Recent case law seeks to limit the impact of the Unfair Contract Terms Directive in Ireland, writes Padraic Kenna, in the September Gazette.
Applying EU law
Almost two years ago, writers in the Gazette began to examine the implications of the Unfair Contract Terms Directive for Irish mortgage contracts. European Court of Justice (CJEU) cases, such as Aziz (Case C-415/11), had reiterated the ‘own motion’ obligations on national courts to examine mortgage contracts for unfair terms, and strike out any such terms.
AIB v Counihan introduced EU consumer law into the arena of Irish mortgage litigation. In this 2016 case, Barrett J held that considering the terms of the mortgage contract required a plenary hearing, and that Irish courts have an obligation under the directive to scrutinise mortgage contracts on their own motion.
The Irish approach
According to Padraic Kenna, a lecturer in property and housing law and NUI Galway, recent case law and commentary regarding unfair mortgage contracts may seek to limit the impact of the directive in Ireland. Irish courts, he writes, have not recently carried any detailed ‘own motion assessments’ for unfair terms, except in the case on builders’ stage payments for new homes in 2001.
In mortgage cases where the issue has arisen, the reasons are varied. They include situations where the lending corporation failed to provide all necessary documentation (EBS v Kenehan [2017] IEHC 604), the proceedings were res judicata (Cronin v Dublin City Sheriff [2017] IEHC 685), where the borrowers had not pointed to any unfair terms and the court had not been able to discern one (Bank of Ireland v McMahon [2017] IEHC 600), and where the borrowers had a solicitor acting for them (AIB v Cosgrave [2017] IEHC 803).
The role of solicitors in advising consumers has been emphasised. In Ulster Bank Ireland v Costelloe ([2018] IEHC 289), it was held that “the court has to take cognisance of the fact that the defendants had the benefit of a solicitor when executing the mortgage deed. Moreover, the offer document clearly advised the defendants to consult with their solicitor ‘on the offer documents, the conditions and the security which will be taken over your home’.”
Writing in the September Gazette, Kenna scrutinises recent case law, suggesting that some pre-2009 clauses in mortgage contracts may yet be vulnerable to challenge. The CJEU, and EU consumer law more generally, will continue to shape Irish mortgage litigation for some time yet.
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