A couple have lost their Supreme Court appeal over a fund's entitlement to sell their home in Galway city and lands owned by them in Clarinbridge, Co Galway.
Frank and Lorna Burke had opposed possession orders granted for the properties in 2010 after they failed to pay a €1.2 million demand issued by Anglo Irish Bank in 2008 arising from various loans made to them from 2003.
The loans, later acquired by Launceston Property Finance, were secured on their home at Averard, Taylor’s Hill, Galway and 13 acres at Clarinbridge.
Giving the three-judge court’s judgment, Mr Justice William McKechnie said that while the court was “not unsympathetic” to the “plight” of the Burkes, their appeal must be dismissed.
When granting the possession orders in 2010, the High Court took into account Mrs Burke's medical condition at the time, the fact dependent children were living in the home, its prestigious location and that the bank's security would not be endangered by a private sale, he said.
Although the fund is an unregulated entity here, it was entitled to pursue the possession orders via an agent, Pepper Finance Corporation Ltd, trading as Pepper Asset Servicing, for reasons including that the Central Bank of Ireland had confirmed Pepper is regulated by it, he held.
‘Excessive’ charges
He rejected claims that “excessive” charges, loan-arrangement fees and high interest rates, enabled by clauses and conditions in the relevant Anglo facility letters, mortgage deed and standard terms and conditions, amounted to a “penalty” vitiating the entire contractual arrangements with the effect the loans security was unenforceable.
The question of penalty relief was “simply not relevant” because this was an appeal against a possession order and not a money judgment. Even if all fees were waived, there was sufficient default triggering the rights set out in the security instruments, he added.
A 2006 agreement between the couple and Anglo provided, if the Averard property was not sold by a date in 2006, a €2,000 fee would be increased to €20,000, he noted. Such a fee had no purpose “save the accretion of super profit” but Launceston had said that fee would not be pursued.
There was nothing “legally objectionable” in the other fees and rates complained about, including an interest rate 3.5 percentage points above the three-month Euribor rate plus commission, plus a bank “arrangement fee” for each separate advance. In 2003, the latter sum was €5,000 while it was €20,000 in relation to a 2005 housing loan agreement.
The judge rejected other arguments that article eight of the European Convention on Human Rights and article one of the first protocol to the convention, dealing with the right to privacy and family life, were engaged.
Commercial transaction
The interference with the Burkes’ property rights arose due to their personal and voluntary decision to enter a commercial transaction under which their home and property were given as security for money advanced, he said. They were both solicitors at the relevant times and were not acting as consumers,he added.
The couple also argued the fund was inspired only by profit and their relationship with it was not the same as that between a traditional banking entity and a client.
While appreciating the point about absence of a “true banking relationship”, the duties and liabilities of the Burkes remained precisely as they appeared under the contractual documents signed by them, the judge said. Their underlying exposure remained the same and it was also relevant that their relationship with Anglo had collapsed, or was “seriously in peril”, in 2008.
Costs issues will be decided later.
