harp graphic.
AN CHΪIRT UACHTARACH
THE SUPREME COURT
S:AP:IE:2024:000064
Murray J.
Between/
BANK OF IRELAND MORTGAGE BANK U.C.
Respondent
AND
BRIAN MURRAY
Appellant/Defendant
AND
ATTRACTA MURRAY
Defendant
Judgment of Ms. Justice Elizabeth Dunne delivered on the 4th day of June 2025
Background
1. These proceedings arise from two loans advanced by the Bank of Ireland Mortgage Bank ("the Bank"), ostensibly to both defendants, which will be referred to here as "the 2003 Loan" and "the 2007 Loan".
2. The appellant ("Mr. Murray") is a fisherman. He fishes from Killybegs, County Donegal, where the defendants reside. At all times material to these proceedings, the defendants were husband and wife and the evidence in the High Court was that Mr. Murray was frequently at sea and Mrs. Murray ran the household and managed the family finances.
3. The 2003 Loan was in the amount of 40,000 and was for the purpose of part-funding the purchase of a holiday apartment in Spain. A number of documents were executed (or apparently executed) by the defendants in connection with the loan agreement, including a mortgage loan application dated 29th July, 2003, a Letter of Offer dated 31st July, 2003 with acceptance endorsed on 7th August, 2003, a Family Home Declaration dated 10th September, 2003, and a Deed of Charge dated 16th September, 2003. The Bank's charge was duly registered on the folio containing the principal private dwelling of the defendants. The loan was duly advanced by the Bank and was repaid by instalments as per the conditions of the loan offer, with the balance being discharged from monies advanced under the 2007 Loan.
4. The 2007 Loan was for the significantly higher sum of 200,000, repayable over 20 years, for the stated purpose of building an "investment property" next door to the defendants' residence and to be secured on the existing charge held by the Bank. Again, a large number of documents were executed, or apparently executed, by the defendants in connection with the loan, including an amended mortgage loan offer letter and acceptance dated 2nd May, 2007 - ostensibly endorsed by both Mr. and Mrs. Murray on 8th May, 2007 - and an equity release application form dated 10th May, 2007, apparently signed by them both.
5. The 2007 Loan amount was drawn down in five instalments between June 2007 and November 2009 into a mortgage account, and then drawn down from time to time into a current account held by the Murrays with another Bank of Ireland entity. Part of the 2007 Loan was used to pay off the balance of the 2003 Loan. As to the remainder of the 2007 Loan, the trial judge found that both defendants had received the benefit of the monies advanced by the Bank, referring in that context to a number of payments made from their joint account, including payments made to the Collector General to discharge the tax liabilities of Mr. Murray, a payment made to the Department of Family and Social Affairs in respect of a scheme for the benefit of fishermen, and a payment made to a firm of solicitors to pay for a field purchased by him (High Court judgment, paras. 159 - 168). No investment property was built.
6. The scheduled repayments were made in respect of the 2007 Loan up to June 2012. The Bank issued the proceedings in April 2013, with a statement of claim being delivered in June 2014 claiming 185,315.52, made up of the principal amount plus a small amount of interest. The Bank's primary claim was for debt due on foot of the 2007 Loan but it also made a claim for monies had and received by the defendants jointly and by each of them.
7. The defendants filed separate defences. In his defence, Mr. Murray denied that he was a party to the 2003 or 2007 loans or that he had agreed to a charge on the defendants' family home. The defence appeared to indicate that Mr. Murray was aware of a loan being made to his wife in 2003, but understood it to be a personal loan facility which was not secured by any charge on the family home, and that he was aware of a loan being made to his wife in 2007 in an amount of some 30,000, again as a personal and unsecured loan.
8. The Bank's claim proceeded to trial over five days and the High Court (Baker J.) heard the evidence of a number of witnesses, including Mr. Murray himself, regarding his involvement in and/or knowledge of the 2003 and 2007 loans and whether he had, in fact, signed any of the documents relating to those loans (Mr. Murray denied that he had). For the reasons set out in forensic detail in the judgment of Baker J. ([2019] IEHC 234) ("the principal judgment"), the High Court made the following findings, which are undisputed and provide the essential factual background to this appeal:
The 2003 Loan
(i) Mr. Murray knew of the 2003 Loan (principal judgment, para. 26).
(ii) Mr. Murray had not signed the loan offer (para. 47) and did not become aware that his wife had forged his signature until 2018 (para. 48).
(iii) Mr. Murray had not attended at the family's solicitors for the purpose of putting the loan and mortgage documentation in place (para. 64).
(iv) Mr. Murray had not signed the Family Home Declaration, the Deed of Charge or any of the other documents purporting to bear his signature (paras. 73 and 86 - 89).
The 2007 Loan
(i) The judgment records Mr. Murray's evidence to the effect that he and his wife had agreed to acquire the site adjoining their family home for 30,000 and that they agreed to borrow 30,000 for that purpose on an unsecured basis (para. 109).
(ii) The Court was not satisfied that the documents relating to the 2007 Loan had been executed by Mr. Murray (para. 133).
(iii) Mr. Murray had become aware of the actual amount due on foot of the 2007 Loan only in late 2011 (ibid).
(iv) Mr. Murray had become aware of the existence of a mortgage on his family home only in July 2012 (ibid).
(v) Mr. Murray had, however, received the benefit of the monies advanced by the Bank along with his wife (paras. 159 - 168).
The Principal High Court Judgment ([2019] IEHC 234)
9. Based on her finding that the 2003 Family Home Declaration was not signed by Mr. Murray and that the Deed of Charge had not been executed by him, the trial judge held that the security interest purportedly created by the Charge was "void and of no effect" by virtue of s. 3 of the Family Home Protection Act 1976 ("the 1976 Act") (para. 98). On the basis of that finding - which is not disputed by the Bank - the trial judge went on to hold that the 2007 Loan was not a "housing loan" within the definition of s. 2 of the Consumer Credit Act 1995 (as amended) ("the 1995 Act"), which requires the existence of an agreement to provide credit "on the security of a mortgage:"
""housing loan" means -
(a) an agreement for the provision of credit to a person on the security of a mortgage of a freehold or leasehold estate or interest in land
(i) for the purpose of enabling the person to have a house constructed on the land as the principal residence of that person or that person's dependants, or
(ii) for the purpose of enabling the person to improve a house that is already used as the principal residence of that person or that person's dependants, or
(iii) for the purpose of enabling the person to buy a house that is already constructed on the land for use as the principal residence of that person or that person's dependants,
or
(b) an agreement for refinancing credit provided to a person for a purpose specified in paragraph (a)(i), (ii) or (iii), or
(c) an agreement for the provision of credit to a person on the security of a mortgage of a freehold or leasehold estate or interest in land on which a house is constructed where the house is to be used, or to continue to be used, as the principal residence of the person or the person's dependants, or
(d) an agreement for the provision of credit to a person on the security of a mortgage of a freehold or leasehold estate or interest in land on which a house is, or is to be, constructed where the person to whom the credit is provided is a consumer"
10. Instead, Baker J. held that the 2007 Loan could be characterised as a "consumer loan" and as such, was subject to the provisions of Part III of the 1995 Act, in particular, ss. 30 and 38. The Bank contests that finding, at least with respect to the characterisation of the loan advanced to Mrs. Murray which, the Bank submits, was a "housing loan", despite the fact that no valid security was ever put in place. The parties' respective positions on this issue are set out later.
11. Having briefly discussed the authorities relating to the recovery of loans where there are defects in the loan documentation, the trial judge proceeded to consider whether the Bank was entitled to judgment against Mr. Murray by way of restitution or for repayment of monies had and received. Baker J. noted that the action for money had and received was now regarded as a common law claim, citing Westdeutsche Landesbank Girozentrale v. Islington London Borough Council [1996] AC 669, where Goff L.J. described it at p. 683 as a personal restitutionary claim at common law, founded upon the principle of unjust enrichment. The claim had also been firmly rooted in unjust enrichment in Lipkin Gorman v. Karpnale [1991] 2 AC 548. Ultimately, in her view, it did not matter whether the claim was regarded as one in equity or at common law given that no equitable principles had been raised by way of defence and there was no issue of priority.
12. Baker J. began her discussion of unjust enrichment by citing para 4.64 of Goff & Jones: The Law of Unjust Enrichment (9th ed., Sweet & Maxwell 2016) where, in considering cases that involve a payment being made into a joint bank account, the authors state that "the law generally holds that all the defendants are jointly and severally enriched, with the result that a claim for the whole amount of the enrichment may lie as against any or all of them." The principle against unjust enrichment had, she noted, been recognised by the Irish courts for a considerable period of time.
13. Baker J. highlighted that the principle against unjust enrichment is one which dates back to Rochford v. Earl of Belvidere 1770 (1766-1791) Wallis by Lyne 45, which was cited by Budd J. in The Right Honourable The Lord Mayor, Aldermen and Burgesses of the City of Dublin v. The Ancient Guild of Incorporated Brick and Stone (Unreported, High Court, 6th March, 1996). She then referred to the judgment of Keane J. (as he then was) in this Court in Dublin Corporation v. Building and Allied Trade Union [1996] 1 I.R. 468, which identified the following preconditions for a successful unjust enrichment claim at p. 493: (i) that the defendant be enriched; (ii) that the enrichment be at the expense of the plaintiff; (iii) that the enrichment be unjust and (iv) that there are no reasons why restitution should be denied (para 158). On the evidence, the trial judge was satisfied that the defendants "received the benefit of the total sum of 200.000 from the 2007 Loan at the expense of the Bank" and therefore, the first two tests in Dublin Corporation v. Building and Allied Trade Union had been satisfied (para 168). While Mr. Murray had given evidence that he had been earning approximately 50,000 per year which was transferred directly into the joint account, and that he never looked at any bank statements relating to the account, he could offer no explanation as to how various "exceptional expenses" had been met. In the trial judge's view, he had shown "some degree of financial acumen" and she did not believe that "he was wholly ignorant of the fact that the couple had on occasion made exceptional purchases which might not readily have been met from current income" (para 169).
14. Baker J. then considered a possible change of position defence, concluding that such a defence could not succeed, as Mr. Murray had not shown that his position was changed or that he had engaged in expenditure which would have rendered it unfair for him to be required to make restitution (paras. 171 - 173).
15. The trial judge next considered whether Mr. Murray had a "no knowing receipt" defence, based on the contention that, in circumstances where he had not known of the draw down of the loan until all the monies had been expended, it would be unfair to require restitution. In support of that argument, Mr. Murray relied on Primlake Ltd. (in Liquidation) v. Matthews [2006] EWHC 1227 (Ch) ("Primlake") and Stanbridge v Advanced Industrial Technology Corporation Ltd [2012] EWHC 1009 (Ch) ("Stanbridge"), but Baker J. considered that those authorities could readily be distinguished on the basis that Mr. Murray had, as a matter of fact, benefitted from the monies advanced by the Bank and had knowledge of the manner in which his wife had operated the account, even if he did not know of the exact amount of the drawings; he had been "'enriched' by the monies in a real sense". Once he had "ceded control" of the family finances to his wife, and once they had agreed that she would borrow from the Bank, he was a "knowing" recipient of the monies. Therefore, that defence failed (paras. 174 - 181).
