Supreme Court allows lender possession claim where full debt was due before statutory moratorium repeal.

THE SUPREME COURT

[Record No: 259/2013]

Denham C.J.

O'Donnell J.

Clarke J.

Laffoy J.

Charleton J.

Between/

Irish Life and Permanent plc

Plaintiffs/Respondents

and

Gemma Dunne and Kevin Dunne

Defendants/Appellants

and

[Record No: 293/2013]

Between/

Irish Life and Permanent plc

Plaintiffs/Respondents

and

Dylan Dunphy

Defendant/Appellant

Judgment of Mr. Justice Clarke delivered the 15th May, 2015.

1. Introduction

1.1 It is hardly surprising that important legal questions relating to the entitlement or otherwise of financial institutions to obtain

possession of mortgaged property have arisen in recent times. It must, of course, be emphasised that it is only the legal aspects of

such questions with which the courts are concerned. Other policy issues raising both economic and social questions do, of course,

arise. But any such issues require to be considered at a political and regulatory level, and to find their way into changes in the law, if

that is to happen at all, through legislation or regulatory measures which have binding legal effect. To say that the courts have no

role in such issues is not to imply that judges are unmindful of the great personal difficulties which have arisen from both the collapse

in property prices and the general financial crisis. Whether, and if so to what extent, those difficulties should lead to a change in the

law and a shift in the balance of legal rights between, on the one hand, those who have lent money on the security of premises and,

on the other hand, borrowers in financial difficulty, is a matter for legislators and regulators. The courts must interpret the law as it is

and apply it to the facts and circumstances of each individual case.

1.2 These two cases come before this Court as cases stated from the High Court (Hogan J.). In both cases, Hogan J. was sitting as a

judge of the High Court hearing an appeal from the Circuit Court. In circumstances which it will be necessary to address in a little

more detail, an issue which arose in both cases was whether, for what I think can fairly be described as technical reasons, it was

open to Hogan J. to state a case for the opinion of this Court in the particular circumstances of the respective cases. The first

question posed by Hogan J. in each case, therefore, concerns jurisdiction and relates to whether this Court can hear the cases at all.

On the assumption that a jurisdiction exists, different substantive issues arise respectively in the two cases. In case no 259/2013

("the Dunnes’ case"), questions were raised by the High Court itself as to whether possession could properly be ordered against the

defendants/appellants ("the Dunnes") arising out of the effect of the Code of Conduct on Mortgage Arrears ("the Code" which term

applies to the version in place at the time of the events under consideration in the Dunnes’ case being the version adopted in 2010

which came into force on the 1st January, 2011) promulgated under s.117 of the Central Bank Act 1989, as amended, ("the 1989

Act"). The second issue raised in the case stated in that case is, therefore, as to whether the Code can, either generally or in certain

specified circumstances, affect the legal entitlement of a lender to secure possession of mortgaged property in the event of default in

repayment.

1.3 In case no. 293/2013 ("the Dunphy case") the first additional issue, beyond the question of whether a power to state a case

arises at all, which arose on the case stated was as to whether the plaintiffs/respondents ("Irish Life and Permanent") had a sufficient

vested right prior to the coming into force of the Land and Conveyancing Law Reform Act 2009 ("the 2009 Act") so as to permit

reliance to continue to be placed on section 62(7) of the Registration of Title Act 1964 ("the 1964 Act") despite that provision having

been repealed on the coming into force of the 2009 Act. A second issue concerning the extent to which Irish Life and Permanent

might be able, in the alternative, to rely on a contractual right to possession was also raised.

1.4 As will appear from this judgment, the Dunnes never participated in the proceedings concerning them. Hogan J. was, nonetheless,

quite properly concerned as to whether he was entitled, as a matter of law, to make the order sought by Irish Life and Permanent in

the Dunnes' case. However, as the Dunnes had not participated in the proceedings up to that point in time, and given that it was,

therefore, likely that they would not participate in the hearing of the case stated, this Court had previously invited the counsel who

had been instructed on behalf of the Dunphys to also make submissions in the Dunnes’ case. I should say that the availability of

leading counsel to present argument in favour of the Dunnes made, in my view, the task of the Court in determining the legal issues

which arise in the case stated in respect of the Dunnes much easier than might otherwise have been the case. The availability of well

formulated argument on both sides of any proposition can only enhance the likelihood of a decision maker reaching an appropriate

determination.

1.5 Be that as it may, in order to more fully understand the precise issues which arise, it is next necessary to set out a brief account

of the procedural history of both cases on the basis of the facts and determinations specified by Hogan J. in the respective cases

stated.

2. The Dunnes’ Case

2.1 The case stated by Hogan J. was made under s.38(3) of the Courts of Justice Act 1936 (“the 1936 Act”). From the facts set out

by Hogan J. in the case stated, it appears that Irish Life and Permanent advanced a loan to the Dunnes on the 16th January, 2007,

which was secured by a registered charge over lands owned by the Dunnes at Silverhill, Kilcoursey, Co. Offaly, which lands were

comprised in Folio OY23220F. The Dunnes defaulted on the repayments due under the relevant loan and, therefore, under the terms

and conditions of the loan, it appears that such default resulted in the total principal sum under the relevant loan agreement

becoming immediately payable. On that basis, Irish Life and Permanent was prima facie entitled to seek to recover possession of the

lands in question. Proceedings were issued in the Circuit Court in May 2011 for the purpose of seeking an order for possession of the

lands. No appearance was entered by or on behalf of the Dunnes, who have, in fact, been living outside of the jurisdiction since

October 2010. As a result, Irish Life and Permanent was required to obtain an order for substituted service and for service of the

proceedings outside of the jurisdiction. In the case stated, Hogan J. noted that, as a consequence of the lack of any appearance by

the Dunnes to the Circuit Court Proceedings, no issue was raised at any stage as to Irish Life and Permanent’s compliance with the

Code prior to the matter coming on for hearing before the Circuit Court sitting at Tullamore.

2.2 In addressing the decision of Dunne J. in Start Mortgages v. Gunn and Others [2011] I.E.H.C. 275 at the Circuit Court hearing,

Irish Life and Permanent made submissions arguing for the persistence of their lawful entitlement to seek possession on foot of the

terms and conditions of the mortgage notwithstanding the repeal of s.62(7) of the 1964 Act by the 2009 Act.

2.3 On 13th February, 2012, Her Honour Judge Murphy refused Irish Life and Permanent’s application for possession due to their failure

to issue a demand for repayment of the mortgage on or before 1st December, 2009, being the date of repeal of s.62(7) of the 1964

Act. On that basis, and in the light of Start Mortgages, Her Honour Judge Murphy was not satisfied that Irish Life and Permanent had,

as of the date of repeal of s.62(7) of the 1964 Act, an existing right which would subsist notwithstanding the repeal of the section.

Irish Life and Permanent appealed that decision to the High Court. Further orders in relation to service on the Dunnes were made and

complied with.

2.4 Hogan J. referred in the case stated to a number of High Court judgments, commencing with Start Mortgages & Ors. v. Gunn &

Ors. and including EBS Building Society v. Gillespie [2012] I.E.H.C. 243, Irish Life and Permanent Plc v. Duff [2013] I.E.H.C. 43,

Stepstone Mortgage Funding Limited v. Fitzell [2012] I.E.H.C. 142, and Zurich Bank v. McConnon [2011] I.E.H.C. 75. Hogan J. stated

that, as a consequence of the “varied and differing views” taken by the various High Court judges in this line of case law regarding,

amongst other things, the issue of the legal status of and the consequence of compliance with the Code insofar as such questions

might affect possession proceedings, it was necessary to state a case to this Court to “seek to determine the jurisprudence on this

matter.” Thus, Hogan J. presented the following questions to this Court:

i. Does the High Court have jurisdiction to state a case for the consideration of the Supreme Court pursuant to s.

38(3) of the Courts of Justice Act 1936 in the course of an appeal from the Circuit Court where no oral evidence

was given before that Court?

ii. In the absence of any statutory indication that failure to comply with the applicable Code of Conduct on

Mortgage Arrears as promulgated under Section 117 of the Central Bank Act 1989 as amended (“the Code”)

affects the ability of the lender to secure an order for possession of premises covered by the Code, does non-

compliance of the Code affect, as a matter of law, the lender’s entitlement to obtain an order for possession.

iii. If non-compliance with the Code affects the entitlement of the lender to secure an order for possession, must

the Court refuse to make such an order in the event of any breach with the Code, or does the lender’s entitlement

to an order depend on the nature or the circumstances of the breach or on the possibility of addressing any

prejudice resulting from such breach by an order for adjournment of the proceedings or the granting of a stay

(subject to conditions or otherwise) or any order for possession.

2.5 It is necessary to touch on one point concerning the questions which were referred to this Court by Hogan J. in this case stated.

