Supreme Court of Ireland Decisions

1. This is an appeal from an order and judgment of the High Court (Laffoy J) refusing to grant the plaintiff an order for possession of certain premises, the property of the defendant, in County Longford. It is not in dispute that the plaintiff had advanced the defendant the sum of £25,000 for a term of three months and that the loan was secured by a charge on the defendant’s property in Longford. The rate of interest was to be 2% per month and, if the loan was not repaid in full within the three month period, interest thereafter would be payable in advance of 3% per month on the unpaid balance. The interest for the three month period was to be deducted at the date of draw down and, in addition there was what was described as a “procurement fee” and a “broker’s fee”. These deductions totalled £5,000, leaving a net balance payable to the defendant of £20,000.

2. That sum was duly advanced to the defendant, but not repaid at the end of the three month period. The defendant, however, did pay the interest at the rate of 3% per month for approximately a year after the termination of the three month period. The plaintiff then instituted these proceedings, at which stage it claimed that the defendant owed it £33,500. In addition to the deductions from the loan, the defendant had at that point paid £11,750 in respect of interest to the plaintiff.

3. The proceedings were in the form of a special summons claiming an order for possession pursuant to s.62(7) of the Registration of Title Act 1964 of the charged premises. In the first affidavit sworn by the defendant, a number of matters were raised by way of defence to the plaintiff’s claim. However, in a second affidavit a further ground was advanced, i.e. that the plaintiff had no license to carry on a business of money lending in this jurisdiction, contrary, as it was argued, to the provisions of the Moneylenders Acts 1900 and 1933, which were in force at the time the money was advanced.

4. That contention was upheld by the learned High Court judge. In the course of her reserved judgment, Laffoy J, having noted that it was not in dispute that the plaintiff was engaged in the business of money lending, went on to consider certain categories of person to whom the requirements of the Acts as to the obtaining of a licence did not apply. Being satisfied that the plaintiff came within none of these categories and that it was settled law that any contract entered into in contravention of the restrictions contained in the relevant Acts was unenforceable ( Cornelius v. Phillips [1918] AC 199), she dismissed the plaintiff’s claim.

5. Unfortunately, it was not drawn to the attention of the learned High Court judge that certain other exemptions from the requirements of the Act as to the obtaining of licences came into being as a result of s.136 of the Central Bank Act 1989 and the Money-lenders Act 1900 (s.6 (e)) Order 1993 (S.I. No. 167 of 1993). Section 136 of the 1989 Act provided that a licence was not required in the case of :-

6. Article 2(1)(a)(iii) of the 1993 Order provided that :-

7. The plaintiff, in their appeal to this court, contended that they came within the provisions of Article 2(1)(a)(iii) on the ground that their business consisted wholly or mainly of the business of lending money where the loan was secured on land, whether with or without other security. However, in the written submissions lodged on behalf of the defendant, it was urged that there was no evidence of this in the affidavits filed in the High Court.

8. On the hearing of the appeal, Mr. Ronan Murphy for the plaintiff submitted that the terms of the commitment letter on foot of which the loan in question was entered into and the nature of the printed standard form completed by the defendant made it clear that the plaintiff was engaged as a matter of routine in transactions consisting of the lending of money where the loan was secured on land. I am satisfied, however that that falls well short of what is required by the terms of Article (2)(a)(iii). It went no further than demonstrating that in the case of some transactions the loan was so secured, but there remained no evidence as to the extent to which the business of the plaintiff consisted wholly or mainly of such transactions.

9. It is certainly unsatisfactory that, through no fault of the learned High Court judge or counsel for the defendant, this case was dealt with in the court below on an erroneous legal basis, i.e. that the category of exemptions from the requirements of the Acts was confined to those set out in the written judgment. If the fact was that the business of the plaintiff consisted wholly or mainly of the business of making loans which were secured on land, then it would seem unjust that the defendant should entirely escape the financial obligations he had entered into with the plaintiff, save for the £11,750 he has already paid in respect of interest. On the other side of the coin, it was conceded on behalf of the plaintiff that, if the matter was remitted to the High Court for a rehearing, justice required that it should be on the basis that the plaintiff paid all the costs of the proceedings to date and confined the claim to interest from the date of the judgment and order of Laffoy J to interest at the court rate.

10. I would, in these circumstances, allow the appeal and remit the matter to the High Court so that it can be determined in accordance with what is now accepted to be the applicable law. It would be for the High Court judge to determine in the light of whatever evidence was furnished whether the plaintiff in fact came within the provisions of Article 2(1)(a)(iii). It would also be open to the defendant to rely on the other grounds raised by him in the High Court which have not so far been the subject of any adjudication in that court. I would so order only on the undertaking of the plaintiff to confine its claim for interest from the date of the order appealed from to the date of the determination of the matter in the High Court to interest at the court rate. The plaintiff must also pay all the defendant’s costs of the proceedings to date.