THe High Court case of
Caroline McCann versus The Judge of the District Court and others with Monaghan Credit Union Limited found
that Section 6 of the Enforcement of Courts Orders Act 1940 was unconstitutional. Since the case was heard the legislation has now been amended.
Caroline McCann bought the case challenging (a) the validity of the order for her arrest (b) the validity of the legislation providing for the order and (c) the validity of the legislation in light of the European Convention on Human Rights. The validity of the legislation providing for her arrest was the main issue with regard to the decision and, as Justice Laffoy stated:
"In its written submissions subsequently delivered, the Credit Union made the practical suggestion that it would not oppose an application for an order of certiorari to quash the
(committal order of)
2005".
This meant Justice Laffoy did not have to decide the validity of the arrest and instead could concentrate on the validity of the legislation.
Justice Laffoy stated in relation to the form of the district court rules;
"Neither the summons nor the form of Statement of Means contains any warning as to what may happen if the debtor does not attend Court or does not complete and lodge the Statement of Means as required. It is not explained that the objective of conducting the examination is to make an appropriate instalment order. There is nothing in the nature of a penal endorsement and there is no mention of the possibility of imprisonment, if an instalment order is not complied with
".
The Oireachtas in The Enforcement of Court Orders (Amendment) Act 2009, which came into force on the 14 July 2009 have signed into law new legislation which amends Section 6. The District Court Rules Committee will have to redraft its forms so that it meets the requirements of the legislation which was amended to satisfy the issues raise by Justice Laffoy as set out above.
Justice Laffoy indicated "procedural safeguards must be in place" which, as indicated above, were not in place as neither the summons nor the statement of means carried any warning of the consequences of non compliance.
Justice Laffoy did recognise that
"having in place an effective statutory scheme for enforcement of contractual obligations, including the payment of debt, is unquestionably a reasonable and legitimate objective in the interests of the common good in a democratic society." She
also recognised that
"the means by which effectiveness is achieved may reasonably necessitate affording a creditor a remedy which entitles him or her to seek to have a debtor imprisoned, but such means will constitute an infringement of the debtor’s right to personal liberty guaranteed by Article 40.4.1 unless they pass the proportionality test."
Justice Laffoy said in her Judgment that the proportionality test contains the notions of minimal restraint on the exercise of protected rights, and of the exigencies of the common good in a democratic society.
The Enforcement of Court Orders (Amendment) Act 2009 came into effect on the 14 July 2009. The new Act changes Section 6 of the 1940 Act so that it now satisfies the points, issues and concerns highlighted by Justice Laffoy in the Caroline McCann case.
The change in the law still allows creditors to apply for instalment orders, as it did previously. However, when a debtor fails to adhere to that instalment order the creditor will, as per the new Act at S.2 (1) being the amended Section 6:
1 Issue a committal summons
2 The summons shall contain details of the consequences of a failure to comply i.e.the possibility of imprisonment and provide information of the options available to the Judge as set out in section 7 as well as stating that the debtor may be arrested and that the summons must be served by personal service;
3 If a debtor fails to appear before the court the judge can;
(a
) issue a warrant for the arrest of the debtor, or
(
b
) fix a new date for the hearing.
4 A debtor arrested under subsection (3)(a) shall be brought before the District
Court.;
5 Where a debtor is arrested and brought before the District Court under
subsection (3)(a), the judge shall fix a new date for the hearing of the summons
and explain to the debtor;
(a) that he or she
(i) is entitled to apply to the court for a certificate of legal aid and
(ii) must attend before the court
(b) the consequences for failure
(i) to comply with an instalment or
(ii) to attend before the court is the possibility of imprisonment.
6 At the hearing of the summons the judge shall explain to the debtor in ordinary
language;
(a) that he or she is entitled to apply to the court for a certificate of legal aid
and
(b) the consequences of failure to comply carries the possibility of
imprisonment.
7 sets out the options available to the judge. The judge may
(a) treat the proceedings on the summons as an application for variation of
the instalment order,
(b) request the creditor and debtor to seek resolution by mediation,
(c) fix a term of imprisonment and postpone the execution of that order,
(d) order the arrest and imprisonment of the debtor.
8 A judge shall not make an order for imprisonment unless they are satisfied that
(a) the failure to pay is not due to an inability to pay.
(b) the debtor has no goods which could be taken in execution under any
process of the court.
9 Where an order fixing and postponing a term of imprisonment has been made
and the ability to comply with the terms of the order has changed, apply to the
District Court to re-enter the matter and the District Court judge shall deal with
the matter as if it was an application to vary.
10 Where a debtor is imprisoned they
(a) may, if the ability to re-pay has changed, apply to the District Court to reenter
the matter
(b) is entitled to be released immediately upon payment of the sum of
money consisting of the amount accrued.
11 All moneys paid shall be paid to the creditor on request.
12 Failure to attend at the court on the date fixed by the court constitutes contempt of court, and the judge may deal with the matter accordingly. The Act, as now amended, goes on to deal with the entitlement to legal aid and the release of the person imprisoned for non-payment of money.
The new legislation will make it more cumbersome and costly for creditors to enforce instalment orders against debtors.
For further information please contact Jim Stafford or Tom Murray on 01 661 4066 or by email: stafford@liquidation.ie or murray@liquidation.ie