As noted earlier, the basis on which Her Honour Judge Murphy declined to make an order for possession against the Dunnes and in

favour of Irish Life and Permanent stemmed from the fact that a demand for repayment had not been made before the 1st December,

2009. It should be recalled that the Dunnes did not participate in the hearing either before Her Honour Judge Murphy in the Circuit

Court or, indeed, before Hogan J. in the appeal brought by Irish Life and Permanent to the High Court. However, notwithstanding the

absence of appearance on behalf the Dunnes, Her Honour Judge Murphy quite properly considered whether Irish Life and Permanent

had made out a case for possession. As noted earlier and on the basis of Start Mortgages, in the absence of a demand for repayment

prior to the relevant date, Her Honour Judge Murphy took the view that, so far as this case was concerned, s.62(7) was, like Monty

Python’s parrot, dead.

2.6 However, it is clear from the written submissions filed on behalf of Irish Life and Permanent on their appeal to the High Court that

reliance was placed on the decision of Laffoy J. in EBS Building Society v. Gillespie [2012] I.E.H.C. 243. That case concerned the

standard terms and conditions to be found in Irish Life and Permanent’s mortgage deed, which terms and conditions it will be

necessary to refer to in due course, and which are applicable both in that case and in the Dunnes’ case. Laffoy J. came to the view

that those terms and conditions were such that they gave rise to a situation where the entire principal sum became due on an act of

default as specified in the mortgage documentation without the necessity for the service of any form of notice of demand. It seems

clear that Hogan J. was, likewise, satisfied that the same situation applied in the Dunnes’ case and was not, therefore, satisfied that

the Start Mortgages point had any application. No further basis was put forward (not least because the Dunnes did not participate)

for suggesting that the full principal sum had not become due by the 1st December, 2009, and the Start Mortgages issue, therefore,

clearly no longer arose. It is for that reason, it would appear, that no question concerning what I might call Start Mortgages type

issues are included in the case stated in the Dunnes’ case.

3. The Dunphy Case

3.1 The facts of this case are, similarly, set out in the case stated by Hogan J. As in the Dunnes’ case, Hogan J., on hearing an

appeal against a decision of the Circuit Court, stated a case under s.38(3) of the 1936 Act for the opinion of this Court.

3.2 As set out in the case stated, it would appear that Mr. Dunphy entered into an indenture of mortgage on 3rd January, 2008, in

favour of Irish Life and Permanent, as security for a loan in his favour to the value of €235,000. The charge was registered as a

burden on Folio 13364F, which relates to the relevant property, being 11 Dun na Rí, Buncrana, County Donegal.

3.3 Mr. Dunphy fell into arrears on payment of his loan and, as in the Dunnes’ case, the provisions of the loan agreement were such

that, where the loan fell into arrears of two months or more, the total debt was stated to become immediately payable and the lender

to be entitled to enter into possession of the property in question.

3.4 In light of this default in payment, Irish Life and Permanent issued a 21 day warning letter to Mr. Dunphy, and subsequently, when

no payment was forthcoming, issued proceedings on the 10th December, 2008, in the form of an Ejectment Civil Bill on Title seeking,

amongst other things, an order for possession of the property concerned. However, Irish Life and Permanent agreed to hold off on

taking action for twelve weeks, without prejudice to its right to take proceedings, on foot of a letter from Mr. Dunphy to the effect

that he was entitled to a first time buyer’s allowance from the Revenue Commissioners to the value of €8,000. Mr. Dunphy stated in

correspondence with Irish Life and Permanent that this would restore the account to credit.

3.5 There followed alleged delays in respect of Mr. Dunphy’s receipt of that payment, and a suggestion on his part that Irish Life and

Permanent might “place the outstanding balance on the capital and switch [his] account to interest only”. He stated that he would

be in a position to start making payments in those circumstances. Further correspondence ensued, in which Irish Life and Permanent

noted that, despite assurances, Mr. Dunphy had failed to make payments since December 2008. In 2011, when no payment was

forthcoming, Irish Life and Permanent proceeded with its application for an order for possession of the property, which order was

made in the Circuit Court sitting in Letterkenny subject to a stay of four months. No oral evidence was given before the Circuit Court

and no order was made as to costs.

3.6 That decision was appealed by Mr. Dunphy to the High Court and came on for hearing before Hogan J. on the 25th of February

and the 4th of March, 2013. A similar point was raised in this case as that outlined in the Dunnes’ case in relation to whether Irish Life

and Permanent was entitled to seek possession, given the repeal of section 62(7) of the 1964 Act on 1st December, 2009, by virtue

of s.8(3) and Part 5 of Schedule 2 of the 2009 Act.

3.7 In a judgment delivered on 29th April, 2013, Hogan J. acceded to Mr. Dunphy’s application for a case stated. On 3rd July, 2013,

Hogan J. stated a case posing the following questions for the determination of this Court:

“(i) Does the High Court have jurisdiction to state a case for the consideration of the Supreme Court pursuant to

section 38(3) of the Courts of Justice Act 1936 in the course of hearing an appeal from the Circuit Court where no

oral evidence was given before that Court?

(ii) If the answer to question (i) is in the affirmative, whether the Plaintiff had a vested right to possession prior to

1st December 2009 for the purposes of section 27 of the Interpretation Act 2005 which was unaffected by the

subsequent repeal of section 62(7) of the Registration of Title Act 1964?

(iii) Irrespective of the answer to question (ii) can this Court grant possession to a mortgagee pursuant to a

contractual agreement which is independent of statute?”

3.8 At this point it should be recalled that no question concerning the effect of the repeal of s.62(7) of the 1964 Act was referred to

this Court in the case stated in the Dunnes’ case. The reason for that situation pertaining has already been dealt with in this

judgment. However, it is clear that, in the Dunphy case, argument was addressed as to why, notwithstanding the standard terms and

conditions contained in Irish Life and Permanent’s mortgage deed, it was said that the principal sum in Mr. Dunphy’s case was not due

on the critical date, being the 1st December, 2009. It is for that reason that specific questions arising out of that argument are to be

found in the case stated in the Dunphy case but are absent in the Dunnes’ case.

3.9 Ultimately, although the application for the case stated was made by Mr. Dunphy, it was agreed that Irish Life and Permanent

would take carriage of these proceedings, since they had carriage of the case stated in the other, connected, proceedings being the

Dunnes' case.

3.10 As the question of whether a jurisdiction to state a case arises at all is common to both proceedings, and is also necessarily

preliminary to a consideration of any of the other issues raised (for, if this Court does not have jurisdiction to consider the cases

stated, it would be inappropriate to comment on the other issues), I turn first to that question.

4. Is there a jurisdiction?

4.1 First, it should be noted that counsel who argued the case on behalf of both the Dunnes (on the nomination of the Court) and Mr.

Dunphy agreed with counsel for Irish Life and Permanent that a jurisdiction to state a case arose in the circumstances of both of

these proceedings. However, the question relates to whether this Court has a legal power to entertain the respective cases stated

and it remained, notwithstanding that agreement, a matter for the Court to consider on its merits. Clearly the trial judge had some

concerns as to whether a power to state a case arose at all. Indeed, as will become apparent, there was a very real basis for the

trial judge’s concerns in that regard, for a literal interpretation of the relevant legislation might well point to the absence of such a

power in the circumstances of these cases. It follows that it is necessary to analyse and consider the basis on which it might be

suggested that no power to state a case lies in the circumstances of either of these proceedings.

4.2 The potential problem about jurisdiction stems from the wording of certain provisions of the 1936 Act. In order to understand the

legislative changes which were brought about by that Act, it is necessary briefly to address the previous statutory position.

4.3 Prior to the enactment of the 1936 Act, the position in respect of circuit appeals was as set out in s.61 of the Courts of Justice

Act 1924, which was repealed by s.3, First Schedule Part II of the 1936 Act. The Courts of Justice Act 1924 abolished the County

Courts of the Irish Free State and transferred their jurisdiction to the Circuit Courts, which were also established under that Act.

Section 61, in particular, implemented Article 64 of the Free State Constitution, which provided for “Courts of limited and local

jurisdiction, with a right of appeal as determined by law.” That section provided for an appeal from any judgment or order of the

Circuit Court in civil cases to two judges of the High Court sitting in Dublin. If such two judges agreed in their opinion, their decision

was final, unless they certified that their decision involved a question of law or fact of such importance as to be fit to be the subject

of an appeal to the Supreme Court, in which case an appeal lay, at the instance of any party, from the decision of such two judges

to the Supreme Court. However, if those two judges differed in their opinion, the judgment or order appealed against was affirmed,

with costs, and an appeal lay at the instance of any party from such affirmance to the Supreme Court. Under s. 61, an appeal could

be brought on law and/or fact, save where the appeal concerned related to a jurisdiction previously exercised by the County Court

under a statutory jurisdiction which had been transferred by the 1924 Act to the Circuit Court, and where the relevant legislation

specifically, or by implication, limited the appeal to questions of law. In those types of cases, the exercise of the appellate jurisdiction

by the High Court under the 1936 Act was similarly limited.

