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 AN CHÚIRT UACHTARACH

THE SUPREME COURT

S:AP:IE:2024:000064

[2025] IESC 24

 

 

Dunne J.

Woulfe J.

Hogan J.

Murray J.

Collins J.

 

 

Between/

BANK OF IRELAND MORTGAGE BANK PLC

Respondent

-AND-

BRIAN MURRAY

Defendant/Appellant

-AND-

 

ATTRACTA MURRAY

Defendant

JOINT JUDGMENT of Mr. Justice Seamus Woulfe and Mr. Justice Gerard Hogan delivered on the 4th day of June, 2025

Part I - Introduction

 

1.                  While we gratefully adopt the comprehensive summary of the relevant facts of this appeal contained in the judgment which Dunne J. has just delivered on behalf of the majority, we nevertheless regret to say that we cannot agree with either key aspects of that reasoning or the proposed disposition of the appeal. For reasons which we now set out, we consider that the appeal of Mr. Murray from the decision of the Court of Appeal to the effect that he was obliged to make restitution to Bank of Ireland Mortgage Bank plc should be allowed.

2.                  The undisputed evidence in this case is that in May 2007, the Bank agreed to advance the sum of approximately €200,000 on foot of what it had understood was a mortgage secured on the family home of the defendants, Mr. and Ms. Murray. The mortgage was ostensibly for the purposes of constructing an investment property from which rental income would be secured. In the event the 2007 loan funds were drawn down from time to time on various dates between June, 2007 and November, 2009 into a mortgage account. These funds were then transferred into a current account controlled by the Murrays. The funds were subsequently used for purposes such as discharging tax liabilities of Mr. Murray, a payment made into a pension scheme for fishermen operated by the Department of Family and Social Affairs and a payment to a solicitors firm in respect of the purchase of a field by Mr. Murray. No investment property was ever constructed.

3.                  The unusual feature of this case is that the trial judge was satisfied that no mortgage or other supporting document in respect of the 2007 loan was ever actually signed by Mr. Murray. It is instead clear from the findings of the High Court that his signature must have been forged on the relevant loan documents, including in particular a document entitled "Confirmation of Marital Status" ("the confirmation document"). The purpose of the confirmation document was to ensure that in the case of a loan application by a married couple involving a family home, each spouse/borrower would sign the document to confirm that they were in fact joint borrowers, and were joint owners of the property. The document was also designed to confirm that they were married to each other and that their marital status had not changed since the original mortgage. It was thus necessary in this case for Mr. Murray and Ms. Murray to certify each of the above matters, by signing the relevant section of the document. It was also necessary for the Bank's Mortgage Adviser to provide his or her signature, alongside the signature of both spouses, in order to confirm that he or she had in fact witnessed the signature of each spouse being affixed to the confirmation document.

4.                  In the present case the relevant Bank Manager purported to witness Mr. Murray's signature on the confirmation document on the 10th May, 2007. The evidence at the trial was that he did not recall meeting either Mr. Murray or Ms. Murray (transcript Day 1, p. 126, line 17 and 27) and that he did not disagree with Mr. Murray's contention that they had never met (transcript Day 1, p. 138). Unfortunately, the inexorable logic of the High Court findings is that the Bank Manager did not in fact witness Mr. Murray's signature of the confirmation document, and could not have done so. It equally follows that the Bank Manager made a false representation of fact by representing that he had witnessed Mr. Murray signing the confirmation document, and that he knew at all times that this representation was false.

5.                  At para. 152 of her judgment Dunne J. states that she thinks it is somewhat inaccurate to describe this as a "false representation", as there was no representation to anyone by the Bank Manager. With respect, this suggestion does not appear to us to be correct. While the loan application was made in the first instance to the Killybegs branch of Bank of Ireland, the mortgage was in fact approved and granted by a separate company or entity within the Bank of Ireland Group, Bank of Ireland Mortgages. It seems inevitable that the confirmation document was relied upon by that latter entity in granting the mortgage, as the purpose of the document was that it could be so relied upon. In this way the false representation was clearly causative of the mortgage being granted.