16. Baker J. then considered the argument made by Mr. Murray that allowing the Bank to recover on the basis of unjust enrichment would circumvent the statutory protections for consumers provided for in the 1995 Act. It was in the context of addressing that argument that the judge held that the loans to Mr. and Mrs. Murray were "consumer loans" and that the provisions of ss. 30 and 38 of the 1995 Act were accordingly "in play" (para. 185). The judge noted that it had not been suggested that the requirements of s. 30 of the 1995 Act had been met. Section 30 requires credit agreements to "be made in writing and signed by the consumer and by or on behalf of all other parties to the agreement" while also requiring that the borrower be sent a copy of the agreement and given a "cooling-off period", during which they may "withdraw from the agreement without penalty". The effect of any non-compliance with s. 30 requires consideration of s. 38 of the 1995 Act, which is in the following terms:
"A creditor shall not be entitled to enforce a credit agreement or any contract of guarantee relating thereto, and no security given by the consumer in respect of money payable under the credit agreement or given by a guarantor in respect of money payable under such contract of guarantee as aforesaid shall be enforceable against the consumer or guarantor by any holder thereof, unless the requirements specified in this Part have been complied with:
Provided that if a court is satisfied in any action that a failure to comply with any of the aforesaid requirements, other than section 30, was not deliberate and has not prejudiced the consumer, and that it would be just and equitable to dispense with the requirement, the court may, subject to any conditions that it sees fit to impose, decide that the agreement shall be enforceable." (emphasis added)
17. However, the trial judge took the view that s. 30 did not apply, given the terms of s. 30(4) which excluded the application of the section to credit in the form of advances on a current account. In the judge's view, having regard to the fact that the loan documentation had not been executed and that no security had been created, "the loan ultimately came to take the form of a series of advances on the joint current account of Mr. and Mrs. Murray". It followed that s. 38 could be relied on by the Bank. That in turn informed the judge's analysis of Mr. Murray's argument that a claim in unjust enrichment could not indirectly enforce an otherwise invalid contract, an argument for which Haugesund Kommune v. Depfa ACS Bank [2010] EWCA Civ 579, [2012] QB 549 was cited as authority. In the judge's view, that argument had no force given that s. 38 allowed for recovery if it was just and equitable to dispense with the requirements of the 1995 Act, which she considered it was in the circumstances here. She was satisfied that Mr. Murray must be held liable "for any capital advanced to him", although the claim for interest was not permitted. That result was permissible having regard to the discretion conferred on the Court by the saver clause in s. 38 (paras. 182 - 195).
Supplemental Judgments
18. Following the delivery of the principal judgment, Mr. Murray asked to be permitted to address the High Court's conclusion as to the application of s. 30(4) of the 1995 Act. The trial judge permitted both parties to make written and oral submissions on that subsection.
19. In her supplemental judgment (Unreported, High Court, 16th August, 2021), the trial judge accepted that the exclusion in s. 30(4) did not apply on the facts, as the 2007 Loan had not been drawn down into a current account. However, Baker J. went on to state that her primary conclusion in the principal judgment remained unaffected. The conclusion on the evidence was that the Bank had not established that an agreement was entered into between the Bank and Mr. Murray in 2007 (or in 2003) and therefore, could not succeed in its contractual claim against him (supplemental judgment, para. 8). By reason of that conclusion, the provisions of the 1995 Act had no application as they applied (only) to contracts of loan and therefore, the conclusion that the Bank was entitled to recover on the basis of unjust enrichment was not displaced.
20. In a further supplemental judgment (Unreported, High Court, 3rd March, 2022), Baker J. addressed the issue of costs, (concluding that the Bank and Mr. Murray should each bear their own costs), as well as the exact amount of the judgment to be entered against the defendants (judgment was entered against Mr. Murray in the amount of 132,355.63, less the amount of certain disbursement, to be calculated). In addition, the trial judge ruled that Mr. Murray could not pursue his counterclaim against the Bank.
Court of Appeal Judgment ([2024] IECA 11)
21. Both defendants appealed to the Court of Appeal. Nothing further is said here about Mrs. Murray's appeal. In his Notice of Appeal, Mr. Murray relied on two grounds: (1) that the High Court judge erred in failing to find that the 2007 Loan could not be enforced as a result of the provisions of ss. 30 and 38 of the 1995 Act and instead, determining that the Bank could recover the monies under the law of unjust enrichment notwithstanding the breaches of those provisions and (2) that the High Court judge erred in finding that Mr. Murray had "knowing receipt" of the 2007 Loan proceeds as that term has been interpreted by the High Court of England and Wales in Primlake (as affirmed by the Court of Appeal of England and Wales in Primlake Ltd (in Liquidation) v. Matthews Associates & Others [2006] EWCA Civ 1708). As well as taking issue with Mr. Murray's grounds of appeal, the Bank in its Respondent's Notice identified as an additional ground for affirming the decision of the High Court the status of the 2007 Loan as a "housing loan" within the meaning of the 1995 Act and submitted that the provisions of Part III thereof accordingly did not apply.
22. The judgment of the Court of Appeal was given by Binchy J. (Costello J. (as she then was) and Faherty J. agreeing). It sets out in detail the factual background and the judgments given by the High Court, the terms of the respective notices and the submissions made by the parties.
Whether Mr. Murray could rely on the 1995 Act
23. In his discussion of Mr. Murray's appeal, Binchy J. first addressed the scope of application of the 1995 Act. Having noted the provisions of s. 3(1) of the Act, Binchy J. stated that it was "axiomatic" that in the absence of an "agreement", the Act had no application and, on Mr. Murray's own case, he had no agreement with the Bank. Therefore, he was not a consumer who was a party to any kind of credit agreement with the Bank. It followed that he could not invoke the 1995 Act in defence of the proceedings. For that reason, the decision of the House of Lords in Wilson v. Secretary of Trade and Industry (No 2) [2003] UKHL 40, [2004] 1 AC 816 ("Wilson") did not avail Mr. Murray, given that in that case the claimant had entered into a loan agreement, albeit one that did not comply with the relevant legislation. The circumstances here were not analogous to those in Wilson and more closely resembled a situation where funds were advanced to a person's account in error. In such circumstances, there are neither statutory nor contractual provisions governing the parties' responsibilities and it was therefore necessary to fall back on the common law. Those conclusions were not, in Binchy J.'s view, in any way "subversive of the will of the Oireachtas"; rather, the common law would step in to fill "what would otherwise be a gap in the legal relations of the parties that is not addressed by the very detailed provisions of the 1995 Act, by reason of the absence of any agreement between the parties." The High Court judge had therefore been correct to hold that the 1995 Act did not apply (paras. 83 - 90).
24. Mr. Murray's first ground of appeal therefore failed.
Unjust Enrichment
25. Turning to the issue of unjust enrichment, Binchy J. noted that there was no disagreement as to the application of the preconditions for a successful claim identified in Dublin Corporation v. Building & Allied Trade Union. He also noted that Mr. Murray did not appear to take issue with the High Court's conclusion that he had been enriched at the Bank's expense. There was, however, strong disagreement as to whether the law required restitution and whether Mr. Murray could avail of the defence of "no knowing receipt" in the circumstances (para. 93).
26. In this context, Binchy J. referred to paras. 178 - 181 of the principal High Court judgment, observing that when the appeal was being heard, Mr. Murray's counsel accepted that Mr. Murray knew that the joint account he held with his wife was used for the purposes of, inter alia, making payments into a pension fund and carrying out refurbishments of their home. That, in Baker J.'s view, had distinguished the instant case from Primlake. Binchy J. considered that there was no inconsistency between those findings and Baker J.'s conclusion that Mr. Murray only became aware of the full amount due on foot of the 2007 Loan in late 2011, nor was it unfair to hold him accountable for the Loan when he did not know of it at a time when the relevant proceedings might have been available for return to the Bank. That contention was, in Binchy J.'s view, "self-serving and unpersuasive." Once Mr. Murray knew that certain payments had been made from the joint account, which had benefitted him and which might not readily be met from his current income, he had been "duty bound to make inquiries as to the source of the funds, and not simply turn a blind eye, and rely on his delegation of the family finances to Mrs. Murray to avoid liability". The defence of "no knowing receipt" was not available in such circumstances. For the same reasons - Mr. Murray's failure to raise any concerns about the source of the funds used by Mrs. Murray to make payments on his behalf and to take steps to prevent further payments being made using the loan proceeds - it was not unfair to hold him accountable for the full amount of the loan, without analysing in detail the benefits he had received. Having failed to take any steps, he could not be heard "to cry 'foul'" when later held accountable for the full loan amount (paras. 94 - 99).
"Leapfrogging"
27. Binchy J. then addressed a further argument made by Mr. Murray, namely, that the Bank should not be permitted to "leapfrog" its claim over that of Mrs. Murray (with whom it had a loan contract which governed repayment of the 2007 Loan) in order to advance a claim against him. In support of that argument, Mr. Murray relied on Costello v. McDonald [2011] EWCA Civ 930, [2012] QB 244 ("Costello") and Pan Ocean Shipping Co Ltd v. Credit Corp Ltd [1994] 1 WLR 161 ("Pan Ocean Shipping"), submitting that in those cases, the defendant had received a benefit, but the court nonetheless held that that was not relevant where the correct defendant was the party with which the claimant had contracted. In circumstances where the Bank had an agreement with Mrs. Murray, but no agreement with Mr. Murray, it was contended that it could not pursue a claim in restitution when it had a remedy available through its agreement with Mrs. Murray.
28. At para. 101 of his judgment, Binchy J. set out an extract from Goff & Jones on Unjust Enrichment (10th ed, Sweet & Maxwell, 2022) at para 3.64 as follows:
"Some academic accounts suggest that there is a rule against 'leapfrogging', such that C, who confers a benefit on D under a valid contract between C and X, may never 'leapfrog' his immediate counterparty, X, and bring a claim in unjust enrichment against D. However, no case clearly establishes that there is any such broad-brush rule, and the better view is that there are rather several overlapping considerations arising out of the contract between C and X, which will often lead the courts to deny C's claim, but will not invariably do so."
29. Binchy J. proceeded to reference the consideration given by the authors (at para. 3.68) to the decision of the Court of Appeal of England and Wales in Costello:
"One concern was that C should not generally be permitted to recover from D where this will be inconsistent with the terms of C's contract with X. To put it another way, the question is whether the contract between C and X establishes a 'regime' in which there is no room for a restitutionary claim. In practice, the question whether this bar should apply depends on the legal validity of C and X's contract, and the proper construction of its terms. In construing the terms of C's contract with X, it is always necessary to take into account the wider history of the dealings between all 3 parties, which might lead to the conclusion that C and X were indeed contracting on the basis that C would not sue D."
30. Binchy J. noted how the authors went on to consider the concern that claimants ought not to be afforded an unjust enrichment claim where doing so would effectively undermine the manner in which the parties decided to allocate the risks that are involved in a transaction and the circumstances in which such objection could be displaced, citing para. 3-71 in which the authors stated:
"Note that a difficult question inevitably arises as to what facts might displace this objection. For example, could C avoid it by proving that his decision to contract with X and/or his decision to benefit D pursuant to the contract, was materially impaired, for example by some causative mistake?"
31. Binchy J. was satisfied that what had happened in the present case was a "causative mistake" which resulted in the benefits that Mr. Murray obtained. He reasoned as follows (judgment, para. 104):
"The Bank obviously thought that it was dealing with both Mr. and Mrs. Murray, and in circumstances where repayment of the 2007 loan was entirely dependent upon the income of Mr. Murray, it is inconceivable that the Bank would have agreed to advance the loan had it known that it was contracting with Mrs. Murray only. The result of the mistake - that the Bank had a loan agreement with Mrs. Murray only - was not the way in which the parties [chose] to allocate the risks involved in the transaction, and it was quite obviously never the case that the Bank contracted with Mrs. Murray on the basis that it would never pursue Mr. Murray in the event of default in repayment of the 2007 loan."
32. On that basis, Binchy J. was satisfied that affording the Bank an unjust enrichment claim against Mr. Murray did not "undermine ... the way in which the parties [chose] to allocate the risks involved in the transaction" and was not a remedy "precluded by the so-called rule against leapfrogging" which was not an "absolute rule" (para 104).
33. Accordingly, the Court of Appeal dismissed Mr. Murray's appeal. As he did not have an agreement with the Bank, he could not place reliance on the 1995 Act. Furthermore, Mr. Murray could not invoke the "no knowing receipt" defence for the reasons set out by Baker J. Finally, the claim brought by the Bank against Mr. Murray was not precluded on the basis of the Bank having a loan agreement with Mrs. Murray (para. 105).
Application for Leave and Determination
34. Mr. Murray applied for leave to appeal to this Court on 4th June, 2024. By Determination of 16th July, 2024 ([2024] IESCDET 87), a panel of this Court granted leave to appeal, considering that the case gave rise to several issues of public importance including the purpose, scope and effect of Part III of the 1995 Act, the availability of a restitutionary claim where a contract claim has succeeded, the interaction of unjust enrichment principles with a statute designed to protect borrowers, and the issue of whether public policy would be offended by allowing an unjust enrichment claim where a credit agreement failed to comply with Part III of the 1995 Act's mandatory requirements.