4.4 The changes which were brought about in 1936 involved the creation of a distinction between, on the one hand, Circuit Court

cases which were heard outside Dublin on oral evidence and, on the other hand, cases so heard without oral evidence. That

distinction arose in the context of a change in the nature of the appeal which was to be provided to a party dissatisfied with a

decision of the Circuit Court. In place of an appeal to two judges of the High Court, provision was made for an appeal to a single

judge of that court. In place of the somewhat complicated arrangements, which have already been addressed, relating to the

possibility of a further appeal to this Court from the High Court, provision was made for a case stated procedure whereby the High

Court judge hearing an appeal might, in certain circumstances, state a case for the opinion of this Court.

4.5 There was, clearly, a logic in making specific provision for cases heard in the Circuit Court outside Dublin which involved oral

evidence. The form of appeal which exists between the Circuit Court and the High Court normally involves a complete rehearing: see

s.37(2) of the 1936 Act. Thus, where a case is heard on oral evidence in the Circuit Court, any appeal is also likely to involve the

same or similar oral evidence being tendered before the High Court judge who hears the appeal. Given that the purpose of the Circuit

Court is to provide for local justice, it follows that there is a significant advantage in having any appeals which require to be heard on

oral evidence conducted in the same locality as the Circuit Court from which the appeal lies. To require witnesses to travel to Dublin

for an appeal from a case which was heard, for example, in the west of Ireland would significantly impact on the local nature of the

Circuit Court jurisdiction.

4.6 There is, therefore, an entirely logical basis for the distinction which is to be found between s.37 of the 1936 Act, which deals

with appeals from the Circuit Court in cases heard with oral evidence, and s.38, which deals with appeals in all other cases.

4.7 The problem, so far as the issue with which this Court is now concerned, stems from the wording of ss. 37 and 38. In relevant

part, those sections provide:-

"37.—(1) An appeal shall lie to the High Court sitting in Dublin from every judgment given or order made (other

than judgments and orders in respect of which it is declared by this Part of this Act that no appeal shall lie

therefrom) by the Circuit Court in any civil action or matter at the hearing or for the determination of which no

oral evidence was given.

38.—(1) An appeal shall lie from every judgment or order (other than judgments and orders in respect of which it

is declared by this Part of this Act that no appeal shall lie therefrom and judgments and orders in respect of which

other provision in relation to appeals is made by this Part of this Act) of the Circuit Court in a civil action or matter

—

…

(3) The judge hearing an appeal under this section may, if he so thinks proper on the application of any party to

such appeal, refer any question of law arising in such appeal to the Supreme Court by way of case stated for the

determination of the Supreme Court and may adjourn the pronouncement of his judgment or order on such appeal

pending the determination of such case stated and, in particular, may so adjourn such pronouncement to Dublin

and there pronounce his said judgment or order at any time after such determination."

4.7 Therefore, it is s.38(3) which confers a jurisdiction on a High Court judge hearing a Circuit Court appeal to "refer any question of

law" … "by way of case stated for the determination of the Supreme Court". However, there is no equivalent provision to be found in

section 37. Thus, on a literal reading, s.38(3) refers only to "an appeal under this section" which in turn means an appeal which, under

s.38(1), lies against judgments and orders "other than … judgments and orders in respect of which other provision in relation to

appeals is made …" Appeals from orders made after hearings without oral evidence are dealt with in s.37 and are, thus, cases where

other provision (i.e. provision other than under s.38) is made. Such appeals are not, therefore, appeals to which s.38 applies. It

follows that the reference to an appeal under "this section" in s.38(3) does not, on such a literal reading, apply to an appeal in a case

in which no evidence was heard in the Circuit Court.

4.8 These provisions have been the subject of some judicial determination. In Hanley v. Martin [1961] Ir. Jur. Rep. 34 Budd J., in the

High Court, heard an appeal from the Circuit Court in a case in which no oral evidence was heard in the lower court. In those

circumstances, Budd J. held, at p.36, that the "case therefore falls within the ambit of s.37 and accordingly, any appeal which lies

under it must be taken to Dublin". Thereafter, Budd J. noted that he had been asked to state a case to this Court. Having noted that

the appeal arose under s.37 and not s.38, Budd J. held that he did not have jurisdiction to state a case.

4.9 Counsel for Irish Life and Permanent drew attention to Wigoder v. Moran [1977] I.R. 112, in which it would appear that this Court

accepted jurisdiction to entertain a case stated from the High Court (Finlay P.) who was himself hearing a circuit under s.37.

However, no argument appears to have been raised as to whether a jurisdiction to state or entertain the case stated concerned

existed. On that basis, it can not be said that any great weight can be attached to the fact that this Court considered the case

stated in Wigoder on its merits. It seems to follow that the balance of judicial authority to date favours the view that a jurisdiction to

state a case from the High Court, hearing a circuit appeal, to this Court only arises in appeals which are before the High Court under

s.38 and does not, therefore, arise in cases where the High Court is considering an appeal from the Circuit Court in a civil case heard

without oral evidence.

4.10 That also seems to accord with the literal wording of the relevant provisions. The real question which arises is as to whether

that interpretation must be displaced by virtue of the provisions of the Interpretation Act 2005 ("the 2005 Act").

4.11 Section 5(1) of the 2005 Act is in the following terms:-

"In construing a provision of any Act (other than a provision that relates to the imposition of a penal or other

sanction)—

(a) that is obscure or ambiguous, or

(b) that on a literal interpretation would be absurd or would fail to reflect the plain intention of—

(i) in the case of an Act to which paragraph (a) of the definition of “Act” in section 2(1) relates, the

Oireachtas, or

(ii) in the case of an Act to which paragraph (b) of that definition relates, the parliament concerned,

the provision shall be given a construction that reflects the plain intention of the Oireachtas or

parliament concerned, as the case may be, where that intention can be ascertained from the Act as a

whole."

4.12 So far as it is material to this case, it would seem that the section applies where, on a literal interpretation, a construction

would be absurd or would fail to reflect the plain intention of the Oireachtas. In such cases, the provision should be given a

construction which reflects that plain intention of the legislation where same can be ascertained from the legislation as a whole. In

considering that provision in Kadri v. Governor of Wheatfield Prison [2012] I.E.S.C. 27, I said the following at para. 3.6:-

"It seems to me that there is at least a broad similarity between that area of jurisprudence and the intent behind

at least aspects of s.5(1) of the Interpretation Act, 2005. It is important to note that the construction which that

section requires is one that ‘reflects the plain intention of (the legislature) where that intention can be ascertained

from the Act as a whole’. It is clear, therefore, that it not only is necessary that it be obvious that there was a

mistake in the sense that a literal reading of the legislation would give rise to an absurdity or would be contrary to

the obvious intention of the legislation in question, but also that the true legislative intention can be ascertained.

There may well be cases where it may be obvious enough that the legislature has made a mistake but it may not

be at all so easy to ascertain what the legislature might have done in the event that the mistake had not

occurred."

4.13 On the facts of Kadri I was not satisfied that a literal construction of the provision under consideration was absurd. In addition, I

came to the view that the potential problem with the relevant legislation in that case was that the Oireachtas, had it applied its mind

to the question, might have considered including some additional provisions in the legislation concerned, but that there was a range of

potential provisions which could have been included.

4.14 The first real question which arises, therefore, is as to whether there could be any possible basis on which the Oireachtas might

have decided to allow for a case stated to this Court from a High Court judge hearing an appeal from a case heard in the Circuit Court

with oral evidence, but decided not to allow for the same procedure in such cases heard in the Circuit Court without oral evidence.

The case stated procedure is designed to allow the High Court, when hearing a circuit appeal, to seek a definitive ruling on a question

of law from this Court. There is no particular reason to believe that a definitive ruling on a question of law may not be just as likely to

be required arising out of a circuit appeal from a hearing where no oral evidence was called as arising out of a hearing conducted, for

example, solely on affidavit. Indeed, if anything, it may be more likely that a point of law requiring definitive clarification may arise in

such cases, for the very fact that the proceedings were heard without oral evidence in the Circuit Court must tend to show that it is

likely that the only issues were legal ones rather than questions of fact.

4.15 As pointed out in Kadri, it is not for this Court to assess the policy behind any legislation. Where there are possible reasons for

adopting a particular measure, even if there might be grounds for believing that the legislation may be ill-suited to achieving its ends,

the courts are given no mandate by s.5 of the 2005 Act to intervene. The question which must be asked is as to whether there could

be any possible or conceivable basis on which the Oireachtas might have chosen to legislate in the manner which a literal

construction of the relevant provisions would require.

4.16 In this case I cannot see any conceivable basis on which the Oireachtas might have chosen to allow for a case stated in one

type of circuit appeal but not in another where the distinction between the two types of cases could have no possible bearing on

whether a legal issue, which might warrant clarification by this Court, might arise. The result is, clearly, absurd.

