Freeman Megamerge

constance tench · 06-12-2014 1:12am

Robbo wrote: »

There's a chap in Waterford who's rolling his own promissory notes and then declaring that the mortgage is "paid in full now".

The Underpants Gnomes are strong in this one.

Edmund Honohan: 'Promissory note' deal for mortgages ticks all boxes

http://www.independent.ie/opinion/analysis/edmund-honohan-promissory-note-deal-for-mortgages-ticks-all-boxes-29150355.html

...Cue alarm bells all round. If it's that simple, they'll say, someone will have thought of it before now, and ruled it out as naive. Not so. In this groupthink society, conventional thinking will always be assumed to be optimal.

This proposal is a lawyer's solution to society's demand for economic stimulus. It ticks all the boxes, both legal and economic.
Allowing borrowers to call the shots will upset the banks' carefully laid plans to deleverage back to profitability? Probably not to the extent you'd imagine, given the multiplier effect on consumption and the likely repayment of unsecured loans.

And as for the balance sheet and the capital requirements, rescheduling repayment of performing loans does not make them bad debts and delaying writedowns or repossession for unsustainable loans postpones the need for accountancy writedown.

The public finances and rating agencies? Not a problem. Inject €10bn or €12bn over three years into Ireland's economy and watch those growth and revenue figures improve. Even the property tax take will be better.
Payment by promissory note. Could this be the silver bullet for personal debt? For a few years we'll be diverting some of the mortgage repayments from the banks. We won't need their permission: after all, it was taxpayers' money which kept them afloat. Now it is the economy which must be kept afloat.

The proposal is simplicity itself. Over the next three years, instead of making the monthly mortgage instalment in hard cash, the borrower will have the option of handing over his IOU promising to pay the sum at the end of the term of the mortgage. The borrower is then free to use the earmarked cash as he thinks fit.

And now, the boring bit: the law. Watch this space for the kneejerk "it can't be done" reaction; the product of ignorance of the law and the politicians' nervous deference to anyone who gives the appearance of being slightly better informed...

Beano · 06-12-2014 1:27am

The only slight problem with the above is that an IOU is not a promissory note.

06-12-2014 2:37am

Beano wrote: »

The only slight problem with the above is that an IOU is not a promissory note.

To be fair... an IOU with an express promise to pay is a promissory note

Beano · 06-12-2014 5:24pm

Deleted User wrote: »

To be fair... an IOU with an express promise to pay is a promissory note

That does not contradict what i said

constance tench · 06-12-2014 9:26pm

Beano wrote: »

That does not contradict what i said

And now, the boring bit: the law. Watch this space for the kneejerk "it can't be done" reaction; the product of ignorance of the law and the politicians' nervous deference to anyone who gives the appearance of being slightly better informed.

... is that your only[non] point having read the article?
You did read it didn't you?

It's quite obvious the Master of the High Court is interchanging IOU [layman's term] with promissory note.

Would legislating for payment by promissory note involve any significant risk for the State? I say not: the option of deferring payment is either already a term of contract, express or implied or, if not, it's a graft-on provision which is constitutionally sound.
An implied term? The law has always been on the side of the borrower in peril of repossession. The so-called equity of redemption always prevented the lender from seizing the property when the borrower could pay off the loan in full, even if the payment is late.

http://www.independent.ie/opinion/analysis/edmund-honohan-promissory-note-deal-for-mortgages-ticks-all-boxes-29150355.html

Beano · 06-12-2014 11:14pm

constance tench wrote: »

....
It's quite obvious the Master of the High Court is interchanging IOU [layman's term] with promissory note.

...

such was my point. the terms cannot be interchanged.

constance tench · 07-12-2014 4:17am

Beano wrote: »

such was my point. the terms cannot be interchanged.

And...? It's a news paper article written to communicate a working example for economic stimulus...your 'point' is meaningless in this context.

07-12-2014 5:00pm

Beano wrote: »

such was my point. the terms cannot be interchanged.

He is making a more subtle mistake than that. He is stating that the promissory note can be an IOU with a promise to repay (which is what a promissory note is) but he also puts a limit on WHEN it can be repaid - the end of the mortgage term.

Technically he's right about an IOU with an express promise to repay being a promissory note. Where he is wrong is that you can't put a time limit before redemption. That invalidates it as a promissory note. So his mistake isn't using the two terms interchangeably, it's adding a term which invalidates the promissory note.

constance tench · 07-12-2014 6:31pm

Deleted User wrote: »

He is making a more subtle mistake than that. He is stating that the promissory note can be an IOU with a promise to repay (which is what a promissory note is) but he also puts a limit on WHEN it can be repaid - the end of the mortgage term.