6.                  One may say in partial mitigation of the Bank Manager that he may have been well motivated in making this false representation; he may have done this in order to facilitate - as he saw it - the Murrays, given that Mr. Murray was a fisherman and frequently away at sea for long periods, and he was someone that might not be regularly available to execute and sign the appropriate documentation. But this can in our opinion amount to very limited mitigation only; the plain fact of the matter was that the Bank thereby became a party to the overall matrix of wrongful conduct which led to the 2007 loan being advanced.  

7.                  This all had very serious consequences for Mr. Murray. As it happens he only found out about the 2007 loan sometime in late 2011, and he only realised in July, 2012 that his family home (which he owned jointly with Ms. Murray) was encumbered with a mortgage. It is true that Mr. Murray obtained the benefit (either directly or indirectly) of much of these monies. It is also hard to avoid the conclusion that he was to some degree negligent in the handling of his family finances. Even though he apparently left these matters to his wife, he must surely to some extent at least have asked himself as to the source of the monies which seemed to be readily to hand for various domestic purposes from which he was a beneficiary.

8.                  Nevertheless, if the Bank's case is correct Mr. Murray now finds himself obliged to repay a mortgage loan to which he had never consented in the first place and in respect of which his signature has been forged. And independently of the issues of forged signatures and false representation, there remains the fact that Mr. Murray was denied the benefit of the consumer safeguards such as notice, cooling-off periods and warnings carefully delineated in respect of consumer loans of this kind by the Consumer Credit Act, 1995 ("the 1995 Act").

9.                  As it happens there was a default in respect of these loans sometime in 2012. The Bank now seeks to recover the sum of some €185,315 plus a small amount of interest by way of a claim for unjust enrichment as against Mr. Murray. Contrary to the view of the majority, there are, we think, three fundamental objections to the Bank's claim in restitution as against Mr. Murray which objections, to some extent, at least, overlap and run into each other. What are these objections?

10.              First, it is perfectly clear that the Bank became a party to the overall wrongful conduct, which was originally instigated by Ms. Murray herself, by falsely attesting Mr. Murray's signature in the manner we have already described. This false representation was a proximate cause of the grant of the mortgage in May 2007 and the release of loans funds for this purpose. While the Bank has a prima facie valid claim for restitution on the grounds that Mr. Murray has been unjustly enriched, nonetheless its own conduct as a party to the overall wrongful conduct is, in our opinion, sufficient to disqualify it from recovery.

11.              The second ground arises from the 1995 Act itself. The entire object of that Act is that loans to consumers (other than in respect of credit cards) should be attended with a high degree of formality and consumer safeguards. While slightly different protections apply depending on whether the loan is characterised as a consumer loan on the one hand or a housing loan on the other, it is clear that none of these protections ever obtained in the case of Mr. Murray. Indeed, as we have already noted, Mr. Murray was to find out only in 2012 that he was now apparently liable in respect in respect of a mortgage which had been taken out in his name in 2007.

12.              Third, it is clear that in any event, Mr. Murray has changed his position by spending these monies at various stages between 2007 and late 2011. It is clear from this Court's judgment in Murphy v. Attorney General [1982] IR 241 that change of position is a defence to a claim in unjust enrichment. We may now consider in turn each of these defences to the Bank's claim for restitutionary recovery.

Part II: The Bank's claim and Mr. Murray's defences to that claim

13.              It is true that, as we have already observed, the Bank has a prima facie valid claim for restitution on the grounds that Mr. Murray has been unjustly enriched. The classic test is that articulated by Keane J. in Dublin Corporation v. Building and Allied Trade Union [1996] 1 IR 468 at 493 where four conditions for recovery in unjust enrichment were set out. There must be (i) the enrichment of the defendant; (ii) at the plaintiff's expense; (iii) in circumstances in which the law requires restitution, and (iv) the absence of defences or other policies to deny restitution. We agree with the majority that the first three of these conditions have been satisfied here. The focus, accordingly, in the present appeal is on the question of defences or other policies such as might defeat the Bank's claim.

