Tuesday 20 March 2018

Sub-prime test case is fast-tracked by courts

Tim Healy

THE Commercial Court yesterday fast-tracked a legal action about the operation of a major sub-prime mortgage lender with €1bn worth of house loans.

It came after the Central Bank warned the lawsuit could have "major implications" for other lenders.

Lawyers for the Central Bank, which is vigorously opposing claims that Start Mortgages Ltd was not authorised to make loans because the company was not properly regulated, yesterday urged the Commercial Court for an early hearing date of the action.

The Central Bank's bid to fast-track the case was supported by lawyers for the State and for Start -- which has brought hundreds of repossession actions against homeowners.

Yesterday High Court judge Mr Justice Peter Kelly granted the Central Bank's application to fast-track the challenge.

The judge noted that hundreds of actions by Start Mortgages for repossession orders are affected by the judicial review proceedings brought by Robert Gunn, an unemployed construction worker who last month initiated a legal challenge aimed at stopping Start repossessing his home.

Start has 242 actions for repossession before the Master of the High Court with another 71 cases sent to the High Court list.

Another borrower with Start has also taken an action similar to that of Mr Gunn, said Mr Justice Kelly, who has listed the Gunn action for hearing next March.

Mr Gunn, who is represented by the New Beginnings group of lawyers and business people, last month initiated his challenge aimed at stopping Start repossessing his home at Lyre, Lisselton, Co Kerry.

He had in 2007 obtained a mortgage of €210,000 from Start, 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 with a view to selling it on. Mr Gunn, a separated father of one, claims he has nowhere else to go.


In his judicial review proceedings against the Central Bank and the State, with Start as a notice party, Mr Gunn claims Start was not legally authorised to make the loan to him because, he claims, it was not regulated by the State as required.

Mr Gunn claims only the Central Bank has 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 (IFSRA) is unconstitutional.

He claims the then consumer director of IFSRA unlawfully and unconstitutionally prescribed Start as a 'Credit Institution' within the State in 2004.

Yesterday, Jim Breslin, for the Central Bank, said it is vigorously defending Mr Gunn's case as the proceedings had implications not just for Start but all other institutions prescribed by the consumer director as a "credit institution", including subsidiaries of banks.

Irish Independent

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