We previously covered the High Court judgment in the Governor and Company of the Bank of Ireland v Janet Matthews.
That judgment was appealed, and the Court of Appeal delivered two written judgments, which upheld the High Court Decision.
Mr Justice Collins embarked on a survey of some key case law relating to the Statute of Limitations and mortgages over the past 10 years. The case provides useful clarity to all involved in judgment or possession proceedings on foot of mortgages.
The Statute of Limitations and Mortgages
The key periods provided by the Statute of Limitations 1957 (the Statute) are:
Sale – 12 years from when the right of action accrues.
Order for possession – 12 years from when the right of action accrues.
Title – section 33 of the Statute provides:
“At the expiration of the period fixed by this Act for a mortgagee to bring an action claiming sale of the mortgaged land, the title of the mortgagee to the land shall be extinguished.”
Principal – effectively the mortgagee has 12 years to recover the principal debt secured by the mortgage.
Interest – arrears of interest cannot be recovered more than 6 years after they accrued.
The Statute also provides for acknowledgements or part payments resetting the above time periods.
Actions against deceased borrowers – Section 9 of the Civil Liability Act 1961 also provides a hard two-year limitation period from the date of death in respect of causes of action subsisting against a deceased at the date of death.
When does time start to run?
In general, time runs from the date on which the lender could sue the borrower for the mortgage debt or possession, as the case may be.
Obviously, the lender cannot sue the borrower for the debt until the borrower is in default of an obligation to pay the debt.
In general, the ability to seek an order for possession is also dependent on the mortgage monies having become due.
In most mortgages, even following an event of default, the mortgage monies do not become due until demanded; that is even where the borrower has missed payments. Typically, the lender must issue a demand for payment before the borrower is obliged to repay all of the money owed.
There are, however, some mortgages where the mortgage monies become due immediately on the occurrence of an event of default.
In Matthews, Collins J. held:
“The making of a demand was an essential element of the Bank’s claim here. If the Bank had applied for possession of the Laytown property without first making a demand, I have no doubt that the Appellant would have – correctly – opposed that application on the basis that it could not be maintained in the absence of a demand”.
As Matthews concerned the estate of a deceased borrower, significantly, Noonan J. held:
“…it was only following upon the making of the demand for payment on the 16th August, 2016 that the facts were in place which, if proved, would have entitled the respondent to judgment. It follows therefore that the cause of action only accrued on that date and is not a cause of action that was pending at the date of Mr. Melsop’s death or one that survived against his estate. The claim herein is therefore not statute barred and the second ground of appeal also fails.”
Separately, Collins J. held: that a provision to the effect that:
“the secured moneys shall be deemed to have become due within the meaning and for all purposes of the Conveyancing Acts on the execution of this Mortgage”
did not alter the mortgagor’s covenant to pay the mortgage monies on demand. Accordingly, he rejected the contention that this rendered the mortgage monies due on default, without demand.
As Matthews is a carefully considered Court of Appeal judgment, which has not been appealed to the Supreme Court, it should provide a good basis for lenders to evaluate their position with respect to the Statute on mortgages and actions against deceased borrowers.
Lenders, and purchasers of mortgage loans, should analyse standard form mortgages and determine the position under each type of mortgage, particularly whether demand was required to render the mortgage monies due and therefore to start time running against the lender. Such analysis would provide a framework in which to rapidly assess the position on each individual mortgage based on a limited number of facts and would likely assist in efficient decision making and more accurate valuations.
It also brings an end to the uncertainty, which has persisted for a number of years, regarding deceased borrowers where demand had not been made before the date of death.
For more information, contact a member of our Restructuring & Insolvency team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
 Judgments by Noonan J. and Collins J.  IECA 214, uploaded 4 August 2021.
 Section 32(2) of the Statute.
 Section 13(2) of the Statute.
 In most cases under the terms of the mortgage and in some instances pursuant to statutes, see for instance s62(7) of the Registration of Title Act 1964, which remains in effect in relation to charges granted before 1 December 2009.
 For instance, the mortgage in GE Capital Woodchester Home Loans Limited v Reade  IEHC 363.
 For instance, the mortgage in Irish Life & Permanent plc v Dunne  1 IR 92.
 At paragraph 23.
 At paragraph 40.
 At paragraph 18.
 Remembering that almost all lenders have taken some bespoke mortgages.