Mediation is to take place in a case brought by a married couple over the alleged high rate of interest they are being charged on their mortgage after the loan was acquired by a fund from a bank.
Darren Hennessy and Emer Barrett have sued Pepper Finance Corporation Ireland DAC which, the High Court heard on Friday, is an agent for a company called Glenbeigh Securities 2018-1 DAC. In 2019, Glenbeigh bought the loan on their home at Argideen Lawn, Deanrock Estate, Togher, Cork, as part of a larger portfolio, from Permanent TSB.
The couple claims Pepper is currently charging them an unfair rate of 8.5 per cent whereas, had their loans remained with PTSB, they would be paying just over 4.3 per cent.
They claim Pepper remains bound to the same rates of interest as those currently being offered by PTSB.
The couple took out a 35-year mortgage with PTSB in 2005 on their home and got further borrowings from the bank in 2007 to renovate the property. Those loans had fixed interest rates for periods before a variable rate kicked in.
It is claimed that Pepper has justified its variable rate increases on the basis of market conditions, including increases by the European Central Bank to address high inflation.
In their action, the couple, who dispute Pepper’s justification, claim the rate they are being charged is “excessive” and “out of proportion with any legitimate rate they should be charged”.
They claim that Pepper must abide by the terms of the loan agreements they entered into with PTSB. Pepper denies the claims.
The case was back before the High Court on Friday in relation to discovery in advance of the full hearing of the case.
While that process is continuing, John Kennedy SC, for the couple, said that on foot of interactions between the parties, it had been agreed to go to mediation which will take place on February 5th.
Mr Kennedy said, in relation to outstanding discovery matters, there was disagreement between the parties on a claim by Pepper that it is unable to say what price it paid for the couple’s loan.
John Breslin SC, for Pepper, said he had taken instructions from his client who says it is “not possible to ascribe a specific price” for their loan as the purchasers, Glenbeigh, had bought it as part of a portfolio and no consideration was identified for that particular loan.
He agreed with the judge that it was part of a bundle of loans for which a “global value” was ascribed. The judge noted that Glenbeigh bought the loans and Pepper acted as its agent.
Mr Kennedy said this was “an absolutely extraordinary position” being put before the court in circumstances in which Pepper had argued that one of the reasons for the high interest rate it charges was the cost of acquiring the loans.
If the cost of buying the loans is a material issue in the case then the cost of buying the loan should be provided, he said.
If all that can be provided by Pepper is a global figure, that can be dealt with at the hearing of the case but Mr Kennedy wanted the request for the cost of the couple’s loan to remain part of the discovery application.
Mr Justice David Nolan, who previously made discovery orders in the case, said the defendant should swear an affidavit of discovery saying they are not in a position to say the price for this loan. The defendant should also state the price for the portfolio of loans.
He adjourned the matter to next month.
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