The Governor and Company of Bank of Ireland v Patrick O'Brien [2020] IECA 29 (19 February 2020)

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JUDGMENT of Ms. Justice Máire Whelan delivered on the 19th day of February 2020

1. 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.

2. 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

3. 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

4. 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”.

5. 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

6. On the 26th March, 2013 this was followed by the issue of a summary summons seeking

7. 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,

8. 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

9. 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

10. The existence of the judgment was first divulged by the respondent to the appellant on

11. 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

12. 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

13. 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.

14. 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

15. 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

“…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

16. The appellant’s case was that he only became aware of the judgment by letter dated the

10th July, 2017 and was never served with an affidavit of debt by the respondent which is

required to be filed under the rules of court before judgment is entered in default of

17. The trial judge referred with approval to the analysis on O. 13, r. 11 and O. 27, r. 14(2)

of the RSC in Delany and McGrath on Civil Procedure (4th edition, 2018) at paras. 4-38 to

4-42 which was agreed by the parties to correctly set out the law. He observed that while

the application had been moved on the basis that the judgment was obtained irregularly,

a search of the court file immediately showed that there was on the file an affidavit of

debt of Lorcan McCluskey sworn on the 10th June, 2013 and accordingly, the application

fell to be determined as an application to set aside a judgment regularly obtained.

“While there is no evidence of any engagement between the defendant and his

solicitor, I am prepared to deal with this application on the basis that the judgment

was obtained by reason of mistake on the part of the defendant as to whether, in

view of the ongoing negotiations, the plaintiff was entitled to, or would, mark

19. The trial judge referred to the summary summons served on the appellant on the 3rd

April, 2013 which required that he should enter an appearance within eight days after

service and warned that failing the entry of an appearance, the respondent might proceed

and judgment be given in his absence, without further notice. The trial judge held that

the appellant was not entitled to impose any additional obligation of notice on the

respondent. The trial judge did not accept the argument of the appellant that his request

to seek time to take legal advice was “somewhat ignored”, finding that the email of 10th

April, 2013 did not ask the respondent “to do any more than stay its hand until the

following Friday or shortly thereafter”. In any event, there was no evidence that the

appellant met with his solicitor as planned but if he did, the solicitor never corresponded

with the respondent’s solicitors and the appellant himself never followed up on his email.

20. The trial judge rejected the contention of the appellant that the respondent moved with

“lightning speed” to mark judgment two months after the summons had been issued,

“…It is perfectly proper in a case in which no appearance is entered, that the

plaintiff may swiftly lodge his judgment papers, and that the application to mark

judgment should be dealt with swiftly and efficiently by the office.”

21. The trial judge was satisfied that on an application of this nature the relevant date is the

date on which judgment was marked – the issue being whether the defendant at that

date could demonstrate that he had a defence to the plaintiff’s claim which had a

reasonable prospect of success. As the alternative repayment arrangement post-dated the

judgment by a number of weeks, it could not form the basis of any defence to the claim.

For this reason, the trial judge also rejected the appellant’s further argument that had he

been given further warning or notice of the respondent’s intention to mark judgment he

would have entered an appearance, triggering the requirement that the respondent

should bring a motion for liberty to enter final judgment, and that any such motion would

have post-dated the alternative repayment arrangement so that the appellant might have

had a defence, or a partial defence, by the time any such motion could have been heard.

22. The notice of appeal encompasses the following grounds: -

i. That the trial judge erred in refusing to set aside the judgment obtained by the

respondent 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. (Ground 3)

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

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; this

assumption was based on the ultimately successful negotiations that were ongoing

at the time judgment was taken and were referred to by the trial judge at para. 15

of his judgment as being the basis of the appellant’s mistaken belief. (Ground 5)

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

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

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

23. The appellant submits that the respondent took judgment against him in a manner that

was unjust and at a pace that was unfair, being only 2 months after the summons was

served upon him, at a time when he was not mentally capable of defending these

proceedings, and in circumstances where he informed the solicitors for the respondent

that he was in the process of seeking legal advice. The appellant notes that email dated

the 14th March, 2013, sent from a case manager with the respondent to the respondent’s

then solicitor, exhibited with the respondent’s first affidavit of 27th February, 2018. The

“I advised him to engage his solicitor regarding the High Court Judgement [sic]

proceedings, but that we will proceed until or unless we receive proposals which will

In any event, I will allow a short time to lapse to allow borrower opportunity to

24. The appellant argues that once he received the request for documentation he did return

these documents but was afforded no such forbearance by the respondent, or their

agent/solicitor, which, he argues, seems to be contrary to the respondent’s instructions to

25. The appellant also contends that the fact that the judgment procured had been concealed

by the respondent during the period of negotiations concerning the alternative repayment

arrangement, which concluded on the 5th July, 2013 is a material factor. This

concealment, the appellant submits, was the reason why he had mistakenly assumed that

the respondent was not progressing the proceedings against him, an assumption which

was reasonable in circumstances where the respondent had not replied to his email of the

10th April, 2013 in which he had sought time to consult with a solicitor. The appellant

submits that this concealment alone was a sufficient ground to warrant the default

judgment being set aside in the interests of justice and that the High Court should have

taken notice of the respondent’s silence during the negotiations as to the fact that it had

26. The appellant, referring to a medical note from his general practitioner dated the 27th

October, 2017 exhibited with his first affidavit of the 11th December, 2017, contends that

he was mentally and psychologically unwell at the time that judgment was taken against

him, suffering from anxiety, depression and severe psychological distress due to financial

pressures, which explains why he failed to deal with these proceedings within the

exceptionally short time-frame afforded to him. He cites Delany and McGrath at para. 4-

“…depression, if sufficiently severe, could give rise to sufficient incapacity for the

court to exercise its discretion in favour of setting aside a default judgment”.

