Woman wins appeal over Credit Union loan

An unemployed mother of two has won her constitutional challenge against a one-month jail sentence imposed on her due to inability to pay arrears on a Credit Union loan

In proceedings regarded as an important test case the High Court held that a 2005 District Court order jailing Caroline McCann, Mullaghmatt, Co Monaghan 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 was unconstitutional.

The €18,000 judgment was obtained by the Credit Union over the non payments of a number of loans taken out by Ms McCann over a period of years.

One loan was taken out to meet the funeral expenses for the death of Ms McCann's daughter.

The action was against the State, which denied the claims, while Monaghan Credit Union was a notice party.

The Human Rights Commission was involved as an amicus curiae (assistant to the court on legal issues). As a result of the court's finding Ms McCann will not have to serve the prison term.

Today in what was a lengthy and detailed judgment Ms Justice Mary Laffoy said that there were "fundamental deficiencies" in section 6 of the Enforcement of Court Orders Act 1940 which rendered it unconstitutional.

The Judge, in quashing the order to jail Ms McCann, said the District Court had no jurisdiction to make the order in 2005.

The judge adjourned the matter to later this month in order to hear submissions in relation to Ms McCann's claim for damages

Noting that both the state and the Credit Union were agreeable to the 2005 order being quashed the Judge said that she found it inexplicable that the State should "countenance continuation" of a "vague scheme of enforcement of debt" that gives no guidance to any party involved.

Ms Justice Laffoy added that a scheme with safeguards designed to ensure that a District Court judge can make a determination in situations like Ms McCann "which is not bad in law could be substituted for the existing one."

In a statement afterwards Caroline McCann said that she was delighted with the court's decision, and hoped that her case would result in a change in the law.