35. The panel granted leave in respect of the grounds of appeal contained in Mr. Murray's Notice of Appeal, namely:
(1) Whether the 2007 Loan is unenforceable by virtue of the provisions set out in ss. 30 and 38 of the 1995 Act.
(2) Whether Mr. Murray can be required, under the law of restitution, to repay the contractual debt to the Bank in circumstances where the Bank was successful in obtaining a judgment in the full amount against Mrs. Murray.
(3) Whether the Bank should have an entitlement to its costs as against Mr. Murray in view of, inter alia, the Bank's practice of processing joint mortgage agreements where only one of the parties is present.
36. The panel's determination left open the question of whether the Bank should be permitted to rely on a further ground for affirming the decision in its favour, namely that the 2007 Loan was, at all times, a "housing loan". At a subsequent case management hearing on 23rd October, 2024, the case management judge gave a direction permitting that ground to be advanced and the parties subsequently made further written submissions directed to that issue.
Submissions
Overview
37. The respective submissions of the parties largely reflect and repeat the arguments previously made by them before the High Court and the Court of Appeal. Therefore, the arguments do not need to be recited in extensive detail.
38. Mr. Murray contends that he is entitled to the protections of Part III of the 1995 Act and it would be contrary to the spirit and intent of the Act to allow a regulated lender (such as the Bank) to avoid its statutory obligations by maintaining that they do not apply on the basis that Mr. Murray did not sign the relevant loan documentation, in circumstances where the lack of a contractual relationship was due to the Bank's own actions. Mr. Murray says that, if the provisions of Part III apply, it follows that the 2007 Loan is unenforceable as a matter of law and that outcome cannot be circumvented by a claim in restitution. Secondly, and in any event, Mr. Murray says that if he is to be regarded as a "third party to the loan", the Bank should not be permitted to maintain a claim against him, in circumstances where it has obtained judgment in full against his wife. He also relies on the Bank's behaviour - involving, he says, facilitating the forgery of certain documents - as a ground for defeating the Bank's claim and raises the issue of whether he can be held liable in restitution to repay a sum greater than that actually received by way of benefit.
39. In broad terms, the Bank seeks to stand over the judgments of the High Court and the Court of Appeal. However, it also maintains that the 2007 Loan offer, which was accepted by Mrs. Murray (the Bank acknowledges that it was not accepted by Mr. Murray), was, at all times, a "housing loan" within the meaning of the 1995 Act. The detail of the Bank's arguments on this issue are addressed further below. The Bank's primary contention is that the 2007 Loan was an effective housing loan as regards Mrs. Murray and therefore outside the scope of Part III of the 1995 Act (which does not apply to housing loans, see s. 29 thereof). As regards Mr. Murray, the Bank's position is that, on his own case, there was no contractual relationship between him and the Bank. In those circumstances, there was no loan made to Mr. Murray and therefore no basis for him to rely on the provisions of Part III of the 1995 Act. The Bank takes issue with the suggestion that it was guilty of any misbehaviour, asserting that no such finding was made by the High Court. With respect to the availability of an unjust enrichment claim, the Bank effectively advances the analysis that found favour with the High Court and the Court of Appeal, and emphasises the finding of the High Court that the benefits received by Mr. Murray rendered him liable to repay the full amount of the loan liability.
The Application of the 1995 Act
40. Mr. Murray submits that the 1995 Act imposes an obligation on all regulated lenders that lend money to consumers in consumer transactions to comply with its provisions. Mr. Murray contends that although the agreement was signed by Mrs. Murray, to exclude him from its application because he had not signed it means that a category of persons which the legislation seeks to protect would be wrongly excluded. He says that the Bank was obliged to ensure that all credit agreements satisfy the requirements of s. 30, and that a failure to ensure the credit agreement complied with the 1995 Act itself constituted a breach of the Act. The High Court and Court of Appeal were, he says, wrong to link the triggering of the obligations of the Bank under the 1995 Act to the signing by one party of the joint loan agreement. This, it is submitted, would effectively permit the Bank to use its own failings for the purpose of excluding important protections within the Act.
41. Mr. Murray emphasises the wording of s. 3(1) of the 1995 Act, the provision upon which the Bank relies in maintaining that it can avoid the application of the Act insofar as its dealings with Mr. Murray are concerned. Section 3(1) confirms that the "Act shall apply to all credit agreements, hire-purchase agreements and consumer-hire agreements to which a consumer is a party" (Mr. Murray's emphasis). Mr. Murray submits that this case concerns a credit agreement where one party is a consumer; Mrs. Murray was a party to the loan agreement and as such, he says, the provisions of the 1995 Act apply to the agreement.
42. Mr. Murray says that the 2007 Loan was "axiomatically" subject to the provisions of ss. 30 and 38 of the 1995 Act. It is common case that the Bank did not comply with the mandatory requirements of s. 30 and thus, he says, the 2007 Loan is unenforceable having regard to s. 38. Citing Wilson, he says that the Bank cannot be allowed to circumvent that statutory consequence by making a "back-door" claim in restitution.
43. The Bank's position on the application of the 1995 Act is relatively simple and straightforward. It says that it entered into an agreement for a "housing loan" with Mrs. Murray and that that loan remained at all times a housing loan, notwithstanding that the intended security over the Murray's family home was never effectively put in place. Thus, the Bank says, the loan to Mrs. Murray did not come within the scope of Part III of the 1995 Act. There was, the Bank says, no loan made to Mr. Murray and no contractual relationship between him and the Bank; accordingly, Mr. Murray is not in a position to rely on any of the provisions of the 1995 Act.
The Bank's Claim in Restitution
44. Mr. Murray says that there are significant factors militating against the sustainability of a restitutionary claim by the Bank in the present circumstances. His submissions identify the following issues: (i) the fact that the Bank had a contract with Mrs. Murray and had obtained judgment in full against her; (ii) the concept of "leapfrogging"; (iii) the allocation of risk and (iv) change in position.
45. As to issue (i), Mr. Murray emphasises that the Bank had sued and obtained a judgment in the full amount against Mrs. Murray pursuant to the contract of loan. It had been open to the Bank to abandon its contractual claim and to pursue a restitutionary claim only, but it had elected not to do so. Citing Dimskal Shipping Company SA v. International Transport Workers Federation [1992] 2 A.C. 152 ("The Evia Luck") and Pan Ocean Shipping, Mr. Murray contends that the manner in which the Bank had advanced its claim against Mrs. Murray fundamentally undermined its entitlement to agitate a claim in restitution, in respect of precisely the same contractual debt, against him.
46. In relation to (ii) (the "leapfrogging" issue), Mr. Murray says that the facts of this case are such that it cannot be compared to the factual matrices which ground the authorities referred to by the authors of Goff & Jones on Unjust Enrichment. Mr. Murray says that rather than concerning a leapfrog situation whereby a claimant looks beyond a putative defendant so as to sue a separate party, the Bank in the present case was successful in suing and obtaining a judgment in full against Mrs. Murray, the "leapfrogged" party. The Bank's claim begs the question whether, and if so to what extent and in which circumstances, a claimant ("C") that obtains a "judgment in full" (Mr. Murray's emphasis) against a contractual debtor ("X") for repayment of the full contractual debt owed by X to C, on foot of an actionable contract the terms of which comprehensively legislate for the event of non-payment, is permitted to simultaneously seek and obtain a judgment in restitution against a third party ("D") for repayment of the same contractual debt which X owes to C, on the basis that D obtained a collateral benefit from the money which C advanced to X. Mr. Murray submits that, as a general rule, such an extension of liability beyond the confines of the existing contract which legislates for the issue in question should not be permissible, and that "significant care" should be taken in permitting the existing unjust enrichment test to be applied in this context.
47. Ultimately, Mr. Murray contends that, in the absence of any action by the Bank to avoid the loan contract with Mrs. Murray, the loan proceeds are irrecoverable in restitution.
48. In relation to (iii) ("allocation of risk"), Mr. Murray says that the contractual risk allocation envisaged by the Bank, and its characterisation of Mr. Murray as a contractual debtor, is problematic in two ways. First, this approach would impermissibly improve the position of the Bank by enabling it to simultaneously treat Mr. Murray as "a de facto contractual debtor" while at the same time, maintaining that he was not a consumer within the agreement but a third party to whom the 1995 Act's provisions are not applicable. Secondly, in doing so, the Bank is asking the Court to effectively ignore the fact that the monies were advanced to Mrs. Murray through a lending practice which Mr. Murray says is "repugnant to the legislative spirit of the Act". Mr. Murray says that "basic fairness" requires that he be regarded as either 'in' the transaction or counted 'out' of it. If he is regarded as being 'in' it for the purpose of examining the Bank's risk allocation, he should be able to avail of the consumer protections provided for by the 1995 Act. Alternatively, if he is viewed as not being a party to the transaction to prevent him from relying on the 1995 Act, it ought to follow that attempts on the part of the Bank to place reliance on his inclusion within the transaction as a way of improving its own position ought to be treated with caution.
49. As regards (iv) ("change of position"), Mr. Murray says that the High Court's analysis of this issue was unfairly premised on an assumption that he had no income and that all payments made out of the joint account were dependent on the draw down of the loan monies. Mr. Murray submits that he had been paying taxes for 40 years or so. He contends that either he could afford the payments which the Bank identified via his own income, or he could not. If it was the case that he could afford them (i.e. where the payments were discharged from money which he earned), it could not be properly said that he was unjustly enriched by the payments being made. If he could not afford the payments, that was concealed through Mrs. Murray obtaining a loan and drawing it into the joint account without Mr. Murray ever being notified by the Bank. In that case, Mr. Murray contends that the change in position is that he was unjustly prevented from being notified that payment(s) were being missed and thus having the opportunity to address his wife's spending at an earlier stage, prior to the loan being drawn down. The "causative factor" that led to him being so prevented was the "artificial propping up of his joint account by monies advanced by the bank to his joint account without his knowledge or consent". It is said that such a change of position falls squarely within the hardship and prejudice which the defence seeks to prevent. The submissions add that the money was advanced pursuant to lending behaviour which is incompatible with ethical and statutory norms.
50. The next argument made by Mr. Murray against recovery by the Bank relates to its behaviour. Mr. Murray cites Haugesund Kommune v. Depfa ACS Bank and Wilson as authorities for the principle that a common law claim for restitution cannot be allowed to circumvent legislation or provide a means of enforcing an otherwise unlawful or unenforceable loan contract. Those cases were, it is said, concerned only with a "technical failure" to comply with statutory requirements whereas here, there is something "significantly more grave: an admitted, systematic practice of advancing mortgage loan facilities to marital joint accounts in the absence of one spouse." The public interest requires that such behaviour on the part of a regulated lender should be discouraged. Permitting recovery by the Bank is, Mr. Murray says, "unattractive from a public policy perspective".
51. Finally, Mr. Murray submits that justice cannot require restitution of a sum which is greater than that by which a person was actually enriched. Mr. Murray contends that he never had the benefit of the full sum or any benefit exceeding the sum of 30,000 which he had understood to have been borrowed. Mr. Murray submits that the alleged benefits identified by the Bank do not take account of the fact that in the period between the loan being obtained by Mrs. Murray (in 2007) and Mr. Murray becoming aware of its existence (in late 2011), he had earned in excess of 200,000, which was deposited to the same joint account from which it is claimed he derived enrichment. For Mr. Murray to have gained the level of benefit attributed to him, he would have had to have earned nothing during that period. In these circumstances, it is said that to find Mr. Murray liable based on "strict liability" due solely to the transfer of money into a joint account would be "manifestly unjust", having regard to what is said to have been the unconscionable actions of the Bank, without which no such transfer would have occurred.
