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Cite as: [2013] IEHC 540
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Judgment Title: GE Capital Woodchester Homeloans Ltd -v- Faulkner Madden; Digan & anor; O'Rourke & anor; Buckley & anor; Healy Neutral Citation: [2013] IEHC 540 High Court Record Number: 2010 878 SP / 2009 493 SP / 2010 809 SP / 2009 418 SP Date of Delivery: 16/05/2013 Court: High Court Composition of Court: Judgment by: Dunne J. Status of Judgment: Approved |
Neutral Citation: [2013] IEHC 540 THE HIGH COURT [2010 No. 878 S.P.] BETWEEN GE CAPITAL WOODCHESTER HOMELOANS LIMITED PLAINTIFF AND
MAUREEN FAULKNER MADDEN DEFENDANT THE HIGH COURT [2009 No. 493 S.P.] BETWEEN GE CAPITAL WOODCHESTER HOMELOANS LIMITED PLAINTIFF AND
DAVID DIGAN AND MARGARET DIGAN DEFENDANTS THE HIGH COURT BETWEEN GE CAPITAL WOODCHESTER HOMELOANS LIMITED AND O'ROURKE AND KEARNEY AND THE HIGH COURT [2010 No. 809 S.P.] BETWEEN GE CAPITAL WOODCHESTER HOMELOANS LIMITED PLAINTIFF AND
TADHG BUCKLEY AND GERALDINE BUCKLEY DEFENDANTS THE HIGH COURT [2009 No. 418 S.P. BETWEEN GE CAPITAL WOODCHESTER HOMELOANS LIMITED PLAINTIFF AND
CIARAN HEALY DEFENDANT JUDGMENT of Ms. Justice Dunne delivered the 16th day of May 2013 A number of cases were listed for hearing before me in which the same issue has arisen for determination. The plaintiff in each case is the same and each set of proceedings relates to an application for possession pursuant to s. 62(7) of the Registration of Title Act 1964. (S. 62(7)). The issue at the heart of these proceedings concerns what constitutes a demand for payment on foot of the relevant deed of charge. In the absence of a demand, where required by the deed of charge, the right to bring proceedings under s. 62.7 does not arise. (See Start Mortgages and Others v. Gunn and Others [2011] IEHC 275). In the course of the hearing before me, arguments were made on behalf Ms. Faulkner Madden represented by Mr. Maguire S.C. who also represented the parties in the Buckley case. There was no appearance on behalf of the defendants in the O'Rourke case. Mr. Robinson B.L. appeared on behalf of Mr. Healy and Mr. and Mrs. Digan appeared in court in person. I indicated that, I would, if necessary, adjourn their case as they were not legally represented. The issue as to the adequacy of the letter of demand in these cases relates to a standard form letter used by the plaintiff over a considerable period of time. The issue is complicated by the fact that the adequacy of that form of letter of demand was considered by the High Court in a number of ex tempore judgments (McGovern J. and Dunne J.) and further has been considered in a written judgment delivered in the High Court (Laffoy J.) in the case of GE Capital Woodchester Homeloans Limited v. Reade and Another (Unreported, High Court, 12th November, 2012) in which Laffoy J. came to the conclusion that the letter of demand relied on by the plaintiff in those proceedings was not a sufficient demand to enable the plaintiff to bring proceedings under section 62(7). The considered decision in the Reade case reached a different conclusion to that given in the course of the ex tempore judgments referred to previously. Accordingly, I propose to look at the arguments in respect of the letter relied on by the plaintiff in these proceedings and whether that letter constitutes a demand such that the plaintiff was entitled to bring proceedings pursuant to section 62(7). I also propose to consider the issue as to whether it is appropriate for this Court to reach any conclusion on this issue having regard to the decision of the High Court in the Reade case. I will set out the relevant sections of two letters which featured in this case and which are relied on by the plaintiff. For ease of reference I will refer to those used in the case of Ms. Faulkner Madden, dated the 7th February, 2009, and the 24th August, 2009, respectively. The letters in every case are identical save for the obvious differences relating to the identity of the addressee and the amounts involved. In the first letter of the 7th February, 2009, it was stated as follows:-
"Dear Sir, Madam,
The purpose of this letter is to advise you that as a result of your above default in your mortgages, the entire balance outstanding on your mortgage accounts in the amount of €467,299.24 as at the 17th day of August, 2009 has now fallen due and owing. We are instructed to demand within ten days from the date hereof vacant possession of our security the premise known as ... for the purpose of sale as our client's power of sale has now arisen under the terms of your mortgages. However, if the arrears outstanding to our client are discharged within ten days from the date hereof, proceedings for repossession of our client's security will not be issued. You should note that if you do not furnish vacant possession or discharge the arrears outstanding within ten days, we have strict and firm instructions to issue proceedings for recovery of possession of our client's security immediately. You should further