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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> The Wise Finance Company Ltd. v Fox & Anor [2002] IEHC 165 (8 October 2002)
URL: http://www.bailii.org/ie/cases/IEHC/2002/165.html
Cite as: [2002] IEHC 165
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2001 No. 1 SP
BETWEEN
PLAINTIFF
DEFENDANTS
JUDGMENT of Mr. Justice Michael Peart delivered on the 8th day of October 2002.
On the 4th January 2001 the plaintiff company issued a special summons in which it seeks an order for possession of lands premises and property comprised in four folios namely 7905, 2880, 2803 and 11381, all of the register of freeholders County Longford. These lands and premises were mortgaged or charged by the defendants to the plaintiff company by indenture of mortgage/charge dated 4th October 1996 (hereinafter referred to as "the charge"). The charge was duly registered against folios 7905, 2880 and 11381 County Longford on the 18th October 1996, registration of the charge on folio 2803 County Longford taking place on the 31st July 1997.
The plaintiff company asserts in the endorsement of claim on the special summons that repayment of the principal money secured by the charge is now lawfully due and owing and that the defendants are indebted to the plaintiff company on foot of the moneys advanced and secured by the charge in the sum of IR£130,276.22 as of the 4th November 2000.
The plaintiff company claims that by letters dated the 18lh July 2000, and by further letters of clarification dated the 24lh October 2000 and the 24th November 2000 it demanded repayment of the said sum, but that the defendants and each of them have failed refused or neglected to pay the said sum, which remains lawfully due and owing. Accordingly the plaintiff company claims an order for possession of the said lands and premises pursuant to Section 62(7) of the Registration of Title Act 1964 which provides as follows:-
" When payment of the principal money secured by the instrument of charge has become due, the registered owner of the charge may apply to the Court in a summary manner for possession of the land or any part of the land, and on the application the Court may, if it so think proper, order possession of the lands or the said part thereof to be delivered to the applicant, and the applicant upon obtaining possession of the said part thereof shall be deemed to be a mortgagee in possession. "
It is of some importance to note at this stage that the family home of the defendants is registered on a separate folio to those already mentioned, namely folio 6251 of the register County Longford, which folio does not form part of the security given under the said charge. This is accepted by counsel for the plaintiff, and has some small relevance in relation to what is later described in this judgment as "the home loan issue ".
The special summons issued herein is said to be grounded upon two affidavits, namely an affidavit of Ronald Weisz, and an affidavit of Charles J. Sheil. Mr. Weisz is managing director of the plaintiff company, and Mr. Sheil describes himself in his affidavit as the accountant and auditor of the plaintiff company. These affidavits are sworn on the 23rd January 2001. Each of the defendants filed replying affidavits sworn on the 14th March 2001, in which certain issues are raised by way of defence to these proceedings and which I will deal with in due course. Mr. Weisz filed a supplemental affidavit in response to the defendants' affidavits, which was sworn on the 15th May 2001. The first named defendant Patrick Fox filed a further affidavit sworn on the 5th July 2001. In turn, Mr. Weisz filed a second supplemental affidavit which he swore on the 4th October 2001. The second defendant Dolores Fox filed a second replying affidavit sworn on the 12th October 2001. In turn, Mr. Weisz filed a third supplemental affidavit sworn on the 15lh November 2001 in which, inter alia, he exhibited an affidavit of Mark Foster sworn on the 9th August 2001. Mr. Foster is of Foster's Chartered Accountants of Eastbourne, East Sussex, England which firm is stated therein to have been the accountants and auditors of the plaintiff company for the fiscal year ended 31s' March 1997.
The affidavits filed by the defendants raise a number of issues which they say disentitle the plaintiff company to the relief claimed, namely an order for possession of the lands and premises charged. These issues arise mainly from ambiguities or inconsistencies in the wording of the loan application form completed by the first named defendant on the 2nd May 1996 and submitted to the plaintiff company, the commitment letter issued by the plaintiff company to the defendants dated the 8th August 1996 and which was accepted by both defendants on the 27th August 1996, and the indenture of mortgage/charge dated the 4th October 1996. The issues raised are five in number, as follows:-
1. The reference in the mortgage document to the terms "home loan" and "home loan agreement", whereas in fact the loan applied for was for the purpose of stocking their farm, creates an uncertainty as to the repayment terms, sufficient to establish that the defendants are not in breach of covenant 1 (a) of the charge, there being no money due and owing on foot of a home loan. It is further submitted on behalf of the defendant that if the Court should decide that the loan can be categorised as a home loan, it is void as a result of the provisions of Section 229 of the Consumer Credit Act 1995. I shall refer to this issue hereafter as "the home loan issue".
2. The reference in covenant l(a) of the charge to an obligation on the part of the defendants to "repay to the mortgagee the loan .... by agreed instalments", is in conflict with the definition of "the loan" at clause A6 of
the charge, which by reference to the "loan agreement" at schedule A of the charge, means the Offer of Loan dated 8th August 1996, which I have earlier referred to as the Commitment Letter, since this document states on its face on p. 1 thereof that there are "no instalments due". I shall refer to this issue hereafter as "the instalments issue".
