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



## barneyg (22 Jun 2015)

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


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## WizardDr (23 Jun 2015)

@barneyg I just hope this case is upheld.


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## Brendan Burgess (23 Jun 2015)

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


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## barneyg (24 Jun 2015)

High Court decision is overturned


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## stefg (24 Jun 2015)

http://www.independent.ie/business/...r-lower-variable-interest-rates-31326585.html


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## Brendan Burgess (24 Jun 2015)

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?"


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## 44brendan (24 Jun 2015)

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."


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## Gerry Canning (24 Jun 2015)

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?"


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!


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## Sophrosyne (24 Jun 2015)

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


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## Raging Bull (24 Jun 2015)

Disappointing but lets hope its appealed to ECJ


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## Asphyxia (24 Jun 2015)

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.


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## Sophrosyne (24 Jun 2015)

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.


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## michaelm (24 Jun 2015)

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


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## WizardDr (24 Jun 2015)

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.


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## Sophrosyne (24 Jun 2015)

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.


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## Brendan Burgess (24 Jun 2015)

Is the judgement online anywhere? 

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

Brendan


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## Sophrosyne (25 Jun 2015)

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


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## Sophrosyne (25 Jun 2015)

Court of Appeal judgment

Kelly J

Finlay Geoghegan J


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## Asphyxia (25 Jun 2015)

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.


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## Raging Bull (25 Jun 2015)

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."
> 
> ...


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.


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## Sophrosyne (25 Jun 2015)

Finlay Geoghegan J

23. Secondly the trial judge decided at paragraph 29:-

“In any event, if the construction of clause 3 urged by Danske were to prove to be correct, the Ombudsman was nonetheless in error in failing to examine whether it would be broadly fair and reasonable for Danske to apply such a construction having regard to his enhanced statutory powers in s. 57BK(4) and s. 57CI(2): see, by analogy, my own reasoning in _Koczan_.”​ 
24. It appears implicit in this part of the judgment that the trial judge considered s. 57BK(4) and s. 57CI(2) imposed a mandatory obligation on the Ombudsman to consider in relation to Mr. and Mrs. Millar’s complaint whether reliance by a bank on contractual terms was “broadly fair and reasonable”. I regret, I cannot agree with such a statutory interpretation. The complaint herein was not made on that basis. The essential complaint was that the Bank was in breach of the loan agreements. *Whilst, pursuant to s. 57BK(4) and s. 57CI(2), the Ombudsman may consider and decide a complaint from such a broader perspective, he is not obliged by the terms of the sections to do so.* Whether or not he is in error in failing to do so will depend upon the complaint and facts before him. In my judgment he was not in error in failing to consider such issue herein having regard to the terms of the complaint made by Mr. and Mrs. Millar.” [Emphasis added]


I think that interpretation is a little narrow.

What she appears to say is that because the Millars’ complaint was not made on that basis to the Ombudsman, the Ombudsman is under no obligation to view the complaint from a broader perspective even though he/she has the power to do so.


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## WizardDr (25 Jun 2015)

Mention has been made as regards 'market conditions' and Kelly J has essentially allowed a subjective view - what ever Danske Bank think the conditions are - versus an objective view. Just so as people know what this means I would refer them to *DPP v Morgan [1976] AC 182* House of Lords. All students of law will know this one. Essentially this was about consent or absence of consent in a rape case. The honestly held belief of the defendants was that they had consent. [This is subjective because it is as they see it]. Whereas the reasonable average man would take the view that they did not have consent. The objective view. [You can read the case yourselves]. There in fact was outrage about how you could possibly have an honestly held belief given the circumstances. In Ireland there should be outrage at this decision. The way to channel the outrage is to get the FSO reformed the way it is needed. We can argue about the judgment but realigning the FSO is the way forward.

What Kelly J decided was that 'market conditions' was a subjective view of Dankse Bank. Many in finance understood that when you look at say risk in companies that there are essentially two divisions of risk. One is unique risk attaching to that company and the other is market risk.  Unique risk is diversifiable as in you can get rid of it by widening your portfolio - and you are left with market risk which the stick market will pay a premium for. But the point I am making is that 'market conditions' is a wide market and that the narrowness of Kelly J is one of the greatest contortions by a judge in preventing the flood gates from opening.

