This briefing summarises recent cases, developments and trends relevant to ongoing efforts to resolve the mortgage arrears crisis. Mortgage arrears and repossessions are a key area of focus in the 2016 Programme for Partnership Government.
Should the Courts consider whether mortgage terms are “unfair”, even if not asked to do so?
Barrett J delivered his judgment in Allied Irish Banks PLC v Counihan on 21 December 2016 in which he stated that the Court has a general obligation to establish if any terms in a mortgage contract are unfair, even if the Court has not been specifically asked to do so. This was on the basis of the decision of the European Court of Justice in Aziz, in which the ECJ ruled that a national court should assess (even if not asked to do so) whether any term of a contract that is within the scope of the Unfair Contract Terms Directive is unfair.
While the Court did not find any term to be unfair in this particular case, it should be noted that if a contract term is found to be unfair, that term will not be binding on the consumer, although the contract will continue to exist if it is possible for it to do so without that term.
After the judgment was delivered, Minister of State Dara Murphy (on behalf of Minister for Justice Frances Fitzgerald and in response to a question raised in the Dáil) told TDs that the ruling is being examined by the Department of Justice, with the matter being “kept under review in terms of any definitive additional obligations which may arise and in terms of how the Department and the House may deal with them.”
Separately, the Master of the High Court also noted the scope of the Aziz case in an interview with the Irish Times and expressed his concern that, in repossession cases, there may not be sufficient experience at county registrar level to enable EU-based legislation, such as the Unfair Contract Terms Regulations, to be applied correctly.
Personal Insolvency: Court review of secured creditor’s rejection of PIA proposal
In three recent cases, the High Court was asked to exercise its power to overrule a secured creditor’s decision to reject a proposal for a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Acts (for background information, read our Client Briefing: New Court Review Process available for rejected Personal Insolvency Proposals).