4.17 But that is not sufficient for the purposes of s.5. As pointed out in Kadri, it must also be possible to tell, from the Act as a

whole, what the true legislative intention actually is. In my view, such is possible in this case. The 1936 Act was designed to make a

change from the previously existing position which allowed for a form of appeal to this Court under s.61 of the 1924 Act in

circumstances where either, in accordance with the legislation in place at the time, the two judges of the High Court hearing the

appeal from the Circuit Court disagreed or where, even though they agreed, they were satisfied that the case involved a question of

such importance as to be fit to be the subject of an appeal to this Court. That regime clearly contemplated that there would be

cases where it would be appropriate that final clarification be obtained on important questions from this Court. There is nothing in the

1936 Act which suggests that there was a radical change in policy. Rather, there was a change in the location of the hearing of

certain types of appeals (and a change in the case of further review by this Court from an appeal to a case stated) which, due to a

mistake in drafting, led, on a literal construction, to an exclusion, for no good reason, of the right to have important issues finally

clarified by this Court, but only in cases where no oral evidence was heard in the Circuit Court. In my view, the intention of the

Oireachtas is clear. It was that a High Court judge hearing a circuit appeal should have the entitlement, if satisfied that it was an

appropriate case in which to exercise the power, to state a case to this Court. The statute was not intended to exclude, for no

obvious or conceivable reason, the case stated procedure from being available in respect of cases originally heard in the Circuit Court

without oral evidence.

4.18 To use the language of Kadri I am, therefore, satisfied that there was an error in the drafting of the legislation, and that it is

also clear what the legislation would have said had such an error not been present. The legislation would not have, in the absence of

error, confined the case stated procedure to appeals "under this section" when providing for a case stated in section 38(3). That

procedure would have been available in all cases.

4.19 There was some debate at the hearing before this Court as to whether s.5 truly extended the principles of construction beyond

those which had previously been identified in the case law of the courts and are referred to, for example, in works such as Bennion on

Statutory Interpretation 5th Ed., (London, 2008). It is not necessary for the purposes of these appeals to consider whether s.5

extends beyond the parameters of the common law rules thus identified. It may well be that, at a minimum, s.5 is designed to

encourage courts to engage, in appropriate cases, in the sort of purposative interpretation which that section mandates. However, it

is also clear that s.5 only applies in limited circumstances. There are limits to the extent to which a court can be expected to correct

errors in legislation even allowing for the scope of section 5. The court cannot be asked to rewrite legislation. The court cannot be

asked to include provisions which the Oireachtas may have omitted, but where there might be legitimate debate as to whether the

Oireachtas would have included same (or in what form same might have been included).

4.20 This case is, most probably, towards the outer reaches of the boundary of the jurisdiction of the court conferred by s.5. Be that

as it may I am, however, satisfied that s.5 does mandate this Court to interpret ss.37 and 38 of the 1936 Act in a manner different

from that which would derive from a literal construction. In those circumstances, I am satisfied that it is proper to interpret the 1936

Act as conferring a jurisdiction on a High Court judge to state a case to this Court in a circuit appeal where no oral evidence was

heard in the Circuit Court notwithstanding that a literal interpretation of s.38 might suggest otherwise. For those reasons, I would

answer the first question in both of the cases stated now before the Court in the affirmative and to the effect that the trial judge

had a jurisdiction to state a case in both proceedings.

4.21 Against that background it is then necessary to turn to the separate substantive issues raised in the respective proceedings. I

turn first to the Dunnes’ case and to the question referred to this Court in that case as to the effect of the Code.

5. The Dunnes’ Case - The Code

5.1 The issue raised by the trial judge is one of very considerable importance. There is no doubt but that the Code forms part of the

law. Under section 117(1) of the 1989 Act, a regulated financial institution is obliged, as a matter of law, to obey the Code. The Code

involves, however, a whole range of measures of greater and lesser importance which are expressed in more or less concrete terms.

At one extreme lies the moratorium period under which a financial institution is precluded from commencing repossession proceedings

until that period has elapsed. That provision is both clear and of very considerable importance. Also important, but much less precise,

are the obligations which are placed on financial institutions to engage with borrowers in difficulty. Just how, and to what extent and

in what manner, such engagement is to take place is specified to some extent, but inevitably each case is likely to throw up its own

individual circumstances. At the other end of the scale, the current version of the code, for example, contains detailed measures on

matters such as the obligation to keep a record of all contact with a borrower.

5.2 Clearly, as a matter of regulation, any relevant financial institution is obliged to comply with its obligations under the Code and will

be answerable, in an appropriate way, to the regulator for any significant failure so to do. But that is not the question with which this

Court is faced. Rather, the Court is concerned with the extent, if any, to which the Code can be said to impact on the legal rights

and obligations as and between a lender who is a regulated financial institution, on the one hand, and a borrower, on the other hand.

5.3 In what way can it be said that the Code so impacts? Two possible bases were put forward in argument on behalf of the Dunnes.

Counsel suggested that it was possible to argue that the Code might amount to an implied term in the relationship between the

parties. In fairness, counsel did not press that argument too far. In my view, counsel was correct in adopting that position. It is very

difficult to see how the contractual arrangements between a lender and a borrower must be taken to have implied into them the

provisions of the Code in circumstances where the Code can change from time to time (and thus could not have been particularly in

the contemplation of the parties when they entered into their contracts) and where, unlike other legislation such as, for example, the

Sale of Goods and Supply of Services Act 1980, the Employment Equality Act 1998 and the Package Holidays and Travel Trade Act

1995, the relevant legislation in this case does not expressly provide that certain terms are to be implied into relevant contracts. If

the Oireachtas had wanted to convert any particular provision or type of provision of the Code into an implied term then it would have

been easy for the Oireachtas to adopt the same policy as was adopted in respect of other legislation and to have said so.

5.4 The second basis, on which counsel placed much greater emphasis, was to suggest that compliance with the Code could be taken

into account by a court in deciding whether an order for possession should be made. In this regard, counsel referred to three cases:

Zurich Bank v. McConnon [2011] I.E.H.C. 75, Stepstone Mortgage Funding Limited v. Fitzell [2012] I.E.H.C. 142 and Irish Life and

Permanent Plc v. Duff [2013] I.E.H.C. 43.

5.5 In McConnon, Birmingham J. had occasion, in the context of summary proceedings, to consider the attempted reliance by the

defendant in that case on a different code made under the same provisions of the 1989 Act, namely the Consumer Protection Code

("the Consumer Protection Code"). The Court found that that Consumer Protection Code did not contain any provision suggesting that

a breach thereof could render an agreement null and void. However, as counsel correctly submitted, that statement is obiter in

circumstances where the defendant in that case was held to be “emphatically” not a consumer within the meaning of the Consumer

Protection Code. Nevertheless, that particular aspect of the judgment in McConnon was referred to by Laffoy J. in Fitzell as being “in

line with the assessment in Breslin on Banking Law (2nd ed.) at para. 3 – 56, which sets out to explain the contractual setting of

Central Bank codes of practice” and which Laffoy J. described as “helpful in considering the status of the current code.” The relevant

passage from Breslin, as set out by Laffoy J. at para. 26 of her judgment, is as follows:

"The Central Bank has promulgated Codes of Practice for credit institutions pursuant to its powers under s. 117 of

the Central Bank Act 1989. Breach of the code is not a criminal offence and the Act does not spell out any

particular consequences in civil law arising from a breach. Breach of a direction by the Central Bank to comply

with particular provisions of the Code is a criminal offence. A key question is whether or not these provisions are

merely 'soft law', i.e. devoid of legal effect such that a breach of a provision in the Code of Practice will not sound

in a remedy in civil law for damages. In the unlikely event that the Codes of Practice have been incorporated into

the bank- customer bargain then they apply. Whether a particular requirement is deemed to be an implied term in

that contract depends on the particular term sought to be implied, and the circumstances of the case - but the

test is not an easy one to meet. It is submitted that the Codes of Practice appear more likely primarily to arise in

the context of the analysis of the bank's duty of care and whether the bank has in a particular case met

reasonable standards."

Laffoy J. also noted that some development of the jurisprudence in this area in the future might be anticipated.

5.6 Fitzell concerned an undefended appeal against a refusal by the Master of the High Court to transfer a case to the Chancery

Special Summons List for hearing in circumstances where the defendants had not been informed of their right of access to an appeal

of a certain decision of the lender’s Arrears Support Unit to an Appeals Board. In the proceedings generally, possession was sought by

the lender. Laffoy J. considered the obligations on the lender under the Code in this context. In the circumstances as outlined, Laffoy

J. found the lender to be in breach of the Code, and found that, where the lender seeks possession of a principal private residence, it

is under an obligation to demonstrate its compliance with the Code. At para. 29 Laffoy J. said:-

“Notwithstanding what is stated in the preceding paragraphs, I find it impossible to agree with the proposition that, in proceedings for

possession of a primary residence by way of enforcement of a mortgage or charge to which the current code applies, which comes

before the court for hearing after the current code came into force, the plaintiff does not have to demonstrate to the court

compliance with the current code.”