14.               There is no doubt but that, as we have noted, Mr. Murray obtained the benefit - either directly or indirectly - of some and perhaps even most of this money, the receipt of which had been induced by fraud. This brings the principle of unjust enrichment into play. As Henchy J. observed in Carey v. Ryan Ltd. [1982] IR 179 at 185 ("Carey"):

 "The general rule is that where a person purports to pay money directly to another, or to pay it to his credit, and that other has notice that the payment has been induced by fraud, the payee or would-be payee does not get any title to the money....If the money has reached the payee then, while it is in his hands, he is a constructive trustee of it for the rightful owner who has been defrauded into paying it and the payee can be compelled to repay it."

15.              The key word here is notice. It is undisputed that Mr. Murray had no actual notice of the fact that the moneys had been received from the Bank in 2007 until late 2011, and that he did not realise that Ms. Murray had taken out a mortgage in both of their names until July 2012. In this respect the present case stands in contrast with this Court's decision in Carey.

16.              In Carey the plaintiff suffered an accident while an employee of the defendant company. Because he was still a minor at the time - this was before the Age of Majority Act 1985 reduced that age to eighteen years - an agreed sum acceptable to the plaintiff's legal advisors was then lodged in court by the company's underwriters. When he reached his majority at the (then applicable) age of twenty one years he applied to the High Court to have the funds released. By this stage, however, the underwriters had become aware of what Henchy J. described as "fraudulent misstatements" made by the defendant company regarding the amount of salaries and wages made to their employees "thus distorting the correct amount of the premium and, indeed, vitiating the whole policy." When they learnt of this the underwriters then repudiated liability and in separate proceedings the High Court upheld the repudiation of the insurance policy.

17.              It was accepted of course that the plaintiff in Carey had not been a party to the fraud. The question then was whether he should be permitted to take the sums which had been lodged in the High Court by the underwriters. Henchy J. held that he could not. The money was still held in a suspense account in the High Court, yet by coming to court and asking for the money to be paid to out, the plaintiff (at 187) was:

 "asking the court to overlook the fraud, to ignore the fact that the underwriters would never have parted with a penny of this money if they had known of the fraud, to treat as irrelevant the fact that the plaintiff now fully known that the money he is seeking is the fruit of a tree poisoned by fraud and, in short and, in short, to exercise its discretion by making an order which would have had the effect of robbing Peter to pay Paul."

18.              The facts of the present case are, however, quite different in at least three critical respects. First, unlike the position of the underwriters in Carey who had erroneously parted with their money in good faith, the Bank here itself engaged in wrongful conduct in that a Bank official purported to witness a signature of a customer to loan documentation which signature he had not in fact witnessed.

19.               Second, in these circumstances the effect of any restitutionary order would in effect make Mr. Murray liable in respect of either a consumer loan or a housing loan even though the necessary safeguards contained in the 1995 Act had not been complied with by the Bank. In her judgment for the majority, Dunne J. agrees with the reasoning of Binchy J. in the Court of Appeal and concludes that the fact that Mr. Murray never actually signed the loan agreement meant that he was not a "consumer" for the purposes of s. 2 of the 1995 Act, so that the protections contained in the 1995 Act simply do not apply. We respectfully disagree with this reasoning as we consider, however, that this interpretation of the 1995 Act leads to some rather startling propositions. It means that the victim of a fraud and other wrongful conduct is actually placed in a worse position than that of the ordinary bank customer and that a lender which has itself engaged in wrongful conduct can thereby - whether intentionally or otherwise - effectively nullify all of these consumer safeguards.

20.              In our view, all of this means that the interpretation of s. 2 of the 1995 Act favoured by Binchy J. in the Court of Appeal and by the majority in this Court must be questioned. We may safely assume that when the Oireachtas legislated to safeguard consumers in respect of consumer loans, it did not intend that the victim of a fraud and other wrongful conduct would actually be worse off and provided with even less safeguards in the context of the 1995 Act than if he or she had not been such a victim in the first place. In these particular circumstances we consider that the strictly literal meaning of the word "consumer" in s. 2 of the 1995 Act should be displaced, and a broader, teleological interpretation of this term should be adopted. This broader interpretation reflects a general legal principle that someone should not profit from their own wrong.

