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The Courts’ Warning to those Financial Institutions who delay in Progressing Court Proceedings

Start Mortgages DAC v Joseph McNamara and Joseph Harris

(Judgment delivered by the High Court on 7 April 2020)

 

Although the Courts are not operating at their normal capacity, judgments are still being delivered by the Courts during these strange times. An (unapproved) judgment was recently delivered by Mr. Justice Power on the 7 April 2020 in the High Court decision of Start Mortgages DAC v Joseph McNamara and Joseph Harris, which makes for an interesting read and is a stark warning to many financial institutions.

Application

The second named Defendant, Mr. Joseph Harris, brought a Motion seeking to have the summary proceedings claim against him dismissed for the following reasons:- (1) want of prosecution; (2) dismissed on the grounds of gross, inordinate and inexcusable delay; (3) dismissed on the basis that the bank’s claim fails to show any sustainable cause of action/or is frivolous/or is vexatious.

Background

Summary proceedings were issued against the Defendants in July 2010 and were before the Master of the High Court on five separate occasions before being adjourned for plenary hearing to the Judges’ Lists and given a return date in the Common Law Motion list for November 2013.

The proceedings were initiated by Irish Life and Permanent PLC T/A Permanent TSB and an application was subsequently made to change the name of the plaintiff to Start Mortgages DAC (“the Bank”).

An Order for Discovery was made against the second named Defendant on the 11 November 2013, in which he had six weeks to discover certain documentation. However, no further steps were taken in this matter until the second named Defendant brought his application to dismiss the Bank’s summary proceedings.

It was noted by the Court during the hearing of Mr. Harris’ Motion that since the Motion was issued, the Bank’s solicitors had filed a Notice of Intention to Proceed and had requested Mr. Harris’ Affidavit of Discovery.

Issue regarding a refinancing arrangement

The Court noted that the summary proceedings had been transferred to the Judges’ Lists for plenary hearing due to a dispute regarding an alleged refinancing arrangement. The Defendants (who were in a business partnership) had obtained a loan from Permanent TSB (who subsequently sold the loan facilities to Start Mortgages DAC) in 2006 to buy four properties.

The partnership subsequently dissolved and the second named Defendant alleged that the Defendants partitioned their debt (the Bank submitted to the Court that it was unaware of this partition arrangement), whereby the Defendants each took over liability for two of the four properties bought while in partnership.  The second named Defendant also submitted to the Court that he had entered into a refinancing arrangement with Permanent TSB, part of the purpose of which was to discharge his liabilities  for the loan obtained while he was in partnership with the first named Defendant.

Consideration of application

While considering the second named Defendant’s application, the Court acknowledged that although Mr. Harris had not engaged in Discovery (as ordered by the Court) in 2013, he (and his solicitors) had contacted the Bank in September 2013 and November 2013 regarding his version of events about the refinancing arrangement entered into with the Bank’s predecessor.

The Bank’s Solicitors stated to Mr. Harris (and his solicitors) that they would revert to him about this, which did not occur.  Accordingly, the second named Defendant was still awaiting the Bank’s replies regarding his version of events about the refinancing arrangement.

The Court noted that if the matter went to plenary hearing, that the second named Defendant would encounter difficulties in securing evidence of relevant witnesses, including his former solicitors and bank personnel (who had since left Permanent TSB) regarding the alleged refinancing arrangement.   Furthermore, the Court also noted that the first named Defendant had left the jurisdiction since the summary proceedings had been issued.

Although the Bank submitted to the Court that if the current proceedings were dismissed, it would re-issue fresh proceedings, the Court noted that the Bank had failed to provide a reason as to why it had failed to prosecute this matter, after it had instituted the proceedings.

Accordingly, the Court was satisfied that the balance of justice required for the Bank’s summary proceedings to be dismissed for want of prosecution and on the grounds of inordinate and inexcusable delay.

Food for thought?

In light of the current Coronavirus situation, many cases are not currently proceeding before the Courts which gives parties an opportunity to carry out some “housekeeping” of their litigation proceedings, whether they are debt recovery proceedings or otherwise, which we would encourage all parties to do.

If you are concerned about any delays in proceedings in which you or your organisation are involved and how the Start Mortgages decision might impact on that litigation, please contact our Sarah Reynolds or Rita Higgins to discuss.