52. The Bank cites Haugesund Kommune v. Depfa ACS Bank as authority for the proposition that, where a loan contract is void because it is ultra vires, the lender may nonetheless advance a claim in restitution, subject to any defences that may arise. In Haugesund Kommune v. Depfa ACS Bank itself, the lender recovered the full amount advanced, together with interest. It seeks to distinguish Wilson on the basis that the borrower in that case had entered into a loan agreement which did not contain the terms prescribed by the relevant legislation, whereas in the instant case, the High Court had accepted that Mr. Murray was not a party to the 2007 Loan and thus, he was not entitled to avail of any defences that might be available to a party to an improperly executed credit agreement.
53. Having referred to Dublin Corporation v. Building and Allied Trade Union, the Bank addresses the issue of the allocation of risk and "leapfrogging", referencing Goff & Jones (10th ed), Pan Ocean Shipping, The Evia Luck and Costello. It notes that in Costello, Etherton L.J. found (at para. 23) that the claim in unjust enrichment against the defendants had to fail, even though the defendants had benefitted from the work carried out by the claimant, as to allow such a claim would have undermined the contractual arrangements between the parties (the builder had agreed to contract with a company controlled by the defendants, rather than with the defendants personally). The Bank says that the considerations that arose in Costello do not arise here as the Bank had not knowingly arranged its affairs with the Murrays so that it would contract with Mrs. Murray alone. Rather, it was of the view - a view which the Bank says was reasonable - that it was engaging with both Mr. and Mrs. Murray who would both be responsible for the loan. As such, the Bank says that the parties did not arrange their affairs in a way that precluded an unjust enrichment claim being advanced against Mr. Murray.
54. On the issue of the benefit received by Mr. Murray, the Bank refers to a passage from para 4.64 of the 9th edition of Goff & Jones, cited at para. 156 of the principal High Court judgment (see para. 4.76 of the most recent 10th edition of Goff & Jones) to the effect that, where a benefit is received by more than one person, as for example where a payment is made into a joint bank account, "the law generally holds that all the defendants are jointly and severally enriched, with the result that a claim for the whole amount of the enrichment may lie against any or all of them". In that context, the Bank refers to the findings made by Baker J. at paras. 159 and 167 - 169 of the principal judgment and also to the statements made at para. 98 of the Court of Appeal judgment. In light of those findings, the Bank says that it is appropriate that it should recover the balance of the principal sum "advanced to Mr. Murray" by way of restitutionary claim.
55. With regard to its alleged lending misbehaviour, the Bank stresses that no finding of misconduct or impropriety was made by the High Court. It rejects any suggestion that the evidence of Mr. Campbell (the former Branch Manager in Killybegs) disclosed any impropriety or misconduct. The Bank says that, from its perspective, when the 2007 Loan offer letter was issued, the intention was that the 2007 Loan would be secured through the Deed of Charge which it already held over the property. It already had in its possession a Deed of Charge which appeared to contain the signatures of the Murrays, witnessed by their solicitor. There was, the Bank says, no requirement that the signatures in respect of the 2007 Loan offer letter had to be witnessed by an official from the Bank (or indeed by any other person) or signed in the branch for it to be valid. The Bank highlights that two signatures were put on the 2007 Loan offer letter, indicating that its terms were agreed to, and the letter was given to the Bank. Accordingly, the Bank suggests that the assertions of Mr. Murray regarding malpractice on the Bank's part are unsubstantiated.
The "Housing Loan" Issue
56. This issue was addressed in the Bank's submissions and considered further in the additional written submissions which the parties were permitted to file.
57. The Bank maintains that the 2007 Loan was a "housing loan" within the meaning of s. 2 of the 1995 Act. In its submission, its agreement with Mrs. Murray came within the scope of paragraphs (c) and (d) of the definition of "housing loan" in that section, which are in the following terms:
"(c) an agreement for the provision of credit to a person on the security of a mortgage of a freehold or leasehold estate or interest in land on which a house is constructed where the house is to be used, or to continue to be used, as the principal residence of the person or the person's dependants, or
(d) an agreement for the provision of credit to a person on the security of a mortgage of a freehold or leasehold estate or interest in land on which a house is, or is to be, constructed where the person to whom the credit is provided is a consumer".
58. According to the Bank, the absence of effective security does not convert a "housing loan" to a different loan category (e.g., a "credit agreement"). It highlights the wording of the definition of "housing loan", noting that it refers to "an agreement for the provision of credit...on the security of a mortgage" (Bank's emphasis), as opposed to credit actually being provided and secured on a mortgage. Therefore, the Bank says, a "housing loan" comes into existence once the agreement is reached, not when the credit is provided or the legal mortgage is created. Any other interpretation would, it says, give rise to "huge uncertainty" as to when in any particular instance a "housing loan" came into existence.
59. The Bank goes on to contend that, even if the security is not in fact put in place, the agreement between the parties nonetheless remains a "housing loan", albeit a "partially failed" one and does not convert into another category of loan, such as a "credit agreement". A "housing loan" subject to a voidable mortgage does not cease to be such if and when that mortgage is voided. Otherwise, the Bank says, a lender entering into a "housing loan" would be required to treat housing loans as akin to credit agreements and thereby ensure compliance with both Part III and Part IX of the 1995 Act so as to avoid the potential consequences of a mortgage later being found to be ineffective. Such a scenario, the Bank says, is neither supported by the language of s. 2 nor by common sense.
60. Accordingly, the Bank argues that Baker J. erred in finding that the 2007 Loan did not constitute a "housing loan" under the 1995 Act but was instead a "credit agreement" to which s. 30 applied. The Bank had advanced that argument to the Court of Appeal, but that court clearly did not consider it necessary to rule on it.
61. The Bank does not accept that the interpretation of "housing loan" that it advances would undermine or conflict with the policy of the 1995 Act. Given the finding that there was no contractual relationship between him and the Bank, he cannot complain that he did not receive the benefit of provisions of the 1995 Act designed to protect parties to a "housing loan."
62. Mr. Murray says that the interpretation of "housing loan" advanced by the Bank would defeat the purpose, context, and language of the statutory provision. On that interpretation, a "housing loan" could exist without the loan being secured by a mortgage. Mr. Murray contends that the argument of the Bank ignores the fact that the 1995 Act provides different consumer protection regimes relative to "the type of regulated lending" in question. Moreover, he submits that the interpretation advanced by the Bank conflicts with the 1995 Act's dual purpose (i.e. to regulate providers of particular loan types and to protect consumers). Mr. Murray says that the Bank is confusing the wording of the definition by seeking, in substance, to import the word "intended" into it such that a housing loan would exist where there was an agreement to provide credit which was intended to be secured through a mortgage. Mr. Murray contends that in view of the definition's wording and the combination of an agreement and the security of a mortgage, "the disaggregated definition" which the Bank contends for (whereby a housing loan could subsist absent the security of a mortgage) receives no support from the statutory provision's proper interpretation.
63. Mr. Murray also submits that "serious policy considerations" must be taken into account when considering the Bank's entitlement to seek repayment by way of a claim for restitution/unjust enrichment. Reference is made to the requirement highlighted by Baker J. when referring to Dublin Corporation v. Building and Allied Trade Union that there be no "defences or other policies to deny restitution" (at para. 158 of the principal High Court judgment). In this regard, Mr. Murray refers to the Bank's practice of processing mortgage applications made by two parties where only one has given instruction. He says that if the 2007 Loan is accepted to be a "housing loan", he was not afforded various prescribed statutory protections. For example, s. 123 requires lenders to furnish borrowers with a valuation report. Mr. Murray submits that the fact criminal liability can be imposed pursuant to s. 12(1) where various sections of the 1995 Act are contravened, illustrates the public policy underpinning them: "the need for strict compliance" on the part of regulated lenders to ensure consumers are protected properly and consistently. Mr. Murray contends that the Bank's actions were "subversive to the will of the Oireachtas" in that they "trespassed upon" the statutory protections which ought to have been afforded to him.
Discussion
The Consumer Credit Act 1995
64. The first issue to be considered is the role of the 1995 Act, and its provisions in relation to two elements of the Act in particular: credit agreements and housing loans.
65. I propose to consider briefly what is meant by a housing loan and the definition contained in s. 2 of the 1995 Act is set out in full at para. 9 above. It bears repeating as to where it explains that a housing loan is:
"an agreement for the provision of credit to a person on the security of a mortgage of a freehold or leasehold estate or interest in land".
A number of purposes for which the loan is required are then set out, but they need not trouble us here.
66. The second element of the 1995 Act that is of relevance concerns those parts thereof dealing with credit agreements. A credit agreement is defined under s. 2 as being:
"an agreement whereby a creditor grants or promises to grant to a consumer a credit in the form of a deferred payment, a cash loan, or other similar financial accommodation".
67. In circumstances where the High Court held that the 2003 Loan was obtained in circumstances where the documents relating to the loan and, more especially, the declaration under the Family Home Protection Act 1976, were not signed by Mr. Murray, and that he had not executed the Deed of Charge, the trial judge reached the conclusion that the charge created by way of security for that loan was "void and of no effect" by reason of s. 3 of the 1976 Act. She went on to say, at para. 99 of the principal judgment, that:
"... the fact that the 2003 Loan cannot be validly said to be one secured on the principal private residence of the defendants has a consequence in regard to the argument from the Consumer Credit Act ...".
68. She went on to conclude at para. 185 of that judgment that, as Mr. Murray never created a mortgage on his principal private resident, the 2007 Loan was not a housing loan, and consequently "the provisions of ss. 30 and 38 of the Consumer Credit Act are in play".
69. She referred to the provisions of s. 3 of the 1995 Act, which provides as follows:
"Subject to this Act, this Act shall apply to all credit agreements, hire-purchase agreements and consumer-hire agreements to which a consumer is a party"
She therefore concluded that "the loans to Mr. and Mrs. Murray were consumer loans".
70. Section 30 of the 1995 Act sets out the general requirements in relation to credit agreements. This includes providing that a copy of the agreement be sent to the consumer by the creditor within a 10-day period of making the agreement, providing a statement in respect of a cooling-off period for some 10 days after the making of the agreement, and other provisions.
71. It was argued on behalf of the Bank before the High Court that the failure to meet the statutory notice, or cooling-off periods, was not fatal. The failure to meet the requirements of s. 30 did not mean that the loan was unenforceable. Section 38 of the 1995 Act has been set out in full at para. 16 above but it is useful to set out the first part of s. 38 again, which provides as follows:
"A creditor shall not be entitled to enforce a credit agreement or any contract of guarantee relating thereto, and no security given by the consumer in respect of money payable under the credit agreement or given by a guarantor in respect of money payable under such contract of guarantee as aforesaid shall be enforceable against the consumer or guarantor by any holder thereof, unless the requirements specified in this Part have been complied with:"
72. Ultimately, the trial judge concluded that s. 38 of the 1995 Act could be relied on by the Bank. In that context, the trial judge relied on the provisions of s. 30(4) of the 1995 Act which disapplies the provisions of s. 30 in relation to credit in the form of advances on a current account or on credit card accounts on the mistaken view that, as the monies were ultimately drawn down into a current account, s. 30 did not apply. This led to the second judgment, and in the course of that judgment it was accepted that the 2007 loan facility was not drawn down into a current account in the first instance but was drawn down in a series of advances to a mortgage account within the Bank, and therefore transferred from time to time into the current account. Therefore, the judge accepted that her conclusion that the provisions of the 1995 Act did not apply to the loan, by reason of the provisions of s. 30(4) of the 1995 Act, was mistaken. However, she ultimately concluded that as a contractual arrangement did not exist between Mr. Murray and the Bank, the provisions of the 1995 Act had no application as far as he was concerned, as those provisions only applied to contracts of loan.
73. The Court of Appeal in its judgment referred to the arguments on behalf of Mr. Murray based on the provisions of ss. 30 and 38 of the 1995 Act. Having referred to the provisions of s. 3(1) of the 1995 Act, Binchy J. in his judgment at para. 85 observed:
"The first obvious point of note that flows from s.3(1) is that, for the 1995 Act to apply, the person relying on it must be a "consumer", who must be a party to one of the kinds of agreement referred to in the section. Each of the terms "credit agreement", "hire purchase agreement" and "consumer hire agreement" has a defined meaning in the 1995 Act, as does the word "consumer"."
