The Governor and Company of Bank of Ireland v Patrick O'Brien
| Jurisdiction | Ireland |
| Judge | Ms. Justice Máire Whelan |
| Judgment Date | 19 February 2020 |
| Neutral Citation | [2020] IECA 29 |
| Docket Number | Record Number: 2019/13 |
| Court | Court of Appeal (Ireland) |
| Date | 19 February 2020 |
[2020] IECA 29
Baker J.
Whelan J.
McGovern J.
Record Number: 2019/13
THE COURT OF APPEAL
Standing – Preliminary issue – Professional misconduct – Appellant seeking to set aside a judgment obtained in the Central Office against the appellant in default of appearance – Whether the trial judge erroneously concluded that orders were obtained regularly
Facts: The appellant, Mr O’Brien, appealed to the Court of Appeal against the decision of the High Court (Allen J) dated the 7th December, 2018 refusing to exercise its discretion and set aside a judgment obtained in the Central Office against the appellant in default of appearance. The notice of appeal encompassed the following grounds: (i) that the trial judge erred in refusing to set aside the judgment obtained by the respondent, the Governor and Company of Bank of Ireland, in default of the appellant’s appearance and in finding that the speed at which the respondent progressed to judgment was not unfair to the appellant; (ii) that the trial judge erred in failing to consider, or fully consider, the medical evidence of the appellant and its effect on the fairness of the proceedings as well as the reason for why the appellant failed to enter an appearance; (iii) that the trial judge erred in failing to find that the respondent was estopped from arguing that the appellant did not have a good defence on the merits based on the positive actions the appellant had taken with regard to his engagement in the negotiations with the respondent and the fact that the respondent had not alerted the appellant to the fact it was pressing on with its application for a default judgment during same; (iv) that the trial judge erred in finding that the appellant had incorrectly assumed that the respondent was not progressing the proceedings and that this incorrect assumption could not be attributed to actions on the part of the respondent; (v) that the trial judge erred in failing to find that there were special circumstances which required that that the default judgment be set aside in the interests of justice and in failing to consider whether any terms could be imposed that would do justice between the parties; (vi) that the trial judge erred in failing to consider, or fully consider, the grounds of mistake and/or surprise in deciding whether or not to set aside the judgment, despite his statement referring to mistake at para. 15, and erred in failing to apply the principles applicable to an application to set aside a default judgment on the grounds of mistake; (vii) the trial judge erred in failing to consider the fact that the respondent did not notify the appellant that it had taken judgment against him for a period of 4/5 years; (viii) that the trial judge failed to consider the prejudice to each party when making his decision, in particular the absence of prejudice to the respondent if the judgment was set aside.
Held by Whelan J that the trial judge fell into error in a number of respects which cumulatively led to him erroneously concluding that the orders were obtained regularly. Whelan J held that the irregularity stemmed not so much from any non-compliance with the Rules of the Superior Courts, but rather by reason of estoppel arising from the conduct and representations of the respondent which led to the appellant reasonably understanding that if he engaged in a certain course of conduct, the litigation would not be proceeded with, and on which representations he acted; as such therefore, the provisions of O. 27, r. 14(2) of the Rules of the Superior Courts did not require consideration in this case.
Whelan J held that she would allow the appeal and set aside the order of the High Court.
Appeal allowed.
This is an appeal against the decision of the High Court (Allen J.) dated the 7th December, 2018 refusing to exercise its discretion and set aside a judgment obtained in the Central Office against the appellant in default of appearance.
By way of background, ICS Building Society, the respondent's predecessor, advanced sums in the total amount of €1,468,545 pursuant to six loan facility letters to the appellant between the 4th April, 2001 and 1st September, 2008.
As appears from the grounding affidavit of Sean Buckley, a manager in the Arrears Support Unit of the respondent, the Governor and Company of Bank of Ireland, dated 27th February, 2018, pursuant to S.I. No. 257/2014, the Minister for Finance, under the powers granted to him pursuant to s. 33 of the Central Bank Act, 1971, as amended, made an order entitled the Central Bank Act, 1971 (Approval of Scheme of Transfer between ICS Building Society and the Governor and Company of the Bank of Ireland) Order 2014 transferring all of the assets and liabilities of ICS Building Society, including the loans the subject matter of these proceedings, to the respondent with effect from the 1st September, 2014.
