The High Court has rejected a married couple’s legal challenge to Pepper Finance’s right to enforce its security over three Dublin buy-to-let properties after they defaulted on a €1.127 million loan. The court directed the parties to try to agree outstanding matters, including costs, and provisionally listed the case for mention one week later if needed.
In a judgment delivered on 21 July 2023, Mr Justice Twomey found that the borrowers had not established that the loan variation terms were unfair or that Pepper lacked the contractual authority to enforce the mortgage. He also rejected their counterclaims for damages. The judgment did not itself make a final costs order: the judge gave a provisional view that the borrowers should pay Pepper’s costs, subject to further submissions.
The loan was taken out in 2007 from IIB Homeloans to finance apartments and houses in Swords, Malahide and Clarehall. The mortgage secured the properties and allowed the lender, including its successors, to appoint a receiver and sell them following default. Pepper acquired the loan and mortgage in 2018. After the borrowers could not meet repayments of about €10,000 a month following a five-year variation arrangement, Pepper demanded repayment of about €1.386 million in September 2021 and appointed a receiver.
The borrowers argued that one of them was a consumer, bringing the 2016 variation within the Unfair Terms Regulations. The judge said they had not discharged their burden of proving consumer status. The purpose of the loan, he found, was to fund three properties for rental and investment. He also held that the alleged “concealed pitfalls” were set out in the variation documents, which warned of higher repayments and a possible sale if those payments could not be met.
The court rejected arguments that Pepper could not rely on the mortgage because it was not a lender, or that it lacked authority to market the properties or appoint an agent. The mortgage defined the lender to include successors, and Pepper was IIB’s successor. The receiver had not sold the properties, the judge noted, but Pepper could market them under its mortgage rights and appoint an agent.
The couple said they had paid about €950,000 from rental income towards the loan. The judgment recorded that the properties were advertised for a combined €1.16 million while about €1.4 million remained due, potentially leaving a shortfall of roughly €250,000. Those figures were estimates in the judgment, not a final sale outcome. The court found the damages counterclaims unsupported by evidence of loss.
The judge ordered the parties to engage on all outstanding matters, including costs, and submit any agreed draft order to the Registrar. If further court intervention is required, the case was provisionally listed for mention one week after judgment at 10.45am.