Here - Dankse Bank may (or may not) have had peculiar funding issues unique to itself. For example in its rush out of the Irish market it may have ceased taking low cost deposits and so on or it may had a uniquely incompetent management - and Kelly is saying that 'market conditions' is not the same as 'market conditions generally'. In other words Kelly J took the view that the peculiar circumstances of Dankse Bank was market conditions.  Some of us think this is simply wrong. When the condition was written in, it was 'the market' rather than their peculiar view of it.


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## WizardDr (25 Jun 2015)

Part of the problem with Hogan J original judgment was that it would open the floodgates. Hogan J has been flattened by Kelly J who took a considerable amount of time essentially rehashing an approach of deference he has had with state Tribunals. His view is that the Oireachtais (God in Heaven help us) set the FSO up. He is not going to second guess their decisions -so effectively even wrong decisions wont get overturned unless they are 'absurd'. This avoids any conflict with the so called Legislative arm of the State and essentially the Oireachtais can change the FSO if it wants to. One of his cases would have been with regard to An Bord Pleanala. Where they reached a decision on the basis on any reasonable ground the Courts would not overturn it. The argument would be along the lines that the expertise in planning would not be something the court would have the skills on. You can see  a logic in that. However, the work of the FSO investigation is mainly conducted by people with a legal background. Kelly J deferring to them did catch many of us by surprise.

So another Bank saving exercise has been undertaken. In fact all Banks wont fear the FSO going forward as the % of cases the FSO upholds for the Banks is staggering. Then we have this Report by the CBI on the appalling compliance with the Code of Conduct on Mortgage Arrears. Some of us despair that these 'structures' get put in place, they do not work. It takes years to get any changes and on it goes.


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## WizardDr (25 Jun 2015)

Could we change that heading '..Ombudsman was right'
That is not what was said. 'Appeal Upheld' would be better because in the detail of the judgments there was mention of deference to the Tribunal. What this means is that once the FSO had a basis (any basis) his decision would not be over turned. That says nothing about right.


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## Asphyxia (26 Jun 2015)

Points to consider!

The term "market conditions" appears to be at the heart of the dispute, or more importantly, the interpretation of what market conditions means, in it's contractual construction.

Let us look at the case to date:

Donna and Robert Millar believe the term is ambigious.
The financial ombudsman believes the term is unambigious.
Judge Gerard Hogan (High Court) believes the term to be ambigious.
Judge Peter Kelly (Appeals Court)  believes the term to be unambigious.

So, from an objective stand point of a reasonable person, there appears to be uncertainty about the meaning of the term. Logically, therefore, the term must be ambigious.

Let us now cut away all the flesh of the argument and get to the marrow. Just what does the term "market Conditions" mean ?

*What is MARKET CONDITION?*
Market’s characteristic(s) such as number of the competitors, level or intensity of competitiveness, and the market’s growth rate that a firm walks into when introducing a new product.

(Black's Law Dictionary)


*Definition of Market Condition:   of a market into which a firm is entering or into which a  will be introduced, such as number of the , level or intensity of , and the  growth .

()

Usage in a sentence:* Three I.P.O.'s were cancelled due to market conditions.
*
*
Let us now examine the wording of the term within Danskse bank's mortgage contract.


Clause 3 of the contractual arrangements made between the Millars and the bank provides:-




_“Rates of interest are altered in response to market conditions and may change at any time without prior notice and with immediate effect.”_


It can be seen that the term above is a nonsense ( with regard to the meaning of what market conditions are ), in that it does not make any sense, the term should have been drafted as follows:


               "Rates of interest are altered in response to the bank's cost of funds and may change at any time without prior notice and with immediate effect."

Even if we do take a leap of faith and allow the term market conditions to be used  within the sentence construction, I would be in agreement with Judge Hogan that this must mean " market conditions generally " and not " danske bank's market conditions as found by Justice Kelly given the meaning of the term "market Conditions". Justice Kelly's interpretation is simply erroneous. I note that both Justice Peart and Finlay Geoghegan are silent on the matter of the ambiguity of the term.

