Court of Appeal overules High Court in Millar case! Upholds FSO's finding.

The court of appeal judgment is to be given on Wednesday.

@barneyg I just hope this case is upheld.

From the legal diary


Court of Appeal: 23rd June 2015 Civil



Wednesday the 24th June
In Court 1 Court of Appeal Building (former Public Record Office Building)

The President
Mr Justice Peart
Ms Justice Irvine
at 10.15 o'clock
For Judgment
2014 1280 Close Invoice Finance Ltd -v- Matthews & Anor

Mr Justice Kelly
Ms Justice Finlay Geoghegan
Mr Justice Peart
at 10.15 o'clock
For Judgment
2014 7 & 2014 8 Millar & Anor -v- Financial Services Ombudsman

High Court decision is overturned

This is a big boost for the Ombudsman and for the banks.

It also answer the question which others have asked "Why is the Ombudsman appealing the High Court decision?"

So in reality once a SVR contract is entered into by a mortgagee the banks have complete autonomy to raise the interest rate to whatever they like. How on earth is this not classified as an "unfair contract"??

"Consumers have legislative protection from unfair terms in consumer contracts. An unfair term in a standard consumer contract is a term that is significantly weighted against the consumer. In other words, the contract contains a statement that puts the consumer at a disadvantage. A supplier of goods or services can have an advantage over the consumer by including such an unfair term in a contract."

Brendan Burgess said:

This is a big boost for the Ombudsman and for the banks.

It also answer the question which others have asked "Why is the Ombudsman appealing the High Court decision?"

Click to expand...

I do not pretend to know much about this case but
It is very hard not to be cynical.

If you have enough money and enough brains you can win a case that a black crow is white.ie it was dead and covered in snow.
There is no way ordinary citizens can risk High Court or Appeal Courts , even if they do, their limited funds may not get the best council.

Simply justice is not for everyone!

Are there any details yet on why the High Court decision was overturned?

Disappointing but lets hope its appealed to ECJ

My heart goes out to Robert and Donna Millar in relation to what I would call a brutal judgment by the appeals court. Once again, the wagons were circled and capitalism at it's worst prevailed. I will study the Judgments in earnest in the next few days and hope to comment further then. The Millars, if brave enough, may challenge the judgment in the Supreme Court and if unsuccessful there, onto the ECJ. The powers that be would not want this to happen, as on the face of it, with respect to the collateral contract ( that being, the mortgage marketing literature and web page descriptions of what a variable rate mortgage was at the time the Millar's entered contract with Danske bank) it is clear that the appeals court judgment ( without referring to same ) is simply wrong in law.

Brendan44, I like your comment and agree absolutely with you.

From the Irish Times.

In one of two separate judgments, Mr Justice Peter Kelly said he disagreed with the High Court’s conclusion that a clause in the loan agreement referring to “market conditions” meant “market conditions generally”.

“I do not share that view nor do I agree the clause in question is ambiguous”, he said.

The Ombudsman was correct in rejecting a “contrived construction” which the Millars sought to place on that clause, he said. The Ombudsman was also correct in finding the wording was clear, he said.

The Central Bank should immediately be given the power to set a cap on mortgage rates if such proves necessary.

I had only a brief look at the judgment.
What Kelly J seemed to decide is that a 'subjective test' on market conditions applied as opposed to what is called an objective test.
In simplistic terms what this means is that its whatever Dankse says it is. No matter what the general conditions in fact are. If you take that view then Kelly's judgment makes sense. If you think that some objectivity has to come into it - then you will despair on the judgment.
This type of ruling is similar to where if the public body had some basis for their decision - then they will not have their decisions overturned. The other sad part of this is that the criticism by Hogan J of the FSO and how it approached its work is now but a blur.

It would be sad indeed if the excellent points made by Hogan J were to be lost in the haze.

One can only hope that if advanced to the Supreme Court or the ECJ, judgments will take account of the wider role of the FSO to consider fairness and reasonableness.

Is the judgement online anywhere?

I think we should read its reasoning in full before assessing it.

Brendan

As should the title "Ombudsman was right" in the thread title.

Court of Appeal judgment

Kelly J

Finlay Geoghegan J

I believe Justice Kelly has taken the view, that because the Millars did not make an argument to the F.S.O. initially, in relation to the existence of a collateral contract regarding the meaning of the term " variable interest rate " and " market conditions", they could not now rely on same.

He states in para 43 " That was not a case that was sought to be made and did not arise."

If this legal argument had been raised by the Millar's with the F.S.O., then I believe a different outcome may have occurred.

I am however, still somewhat perplexed by Justice Kelly's interpretation of "market conditions" Judge Hogan in his High Court Judgment states:

"23. In its more common usage the term “market conditions” may be taken to refer to “market conditions generally.” While I agree that the term might also in some contexts refer to particular market conditions experienced, for example, by one undertaking in the relevant market, I should have thought that this was a less frequent usage. If, moreover, the construction urged by Danske were correct, it would mean that its interest rate could be varied by reference to special factors which were peculiarly within its own knowledge, the details of which it would not be obliged to disclose and which, as the Ombudsman himself acknowledged, the customer would have been obliged to accept more or less at face value. If this was, indeed, what was intended by the term “in response to market conditions”, one might have supposed that more explicit language along these lines might also with advantage have been used."