He submits that the trial judge failed to consider the impact of these conditions on him.

27. The appellant argues that the trial judge erred in focusing on whether or not the

respondent had followed the correct procedure in the method by which it took their

default judgment on the 10th June, 2013 rather than considering the balance of justice

between the parties, or the prejudice that would be suffered by either party, as

necessitated by O. 13, r. 11 and the jurisprudence – the requirement that the interests of

justice be considered remains the legal test to be applied and has not been changed to a

test where a good defence to the claim is a prerequisite to have a default judgment set

28. The appellant relies on the decision of Peart J. in Allied Irish Banks Plc v Lyons

[2004] IEHC 129 wherein the breadth of the discretion conferred by O. 13, r. 11 and the

necessity for the Court to seek to achieve justice for both the plaintiff and the defendant

was emphasised, and on the Supreme Court decision in McGuinn v Commissioner of An

Garda Síochána [2011] IESC 33, where it was stated that the courts in the interests of

justice generally lean in favour of a determination of litigation on the merits of the issues.

29. The appellant further submits that the principle in O. 27, r. 14(2) is engaged and ought to

be applied. The appellant contends that in regard to the operation of O. 27, r. 14 (2) the

test is one of “special circumstances” and not one of a “good defence”. The appellant

relies on Fabri-Clad Engineering Ltd v Stuart t/a Stuart Steele Fabrications [2019] IEHC 259

“…where the Court is satisfied that there are special circumstances that caused the

default giving rise to the judgment, O. 27, r. 14(2) makes it very clear that the

Court must, before exercising that discretion, first be satisfied as to the existence of

such special circumstances, and must identify those circumstances, before then

going on to exercise its discretion on the merits of the application.”

The appellant relies on the decision of this Court in EMO Oil Ltd v Willowrock Ltd

“…It is clear that each case is decided upon its own facts and that the court has a

relatively unfettered discretion as to the terms upon which it will set aside any

30. The appellant cites Delany and McGrath at para. 4-51 to support a contention that it is

only after irregularity (O. 13, r. 11) and special circumstances (O. 27, r. 14(2)) have been

considered, and where it is found there are no special circumstances, that it falls to be

“The jurisdiction to set aside a judgment seeks to avoid the injustice that might

otherwise result if a defendant with a good defence on the merits was precluded

from contesting a claim made against him. It follows logically that, absent

exceptional circumstances, the court can only exercise its discretion in favour of

setting aside the default judgment where it is satisfied that the defendant may have

a good defence and, for this reason, an affidavit of merits setting out that defence

is essential. Otherwise, the court will be making an order that is futile and

31. The appellant contends that the trial judge failed to consider whether there were special

circumstances to warrant setting aside the judgment, as he was required to do. The

special circumstances existing in the present case, it was contended, were: -

(iii) the temporally proximate, if not contemporaneous, agreement concluded between

(iv) the considerable prejudice to the appellant, especially in circumstances where the

respondent is now refusing to extend the loan again due to these proceedings;

(v) the fact that respondent would suffer no prejudice if the judgment was set aside;

(vi) the fact that the respondent delayed for over 4 years to disclose the existence of

32. Counsel argued that it was noteworthy that bank statements exhibited by the respondent

show that the respondent was treating this as an unexceptional tracker mortgage within

its mortgage department in the years following actual procurement of judgment in the

Central Office of the High Court, as opposed to an exceptional judgment debt or bad debt

33. The appellant submits that in any event, the fact that the parties concluded an agreement

on the 5th July, 2013 would have given rise to an arguable/bona fide or real chance of

success had a summary judgment hearing taken place. The effect of the 5th July, 2013

compromise was that the respondent would have been unable to argue that the debt was

in default or remained due and owing. He contends that the trial judge was incorrect in

finding that the relevant date is the date on which judgment was marked, it being

submitted that the relevant date is the date on which the court considers the matter, in

this case the date that the motion was issued, the 20th December, 2017 or, in the

alternative, the relevant date should have been the hypothetical summary judgment

34. The appellant argues that the trial judge erred in not considering the prejudice to each

side and did not “weigh the consequences for both parties of granting or refusing the

relief sought” (EMO Oil Ltd v Willowrock Ltd at para. 30) when making his decision despite

the issue of prejudice being expressly referred to at para. 11(7) of the appellant’s second

35. The appellant, relying on McGrath v Godfrey [2016] IECA 178 and Fox v Taher (High

Court, 24th January, 1996) submits that mistake grounds a basis to set aside a default

judgment and that the trial judge erred in failing to consider that the judgment was

entered as a result of a mistake on the part of the appellant, despite making a reference

to mistake at para. 15 of his judgment. The appellant contends that if the trial judge

considered that the judgment was marked as a result of a mistake on the part of the

36. The appellant further submits that the respondent will suffer no prejudice as a result of

being required to follow the standard procedure to take a judgment as set out in the

Rules of Court nor does the respondent set out any prejudice on affidavit – setting aside

the judgment will do nothing to undermine their loans or their security.