Now let us look at what Unfair terms in contract regulations 1995 ( SI 27/1995 refers) (EC Directive 93/13/EEC refers) says in respect to vaguely drafted terms.

5. (1) In the case of contracts where all or certain terms offered to the consumer are in writing, the seller or supplier shall ensure that terms are drafted in plain, intelligible language.

(2) Where there is a doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail.

6. (1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.


The European Court of Justice has ruled on the interpretation of unfair terms on a number of occasions  ( see my article on Fairness in interest variation terms in the Fair Mortgage rate Forum )


I urge the Millars to challenge the Judgment of the Appeals Court  to the Supreme court on a point of Law, that being, that the term in dispute, is an unfair term as defined by European Directive 93/13/EEC.

If they do, I am of the belief that they will be successful a number of fronts, such as clear intelligible language, ambiguity and the transparency requirements of the term.


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## Sarenco (26 Jun 2015)

There is no automatic right to appeal a decision of the Court of Appeal to the Supreme Court and no right of appeal to the CJEU.  

There was no determination as to whether or not the relevant clause in issue in the Millar case was an unfair term within the meaning of the above Directive and therefore there is nothing to appeal in this regard.

The legal position now is simply that the FSO did not err in law in concluding that the relevant term was unambiguous.  You may disagree with the judgment of the Court of Appeal but that is the settled legal position as things stand.


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## WizardDr (26 Jun 2015)

What should happen is another case should be taken with a few financial types helping the legal types.

I don't think the legal position is that the FSO did not err in law as opposed to a substantial deference by Kelly J to tribunals in general. The situation that prevails is that the tribunal possesses more experience say in planning at Bord Pleanala. In fact many involved in these FSO cases see lawyers becoming more the norm. One case that I am familiar with was Mrs Bloggs (name preserved) and Bank of Ireland. The good bank had 2 x solicitors and 1 x barrister And that's fair isnt it? We cannot have these unwashed consumers winning -lets scare the daylights out of them. Folk might be better off going to High Court and bypassing FSO.


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## Sophrosyne (26 Jun 2015)

Could Kelly J have taken an objective rather than subjective view?

If so, would have been different?


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## Asphyxia (26 Jun 2015)

Sarenco said:


> There is no automatic right to appeal a decision of the Court of Appeal to the Supreme Court and no right of appeal to the CJEU.
> 
> There was no determination as to whether or not the relevant clause in issue in the Millar case was an unfair term within the meaning of the above Directive and therefore there is nothing to appeal in this regard.
> 
> The legal position now is simply that the FSO did not err in law in concluding that the relevant term was unambiguous.  You may disagree with the judgment of the Court of Appeal but that is the settled legal position as things stand.



I am not fully up to speed on the procedures for legal actions in this Country but I am fully briefed about European Directives from the European Commission and how they must be adhered to by Member States. It is incredulous that three Judges in the Superior Courts of Ireland are not aware of the Pannon Judgment from the E.C.J. This Judgment relates to a National Courts obligation to examine on its own motion the unfairness of a contractual term, whether or not the consumer explicitly contested it.
 Summary below:

C-243/08 Pannon GSM Zrt. v Erzsébet Sustikné Győrfi, judgment of 4 June 2009 The Court of Justice defines the scope of the obligation on the national court to examine of its own motion the unfairness of a contractual term. Ms Sustikné Győrfi entered into a subscription contract with Pannon for the provision of mobile telephone services. The contract was concluded on the basis of a form supplied by Pannon and conferred jurisdiction on the court for the place where Pannon has its principal place of business for any dispute arising from the subscription contract or in relation to it; that term conferring jurisdiction was not individually negotiated by the parties. Taking the view that Ms Sustikné Győrfi had not complied with her contractual obligations, Pannon applied for an order for payment to the court in the territorial jurisdiction of which it has its principal place of business. That court noted that the permanent place of residence of the subscriber, who received invalidity benefit, was situated 275 km away, with very limited means of transport. It also observed that, according to the rules of the Hungarian Code of Civil Procedure, where there is no clause in a subscription contract stipulating its jurisdiction, the court with territorial jurisdiction is the court for the place where the subscriber resides. In those circumstances, the Hungarian court referred to the Court of Justice questions concerning the interpretation of Directive 93/13/EEC on unfair terms in consumer contracts. It wished in particular to know whether it was required to examine of its own motion, in the context of exercising control over its own jurisdiction, the unfairness of a contractual term conferring jurisdiction. In its judgment the Court explains that, in the field covered by Directive 93/13/EEC, *the role attributed to the national court is not limited to a mere power to rule on the possible unfairness of a contractual term, but also consists of the obligation to examine that issue of its own motion, where it has available to it the legal and factual elements necessary for that task.* That obligation is also imposed on the national court when it is assessing whether it has territorial jurisdiction. However, having carried out that examination of its own motion, the national court is not required to exclude the possibility that the term in question may be applicable, if the consumer, after having been informed of it by that court, does not intend to assert its unfair or non-binding status and thus benefit from the non-application of the term. *The Court also points out that, for the court to find that an unfair contract term is not binding on the consumer, it is not necessary for the consumer to have explicitly contested it.
*
This is another reason why the Millars should appeal this Judgment, as the appeals court failed in it's duty to so consider the term unfair. There is no mention of such consideration in either Judgment.


