Settlement reached in credit union debt case

A SETTLEMENT was reached yesterday in outstanding damages and costs issues between an unemployed mother-of-two and the state over her successful constitutional challenge to the debtors’ prison laws.

Last June, Caroline McCann, 36, of Mullaghmatt, Monaghan, won a High Court test case against a one-month jail sentence imposed on her due to inability to pay arrears on a credit union loan.

Ms Justice Mary Laffoy ruled that a District Court order in November 2005, when she received the jail sentence, was unconstitutional.

The case was adjourned until yesterday to deal with the legal costs and for the judge to assess damages due to Ms McCann.

Following discussions between the sides yesterday, Michael Cush SC, for the state, told Ms Justice Laffoy that the matter need not trouble the court any further and it could be struck out with no order as to costs.

Ms McCann had received the one-month jail sentence over failure to pay a series of instalments of €82 per week to meet a judgment of €18,000 secured by Monaghan Credit Union in 2003. It related to the non payments of a number of loans taken out by her over a period of years. One loan was taken out to meet the funeral expenses for the death of her daughter.

In her High Court action, Ms McCann argued the imprisonment order was unlawful because it deprived her of her liberty merely on the grounds of inability to fulfil a contractual obligation and amounted to a conviction for a criminal offence.

It was also argued that the prison term was disproportionate and was reminiscent of “Victorian era” Britain, before the writings of Charles Dickens prompted a change in laws which saw people jailed over debts.

The state denied her claims.

The court’s finding last June meant Ms McCann did not have to serve the one-month prison term.

In her judgment, Ms Justice Laffoy said there were “fundamental deficiencies” in section 6 of the Enforcement of Court Orders Act 1940, under which she was given the sentence, and which rendered it (the sentence) unconstitutional.

The sanction of imprisonment, envisaged in the law, is aimed at those who will not pay their debts, she said. However it also strikes at those who cannot pay.

The District Court had no jurisdiction to make the 2005 order, the judge said.