Justice Hogan, I believe was indirectly alluded to the fact that if Danske Bank's argument that the term "market Conditions" referred to "Danske Bank's market conditions" then the term would fall foul of The European Communities (Unfair terms in consumer contracts) regulations 1995, SI 27/1995 refers. He is of course completely correct, moreover, a recent European Court of Justice determination in relation to a disability insurance contract in relation to two mortgages ( Van Hove V CNP Assurance c-96/2014) may add fuel to the fire in relation to how a National Court must assess, plain intelligible language, within a contract.


In this Judgment the ECJ stated: "The court therefore declares that terms that relate to the main subject-matter of an insurance contract may be regarded as being drafted in plain, intelligible language if they are not only grammatically intelligible to the consumer, but also set out transparently the specific functioning of the insurance arrangements, taking into account the contractual framework of which they form part, so that that consumer is in a position to evaluate, on the basis of precise, intelligible criteria, the economic consequences for him which derive from it. If not, the national court may assess the possible unfairness of the term at issue."

This appears to be at odds, with Justice Kelly's interpretation of a term in a contract.

Finally, in relation to interpretation of contract,


Interpreting contracts in law is an area of contract law, which concerns how the courts decide what an agreement means. It is settled law that the process is based on the objective view of a reasonable person, given the context in which the contracting parties made their agreement. This approach marks a break with previous a more rigid modes of interpretation before the 1970s, where courts paid closer attention to the formal expression of the parties' intentions and took more of a literal view of what they had said.

The process of interpretation was often skewed by courts who tried to construe contracts in a way that was fair. Before the Sale of Goods, Supply of Services Act 1980, the courts had not developed a jurisdiction to strike down unfair terms. When faced with harsh exclusion clauses they would often "interpret their way out" of the plain meaning of the clause through a process of strict construction against the party relying on a clause (in Latin, contra proferentum). This would often run contrary to the common sense meaning of a contractual document, and embodied a strained approach.

Asphyxia said:

I believe Justice Kelly has taken the view, that because the Millars did not make an argument to the F.S.O. initially, in relation to the existence of a collateral contract regarding the meaning of the term " variable interest rate ", they could not now rely on same.

He states " That was not a case that was sought to be made and did not arise."

If this legal argument had been raised by the Millar's with the F.S.O., then I believe a different outcome may have occurred.

I am however, still somewhat perplexed by Justice Kelly's interpretation of "market conditions" Judge Hogan in his High Court Judgment states:

"23. In its more common usage the term “market conditions” may be taken to refer to “market conditions generally.” While I agree that the term might also in some contexts refer to particular market conditions experienced, for example, by one undertaking in the relevant market, I should have thought that this was a less frequent usage. If, moreover, the construction urged by Danske were correct, it would mean that its interest rate could be varied by reference to special factors which were peculiarly within its own knowledge, the details of which it would not be obliged to disclose and which, as the Ombudsman himself acknowledged, the customer would have been obliged to accept more or less at face value. If this was, indeed, what was intended by the term “in response to market conditions”, one might have supposed that more explicit language along these lines might also with advantage have been used."


Justice Hogan, I believe was indirectly alluded to the fact that if Danske Bank's argument that the term "market Conditions" referred to "Danske Bank's market conditions" then the term would fall foul of The European Communities (Unfair terms in consumer contracts) regulations 1995, SI 27/1995 refers. He is of course completely correct, moreover, a recent European Court of Justice determination in relation to a disability insurance contract in relation to two mortgages ( Van Hove V CNP Assurance c-96/2014) may add fuel to the fire in relation to how a National Court must assess, plain intelligible language, within a contract.


In this Judgment the ECJ stated: "The court therefore declares that terms that relate to the main subject-matter of an insurance contract may be regarded as being drafted in plain, intelligible language if they are not only grammatically intelligible to the consumer, but also set out transparently the specific functioning of the insurance arrangements, taking into account the contractual framework of which they form part, so that that consumer is in a position to evaluate, on the basis of precise, intelligible criteria, the economic consequences for him which derive from it. If not, the national court may assess the possible unfairness of the term at issue."

This appears to be at odds, with Justice Kelly's interpretation of a term in a contract.

Finally, in relation to interpretation of contract,


Interpreting contracts in law is an area of contract law, which concerns how the courts decide what an agreement means. It is settled law that the process is based on the objective view of a reasonable person, given the context in which the contracting parties made their agreement. This approach marks a break with previous a more rigid modes of interpretation before the 1970s, where courts paid closer attention to the formal expression of the parties' intentions and took more of a literal view of what they had said.

The process of interpretation was often skewed by courts who tried to construe contracts in a way that was fair. Before the Sale of Goods, Supply of Services Act 1980, the courts had not developed a jurisdiction to strike down unfair terms. When faced with harsh exclusion clauses they would often "interpret their way out" of the plain meaning of the clause through a process of strict construction against the party relying on a clause (in Latin, contra proferentum). This would often run contrary to the common sense meaning of a contractual document, and embodied a strained approach.

Click to expand...

Totally agree with your post but im not the judge really hope they go to Europe. ..my objective reading of market conditions would be the rate Danske can borrow at. The ECB rate is a misnomer. From my understanding Danske rate being cost of funds did fall so it would be hard to say market conditions mean they need to put rate up. It would seem to be an exercise to increase the spread thats why I feel they were hard done by.