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## Sophrosyne (26 Jun 2015)

Asphyxia,

Was Finlay Geogheghan J then in error - see post 21 above?


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## 44brendan (26 Jun 2015)

So essentially the unambiguous term in the contract was at the kernel of the Appeal Court decision (my reading). In essence it would appear that the case should have originally been  taken on the basis of an "unfair clause" in the original contracts rather than the interpretation of the clause itself! However it is not clear to me as to whether the case was based on the FSO decision or whether the Millar's own legal team took the case independently of the FSO. In accordance with Asphyxia's posts above it would appear that there is potentially a strong case that could have been taken in respect of contract unfairness. It would appear that this issue was never addressed in the Courts decision and would have required a separate claim.
I have on a number of occasions raised queries as to why no case has been taken on the "unfairness" issue of SVR's. Perhaps one has and we haven't heard of the result! If not, then can anyone explain why a sample case has not been brought forward? I take it that Asphyxia has a certain level of expertise in this area and her posts appear to indicate that there would be a high probability of success with such an action!


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## Sarenco (26 Jun 2015)

44brendan said:


> I have on a number of occasions raised queries as to why no case has been taken on the "unfairness" issue of SVR's. Perhaps one has and we haven't heard of the result! If not, then can anyone explain why a sample case has not been brought forward? I take it that Asphyxia has a certain level of expertise in this area and her posts appear to indicate that there would be a high probability of success with such an action!


 
Well, I wouldn't agree that there is a high probability of success.  There is no judicial determination to date that supports the contention that variable rate mortgages are inherently unfair.  It is certainly possible to build an argument to this effect but there can be no assurance that any such argument will be successful.


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## Sophrosyne (26 Jun 2015)

In the Pannon case, the ECJ held that, as the national court is required to ensure the effectiveness of the protection intended under the Unfair Terms Directive, it must examine the possible unfairness of a term of a contract _even where the consumer has not challenged it._ This is a duty of the national court, not merely a right or power.

The ECJ took the view that it would be contrary to the principle of consumer protection behind the Unfair Terms Directive if a consumer was required to challenge the unfairness of a contract term before a court could assess its fairness.


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## Raging Bull (26 Jun 2015)

Sarenco said:


> There is no automatic right to appeal a decision of the Court of Appeal to the Supreme Court and no right of appeal to the CJEU.
> 
> There was no determination as to whether or not the relevant clause in issue in the Millar case was an unfair term within the meaning of the above Directive and therefore there is nothing to appeal in this regard.
> 
> The legal position now is simply that the FSO did not err in law in concluding that the relevant term was unambiguous.  You may disagree with the judgment of the Court of Appeal but that is the settled legal position as things stand.


You can appeal to ECJ once you have exhausted all domestic avenues
..its up to supreme court if they want to hear it, if not they can go to ECJ...its a slam dunk under EU law but vested interests being protected in Ireland


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## Sarenco (26 Jun 2015)

Raging Bull said:


> You can appeal to ECJ once you have exhausted all domestic avenues
> ..its up to supreme court if they want to hear it, if not they can go to ECJ...its a slam dunk under EU law but vested interests being protected in Ireland



Not true - an individual has no right of appeal to the CJEU (I think you may be thinking of the European Court of Human Rights). 

