Irish Nationwide loses appeal against ruling on widow's loan

A widowed mother of four has won her nine-year battle against a building society's claim that she had to repay a £100,000 loan…

A widowed mother of four has won her nine-year battle against a building society's claim that she had to repay a £100,000 loan made in 1989 to her and her husband.

Ms Eileen Malone's husband Sean died suddenly before a mortgage protection assurance policy had been effected.

She was left with four young children and a newly purchased pub-grocery-residence at Rathmolyon, Co Meath, when her husband died suddenly on July 29th, 1989.

Yesterday the Supreme Court upheld a High Court finding that the Irish Nationwide Building Society should not get an order for possession of the Malone premises. It also ruled that Ms Malone was relieved of any liability to repay the society.

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Mr Justice Lynch, giving the court's judgment, described the society as "manifestly negligent" in relation to the handling of the Malones' insurance application.

The total lost by the society - the loan plus accumulated interest over the nine years - is estimated at £430,000.

The society also faces a legal bill estimated at more than £200,000 following the Supreme Court's decision to award Ms Malone her costs.

An earlier court hearing was told the Malones were granted the loan in February 1989, closed the sale on March 13th, 1989, had gone on bridging finance and were anxious to draw down the loan.

The Irish Nationwide Building Society accepted that through an oversight, it had not forwarded the Malones' application for mortgage protection assurance to the Caledonian Insurance Company until four weeks later.

The society agreed ultimately the Malones could draw down the loan in the absence of insurance protection.

Counsel for the Irish Nationwide sympathised with Ms Malone, who had been left with a young family to run the business. She did not have the money to pay the mortgage and had never paid.

It was claimed there had been a clear agreement with the society that the Malones would get the loan at their own risk.

Counsel for the Malones argued they had not been free to look for their own insurance cover. It was alleged the society failed to effect the cover despite repeated promptings from the Malones' solicitor.

Before his death, it was claimed Mr Malone gave a direct debit to the society to cover repayments, including repayments on the insurance policy. When the society failed to lodge the direct debit, Mr Malone paid the society to cover a three-month period.

The High Court decided Ms Malone was entitled to damages equalling any sum due to the Irish Nationwide Building Society on foot of the mortgage. This wa s appealed to the Supreme Court.

Giving the Supreme Court decision, Mr Justice Lynch said that by the terms of its own documentation, the building society had appointed itself as insurance agents for the Malones and was manifestly negligent.

The building society seemed to think its only function was to forward the insurance application and it then a matter for the Caledonian company and the Malones. It was wrong.

Apart from letters sent by the Caledonian to the Malones' medical advisers, nothing else happened for more than five months. This was "quite extraordinary", the judge said.

The Supreme Court could find no reason to interfere with the High Court decision and dismissed the building society's claim. The court had been told Mr Malone was a bank official who took early retirement at the age of 47 and, with his wife, bought the Co Meath premises with a view to carrying on a supermarket, licensed premises and home. Evidence was given that he was prompt and meticulous in attending to business.