Julie Sadlier: Mortgages ruling offers hope for those at risk of repossession
Julie Sadlier, solicitor at Kieran Mulcahy Solicitors in Limerick, writes on a recent ruling with potential significance for mortgage cases.
Earlier this month, a decision from a High Court case was posted on the website of the Courts Service of Ireland. It didn’t warrant any huge public or media attention. It may have barely registered with the majority of the busy legal community.
However, this under-the-radar decision could prove to be quite an important milestone, and perhaps rare welcome news, for the thousands of individuals and families at risk of losing their home through possession.
Most recent Central Bank statistics indicate that there are still over 60,000 mortgages in arrears in Ireland, of which over 25,000 are in arrears for more than two years. There are an estimated 20,000 possession cases before our courts.
Significantly, the decision confirms that Irish courts must protect consumers’ rights under EU law in mortgage arrears cases. In his judgement in Grant v County Laois Registrar, Mr Justice McDermott confirmed that Judges and Circuit Court Registrars, who are dealing with possession cases, are now obliged to assess mortgage documents for unfair mortgage terms on their own initiative — in other words, they have to do so without being asked by the borrowers.
They will then have to delete any terms they find unfair before entering a possession order, in accordance with the EU Unfair Terms Contract Directive (UTCD).
This directive has been in force in Ireland since 1993 but its implementation has been scant. In this country it is still largely either unknown or ignored despite the fact that it actually is, in most cases, the only real protection all of us have against contract terms of giant suppliers, such as banks, utility providers, insurers or travel companies.
Perhaps if our courts had been applying this law since 1993, the mortgage contract terms that allowed the recent tracker rate miscalculations would have been outlawed long ago and replaced with fairer terms which may have prevented that overcharging.
The second and even more significant point arising from the Grant case is that the Judge held that the Irish mortgage enforcement process protects the right to a home because Irish courts have the jurisdiction, when asked by the borrowers, to consider all the evidence in the case including critical issues like the terms of the original contract, the amount and duration of the loan, the amount outstanding, the extent of the arrears, the nature and extent of the default and the steps taken to work with the borrowers to address their default before seeking possession, for example.
They must also consider the impact of the loss of the family home on the entire household, including children, older people or people with disabilities for example.
This is called a proportionality assessment, and is in keeping with key principles underpinning the EU Charter of Fundamental Rights and the European Convention of Human Rights.
This is the first time that an Irish court has acknowledged that borrowers have these Charter rights in possession cases. Most significantly, this decision raises the debate about the importance of balancing human rights and consumer rights over economic and commercial rights in mortgage cases, which our courts have been slow to formally acknowledge.
At a minimum solicitors and advisors working with the State support organisations like Abhaile and Legal Aid, will also now begin to provide advice and information about the possible application of EU law to possession cases.
This decision is not going to revolutionise our possession courts. It is not going to let anyone off the hook. It is not going to change the fact that people must pay what they owe.
But it does give some small ray of hope to people that their human rights and consumer rights should be balanced fairly against the already very strong commercial rights of the financial institutions they face across the court rooms.
- Julie Sadlier is a solicitor at Kieran Mulcahy Solicitors in Limerick. This article first appeared in the Irish Examiner.