note that all costs incurred by our client in the recovery of the arrears or in recovery of possession of the premises together will all legal costs and outlays, will be charged to your mortgage accounts and be payable by you to our client together with the balance outstanding your mortgage accounts. You should also take note that on recovery of possession of the security by our client (pursuant to a court order or by voluntary surrender by you) our client will proceed to sell the security. However, if the net proceeds of sale are not sufficient to discharge the balance outstanding to our clients, our clients are entitled to demand payment from you of the deficit remaining unpaid. This includes any accrued interest, charges, legal fees, costs incurred in selling the property and other related costs." Depending on the wording of a mortgage it may be necessary prior to the institution of proceedings to have a valid demand for payment of the full amount due on foot of the mortgage. Such a demand was necessary in the Gunn case referred to above, but not in the case of the mortgage in the case of EBS Limited v. Gillespie [2012] IEHC 243. It is not in dispute that in these cases, it is necessary for there to have been a valid demand for payment in order to bring proceedings under section 62(7). By way of explanation, I should refer to the provisions of s. 62(7) which provides as follows:-
At this stage I propose to look at the submissions in relation to what amounts to a demand. A series of cases from other jurisdictions were relied on by counsel on behalf of the plaintiff. The first was in Re. A Company [1985] B.C.L.C. 37 in which an issue arose as to whether a telex was a statutory demand pursuant to s. 223(a) of the Companies At 1948, such that the non payment of the sum referred to would result in the company being deemed to be insolvent. Nourse J. in the course of his judgment at p. 41 stated as follows:-
'... there must be a clear intimation that payment is required to constitute a demand; nothing more is necessary, and the word 'demand' need not be used; neither is the validity of a demand lessened by its being clothed in the language of politeness.' It must be of a peremptory character and unconditional, for the nature of the language is immaterial provided it has its effect." Nourse J. went on to refer to the demand in that case as follows:-
'There is, therefore, due to us a total of £58,964.19. No payments have been made in respect of this album since you settled the January statement. There is, as you are well aware, no provision for cross collateralisation between different streams of product. There has, therefore, been a failure to pay for a considerable period.'
Counsel for the petitioner (Mr. Crawford) submits, in effect, that those two passages combined with the last words, constituted a demand as defined by Walker J. I am quite unable to accept that submission.... But it seems to me that the telex is quite unspecific as to which of these remedies is to be enforced. It certainly is not a clear intimation that payment is required, far less is it of a peremptory character and unconditional. In those circumstances, while I certainly would not consider the telex to be fatal for not having used the word 'demand', it does seem to me that it is not a demand within s. 223(a) of the 1948 Act. It is also flawed on the ground earlier stated, namely that it does not relate to a debt of a specified sum which cannot be seriously questioned as to existence or quantum." Counsel on behalf of the plaintiff in relying in that decision pointed out that the amount due herein had been specified in the plaintiff's letter to the defendant. The effect of giving an alternative option to the debtor as occurred in this case, namely that "if the arrears outstanding are discharged within ten days from the date hereof, proceedings for repossession of our client's security will not be issued", was said not to affect the validity of the demand. Reference was made in that context to the case of N.R.G. Vision Limited v. Churchfield Leasing Limited and Others [1988] B.C.L.C. 624, a decision of the Chancery Division of England and Wales, which upheld the validity of the appointment of a receiver. Knox J. in that case stated at p. 637 as follows:-
I think it is clear from that decision that the offer to accept instalments or any other alternative does not necessarily render a demand equivocal. I now want to consider the decision in the Reade case and the judgment in the case of the Wise Company Limited v. John Lanigan (Unreported, Supreme Court, 21st January, 2004) (Wise) which was relied on by Laffoy J. in the judgment in Reade. In the course of her judgment in the Reade case, Laffoy J. referred to the decision of the Supreme Court delivered by Fennelly J. in the Wise case. She quoted extensively from that judgment, stating:-
