Lender can again seek to repossess man's home

A HIGH Court judge has cleared the way for Start Mortgages to resume its bid for an order for repossession of a man’s family home after effectively accepting arguments the lender was entitled to issue housing loans.

The decision by Mr Justice Peter Kelly yesterday lifting a stay on Start’s repossession proceedings against Robert Gunn has implications for hundreds of other repossession actions by Start, and for the forthcoming judicial review challenge by Mr Gunn to Start’s entitlement to issue housing loans.

The Central Bank previously said the judicial review, to be heard on March 29th next at the Commercial Court, had major implications for Start’s €1 billion housing loans in Ireland and for the legal position of other lenders.

Mr Gunn, represented by the New Beginnings group of lawyers and business people, wants in his judicial review to prevent Start from repossessing his home at Lyre, Lisselton, Co Kerry. He obtained a mortgage of €210,000 from Start in 2007, secured against his family home, but after losing his job in 2008 he fell into arrears on mortgage repayments.

Start later brought proceedings seeking possession of Mr Gunn’s home. A separated father of one, Mr Gunn claims he has nowhere else to go.

Yesterday, Mr Justice Kelly granted an application by Denis McDonald, for Start, to lift a stay imposed by another High Court judge on the repossession proceedings against Mr Gunn.

The judge suggested lawyers for Mr Gunn should address whether there was any point now to the judicial review, but Ross Maguire, for Mr Gunn, said issues still arose.

The stay was imposed by Mr Justice Michael Peart last November after Mr Gunn secured leave for judicial review of Start’s right to bring repossession proceedings.

In the repossession proceedings, Start had described itself as a “credit institution”, but Mr Gunn argued Start was not properly designated as such. Start denied this, but its solicitors also later argued that even if Mr Gunn was right, Start was a mortgage lender entitled to issue home loans and to bring proceedings over non-repayment of such loans.

On that basis, Start asked Mr Justice Kelly to lift the stay on the repossession proceedings.

In his ruling, Mr Justice Kelly noted that, in his judicial review against the Central Bank and the State, with Start as a notice party, Mr Gunn claimed only the Central Bank had the power to prescribe any entity as a “credit institution”, and the purported delegation of that power to the consumer director of the Irish Financial Services Regulatory Authority was unconstitutional.

Mr Gunn claimed the then IFSRA consumer director unlawfully and unconstitutionally prescribed Start as a “credit institution” within the State in 2004 when provisions of the 1942 Central Bank Act did not vest, delegate or transfer the power to prescribe a credit institution to the office of the consumer director.

Mr Justice Kelly said Mr Gunn secured the stay on the repossession proceedings because Start, in those proceedings, described itself as a credit institution.

Start contended that, even if Mr Gunn won his judicial review, it would not help him, as the net effect of the Consumer Credit Act 1995 and amendments was that Start, as a mortgage lender in the business of home loans, did not have to be a “credit institution”.

The judge said counsel for Mr Gunn was contending the court should not lift the stay because it was “unthinkable” loans could be issued by an entity that was not authorised a credit institution. However, no legal authority to that effect had been identified.

If Mr Gunn won his judicial review it would be a “pyrrhic victory”. It was clear from Mr McDonald’s analysis of the law, as Start was a mortgage lender making a housing loan, it was not relevant whether it was an authorised credit institution. It could not be prevented bringing repossession proceedings against Mr Gunn.

The judge refused Start the costs of yesterday’s application as the lender, when initiating repossession proceedings, described itself as a “credit institution” and that had led to the judicial review and stay. Justice would be met by making no order for costs, he said.