Also, it is a matter for the national courts (not the ECJ) to determine whether or not a particular contractual term is unfair within the meaning of the Directive.  I am not aware of any previous determination to this effect that relates to variable rate loans by a national court anywhere in the EU so I don't see how you can come to the conclusion that it is a slam dunk.


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## WizardDr (27 Jun 2015)

What is most interesting here is that we have the bones of an approach on a new case.

I think the point on unfair terms is a most useful basis for another case.

If we do not do something the problems that we will have are:
- a resurrected FSO continuing to uphold 90% of the rulings in favour of the banks;
- a flattened consumer who will have no confidence in taking any actions against FSO thanks to the submissive deference of the Court of Appeal to the FSO noting that there are more legal types on these cases comparable to the EAT;
- an Oireachtais who haven't a handle on how many of us see the FSO as a large part of the problem
- despite the fact that they have wider powers than they exercise.


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## Asphyxia (27 Jun 2015)

Without meaning to be disparaging to Justice Kelly,s judgment on the matter, I would like to bring this further point of contention to the Millar's attention and indeed their legal team.

*Judge Hogan in his High Court Judgment sets out the reason he believes the term "market conditions" means market conditions generally:*

*The construction of clause 3*
21. Turning now to that question, it will be seen that the key words are those contained in clause 3 (“…in response to market conditions…”) of the applicable terms and condition. The Millars, while not contending for a form of tracker mortgage, argued nonetheless that the clause meant that the interest rates should generally follow general market conditions, _i.e._, that the rate should decrease when rates were lowered generally, while accepting that the rate could increase when rates were generally increased. For its part, Danske contended that clause 3 did not refer to market conditions generally, but rather to its own cost of funding. It averred that as it did not avail of any ECB funding, the interest rates set by the ECB were not relevant to its own funding costs.

22. The Ombudsman concluded that clause 3 was “clear in its wording” and for this precise reason found against the Millars. I fear that I cannot agree. The term “market conditions” is not a specialist term of art which has a defined meaning in legal or financial circles. Given that these words are not terms of art, they must therefore be construed in the first instance by reference to the ordinary usage of these terms and how, objectively, these words would be understood by a reasonable person in the context in which they appear.

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.

24. The clause is, in any event, an ambiguous one, the meaning of which falls to be determined by reference to the general factual background against which the contract was entered into: see generally _Analog Devices v. Zurich Insurance Co._ [2005] IESC 12, [2006] 1 I.R. 274, 280, per Geoghegan J. and the judgments of Fennelly and O’Donnell JJ. in _ICDL GCC Foundation v. European Computer Driving Licence Foundation Ltd._ [2012] IESC 12. In _Analog Devices_ Geoghegan J. referred with approval to the judgment of Lord Hoffmann in _Investor Compensation Scheme Ltd v. West Bromwich Building Society_ [1998] 1 W.L.R. 866, 912-913, in which the following principles of interpretation were set out:




“(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’ but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammar; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meaning of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must for whatever reason, have used the wrong words or syntax.....

(5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.”

25. These principles were also expressly approved by the Supreme Court in _ICDL._ It follows, therefore, that having regard to the Lord Hoffmann’s second principle, the Ombudsman could and should have had regard to the available background evidence in order to determine the precise meaning of this phrase in this particular context. That background evidence may - or may not - show that the words in question should have a more particular or a more general meaning. It is only where this background material cannot assist in resolving the ambiguity that, in line with the comments of O’Donnell J. (in his admittedly dissenting) judgment in _ICDL,_ recourse should be had as a last resort to the principle of _contra preferentem_.



*Now let us look at what Justice Kelly says in total on the matter:*

42. I am of the view that the Ombudsman was correct in concluding that clause 3 is clear in its wording. The trial judge in his analysis came to a different conclusion, holding that the term “_market conditions”_ may be taken to refer to “_market conditions generally”._ I do not share that view nor do I agree that the clause in question is ambiguous.


