ACC cannot repossess couple's home following hotel failure
ACC Bank is not entitled to take possession of a couple's home which was part of a failed spa and hotel development in Westmeath, the High Court ruled.
Declan and Bernadette Fagan were declared bankrupt over a €5.7m judgment arising out of their failure to repay loans for the development of the Temple House Spa in Moate, but they objected to the bank's bid to take possession of the part of the property which comprises their home.
Today, Ms Justice Mary Finlay Geoghegan ruled they were entitled to the benefit of recent High Court rulings exposing a loophole in repossession law.
The judge said however that since she prepared her judgment legislation closing the loophole has been passed by both houses of the Oireachtas although it had not been signed by the President. Her decision did not therefore affect ACC as the registered owner of a charge over the property involved, she said.
In 2004, ACC gave the Fagans' company, Temple Spa Ltd, loan facilities to build and fit out a new extension to Temple House Spa.
With the Fagans as guarantors of the loans, the bank's security was first legal charge over Temple House and 20 acres and over another 70 acres at Temple, Horseleap, Westmeath.
When the loans went into arrears in 2009, the bank did not demand repayment but did so in October 2010, the judge said.
ACC appointed a receiver who went into occupation of the spa and adjoining lands but he was refused possession of Temple House and 14.5 acres by the Fagans who contended that the charge on this part of the property was only security on a homeloan for €250,000 they got in 2007 and on which repayments were being made, she said.
ACC obtained judgment for €5.7m against them and when this was not discharged, the bank sought and obtained orders declaring them bankrupt in May 2012, she said.
It then brought proceedings seeking possession of the house and 14.5acres and the judge noted the court-appointed official dealing with the bankruptcy, the official assignee, indicated he would not oppose the possession application.
The Fagans, although bankrupts, were however permitted by Ms Justice Finlay Geoghegan to make submissions in opposition to the possession application.
She said ACC had based its right to seek possession on a part of the Land and Conveyancing Reform Act 2009 which had been the subject of a number of High Court rulings and affected any charges on property created prior to December 1, 2009. (rulings which exposed a loophole in the law and brought re-possessions to a halt).
While the possession application against the Fagans post-dated December 1, 2009, the judge said that on the facts before her she concluded the loans secured by the charge on the property had not become due and payable before that date.
ACC had not made a demand for repayment before December 2009 and therefore the payment had not become due, she said. ACC did not therefore have the power to take possession of and sell the property because its statutory power to do so had not arisen, she said.
In view of her finding that the bank was not entitled to possession of Temple House and the 14.5 acres, it was not necessary for her to consider claims made by the Fagans that ACC had breached the Central Bank's code of conduct in relation to mortgage arrears.