74. He went on to say at para. 86:
"It is thus clear that the 1995 Act only has application in specified - if very wide-ranging - circumstances which in each case are defined by reference to a particular kind of agreement. It is axiomatic that if there is no agreement, the 1995 Act is of no application. On Mr. Murray's own case, in which he prevailed in the Court below, he had no agreement with the Bank, for the purpose of either the 2003 loan or the 2007 loan; or put another way, within the terminology of s.3(1) of the 1995 Act, he was not a consumer who was a party to any kind of credit agreement with the Bank. It follows that Mr. Murray may not invoke the provisions of the 1995 Act in defence of these proceedings."
75. Accordingly, the Court of Appeal dismissed the arguments of Mr. Murray based on the provisions of the 1995 Act.
76. The arguments relied on by Mr. Murray before the Court of Appeal were reiterated before this Court. For its part, the Bank, whilst it necessarily accepts that it has no contractual relationship with Mr. Murray, by reason of the findings of the High Court and the Court of Appeal, nevertheless contends that the 2007 Loan at the heart of these proceedings constitutes a housing loan. The Bank relies on a number of matters in support of this. In the first instance, the Bank emphasises the wording of the definition of a housing loan, namely, that it refers to "an agreement for the provision of credit ... on the security of a mortgage ...", rather than the actual provision of credit on the security of a mortgage. The Bank highlights the distinctions between the steps to be taken by a creditor in respect of housing loans, and those to be taken by a creditor in respect of a credit agreement. Counsel on behalf of Mr. Murray, on the other hand, emphasises that the Bank's approach was not consonant with the proper interpretation of the words used in the statute to define a housing loan. It is argued that the Bank's approach means that there does not have to ever come into existence any "security of a mortgage of a freehold or leasehold estate or interest in land", and accordingly, a housing loan, within the meaning of the 1995 Act, could subsist in the absence of such security in circumstances where security had not been put in place. In essence, it is argued on behalf of Mr. Murray that the Bank's approach sought to import the word "intended" into the definition of a housing loan so that it would read, 'an agreement for the provision of credit to a person on the [intended] security of a mortgage of a freehold or leasehold estate or interest in land ...'. It was contended, therefore, having regard to the principles of statutory interpretation, that the Bank's view of the meaning of a housing loan was not correct. Accordingly, it was urged on this Court that the trial judge's conclusion at para. 185 of the judgment, to the effect that the 2007 Loan was not a housing loan, was correct and therefore, "the provisions of ss. 30 and 38 of the Consumer Credit Act are in play".
77. The point is made on behalf of the Bank that, if the argument of Mr. Murray and the conclusion of the trial judge are correct to the effect that if a mortgage was never created on an interest in land, what should have been, and was intended to be, a housing loan was, in fact, a credit agreement, it would follow that the Bank would be required to comply with the provisions of the 1995 Act dealing with credit agreements, and in particular ss. 30 and 38. I cannot see how that could be correct.
78. The Bank contends that the definition of a housing loan concerns an agreement for the provision of credit on the security of a mortgage, rather than the actual provision of funds on foot of a mortgage. I do not agree with the contention that the Bank is seeking to import the word "intended" into the definition of a housing loan. What is in contemplation in the 1995 Act is an agreement to provide monies on foot of a mortgage. It is envisaged by the parties in such a scenario that, having agreed the terms of the loan which include the provision of security, they will then arrange for the security to be created, after which, on foot of the agreement, the monies will be drawn down.
79. The 1995 Act contains detailed provisions in relation to the steps to be taken by a creditor in relation to housing loans. These comprehensive provisions are contained in Part IX of the Act under the heading, "Housing Loans Made by Mortgage Lenders". They regulate the role of mortgage intermediaries, the redemption of housing loans, criteria for the calculation of the annual percentage rate (APR) in relation to housing loans, and other important issues in relation to such loans, such as valuation reports, issues in relation to the insurance of mortgage property, and the costs of the legal investigation of title. Other significant issues are dealt with, such as the requirement for banks to provide information as to the possible loss of a home in the event of failure to keep up payments on a mortgage.
80. These requirements can be compared with those set out earlier in the 1995 Act in relation to the provision of consumer agreements. It is not necessary to set those out again. The respective provisions in the Act in relation to credit agreements, and those in relation to housing loans, are tailored to meet the circumstances of those who are either obtaining credit on foot of a housing loan or obtaining credit on foot of a credit agreement. I find it difficult to understand how it can be said that, in circumstances where the security required to be put in place in respect of a housing loan fails for some reason, that which was contemplated by the parties ceases to be a housing loan.
81. It has to be borne in mind that in the circumstances of this case, the Bank entered into a housing loan with Mrs. Murray, and believed it was entering into such a loan with Mr. Murray. Thus, funds were made available by the Bank in the mistaken belief (brought about by the wrongful actions of Mrs. Murray) that it had security over the family home of the Murrays, in respect of the loan. The fact that the security over the family home is void, by reason of the provisions of the 1976 Act, cannot, in my view, alter the nature of the loan being provided by the Bank. It engaged in the provision of a housing loan, complied with the provisions of the 1995 Act in relation to housing loans, provided funds on the basis of what it understood to be a valid security, and it was only some years later, having regard to the findings of the trial judge, that it transpired that the security was void by reason of the actions of Mrs. Murray and the failure of Mr. Murray to sign the required security documents.
82. The idea that the failure of the security would, in and of itself, convert what was understood to be a housing loan by the Bank, Mrs. Murray and - it should be remembered - Mrs. Murray's solicitors, who were involved in the creation of the 2003 Loan, into a credit agreement is hard to understand. In practical terms, if that approach was correct, it would mean that in every case where a mortgage lender proposes to provide a housing agreement, it would be necessary for a mortgage lender to comply not only with all the requirements of the legislation in relation to housing agreements, but also with the distinct requirements in relation to credit agreements set out in the legislation. That simply does not make sense. The failure of the security does not result in what was a housing agreement turning into a credit agreement. This approach does not involve the insertion into the definition section of additional words, as contended for by Mr. Murray, but rather reflects the plain meaning of the words used in the definition section. The definition relates to an agreement for the provision of credit on foot of a security. That is all that is required. The fact that a security created over a property subsequently fails for one reason or another does not alter the original agreement between the parties for the provision of credit on foot of a security.
83. Accordingly, insofar as it was concluded by the trial judge that the provisions of ss. 30 and 38 of the 1995 Act came into play following the failure of the security in this case, I respectfully disagree with that conclusion. That which started as a housing loan does not thereafter become a credit agreement by reason of some defect in the creation of the security in respect of the loan. For that reason, I am satisfied that the provisions of ss. 30 and 38 are of no relevance or application to circumstances such as those which arose in this case. Accordingly, the restriction on enforceability contained in s. 38 of the Act has no bearing in circumstances such as these. In my view, the Oireachtas in drafting the legislation carefully distinguished between the requirements of a lender providing credit in respect of a credit agreement, and a lender providing credit on foot of a security over an interest in land. Quite distinct and loan-appropriate measures have been provided for in the legislation and, in those circumstances, it is difficult to see how it could be said that, by reason of a defect in the actual taking of security in respect of a housing loan, that fact could turn the loan into a credit agreement. To reach any other conclusion would seem to me to ignore the very careful distinctions made by the Oireachtas in the Act as between credit agreements and housing loans. Quite simply, a loan cannot be a credit agreement and a housing loan at the same time, depending on the possibility of the failure of security.
84. Having said this, it is necessary to point out once more that on the facts of this case, it was accepted and found by the trial judge that Mr. Murray did not enter into any agreement with the Bank, be it a credit agreement or a housing agreement. In those circumstances, it is difficult to disagree with the conclusions of Binchy J. set out at paras. 85 and 86 of his judgment, where he concluded that: "It is axiomatic that if there is no agreement, the 1995 Act is of no application".
85. Mr. Murray, it must be remembered, had contended that he had no agreement with the Bank and that proposition was accepted. Accordingly, he was not a consumer who was a party to any kind of agreement with the Bank, and therefore could not invoke the provisions of the 1995 Act by way of defence of the proceedings.
86. I therefore agree with the conclusion of the Court of Appeal in this regard.
Restitution/Unjust Enrichment
87. Having decided that Mr. Murray is not entitled to rely on the provisions of the 1995 Act to render the Bank's claim unenforceable, the question arises as to whether the Bank is entitled to recover any sum from Mr. Murray by reliance on the law relating to restitution or, as it is otherwise called, unjust enrichment.
88. The law in this area can be traced back to the words of Lord Mansfield C.J. in the case of Moses v. MacFerlan (1762) 2 Burrow 1005, 97 E.R. 676 when he said at pp. 680 - 681:
"... This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged ... In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money."
89. That principle could be described as the fons et origo of the law of unjust enrichment. While the decision in that case has been subject to much criticism, (see, for example, Goff & Jones on Unjust Enrichment (10th ed), para. 2-34, and Keane C.J., speaking for this Court in Dublin Corporation v. Building & Allied Trade Union p. 485), nonetheless, the underlying principles gave rise to the modern law of restitution/unjust enrichment. The error in that case involved the setting aside of a previous decision of a court of competent jurisdiction, which, as has been said in many subsequent cases, the law generally does not allow.
90. It is interesting to note that in the earlier case of Murphy v. The Attorney General [1982] I.R. 241, Henchy J. in the course of his judgment on the consequences of a finding of unconstitutionality of certain provisions of the Income Tax Act 1967 relating to the taxation of married couples cited the passage above from Moses v. Macferlan, and made the following observation at p. 320:
"Whether the action be framed at common law for money had and received or (as here) in equity for an account of money held as a constructive trustee for the plaintiffs, I would hold that, in the absence of countervailing circumstances (to which I shall presently refer), such money may be recovered".
Thus, it was found, in principle, that moneys paid by way of taxation on foot of legislation subsequently found to be unconstitutional could be recovered. I will return to some further comments of Henchy J. subsequently.
91. The authors of Goff & Jones, relying on the decision of Deane J. in the High Court of Australia (Pavey & Matthews Pty Limited v. Paul [1987] 162 CLR 221 at pp. 256 - 257), describe unjust enrichment as a:
"... unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case." (Goff & Jones, para. 1-07)
92. As the authors of Goff & Jones explain the concept in its simplest terms at para. 1-08, unjust enrichment can be understood as:
"an organising concept that groups decided cases on the basis that they share a set of common features, namely that in all of them the defendant has been enriched by the receipt of a benefit gained at the claimant's expense in circumstances that the law deems to be unjust".
93. Thus, the issue that falls to be decided in this appeal is whether Mr. Murray has been enriched by the receipt of a benefit gained at the Bank's expense, in circumstances that the law deems to be unjust.
94. Baker J. in her first judgment in the High Court set out the principles to be applied by a plaintiff in seeking restitution on the basis of unjust enrichment, in a passage which, as Binchy J. noted at para. 93 of his judgment, was not the subject of any disagreement on the part of the parties. She did so by reference to the judgment in Dublin Corporation v. Building & Allied Trade Union at para. 158 in which she observed:
"Keane J. giving judgment for the Supreme Court in Corporation of Dublin v. Building and Allied Trade Union [1996] 1 IR 468, at p. 493, considered the following preconditions must be fulfilled by a plaintiff who claims for unjust enrichment:
(i) the enrichment of the defendant;
(ii) at the plaintiff's expense;
(iii) in circumstances in which the law requires restitution (the "unjustness" of the enrichment); and
(iv) the absence of defences or other policies to deny restitution."
95. There are a number of facts in this case which are not in dispute. In the first instance, the Bank provided a loan in 2003 in the sum of 40,000 to enable the purchase of an apartment in Spain. In 2007, the Bank provided a further loan facility in the sum of 200,000. The amount outstanding on the 2003 Loan was discharged in full out of the proceeds of the 2007 Loan.
96. The Bank provided the said loans in the mistaken belief that the monies concerned were being provided to Mr. and Mrs. Murray jointly on foot of a security on their family home.