5.7 Using provision 47 of the Code, which provides for the imposition of a moratorium on the initiation of proceedings in circumstances

where a borrower co-operates with their lender, to illustrate her assessment, Laffoy J. continued:

“To take what is perhaps the best known provision of the current code, the imposition of a moratorium on the

initiation of proceedings, which is now contained in provision 47 of the current code (and which was also to be

found in the earlier codes, although the moratorium period in the case of the earliest code was six months, rather

than twelve months), surely a court which is being asked to make an order which will, in all probability, result in a

person being evicted from his or her home, is entitled to know that the requirement in provision 47, which has

been imposed pursuant to statutory authority, is complied with. Moreover, it is likely that it would render the

enforcement of provision 47 nugatory, if a lender did not have to adduce evidence to demonstrate that the

moratorium period had expired.”

Laffoy J. found that the Code, on the particular facts of that case, had not been complied with. In allowing the appeal in respect of

the refusal of the Master to transfer the matter to the Chancery special summons list, Laffoy J. also noted at para. 31:-

“In the light of the view I have taken of the application of the current code to the defendants’ case, however, that

would not have availed the plaintiff because, on the basis of the evidence before the court now, in my view, they

are not entitled to an order for possession, not having complied with the current code.”

5.8 Both of these judgments were considered by Hogan J. in Duff. That case was an appeal from an order of the Circuit Court granting

possession to the lender in circumstances where it was alleged, and subsequently found, that, amongst other things, the lender had

not fully complied with the Code operative at the time. In following Fitzell, Hogan J. held:

"67. The present case is governed by the 2009 Code of Conduct which was the one applicable at the time of the

commencement of the proceedings. Clause 6 of the Code provides that:-

‘the lenders must not seek repossession of the property until every reasonable effort has been made to agree an

alternative repayment schedule with the borrower or his/her nominated representative. However where it is clear

that the borrower is deliberately not engaging with the lender or where other circumstances reasonably justify [it]

the lender may seek repossession in the absence of any engagement with the borrower.’

68. The question, for example, of what constitutes a ‘reasonable effort’ on the part of the lender does not easily

lend itself to judicial analysis by readily cognisable legal criteria. How, for example, are ‘reasonable efforts’ to be

measured and ascertained? If, moreover, non-compliance with the Code resulted in the courts declining to make

orders for possession to which (as here) the lenders were otherwise apparently justified in seeking and obtaining,

there would be a risk that by promulgating the Code and giving it a status that it did not otherwise legally merit,

the courts would, in effect, be permitting the Central Bank unconstitutionally to change the law in this fashion.

Likewise, the argument advanced by Birmingham J .in McConnon regarding the absence of any statutory indication

that failure to comply with the Code would affect the ability of the lender to secure relief may be thought to be a

forceful one.

69. While I am acutely conscious of these concerns, given these cross-currents of judicial opinion, I feel that I

must nonetheless follow the most recent pronouncement of this Court in Fitzell, given that this is the most recent

and authoritative analysis of this question where the judicial comments formed part of the ratio of the decision:

cf. by analogy my own judgment in AG v. Residential Institutions Redress Board [2012] IEHC 492 and the

comments of Clarke J. for the Supreme Court in Kadri v. Governor of Cloverhill Prison [2012] IESC 27 regarding the

importance (where possible) of maintaining stare decisis at High Court level in respect of earlier High Court

decisions. This is especially so where the decision is recent and all issues have been fully considered. It is

essentially for that reason that I feel that I must follow Fitzell while departing from the earlier decision in Gale, the

latter decision having been overtaken in any event by constitutional and statutory developments.

70. Proceeding from that standpoint, therefore, in the present case I feel I cannot ignore the averment made by

Mr. Duff that he offered the Bank interest only repayments in 2009, but that this was rebuffed. In these

circumstances, I find myself coerced to the conclusion that the Bank did not comply (or, at least, comply fully)

with the requirements of Clause 6 of the 2009 Code prior to the effective commencement of the proceedings in

that it cannot be said that ‘every reasonable effort’ had been made to agree an alternative repayment schedule in

the discussions which ensued in 2009, even if some of these discussions formally post-dated the commencement

of the present proceedings by some weeks or even months.

71. Nor can it be said that at that stage – whatever possibly may have been the case subsequently – that the

Duffs were non-cooperating borrowers. On the contrary, they seem to have been as frank and forthcoming with

the Bank – whether personally or through their solicitors in correspondence – to the effect that they were facing

acute financial difficulties and sought some way out of the dreadful circumstances into which they – like so many

others – had been plunged.”

5.9 It seems to me that, at the level of very general principle, the issues which this argument raises are very similar to the issues

with which this Court was concerned in Quinn and Ors. v. Irish Bank Resolution Corporation Limited (In Special Liquidation) and Ors.

[2015] I.E.S.C. 29. In that case the Court had to consider the principles by reference to which a court would decline to enforce a

contract by reason of the fact that the relevant contract was, in some way, said to be tainted by reference to illegality created by

statute. This case does not, of course, raise exactly the same point. Here, there is no suggestion that the underlying contract

between Irish Life and Permanent and the Dunnes was in any way tainted by illegality. However, what is suggested is that it may be

that the seeking of possession itself may be tainted by illegality if Irish Life and Permanent, as a regulated financial entity, has failed

to comply with the Code prior to seeking possession and is, therefore, in breach of the Code by seeking possession at this time. On

the basis of that argument it is suggested that, just as a court may be reluctant to act in aid of a knowing party to an illegal

contract, so also ought a court be reluctant to make an order in favour of a party where the court is aware that the party is acting

unlawfully in seeking that order in the first place.

5.10 It seems to me that the analogy is well made. On that basis it is necessary to look at the test developed by this Court in Quinn

v. I.B.R.C. which is in the following terms:-

"8.55 In summary, the principal criteria are as follows:-

The first question to be addressed is as to whether the relevant legislation expressly states that contracts of a

particular class or type are to be treated as void or unenforceable. If the legislation does so provide then it is

unnecessary to address any further questions other than to determine whether the contract in question in the

relevant proceedings comes within the category of contract which is expressly deemed void or unenforceable by

the legislation concerned. (para. 8.9)

Where, however, the relevant legislation is silent as to whether any particular type of contract is to be regarded

as void or unenforceable, the court must consider whether the requirements of public policy (which suggest that a

court refrain from enforcing a contract tainted by illegality) and the policy of the legislation concerned, gleaned

from its terms, are such as require that, in addition to whatever express consequences are provided for in the

relevant legislation, an additional sanction or consequence in the form of treating relevant contracts as being void

or unenforceable must be imposed. For the avoidance of doubt it must be recalled that all appropriate weight

should, in carrying out such an assessment, be attributed to the general undesirability of courts becoming involved

in the enforcement of contracts tainted by illegality (especially where that illegality stems from serious criminality)

unless there are significant countervailing factors to be gleaned from the language or policy of the statute

concerned. (para. 8.9)

In assessing the criteria or factors to be taken into account in determining whether the balancing exercise

identified at 2 requires unenforceability in the context of a particular statutory measure, the court should assess

at least the following matters:-

3(a) Whether the contract in question is designed to carry out the very act which the relevant legislation is

designed to prevent (para. 8.32)

3(b) Whether the wording of the statute itself might be taken to strongly imply that the remedies or

consequences specified in the statute are sufficient to meet the statutory end. (para. 8.34)

3(c) Whether the policy of the legislation is designed to apply equally or substantially to both parties to a relevant

contract or whether that policy is exclusively or principally directed towards one party. Therefore, legislation

which is designed to impose burdens on one category of persons for the purposes of protecting another category

may be considered differently from legislation which is designed to place a burden of compliance with an

appropriate regulatory regime on both participants. (para. 8.37)

3d) Whether the imposition of voidness or unenforceability may be counterproductive to the statutory aim as

found in the statute itself. (para. 8.39)

The aforementioned criteria or factors are, for reasons which will become apparent, sufficient to resolve this

case. However, the following further factors may well be properly taken into account in an appropriate case:-

4(a) Whether, having regard to the purpose of the statute, the range of adverse consequences for which express

provision is made might be considered, in the absence of treating relevant contracts as unenforceable, to be

adequate to secure those purposes. (para. 8.44)

4(b) Whether the imposition of voidness or unenforceability may be disproportionate to the seriousness of the

unlawful conduct in question in the context of the relevant statutory regime in general. (para. 8.47)

Doubtless other factors will come to be defined as the jurisprudence develops."

