Decision DEC-S2013-001
PARTIES
Adrian D'Arcy
(represented by Ms. Mary Honan BL instructed by O'Meara Geraghty, McCourt Solicitors on behalf of the Equality Authority)
v.
Allied Irish Banks p.l.c.
(represented by Ms. Gemma Carroll B.L. instructed by Mr. Joe Donoghue Solicitor)
File Reference: ES/2011/179
Date of Issue: 11th March 2013
Key words
Equal Status Act, 2000 - 2012, Direct discrimination, Section 3(1) - less favourable treatment, Civil Status - 3(2)(b), provision of a service, access to a mortgage - 5(1), Section 3(1)(c) - indirect discrimination, security on family home, Family Home Protection Act 1976.
Delegation under Equal Status Acts, 2000-2008
The complainant referred a complaint to the Director of the Equality Tribunal under the Equal Status Acts on the 9th December 2011. On the 7th of January 2013, in accordance with his powers under section 75 of the Employment Equality Acts and under the Equal Status Acts, the Director delegated the case to me, Marian Duffy, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under Part III of the Equal Status Acts. On this date my investigation commenced. A submission was received from the complainant on the 7th September 2012 and from the respondent on 15th November 2012. As required by Section 25(1) and as part of my investigation, I proceeded to hearing on the on the 13th February 2013 and the final correspondence was received on the 28th February 2013.
1. Dispute
1.1 The dispute concerns a claim by the above named complainant that he was discriminated against on the civil status ground when the above named respondent refused him a mortgage to purchase a family home. The complainant alleges that the respondent discriminated against him in terms of Sections 3(1) and 3(2)(b) of the Equal Status Acts and contrary to Section 5(1) of that Act.
2 Complainant's Case
2.1 The complainant held a mortgage on his family home with the respondent since 2006 and in 2011 he got an offer from the Local authority to purchase his house which he accepted. He made an application with his wife to the respondent for a joint mortgage on a new home in the amount of €85,000 which was rejected due to difficulties concerning his wife's credit rating. In a telephone call with the respondent, he was advised to apply for a mortgage in his own name which he did. He telephoned the respondent some days later and he was informed he could not get a mortgage in his own name because he was married and under family law his wife would have legal rights over the home. In the event of a default on the mortgage and the bank would not be able to repossess it. He then received a letter from the respondent dated the 22nd of June 2011 cancelling his mortgage application. The complainant said that he had already agreed to sell his house at a very good price and he was very anxious to proceed with the purchase of the new house and he approached a mortgage broker to try and secure a loan. He was advised that he would not be able to get a mortgage in his sole name because he was married and that the best option for him was to get an investment mortgage. The complainant said that he eventually got a mortgage from another lender but at a higher rate of interest and for a shorter term.
3. Respondent's Case
3.1 The respondent accepted that the complainant was informed that he could not make a sole application for a mortgage on a family home due to the fact that he was married and the mortgage required by him was for the purchase of a family home. His application was then withdrawn by the respondent and he was informed of this by letter dated 22nd of June 2011. It was further submitted that the application was not assessed by the underwriters so no decision was made on whether he would have been accepted for a mortgage or not regardless of his marital status. The Mortgage Lending Manager stated that there was no policy as regards not providing a mortgage to a married person in their sole name. He said that the respondent operates best practice in relation to mortgages for family homes; that is that there should be a joint application for a mortgage for a family home. The Manager stated that the complainant's application was not assessed because he was told inadvertently that his application could not be processed because it was in his sole name. It was submitted that the mortgage that the complainant obtained with a different bank was an investment mortgage and different terms and conditions apply including higher interest rates.
3.2 The respondent's barrister submitted that the defence of objection justification applies. Section 3(1) provides:
(c) "where an apparently neutral provision puts a person referred to in any paragraph of section 3(2) at a particular disadvantage compared with other persons, unless the provision is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary."