37. The respondent contends that the appellant selectively quotes part of para. 4-40 of

Delany and McGrath to support his submission. It asserts that the remainder of para. 4-

40 and its succeeding paragraph, as set out in full in the judgment under appeal, clearly

indicates that the legal test as to whether the court should grant an application to set

aside a judgment regularly obtained includes, as a prerequisite, consideration of the

38. The respondent relies on the decision of this Court in McGrath v Godfrey wherein Irvine J.

suggested at para. 44 that where a judgment is obtained regularly: -

“…the onus was on the defendant to demonstrate the existence of a defence which

had a real prospect of success and thereafter to establish the existence of some

special circumstances such that, having weighed the interests of both parties,

would have warranted the trial judge setting aside the judgment...”

39. The respondent contends that the decisions of Fabri-Clad Engineering and EMO Oil v

Willowrock Ltd do not support the appellant’s proposition that the sole test to be applied

is one of “special circumstances” and not one of a “good defence”.

40. In Fabri-Clad Engineering, Binchy J. considered in light of the jurisprudence that the test

to be applied is whether a defendant had a real or reasonable prospect of success. Binchy

J. also referred to McGrath v Godfrey, finding at para. 27 that the court must be satisfied

that there were special circumstances to grant an application to set aside a judgment

regularly obtained and that this would be the case whether such consideration was given

before or after a determination of whether the applicant might have a defence to the

proceedings. Binchy J. refused to set aside the judgment despite finding that the

applicant would have had a reasonable prospect of defending the proceedings as he had

untruthfully averred on affidavit that the only reason judgment was obtained against him

was because he had not been served with the proceedings and also noted that it was

significant that, “faced with the judgment, his response was to make proposals for

payment in a manner that suggested he accepted the debt was due by him to the

41. In EMO Oil v Willowrock Ltd, Irvine J. at para. 28 found that where a judgment is

obtained in a regular manner, the burden of proof is on the defendant to establish a bona

fide defence to the proceedings and that, having regard to all of the relevant

circumstances and the interests of both parties, the interests of justice would favour the

42. The respondent submits that the alternative repayment arrangement post-dated the

judgment and therefore could not possibly have given rise to an arguable defence open to

the appellant on the date that judgment was marked. Further, in any event, the

agreement amounts in its essence to no more than an agreement to pay what was

already due and is unenforceable as constituting a variation of the original loan

agreements as it was not accompanied by good consideration. To support this

proposition, the respondent relies on the rule in Pinnel’s case [1602] 5 Co Rep 116A as

upheld in Foakes v Beer [1884] UKHL 1, and followed in this jurisdiction in Truck &

Machinery Sales Ltd v Marubeni Komatsu Ltd [1996] 1 IR 12, The Barge Inn Limited v

Quinn Hospitality Ireland Operations 3 Limited [2013] IEHC 387 and Harrahill v Swaine

[2015] IECA 26. In The Barge Inn Limited, Laffoy J. stated at para. 62 that: -

“…the introduction of a new element into the relationship of the debtor and

creditor, such as the collateral advantage to the creditor, may remove the

43. The respondent submits that the appellant has not asserted, nor was there, any new

element introduced into the relationship of debtor and creditor by the alternative

repayment agreement nor is it asserted that any such agreement conferred any collateral

advantage to the respondent and thus, that there was no enforceable agreement to vary

the terms of the loan agreements at issue herein such as might amount to even a partial

44. In response to the appellant’s submission that special circumstances existed in the

present case to warrant setting aside the judgment, the respondent argues that: -

(i) there was nothing unusual in the speed with which the respondent moved to mark

judgment in circumstances where no appearance had been entered nor any

indication had been given by the appellant that he was contesting the claim;

(ii) that the medical note from the appellant’s general practitioner does not speak to

any exceptional circumstance that a person in the appellant’s precarious financial

(iii) it is not exceptional or unusual for a judgment creditor to enter into an agreement

45. The respondent contends that the question of the balance of prejudice is only a matter

that should be considered after establishing that (a) the defendant has demonstrated the

existence of a defence which had a real prospect of success, and, thereafter (b)

established the existence of some special circumstances such that, having weighed the

interests of both parties, would have warranted the trial judge setting aside the

judgment. The respondent submits that there was no evidence before the trial judge as to

the level to which the respondent was secured or that the respondent was refusing to

extend the appellant’s loans and the matters cannot therefore be a consideration in this

appeal, notwithstanding the fact that any such refusal in a situation of admitted ongoing

46. The respondent accepts that mistake can be accepted as a valid ground to set aside a

judgment but that in the current case, the appellant’s misunderstanding as to the onus on

him is not in itself a sufficient ground to have a default judgment set aside. Further,

where there is no defence to the respondent’s claim, the appellant would be asking the

court to make an order that is futile, and a waste of court time.