1. 3. Schedule B of the charge refers to "the loan: IR£60,000.00 (sixty thousand pounds)" whereas the grounding affidavit at paragraph 14 refers to the amount advanced being in Sterling pounds. The defendants contend that the only sum secured was one in Irish pounds, whereas the only sums advanced were in sterling pounds, and that this inconsistency should be interpretated against the plaintiff company, and that they have hereby disentitled themselves to the reliefs sought. I shall refer to this issue hereafter as "the currency issue".
4. The loan application made by the defendants was for £60,000.00 for the term of "3 months (thereafter monthly renewal allowed)". The Commitment Letter at paragraph 6 confirms this, but paragraph 7 thereof permits a renewal of the loan by the borrower after the initial 3 month period on a month to month basis subject to certain interest implications. In the event of such renewal, the borrowers must notify the lender in writing prior to the redemption date. Since no such renewal was ever notified by the borrowers, counsel for the defendants submits that it is arguable that the plaintiff is not entitled to charge interest after the 3 month default. This point does not need to be decided in these proceedings, which are proceedings for possession only, but may be relevant when it comes to deciding how much is due to the plaintiff company on foot of the loan at any stage. These proceedings relate only to the question of whether the plaintiff can obtain an order for possession on foot of the charge. This issue is hereafter referred to as "the renewal issue".
5. The final issue raised concerns the question as to whether the plaintiff company is a "mortgage lender" or a "credit intermediary", within the meaning of those terms in the Consumer Credit Act 1995. In the event that the plaintiff company is a "credit intermediary", the plaintiff company would require a licence, and in the absence of one, the loan the subject of these proceedings cannot be enforced. I shall refer to this issue hereafter as "the mortgage lender issue".
The Home Loan Issue
Clause l(a) of the charge (at page 8 thereof) reads as follows:-
"1. The mortgagor hereby covenants with the mortgagee as follows
(a) subject to the proviso in clause 2 hereinafter contained and the rights of variation of the mortgage in clause 8 hereinafter contained, to repay to the mortgagee the loan with interest thereon at the appropriate rate from the commencement date by agreed instalments, such payments to be made at such place as the mortgagee may from time to time direct on the specified day, or should such day be a Saturday, Sunday or Bank Holiday, then on the next following working day, the first of such payments having been made or to be made on the initial specified day and subsequent payments having been made and/or to be made at regular successive intervals of one month during the term until the whole of the home loan with interest thereon at the appropriate rate from the commencement date shall have been repaid in full to the mortgagee."
In the definition section of the deed at A(6) "the loan" is defined as "the principal sum specified in B in the schedule hereto being the loan which has already been advanced ..." Schedule B refers to "the loan": IR£60,000.00 (sixty thousand pounds).
In paragraph 9 (p. 14) of the Deed, the mortgagor charges the mortgaged property "with payment to the mortgagee of the secured moneys." "The secured moneys" are defined at A (13) of the Deed as "moneys and liabilities which the mortgagor covenants to pay to the mortgagee ...."
There can be no doubt but that what the defendants applied to the plaintiffs for by way of loan, when they filled out their loan application form which is exhibited at RW4 of the grounding affidavit of Ronald Weisz sworn on the 23rd January 2001 was an amount of money expressed to be "£60,000.00", the purpose of which was to "increase trading stock". This appears on the face of the application form itself at B under the heading "your loan requirements". Leaving aside the question, for the moment, as to whether the amount of the loan is intended to be Irish punts or sterling pounds, its purpose is quite clear. By no stretch of the imagination can it be considered to be anything in the nature of what is commonly called a home loan, or a housing loan, as is commonly understood by those terms - in other words a loan sought for the purpose of purchasing or improving a dwelling house.
The question raised by the defendants is whether the fact that the covenant to repay refers to "home loan" creates an impediment to enforcement, since a consequence of it being thereby regarded as a housing loan is, according to counsel for the defendants, that the second named defendant could be categorised as "a consumer" for the purpose of the Consumer Credit Act 1995 (Section 129) Regulations, 1996 (S.L No. 132/1996), and that the plaintiff therefore would have been obliged to comply with the terms of the Statutory Instrument, which they have not, as to the form of notice which must be included on the front page of a housing loan.
While there are several references in the deed of mortgage/charge to "the home loan" and "the home loan agreement", I am satisfied that this fact alone would not constitute a sufficient ambiguity or uncertainty as to invalidate the charge to the extent of refusing to make an order for possession. The expression "home loan" is not a term of art, and its similarity to the term "housing loan" cannot of itself change the nature of the loan (i.e. to increase trading stock) to a housing loan for the purpose of that definition in the Consumer Credit Act 1995. There was never any intention on the defendants part, or either of them, that they were applying for a home loan. This ground of objection must fail.
1. The Instalments Issue:
I have already set out above the terms of the deed of mortgage/charge which are concerned with the defendants covenant to repay as set forth in clause 1 (a) of the deed. In summary, the defendants charged the mortgaged lands with repayments of "secured moneys" which are defined as "all moneys and liability which the mortgagor covenants to pay to the mortgagee ....". The covenant at clause l(a) is to repay "the loan" which is defined at clause A(6) of the deed as "the principal sum specified in B in schedule hereto being the loan which has already been advanced or which on the execution of these presents will be advanced by the mortgagee to the mortgagor in accordance with the terms of the loan agreement." (Emphasis added).
