Like a lot of people I watched, with horror, Ian Kehoe’s recent documentary “The Great Irish Sell-Off”. The ease in which these so called “vulture funds” can turn people’s lives upside down is distressing.
While watching the show, I could not help but think of all the criminal trials where potentially guilty people got off because of technicalities on the face of the warrants for the search of the family home. How is it that the law protects the criminal but not the indebted house owner?
Constitutional rights
Article 40.5 of our Constitution provides that “the dwelling of every citizen is inviolable and shall not be forcibly entered save in accordance with law”. Inviolable usually means “never to be broken, infringed or dishonoured”. Surely what these vulture funds are doing is “dishonouring” citizen’s dwellings.
Of course this basic right carries the proviso, “save in accordance with law”. However, Henchy J in King v Attorney General remarked that “save in accordance with law” is to be interpreted “without stooping to methods which ignore the fundamental norms of the legal order postulated by the Constitution”.
I think that the acts of the vulture funds are stooping to levels which ignore the fundamental norms with which our Constitution is replete, particularly where the property in question is the family home.
Our Constitution holds the family up on the highest pedestal, and yet families can be destroyed by the actions of these corporations. It is arguable that the acts of these vulture funds are outside what is to be permitted by our Constitution.
The family home is enshrined in our Constitution
The inviolability of the family home is not only enshrined in our Constitution, but also in the Charter of Fundamental Rights of the European Union. Article 7 of the Charter provides that everyone has the right to respect for his or her private and family life, home and communications.
In the case of Monika Kusionova v Smart CAPITAL, the Court of Justice again reiterated that the loss of a family home places the family in a particularly vulnerable position. The Court went on to note that the loss of a home is one of the most serious breaches of the rights to respect for the home and that any person who risks being the victim of such a breach should be able to have the proportionality of this measure reviewed.
Victims who have made reasonable efforts to co-operate with the vulture funds should have those efforts, and in some cases offers, considered by the courts, before they are removed from their own homes.
The contractual position
Up until now, the courts have largely focused on the contractual position. Is there a provision providing for possession to be granted to the mortgagor under the Mortgage Agreement in the event of default?
If there is such a clause, irrespective of the consequences to the family, the courts have, up to now, granted possession. Apart from the proportionality position, regard should also be had for Council Directive 93/13/EC, which resulted in the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995. This applies to contracts where the terms have not been individually negotiated. The majority of mortgages would be caught under this legislation.
Under this legislation an unfair term is a term which is
“contrary to the requirement of good faith…causes significant imbalance…to the detriment of the consumer taking into account the nature of the goods or services…and all circumstances attending the conclusion of the contract and all other terms of the contract”.
European case law has determined that the court has a duty to assess whether a contractual term, falling within the scope of the directive, is fair. So, in mortgage proceedings, where the regulations apply, the court must decide whether the terms of the Mortgage Agreement comply with the regulations.
Some of the clauses in the Mortgage Agreement mean that even if one payment isn’t made, that is deemed to be a default justifying an application for possession by the mortgagor.
Is a clause like this fair? I don’t think so. I believe that these issues must be looked at by the courts and argued before the courts in a way that focuses on the rights of the mortgagee, rather than on the rights of the mortgagor. This is also a way to fight back against the vulture funds.
Jody Cantillon is an Associate Solicitor in the Litigation Department at Cantillons Solicitors, Cork. Jody advises and represents clients in relation all aspects of Litigation including Personal Injuries Litigation, Constitutional Law, Employment Law, Defamation Law and Data Protection.
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