47. The respondent submits that since the appellant has failed to meet the first step of the

legal test, the issue of prejudice does not arise but in any event, that the respondent

would suffer a severe prejudice in terms of wasted legal costs and time if it were forced to

relitigate a matter in which the debt is admitted on affidavit. There is no evidence that the

respondent is fully secured and as these proceedings arise out of circumstance in which

the appellant appears unable to pay his admitted debts as they fall due, an award of

costs, if the respondent were ultimately successful following the re-litigation of the

48. The respondent submits that the trial judge took into account all significant issues raised

by the appellant and that contrary to what is asserted by the appellant, the trial judge

was prepared, notwithstanding the absence of any evidence that the appellant ever

engaged with his solicitor, to deal with the application on the basis that the judgment was

obtained by reason of mistake on the part of the appellant. However, the trial judge found

that no possible defence had been made out and the test had therefore not been met and

“Where final judgment is entered pursuant to any of the preceding rules of this

Order, it shall be lawful for the Court to set aside or vary such judgment upon such

“Any judgment by default, whether under this Order or any other of these Rules,

may be set aside by the Court upon such terms as to costs or otherwise as the

Court may think fit, if the Court is satisfied that at the time of the default special

circumstances (to be recited in the order) existed which explain and justify the

failure, and where an action has been set down under rule 8, such setting down

may be dealt with by the Court in the same way as if a judgment by default had

50. A judgment is a solemn order of the court and in normal circumstances is final subject to

appeal. A plaintiff derives substantial rights of property from a judgment. The first issue

to be determined is whether the judgment marked in the Central Office by the respondent

on the 10th June, 2013 was obtained regularly or irregularly. It is apparent from the

authorities cited that a primary consideration behind that distinction is that a party who

suffers an irregular judgment should not be placed in a worse position by reason of the

fact that a judgment was irregularly obtained than he would have been had no judgment

51. On the other hand, a party against whom a regular judgment has been obtained, who

seeks to have the judgment set aside in order to defend the proceedings, is in a different

position and must meet certain criteria, such as, for example, establishing an arguable

defence, before the court will accede to an application to set aside the judgment. The

underlying principle governing the distinction is that a party who obtains an irregular

judgment should not benefit by it and a party who suffers an irregular judgment entered

52. In general, where judgment is obtained irregularly the court will set aside the judgment

without enquiring into the merits of any proposed defence. As Clarke J. (as he then was)

held in O’Tuama and Ors v Casey and Casey [2008] IEHC 49 at para. 2.1: -

“The logic of this position is that the judgment should not have been obtained in

the first place and a plaintiff who has obtained judgment irregularly should not have

any benefit by reason of having obtained judgment in that fashion. On the other

hand, where judgment is obtained regularly, the court may, nonetheless, be

persuaded to set aside the judgment so as to permit the defendant to defend the

proceedings but will only do so after considering the possible merits of the defence

Clarke J. considered on the facts before him that the circumstances leading to the

procurement of judgment were somewhat unusual but were more analogous to a regular

than an irregular situation. He was satisfied that the defendant was well aware that the

“They must also have been well aware that without the agreement of the plaintiffs

it could not be assumed that an extension of time for the filing of an appearance

53. Authorities such as O’Tuama illustrate that in reaching a conclusion as to whether a

judgment was obtained regularly or irregularly the totality of the circumstances

surrounding its procurement are to be considered to properly determine where along the

54. Such applications are substantially fact dependent. The conduct of the parties and events

leading up to the procuring of the judgment which is sought to be set aside are highly

material. To a limited extent, depending on the circumstances of the case, the conduct of

the parties in the time immediately after the obtaining of the judgment may be

considered relevant. As was observed by Lord Atkin in Evans v Bartlam [1937] AC 473 at

p. 478 there is wide discretion vested in a judge in an appropriate case to set aside a

“The Courts… have laid down for themselves rules to guide them in the normal

exercise of their discretion. One is that where the judgment was obtained regularly

there must be an affidavit of merits, meaning that the applicant must produce to

the Court evidence that he has a prima facie defence. It was suggested in

argument that there is another rule that the applicant must satisfy the Court that

there is a reasonable explanation why judgment was allowed to go by default, such

as mistake, accident, fraud or the like. I do not think any such rule exists, though

obviously the reason, if any, for allowing judgment and thereafter applying to set it

aside is one of the matters to which the Court will have regard in exercising its

discretion. If there were a rigid rule that no one could have a default judgment set

aside who knew at the time and intended that there should be a judgment signed,

the two rules would be deprived of most of their efficacy. The principle obviously is

that unless and until the court has pronounced a judgment upon the merits or by

consent, it is to have the power to revoke the expression of its coercive power

where that has only been obtained by a failure to follow any of the rules of

procedure. But in any case in my opinion the Court does not, and I doubt whether it

55. The decision in Alpine Bulk Transport Co Inc. v Saudi Eagle Shipping Co Inc. (Saudi

Ambassador, Saudi Eagle) [1986] 2 Lloyd's Rep 221 and in particular the principles

enunciated therein are of assistance in carrying out the balancing exercise necessary to

determine whether a judgment was in all the circumstances regularly or irregularly

(1) The rules give to the judge a discretionary power to set aside a default judgment

which is in terms “unconditional” and a court should not “lay down rigid rules which

