Legal action against Start has ‘major’ implications

A LEGAL challenge to the entitlement of Start Mortgages Ltd to issue mortgages here has major implications for Start’s €1 billion housing loans and for the legal position of other lenders, the Central Bank has told the Commercial Court.

Hundreds of actions by Start for repossession orders are also affected by the challenge brought by Robert Gunn, Mr Justice Peter Kelly noted yesterday when granting the Central Bank’s application to fast-track the challenge to Start’s entitlement to issue loans.

The judge noted Start has 242 actions for repossession before the Master of the High Court with another 71 cases sent to the High Court list, while Start chief executive David Ingram had also said 115 orders for possession have been granted in other cases and a further 89 possession orders have been executed.

Another borrower with Start has also taken an action similar to that of Mr Gunn, the judge said.

The Central Bank’s application was supported by lawyers for the state and for Start, while Ross Maguire, counsel for Mr Gunn, an unemployed construction worker, adopted a neutral position.

The judge directed the Gunn action will be heard in March next.

Mr Gunn, who is represented by the New Beginnings group of lawyers and business people, last month initiated his challenge aimed at stopping Start repossessing his home at Lyre, Lisselton, Co Kerry. He had in 2007 obtained a mortgage of €210,000 from Start, secured against his family home, but after losing his job in 2008, fell into arrears on mortgage repayments.

Start later brought proceedings seeking possession of Mr Gunn’s home with a view to selling it on. Mr Gunn, a separated father of one, claims he has nowhere else to go.

In his judicial review proceedings against the Central Bank and the state, with Start as a notice party, Mr Gunn claims Start was not legally authorised to make the loan to him because, he claims, it was not regulated by the state as required.

Mr Gunn claims only the Central Bank has the power to prescribe any entity as a “Credit Institution” and the purported delegation of that power to the consumer director of the Irish Financial Services Regulatory Authority is unconstitutional.

He claims the then-consumer director of IFSRA unlawfully and unconstitutionally prescribed Start as a “Credit Institution” within the state in 2004. He claims provisions of the 1942 Central Bank Act did not vest, delegate or transfer the power to prescribe a credit institution to the office of the consumer director.

Yesterday, Jim Breslin, for the Central Bank, said it is vigorously defending Mr Gunn’s case as the proceedings had implications not just for Start but all other institutions prescribed by the consumer director as a “credit institution”.

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