21.              A good example of this approach may be found in the judgment of this Court in Nestor v. Murphy [1979] IR 325 ("Nestor"). In Nestor, a married couple had refused to complete the sale of their family home on the ground that the wife had not given her consent in writing as required by s. 3 of the Family Home Protection Act 1976, even though both spouses had otherwise participated in the sale. While Henchy J. accepted that a literal interpretation might provide support for this argument, he rejected such a construction as it would lead to a "pointless absurdity" which interpretation, furthermore, "would enable contracts to be unfairly or dishonestly repudiated by parties who entered into them freely, willingly and with full knowledge." Henchy J. expressly advocated the adoption of a telelogical interpretation of s. 3(1) of the 1976 Act, so that the Act should be construed by reference to its underlying purpose, namely, prohibiting the unilateral alteration of the family home by one spouse only.

22.              If one applies the Nestor principles to the circumstances of the present case, we consider that the word "consumer" in s. 2 of the 1995 Act should be given a broader, teleological interpretation so that it covers the situation of a private individual whose consent to a loan is forged and where the Bank's own wrongful conduct contributes to the outcome. This broader interpretation fully accords with the underlying objectives of the 1995 Act by providing critical safeguards for the private customer of the bank. Had these safeguards been applied so that, for example, the Bank had provided the requisite information as to the nature of the loan to both borrowers in the manner required by, for example, s. 129(2) of the 1995 Act (in the case of housing loans), the seriousness of the situation would quickly have become apparent to Mr. Murray and the state of affairs which gave rise to this litigation might well have been avoided.

23.              We might also observe that this Court has already held that a restitutionary award should not be made where this would be at variance with the requirements or policy of the underlying statute: see East Cork Foods Ltd. v. O'Dwyer Steel Ltd. [1978] IR 103. Here the issue was whether the court had a jurisdiction to award interest on a restitutionary basis in respective of certain moneys which A had obtained from B on foot of a High Court order which order was later set aside by this Court. A accepted that the money had to be repaid to B but it denied that any interest was due on this sum

24.               Henchy J. observed that had B sued A for that money, the claim for interest would have been governed by s. 53 of the Debtors (Ireland) Act 1840 which requires in such circumstances that written notice be given of the amount claimed and that such demand must include a claim for interest, if interest is sought. Absent such a written demand, any claim for retrospective interest would fail. This Court reasoned in turn that as no such demand notice had been made in that case, the claim for interest by way of restitution must also fail.

25.              Here, if anything, the case is even stronger because, in our view, an order for restitution in these circumstances would wholly undermine a key objective of the 1995 Act - namely, to safeguard the interests of the consumer. The 1995 Act makes it obligatory for a Bank to comply with these safeguards. The making of an order for restitution in these circumstances would not only - to adapt the words of Henchy J. in Carey - "make the Court virtually an accessory" to the wrongful conduct, it would in our view also undermine the important public policy requirements reflected in the 1995 Act. The false representation of fact made by the Bank Manager which we have already described was causative of the loan being granted which, as per the judgment of Dunne J., was in the circumstances deemed to be outside the provisions of the 1995 Act. The Bank's own wrongful act thus contributed to an outcome which was wholly at odds with the public policy as reflected in the 1995 Act, and in the circumstances it seems clear to us that it would be totally contrary to public policy to allow the Bank's claim in unjust enrichment.

