Director of Consumer Affairs v Bank of Ireland

• Jurisdiction: Ireland
• Judge: Mr Justice Kelly
• Judgment Date: 28 March 2003
• Neutral Citation: 2003 WJSC-HC 2610
• Court: High Court
• Docket Number: [2002 No. 9695P]
• Date: 28 March 2003

DIRECTOR OF CONSUMER AFFAIRS v. GOVERNOR & CO OF BANK OF IRELAND

BETWEEN

THE DIRECTOR OF CONSUMER AFFAIRS

Plaintiff

and

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

Defendant

2003 WJSC-HC 2610

Record No. 2002/9695p

THE HIGH COURT

Synopsis:

CONSUMER LAW

Banking

Consumer protection - Customer charges - Whether plaintiff entitled to orders directing defendant to discontinue charges upon customers - Whether plaintiff outside limitation period - Whether exercise of powers ultra vires - Consumer Credit Act, 1995 sections 4(i)(d), 149 (2002/9695P - Kelly J - 28/3/2003)

Director of Consumer Affairs v Bank of Ireland - [2003] 2 IR 217

The plaintiff sought orders pursuant to s. 4(i)(d) of the Consumer Credit Act, 1995 directing the defendant to discontinue the imposition of charges upon customers in respect of two services provided by it. They were its Business On-Line and American Express blue card services. The defendant contended that the plaintiff was not entitled to the orders because the plaintiff was outside the limitation period, the exercise of the powers was ultra vires and plaintiff was not entitled to seek relief pursuant to s. 4(i)(d) of the Act in respect of functions conferred by s. 149 of the Act.

Held by Kelly J. in granting judgment in favour of the plaintiff that failure to comply with the time stipulation rendered the power voidable rather than void. Although the direction was late it was nonetheless accepted and acted upon. The plaintiff acted intra vires. The power to grant a conditional approval was implicit to the statutory remit.

Citations:

CONSUMER CREDIT ACT 1995 S4(1)(D)

CONSUMER CREDIT ACT 1995 S149

CENTRAL BANK ACT 1989 S28

CONSUMER CREDIT ACT 1995 S149(2)

CONSUMER CREDIT ACT 1995 S149(3)(B)

CONSUMER CREDIT ACT 1989 S149(6)

CONSUMER CREDIT ACT 1989 S149(9)

CONSUMER CREDIT ACT 1989 S4(1)

CONSUMER CREDIT ACT 1989 S4(1)(C)

HIRE PURCHASE ACT 1946

HIRE PURCHASE ACT 1960

MONEYLENDERS ACT 1900

MONEYLENDERS ACT 1933

SALE OF GOODS & SUPPLY OR SERVICES ACT 1980

CONSUMER CREDIT ACT 1995 S149(2)(B)

CONSUMER CREDIT ACT 1995 S149(5)

CONSUMER CREDIT ACT 1995 S149(7)

CONSUMER CREDIT ACT 1995 S149(7)(C)

JAMES V SECRETARY OF STATE FOR WALES & ANOR 1965 AC 135

CONSUMER CREDIT ACT 1995 S149(8)

PLANNING & DEVELOPMENT ACT 2000 S34(1)

PLANNING & DEVELOPMENT ACT 2000 S26(1)

ENVIRONMENTAL PROTECTION ACT 1992 S83(1)

COMPETITION ACT 1991 S8

ENVIRONMENTAL PROTECTION ACT 1992 S88

ENVIRONMENTAL PROTECTION ACT 1992 S90

PLANNING & DEVELOPMENT ACT 2000 S34(8)

EUROPEAN COMMUNITIES (ENVIRONMENTAL IMPACT ASSESSMENT) (AMDT) REGS 1994 ART 17 SI 84/1994

WASTE MANAGEMENT (PLANNING) REGS 1997 SI 137/1997 ART 16

PLANNING & DEVELOPMENT ACT 200 S34(9)

HOWARD V CMSR OF PUBLIC WORKS 1994 IR 101

AG V GREAT SOUTHERN RAILWAY CO 1880 5 CAR 473

KEANE V AN BORD PLEANALA 1997 1 IR 184

MIN TRANSPORT & POWER V TRANSWORLD AIRLINES INC UNREP SUPREME 6.3.1974

AIR NAVIGATION & TRANSPORT ACT 1936

AN BLASCAOD MOR TEO V CMST PUBLIC WORKS UNREP KELLY 18.6.1996 1997/1/96

AN BLASCAOD MOR NATIONAL HISTORIC PARK ACT 1989

HOGAN & MORGAN ADMINISTRATIVE LAW IN IRELAND 3ED 404

CONSUMER CREDIT ACT 1995 S149(11)

1 JUDGMENT of Mr Justice Kelly delivered the 28th day of March, 2003 .

Introduction

2 The plaintiff seeks orders pursuant to the provisions of s.4(i)(d) of the Consumer Credit Act, 1995directing the defendant to discontinue the imposition of charges upon customers in respect of two services provided by it. They are its Business On-Line and American Express blue card services.

