A WOMAN who claimed she had no choice but to take out a short-term mortgage with an interest rate of almost 20 per cent has lost her High Court case to prevent repossession of her pub and home.
The woman, who took out the mortgage with subprime lender Secured Property Loans Ltd (SPL) in 2008, had not demonstrated why the court should make an order preventing repossession by SPL of the premises in Co Clare, Ms Justice Mary Laffoy ruled.
Any regulation of interest rates charged by lenders was a matter for the Oireachtas, the judge added.
The woman borrowed €125,000 over 12 months at an APR of 19.41pc and the debt now stands at €201,000.
The loan was secured on the rural pub, which is also her home.
Ms Justice Laffoy noted the woman took out the loan arising from difficulties due to the mismanagement of the pub by her husband, from whom she was now divorced. She was left with a large tax bill as well as an outstanding €30,000 loan to AIB and turned to SPL for finance.
In seeking to prevent possession, the woman argued the interest rate constituted an unconscionable and oppressive term of the loan agreement. She also argued the loan agreement should be struck down on grounds the “exorbitant” rate of interest constituted a penalty levied on her and was a source of unjust enrichment to SPL.
The lender denied the claims and said the woman had received information beforehand in a “customer care booklet”. The interest rate was not unlawful, it also said.
Ms Justice Laffoy said she did not accept the woman’s claim of being “thrown on a lender of last resort”. The woman had made a commercial decision with the benefit of independent legal advice, the judge said.
It was not open to the court to take judicial notice that SPL’s rate was “out of kilter” with rates charged by other lenders, she added.
While the rate appeared high, a number of factors including size and duration of the loan, creditworthiness of the borrower and security for the loan would have to be taken into account to determine whether the interest rate was fixed at a level which rendered the bargain between the parties unconscionable, the judge said.
No evidence was provided by the woman to this effect, the judge ruled.
While it was understandable the woman had an obvious sense of grievance over the level of debt she is facing, the court had no jurisdiction to grant relief concerning the high level of interest rate payable.
“Any regulation of interest rates charges by lenders to borrowers is a matter for the Oireachtas,” the judge said.