The Supreme Court has ruled that the courts can decline to make an order for repossession where a lender does not adhere to moratorium provisions laid down in the Code of Conduct of Mortgage Arrears (the Code) aimed at giving a “window of opportunity” to explore other solutions for those in mortgage arrears.
Delivering the unanimous decision, Mr. Justice Clarke held that lenders are legally obliged to comply with the regulatory Code that was introduced under s117 of the Central Bank Act 1989. In dealing with statute that does not expressly state that a contract is to be treated as void or unenforceable, the Court followed Quinn v IBRC that courts must look to the public policy behind the legislation. The purpose of the Code was to regulate the way in which financial institutions seek to repossess properties in mortgage arrears, making requirement to comply in no way counterproductive to such an objective. For a lender to proceed with seeking repossession in clear breach of the moratorium was to do exactly what the Code was designed to prevent, and to allow an application for repossession during that period would be to undermine the intention and purpose of the Code.
The Court, however, confined its ruling to the limited cases of breach of the moratorium. For the courts to have any wider jurisdiction in relation to repossession cases, such as deciding on the reasonableness of a lender’s conduct, clear legislation would be required to confer such powers.
This decision involved the case of Irish Life & Permanent v Dunne – along with another, Irish Life & Permanent v Dunphy, on sums payable on breach – that was referred to the Supreme Court by Judge Gerard Hogan on the basis of varying High Court decisions on whether an order for possession could be granted where a financial institution had not demonstrated compliance with the Code. These cases will now be returned to the High Court.
Click here to read the judgment in full.