'By a letter of 18th February 2000 from its solicitors, the appellant formally wrote to the respondent demanding possession of the lands within seven days. The letter continued: 'In the alternative, you may pay the said sum of Stg£60,898.47 to our client within the said period of seven days'. On the question as to whether that was an adequate demand to give the Court jurisdiction under s. 62(7), Fennelly J. stated: 'There remains, however, the point made by the respondent about the absence of a demand. The appellant accepts that the covenant to pay 'general indebtedness' and, hence, the inclusion of such sums within the scope of the charge depends on a demand being made. The appellant says that a sufficient demand was made in the letter demanding vacant possession of the charged lands. That demand was followed by the sentence quoted earlier indicating that the respondent might as an alternative 'pay the said sum of Stg£60,898.47 to our client within the said period of seven days'. That letter, in its own terms purported to rely on a right conferred by the deed of charge to enter into possession of the property 'in the event of default by you in respect of the repayments due by you...'. Insofar as the advance came within the scope of 'general indebtedness', the covenant to pay came into effect only on demand being made. The present case concerns a claim for possession, not pursuant to any express terms conferring a right to possession, but upon the exercise by the Court of its power to grant an order for possession 'where repayment of the money secured by the instrument of charge has become due'. That, in turn, depends on the appellant being able to show that the general indebtedness has become due. I am satisfied that the appellant could not apply to the court for an order pursuant to s. 62(7) of the Act on the basis of general indebtedness without proof of prior demand for payment, since the covenant applied only upon demand for payment. A suggestion that the respondent might avoid the demand for possession by making a specified payment does not constitute a demand for payment. On this ground, therefore, I believe that the applicant's claim must fail. I would dismiss the appeal."
8. Secondly, as in the Wise case, the core question then was whether there was a demand which rendered repayment of the principal monies secured by the Charge due, as required to give the Court jurisdiction under section 62(7). 9. Thirdly, as regards the letter which the plaintiff contended was dispatched on 10th April, 2007 in the form of the precedent letter, on which the plaintiff relied so as to avoid the implications of the decision in Start Mortgages Ltd & Ors. v. Gunn & Ors. [2011] IEHC 275, in the interests of clarity, I will quote hereunder the first two paragraphs of that letter, which are the only paragraphs relevant to the issue, because the remainder of the letter deals with the question of legal expenses. The first two paragraphs were in the following terms: 'We refer to your mortgage account and note from our records that as of XX/XX/XX, your account is €xxxx.xx plus charges of €xx.xx in arrears. We must advise you that unless you remit this sum in full within 7 days from the date hereof we will have no alternative but to pass this account over to our Solicitors to commence repossession proceedings as arising from your default under your mortgage agreement the entire balance outstanding has now fallen due which as of the xx/xx/xx, amounted to €xxxxxxxx.xx.' The problem with that precedent is that it 'put the cart before the horse'. Under the terms of the charge all monies remaining unpaid by the defendants to the plaintiff secured by the charge would have become immediately due and payable 'on demand' to the plaintiff on the happening of any of the events of default specified, for example, default 'in payment of any monthly or other periodic payment or in payment of any of the secured monies hereunder'. So for repayment of the principal monies to be due, as required by s. 62(7), the essential sequence was - (a) the happening of an event of default such as non-payment of an instalment, followed by (b) a demand for repayment of all of the monies remaining unpaid. The entire monies secured by the charge did not automatically become repayable on the happening of an event of default, as assumed in the precedent letter. The precedent letter demanded the arrears due at the date thereof and threatened the commencement of possession proceedings in the event of the defendants failing to pay up. It did not demand the entire balance outstanding on the charge. On the authority of the Wise case, the court has no jurisdiction under s. 62(7), because the principal monies secured by the charge had not become repayable, no demand having been made in accordance with clause 3 of the charge. 