The High Court has granted ACC Loan Management Limited summary judgment against Grace Cahalane for €236,121.17, excluding €21,445.51 in surcharge interest that the court found could form the basis of a bona fide defence. The judge said he would hear counsel about remitting that balance for a plenary hearing.
The bank’s claim arose from a €243,000 loan advanced in 2005 for 15 years. The agreement described the purpose as buying an investment property in Baltimore, County Cork, although the judgment records that Ms Cahalane already owned the property. The loan was secured by a mortgage over lands in County Cork; the judgment noted an issue about whether the mortgage adequately secured the bank’s interest because the title appeared to be registered in several folios.
The loan initially required interest-only payments for two years. The bank later extended that period, but the parties disputed whether a further extension had been agreed and whether Ms Cahalane had received the bank’s July 2011 letter enclosing an agreement for signature. Her last recorded payment was on 16 August 2011. The bank later called in the loan, demanding €257,566.68, and appointed a receiver in February 2013. The receiver’s appointment was being challenged in separate proceedings.
Ms Cahalane relied on three main grounds to oppose summary judgment. She argued that the bank had not complied with the Code of Conduct on Mortgage Arrears, that continuing discussions about an extension prevented the bank from suing, and that the surcharge of 6% above the standard loan rate was an unenforceable penalty.
The judge was not satisfied that the mortgage-arrears code applied. He found the evidence showed her primary residence was in the United Kingdom and that the Baltimore property had been rented. He also noted that the claim was not one for possession. On the negotiations argument, he found the bank’s correspondence showed worsening arrears and repeated warnings, and that there was no substantial evidence Ms Cahalane had acted to her detriment in reliance on the discussions.
The judge accepted the surcharge argument as a possible bona fide defence. Applying the summary judgment test in Aer Rianta v Ryanair, he concluded that the affidavits disclosed no credible defence to the rest of the claim. He entered judgment for the net amount of €236,121.17 and said he would hear counsel on whether the remaining surcharge claim should be remitted for a plenary hearing.