Bank entitled to repossess family home used as security on loan, appeal court rules

Bank entitled to repossess family home used as security on loan, appeal court rules

A couple have lost their appeals against a decision that Irish Bank Resolution Corporation is entitled to an order for possession of their family home arising from failure to repay a loan advanced in the 1990s.

IBRC sought possession of the home of Patrick and Patricia Raftery at Cloonbrackna Court, Roscommon, over their failure to repay €246,000 arising from a £69,000 loan taken out to buy an investment property. Most of the sum claimed is interest.

The case arises from a bridging loan advanced in 1991 by INBS, subsequently nationalised with Anglo Irish Bank into IBRC.

IBRC said the loan was advanced for a three-month term at a variable interest rate of 16% to go towards the purchase of a property known as 'The Hob' in Charlestown, Co Mayo, incorporating a coffee shop, post office and pub.

In an Indenture of Mortgage agreement entered into between the parties in November 1992, IRBC claimed the couple agreed to repay the IR£69,000 (€87,600) loan and to put up the family home as security.

Arising from alleged failure to repay the loan, INBS took possession of the Co Mayo premises in 1996 and sold it for IR£72,500.

IBRC later took proceedings over an amount allegedly outstanding on the original loan, plus interest.

When the case was before the High Court in 2012, IBRC claimed the couple owed more than €246,000 and sought an order for possession of the Roscommon house.

In separate defences, the couple denied failing to repay the loan as claimed and argued loan agreements relied upon by IBRC were not valid and breached the 1976 Family Home Protection Act. They also argued the bank sold the Mayo premises and its publican's licence for much less than its market value as it was purchased in 1991 for a total IR£86,000.

After the High Court rejected their case, they appealed.

In a unanimous judgment today, a three-judge Court of Appeal dismissed their appeals on all grounds.

Giving the judgment, Mr Justice Michael Peart noted this appeal was heard on foot of the evidence before the High Court as applications to admit new evidence had been rejected.

On the evidence before the High Court, it was entitled to reach the conclusions it had, including the relevant provisions of the Family Home Protection Act had been complied with, he found.

There was evidence the loan application form was signed by both Mr and Mrs Raftery and that form stated they were the joint owners of the family home property. There was also evidence the loan offer was accepted by both of them.

While Mrs Raftery had argued she had no independent legal advice, it was not disputed a solicitor acted as solicitor for both of them and gave the usual undertaking to the bank he would perfect the title and ensure its security was put in place. The appeal court could not interfere with the High Court's finding of fact Mrs Raftery was a "sensible, rational person" who in all probability understood very well what she was doing and what she was signing.

The trial judge was also satisfied from the evidence there was nothing "untoward" in the transactions.

The High Court had copies of the mortgage, dated November 12th 1992 and executed by both, and a deed of transfer of the same date transferring the family home premises into their joint names, also executed by both.

Mr Justice Peart said, on the 1992 date the mortgage was executed, Mr Raftery was the sole "registered" owner of the family home property. The mortgage document was sufficient to have the mortgage registered on the property folio against the interest of Mr Raftery as the then sole registered owner.

When the transfer into both names was registered in December 1995, the mortgage burden was already registered on the folio and Mrs Raftery's joint ownership was then subject to that burden, he said.

The bank, he noted, did not rely on any consent to the mortgage by Mrs Rafterty but rather on the fact the family home was in the joint names of the borrowers as stated by both in the loan application form.

Final orders will be made on a later date.

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