(2) The purpose of this discretionary power is to avoid the injustice which might be

(3) The primary consideration is whether the defendant “has merits to which the court

should pay heed” not as a rule of law but as a matter of common sense, since there

is no point in setting aside a judgment if the defendant has no defence and if he

(4) As a matter of common sense, though not making it a condition precedent, the

court will take into account the explanation as to how it came about that the

defendant found himself bound by a judgment regularly obtained to which he could

56. The principles in Saudi Eagle were considered by Peart J. in Allied Irish Banks plc v Lyons

[2004] IEHC 129, a decision which emphasised the breadth of the discretion conferred by

“Clearly a wide discretion is given to the Court in its task of achieving justice

between the parties, but the interests of both parties must be taken into account in

the weighing exercise undertaken by the Court in considering the interest of each

party, and not simply the hardship and distress pleaded on behalf of the applicant

The decision establishes the extent of the burden of proof which rests on a defendant who

seeks to set aside a judgment which was obtained regularly. Peart J. adopted the

principles set out by Sir Roger Ormrod in Saudi Eagle which established that a defendant

needs to demonstrate more than “an arguable case” and must show that the proposed

defence has “a real chance of success”. Further, as was observed by Peart J. in carrying

out the balancing exercise to arrive at a just determination the court must consider and

weigh in the balance the consequences for both parties of granting or refusing the reliefs

sought. That approach has been approved by this Court in a number of decisions

including Emo Oil Limited v Willowrock Ltd. The appellant contends that the judgment was

irregularly marked in the Central Office on the 10th June, 2013 and relies on several

57. The appellant contends that he was psychologically and mentally unwell at the time

judgment was taken and that the trial judge failed to consider the impact of these serious

medical issues on the appellant. To that end a medical report is exhibited indicating

treatment and psychiatric intervention for management of his condition with effect from

November 2012. On the other hand, all litigation is stressful, none more so than that

arising from financial pressures. Whilst there may well be circumstances where ill health

substantially and significantly impairs the capacity of an individual to engage with

litigation to a degree where a court is satisfied that it is in the interests of justice that an

order obtained in default ought to be set aside; this is not such a case. The evidence does

not support the appellant’s contention at para. 3 of his affidavit sworn on the 11th

December, 2017 that he was not mentally capable of defending the proceedings.

58. Whilst an appellate court enjoys the jurisdiction to overturn an order made by a High

Court judge in the exercise of his or her discretion, it should nonetheless attach significant

weight to the conclusions reached by the judge at first instance. It would be an incorrect

approach for this Court to undertake a full reconsideration of all matters heard in the High

Court and then proceed to substitute its own views for those of the High Court judge.

Accordingly, it is proposed in this appeal to assess whether or not the approach and

conclusions of the trial judge were reasonable and correct in light of the evidence which

59. The right of access to the courts was identified by Kenny J. in Macauley v Minister for

Posts and Telegraphs [1966] IR 345 as “…a necessary inference from Article 34, sect. 3,

sub-sect. 1, of the Constitution…” Denning L.J. in R v Appeal Committee of County of

London Quarter Sessions; Ex parte Rossi [1956] 1 QB 682 at p. 691 observed:

“… it is a fundamental principle of our law that no one is to be … made liable by an

order of any tribunal unless he has been given fair notice of the proceedings so as

60. The summons issued on the 26th March, 2013 and was served on the 3rd April, 2013.

Prior to that there had been letters of demand dated the 12th March, 2013 in respect of

each of the six loans. The appellant communicated by email with the solicitor on the 10th

April, 2013, approximately one week following service. This case is characterised by a

number of unusual features; the respondent was communicating and engaging directly

with the appellant, including by telephone, notwithstanding that it had retained a solicitor

and this approach continued after proceedings were served on the appellant. Tellingly, the

solicitor never communicated directly with the appellant and failed to respond to email

communication from him. At a time when the appellant was actively negotiating directly

with the respondent in accordance with their requirements, the solicitor obtained

judgment in the Central Office. The respondent and its solicitor appear to have been

operating in strategic bifurcation in their dealings with the appellant who was throughout

a litigant in person. It is noteworthy that both the respondent and its solicitor refrained

from divulging the existence of the judgment or serving the appellant with a copy of

same. The negotiations continued on after the entry of judgment on 10th June, 2013

culminating shortly thereafter in a concluded settlement which encompassed the same

debts which were the subject matter of the proceedings. The appellant contends that he

understood the negotiations in question were for the purposes of compromising the

litigation and that the settlement of 5th July, 2013 effected such a compromise. The

appellant was kept in the dark and remained ignorant of the existence of the judgment for

over 4 years. Any assessment of the bona fides of the respondent is freighted by that

61. The respondent seeks to rely on email communication of 14th March, 2013 between an

official of its predecessor and the solicitor who acted on its behalf and who procured

judgment in the Central Office on the 10th June, 2013. This communication took place

nine days prior to the institution of proceedings. Referring to the appellant it states: -

“I have spoken with him in the last few minutes. I advised that if he has any

proposals these must be put to the receiver as the properties are all in receivership.