97. The sum of 200,000 was initially paid into a mortgage account in the names of Mr. and Mrs. Murray by way of a series of advances (although it is not disputed that Mr. Murray was not a party to the mortgage account on the facts as found), in relation to the advance of the 2003 Loan, and the subsequent advance of the 2007 Loan, and was thereafter paid from time to time into the joint account of the Murrays. It goes without saying that neither the 2003 Loan nor the 2007 Loan would have been provided by the Bank if it had been aware of the fact that Mr. Murray had not signed the relevant documents to borrow the monies concerned and the documents required to create the security over the family home of the Murrays. The loans were provided by the Bank in the mistaken belief that Mr. Murray was a party to the relevant transactions. It is, at this stage, beyond dispute that Mr. Murray did not participate in the dealings with the Bank, and insofar as the provision of the loans and the creation of the security in respect of the loans is concerned, he had no contractual relationship with the Bank. Despite the fact that Mr. Murray and the Bank had no contractual relationship, it would appear that the Bank is entitled to look to Mr. Murray for restitution, subject to any possible defences he may have.
The Benefit to Mr. Murray or 'No Knowing Receipt'
98. A key question arises as to whether Mr. Murray received any benefit from the proceeds of the 2007 Loan. The trial judge considered this issue in detail at paras. 159 - 170 of the principal judgment. While there was an error in that part of the judgment, to the effect that the monies concerned were "paid directly" into the joint account of the Murrays, this was corrected in the supplemental judgment, and she concluded, at para. 168 of the principal judgment, as follows:
"I am satisfied that Mr. and Mrs. Murray received the benefit of the total sum of 200.000 from the 2007 Loan at the expense of the Bank. The first two tests in Corporation of Dublin v. Building and Allied Trade Union are satisfied."
99. She went on to observe, at para. 169, as follows:
"Mr. Murray's evidence is that, at the relevant times, he had been earning approximately 50,000 per year and that his income is transferred directly, usually every Friday, by direct debit to his bank account without any tax deduction, as he is self-employed. He says that he never looked at bank statements but was able to guess his monthly/weekly income from the amount of the catch. He could offer no explanation as to how various exceptional expenses were met, especially expensive refurbishments of the family home and the purchase of two sites. Mr. Murray showed some degree of financial acumen and I do not believe he was wholly ignorant of the fact that the couple had on occasion made exceptional purchases which might not readily have been met from current income."
100. Binchy J., in his judgment in the Court of Appeal, observed at para. 93 as follows:
"There was no disagreement as to the application of these preconditions. Nor did Mr. Murray appear to cavil with the conclusions of the trial judge that he had been enriched at the expense of the Bank, or put another way, that he had received certain benefits at the expense of the Bank. In the course of his evidence, Mr. Murray acknowledged having received a benefit from certain payments made by Mrs. Murray from the proceeds of the 2007 loan. Indeed, amongst the arguments advanced on his behalf at the hearing of this appeal was that the trial judge erred in failing to conduct a sufficiently detailed analysis of the benefits of which Mr. Murray had acknowledged. There was, however, strong disagreement between the parties regarding the conclusions of the trial judge that in the circumstances of this case, the law requires restitution and the trial judge's conclusion that Mr. Murray could not avail of the defence of "no knowing receipt"."
101. Binchy J. went on to reject the defence of "no knowing receipt", and made a number of comments in that regard, which I think are appropriate to refer to here. At para. 98, it was observed as follows:
"However, in circumstances where Mr. Murray has acknowledged that the proceeds of the loan were used to make certain payments from which he received a benefit, and the trial judge separately concluded, at para. 169 that "the couple had on occasion made exceptional purchases which might not readily have been met from current income", the contention that he should not be liable to make restitution because he did not know the exact amount of the loan until 2011 is self-serving and unpersuasive. Once he knew that certain payments had been made, from which he received a direct benefit, and that those payments might not readily be met from current income, Mr. Murray was duty bound to make inquiries as to the source of the funds, and not simply turn a blind eye, and rely on his delegation of the family finances to Mrs. Murray to avoid liability."
102. He went on to conclude at para. 99 that it would not be unfair in those circumstances to hold Mr. Murray "accountable for the full amount of the loan in the absence of a detailed analysis of the benefits that he received".
103. I can see no basis for disagreeing with that conclusion.
Other Defences
104. Mr. Murray has contended that it is not open to the Bank to pursue a claim in restitution against him, in circumstances where it has relied on its contract with Mrs. Murray to obtain judgment against her. In making that argument, reliance has been placed on a statement by the authors of Goff & Jones, to the following effect:
"Where a benefit has been transferred pursuant to a contract which remains open, or has been discharged by performance, no claim in unjust enrichment will generally lie." (para. 3-12, p. 52).
105. Further reliance was placed on the decision in Pan Ocean Shipping Ltd. v. Credit Corp Ltd. (The Trident Beauty) [1994] 1 WLR 161, in which the House of Lords commented at p. 164:
"... as between shipowner and charterer, there is a contractual regime which legislates for the recovery of overpaid hire."
106. In that case, Lord Goff continued at p. 164:
"The law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate."
107. However, I find the reliance by Mr. Murray on these observations to be unhelpful. It is undoubtedly the case that there is a contractual relationship between the Bank and Mrs. Murray. It is also the case that the Bank has obtained judgment on foot of that relationship against Mrs. Murray. However, as is clear, there was no contractual relationship between Mr. Murray and the Bank. In those circumstances, there is no subsisting contract between Mr. Murray and the Bank. This can perhaps be explained by reference to an Australian decision in the case of Mann v. Patterson Constructions Pty Ltd. [2019] HCA 32, in which Gageler J. said at para. 64:
""[N]o action can be brought for a restitution while an inconsistent contractual promise subsists between the parties in relation to the subject matter of the claim.
The continuing application of the regime of rights and obligations set out in the contract to govern the mutual rights and obligations of the parties in respect of payment for the work has the result that the law of restitution simply "has no part to play in the matter.""
108. This is not a case where there is a subsisting contract between the Bank and Mr. Murray, and where there are any inconsistent contractual arrangements between them. That point is perhaps emphasised by one of the cases relied on by Mr. Murray in his arguments, The Evia Luck. Lord Goff in that case commented, at p. 165, as follows:
"It was common ground between the parties before your Lordships that the money in respect of which the owners claimed restitution was paid to the I.T.F under a contract, albeit a contract which the owners claim to have been voidable by them, and indeed to have been avoided by them, on the ground of duress. It follows that, before the owners could establish any right to recover the money, they had first to avoid the relevant contract. Until this was done, the money in question was paid under a binding contract and so was irrecoverable in restitution. But once the contract was avoided, the money paid under it was recoverable in restitution, on the ground either of duress or possibly of failure of consideration. It was not, in my opinion, necessary for the owners, even if the duress relied upon them was in fact tortious, to base their claim on waiver of tort. ... nor have they done so. The present case is, however, concerned with the anterior question whether the pressure exerted by the I.T.F constituted duress enabling the owners to avoid the contract on that ground, as they claim to have been entitled to do."
109. The point is that this was a case in which a claim for restitution was made in circumstances where one party claimed that the contract had been avoided on grounds of duress, and an issue arose as to whether, in fact, that was a correct view of the law. The question to be determined before the House of Lords was whether or not the duress involved in that case was of such a nature as to justify avoidance of the relevant contract by the innocent party. What was at issue was the nature of the contract between the parties to the contract, and whether or not a claim in restitution could be brought while that contract was subsisting. However, in circumstances where the contract could be avoided and, in fact, was so avoided in the circumstances of that case by reason of duress, a claim lay in restitution. The point to note is that the claimant seeking restitution in that case had been in a contract with the party against whom restitution was sought but had voided the contract - a position which is very different to that in the present case. There was no contract between the Bank and Mr. Murray. That is a fact established by the High Court and upheld by the Court of Appeal. In those circumstances, the fact that there may be a subsisting contract between the Bank and Mrs. Murray does not alter the position as between the Bank and Mr. Murray. Mr. Murray was the beneficiary of money paid under a mistake of fact and, as such, the Bank is entitled to pursue its claim for restitution against him. It can do so notwithstanding the subsisting contract between it and Mrs. Murray. There is nothing in the authorities relied upon by Mr. Murray to suggest that such a course is impermissible.
Leapfrogging
110. Mr. Murray has also relied on the concept of "leapfrogging" to argue that the Bank is not entitled to recover any sum from him by way of restitution. In this regard, Binchy J., in the Court of Appeal, quoted a passage from Goff & Jones (para. 3-64), at para. 101 of his judgment which is set out at para. 29 above.
111. In this context, the decision of the Court of Appeal of England and Wales in the case of Costello v. MacDonald [2011] EWCA Civ 930, [2012] QB 244, is of some assistance. The background to this case involves a situation where a builder did work on land owned by the defendants. The defendants, for tax reasons, wanted to pay for the work through a company of which they were the sole directors and shareholders. The builders fell in with this arrangement in circumstances where they had previously done work for the company. Subsequently, a dispute arose as to the quality of the work, and there was a refusal to pay on foot of invoices that had been issued by the builders. Judgment was obtained in the County Court against the defendants for the balance due, on the basis that the defendants had been unjustly enriched at the builders' expense. This decision was overturned by the Court of Appeal. In the course of his judgment, Etherton L.J. observed at paras. 21 and 23:
"The obligation to pay for the claimants' services, and so the risk of non-payment, was contractually confined to Oakwood. If a claim was permitted directly against Mr and Mrs Costello it would shatter that contractual containment. It would also alter the usual consequences of Oakwood's insolvency, which was one of the risks assumed by the claimants in contracting with Oakwood, since a direct claim against Mr and Mrs Costello would improve the claimants' position over Oakwood's other unsecured creditors ...
I am clear ... that the unjust enrichment claim against Mr and Mrs Costello must fail because it would undermine the contractual arrangements between the parties, that is to say, the contract between the claimants and Oakwood and the absence of any contract between the claimants and Mr and Mrs Costello. The general rule should be to uphold contractual arrangements by which parties have defined and allocated and, to that extent, restricted their mutual obligations, and, in so doing, have similarly allocated and circumscribed the consequences of non-performance. That general rule reflects a sound legal policy which acknowledges the parties' autonomy to configure the legal relations between them and provides certainty, and so limits disputes and litigation."
112. That decision makes it clear that where the parties themselves have, by their contract, made arrangements as to how their mutual obligations are to be discharged, one of the parties cannot thereafter seek to enforce or recover payment due under the contract from a third party by way of claim in restitution. In the case of Pan Ocean Shipping, it was stated at p. 161:
"It is always recognised that serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract."
113. In other words, where the parties themselves have agreed a process regarding the manner in which the risk under a contract is to be allocated, it is not appropriate to allow one of the parties to undermine the allocation of risk, as provided for by the parties themselves.
114. In this case, it is argued that, in circumstances where the Bank has obtained judgment against Mrs. Murray, to allow the Bank to obtain a further judgment against Mr. Murray by way of a claim in restitution is a form of 'leapfrogging.' I disagree with this contention. It will be readily apparent that the situation in this case is vastly different to that which occurred in the case of Costello. As has been seen, in the case of Costello, the parties themselves had dealt with one another on previous occasions. For the purpose of the particular contract at issue in the proceedings, the parties had agreed that payment would be made by a company to the builders, rather than the individuals who were commissioning the work. Put simply, the parties themselves agreed as to the method of payment on foot of the contract, and thereafter, the parties were bound by the agreement they had reached in that regard. It was not open to one of the parties to go behind the arrangement they had made. The arrangement here is very different.
115. By contrast, this is not a situation of the Bank trying to go behind an arrangement made between the Bank and Mr. Murray, or indeed an arrangement between the Bank and Mrs. Murray, in order to obtain payment from a party otherwise than in accordance with the agreements between them. As has been clearly established, there was no agreement between the Bank and Mr. Murray. As there was an agreement between the Bank and Mrs. Murray, the Bank is entitled to pursue her for judgment for the sum outstanding from her. The claim brought by the Bank against Mr. Murray by way of restitution is not an attempt by the Bank to reallocate the risk by suing another party in restitution, contrary to the arrangements made between the parties as to the allocation of risk between them as to where liability should fall, unlike the facts of the case of Costello. This is not a situation in which the Bank and Mrs. Murray entered into a contract which provided that the Bank would have recourse to her alone in the event of default.