It was submitted on behalf of the respondent that objective justification arises in the context of the Family Home Protection Act 1976 which confers rights on a borrower who is married and also on their spouse. The purpose of the Act is to equally protect the rights of each spouse in relation to the family home and it also confers responsibilities on the respondent when lending money to customers to purchase a family home. The Family Home Protection Act allows for the consent of a spouse in relation to mortgages on a family home and the issue has given rise to significant litigation which has caused difficulties for banks when there is a need to repossess a family home from a borrower who has obtained the mortgage in their sole name. It was submitted that the spouse has an overriding right to stay in the family home in spite of their consent being given or following the successful withdrawal of this consent. Given the difficulties encountered by the Banks the "best practice" is for the Bank to lend to married couples jointly in respect of mortgages secured on the family home. It was further submitted that while the respondent refused the loan application on the basis of the complainant's marital status, the respondent does not prohibit lending to a married person for the purpose of purchasing a family home.
4. Conclusion of Equality Officer
4.1 The facts of this case were not in dispute in this case. The matter I have to decide is whether the refusal to consider the complainant's application for a mortgage was discriminatory treatment on his marital status ground in relation to the provision of a service.
Section 2 of the Equal Status Acts as amended the term 'service" refers to
''service'' means a service or facility of any nature which is available to the public generally or a section of the public and, without prejudice to the generality of the foregoing, includes --
(a) access to and the use of any place,
(b) facilities for --
(i) banking, insurance, grants, loans, credit or financing,
(ii) entertainment, recreation or refreshment,
(iii) cultural activities, or
(iv) transport or travel,
3. -- (1) For the purposes of this Act, discrimination shall be taken to occur --
(a) where a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the grounds specified in subsection (2) (in this Act referred to as the ''discriminatory grounds'') which -- .................
(2) As between any two persons, the discriminatory grounds (and the descriptions of those grounds for the purposes of this Act) are:
(b) that they are of different civil status (the ''civil status ground''),
" 'civil status' means being single, married, separated, divorced, widowed, in a civil partnership within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 or being a former civil partner in a civil partnership that has ended by death or been dissolved;",
4.2 Section 5 refers to the disposal of goods and provisions of services. Section 5(1) states:
"A person shall not discriminate in disposing of goods to the public generally or a section of the public or in providing a service, whether the disposal or provision is for consideration or otherwise and whether the service provided can be availed of only by a section of the public."
The burden of proof is set out in Section 38A which provides:
38A. -- (1)" Where in any proceedings facts are established by or on behalf of a person from which it may be presumed that prohibited conduct has occurred in relation to him or her, it is for the respondent to prove the contrary."
4.3 The complainant's case is that he was discriminated against on the civil status ground in his application for the mortgage. The complainant's representative submitted that the complainant was directly discriminated against on the civil status ground and the defence of objective justification does not apply as this defence only applies to indirect discrimination. It was further submitted that while the respondent stated it does not have a practice of refusing applications from married applicants it has a best practice approach to such applications for mortgages. She further submitted that it was difficult to understand what the difference was between the effect of a policy and the effect of the "best practice" approach and submitted that the respondent's practice operated as a de facto policy of discriminatory treatment of married person in relation to the purchase of a family home. I was referred to an Equality Officer decision in the case of A Separated Complainant v A Hospital DEC-S2010-046 where it was held that the complainant was discriminated against on the marital status ground because as a separated person he was required to go to a solicitor in order to obtain information about his daughter's condition. The Tribunal, in that case, held that the respondent failed to provide evidence of any legitimate reason for the less favourable treatment and I was asked to apply the reasoning of this case to the case in hand.
4.4 The respondent's accepts that the complainant's application for a mortgage was not accepted because he is married and the loan was for a family home. The legal representative submitted that the defence of objective justification applies. It was further submitted that this was not Bank policy and the complainant was inadvertently told that his application would not be considered and the Bank has since this matter arose informed staff to follow the procedures.
4.5 I note that the complainant was told by the respondent he could not have a mortgage on the family home in his own name because he was married. I further note that the respondent accepts applications for a mortgage from a person of a different civil status to that of the complainant, that is persons who are single, divorced, separated or in a civil partnership. I am satisfied therefore that the complainant has established that he was treated less favourably than a person of a different civil status has been or would have been treated in similar circumstances. I find therefore that the complainant has established a prima facie case of discriminatory treatment.