… As discussed with you this morning, I will forward the borrower a letter with a

request for documentation (which will be required by the receiver if he wishes to

provide proposals) and he will need to return this to them within a week. However,

we will not be putting a stay on proceedings pending receipt of this. The borrower

has been already afforded numerous opportunities to provide this information which

he has provided to do resulting in the appointment of the receiver. In any event, I

will allow a short time to lapse to allow borrower opportunity to return the

documents. I will also advise Brid Daly in Grant Thornton who is managing this

62. It is evident from this email that the bank official, Ms. Quinn, was in direct communication

with the appellant. It appears likely that this communication stemmed from the letters of

demand received in respect of the six loans. The email makes reference to the

receivership, a matter to which I will return presently. The respondent has not disclosed

the contemporaneous record or note of the conversation held between Ms. Quinn and the

appellant. However, it must be inferred that this email is reflective of what transpired

directly between Ms. Quinn and the appellant in the course of the phone call earlier on the

(a) An intention on the part of the respondent to institute proceedings against the

(b) An intention to forward to the appellant a letter with a request for documentation to

(d) That the proceedings would not be stayed until receipt of the documentation.

(e) That the proceedings would be stayed on receipt of the requested documentation.

(f) The respondent would proceed with High Court proceedings then in contemplation

“Until or unless we receive proposals which will otherwise be agreed to by the

I am satisfied that there was evidence before the High Court that the respondent did

leave the appellant with the clear impression that, so long as he engaged in negotiations

on the respondent’s terms and provided it with the requested documentation regarding

the debts, the litigation which was shortly to issue and be served would not proceed to

Conduct of parties between the date of service of the proceedings on the 10th April,

2013 and the date of the default judgment obtained in the Central Office on the 10th

63. It is common case that a significant process of negotiation took place from April 2013

onwards. Paragraph 8 of the affidavit of the respondent sworn by Sean Buckley states: -

“It is again not in dispute that following the commencement of proceedings without

prejudice negotiations were entered into as between the Defendant and the

Bearing in mind the email of the 14th March, 2013 which expressly articulates the

“I advised him… that we will proceed until or unless we receive proposals which will

It can reasonably be inferred from the email of the 14th March, 2013, in the absence of

evidence to the contrary, that Ms. Quinn did communicate with the appellant seeking

documentation to be provided within a week. “… I will forward the borrower a letter with a

request for documentation (which will be required by the receiver if he wishes to provide

proposals) and he will need to return this to them within a week.”

64. There is no evidence forthcoming for the respondent to suggest that the appellant failed

to meet the requirements of the respondent and its receiver or failed to supply requested

documents of the kind and in the manner and within the time-frame specified by the

65. The significance of silence always falls to be considered in the context in which it occurs.

In the instant case I am satisfied that the surrounding facts as outlined above and which

characterised the course of dealings between the respondent directly and the appellant

did give rise to a reasonable expectation in all the circumstances of this case that if the

respondent were to take the view at any time in the negotiations that his co-operation fell

66. The settlement of 5th July, 2013 is only relevant insofar as it self-evidently stems from

the negotiations referred to and contemplated in the respondent’s email to its own

solicitor dated the 14th March, 2013. The said email evidences the representations made

earlier that day to the appellant. The respondent offered no evidence that at any time he

failed to comply with their requirements. The continuation of the negotiations after the

10th June, 2013 in the circumstances are consistent only with the appellant remaining

compliant with all the respondent’s requirements including providing all the requested

documentation and the provision of proposals. The failure of the respondent to indicate

that the proposals were not acceptable to it or to terminate the negotiations on that or

any basis results, on the facts of this case, in the respondent now being estopped by its

conduct from being entitled to rely on its strict legal entitlement to mark judgment in

67. The revised loan agreements of 5th July, 2013 are inconsistent with the summary

judgment. The terms of the revised loan agreements were performed by the appellant

over its term in accordance with its tenor. They were concluded over a period of weeks

from April 2013 when not alone had the appellant submitted proposals requesting the

discharge of a receiver over properties at Eglinton Terrace in Cork and Churchtown Road,

Dublin and Dunmanway in County Cork, but his proposals had been heard and considered

by the Credit Committee of ICS Building Society which proceeded to make decisions

68. The respondent proceeded to mark judgment in the Central Office against a background

where it had led the appellant to understand, and he did reasonably believe, that

provided he engaged with it and met its requirements such judgment would not proceed.

The respondent never disabused the appellant of that understanding nor did it ever

suggest that the proposals under negotiation would not result in the proceedings being

69. The agreement was entered into by the parties on the 5th July, 2013. The first agreement

of that date pertained to mortgage account ending “495”. The agreement expressly

provides that the interest on the loan would be a standard variable rate of 4.49% per

annum for the duration of the loan. This is fundamentally inconsistent with the judgment

marked in the Central Office in respect of which court rate of interest would operate at

8% per annum from the date of judgment until the 1st January, 2017 when the rate of

interest was varied to 2%. The agreement varied the maturity date of the loan to the 5th

July, 2018 and was subject to review after three years. The second agreement in

substantially similar terms was concluded in respect of loan ending “336” and the security

property was Eglinton Terrace, Western Road, Cork. The sum due on foot of the said loan

as specified in the summary summons was €670,027.09. The agreement acknowledges

an interest rate of 2.25% per annum. It was operative for a period of five years,

reviewable after three years. With regard to loan ending “509” the agreement of the 5th

July required disposition of the secured property at Lower Churchtown Road in Dublin.