Technically he's right about an IOU with an express promise to repay being a promissory note. Where he is wrong is that you can't put a time limit before redemption. That invalidates it as a promissory note. So his mistake isn't using the two terms interchangeably, it's adding a term which invalidates the promissory note.

Again, this is a news paper article...not a legal document!The Master of the High Court is trying to communicate an idea to the general public.

Others might object to his use of 'quantitative easing'...again used for the purpose of getting the idea across...

'In regard to the aggregate promissory note rescheduling private debt, from a macro economic perspective it doesn't matter much which cohort of consumers gets the extra "quantitative easing" spending cash.'

He suggests '...A three-year scheme would be enough to pump €10bn or €12bn into the economy just where and when it can be used to best effect...'

07-12-2014 9:24pm

constance tench wrote: »

Again, this is a news paper article...not a legal document!The Master of the High Court is trying to communicate an idea to the general public

Yeah, I got that. But the idea he is putting across is wrong. Not because "the powers that be will say it's impossible" but rather because it's totally wrong in law.

So this is an article putting across an idea that is simply incorrect. That's what I was commenting upon.

Doesn't matter what you call it or how you convey it. The point is simply wrong.

constance tench · 08-12-2014 12:18am

Deleted User wrote: »

Yeah, I got that. But the idea he is putting across is wrong. Not because "the powers that be will say it's impossible" but rather because it's totally wrong in law.

So this is an article putting across an idea that is simply incorrect. That's what I was commenting upon.

Doesn't matter what you call it or how you convey it. The point is simply wrong.

I believe the quote was 'Watch this space for the kneejerk "it can't be done" reaction; the product of ignorance of the law and the politicians' nervous deference to anyone who gives the appearance of being slightly better informed.'

... The Master of the High Court [His brother, Prof Patrick Honohan; governor of the central bank] is wrong simply because you say so?

Edmund Honohan:

'...there are no formal relationships between these departments,[Justice and Finance] except at the informal departmental level.

The Department of Justice would be inclined to say, well we'd better not press the point if somebody in finance tells us that's not a runner, and likewise in finance, if somebody in justice tells them that would be unconstitutional they'd say...well I suppose they know best.

It needs actually a multidisciplinary approach to most issues in life now and unfortunately the temptation is to bring us all to the lowest common denominator instead of the highest common multiple.'

Possessions, repossessions and economic stimulus through promissory note. Full interview here:
http://www.rte.ie/radio1/marian-finucane/programmes/2013/0420/383502-marian-finucane-saturday-20-april-2013/

08-12-2014 12:30am

constance tench wrote: »

I believe the quote was 'Watch this space for the kneejerk "it can't be done" reaction; the product of ignorance of the law and the politicians' nervous deference to anyone who gives the appearance of being slightly better informed.'

... The Master of the High Court [His brother, Prof Patrick Honohan; governor of the central bank] is wrong simply because you say so?

Edmond Honohan:

'...there are no formal relationships between these departments,[Justice and Finance] except at the informal departmental level.

The Department of Justice would be inclined to say, well we'd better not press the point if somebody in finance tells us that's not a runner, and likewise in finance, if somebody in justice tells them that would be unconstitutional they'd say...well I suppose they know best.

It needs actually a multidisciplinary approach to most issues in life now and unfortunately the temptation is to bring us all to the lowest common denominator instead of the highest common multiple.'

Possessions, repossessions and economic stimulus through promissory note. Full interview here:
http://www.rte.ie/radio1/marian-finucane/programmes/2013/0420/383502-marian-finucane-saturday-20-april-2013/

I'm just telling you that a promissory note with a term limiting repayment to a future date isn't a promissory note (that's in this very specific context by the way - generally speaking a promissory note can obviously be a debitum in presenti solvendum in futuro) .

constance tench · 08-12-2014 12:36am

Deleted User wrote: »

I'm just telling you that a promissory note with a term limiting repayment to a future date isn't a promissory note (that's in this very specific context by the way - generally speaking a promissory note can obviously be a debitum in presenti solvendum in futuro) .

A promissory note is... a promissory note.

08-12-2014 12:38am

constance tench wrote: »

A promissory note is... a promissory note.

There's a pretty solid line of case law to say that calling something a promissory note doesn't make it one - it has to comply with the requirements of the Bills of Exchange Act

constance tench · 08-12-2014 12:43am

Deleted User wrote: »

There's a pretty solid line of case law to say that calling something a promissory note doesn't make it one - it has to comply with the requirements of the Bills of Exchange Act

Don't keep it to yourself...share it with us.

08-12-2014 12:50am

Just one example:

Provincial Bank of Ireland -v- Fisher [1918] 2 IR 521 where the Court held that notwithstanding the Plaintiff's contention that he had been given a promissory note upon which he was suing that the notes were in essence conditional and contingent and therefore were not promissory notes.

You can just research the rest yourself but that's a pretty basic example.