*Notice anything unusual!*

Justice Kelly's Judgment was a reserved Judgment in the fact that it was heard mid February 2015. The Judges took over 4 months to deliver their respective judgments. A reserved judgment can be defined as follows:

"Reserved judgment" or "reserve judgment" most basically refers to a judgment that is withheld in order to gather more information before arriving at a conclusion. It refers to the need for more data or opinions in order to make an informed decision. It is most often used as a legal term to refer to a judge withholding a sentence or declaration in order to consult more evidence and develop a more informed judgment.

More importantly, Judgments should quantify and qualify the reasons  a particular Judges arrives at the said conclusions. Judgments should contain the summary of arguments of both the parties, the law of the land, previous judgments on the issue, conclusion and the reasons for arriving at that conclusion. The lack of stated reasons for Judge Kelly's conclusion in relation to his finding of what the term "market conditions" means, is very pronounced. This may form another pillar of a valid argument, if the Millar's wish to make an application to the Supreme Court for a Supreme Court appeal.


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## WizardDr (27 Jun 2015)

@Asphyxia:

You have gone to a lot of trouble and many of us share the great frustration with the result in this case.

Kelly J followed a risk reducing strategy which some would share. Lets be clear Donoghue v Stevenson well known to many people broke huge ground in the 1930s because a duty of care was found to be owed by a 'neighbour' who was not party to the contract. Kelly J would not have broken that ground today or ever because that is not the way he arrives at his conclusions. In fact he is the exact opposite of that other favourite canary of law students namely Denning - excusing the Birmingham Six case. Kelly J does not break new ground. Ever.

Kelly J would have the view that fixing what ever the deficiencies there are with the FSO is not something that he as a judge is going to do. Ever ever ever.

To understand his reasoning - this might help:

In _*State (Keegan) v. Stardust Victims Compensation Tribunal [1986] I. R. 642*_ , Henchy J held that it was not for the courts to substitute their decision for that of the tribunal being reviewed.  If the tribunal had not erred in its procedure or on the law, the courts could only intervene if “_the impugned decision plainly and unambiguously flies in the face of fundamental reason and common sense_.”


In _*O’Keeffe v. An Bord Pleanala & Others [1993] 1 I. R. 39*_ in 1992, Finlay CJ said: _“[T]he circumstances under which the courts can intervene on the basis of irrationality with the decision-maker involved in an administrative function are limited and rare_.”  A court could not interfere just because it would have come to different conclusions or because “_the case against the decision made by the authority was much stronger than the case for it_.”  For the court to intervene, “_it is necessary [to establish] ... that the decision-making authority had before it no relevant material which would support its decision_.”

This is where he is coming from, much as I don't like it. He is saying that the FSO had a basis (any basis will do) and in fairness to FSO they did conduct a thorough inquiry.

He also was not going to bring in issues that were not raised. Your view on Unfair Terms I happen to believe has a basis but nobody is now to going to appeal the appeal. We are not the only jurisdiction that has difficulty with their Court of Appeal. There are many instances of huge overturns by the House of Lords with the Court of Appeal. [My favourite is R v Moloney [1985] AC 905 House of Lords and here a far more thorough analysis was conducted by the HoL and it overturned a murder conviction]. But recent Supreme Court jurisprudence unfortunately suggests that Hardiman J is now a minority and there are several conservative types on the Supreme Court. The recent row back on admissible evidence shows that.

What was crucial to his ability to steer the dull, conservative approach rested on the meaning of market conditions no less. I can argue cogently about what those two words mean. One was conditions applying to all market participants as that is what I would call market conditions.  All participants face these conditions and then the unique conditions your firm faces.  Some would be of the view that Dankse Bank in the rush to abandon this country had created some of its funding issues and also the Danes did impose losses on Depositors. In the end maybe this needed outstanding expert evidence and it is difficult to see how any consumer can or could do this. It would need the equivalent of an INNOCENCE style project to approach this.

In fact the only reason Kelly J required the interpretation he required (this is the extremely intellectually lazy approach of forcing the facts to find the accused guilty) is that when he did the research he found that actually others may have the same condition (called plagiarism in exams) and therefore he could trigger a major crisis. Legal bods wold know this as the 'floodgates' principle. That means he was going to find a way. And he did.

Some thought that he could confine the case to the Millars as the Murphy tax case was such a precedent.

