Call us now on +35316632000

About SOR Solicitors

The latest legal news, blogs and announcements from Sherwin O'Riordan Solicitors in Dublin.

When Good Service isn’t [good] enough

When Good Service isn’t [good] enough.  - €6,971,856.49 Judgment set aside due to debtor’s mental illness

 

Even where the rigours of legal procedure are satisfied, but the borrower fails to truly understand their actions in compliance by means of mental illness, the Court can look to equity to set aside any imbalance of capacity. A recent High Court decision will be of particular relevance to those involved in litigation over unpaid loans, where the mental capacity of one party was genuinely and sufficiently compromised so as to remove necessary comprehension.

Bank of Scotland PLC -v- McDermott [2017] IEHC 77 (High Court, Barrett J, 15 February 2017

In a case involving debtor and creditor, the High Court set aside a Commercial Court order for judgment against the Defendant in the sum of €6,971,856.49 by reason of mental illness on the part of the Defendant at the time of service of proceedings.

Service of the summary summons was effected on the Defendant in 2013, with Mr McDermott entering an Appearance on 9th July, 2013. A motion to transfer proceedings to the Commercial Court was accepted, with a return date of 29th July 2013. On the day of proceedings, the Plaintiff bankwas present in court, but the Defendant was not. Accepting service of motion papers on the Defendant to be good, and relying on sworn Affidavits by the Plaintiff bank, Kelly J gave judgment for almost €7 million, in favour of the Plaintiff bank.

Almost 18 months later, the Defendant sought an order to extend the time for setting aside the judgment obtained, and an order granting leave to defend proceedings.

In his Grounding Affidavit, the Defendant sought to rely on;

  • lack of capacity owing to mental and psychological illness at the time of being served with the Plaintiff’s motion;
  • the speedy pace of proceedings then materialising which meant obtaining representation was compromised;
  • that certain figures purported by the Plaintiff bank were incorrect, and that the judgement would cause severe and irreversible prejudice to him.

The Defendant’s application to set aside the judgment obtained was refused by McGovern J. in the High Court on 18th May 2015.

This refusal was challenged in the Court of Appeal in October 2016, wherein Counsel noted the error of the High Court in having relied on O. 13, r.11. The latter rule relates to setting aside judgment only where no appearance has been entered (clearly not so in Mr McDermott’s case). O. 36, r. 33 was also mentioned and discounted, as it relates only to plenary proceedings. O. 37 was considered in relation to summary proceedings, but was of little assistance to the Court, as it makes no mention of applications to set aside. Therefore, the High Court’s inherent jurisdiction was of significance to Mr McDermott’s situation.

He noted the Court will only re-open a matter in such exceptional circumstances as would be an affront to constitutional rights. Barrett J considered Mr McDermott’s asserted position and accepted the Defendant’s contention as to being so mentally unwell that he did ‘not remember having received the correspondence’. This period of mental illness was accepted as having lasted from July 2013 until February 2015, with the court relying on the evidence of a professional psychiatric report prepared by a distinguished consultant psychiatrist.

Barrett J. then found the following:

  • that although the mechanics of service of the motion were observed, Mr McDermott was not in a position to comprehend such;
  • that Mr McDermott was so mentally unwell (noted as evidenced by the defective logic of a person in dispute of a sum of almost €7m not showing up to his trial but having entered an Appearance) that his capacity to act was significantly compromised; and
  • that in all the circumstances, the court as a court of conscience embraces ‘the protection of those suffering from mental ill-health’.

In relying on all such circumstances, Barrett J. found that Mr McDermott did not have actual knowledge of the hearing taking place, and that it would be manifestly unjust to allow the costly judgement to stand. Therefore, the Court acceded to Mr McDermott’s application to set aside, with an emphasis on the parties working to conclude matters in a most expeditious manner.

Contact our Insolvency & Asset Management Lawyers in Dublin, Ireland

At Sherwin O’Riordan, we understand that the prospect of having to pursue debtors for unsatisfied debts can be costly and time-consuming. If you require legal advice on this or any other legal matter, get in touch on +353 1 513 7309 to speak with one of our experienced solicitors.

Written by Rachael Connolly

 

Sherwin O’Riordan shortlisted for Litigation Law F...
The Uber Case: An Irish Perspective

Testimonials

"We simply cannot fault the service we receive from SOR. They have specialist solicitors in each area where we need advice and we’ve had contact with 4 different partners during the last 14 months, and the experience has been the same each time. Really really good."

Justin Cahill, Chairman, CMC Platform Financials

Office location

74 Pembroke Road
Dublin
Dublin 4
Ireland

Phone +35316632000
Fax +353 1 663 2001
Email

Tweets

EU Court Ruling Could Affect Employment Dispute Jurisdiction ow.ly/AI6u50eB0BJ

Read more

Brexit – The Opportunities for Irish Business Owners - The UK’s decision to leave the EU continues to feature h... ow.ly/lbZD50ekUBa

Read more

Spotlight on Workplace Health and Safety - The latest figures from Ireland’s Health and Safety Authority (HSA) ... ow.ly/j5mW50e8yJ5

Read more

Yes, I accept cookies and get the best experience on this website.