 

This Briefing Note is not intended as legal advice. For specific queries, please liaise with Sarah Reynolds OR Rita Higgins whose details are set out below.

 

AUTHORS:

Sarah Reynolds

Partner in Commercial Litigation and Data Protection

E:  sreynolds@kanetuohy.ie         M:  087-248433

 

Rita Higgins

Solicitor in the Commercial Litigation Department 

E:  rhiggins@kanetuohy.ie        M:  087-4141509

 

 

Covid-19 – Emergency Legislation

Emergency Measures in the Public Interest (Covid-19) Act 2020

and

Health Preservation and Protection and other Emergency Measures in the Public Interest Act 2020

The Legislation

On 20th March 2020, having been passed by both Houses of the Oireachtas, the Health Preservation and Protection and other Emergency Measures in the Public interest Act 2020, was signed into law by President Higgins. The Following week, on 27th March, the Emergency Measures in the Public Interest (Covid-19) Act 2020 was enacted.

The legislation has been introduced by the Government to make provision for emergency measures to mitigate social effects and economic consequences as a result of COVID–19. On the request of the Ceann Comhairle the legislation was passed with a 30% attendance in the Dáil, split proportionately along party lines, representing a democratic consensus among the TDs which supports the legislation’s validity.

Analysis

There is no doubt that the emergency legislation provides a very sizeable grant of statutory authority; potentially the most significant being the amendment to the Health Act 947 which gives the government ability to issue regulations to prohibit travel to or  from the State; travel within the State; require persons to remain in their homes or other places specified by the government, and prohibit events which could reasonably be considered as posing a risk of infection to the persons attending.

The Public Interest (COVID-19) Act 2020 provides for a three-month cessation of evictions and rent increases, but this time frame can be extended by the Government if it considers it in the public interest. The Oireachtas can annul any such extension within 21 days.

“The Emergency”

Ireland is no stranger to the introduction of emergency legislation and it was almost this time last year that the Omnibus Bill was prepared to be fast-tracked through the Oireachtas to support businesses and jobs impacted by a no-deal Brexit, and to maintain essential services and products across the Irish border.

Comparisons can be drawn between the current situation, and that of the state of emergency which existed in Ireland during the Second World War. During ‘the Emergency’, the Oireachtas passed the Emergency Powers Act 1939 and Offences Against the State Act 1939. These Acts vested the Government with wide-ranging powers, including authority to issue regulations to control private property and economic activity, impose censorship, establish military courts with power to issue the death penalty, and establish internment without trial by Government order. In more recent times, the Oireachtas passed several pieces of legislation giving the Government extraordinary authority to tackle the financial crisis of the late 2000s.

Lawless -v- Ireland[i]

This case was filed by an ex-IRA member who had been arrested and detained under the special powers of indefinite detention without trial under the Offences against the States (Amendment) Act 1940. Lawless claimed that the Irish Government was in violation of Articled 5, 6 and 7 of the European Convention of Human Rights. The case was dismissed because emergency legislation was used[ii].

The Constitution

Under Article 15 of the Constitution of Ireland, the Oireachtas must not enact a law which is incompatible with the Constitution. Therefore, Legislation passed by the Oireachtas for the purpose of tackling a very serious emergency, will not be immune from legal challenge by a plaintiff on the grounds it is unconstitutional.

However, to challenge the constitutionality of legislation, you must show that you have sufficient interest in the proceedings, that is, that the legislation affects you in some real way. You must also show that you have an arguable case, that is, that your case has grounds.

Article 28 of Constitution of Ireland which allows emergency legislation “for the purpose of securing the public safety and the preservation of the State in time of war or armed rebellion”. There is no military aspect to this, however, Article 24 is likely to provide the required justification for this. This Article allows for emergency legislation “by reason of the existence of a public emergency, whether domestic or international”.

A good recent example of how judges respond to challenges to emergency legislation can be seen through their treatment of legislation passed to tackle the financial crisis. As these laws were not passed through reliance on Article 28.3.3[iii], challenges were brought challenging their constitutionality.