In the end he took this interesting non-confrontational approach. This is in sharp contrast when it came to the matters concerning the pay and conditions of the judiciary. As shop steward he successfully broke new legal ground. Not so for consumers.

The only approach  here is Burgess B to be convinced to lead a campaign on the FSO.


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## Sophrosyne (28 Jun 2015)

I am sure that many people cannot understand what went wrong in the Millar case.

To summarise:

The EU Unfair Terms in Consumer Contracts imposes a duty on national courts to assess the possible unfairness of a contract term, _whether or not a consumer has challenged it._

The FSO could have but did not exercise his broader powers to consider fairness – not just ambiguity.

Even though “unfair term” was not part of the complaint to the FSO, the High Court correctly acted in accordance with the EU Directive, particularly in paragraph 29 of its judgment and referred the case back to the FSO to re-examine inter alia whether the construction applied by Danske to clause 3 was broadly fair and reasonable, given his enhanced statutory powers.

The FSO instead, appealed to the Court of Appeal, which took no account of _its_ duty to examine the possible unfairness of the contract term, _regardless_ of the basis of the complaint to the FSO.

To assist future complainants, it would be great if it could be explained, in layman’s terms, that given the duty imposed by the EU Directive:

why the Court of Appeal only considered whether clause 3 was ambiguous and not also whether it was broadly fair and reasonable; and

why it concluded that, in this case, there continued to be no obligation on the FSO to consider this either.
The upshot for the Millars is that the Court of Appeal has made it impossible for them to obtain a court assessment of clause 3 in the light of the Unfair Terms Directive.


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## WizardDr (28 Jun 2015)

@Sophrosyne. As usual you have some excellent points.

I am told that the EU Unfair Terms in Consumer Contracts did feature in the case. This must be appealed to the Supreme Court.

At this stage Aesop's famed fable of the wolf and the lamb. A wolf came upon a lamb straying from the flock, and felt some compunction about taking the life of so helpless a creature without some plausible excuse. So he cast about for a grievance and said at last, "Last year, sirrah, you grossly insulted me." "That is impossible, sir," bleated the lamb, "for I wasn't born then." "Well," retorted the wolf, "you feed in my pastures." "That cannot be," replied the lamb, "for I have never yet tasted grass." "You drink from my spring, then," continued the wolf. "Indeed, sir," said the poor lamb, "I have never yet drunk anything but my mother's milk." "Well, anyhow," said the wolf, "I'm not going without my dinner." And he sprang upon the lamb and devoured it without more ado.

The moral of the story children, if the wolf is going to eat you, he is going to eat you anyway.


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## Asphyxia (28 Jun 2015)

I will refer readers to Danske banks annual report 2013 page 12 and their description of market conditions:



Market conditions

Conditions in the financial markets

The financial markets generally improved in 2013. The US was heavily affected by the discussion
of when and how to scale back its expansionary monetary policy. In the eurozone, the recovery appeared to be broadening as even countries

such as Italy, Spain and Portugal started to show tentative signs of recovery. The economic outlook for the emerging markets, including China, is more fragile.

The stock markets rose significantly throughout 2013 on the strength of a stronger outlook for the global economy and ample liquidity in the financial markets.

Conditions in our home markets

The Danish economy picked up throughout 2013. GDP rose in the second and third quarters, and economic indicators suggest that growth continued

towards the end of the year. Growth was stimulated by increasing exports, real wage growth and low interest rates. Exports are expected to continue rising in 2014. Housing prices started to increase, but the turnaround is weak and the housing market remains a risk factor.

The Swedish economy did not grow in 2013. Survey data indicate that it might expand in 2014 because of the outlook for higher global growth. Housing prices have risen sharply in recent years, and even considering the strong underlying economy, the high prices pose a risk of corrections in the years ahead.

The Norwegian economy remains strong, but growth slowed markedly because of lower oil prices and a lacklustre housing market. Since oil prices remain high, despite a drop from their peak, the deceleration is expected to be temporary. Export growth and a continuation of strong domestic demand will underpin the economy. Housing prices fell in the second half of 2013, and the possibility of a further decline is a risk factor.