116. Accordingly, I am satisfied that the Bank is not debarred from looking to Mr. Murray by way of a claim in restitution, and that such an approach by the Bank does not amount to leapfrogging. It would be inappropriate, in my view, to extend the concept of leapfrogging to a situation where a creditor is seeking judgment against another party who may be liable by way of restitution, solely by reason of the fact that a bank already has judgment against one party. Such an approach would be unduly restrictive. There is no need to enlarge the concept of leapfrogging in that way, and doing so would distort the meaning of leapfrogging as it has been developed in cases such as Costello v. MacDonald and Pan Ocean Shipping, referred to above. Put very simply, if the parties agree between themselves to allocate the risk as to liability in the event of a breach of a contract, then one party cannot ignore that allocation of risk in order to sue someone else. That has not happened in this case. There was no agreement between the Bank and Mrs. Murray to the effect that, in the event of default, the Bank could only pursue Mrs. Murray. Quite the contrary, insofar as anything was represented to the Bank, the representation was to the effect that both Mr. and Mrs. Murray would be liable for any default that occurred. In saying this, I appreciate the fact that it was found as a fact that Mr. Murray had no hand, act or part in the signing of any of the documents that led to the lending of money on foot of what the Bank believed to be a security to Mrs. Murray, in circumstances where it understood at all times that it was dealing with Mr. and Mrs. Murray.
117. In all the circumstances, this is a case which is far removed from the concept of leapfrogging as described in cases such as Costello v. MacDonald. For that reason, Mr. Murray cannot look to the concept of leapfrogging to prevent the Bank from seeking to recover the debt due to it by way of a claim for restitution.
Change of Position
118. An argument was also made on behalf of Mr. Murray to the effect that, but for the manner in which the Bank advanced monies to Mrs. Murray without ever engaging with him, he changed his position so that monies were drawn down from the Bank, paid into the joint account of the parties, and then expended by his wife without him having an opportunity to have knowledge of and prevent this expenditure.
119. Reference was made to a number of payments made on his behalf, such as payments to the Collector General. It was argued that, if he could not afford to make those payments without the monies provided by way of a loan by the Bank, and ultimately drawn down into the joint account, he would have discovered at an earlier stage the problems with his wife's spending. Thus, he says that his position has changed such that it would be inequitable to allow the Bank to recover the sums it advanced by way of a claim in restitution.
120. As the authors of Goff & Jones (9th ed.) point out at para. 27-08, such a defence is only available "if the defendant has suffered detriment that was causally linked with receipt of the relevant benefit".
121. The trial judge considered the arguments as to change of position and observed, at para. 172 of her judgment, as follows:
"The authors of Goff and Jones' The Law of Unjust Enrichment suggest, at para 27.08, that the defence of change of position, whilst it might appear to be a rule about the type of detriment a party must have suffered to defend a claim in undue enrichment on account of a change of position defence, is really a test of causation. For the present case, that proposition is helpful and I consider that a defendant does not need to show that he spent the money on something out of character or in a way he had never spent money before, but that he entered a transaction he would not have entered but for the enrichment, and that the balance of fairness means that the money is not to be restored."
122. She continued, at para. 173, as follows:
"I am not satisfied that Mr. Murray can show that he changed his position or engaged in expenditure which would make it unfair to him, in all the circumstances, to require him to make restitution in whole or in part. The expenditure may have been exceptional but the evidence is that the decision to purchase the sites was a mutual one, as was the expenditure on refurbishments. I am satisfied that it would be unjust to deny the enrichment, and that the balance of fairness demands restitution."
123. While the Court of Appeal in its judgment did not specifically deal with the defence of change of position, the Court did consider in detail the defence in relation to "no knowing receipt". However, what was said by the Court of Appeal in relation to the defence of "no knowing receipt" at para. 98 of the judgment of Binchy J. echoes to some extent the views of the High Court regarding the change of position defence. What is clear from the judgment of the High Court, and indeed of the Court of Appeal, is that Mr. Murray was aware of certain expenditure, as was stated by the Court of Appeal at para. 98:
"Once he knew that certain payments had been made, from which he received a direct benefit, and that those payments might not readily be met from current income, Mr. Murray was duty bound to make inquiries as to the source of the funds, and not simply turn a blind eye, and rely on his delegation of the family finances to Mrs. Murray to avoid liability."
124. In truth, although it was accepted that "the couple had on occasion made exceptional purchases which might not readily have been met from current income", there was nothing in the evidence to show that Mr. Murray was not aware of the expenditure being made by his wife, and no indication that he made any enquiries into the source of funds to enable that expenditure to be made. The authors of Goff & Jones (10th ed.) make the observation in para. 27-09 as follows:
"Also, when making factual findings about the effect of a receipt on a defendant's decision making, the court must exercise its usual caution towards the defendant's evidence of his own state of mind, particularly if this consists of statements made after the event, and the main focus of the court's attention "must be on the evidence of what was done at the time".
125. I referred previously to the case of Murphy v. The Attorney General and to the judgment of Henchy J. in that case. First of all, it was made clear in that case that a claim that the State had been unjustly enriched by the collection of the impugned taxation could only be brought from the time when objection was raised to the payment of these takes. As Henchy J. explained at p. 318:
"Up to that year the State was entitled, in the absence of any claim of unconstitutionality, to act on the assumption that the taxes in question were validly imposed, that they were properly transmissible to the central fund, and that from there they were liable to be expended, according to the will of Parliament, for the multiplicity of purposes for which drawings are made on the central fund of the State. Equally, every taxpayer whose income tax was deducted from his earnings throughout a particular tax year, no matter how grudgingly or unwillingly he allowed the deduction to be made from his weekly or monthly income, could not avoid having imputed to him the knowledge that the tax he was paying was liable to be immediately spent by the State..."
126. Henchy J. went on to note at p. 319:
"It is one of the first principles of the law of restitution on the ground of unjust enrichment that the defendant should not be compelled to make restitution, or at least full restitution when, after receiving the money in good faith, his circumstances have so changed that it would be inequitable to compel him to make full restitution."
127. Here, it is clear that Mr. Murray was aware of the expenditure that had taken place, and the fact that he did not know the source of the funds does not, in my view, show that but for the loan provided by the Bank, he would not have been a participant in the various elements of expenditure outlined in the course of the evidence. The question is whether he changed his position or engaged in expenditure which would make it unfair to allow him to be pursued by way of restitution, as the trial judge put it. In the circumstances of this case, I see no basis for disagreeing with the conclusion of the learned trial judge at para. 173 of her judgment, referred to above.
Public Policy
128. In the submissions on behalf of Mr. Murray on the issue of public policy as a bar to recovery by way of restitution, reference was made to the decision of the Court of Appeal of England and Wales in the case of Haugesund Kommune v. Depfa ACS Bank [2012] QB 549, in which Aikens L.J. stated at para. 96 as follows:
"First, there is no longer any general public policy rule of English law that either prevents or restricts the right to claim restitution of money advanced under a borrowing contract that is void as being ultra vires the borrower. Secondly, however, it is well established that if such a claim is inconsistent with the express provisions of a statute or, I would say, its clear intention, then English law will not permit the claim as a matter of public policy. That is because a common law claim for restitution cannot be allowed to circumvent legislation whose object and effect is to bar such a recovery. I agree with Etherton LJ that the question of whether there is any other category of public policy (wide or narrow) that is capable of defeating a restitution claim for unjust enrichment, separate from the defence of "change of position", has not previously been decided."
129. Relying on that statement, focus was placed on the provisions of ss. 30 and 38 of the 1995 Act to argue that the Bank would not be entitled to bring a claim in restitution to avoid the consequences of the Act. As has been seen earlier, s. 38 of the Act precludes a creditor from enforcing a credit agreement if the provisions of the Act have not been complied with. As it is clear that Mr. Murray did not have a credit agreement, or indeed a housing loan with the Bank, this is not a case in which the Bank has sought to circumvent the legislative intent set out in the Act by means of a claim in unjust enrichment. As Aikens L.J. further explained, at para. 92 of Haugesund Kommune:
"... in English law, a restitutionary claim for the return of money may be defeated on grounds of public policy where, on the correct construction of a statute or regulation, recovery in restitution would be contrary to the objective of the statute."
130. Thus, I think it is clear that public policy would be a bar to a claim by way of unjust enrichment, where the creditor was, in effect, making such a claim to avoid the consequences of the requirements of the relevant statutory provisions such as those contained in the 1995 Act which, after all, were enacted for the protection of consumers. That does not apply to the facts of this case in circumstances where there was no agreement at all with Mr. Murray and further, where what is at issue is not a consumer loan subject to the provisions of ss. 30 and 38 of the Act.
131. However, it was also urged on the Court that there was a further public policy issue at play in these proceedings arising from the manner in which the Bank provided a mortgage loan facility on the home of a married couple, in circumstances where the Bank's actions facilitated the deception carried out by Mrs. Murray. This was described in Mr. Murray's written submissions in this way:
"An admitted, systematic practice of advancing mortgage loan facilities to marital joint accounts in the absence of one spouse."
132. Assuming for the sake of argument that a claim in unjust enrichment could be barred on the grounds of public policy as contended for by Mr. Murray, it seems to me that, in considering this question, it is necessary to consider, once again, the history of the loans obtained by Mrs. Murray from the Bank. This is set out in detail in the judgment of the High Court herein, but I would like to focus on certain aspects of the parties' arrangements.
133. The trial judge set out the evidence in relation to the 2003 Loan in some detail between paras. 33 - 90 of her judgment. Notably, she outlined the evidence of Mr. Brennan, the solicitor who was purporting to act on behalf of the Murrays in relation to the 2003 Loan. She also set out the evidence of Mr. Murray in this regard and having done so, she concluded on the balance of probabilities that there was no evidence that Mr. Murray attended at the solicitor's offices. Of particular relevance is the matter of the Family Home Protection Act Declaration. This was witnessed by a Commissioner for Oaths and the trial judge, in regard to that document, expressed the view that she was satisfied,
"having regard to the evidence of Mr Murphy [the Commissioner for Oaths] and of Mr Murray, the concession made by Mr Brennan, in the light of the clear evidence that Mr. Murray was at sea, the evidence from the dates of the correspondence, that the declarations were not made before Mr Murphy, and that, as a matter of probability, the signature on the Family Home Declaration is not the signature of Mr. Murray."
134. Leaving aside for a moment any criticism of the Commissioner for Oaths who allowed a Family Home Declaration to bear his imprimatur in circumstances where he did not witness Mr. Murray signing that document, it goes without saying that the Bank was entitled to rely on the authenticity of the Declaration in circumstances where it was stated on its face to have been made before a Commissioner for Oaths. The same observation can be made about the Deed of Charge which was, in its turn, "witnessed" by the solicitor, and which appears to bear the signatures of both Mr. and Mrs. Murray. Again, in circumstances where that was a document emanating from the solicitor purporting to act for the Murrays, the Bank cannot be criticised for accepting that document as an authentic one duly received by the Bank from the solicitors. It must also be acknowledged that none of this would have happened without the actions of Mrs. Murray which were calculated to, and did in fact, deceive the Bank into thinking that the loan it was providing was properly secured on foot of a mortgage which, so far as the Bank was concerned, had been duly executed with all of the necessary paperwork having been completed and provided to the Bank by the solicitor purporting to act on behalf of both of the Murrays.
135. The facts leading up to the provision of the 2007 Loan were set out at paras. 105 - 133 of the judgment of the trial judge. Again, it is not necessary to refer in detail to all aspects of the evidence recounted by the trial judge, but a number of points may be noted. The Bank in correspondence addressed to the Murrays made it clear that, in providing a further loan in the sum of 200,000, it was relying on its existing charge. A number of documents were created for the purpose of obtaining this further loan, one of which was a "Confirmation of marital status" document, which appeared to have been signed by Mr. Murray. Having heard evidence from a number of witnesses, including Mr. Murray, and in particular, from Mr. Campbell, the then Branch Manager of the Bank in Killybegs, the trial judge concluded at para. 133:
"The Bank has not satisfied me that the signature of Mr. Murray as it appears on the 2007 Loan Offer, the Confirmation of Marital Status, and the Life Assurance Application, is his signature. I am also satisfied from his evidence, supported by Ms Dorian's, that Mr. Murray only became aware of the actual amount of money due on foot of the 2007 Loan in late 2011, and of the actual existence of a mortgage on his family home in July 2012."
