation was in force. The plaintiffs had identified no actionable wrong or loss during the intervening period that could support their damages claim against the bank.
The order does not determine whether the plaintiffs’ allegations against Pentire, Pepper Finance Corporation (Ireland) Ltd. or the receiver are well founded.