5.11 Given that, as pointed out, the Code is not concerned with rendering contracts illegal or unenforceable, it is necessary to adapt

the test thus set out to the circumstances of this case. In other words the Court must ask itself whether, applying the principles

identified in Quinn, a financial institution must be regarded as being legally debarred from seeking to exercise a right to possession,

which it would otherwise enjoy, by reason of a breach of the Code.

5.12 So far as the first test identified in Quinn is concerned, it is clear that the relevant legislation does not make any express

provision at all concerning the effect or otherwise of the Code on the private legal rights and obligations of lenders and borrowers. In

those circumstances it is necessary to go on to the second test. In addressing that question, it is necessary for the Court to place all

appropriate weight on the undesirability of the Court being seen to become involved in countenancing what might otherwise be

regarded as illegal activity. In Quinn, the issue concerned contracts which were, allegedly, illegal by statute. In this case the issue

concerns an allegation that the very act of seeking possession is itself illegal. However, as the second test set out in Quinn makes

clear, the Court must also have regard to whether other requirements of public policy, as gleaned from the relevant legislation itself,

require that, in the context of a case such as this, a party should not be permitted to rely on what otherwise would be its legal

entitlement.

5.13 In that context, the decision of this Court in Quinn gives guidance as to the criteria which should or may be taken into account

in attempting to make such an assessment. The difficulty with the provisions of the Code is that, as already noted, they are many

and various both as to their importance and precision.

5.14 As set out in its introduction, the Code is concerned with the manner in which mortgage lenders must treat borrowers in, or

facing, mortgage arrears, with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its

own merits. It is stated in the introduction that the Code sets out the framework that lenders must use when dealing with borrowers

in mortgage arrears or pre-arrears.

5.15 The Code goes on to identify its legislative basis (i.e. section 117 of the 1989 Act) and specifies that “Lenders are… required to

comply with this Code as a matter of law.” It contains detailed provisions on the circumstances in which it will apply, the position in

relation to existing arrears cases, and details on what is required in terms of drawing up and implementing procedures for dealing with

different types of borrowers, the establishment of management information systems in relation to same, staff-training,

communications with borrowers and the Mortgage Arrears Resolution Process (M.A.R.P.). Detailed provisions set out the requirements

regarding the provision of information to the borrower (including maintaining a website and providing information booklets detailing the

particular lender’s M.A.R.P.), and provisions on what steps the M.A.R.P. should consist of, namely communication with borrowers,

financial information, assessment, resolution and appeals (including a requirement to establish an Appeals Board to consider any

appeals submitted by borrowers and to independently review certain matters). These steps, in turn, are detailed in the Code. Finally,

the Code contains provisions relating to repossessions, and provisions outlining the necessity for a lender to be able to demonstrate

to the Central Bank of Ireland that it is in compliance with the requirements of the Code.

5.16 The version of the code which is currently in place became effective on the 1st July, 2013, on which date it replaced the Code.

A clause in the introduction sets out that “[a]ny right acquired, or obligation or liability incurred, in respect of a contravention of, or

act of misconduct under, the previous code survives the replacement of the previous code with this Code.” The current code, while

similar to its predecessor in the main, differs in a few significant ways. It is far more detailed generally, but particularly in relation to

certain matters such as, for example, the manner and frequency of communication with the borrower which is permissible. The 2013

Code also sets out the position in respect of the Personal Insolvency regime, as introduced by the Personal Insolvency Act 2012.

There is also a noticeable shift in the emphasis in the 2013 Code towards procedures to employ, and warnings to issue, where a

borrower is deemed not to be cooperating, including the implications for such a borrower under the Personal Insolvency scheme.

5.17 The question with which this Court is now concerned is as to whether a dispute concerning whether a financial institution

complied with the Code is a matter which the Court must resolve in the context of possession proceedings. It must be recalled that if,

and to the extent that, the Code might be held to affect the private law rights and obligations of a financial institution and a

borrower, a court will be required to assess compliance or otherwise with the Code in virtually every possession application. It is in

that context that the criteria identified in Quinn need to be considered. Some of those criteria are quite clear in their application so

far as this case is concerned. The legislation only applies in the main to one party, being the relevant financial institution. Likewise, it

is clear that the statutory aim of the Code and its enabling legislation is to seek to regulate the way in which financial institutions

seek to repossess properties in cases of mortgage arrears. It could not be said that requiring compliance with the Code as a

precondition to obtaining an order of repossession would, necessarily, be in any way counterproductive to that aim.

5.18 So far as one limited aspect of the Code is concerned, it might well be said that a court making an order for possession might be

facilitating the carrying out of "the very act" which the Code is designed to prevent. As already noted, the Code imposes a

moratorium on seeking possession in certain circumstances. Presumably the purpose of the Code in that regard is to provide a window

of opportunity in which there can be an exploration of whether there are other solutions to the mortgage arrears problems of the

borrower in question and, if there are, to take action to put those solutions in place. A financial institution which, entirely ignoring the

provisions of the Code in that regard, simply went ahead and sought possession as soon as it was legally entitled so to do would be

doing the very thing which the Code is designed to prevent. For a court to entertain an application for possession which was brought

in circumstances of clear breach of the moratorium would be for a court to act in aid of the actions of a financial institution which

were clearly unlawful (by being in breach of the Code) and in circumstances where the very act of the financial institution concerned

in seeking possession was contrary to the intention or purpose behind the Code itself.

5.19 In my view a court could not properly act to consider a possession application in those circumstances. It should be recorded

that the Code (being the version applicable to this case) does make some provision for the moratorium period being cut short (see

step 4 of the M.A.R.P. provisions) or not applying (see provision 48). I am, in this section of this judgment, dealing with a situation

where an application for possession has been brought at a time when the Code precludes such action. Like consideration would apply

to any similar provisions in the current or any future versions of the code.

5.20 However, in respect of the other provisions of the Code, different considerations apply. There is nothing in the legislation to

suggest that it is the policy of the legislation that the courts should be given a role in determining whether particular proposals should

be accepted or in deciding whether a financial institution, in formulating its detailed policies in respect of mortgage arrears and

applying those policies to the facts of individual cases, can be said to be acting reasonably. Neither can it be said that the policy of

the legislation requires that courts assess in detail the compliance or otherwise by a regulated financial institution with the Code. If

the Oireachtas had intended to give the courts such a role then it would surely have required detailed and express legislation which

would have established the criteria by reference to which the Court was to intervene to deprive a financial institution of an

entitlement to possession which would otherwise arise as a matter of law.

5.21 It must be recalled that these issues only arise at all in circumstances where, as a matter of law, the relevant financial

institution is entitled to possession. If it is regarded, as a matter of policy, that the law governing the circumstances in which

financial institutions may be entitled to possession is too heavily weighted in favour of those financial institutions then it is, in

accordance with the separation of powers, a matter for the Oireachtas to recalibrate those laws. No such formal recalibration has yet

taken place. The courts have not yet been given any express power to consider the merits or otherwise of proposals put forward by

those in mortgage arrears to solve their problems. Indeed, there could well be questions as to whether courts are the appropriate

place for such questions of detail to be worked out at least at first instance. In particular, courts do not at present have the

necessary resources to engage in detailed analysis of the merits or otherwise of debt resolution procedures and proposals in every, or

virtually every, repossession case.

5.22 It should be emphasised that the current function of a court in considering a case in which a lender seeks possession against a

borrower is to determine whether, as a matter of law and on the evidence, the conditions which entitle the relevant lender to

possession have been shown to exist. A court is not, on the law as it currently stands, given any general jurisdiction to consider

whether the actions of a lender might be considered, by reference to whatever criteria one might like to apply, to be reasonable or

fair. The problematic legal issue which arises in this case stems from the very fact that the Oireachtas did not choose, in the context

of empowering the Central Bank to make binding codes, to specify whether the courts were to have any particular role in applying the

provisions of such a code to affect what would otherwise be the ordinary legal rights and obligations arising between a lender and a

borrower. It is the silence of the legislation that gives rise to the issue with which this Court is now concerned. If it is considered

desirable, as a matter of policy, to give to the courts a wider jurisdiction in the context of repossession cases which would allow the

Court to have a role in deciding the reasonableness or otherwise of the conduct of a lender, then it seems to me that clear legislation

would be needed which conferred that role on the courts and which specified the criteria to be applied by the courts in exercising any

jurisdiction thus conferred.

5.23 It would, indeed, be a very new type of jurisdiction for the courts to exercise, but if the Oireachtas wish the courts to exercise

such a jurisdiction, then it should be clearly conferred, and its parameters should be clearly defined. In that context, it is worth noting

that the jurisdiction conferred on the Financial Services Ombudsman to consider a much wider range of factors in assessing the

conduct of regulated financial institutions is now well established. The remit, in that regard, of the Financial Services Ombudsman is

much wider than the remit of the courts which, as I have been at some pains to point out, currently does not extend beyond

determining whether a legal right to possession has arisen. In the absence of there being some legal basis on which it can be said

that the right to possession has not been established or does not arise, then the only role which the Court may have is, occasionally,

to adjourn a case to afford an opportunity for some accommodation to be reached.

