Harte & Ors v. Governor and Company of the Bank of Ireland

McCord v. Electricity Supply Board [1980] ILRM 153 (SC) on standard-form contracts applied: ‘where a standard-form contract confers a unilateral power upon a dominant contracting party to alter a fundamental feature of the bargain, the court should be slow to infer the existence of such a power from language which is doubtful or ambiguous. … Clear words are required.’ [22] Law Society of Ireland v. Motor Insurers’ Bureau of Ireland [2017] IESC 31 [18] cited.

1. 2.1

   Standard terms akin to bye-laws: Standard contracts with unilateral variation clauses have ‘less affinity with a freely negotiated interpersonal contract than with a set of bye-laws’ [17].

2. 2.2

   Clause 1(j) of the Annex to Directive 93/13/EEC on unfair terms in consumer contracts not applied: ‘in the context of a consumer contract (which this contract is admittedly not), clauses of this kind are viewed with disfavour.’ [20] Invitel Távközlési Zrt. (Case C-472/10, EU:C:2012:242) cited.

3. 2.3

   Possible relevance of competition law to construction: ‘courts have drawn from areas contained in administrative law (and, perhaps, to some extent, from competition law as well) and this in turn has obliged them to view contractual clauses of this kind with some reserve. This is perhaps especially apposite here given that … Bank of Ireland occupied a dominant position in that market.’ [21]

4. 2.4

   No rewriting of bargain: ‘does not mean that sweeping provisions of the kind contained in Clause 5 should be regarded with judicial disfavour on some ex ante basis. … not that they authorise the Court to rewrite the parties’ bargain or to disregard clear contractual language.’ [22]

O’Sullivan v. Health Service Executive [2023] IESC 11 on reasonableness in contract applied: ‘discretionary powers contained in clauses such as Clause 5 must be construed in a manner not dissimilar to similar powers which are governed by administrative law’ [22]. Courts ‘could intervene if this power had been exercised in an arbitrary or manifestly unreasonable way.’ [36] Braganza v. BP Shipping Ltd [2015] UKSC 17 adopted.

1. 3.1

   Reasonableness not in issue: ‘not suggested that the Bank acted in some unreasonable, capricious or irrational fashion … the Bank was at the time effectively locked out of the EURIBOR short term borrowing market.’ [23]

Investors Compensation Scheme Ltd v. West Bromwich Building Society [1997] UKHL 28 on ‘whether … or otherwise’ adopted: ‘reference to changes in market conventions is simply confirmatory and was inserted for greater certainty and for illustrative purposes. … confirmatory and not restrictive.’ [29]

1. 4.1

   Literal reading: ‘The word “whether” is used here as a conjunction which gives a certain example of events … was not intended to confine or limit this discretionary power and, in any event, the use of the term “or otherwise” – essentially a form of adverbial parenthesis governing the verb “to change” – makes it perfectly clear that this subordinate clause should not be regarded as limiting’ [27]. Clause read ‘as if the clause had said that the Bank is in all circumstances entitled to do X, irrespective of whether it is by reason of the happening of event Y or not.’ [28]

2. 4.2

   Ejusdem generis not applied: ‘words “or otherwise” negative the argument that the example of “market conventions” was intended to set up some restricted set of examples such that the ejusdem generis principle could otherwise come into play.’ [29]

‘Market conventions’ interpreted: Phrase ‘does not appear to have been the subject of judicial consideration, whether in this jurisdiction or … any other common law jurisdiction.’ [6] It refers ‘to general market practices and norms which are followed in banking and the financial services industry generally.’ [26]

Pirovic v. Barbieri [2020] NSWSC 1892 on ‘method of calculating interest’ adopted: ‘changing one of the component elements of the interest formula directly comes within the scope of the words “method for calculating interest”’ [30]. Argument ‘that the power to change the method of calculating interest did not extend to replace EURIBOR with its own cost of funds formula is itself contrived and artificial.’ [31]

McDermott and McDermott, Contract Law (Dublin, 2017) at 10.140–10.144 on genuine ambiguity adopted: ‘it would have had to be clear that two alternate interpretations of Clause 5 were both reasonably open.’ [33] No ‘residual ambiguity upon which the contra proferentem principle can properly operate.’ [34]

Harte v. Bank of Ireland [2025] IECA 233 and [2024] IEHC 714 affirmed: Appeal dismissed [38].