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‘Bad situation made worse’ in home-arrears case

A briefing note from Lavelle Partners on the recent High Court decision of Start Mortgages Limited v Michael Ryan and Agnes Ryan says that the decision highlights the difficulties and adverse consequences caused by unqualified advisors in the mortgage-litigation area.

The significant growth in the volume of mortgage litigation has thrown up a plethora of unprecedented issues, the lawyers point out.

One such ongoing issue is that of unregulated and unqualified third-party advisors acting on behalf of defendants with distressed mortgages facing possession procedures.

Risks

These parties often receive significant financial consideration from defendants in return for their services, the lawyers add.

Unfortunately, their efforts often exacerbate the plight of defendants in possession proceedings, the Lavelle Partners note states.

The associated risks have been addressed in notable decisions such as that of Mr Justice Noonan in KBC Bank Ireland Limited v Flynn.

Order for possession

In the recent High Court decision of Start Mortgages Limited v Michael Ryan and Agnes Ryan, the facts consisted of an appeal brought by the second-named defendant against a Circuit Court order made by Judge O’Sullivan on 17 January 2023, refusing an application for an extension allowing appeal of an order for possession made by the County Registrar on 21 February 2022.

The standard time in the Circuit Court Rules to make such an appeal is ten days, but it was not issued for five months by the third-party advisor.

In her application to appeal, the second-named defendant swore an affidavit that she had engaged the services of an individual giving assistance to those in mortgage arrears, and had paid this individual €14,000.

A subsequent affidavit revealed that the said individual had been recommended by a neighbour. In neither affidavit was it outlined by the second-named defendant that she was aware that this individual held any appropriate legal qualifications.

‘Litany of mishaps’

In effect, her application for an extension was grounded in a mistaken belief in the third-party advisor’s assertion that he could “take on” the plaintiff and stop any possession.

Regrettably, the third-party advisor then made a litany of mishaps to the detriment of the second-named defendant, Lavelle Partners states.

These mishaps involved advising her that she did not have to attend a hearing in February 2022, which meant that a possession order was made against her in her absence and without her knowledge.

Upon being served with the order in March 2022, the third-party advisor said that he would submit an appeal to the High Court. It later transpired that no such appeal had been arranged.

Judgment

In refusing the application of the appeal, Mr Justice Heslin (pictured), while sympathetic, noted that the decision to engage an unqualified and unregulated individual to address mortgage difficulties was one with full knowledge as to his true status, notwithstanding ongoing breach of mortgage obligations.

The Ryan decision is a stark reminder of the negative consequences for any defendants who choose to engage the services of unqualified and unregulated third-party advisors in the context of mortgage litigation, Lavelle Partners states.

“As Mr Justice Noonan said in Flynn, they often make bad situations considerably worse.

“This was certainly the case in Ryan, which also shows that, while the courts do have sympathy for defendants who are in the receipt of unregulated and unqualified advice, it will not prohibit the courts in making orders which result in them losing entitlement to their property,” the lawyers conclude.