3 The defendant contends that the plaintiff is not entitled to the orders sought for three reasons. First, it is contended that she has purported to exercise her powers outside a limitation period imposed under the Act and such exercise is therefore void. Secondly, it is said that the purported exercise of the statutory powers is in any event ultra vires. Thirdly, it is said that the plaintiff is not entitled to seek relief pursuant to s.4(i)(d) of the Act in respect of functions conferred upon her under s.149 of the Act.

The Parties

4 The plaintiff is a statutory officer. With the coming into force of the provisions of the Consumer Credit Act, 1995(the Act) the plaintiff became responsible for what the long title of the Act calls the monitoring of all customer charges by credit institutions. That function was formerly exercised by the Central Bank pursuant to the provisions of s.28 of the Central Bank Act, 1989. That section was repealed by the Act.

5 The defendant is a credit institution within the meaning of the Act.

The Facts - Business On-line Service

6 On the 22 ^nd December, 1998 the defendant notified the plaintiff of a charge which it proposed in respect of the provision by it of a Business On-Line service. This was a new electronic banking service. It was to be introduced in order to meet the increasing requirements of business customers of the defendant. The letter of the 22 ^nd December, 1998 was expressly described as a notification under s.149 of the Act. It was accompanied by the notification fee of £25,000. It made it clear that the proposed new service and pricing would become effective from the end of January, 1999. The letter was accompanied by a document which set out the commercial justification for the proposal, details of the costs and income together with background information on the service and the anticipated impact on customers.

7 Over eight months later on the 25 ^th August, 1999 the defendant issued what she described as "a direction in respect of the Business On-Line service pursuant to s.149 of the Act". The terms of this communication are of some importance. It read as follows

"Re: Notification of charges under s.149(2) of the Consumer Credit Act, 1995Business On-Line"

8 Dear Ms Smith,

9 I have assessed your notification in relation to Business On-Line (BOL) and welcome it as an innovative service for the bank's customers. Your research concludes that for the majority of customers on BOL level 1, £20 per month represents value for money, although there are some issues in relation to the more expensive options.

10 I am prepared the approve the charges as notified subject to the following directions:

11 1. The package will include ten accounts as standard (i.e. status quo) rather than the proposed level of five accounts

12 2. Service level 2, as originally notified, will be set at £40 per month for all customers and not split into International Reporting and International Payments

13 3. A charge of £20 will not apply for bank repaired transactions as proposed

14 4. Each customers [sic] will have access to BOL at the lower charging structure for twelve months from the date of this direction (where the service is already in operation) or the date of implementation for existing customers not yet availing of the service. This will provide customers with an opportunity to use the service and determine whether or not it represents value for money

15 5. As with the other charges, the dial up charge will not apply for the first twelve months

16 6. The charge for installation and training at £500 per day relates to call-outs subsequent to the initial installation and training

17 Within three weeks of this direction, all customers should be informed of the new charging structure and when it will apply to them. The bank should communicate the cost advantages of the internet based service over dial-up (including telephony and access costs) in its initial correspondence with customers and in ongoing promotional material.

18 These charges are being approved for a period of two years at which point I will review the operation of BOL and its charges. I will also be requesting operating data in 2000.

19 Finally, I note from your submissions and press coverage that the service has already been substantially rolled out although the new charging structure has yet to be approved or applied. I appreciate the urgency in providing a replacement service for Keybank and Password. However, I would advise that there are certain risks in launching a new product or service prior to receiving a direction in relation to charges. Therefore, this is not a practice which I would encourage".

20 On the 4 ^th September, 2001 the plaintiff wrote to the defendant pointing out that the letter of the 25 ^th August, 1999 approved the charges in question for a period of two years at which time they were to be subject to review. The plaintiff requested full operating statistics of the Business On-Line service and its charges together with updated commercial justification with regard to those charges. The plaintiff required that the justification should contain as much information as was available on the actual costs and revenues associated with the service. A period of three weeks was allowed for the furnishing of this information. Although not stated in the letter it is said in evidence that this request was made pursuant to the provisions of s.149(3)(b) of the Act.

21 The defendant did not respond to this letter and so a reminder was sent by the plaintiff on the 19 ^th October, 2001.

22 On the 9 ^th November, 2001 the defendant purported to furnish the information sought.

23 On the 22 ^nd January, 2002 further information was requested by the plaintiff. A reminder was sent on the 18 ^th February, 2002 with a further reminder in rather more minatory terms on the 25 ^th March, 2002.

The Facts - American Express Blue Card Service

24 On the 13 ^th August, 1999 the defendant notified the plaintiff of charges which it proposed to impose in respect of its American Express Blue Card service. The letter expressed itself to be a notification under s.149(2) of the Act. The letter pointed out that since June, 1998 the American Express business in this jurisdiction had been operated under a licence agreement...