10. Fourthly, the letter of 2nd February, 2012 from the plaintiff’s solicitors suffers from the same frailty. In the interests of clarity I will quote the first two paragraphs of that letter and part of the third paragraph. The remainder of the letter deals with the issue of legal costs and expenses. The letter stated: 'We act on behalf of [the plaintiff] who instruct us that you are in arrears on your mortgage account in the sum of €53,317.78 as at the 2nd February, 2010. The purpose of this letter is to advise you that as a result of your above default in your mortgage the entire balance outstanding on your mortgage account in the amount of €270,915.45 as at the 2nd February, 2010 has now fallen due and owing. We are instructed to demand within ten days from the date hereof vacant possession of our security the premises known as ... for the purpose of sale as our client's power of sale has now arisen under the terms of your mortgage. However, if the arrears outstanding to our clients are discharged within ten days from the date hereof proceedings for repossession of our client's security will not be issued. You should note that if you do not furnish vacant possession or discharge the arrears outstanding within ten day's, we have strict and firm instructions to issue proceedings for recovery or possession of our client's security immediately.' In that letter, it was assumed that the entire balance outstanding on the charge had fallen due and owing as a result of the defendants' default. In accordance with the terms of the contract between the plaintiff and the defendants embodied in the charge that was not the case. A demand was necessary to call in the entire principal and interest outstanding. The letter of 2nd February, 2010, like the letter relied on in the Wise case, was not a demand which rendered the principal money repayable, so as to confer jurisdiction under s. 62(7) on the Court. 11. This Court is bound by the decision of the Supreme Court in the Wise case. Therefore, counsel for the second defendant was correct in submitting that that decision determines the issue." I have already noted that in the course of submissions, reference was made to the fact that a number of ex tempore decisions have been given by the High Court in relation to the same form of letter of demand where the court was satisfied with that letter of demand. In the written submissions reference was made to a decision in the case of GE Capital Woodchseter Homeloans Limited v. Touhidule Islam and Sadia Shahnaz, in which I considered the decision in N.R.G. referred to above. In that case I accepted that the letter of demand was a sufficient demand. However, the argument in that case was predicated on the fact that the letter gave the mortgagor/chargor the alternative of discharging the arrears. The focus of the court was therefore on the question as to whether or not the giving of an alternative in such a letter could vitiate the demand on the basis that it was not an unequivocal demand. Relying on the authority of N.R.G. Vision v. Churchfield, I was satisfied in that case that the giving of an alternative did not render the letter unequivocal. The Wise decision was not cited to the court in the course of the submissions in that case. It would not be appropriate to make any comment on the judgment in Reade and on the earlier judgment in Wise before referring briefly to a number of authorities dealing with the principle of judicial comity or, to put it another way, the circumstances in which one judge of the High Court will or will not follow an earlier judgment of the High Court. During the submissions, I was referred to a series of judgements in the cases of Re. Worldport Ireland Limited (In Liquidation) [2005] IEHC 189, Clark J. pp 7 to 8, Brady v. Director of Public Prosecutions [1020] IEHC 231, pp. 9 to 12, Kearns P. and Irish Trust Bank Limited v. Central Bank of Ireland [1976-7] I.L.R.M. 50, 53 on this point. It goes without saying that certainty in the law is not just a desirable concept but a necessary one. Parties to litigation are entitled to reasonable certainty as to the applicable legal principles in any given area of law. Inevitably, over time, a divergence of view or a series of conflicting or apparently conflicting judgments on specific topics may arise such that the overall position in relation to a particular legal principle becomes uncertain. Clarke J. discussed this matter in his judgment in the case of In Re. Worldport Ireland Limited (In Liquidation) [2005] IEHC 189, where he made the following observation at internal pp. 7 and 8 of his judgment:-
The judgment of Clarke J. in the Worldport case was considered by Kearns P. with approval in the decision in the case of Brady v. Director of Public Prosecutions [2010] IEHC 231 at internal pp. 9 et seq.
'I fully accept that there are occasions in which the principle of stare decisis may be departed from but I consider that these are extremely rare. A court may depart from a decision of a court of equal jurisdiction if it appears that such a decision was given in a case in which either insufficient authority was cited or incorrect submissions advanced or in which the nature and wording of the judgment itself reveals that the judge disregarded or misunderstood an important element in the case or the arguments submitted to him or the authorities cited or in some other way departed from the proper standard to be adopted in judicial determination."' |