Stephen Donnelly (Wicklow, Independent)

I thank the Minister.

It was stated that it is a fact, having regard to the relevant statistics, that Irish courts are slow to order possessions. I agree with that and take the Minister's point on the falling numbers. This Bill would have an impact not be in the court, although obviously it would have in a few marginal cases, but much like the Minister's proposed legislation, the real impact would be at the negotiating table. With that sensible set of measures, we should see a fall in possessions because the balance will have been struck in the negotiations and the banks will begin to make more sensible decisions.

It was stated that it seems I envisage the courts restructuring mortgage loans and effectively determining that a portion of outstanding capital should cease to be payable to an individual financial institution and that the courts presently have no such jurisdiction and the Bill gives no guidance as to how this might be exercised or on what basis a court could simply reduce the amount of capital outstanding. The Bill does not give judges explicit statutory power to enforce an arrangement.

On the issue of not giving guidelines, I am certainly very open to that and I discussed this very point again with senior counsel who told me that it is something of a philosophical argument. I am way outside my area of expertise but it is essentially civil versus common law and that one approach is to give judges discretion and let a set of case law build up quickly, to which the courts would refer or that the Oireachtas could provide guidelines. There are people on both sides of that argument as to which is better. I certainly would not live or die by either, so I would be very happy to consider what the Minister believes would be most workable.

It was stated that the level of arrears on a loan is a matter of specific relevance in the determination of every court application made for possession. I have covered that point and I take the Minister's point on the adjournment but, ultimately, the court cannot stop a possession on foot of it.

On the implications for the banks, an area about which I feel a bit more comfortable talking, it was stated that statutory provision could render a financial institution's security illusory and undermine the credibility of all secured debt, that this would disadvantage any new mortgage seekers from being granted home loans by the banks as the concept of security would become meaningless and that it is obvious that this provision gives rise to substantial constitutional issues pursuant to Article 43 of the Constitution. I disagree with that; I do not believe it does. It is very much at the margin. In the same way as the proposed personal insolvency Bill is in a way retrospective in that it allows people do things under existing contracts, this would be exactly the same. The safeguard is that the judge would have discretion. If I tried to introduce a Bill which stated that possession is now not possible, then something like that might happen but certainly it is at the margin. I do not believe that it would cause the above because of the low scale and the discretion of the courts in the same way as I do not believe Minister's Bill would. His Bill will be open to the same argument.

It was stated that this provision could effectively incentivise those who have sufficient income to discharge mortgage obligations to cease making mortgage repayments. It is the moral hazard argument. Again, that is why discretion is given. I have spent very little time in the courts but I would hope a judge would be able to see someone who is trying play the system, apply his or her discretion and say he or she is granting possession.

It was stated that this would have a catastrophic impact on our recapitalised financial institutions and could lead to further public money being required. From an economic perspective, I do not see that at all. We have already given them €7.5 billion and they are not using one cent of it. They are taking the hit on their balance sheets but they have the money. The number of possession cases which come up is negligible relative to the €7.5 billion, so I do not accept that it would have an effect on the financial institutions that has not already been provided for by the State many times over.

The next issue is the current market value of the home and the amount of mortgage debt and judges taking this into consideration, which already happens. The intention is that the judges would be able to consider the current market value in the same way as the Minister stated they do for adjournments and so forth.

The next point is a very substantive one. It was stated that there is a danger that this proposal could very well contravene the Constitution and allow the court to retrospectively and unilaterally rewrite a valid contract. I am not a constitutional lawyer but Professor Gerry Whyte looked at this and did not seem to think it would. I will not read Article 43 out but it basically refers to private property and that when one owns something, one owns it and it cannot be taken from one. Article 43 states: "The State, accordingly, may as occasion requires, delimit by law the exercise of said rights [the right to private property] with a view to reconciling their exercise with the exigencies of the common good." I understand from Professor Whyte that it may not be in contravention and that there is provision in the Constitution for this kind of approach. Obviously, if it was felt that it was constitutionally invalid, we would have to figure that out. The Minister referred to the future value of the property and I take his point. The point on the clairvoyance is well taken and I agree.

There are reasonable answers to many of the questions not in the frame of "and therefore it is correct" but in the frame of "very good input and let us make sure those kinds of things are in there".

The Minister stated that enacting a Bill which requires the courts to consider unnecessary, unworkable and constitutionally flawed factors will not improve the situation. That would be a terrible situation but that is the point of the parliamentary process.

The Minister raised several technical factors which it seems could be addressed. It seems the nub of this legislation could be included in the personal insolvency Bill which will be brought forward. I worked very closely with Ross Maguire SC on this and consulted a lot with New Beginning. As the Minister said, they are doing this work free for some of the most exposed people. It is their opinion, as people working on this every day, that this additional piece matters. They are seeing situations where the bank is saying that no matter what one does, it can take one's family home but this would say that it cannot and that under appropriate circumstances, it does not have an automatic right to one's family home. In their opinion, this would be a really useful addition to the legislation proposed.

Again, I thank the Minister. I would like to sit down in the coming weeks to see if we could find a workable way for this to be incorporated.

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