The recent High Court decision of Start Mortgages Limited -v- Michael Ryan and Agnes Ryan highlights the difficulties and adverse consequences that can be caused by unqualified advisors in the area of mortgage litigation.
Overview
The significant growth in the volume of mortgage litigation in recent years has tasked the Courts in this jurisdiction with a plethora of unprecedented issues. One such ongoing issue is that of unregulated and unqualified Third-Party Advisors. Third Party Advisors of this nature often act on behalf of Defendants whose Mortgages are in significant distress and as a result find themselves and their property subject to possession proceedings.
These persons often receive significant financial consideration from Defendants in return for their services in attempting to resolve the litigious and financial issues faced by Defendants. Unfortunately, a combination of incorrect advice and insufficient attempts made by these unregulated and unqualified advisors often exacerbate the plight of Defendants in possession proceedings.
The risks associated with engaging such persons in the context of mortgage litigation have been a topic of interest before the Courts in recent years and have been addressed in notable decisions such as that of Mr. Justice Noonan in KBC Bank Ireland Limited –v- Flynn (“Flynn”) [1]. These risks have been more recently illustrated in the judgment of Mr. Justice Heslin in the recent High Court decision of Start Mortgages Limited -v- Michael Ryan and Agnes Ryan (“Ryan”) [2] .
Start Mortgages Ltd v Ryan & Anor (Approved) [2023] IEHC 738: The Facts
The facts in Ryan quintessentially consisted of an appeal brought by the Second Named Defendant against an Order of the Circuit Court made by Judge O’Sullivan on 17 January 2023, refusing an application of the Second Named Defendant for an extension of time, allowing her to appeal an Order for Possession made against the Defendants by the County Registrar on 21 February 2022.
The standard time as per the Circuit Court Rules to make such an appeal is 10 days. The application in this instance was not issued for a period of 5 months by the Third-Party Advisor purporting to act on behalf of the Second Named Defendant after the Order for Possession was granted.
In her application to appeal the decision of Judge O’Sullivan, the Second Named Defendant swore an Affidavit which inter alia showed she had engaged the services of an individual acting under the auspices of an organisation that provided assistance to those in mortgage arrears and moreover, that she had paid this individual the total sum of €14,000 in consideration for his services.
In a subsequent Affidavit, it was further revealed that the said individual had been recommended to her by a neighbour. Importantly, in neither Affidavit, was it outlined by the Second Named Defendant that she was aware that this individual held any appropriate legal qualifications.
In effect, the Second Named Defendant’s application for an extension for time to appeal the Order for Possession was grounded on her unfortunately mistaken belief in the Third-Party Advisor’s assertion that he could “take on” the Plaintiff and stop any Order for Possession against her property. Regrettably, albeit unexpectedly, the Third-Party Advisor herein made a litany of mishaps to the detriment of the Second Named Defendant.
In particular, these mishaps involved advising the Second Named Defendant that she did not have to attend a hearing in February 2022, which meant that an Order for Possession was made against her in her absence and without her knowledge.
Secondly, upon being served with the Order for Possession of her property in March 2022, the Third-Party Advisor confirmed that he would submit an appeal to the High Court and furnish same to the Plaintiff’s Solicitor on 14 March 2022. It later transpired that no such appeal had been arranged by the Third-Party Advisor.
Judgment
In refusing the application of the Second Named Defendant’s appeal, Mr. Justice Heslin whilst being sympathetic to the gravity of the situation, noted that the decision made by the Second Named Defendant to engage the services of an unqualified and unregulated individual to address her mortgage difficulties was one made with her full knowledge as to the nature of his true status, notwithstanding her ongoing breach of her mortgage obligations.
Conclusion
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. 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.
By way of contrast, Ryan further underlines the need for those being subject to possession proceedings to engage qualified and regulated advisors at the earliest opportunity.
Further Information
For further information on mortgage litigation or any related matters, please contact Kevin O’Keeffe, Solicitor or a member of our Asset & Debt Recovery Team.
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[1] KBC Bank Ireland Limited –v- Mark Flynn and Mairead Flynn (Nee Gorman) [2017] IEHC 79
[2] Start Mortgages Ltd -v- Ryan & Anor (Approved) [2023] IEHC 738
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