136. The reason why I have referred in particular to the "Confirmation of marital status" document is because it is the only document of the 2007 suite of documents completed in order to obtain that loan which was witnessed by someone other than the Murrays. For example, the document "Equity Release Application", appeared to have been signed by Mr. and Mrs. Murray with each signature apparently witnessed by that of the other.
137. The document headed "Confirmation of marital status" was, in fact, witnessed, apparently, by Mr. Campbell, the then Branch Manager of the Bank of Ireland in Killybegs.
138. Suffice it to say that all of the documents one would expect to see in the context of a further loan on foot of an existing mortgage appeared to have been duly completed and signed by both Mr. and Mrs. Murray. There was correspondence from the Bank to the Murrays, and in addition, there was correspondence with the Murrays' accountant in relation to information being sought from him regarding the further loan. As in the case of the 2003 Loan, Mr. Murray denied signing any of the relevant documentation, and this was accepted by the trial judge.
139. It would be helpful to look at the document at issue in respect of the 2007 Loan in more detail. It was headed 'Confirmation of marital status (in compliance with the Family Home Protection Act 1976)'. The document then went on to give the names and address of the borrowers, Brian and Attracta Murray. It then stated, "The property is a family home (principal residence for married couples)", and in a box headed "Joint Borrowers/Joint Ownership/Married", it went on to provide as follows:
"We certify that:
· We are joint borrowers
· We are joint owners of the property
· We are married to each [sic] and our marital status has not changed since the original mortgage."
140. The document is then signed and dated as of the 10th May, 2007. In a box designated for the first borrower appears to be the signature of Mr. Murray, and in the box for the second borrower is the signature of Mrs. Murray. Crucially, there is a third box which is completed, and it states that it is "witnessed by mortgage advisor". That box contains the signature of Mr. Campbell. He confirmed that it was indeed his signature in the course of his evidence, but, as was noted by the trial judge in the course of her judgment, he said "he could not remember witnessing the signing of the documents by the Murrays" (see para. 116 of the judgment).
141. It is unfortunate, to say the least, that the evidence surrounding the circumstances in which the relevant documentation was provided to the Bank, and the apparent witnessing of the signature of Mr. Murray by Mr. Campbell was so sparse, but, as the trial judge observed in relation to the evidence of Mr. Campbell at para. 120:
"The attesting witness was unable to offer any evidence to counter Mr. Murray's assertion that he did not sign any of the documentation."
142. It is relevant to note one other aspect of the evidence of Mr. Campbell. In the course of his evidence, he described difficulties in relation to the completion of documentation in relation to borrowings. He explained the difficulty as follows:
"Basically, it was due to the large number of the local population that was involved in the fishing industry. And something similar to today in that fishermen, they can be, could have employers in Killybegs, but they could be fishing off Africa and don't work six weeks and then be off on holidays six weeks. Back then, I don't know but I am sure it is the same now, is that one party of a partnership might come in to us to submit an application for a loan or a mortgage and I would say in the case of a mortgage or something that you kind of know it is going to take at least a month or possibly maybe two months to get an ordinary mortgage drawn down. So for that reason it would be my practice and that of other people that you would do the mortgage application on the instruction of one party."
143. He added that:
"Basically prior to drawing down, as I say, it could be a month or two in the case of a mortgage before it is drawn down, my practice was that I would tell the members of staff in the Branch that look, if Mr. A is in the branch I need to see him so if a couple of weeks passed and he didn't happen to be in the branch my own practice then would be to contact him by phone and just maybe tell him I need to see you to get a form signed or whatever in relation to the mortgage or in relation to the loan you have applied for. That was my normal way of operating."
144. Thus, it can be seen that the practice of the Branch Manager at the time, in relation to applications for loans where one of the parties involved was regularly at sea, was to facilitate the negotiation for the loan by one of the parties with a requirement for the other party to come into the Branch at some stage to sign off on the necessary documentation. It would appear that, in the case of Mr. Murray, this practice broke down in circumstances where Mr. Campbell had no recollection of witnessing the signature of Mr. Murray on one of the documents required by the Bank to be completed for the purpose of obtaining a further loan on foot of the apparent security held by the Bank. As previously set out, the trial judge did not accept that the Bank had established that Mr. Murray had signed the document which was then apparently witnessed by Mr. Campbell. Although the "Confirmation of marital status" was not a document which had to be completed in order to comply with any statutory requirement, it was a document created by the Bank which it clearly required parties to borrowings to complete. From that point of view, it was obviously an important document. The manner in which it was completed in this case is problematic in that, had the document been duly signed by Mr. Murray and witnessed by Mr. Campbell, no issue could arise in relation to Mr. Murray's involvement in the borrowings by Mrs. Murray. Nevertheless, does the fact that the Bank did not establish in its evidence that Mr. Murray had, in fact, signed the document, preclude its entitlement to recover the sums of which he, undoubtedly, had the benefit, by way of a claim in restitution by reason of public policy?
145. In considering the argument put forward by Mr. Murray, to the effect that the Bank had a systematic practice of advancing mortgage loan facilities to marital joint accounts in the absence of one spouse, it is necessary to consider a number of matters. In the first place, I do not agree with the contention of Mr. Murray that the Bank had a systematic practice of advancing mortgage loan facilities in the absence of one spouse. Quite the contrary, in fact. I have already referred to the evidence of Mr. Campbell above as to the practice in relation to negotiating with one partner where the other partner was likely to be at sea, and then requiring the other party to the borrowing to come to the Bank at some stage before the loan could be drawn down. That is the clear evidence of Mr. Campbell. I can see nothing wrong with that practice per se. Provided that the second party to the borrowing was a knowing party who participated in the borrowing, there could be no problem with that practice. It was a sensible approach to dealing with exigencies of the situation which pertained to that area.
146. Looking at the original borrowing in this particular case in circumstances where matters were being dealt with by the solicitors for the Murrays and where the signatures of Mr. and Mrs. Murray were validated by a Commissioner for Oaths, there was no possibility that the Bank could have known that it was being deceived into thinking that both Mr. Murray and Mrs. Murray were parties to the borrowing and the giving of security in respect of the loan. The Bank cannot be faulted for that. As to the 2007 Loan, there is no doubt that if Mr. Murray had, in fact, been in the Bank to see Mr. Campbell around the time of the 2007 Loan, things may well have turned out differently, but it is impossible to know what might have happened in those circumstances.
147. It has been argued that the Bank should not be entitled to recover in circumstances where it appears that Mr. Murray did not sign the requisite documentation required by the Bank in relation to the 2007 Loan, but I am far from persuaded that the failure of the Bank in this case was the result of a systematic practice on its part, or that its behaviour in this regard was unconscionable as contended for by Mr. Murray. At the end of the day, the Bank failed to establish that he had signed the necessary documents in order to obtain the loan of 200,000. Nevertheless, it is also the case that the evidence established that Mr. Murray had the benefit of the sum of 200,000. The trial judge dealt with the details of the payments made to the accounts of the Murrays, and the benefit obtained by Mr. Murray from the borrowings (see paras. 160 - 166 of the principal judgment). As the trial judge concluded at para. 169:
"He could offer no explanation as to how various exceptional expenses were met, especially expensive refurbishments of the family home and the purchase of two sites. Mr. Murray showed some degree of financial acumen and I do not believe he was wholly ignorant of the fact that the couple had on occasion made exceptional purchases which might not readily have been met from current income."
148. She later observed, at para. 179, as follows:
"179. The management of household finances was, firmly and by agreement, in the hands of Mrs. Murray and Mr. Murray did receive a benefit from the monies and he expressly confirmed this in the course of his oral evidence. He also gave evidence that he was aware, without looking at bank statements, of the amount of his weekly takings from the fishing vessel.
180. He must therefore have been aware that the current account was used to make the payments to his pension fund, to carry out refurbishment works to the principal private residence, and to purchase the holiday home in 2007 and the other lands in December 2009."
149. This is a case in which the Bank fell victim to a deception practiced on it by Mrs. Murray. Mr. Murray had the benefit of the funds obtained by that deception. There was a process of the Bank, which, if it had been properly adhered to, could have avoided the situation which transpired. To that extent, there was a degree of fault on the part of the Bank which led to its mistake in providing the sum of 200,000 to the Murrays. However, this situation did not arise out of a systemic practice on its part. On the contrary, what seems to have occurred was a departure from the normal practice of the Branch Manager of the Bank. That was an error on his part and undoubtedly facilitated the deception of the Bank by Mrs. Murray which resulted in the provision of funds to her and in respect of which Mr. Murray shared the benefit. I find it difficult to categorise the actions of the Bank through its Branch Manager as unconscionable on the facts of this case.
150. I am fortified in this view by a further statement to be found in Goff & Jones (10th ed.) as to the role of fault on the part of a claimant for unjust enrichment. At para. 9-163, the authors opine:
"It is a long-standing assumption within the law of unjust enrichment that a claimant will not be denied restitution for mistake merely because he was "negligent". On this basis, as long as the claimant can show that he acted because of a mistaken belief as to some past or existing state of affairs, he will not be denied relief because that belief was the consequence of (for example) having carelessly forgotten or overlooked the true facts, or having carelessly made no inquiry or only an inadequate enquiry, despite adequate means of knowledge being available."
151. On the facts of this case, there is no doubt that had Mr. Campbell not witnessed the signature of Mr. Murray on the "Confirmation of marital status" document in his absence, things might have turned out differently. But equally, there is no doubt that the Bank had been deceived into providing the original loan by means of the witnessing of Mr. Murray's signature by persons on whom the Bank were entitled to rely, such as a solicitor and a Commissioner for Oaths. While it was negligent of Mr. Campbell to have done this on behalf of the Bank, I am not surprised by this in circumstances where previous documents had been authenticated by appropriate and apparently responsible people and where on this occasion, the documents were presented by Mrs. Murray, a person the Bank manager had no reason to distrust and where necessary queries relating to the loan were dealt with by Mr. Murray's accountant. For my part, I am of the view that the Bank in this case is not to be denied restitution for mistake by reason of negligence in the completion of the documentation for the further loan.
152. Since the preparation of this judgment, I have had the opportunity to read the joint dissenting judgment about to be delivered herein by Woulfe and Hogan JJ. With the greatest respect, I cannot agree with their conclusions as will be apparent from this judgment. I find it particularly difficult to accept the description that the Bank Manager made a "false representation" as set out in para. 4 of that judgment and subsequently, in para. 25. The Bank Manager in his evidence explained his practice in relation to mortgages where one of the parties was involved in the fishing industry. It is true that the Bank Manager apparently witnessed the "Confirmation of marital status" in the absence of Mr. Murray, having been presented with the signed document. Had the Bank Manager adhered to his stated practice of getting the other party to the application to come in, or if he was in the branch to confirm the position, that would have provided an opportunity to acknowledge that the signature was his on the document, or not, as the case may be. That being so, I think it is somewhat inaccurate to describe this as a "false representation". There was no representation to anyone by the Bank Manager. A false representation, as that phrase is usually understood, is designed to induce someone to act to their detriment on the basis of the false representation that has been made. That simply has not occurred here. I should add that it is not necessary for me to reiterate the other points on which there is disagreement between us as to the effect of the 1995 Act and the defence of "change of position". Unfortunately, this is a case in which a fraud was perpetuated on the Bank. Mr. Murray was not a party to that fraud and indeed, like the Bank, was a victim of the fraud. Nevertheless, as described above, he obtained the benefits of that fraud.
153. I have also had the opportunity of reading in draft the judgment of Collins J. with which I am in agreement.
154. In the circumstances, I cannot conclude that the conduct of the Bank was such as to disentitle it from recovering the sum it provided to Mr. and Mrs. Murray on the grounds of public policy. Accordingly, it is my view that Mr. Murray's appeal should not be allowed. I would therefore dismiss this appeal.