26.              Third, unlike the situation in Carey, the monies were in fact paid out in the present case and Mr. Murray did in fact change his position by having the use of those moneys for his benefit at least four years before he had come to learn of the existence of the loan. As is clear from the judgment of this Court in Murphy v. Attorney General [1982] IR 241, the defence of change of position is an established defence to a claim in unjust enrichment. The change of position here stands in contrast to the facts of Carey where the monies were being held by the High Court for the benefit of the minor plaintiff in a form of escrow account. If the monies had, in fact, been paid out by the High Court and the underwriters had only come to learn of the fraud many years later, their claim for recovery by way of unjust enrichment would presumably have been defeated by the defence of change of position on the part of the plaintiff who had obtained these monies.

Part III: Restitutionary claims and disqualifying circumstances

27.              It is clear from Goff & Jones, The Law of Unjust Enrichment (10th Ed., 2022) at para. 9-162 et seq. that there may be circumstances in which a claimant who can establish that he made a qualifying mistake, and that the mistake caused him to confer a benefit on the defendant, will nevertheless be denied restitution. These disqualifying circumstances include, in particular, circumstances where the claimant's own fault has been a causative factor in the conferring of the benefit on the defendant in question.

28.              In the present case, as set out above, the Bank failed to satisfy the trial judge that the signature of Mr. Murray as it appears on the confirmation document was in fact his signature. The then Branch Manager of the Bank in Killybegs nonetheless purported to have witnessed Mr. Murray's signature being affixed to that document. As we have already indicated, the unavoidable conclusion which has to be drawn is that the Bank official made a false representation of fact (i.e., that he had witnessed Mr. Murray signing the document) which was causative of the loan being granted, and that this was a deliberate false representation of fact. This was conduct which, in our view, goes well beyond mere casualness or even negligence as suggested at para. 151 of the judgment of Dunne J. It is not a question of failing to take reasonable care; one either does in fact witness a live signature being placed on a document or one does not.

29.              If that false representation of fact had not been made, and the Bank did not have the signature of Mr. Murray to certify that he was a joint borrower with his wife, then it seems inevitable that the loan in question would not have been granted, until Mr. Murray did in fact provide his signature. Had this happened, then this would have had the consequence that he would have been aware of the loan and the present case would never have arisen. It may well be that Mr. Murray would never have agreed to this loan in the first place.

30.              In our opinion, the import of the above circumstances is that the Bank's actions facilitated the deception carried out by Ms. Murray to the extent that the Bank itself not only fell victim to a deception practiced on it by Ms. Murray, as stated at para. 146 of the judgment of Dunne J., but the Bank itself in effect became a party to the overall deception. To repeat: the making of the false representation as to the witnessing of Mr. Murray's signature involved a significant degree of wrongful conduct on the part of the Bank going well beyond the casual slip or even negligence. We find ourselves obliged to conclude that these circumstances justify disqualifying the Bank from obtaining relief in the present case.

31.              In addition to disqualifying circumstances, there are also circumstances in which a claim for unjust enrichment will be defeated by public policy considerations: see Goff & Jones, at para. 35-40 et seq. In the present context it was clearly part of the important public policy underlying the 1995 Act that all consumer loans and housing loans should be governed by that Act, with the inbuilt strong protections for borrowers. The false representation of fact made by the Bank official, as described above, was causative of a loan being granted which has been found by the majority to be outside the provisions of the 1995 Act, for the reasons set out in the judgment of Dunne J. The Bank's own wrongful act thus contributed to an outcome which was wholly at odds with the public policy as reflected in the 1995 Act, and in the circumstances it seems clear to us that it would be totally contrary to public policy to allow the Bank's claim in unjust enrichment.

Part IV - Conclusions

32.                                 In summary, therefore, we are of the view that the Bank has debarred itself by its own conduct itself to the claim for unjust enrichment to which it was otherwise prime facie entitled. We consider that the Bank's conduct made it effectively a party to the overall wrongful conduct which led to the 2007 loan being advanced, and the effect of this was to frustrate Mr. Murray's entitlement to the protections of the 1995 Act. An order for restitution in these circumstances would be wholly at odds with the public policy reflected in the 1995 Act itself.

33.                                 In these circumstances we consider that the Bank's claim as against Mr. Murray should be dismissed and we would accordingly allow his appeal against the decision of the Court of Appeal.

 

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