5.24 It does not seem to me, therefore, that the statutory policy of the 1989 Act and the Code-making powers contained therein is

such that same is intended to, as it were, by the backdoor, create a whole new jurisdiction for the courts in which the court would

be required to assess in some detail the type of engagement entered into between a financial institution and a borrower who is in

sufficient arrears to enable that financial institution, as a matter of law, to seek possession. In such circumstances it seems to me

that criterion 3(b) of the test set out in Quinn v. I.B.R.C. would lean heavily against implying that the courts have any role in

declining possession in cases other than where the breach of the Code alleged is a failure to abide by the moratorium.

5.25 Finally, it is necessary to turn to the question of evidence. The basis on which I have concluded that a breach of the moratorium

does require a court to decline to make an order for possession stems, for the reasons already set out, from the fact that a court

would, by entertaining an application for possession in breach of the moratorium, itself be participating in an act which was illegal, for

it is the very act itself of seeking possession before the Court, rather than any other questions of compliance with the Code, which is

in breach of the moratorium provision.

5.26 In those circumstances, it seems to me that it is appropriate that the Court should require that it be satisfied that there has

been no breach of the moratorium. While it will be a matter for any court hearing an individual application to determine the adequacy

of the evidence placed before it, I should say that it seems to me that a simple averment in an appropriate affidavit to the effect

that the proceedings were commenced outside of the moratorium period, insofar as it is relevant to the case in question, ought be

sufficient to establish compliance with that requirement on a prima facie basis. If the full or normal moratorium period is said not to

apply then that should be explained. Clearly, if the matter is contested, the Court may have to consider what further evidence may

be necessary to enable the Court to be satisfied that there was no breach of the moratorium.

5.27 In conclusion on this issue I should say that in those circumstances I am satisfied that, in the limited cases of a breach of the

moratorium, but in no other cases unless and until appropriate legislation is passed, a court should decline to make an order for

possession.

5.28 I would, therefore, answer questions (ii) and (iii) in the case stated in this case by indicating that, where the breach of the Code

involves a failure by a lender to abide by the moratorium referred to in the Code, but in no other case, non-compliance with the Code

affects, as a matter of law, a relevant lender’s entitlement to obtain an order for possession. I would further clarify that it is a matter

for the relevant lender to establish by appropriate evidence in any application before the Court that compliance with that aspect of

the Code has occurred.

5.29 That is sufficient to deal with the Dunnes’ case. I, therefore, turn to the specific issues which arise in the Dunphy case. As will

be recalled, the first of those issues concerned the 2009 Act.

6. The 2009 Act

6.1 The starting point for a discussion of the issues which arise under this heading has to be the decision in Start Mortgages. That

case was concerned with the effect of the repeal, on the 1st December, 2009, of s.62(7) of the 1964 Act by the coming into force of

the 2009 Act,

6.2 It should be noted that, in respect of proceedings commenced after the 31st July, 2013, the situation has been changed by virtue

of the Land and Conveyancing Law Reform Act 2013. However, the potential problem identified in Start Mortgages arises in respect of

mortgages created before the 1st December, 2009, and where proceedings were commenced before the 31st July, 2013.

6.3 The effect of the decision in Start Mortgages is that, if the principal monies secured by a charge on registered land have not

become due before the 1st December, 2009, the mortgagee was found not to be entitled to maintain a claim for possession of the

charged property as a result of the repeal of s.62(7) of the 1964 Act with effect from that date. The rationale of the decision is that

a mortgagee could only acquire a right to apply for an order under s.62(7) when the principal monies secured by the relevant

mortgage had become due and, if that had not happened before the repeal of s.62(7), s.27 of the Interpretation Act 2005 was of no

assistance to the mortgagee in negating the effect of the repeal.

6.4 Two questions potentially arise. One is of a broad nature and concerns the question of whether it might be said that the right of a

mortgagee to obtain possession of lands, the subject of a registered charge, is acquired or accrued as soon as the charge is created

even though reliance could not be placed on that vested right to actually seek an order for possession until such time as the principal

monies had become due.

6.5 However, a narrower question arises in the circumstances of the Dunphy case. Irish Life and Permanent argue that, on the facts

as found by the trial judge, the principal monies were due as of the 1st December, 2009. On that basis it is said that, on any view of

when rights may have been vested, the right to obtain possession on the facts of this case had clearly arisen prior to the repeal of

s.62(7) of the 1964 Act.

6.6 In the course of their written submissions, Irish Life and Permanent suggested that in each case the appropriate test was as to

whether, having regard to the provisions of the relevant mortgage and/or loan and to the facts insofar as they are relevant to the

operation of those provisions, the payment of the principal money secured by the charge is due. It seems to me that counsel for Irish

Life and Permanent was correct in suggesting that the test was as thus described. In order for the power to seek an order for

possession under s.62(7) of the 1964 Act to have arisen, what was required was that the principal monies were due. It follows that

the question which any court invited to apply the jurisdiction arising under that section must ask itself is as to whether, as a matter

of law, it can properly be said that the principal monies had become due. The first port of call for determining whether those monies

had become due is to identify the terms of the contract between the lender and the borrower as to when the entire principal sum can

be said to fall due. Terms in that regard can, and do in practice, differ. It may be that, on a proper interpretation of the contractual

documents in one case, a demand for payment following some form of default may be necessary. It might, however, be the case that,

in other circumstances and in the light of the terms contained in a particular mortgage deed, the full sum may become due without

demand in certain, specified circumstances.

6.7 The first question which the Court must, therefore, address is as to the terms of the loan and/or mortgage in question and what

they say, when properly interpreted, about the circumstances in which the principal sum can be said to be due.

6.8 The relevant provisions of the mortgage in this case provide as follows:

“6.4 At any time after the Total Debt has become immediately payable permanent tsb may without any previous

notice to or concurrence on the part of the Mortgagor:

(a) enter into possession of the property or any part thereof or into receipt of the rent or profits of

the property or any part thereof”

“7. The Total Debt shall become immediately payable to permanent tsb:

7.1 if the Mortgagor defaults in the making of two Monthly Repayments or for two months in the payment of any

other moneys payable under the Mortgage…”

“20.8 No failure to exercise and no delay in exercising on the part of permanent tsb any right power or

privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right

power or privilege preclude any other or further exercise of any power or right or privilege.”

6.9 The contractual terms between the parties in this case are, therefore, clear. It is provided that the "total debt is immediately

payable" where a default amounting to two months’ repayments has occurred. That provision is automatic in its effect. It does not

require any letter of demand or other action on the part of the lender in order for the total sum to become due. To the extent that

such a term might be regarded as harsh, it should be again be emphasised that, in the absence of any statutory provision either

preventing certain types of clauses from being effective or conferring any jurisdiction on the Court to consider the merits of a

particular clause, lending contracts are no different to any other form of contract, and simply mean what they say. Thus, the

provisions to be found in what the Court understands to be Irish Life and Permanent's standard form documentation mean that the

entire principal owed under a mortgage loan becomes due automatically as soon as the borrower falls into arrears in respect of two

monthly repayments.

6.10 As noted earlier, the first question is as to what the contractual arrangements between the parties provide as to the

circumstances in which the principal sum can be said to become due. Thereafter, the Court will have to consider whether, on the

facts, those circumstances can be said to exist. It was not disputed, on the facts of Mr. Dunphy's case, that he was in arrears for

more than two months prior to the 1st December, 2009. It follows that, prima facie, the full principal sum had become due while

s.62(7) of the 1964 Act remained in force. In that context it is, however, necessary to address the reason why it was argued on

behalf of Mr. Dunphy that, in the particular circumstances of his case, it could not be said that the principal sum had become or, at

least, remained due as of the 1st December, 2009.

6.11 It was argued on behalf of Mr. Dunphy that the demand made by Irish Life and Permanent was “flawed” as it “fails to Demand

the Principal sum.” Reference was made to the letter of demand issued by Irish Life and Permanent, which is exhibited to an affidavit

filed on behalf of Irish Life and Permanent in these proceedings. That letter, which is dated 4th November, 2008, sets out in its

heading the amount of €5,286.85 arrears, and states:-

“As a result of the arrears stated above and the terms of your mortgage, the Bank is now entitled to recover

possession of the mortgaged premises.

Accordingly, unless the above mentioned arrears are discharged within 21 days of today’s date or, alternatively,

vacant possession of the above premises is given to the Bank within 21 days; we will issue proceedings without

further notice against you for a Court Order for the recovery of possession of the premises so that the property

may be sold and the proceeds of sale applied towards the redemption of your mortgage. In the event of there

being any shortfall, you will be sued for the recovery of the outstanding balance.