4.6 In rebuttal, the respondent submits that it is best practice of the Bank is to lend jointly to a married couple in respect of a mortgage on a family home having regard to the provisions of the Family Home Protection Act 1976 and the defence of objective justification under Section 3(1) of the ES Acts applies.
Section 3(1) of the Family Home Protection Act provides:
"Where a spouse, without the prior consent in writing of the other spouse, purports to convey any interest in the family home to any person except the other spouse, then, subject to subsections (2) and (3) and section 4, the purported conveyance shall be void".
Section 3(1) of the ES Acts provides:
(c) "where an apparently neutral provision puts a person referred to in any paragraph of section 3(2) at a particular disadvantage compared with other persons, unless the provision is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary."
It is the respondent's case that the above section has given rise to considerable legal challenges in relation to the repossession of a family home by the Banks and given the difficulties encountered in relation to consent of the spouse it is best practice to lend to married couples jointly. Therefore the defence of objective justification in section 3(c) applies in the circumstances.
I note the respondent's submission, but the difficulties encountered by the respondent in relation to the application of the said Section of the Family Home Protection Act do not require the respondent to discriminate on the civil status ground. It is not a defence to discrimination and it cannot be used to justify "best practice" that is not to lend to the complainant in his sole name because he is married. There are other non discriminatory means of protecting the Banks security in respect of the mortgage on a family home.
In considering the provisions of Section 3(1)(c) of the Equal Status Acts, I am of the view that in order for a person to establish a case of indirect discrimination, it is necessary for that person to demonstrate that the apparently neutral provision, which is referred to in this section, puts that person at a particular disadvantage compared to other persons. If the person succeeds in this regard, it is then a matter for the respondent if it is to successfully rebut the allegation of indirect discrimination, to prove that the provision is objectively justified by a legitimate aim.
4.7 I am satisfied that this defence above only applies to indirect discrimination and I am satisfied that this is a case of direct discrimination. I requested a copy of the respondent's policy/procedures and instructions to staff in relation to mortgage applications. The policies were provided on the basis that I did not give them to the complainant or his representative. In the interest of fair procedures, I returned them to the respondent and they were not taken into consideration in this decision. I am satisfied from the evidence that the respondent, in effect, operates a policy of not lending to a married person in their sole name where the mortgage security is the family home. I find therefore, that the respondent has failed to rebut the prima facie case of discriminatory treatment on the civil status ground raised by the complainant when the respondent refused to consider his application in his sole name for a mortgage secured on the family home.
5. Decision
5.1 Accordingly I find that the complainant was discriminated against on the civil status ground pursuant to sections 3(1) and 3(2)(b) of the Equal Status Acts. Under section 27(1) of that Act redress may be ordered where a finding is in favour of the complainant. Section 27(1) provides that:
"the types of redress for which a decision of the Director under section 25 may provide are either or both of the following as may be appropriate in the circumstances:
(a) an order for compensation for the effects of the discrimination;
or
(b) an order that a person or persons specified in the order take a course of action which is so specified."
5.2 Under the above Section the maximum amount of compensation I can award is €6,348.69. In considering the amount of compensation that I should award, I have taken into account the effect of the discrimination had on the complainant and the stress he experience as a result of having his home sold and the necessity to seek a mortgage for his new home from a different bank. Taking this into consideration, I order the respondent to pay to the complainant the sum of €6,300 (six thousand three hundred euro) to compensate him for the effects of the discriminatory treatment experienced by him.
5.3 I am also making an order under section 27(1)(b) of the Acts, and I order the respondent to amend their procedures in order to ensure that applications for mortgages secured on the family home in the sole name of married persons are given appropriate consideration regardless of the marital status of the applicants and in accordance with the provisions of the Equal Status Acts.
___________________
Marian Duffy
Equality Officer
11th March 2013