But in case after case, the Courts upheld their constitutionality, and when doing so made frequent references to the dire circumstances the country found itself in, and the leeway they had to give the Oireachtas when tackling emergencies, even if its response had a significant impact on individual property rights. In such circumstances, the Courts said they would give a wide margin to the Oireachtas in deciding what measures were necessary and proportionate to respond to a crisis.

In Horgan v Ireland (2003)[iv] the Dáil was asked whether an aircraft refuelling at Shannon Airport en route to Iraq was deemed participation in war. Here the Court extended a significant margin of appreciation to the Government in this area. Essentially the Court must presume that a decision had been made by the Dail that this was not participation in war.

Remedies under the Human Rights Convention

Article 15(1) of the European Convention on Human Rights (“the Convention”) stipulates that:

“In time of war or other public emergency threatening the life of the nation any High Contracting Party may take measures derogating from its obligations under this Convention to the extent strictly required by the exigencies of the situation, provided that such measures are not inconsistent with its other obligations under international law.”

In March 2020, in the context of the COVID-19 health crisis, Latvia, Romania, Armenia, the Republic of Moldova, Estonia and Georgia notified the Secretary General of the Council of Europe of their decision to use Article 15 of the Convention. To date, eight other States who are parties to the Convention– Albania, Armenia, France, Georgia, Greece, Ireland, Turkey and the United Kingdom – have relied on their right of derogation. Four of those States have had to justify the measures taken, in the light of Convention requirements, namely Greece, Ireland, the United Kingdom and Turkey[v].

It is an undeniable fact of life that many States will, at some stage, be confronted with serious crisis situations, such as wars or other kinds of serious societal upheavals, and that in such situations they may consider it necessary, in order to restore peace and order, to limit the enjoyment of individual rights and freedoms and possibly even to suspend their enjoyment altogether. The result may be disastrous not only for the persons affected by the restrictions but also for peace and justice in general[vi].

It seems that in circumstances of national emergency governments are permitted to deviate from international human rights treaties in certain scenarios. However, States cannot derogate from the following articles of the Convention:

  • Article 2- the right to life;
  • Article 3- the right to freedom from torture and from inhuman or degrading treatment or punishment;
  • Article 4(1) – the right to freedom from slavery and servitude;
  • Article 7- the right not to be subjected to retroactive penal legislation;
  • Article 3 of Protocol No. 6- the right not to be subjected to the death penalty;
  • Article 4 of Protocol No. 7- the principle of ne bis in idem or double jeopardy.

 

What we can do for you

In these unprecedented times, it is important to know your rights. Notwithstanding that the courts in previous cases have given the Oireachtas a wider margin during emergency periods in striking the balance between the common good and individual rights. We are here to help if you feel that the emergency COVID-19 legislation is unreasonably affecting on your rights.


AUTHOR: Anna Hollywood, Trainee Solicitor

This Briefing Note is not intended as legal advice. For specific queries, please liaise with your usual contact in Kane Tuohy or with Hugh Kane (hkane@kanetuohy.ie / 087-9726164)

 

[i] Case of Lawless v Ireland

[ii] http://www.nuigalway.ie/irish-centre-human-rights/publicpolicyengagement/completedprojects/irelandparticipationininternationalhumanrightslawandinstitutions/

[iii]  Nothing in this Constitution other than Article 15.5.2° shall be invoked to invalidate any law enacted by the Oireachtas which is expressed to be for the purpose of securing the public safety and the preservation of the State in time of war or armed rebellion, or to nullify any act done or purporting to be done in time of war or armed rebellion in pursuance of any such law. In this subsection “time of war” includes a time when there is taking place an armed conflict in which the State is not a participant but in respect of which each of the Houses of the Oireachtas shall have resolved that, arising out of such armed conflict, a national emergency exists affecting the vital interests of the State and “time of war or armed rebellion” includes such time after the termination of any war, or of any such armed conflict as aforesaid, or of an armed rebellion, as may elapse until each of the Houses of the Oireachtas shall have resolved that the national emergency occasioned by such war, armed conflict, or armed rebellion has ceased to exist.

[iv] Horgan v Ireland [2003] 2 IR 468

[v] https://www.echr.coe.int/Documents/FS_Derogation_ENG.pdf

[vi] https://www.ohchr.org/Documents/Publications/training9chapter16en.pdf