The difficulty which the mortgagee faces is that the "loan agreement" is described in the schedule to the deed as "offer of loan dated 8lh day of August 1996 which was accepted by the mortgagor". This offer of loan dated 8th August 1996 is exhibited in the grounding affidavit of Ronald Weisz sworn on the 23rd January 2001 at RW6 and is signed by Mr. Weisz, and by each of the defendants in order to indicate their acceptance of its terms. The essential features of the loan agreement appear on the first page of the document "commitment letter" in the following terms:-
1. Amount of credit advance £51,200.00
2. Period of agreement 3 calendar months
3. . Number of repayment instalments no instalments due
4 Amount of each instalment optional prepayment prior to due date
5. Total amount repayable £60,000.00
6. Cost of this credit £8,800.00
7. APR 26.7%.
It is clear that this agreement can be summarised in the following way. The defendants applied for and were granted a loan of £60,000.00 (leaving aside the dispute as to whether this is referable to Irish punts or pounds sterling for the moment). This entire sum was repayable after 3 calendar months, and not by instalments, although there is also contained in the Commitment Letter certain terms regarding any early repayment.
It is clear from the grounding affidavit of Ronald Weisz that this loan was drawn down by him (1) by sending to the defendants solicitor Brendan J. Muldowney a cheque in the sum of STG £50,181.25, although that solicitor subsequently requested that instead, the said sum should be transferred directly to his client account, which was done, and (2) by sending a second cheque to Messrs Reeves and Son Solicitors in the sum of STG £1,018.75 to cover their costs of stamping and registering the charge. The balance of the loan of £60,000.00 was in fact retained by the plaintiff company, as appears from the closing statement exhibited at RW15 of Mr. Weisz's grounding affidavit, in order to cover the procurement fee of £4,200, the brokers fees of £1,000, and what is described as "3 months interest (term of loan) £3,600". In other words the plaintiff company deducted at source the 3 months interest payable under the terms of the loan agreement. This fact is entirely consistent with term no. 6 of the letter of offer that there were "no instalments due" under the agreement.
The defendants submit that the terms of the loan agreement as outlined above are entirely consistent with the terms of the repayment covenant contained in the deed of mortgage/charge at clause 1 (a) which expressly refers to repayment by "the agreed instalments". Clause Kb) again refers to certain interest charges which will become payable "if any of the monthly instalments due by the mortgagor to the mortgagee under paragraph (a) of this clause shall not be paid on the specified day".
The defendants also submit that this inconsistency is so fundamental as to disentitle the plaintiff company to any order for possession to enforce the charge. In this regard counsel for the defendants pointed to the fact that the making of an order for possession under Section 62(7) of the Registration of Title Act 1964 is a discretionary order. Counsel for the defendants also referred the Court to the judgment of Mr. Justice McCracken (unreported) dated the 6lh November 2000 in proceedings of a similar nature entitled the Wise Finance Company Limited -v- John Lanagan, wherein it was found by the learned judge that, in almost identical circumstances to the instant case, such a contradiction was a fatal flaw to the plaintiff's claim. Concluding his judgment, the learned judge states:-
"The plaintiff can only recover possession if the principal moneys secured by the deed of charge become due. In view of the contradictions between the deed of charge and the Commitment Letter I do not think it could be said that the moneys secured by the deed of charge have become due under the terms of the charge, and the plaintiff can only recover possession if the moneys are due under the deed of charge. Accordingly I must refuse the relief claimed."
I adopt this statement for the purpose of the present case. I should also refer to the argument advanced by counsel for the plaintiff that if the money was not due under the covenant at 1 (a) of the deed, that it was captured by what was described in argument as "the general indebtedness clause" appearing at clause 1 (d) of the deed at p. 9 thereof. I do not accept that this could be so, given the express exclusion of the loan and mortgage expenses from the definition of "general indebtedness and liability" contained in clause A(12) of the deed at p. 4 thereof, and in that regard I note also that Mr. Justice McCracken was of a similar view in the Lanaean case from which I have just quoted.
3. The Currency Issue
Since I have found against the plaintiff under "the instalments issue" it is not necessary that I make a finding under this heading and I refrain from doing so.
4. The Renewal Issue
I have already stated at the outset that this issue is not relevant to the present application, but that it may become relevant when determining an amount of money to which the plaintiff may be entitled under the loan agreement, and for this reason I express no view on it at the present time.
5. The Mortgage Lender Issue
Insofar as it may be relevant to any other proceedings the plaintiff may bring against other borrowers in the future, I should express my view that I am satisfied that for the purposes of this case the affidavits sworn by Charles J. Sheil and Mark Foster contain sufficient evidence to demonstrate to my satisfaction that the plaintiff company is a mortgage lender for the purposes of Section 2(1) of the Consumer Credit Act 1995.
For the reasons set forth, I refuse the relief sought.