70. I am satisfied 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.

71. Insofar as he concluded that the appellant did not give any basis for his belief that the

summons “… had something to do with the appointment of a Receiver…” I am satisfied

that there was clear evidence before the court that such a belief was reasonably held by

the appellant. The email of the 14th March, 2013 from Maria Quinn to the respondent’s

solicitor makes several references to a receiver. It is evident that she had previously had

a conversation with the appellant concerning the receiver and the receivership: “I advised

him that if he has any proposals these must be put to the receiver as the properties are

all in receivership.” Ms. Quinn was the conduit between the appellant and Brid Daly of

Grant Thornton. As the affidavit sworn on behalf of the respondent demonstrates, once

the proceedings were served on the appellant the parties actively engaged in negotiations

and it is very evident that the discharge of the receivership was integral to same. – “I

refer to your recent proposals requesting discharge of receiver over the above listed

properties…” Therefore, I am satisfied that a clear basis for the appellant’s

misunderstanding is identified. It was induced by the respondent.

Appellant’s assumption that the respondent was not progressing the proceedings

72. Whilst the trial judge observed regarding the appellant that – “He had assumed that the

plaintiff was not progressing the proceedings but does not suggest that assumption was

based on anything done or said by or on behalf of the plaintiff” (para. 6). I am satisfied,

on the contrary, that three key elements in the evidence point in the opposite direction: -

i. The references contained in the email of Ms. Quinn of the 14th March, 2013

addressed to the solicitor who then acted for the respondent as set out above. This

pre-dated the institution and service of the proceedings. Since the respondent has

not disclosed the contemporaneous record of the telephone conversation held with

the appellant on the said date, this offers the best evidence of what transpired on

that date. Ms. Quinn states “I advised that if he has any proposals these must be

put to the receiver…I advised him to engage a solicitor regarding the High Court

Judgement [sic] proceedings but that we will proceed until or unless we receive

proposals which will otherwise be agreed to by the Society” (emphasis added).

ii. The email further goes on to make clear that the appellant was to receive a letter

with a request for certain unspecified documentation “… and he will need to return

this…within a week…However, we will not be putting a stay on proceedings pending

receipt of this” (emphasis added). Significantly, there is no evidence that the

respondent ever suggested to the appellant that there was non-compliance with

their requirements such as would warrant it carrying through on their threat that it

would “…not be putting a stay on proceedings pending receipt of this…”

iii. We have clear evidence in the affidavit sworn on behalf of the respondent in this

application that following commencement of proceedings that “Without prejudice

negotiations were entered into between the defendant and the plaintiff”. It can

reasonably be inferred that the respondent dealt with the appellant in the months

of April, May and June 2013 consistent with the representations it made on 14th

March, 2013 such as to positively lead him to understand that the contemplated

litigation was effectively being stayed and the respondent would not proceed to

judgment provided he furnished the documentation sought and put forward

acceptable proposals acceptable to the respondent and the receiver – which he

Respondent’s negotiations with the appellant and agreement of the 5th July, 2013

73. The respondent’s course of direct engagement with the appellant was governed by the

terms agreed with him on 14th March, 2013 and precluded it from inconsistently

instructing their solicitor to secure summary judgment in default of appearance when it

had effectively agreed to stay the proceedings on certain terms which it never suggested

the appellant had not complied with. It may well be that through inadvertence or

otherwise that a misunderstanding or misapprehension arose between the respondent

and their solicitors. The consequences of that cannot be visited on the appellant.

74. The agreement concluded on the 5th July, 2013 omits all reference to the judgment

procured three weeks before. The compromise embodied in the said agreement cannot be

characterised as confined to two of the loan agreements only as the respondent argued.

It involved the sale and disposition of one property in Dublin over which three mortgages

were secured. One mortgage was redeemed; another was partly redeemed on foot of the

subsequent sale. The residual debt was cross-collateralised with a property at

Dunmanway. A receiver was discharged in respect of two properties at Eglinton Terrace,

Western Road in Cork and Dunmanway in Cork on terms for a period of five years. Thus,

75. The process of negotiations engaged in from April 2013 onwards, culminating in the

agreement concluded in early July, is consistent with an understanding on the part of the

appellant that the respondent would be conditionally staying the proceedings and this was

based on the representations of Ms. Quinn and the appellant together with the

subsequent course of negotiations between the parties which were actively ongoing on

76. The agreement of the 5th July, 2013 corroborates the appellant’s position that he had

actively engaged in a process of negotiation in the preceding months following service of

the proceedings, a position which is clearly acknowledged in the respondent’s own

affidavit as referenced above at para. 8. Further, that the providing of requisite

documentation as intended to be requested in writing by the respondent and the making

of proposals of an acceptable nature by the appellant would lead to a resolution of the

intended litigation is implicit from the substance of the email of the 14th March, 2013

when considered in its totality and is corroborated by the subsequent course of dealings

between the parties culminating in the agreements concluded on the 5th of July, 2013.

