The Court of Appeal has upheld the dismissal of Michael and Kathleen Leahy’s claim against Bank of Scotland over the transfer of their loans to Pentire Property Finance in April 2015. The court found that the pleaded case against the bank was bound to fail, even if the facts alleged by the couple were established.
In a judgment dated 12 July 2021, Ms Justice Faherty affirmed the High Court’s order striking out the claim under Order 19, rule 28 of the Rules of the Superior Courts. She also affirmed the order striking out the Leahys’ separate motion seeking relief against the bank. The ruling concerns the claim against Bank of Scotland; the judgment says claims against Pentire, Pepper Finance Corporation (Ireland) and the receiver remain for trial.
The loans, advanced in 2004 and secured on commercial units, shell units and apartments in County Kilkenny, totalled €740,000. The Leahys argued that the bank was not entitled to transfer them to an unregulated entity, and that the transfer deprived them of protections under Central Bank codes. They also relied on the loan conditions and alleged that the bank had failed to tell Pentire they lived in apartments forming part of the secured property.
The court rejected those arguments as a basis for damages against the bank. It held that Condition 14.2 of the loan agreements allowed the lender to assign its rights and benefits, and that the bank was not legally barred from transferring the loans. The court also concluded that the 2015 credit-servicing legislation provided borrower protections when a loan owner used a regulated servicing firm. The loans had been transferred before that Act commenced, but the court relied on earlier decisions involving transfers made before commencement.
The Leahys’ account of discussions about a loan buyback and a repayment moratorium did not alter the result. The judgment records that no binding agreement had been reached on either. It also says no enforcement action occurred during the three months between the transfer and commencement of the 2015 Act; the receiver was appointed in February 2016.
The court said complaints about the later conduct of Pentire, Pepper and the receiver could be pursued against those defendants in the ongoing action. It did not decide those claims. The Leahys lost the appeal, and the bank was proposed to receive its costs, subject to either party notifying the Court of Appeal within 21 days if it sought a different costs order.