08-12-2014 1:05am

On another point the sum would need to be certain to be a promissory note. I'm not sure if you could put down the amount plus interest as a certain sum given the older English case law.

constance tench · 08-12-2014 1:12am

Deleted User wrote: »

Just one example:

Provincial Bank of Ireland -v- Fisher [1918] 2 IR 521 where the Court held that notwithstanding the Plaintiff's contention that he had been given a promissory note upon which he was suing that the notes were in essence conditional and contingent and therefore were not promissory notes.

You can just research the rest yourself but that's a pretty basic example.

Can you post the specifics or a link?
[and] It's not in 'Official' law reporting in Ireland...'

08-12-2014 1:18am

constance tench wrote: »

Can you post the specifics or a link?
[and] It's not in 'Official' law reporting in Ireland...'

It's an Irish Reports decision from the Kings Bench division. What are you on about "official" law reporting?

I can't post a link. Can get it on Justis but it's an old scanned PDF so can't copy over any of the text and I'm not transcribing it. You don't wanna believe me so that's your call.

constance tench · 08-12-2014 1:19am

Deleted User wrote: »

It's an Irish Reports decision from the Kings Bench division. What are you on about "official" law reporting?

I can't post a link. Can get it on Justis but it's an old scanned PDF so can't copy over any of the text and I'm not transcribing it. You don't wanna believe me so that's your call.

Eamonn G Hall?

constance tench · 08-12-2014 1:24am

...Have you anything else?
You haven't provided anything, just your opinion!

08-12-2014 1:26am

constance tench wrote: »

Eamonn G Hall?

Yeah... this decision is from 1918, pretty sure Eamonn wasn't on the board 96 years ago.

08-12-2014 1:31am

constance tench wrote: »

...Have you anything else?
You haven't provided anything, just your opinion!

I'm not trying to prove anything. I was offering my opinion and given reasons. If you disagree that's fine. It's a discussion forum not a court room.

constance tench · 08-12-2014 1:33am

Deleted User wrote: »

Yeah... this decision is from 1918, pretty sure Eamonn wasn't on the board 96 years ago.

No, the book. The Superior Courts Of Law 'Official' Law reporting in Ireland
1866-2006.

constance tench · 08-12-2014 1:34am

Deleted User wrote: »

I'm not trying to prove anything. I was offering my opinion and given reasons. If you disagree that's fine. It's a discussion forum not a court room.

And here's me thinking we were having a debate.

08-12-2014 1:41am

constance tench wrote: »

And here's me thinking we were having a debate.

It's not really a debate though. You're standing over an article from Master Honohan and I'm pointing out that he's made a subtle error.

FWIW I think the time thing is actually easy to get around once the promissory note is drafted properly. The "certain sum of money" issue is far far less so.

I don't quite follow your point re: Dr. Hall's book though. Are you suggesting that if this decision isn't contained within that book that it's not a binding Irish judgment? I really don't get your point there.

constance tench · 08-12-2014 1:57am

Deleted User wrote: »

It's not really a debate though. You're standing over an article from Master Honohan and I'm pointing out that he's made a subtle error.

FWIW I think the time thing is actually easy to get around once the promissory note is drafted properly. The "certain sum of money" issue is far far less so.

I don't quite follow your point re: Dr. Hall's book though. Are you suggesting that if this decision isn't contained within that book that it's not a binding Irish judgment? I really don't get your point there.

I am standing over the statement 'a promissory note...is a promissory note'

I'm interested in reading the 'solid line' of case law you mention. If you have links or a link to that pdf, I [and others, I'm sure] would be grateful if you would publicly post it.

Pro Hoc Vice · 08-12-2014 9:56am

constance tench wrote: »

I am standing over the statement 'a promissory note...is a promissory note'

I'm interested in reading the 'solid line' of case law you mention. If you have links or a link to that pdf, I [and others, I'm sure] would be grateful if you would publicly post it.

I believe this section still applies I could be wrong.

http://www.irishstatutebook.ie/1882/en/act/pub/0061/sec0083.html

Pat Mustard · 08-12-2014 1:06pm

Pro Hoc Vice wrote: »

I believe this section still applies I could be wrong.

http://www.irishstatutebook.ie/1882/en/act/pub/0061/sec0083.html

Appears to be still in force.

http://www.irishstatutebook.ie/isbc/bps1882.html

constance tench · 08-12-2014 2:33pm

Pro Hoc Vice wrote: »

I believe this section still applies I could be wrong.

http://www.irishstatutebook.ie/1882/en/act/pub/0061/sec0083.html

Yes, that is what a promissory note is as defined by The Bills of Exchange Act, but, what I'm trying find out from kayroo is, why he/she is suggesting a promissory note can not be used to defer payment in cash/credit on a mortgage.

Freeman Megamerge

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