Catch Me If You Can ' Allegations Of Fraud As A Defence In Enforcement Proceedings

• Published date: 10 June 2020
• Author: Ms Hilda Mannix, Darryl Broderick and Chris Murray
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Criminal Law, Charges, Mortgages, Indemnities, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Ronan Daly Jermyn

Lenders and loan purchasers may find themselves faced with an allegation by a defendant in repossession and/or enforcement proceedings that they are not entitled to the reliefs sought, in circumstances where the defendant's signature on the underlying loan and/or related security documentation was the subject of a fraud on the part of the lender and/or a co-defendant to the proceedings. This purported defence can arise in particular in a scenario involving an estranged husband and wife, where most commonly the wife would allege that she did not sign the relevant loan documentation, that her signature was forged and/or the related security documentation which is sought to be enforced was executed without her knowledge or consent. While an allegation of fraud is evidently very serious, it rarely succeeds as a defence. The recent High Court decision of Bank of Ireland Mortgage Bank -v- Heather and Peter Cody ¹ provides food for thought for lenders and loan purchasers as to the strategies they should consider when met with such allegations.

Facts

The case involved an appeal by the First Named Defendant, Ms. Cody to the High Court of an Order for Possession made in favour of Bank of Ireland Mortgage Bank ("BOIMB") in the Circuit Court in respect of her family home which she jointly owned with the Second Named Defendant, Mr. Cody, but from whom she is now estranged. BOIMB asserted that there were monies due to it pursuant to two loan agreements entered into by the Defendants in October 2005 and that the repayment of same was secured against the family home by a Deed of Mortgage and Charge executed by the Defendants in January 2007, which was subsequently registered on the property in June 2007. However, Ms. Cody alleged that the mortgage was undertaken "as part of a systemic fraudulent practice which took place between the years 1990 until 2018", that during those years there was collusion between Mr. Cody and BOIMB whereby loans and mortgages were created in Ms. Cody's name without her knowledge and consent, that BOIMB personnel (and staff within the firm of solicitors in which Mr. Cody was then a partner, James Cody & Son) witnessed her signature when she was not present and that there was a "systemic practice" to send all bank statements and documents to the offices of James Cody & Son in order to hide evidence of these loans and mortgages from Ms. Cody. Ms. Cody had instituted separate plenary proceedings before the High Court against Mr. Cody, James Cody...