The High Court reinstated an order striking out ACC Bank plc’s proceedings seeking possession of two properties charged as security for loans, ruling that the bank had not established a legally effective demand for repayment before a statutory deadline.
Mr Justice Moriarty delivered judgment on 5 March 2013 in a special summons hearing. The Master had initially struck out the proceedings. Dunne J later set aside that order for want of jurisdiction, without deciding the ultimate outcome. After hearing the parties, Mr Justice Moriarty ordered the original strike-out reinstated and made no order for costs.
The dispute concerned whether the bank retained a right under section 62(7) of the Registration of Title Act 1964 to seek possession after that provision was repealed on 1 December 2009. The judgment followed Dunne J’s analysis in Start Mortgages Limited v Robert Gunn and Maura Dunne: a lender’s right to apply had to have been acquired by the repeal date. That required the secured principal to have become due, including following default and a demand for repayment.
The bank sought possession for sale of a derelict cottage in Folio 52112 of the Galway Register of Freeholders and a dwelling-house in a Dublin housing estate in Folio 169864F of the Dublin Register of Freeholders. The properties secured loans of €200,000 for renovation work and €490,000 to buy the house. The charges were registered in 2008 and 2006 respectively.
Repayment defaults began relatively early. The bank prepared letters of demand dated 9 November 2009, but sent them by ordinary post to 21 Riam Luachra, Ballybane, County Galway, rather than 22 Riam Luachra. The defendant said he had not received either letter. The bank’s barrister accepted that he could not dispute this. Later demands, including service of the special summons, came after 1 December 2009.
The bank argued that the letters were sufficient because they clearly expressed its intention to call in the loans, even though they had not reached the defendant. Mr Justice Moriarty rejected that argument, finding that a demand must be communicated to the person affected. Without that communication, the letters were only an internal record of intention and could not establish the required demand before the deadline.
The judge said the ruling did not extinguish the debt. He noted that the bank had not denied the defendant’s assertion that a relatively substantial payment was made at a late stage, and suggested that the parties might explore a revised payment arrangement. He did not rule on those matters.