Please, therefore, ensure that the required payment is made within the specified period of 21 days, as otherwise

you will automatically be involved in legal proceedings for ejectment and the consequent costs.”

6.12 In substance, the argument made on behalf of Mr. Dunphy is that, in some way, that letter and subsequent correspondence

amounts either to a waiver or could be said to be inconsistent with a statement that the full principal is due. It must be recalled that

the sort of situation which arose in this case is not at all unusual. A party may fall into arrears of repayment on foot of any type of

loan. The lender may not be particularly minded to enforce the entirety of the loan and may be entirely amenable to the loan being

"put back on track" by appropriate measures being adopted to address any arrears.

6.13 At the oral hearing, counsel on behalf of Mr. Dunphy placed particular reliance on clause 2.8 of the relevant mortgage deed. That

clause provides that, if Irish Life and Permanent made a concession to the mortgagor by allowing a suspension or postponement of

any payments, then in the event of subsequent default in payment of interest or otherwise, the concession would cease to operate

and become void and the mortgagor would “on request” be obliged to fulfil his obligations. On that basis, it was argued that

arrangements had been entered into between the parties which, even if they were breached, required a further request or action on

the part of Irish Life and Permanent to, as it were, reactivate the entitlement of the lender to become entitled to payment of the full

principal sum. In the absence of any such request or demand it was argued, therefore, that, on the relevant date, the full principal

sum was not due and that the consequences identified in Start Mortgages, therefore, followed.

6.14 The sequence of correspondence between the parties appears to have been as follows:-

• By letter dated 4th November, 2008 from Irish Life and Permanent, Mr. Dunphy was informed that he was in arrears and

that the lender was entitled to recover possession. He was told that unless the arrears were discharged within 21 days or

vacant possession given, proceedings would be issued seeking possession.

• There was no response to that letter.

• On 15th December, 2008 Irish Life and Permanent’s solicitors wrote to Mr. Dunphy serving the ejectment civil bill on title

to him.

• Mr. Dunphy wrote on 17th December, 2008 to Irish Life and Permanent’s solicitors, effectively acknowledging that he

owed €5,900 but stating that he had applied for a first time buyer’s tax allowance, which would cover the arrears. He

indicated that he had contacted Irish Life and Permanent and that he would endeavour to make the repayments.

• Apparently no repayments were made, and Irish Life and Permanent went ahead with the proceedings in the Circuit

Court.

6.15 I can well envisage that, if a lender were to make a statement along the lines of "if you do not restore this account to order

within (say) three months we will have no option but to initiate proceedings" and if the borrower were to restore the account to order

within that time, the lender might be faced with a cogent plea of estoppel if, notwithstanding that the loan had been restored to

order in a manner specified by the lender, the former breach of the terms of the loan were to be relied on to suggest that the entire

sum remained due.

6.16 However, in this instance, Mr. Dunphy did not restore the account to order in any manner which Irish Life and Permanent might

be suggested to have bound itself to accept. In those circumstances, it is suggested on behalf of Mr. Dunphy that, when he had

failed to regularise his account, a further demand or “request” would have been required to create a situation where the full principal

became due again.

6.17 In my view, such is not an appropriate way to characterise the events. Rather, as a result of the contractual arrangements

between the parties and the events which happened, the entire principal had already become due before the relevant correspondence

between the parties started. That situation arose because of Mr. Dunphy's arrears exceeding the amount which triggered, under the

terms of the mortgage loan, the full amount becoming due. No demand was required.

6.18 It is not, in my view, appropriate to characterise the correspondence in this case as amounting to any waiver on the part of Irish

Life and Permanent or a suspension or postponement of any payments. Rather, that correspondence simply provided an indication

that, provided certain conditions were met (i.e. payment within 21 days), Irish Life and Permanent would not seek to enforce its

rights. As indicated earlier, a different situation might well have arisen had Mr. Dunphy complied with the relevant terms in a timely

fashion. However, he did not. To the extent that any legal entitlement might have been available to Mr. Dunphy to prevent Irish Life

and Permanent from exercising what might otherwise be said to be their legal entitlement to seek possession, that entitlement was

clearly and entirely conditional on the account being restored in the manner contemplated by the correspondence. In substance, the

height of what it might be said Irish Life and Permanent had committed themselves to in that correspondence was a conditional

agreement not to proceed to exercise their entitlement to seek possession provided that the arrears were cleared within 21 days. In

circumstances where those terms were clearly not met, it seems to me that the conditional offer not to press ahead with an

application for possession simply drops out of the picture and has no effect on the pre-existing entitlement of Irish Life and Permanent

to the entire principal sum. It should be emphasised that a breach of a formally negotiated restructuring of a loan might give rise to a

different analysis.

6.19 In those circumstances, I am satisfied that the principal sum was due as of the 1st December, 2009 and that, therefore, the

repeal of s.62(7) of the 1964 Act has no effect on this case.

6.20 One further issue which arose in the course of discussion between counsel and the Court at the oral hearing should at least be

recorded at this stage. The issue concerns the time at which a right to seek possession can be said to be vested for the purposes of

s.27 of the Interpretation Act 2005. That legislation preserves rights “acquired, accrued or incurred” even after the legislation giving

rise to such rights has been repealed. The underlying rationale behind the decision in Start Mortgages was that the right to

possession conferred by s.62(7) of the 1964 Act only became vested in that sense when there were arrears or other circumstances

which, in accordance with the terms of the contractual arrangements between the parties, entitled a lender to actually seek an order

for possession by bringing appropriate proceedings. It is arising out of that analysis that the question of whether the right thus

characterised had become vested prior to the 1st December, 2009, has up to now been considered.

6.21 However, there may be an alternative view as to the time at which it might be said that the relevant right becomes vested. On

that alternative view, the right to seek possession, although contingent on some act of default or the like triggering the

circumstances in which it can actually be exercised, is nonetheless acquired or accrued as soon as the mortgage is put in place and

the relevant charge registered on the folio in question. On that view, it would follow that the right to seek possession at some stage

in the future in the event of, for example, default, remained vested and in place at all material times after the mortgage deed had

been entered into even in cases where no immediate entitlement to exercise that right existed because of the absence of a triggering

event.

6.22 Because I have concluded that, as a matter of fact, the full principal sum was due in Mr. Dunphy’s case on the 1st December,

2009, that point does not, strictly speaking, need to be decided. Furthermore, it was not a point which was clearly urged on behalf of

Irish Life and Permanent. In those circumstances, it does not seem to me to be appropriate to reach a final view on that important

question in this case, but I should not, for the avoidance of doubt, be taken as a expressing a view one way or the other on that

question. I would leave its resolution to a case in which it turned out to be decisive.

6.23 For like reasons it does not seem to me to be necessary to address the issue raised in the case stated in this case which

concerns whether Irish Life and Permanent would have had a contractual right to possession even if it were to have been held that

the lender did not have an entitlement to rely on s.62(7) of the 1964 Act.

6.24 I would, therefore, answer question (ii) in the case stated in the Dunphy case in the affirmative on the basis that, for the

reasons set out in this judgment, I am satisfied that the entire principal sum was due on the 1st December, 2009, and that, on any

view of the meaning of the terms “acquired” or “accrued”, a right to bring an application under s.62(7) of the 1964 Act was clearly

vested as of that date and thus not affected by the repeal of the section. I would, for the reasons which I have also set out, leave

to a case in which the issue turned out to be decisive, any further consideration of the definition of the point in time when a right to

possession of registered land on foot of a registered charge can be said to have been “acquired” or “accrued” for the purposes of

s.27 of the 2005 Act.

6.25 In the light of that answer to question (ii) I do not consider it necessary to answer question (iii).

7. Conclusions

7.1 For the reasons set out in this judgment I would answer question (i) in both cases stated in the affirmative and to the effect that

the trial judge in the High Court had a jurisdiction to state a case in both proceedings.

7.2 So far as questions (ii) and (iii) in the Dunnes’ case are concerned, I would answer those questions by indicating that, where a

breach of the Code involves a failure by a lender to abide by the moratorium referred to in the Code, but in no other circumstances,

non-compliance with the Code affects, as a matter of law, a relevant lender’s entitlement to obtain an order for possession. I would

further clarify that it is a matter for the relevant lender to establish by appropriate evidence in any application before the Court that

compliance with that aspect of the Code has occurred.

7.3 So far as question (ii) in the Dunphy case is concerned, I would answer that question in the affirmative on the basis that I am

satisfied that the entire principal sum was due on the 1st December, 2009, and that, on any view of the meaning of the terms

“acquired” or “accrued”, a right to bring an application under s.62(7) of the 1964 Act was clearly vested as of that date. I have also

included in this judgment some comments on the question of the proper application of s.27 of the 2005 Act to the repeal of s.62(7) of

the 1964 Act.

7.4 Finally in the light of the answer which I propose should be given to question (ii), I do not consider it necessary to answer

question (iii) in the Dunphy case.