The Finnish economy saw economic contraction again in 2013 because of weak exports and a tight fiscal policy. Housing prices have been quite flat. We expect a slight pickup in growth in 2014.

In Northern Ireland, we saw low growth in 2013. The Irish economy is still fragile, but the Irish government has decided to exit the eurozone bailout programme without an ESM precautionary backstop since the public deficit has been reduced significantly. Housing prices appear to have found their floor and have started to rise from the level some 50% below their peak.

So it is plain to see how Danske bank interpret market conditions, except, of course, for litigation in Ireland.


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## WizardDr (29 Jun 2015)

Ooh that is good!


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## Asphyxia (29 Jun 2015)

WizardDr,

Danske bank have been caught with their fingers in the cookie jar, so as to speak. I have several other pertinent points regarding an appeal to give to the Millars, however I do not wish to give them on this open forum, as I believe Danske Bank does review AAM regularly. Do you know their email address or contact no. Maybe you can converse with me in Conversation mode re same.


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## New Romanse (29 Jun 2015)

Asphyxia,

I expect the Millars are shattered right now, perhaps you might prefer to direct your eloquent and well intentioned advice through their legal team?


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## Brendan Burgess (30 Jun 2015)

Their Senior Counsel was David Langwallner whom you can email on david@langwallner.com or phone on 01-817 2828

http://www.lawlibrary.ie/members/David-Langwallner/995.aspx


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## Asphyxia (30 Jun 2015)

To Brendan,

thank you for that, got mobile also.


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## Raging Bull (30 Jun 2015)

Might also be worth looking at the various rights breached under the charter of fundamental rights re consumer protection which have the same value as treaty law by virtue of articles 6  of teu post lisbon treaty it's stronger than unfair terms


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## Asphyxia (1 Jul 2015)

Raging Bull,

Excellent point.

I have examined the charter and I am in agreement with you in that the Millar's can also include in their application to the Supreme Court for a Supreme Court appeal, together with Article 6 ( civil limb ) ECHR, ( IV Procedural Requirments ( particularly (i) (b) and (g))


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## Raging Bull (1 Jul 2015)

If I was there legal person I would definitely go down the Charter route being Treaty law can't be over turned...it covers consumer protection,  pretty sure unfair terms by back door and also the fair procedures being breached in your other post so it will cover all your bases...not being used yet I believe in Irish courts  but plenty of ECJ judgement accepting its full legal standing post Lisbon treaty


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## baltic (10 Jul 2015)

I've been following this with interest.
I note from the judgement that Danske alluded that the increase in interest rates was due to increased funding costs. Having looked at the Danske Annual Report 2008 (page 32),
in relation to Market Conditions in Ireland, it states:

*Financial summary 
Total income grew 13%. Growth in both deposits and lending and wider lending margins more than compensated for higher funding costs, lower fee income and the keen competition in the Irish market that caused a further narrowing of deposit margins.*

Notwithstanding this, variable interest rates increased.............


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## 10amwalker (14 Jul 2015)

Brendan, I am more than surprised at the recent mail you sent me. 

I did not send a mass pm. The maximum number of people you can ask to join in a particular conversation is 4. I chose the particular 4 people very carefully based on their contributions and knowledge of the above case.

I believed you jumped to a response rather than digesting what I was offering. My offer was for the good of consumers.


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## Gerry Canning (14 Jul 2015)

From my reading of Millar case , they should win eg on the Rates issue it was ,Walks like a duck ,quacks like a duck ,but since (learned) judges did not see the DNA of the duck they found against Millars,whereas a jury can quickly cut through the legaleeze and minutiae of legal argument and interpret more than a dry (law) judgment.
I do worry that our Judges are in effect ,unaccountable and a hindrance to moving law on !.
Even if Millars appeal , the law process is so self (stalling) that time rolls on and that suits the big boys (in this case Banks) 

Am I wrong?


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## Asphyxia (17 Jul 2015)

The Millar's should definitely apply to the Supreme Court for an appeal, as, as stated before, they have ample grounds for so doing so due to the fact that the case is of significant general public importance and it is also in the interest of *Justice. *I doubt very much, that in the unlikely event that they lose, costs will be awarded against them. The Millar's have been wronged and this needs to be rectified.


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