77. The fact that the appellant never further adverted to the litigation is consistent only with

him having been led to believe, arising from the conversation he had with Maria Quinn on

the 14th March, 2013 which she subsequently outlined in an email to the respondent’s

own solicitor at 11.13am the same day that whilst High Court proceedings were intended

to be instituted by the respondent, they would only proceed “… until or unless we receive

78. Whilst the appellant asserted that there had been no affidavit of debt sworn in connection

with obtaining judgment he was clearly mistaken in that belief and whilst there was no

necessity to serve him with an affidavit of debt same was filed in the Central Office, being

the affidavit of Lorcan McCluskey sworn 10th June, 2013. I am satisfied that merely

because an affidavit of debt was filed in court same does not, in and of itself, result in the

judgment being regularly obtained. Whilst the trial judge attaches weight to the email of

the 10th April, 2013, in my view, of significantly greater import is the conversation

between Ms. Quinn and the appellant evidenced in the email of the 14th March, 2013 to

79. The trial judge was correct in observing that it is proper in a case in which no appearance

is entered that a plaintiff may swiftly lodge his judgment papers and that an application to

mark judgment should be dealt with swiftly and efficiently by the Central Office (para. 14

of the judgment). However, this principle requires to be modified in circumstances where,

as here, in direct engagement between the respondent and the borrower, by conduct and

representations, the bank reasonably causes the borrower to understand and believe that

if certain steps and measures are undertaken by him judgment will not be proceeded

with. The facts disclose such a state of affairs in this instance.

80. Events that occurred after the marking of judgment on the 10th June, 2013 are relevant

only to the extent that they tend to corroborate one or other of the competing versions of

events being advanced by the parties. The inadvertent failure of the respondent to ever

serve a copy of the judgment or even disclose its existence for over four years is unusual

81. By letter of the 10th July, 2017 the respondent wrote in respect of one of the mortgages

claiming recovery of the sum due stated to be €1,376,462.77 and further claiming

interest at the rate of 8% simple interest per annum up to the 31st December, 2016 and

2% interest from the 1st January, 2017. The conduct of the respondent in omitting to

disclose the very existence of the judgment for such an extensive period of time to the

judgment debtor calls for an explanation and none is forthcoming. I am satisfied that

contrary to the conclusions in para. 15 of the judgment the appellant had been led to

understand that if the negotiations were proactively pursued the respondent would stay

the proceedings and not proceed to judgment. It was accepted that for the five years of

the revised loan agreements 2013- 2018 the appellant had paid and discharged the

agreed amounts, and that the other terms of the agreement executed on the 5th July,

82. With regard to the judge’s conclusion that the appellant had a possible defence at being

removed from its tracker interest rate and forced onto a less favourable interest rate, in

fact the marking of judgment in the Central Office resulted in interest operating at the

court rate of interest. Section 50(2) of the Courts and Court Officers Act, 1995 provides

“Where, in the case of a claim in the High Court for a debt or a liquidated sum, an

application is made for judgement in default of appearance, the Registrar of the

Central Office may exercise the discretion to award interest conferred on a judge by

83. Although subsequent documentation furnished to the appellant in 2018 indicates that all

of the mortgages were maintained on tracker rates this is fundamentally at variance with

the letter Exhibit POB2 referred to in the affidavit sworn by the appellant on the 11th

December, 2017 which expressly claims interest on the entire sum of the judgment at

court rate of interest being 8%, which was varied by statutory instrument to 2% with

effect from the 1st January, 2017. It appears two inconsistent positions are being

advanced by the respondent. One embodied in their letter of the 10th July, 2017 suggests

that the appellant has indeed been removed from his tracker interest rates and forced

onto a far less favourable rate which, in the first instance, was at 8%. That suggestion

was refuted in the affidavit of Sean Buckley, and statements from the respondent were

exhibited, identifying lower rates of interest. This gesture suggests fundamental doubts

on the part of the respondent that it was entitled to rely on the judgment obtained in the

first place which could only have flown from a consideration, properly held, that there

84. The evidence before the court adequately explains the failure on the part of the appellant

to enter an appearance in all the circumstances of this case. Notwithstanding that there

have been substantial delays, it is important to have regard to the fact that the

respondent refrained for over four years from disclosing the existence of the judgment in

85. I am satisfied that in their totality, all of the factors outlined above result in the

circumstances in which judgment was obtained in the Central Office on 10th June, 2013,

being closer to the irregular end of the spectrum, and as such it is appropriate to set

aside the judgment ex debito justitiae. As is succinctly stated in Delany & McGrath on

“…where there was some irregularity in the proceedings or the procedure by which

the judgment which is sought to set aside or vary was obtained in which case the

defendant will be entitled to have the judgment set aside ex debito justitiae.”

In the instant case, the irregularity stems 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

86. As such therefore, the provisions of O. 27, r. 14(2) do not require to be considered in the

87. For all the above reasons I would allow the appeal and set aside the order of the High

Court.

Result: Allow the appeal and set aside the order of the High Court

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You are here: BAILII >> Databases >> Irish Court of Appeal >> The Governor and Company of Bank of Ireland v Patrick O'Brien [2020] IECA 29 (19 February 2020) URL: http://www.bailii.org/ie/cases/IECA/2020/2020IECA29.html Cite as: [2020] IECA 29

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