For ease of reference, both ICS Building Society and the Governor and Company of Bank of Ireland will hereafter be referred to as the “respondent”.
The repayments due on foot of the loans fell into arrears. On the 12th March, 2013 the respondent issued six separate demand letters seeking payment of the arrears in default of which proceedings would be issued for recovery of the full balance together with interest.
On the 26th March, 2013 this was followed by the issue of a summary summons seeking the amount then outstanding in the sum of €1,373,676.11.
The summons was served on the appellant on the 3rd April, 2013. By email dated the 10th April, 2013 sent to the respondent's former solicitor, the appellant acknowledged receipt of the summons. The email stated “I have an appointment this coming Friday with a solicitor. Can you refrain from any actions until I have had time to meet my solicitor? Thank you.” This email was ignored by the solicitor and no further correspondence between the respondent's solicitor and the appellant took place. The solicitor entered judgment against the appellant in the Central Office of the High Court on the 10th June, 2013 for the sum of €1,373,676.11.
In the appellant's grounding affidavit dated the 11th December, 2017 he avers that his understanding of the summons was that “… it had something to do with the appointment of a Receiver”.
The conduct of the respondent towards the appellant, and in particular the relevance of simultaneous parallel engagement by the respondent's personnel directly with him during the weeks from 10th April, 2013 which culminated in a negotiated agreement concluded in early July 2013, is considered further below. For reasons which remain unexplained on the part of the respondent, the appellant was never informed that judgment had been procured in the Central Office against him and he proceeded with the negotiations and concluded a settlement agreement oblivious to the fact.
The existence of the judgment was first divulged by the respondent to the appellant on 10th July, 2017, a delay of over four years.
It is common case that on the 5th July, 2013, the parties concluded an alternative repayment arrangement in respect of two of the six loans and that this arrangement was adhered to throughout by the appellant until it expired in July 2018, leaving a residual debt owing to the respondent. The said agreement involved the sale of a property in Dublin on which three of the six mortgages were secured. The letter of the 5th July, 2013 referred to the appellant's “… recent proposals requesting discharge of Receiver on the above listed properties” and notified the appellant of a decision by the ICS Building Society's Credit Committee that one of the properties should be sold, and the receiver on the other two discharged upon terms that “fixed repayments at €2,200 per month between both accounts for a period of 5 years.”
The appellant was informed that further paperwork would issue under separate cover outlining the repayment arrangement on those two accounts, and that paperwork was duly issued on the same day. A further significant aspect of the alternative repayment arrangement was the obligation on the part of the appellant, which he performed, to sell a property in Dublin on which three of the six mortgages were secured and the application of the proceeds towards the reduction of the debt.
On the 20th December, 2017 the appellant issued a motion seeking to have the judgment set aside pursuant to the provisions of Order 13, Rule 11 of the Rules of the Superior Courts (“RSC”) and/or the inherent jurisdiction of the court.
In his written judgment the trial judge firstly outlined the background to the application and the arguments put forward by both parties. The appellant had argued that judgment was irregularly obtained, suggesting that this was unfair and unjust, and amounted to sharp practice. He contended that at the time the judgment was marked against him he was not mentally capable of defending the proceedings and was in the process of seeking legal advice.
The appellant further argued, referring to the revised loan agreement concluded on the 5th July, 2013, that he had been in negotiations with the respondent, which negotiations were successfully concluded, and had assumed that the respondent was not progressing the proceedings. In relation to this assumption, the trial judge considered at para. 6 that the appellant: -
“… had assumed that the plaintiff was not progressing the proceedings but does not suggest that that assumption was based on anything done or said by or on behalf of the plaintiff.”
The appellant's case was that he only became aware of the judgment by letter dated the 10th July, 2017 and...
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