Cronin v Dublin City Sheriff

• Jurisdiction: Ireland
• Judge: Ms. Justice Ní Raifeartaigh
• Judgment Date: 17 October 2017
• Neutral Citation: [2017] IEHC 685
• Docket Number: [3387/2017 P],[2017 No. 3387 P]
• Court: High Court
• Date: 17 October 2017

BETWEEN

PATRICK CRONIN

PLAINTIFF

AND

DUBLIN CITY SHERIFF

AND

TANAGER DAC

DEFENDANTS

[2017] IEHC 685

[3387/2017 P]

THE HIGH COURT

Practice & Procedure – O. 19, r. 28 of the Rules of the Superior Courts – Banking & Finance – Non-payment of loan – Possession of property – European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 ('Unfair Terms Regulation') – Council Directive 93/13/EEC – Unfair Terms in consumer contract – Proportionality under European law – Res judicata

Facts: The plaintiff sought an injunction to restrain the bank/second named defendant from getting repossession of his family home. The second named defendant had filed the present application pursuant to o. 19, r. 28 of the Rules of the Superior Courts or under the inherent jurisdiction of the Court for striking out the plaintiff's action. The plaintiff contended that as per the Unfair Terms Regulation and Council Directive 93/13/EEC, the contractual terms entered with the bank were unfair and had not been individually negotiated. The plaintiff contended that the domestic courts had an obligation to consider the European law, when considering whether to enforce a consumer contract, including a mortgage contract between a customer and a bank. The second named defendant contended that the plaintiff should not be entitled to re-litigate matters or raise issues, which had already been determined by the final judgment of a court of competent jurisdiction between the same parties.

Ms. Justice Ni Raifeartaigh granted the relief sought by the second named defendant and thus, dismissed the plaintiff's action. The Court held that since the plaintiff had failed to raise the objections in relation to Unfair Terms Regulation in the first two concluded proceedings, and even on appeal, the same objections could not be raised by initiating the third proceedings as an abuse of process of law and under the doctrine of res judicata, though not strictly. The Court observed that since the European Court of Justice ('ECJ') required the national courts to apply domestic rules of procedures over community laws, there was no obligation on the Irish Courts to depart from its rules of procedure.

JUDGMENT of Ms. Justice Ní Raifeartaigh delivered on the 17th day of October, 2017

The Nature of the Case

1 This is a case in which the plaintiff seeks an injunction to restrain the repossession of his family home, based upon points of European law, in circumstances where there have already been two sets of proceedings in connection with the matter. He also seeks, inter alia, a declaration that an order for repossession previously made by the High Court should not be enforced. The plaintiff seeks to rely upon Council Directive 93/13/EEC (5th April 1993), the 'Unfair Terms Directive', which deals with unfair terms in consumer contracts. The plaintiff also seeks to rely upon the proportionality principle as articulated in the jurisprudence of the ECJ. There is an extensive jurisprudence from the ECJ concerning the Unfair Terms Directive, and it is submitted on behalf of the plaintiff that one of the conclusions of the ECJ is that the domestic courts have an obligation, when considering whether to enforce a consumer contract, including a mortgage contract between a customer and a bank (see Aziz v Caixa d'Estalvis de Catalunya, Tarragona i Manresa, Case C-415/11, EU:C:2013:164, 14th March 2013), to consider whether the contract may contain terms prohibited by the Directive; and that the obligation extends to raising the issue on the court's own motion, even if the parties have not done so. The plaintiff argues that notwithstanding that the point was not raised in either of the first two sets of proceedings (or more accurately, was not raised by anybody except him until the lodging of an appeal in the second set of proceedings), the obligation upon the courts in the previous proceedings was mandatory by reason of the ECJ's interpretation of the Directive, and that the normal principles as to the finality of judgment and res judicata do not apply in those circumstances. The application is vigorously resisted by the second defendant which has responded to the proceedings with a motion to dismiss on the principles of res judicata and abuse of process.

Council Directive 93/13/EEC of 5th of April 1993 – the 'Unfair Terms Directive'

2 It may be helpful if I refer to the essential aspects of the Directive in question by way of context at this stage. Council Directive 93/13/EEC (5th of April 1993) on unfair terms in consumer contracts defines a consumer as any natural person who is acting for purposes which are outside of his trade, business or profession. Article 3 provides that a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contracts, to the detriment of the consumer. It also provides that a term shall be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract. Article 4 provides that the assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration as against the services and goods supplied in exchange. However, it also provides that the unfairness of a contractual term shall be assessed by taking into account the nature of the goods or services for which the contract was concluded and all the circumstances attending the conclusion of the contract. Article 5 provides that written terms must be drafted in plain, intelligible language, and that where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail. Article 6 provides that member states shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms. The Annex to the Directive in paragraphs (a) to (q) sets out an 'indicative and non-exhaustive list' of terms which may be regarded as unfair. The Directive was implemented in Irish law by the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995, S.I. 27/1995 which replicates the essence of the above-mentioned provisions. The ECJ has considered the interaction between the Directive and the provisions of domestic law in a number of countries in a number of cases, the most important of which are discussed below.

Relevant Facts/Chronology

The first set of proceedings

3 In November 2008, Mr. Cronin entered into two loan agreements with the Bank of Scotland (Ireland) Ltd, involving loans of €600,000 and €450,000. Those loans were secured by a mortgage on premises in Dublin city ('the property'). He failed to meet his repayment obligations and went into significant arrears. He does not dispute that he defaulted on his loans. As of March 2013, he was €144,120.00 in arrears and on the 14th March, 2013, the Bank of Scotland Plc brought Circuit Court proceedings seeking possession of the property, the business of Bank of Scotland (Ireland) having been transferred to Bank of Scotland Plc with effect from 1st December, 2010. An order for possession was made by the Circuit Court on 28th January, 2014, subject to a stay of six months. While Mr. Cronin had entered an appearance and was apparently aware of the hearing date, he did not attend the hearing in the Circuit Court, for reasons which have not been explained to the Court. He did, however, appeal the order for possession to the High Court. In April 2014, while that appeal was pending, Bank of Scotland Plc assigned its interests in the relevant facilities to Tanager, and in June 2014, Tanager was substituted as the plaintiff in those proceedings. On the 29th February, 2016, following a full day's hearing at which Mr. Cronin was represented by solicitor and counsel, the High Court (Twomey J.) affirmed the order for possession, subject to a stay of three months. That concluded the first set of proceedings, being the proceedings initiated by the Bank. There was of course no legal limit to the arguments that could be raised on behalf of Mr. Cronin in those proceedings including, in particular, the issues of European law now sought to be relied upon in the present proceedings. They were not raised on his behalf in those proceedings.

The second set of proceedings

4 In November 2016, Mr. Cronin commenced proceedings in this Court, asserting that he had made a binding agreement with Tanager according to which Tanager had agreed that it would not enter into possession provided that he made weekly payments of €600 to Tanager. In December 2016, Tanager applied to dismiss those proceedings on the grounds of res judicata/abuse of process. On the 14th February, 2017, the High Court (Twomey J.) made an order dismissing the proceedings on that basis. He also directed the vacation of a lis pendens that had been registered by Mr. Cronin. The court extended the stay on the execution of the order for possession for a further period of two months. Mr. Cronin was represented by solicitor and counsel at the hearing of that application. Again, the European law issues now sought to be relied upon were not raised on the plaintiff's behalf. On the 14th March, 2017, Mr. Cronin filed a notice of appeal to the Court of Appeal against the High Court order of the 14th February, 2017. In his notice of appeal, and for the first time, arguments relating to the European Communities ( Unfair Terms in Consumer Contracts)...