Appeals court sets aside €1.37m judgment entered by Bank of Ireland

The Court of Appeal has set aside, "as a matter of right", a €1.37 million judgment entered by Bank of Ireland against a man just weeks before it concluded an alternative repayment agreement with him for some loans.

The bank had not explained its inadvertent and “unusual” failure over some four years to serve the judgment on Patrick O’Brien or “even disclose its existence” to him, the three-judge court noted.

Giving the court’s judgment granting Mr O’Brien’s appeal over the judgment order, Ms Justice Máire Whelan found the High Court had erred in concluding the order was obtained “regularly”.

A totality of factors resulted in the circumstances in which the judgment was obtained being “closer to the irregular end of the spectrum”, and the judgment should be set aside “ex debito justitiae” (as a matter of right), she said.

The irregularity arose as a result of estoppel (precludes a person from alleging facts that are contrary to previous claims or actions) arising from conduct or representations of the bank that led to Mr O’Brien reasonably understanding, if he engaged in a certain course of conduct, judgment would not be proceeded with and he had acted on those representations, she held.

The judgment was entered by the bank, in default of appearance by Mr O’Brien, in the High Court central office on June 10th, 2013. Mr O’Brien, with an address at “Simla”, Curragh Road, Kildare town, was then negotiating with the bank about a repayment agreement, which was concluded in early July 2013 and complied with by him.

‘Sharp practice’

Having been told of the judgment by the bank in July 2017 of the judgment, he took proceedings in late 2017 to have it set aside, arguing it was irregularly obtained and amounted to “sharp practice”.

He appealed after the High Court dismissed his case and, on Wednesday, the appeals court allowed the appeal.

The case arose from loans made by ICS Building Society to Mr O’Brien between 2001 and 2008 and later transferred to Bank of Ireland. Due to arrears on repayments, the bank issued letters on March 12th, 2013, demanding repayment in default of which proceedings would be issued for recovery of the full balance, plus interest.

A summary summons seeking the then outstanding sum of €1.37 million was served on Mr O’Brien on April 3rd, 2013. He emailed the bank’s then solicitor a week later asking it to refrain from any action until he had met his solicitor “this coming Friday”.

Ms Justice Whelan said the bank solicitor ignored the email. There was no further correspondence between the sides and the bank solicitor entered judgment for €1.37 million on June 10th, 2013.

Mr O’Brien was not informed by the bank that judgment was procured, and he proceeded with the negotiations and concluded a settlement with the bank “oblivious to the fact”.

Residual debt

He adhered to the alternative payment agreement until it expired in July 2018, leaving a residual debt owing to the bank, she said. The agreement had an impact on five of six mortgages, provided for sale of a Dublin property and discharge of a receiver on agreed terms.

The judge found the bank’s course of direct engagement with Mr O’Brien was governed by terms agreed with him in March 2013. That precluded it from “inconsistently” instructing its solicitor to secure summary judgment in default of appearance when it had effectively agreed to stay the proceedings on certain terms it had never suggested he had not complied with, she held.

While a misunderstanding or misapprehension may have arisen between the bank and its solicitors, the consequences of that “cannot be visited” on Mr O’Brien, she said.

There was “clear evidence” that Mr O’Brien, who directly conducted negotiations with the bank himself, had also reasonably believed the summary summons served on him in April 2013 had “something to do with the appointment of a receiver”, she said.