Interest on Judgment Debts-What You Need to Know

Are you concerned about interest accumulating on a judgment against you?

Or are you a creditor seeking to recover a reasonable amount of interest on money rightfully due and owing to you?

When a debtor obtains a judgment against a creditor he may also be entitled to interest on the judgment amount pursuant to section 22 of the Courts Act, 1981. This interest order is at the discretion of the Judge concerned.

Interest begins to run on the judgment amount (not costs) from the day the judgment is granted.

The discretion of the Court to award interest or not was raised in Reaney v Interlink Ireland Ltd [2016] IECA 238. Judge Finlay Geoghegan, in this Court of Appeal case, described the rationale behind Courts Act interest as follows:

“To put it another way: it is intended to compensate a person for being out of the money awarded from the time he ought to have received it to the date of judgment, provided, however, other facts make it just between the parties to make such an award.”

This Reaney v Interlink Ireland Ltd case is a good one to review to see what the considerations of a Court will be in deciding whether to award interest or not.

The rate of interest was set at 8% per annum from 1989 pursuant to section 26 of the Debtors (Ireland) act, 1840. This rate was reduced from 8% to 2% per annum in the Courts Act 1981 (Interest on Judgment Debts) Order 2016 (SI 624/2016) with effect from 1st January, 2017.

You can read the full decision in the Court of Appeal in Reaney & ors -v- Interlink Ireland Limited (t/a D.P.D.) [2016] IECA 238.

The Quinn Children Consent to Judgments Totaling €440 Million

There was a large group of photographers outside the entrance to the Four Courts a few weeks ago as I walked out to the WRC in Ballsbridge for an employment hearing. As I walked past the building entrance the targets of their interest strolled down the street to enter the Round Hall and I guessed, correctly, who they were: “the Quinn children”.

When I say “the Quinn Children” I refer to the adult children of Ireland’s once wealthiest man, Seán Quinn.

Even if I never met them that morning on the quays by sheer coincidence I would have had an interest in their case.

Because their case was one in which they, the Plaintiffs in the action, were suing IBRC, formerly known as Anglo Irish Bank. Their claim was that €415 million guarantees they provided for loans to the Quinn Group in 2007 and 2008 were invalid and, therefore, unenforceable.

When I read that this was the basis of their claim-their cause of action-I was interested to see how they were going to win that argument. For it is an argument that has been made, for the last 10 years or so, by many small business owners, wives and girlfriends of small company directors, who argued that they could not be held to the guarantee they signed.

For all sorts of reasons-for example, signing a document in the kitchen of their home for their spouse who was a small business owner and discovering years later that this document was, in fact, a guarantee and the lender now wanted to be paid.

So, I kept an eye on the case as it was reported in the papers and on TV/radio.

It appeared to be the case that the Quinn children were claiming that they were put under undue influence by their father, Seán Quinn, into signing the guarantees. And what’s more, they claimed they were naïve, inexperienced, and unsophisticated and didn’t understand what they were doing or the significance of the papers they were signing.

This line of argument was, as you would expect, rejected by the bank’s lawyers who pointed out that these ‘children’ were experienced, well educated, professional adults and the notion that they did not understand what they were signing or what it meant was fanciful nonsense.

Significant ruling by Judge-game changer?

But the case took an unexpected turn last week leading to settlement talks which are ongoing. These talks commenced after the Judge, Justice Simons, made a significant ruling in the case.

This ruling hinged on the fact that the Quinn children sued the bank, IBRC, on the basis that the bank had unduly influenced them; but when it came to running the case and giving evidence the case put forward appeared to be that it was Sean Quinn who was the culprit in point of undue influence and overbearing their minds, not IBRC, the defendant.

And last week the children applied to Court to change their statements of claim to reflect this and wished to file supplementary written statements.

Justice Simons, however, refused to grant orders along these lines. He also stated that the argument that their pleadings in the case that Sean Quinn had unduly influenced them were “untenable”. He also said that they

“were unequivocal in stating that the entity against whom the allegation of undue influence was being made was Anglo…Not only is no claim of undue influence made against Sean Quinn Snr in the pleadings, the making of any such claim would, in any event, be entirely inconsistent with the manner in which the litigation has been conducted to date.”

Justice Simons also stated that if Sean Quinn was the ‘guilty’ party in respect of undue influence he should have been named as a defendant. When he asked counsel for the Quinn children why statements along their present course of argument were not included in their original witness statements counsel for the Quinn children admitted there was ‘’no good reason’’.

Significantly Justice Simons decided that if he allowed this change in approach by the Quinn children it would cause prejudice to the defendant, IBRC, as it would not now know what case it was expected to meet.

Moreover, IBRC had a counterclaim against the Quinn children and was entitled to bring that case along without further delays, especially having regard for the fact that this case commenced in 2011.

This ruling, I suspect, was a game changer and prompted the settlement talks.

What I find fascinating about this case, however, is why the claims of undue influence alleged against Sean Quinn were not included in the original statement of claim of the Quinn children.

If you never knew anything about the law, or how legal proceedings are conducted generally, you would probably be raising your eyebrows at a claim of wrongdoing against one party for 8 years and then, when the case is being heard and evidence is being adduced, somebody else is being fingered as the culprit.

You might also raise your eyebrows a little further, I believe, if you knew that all parties in the case had legal professionals who were at the top of their profession and as good as ready money could instruct.

As an outsider looking in I find it fascinating that the case took the turn it has taken as I was looking forward to seeing the final judgment in a high stakes, high profile case. If settlement talks are successful we will never know, although I had my own strongly held opinion which shall remain unventilated.

UPDATE 3rd April, 2019

I held off publishing this post for a couple of days as settlement negotiations were ongoing between the parties. The outcome of those talks were that the Quinn children consented to judgments totaling €440 million being entered against them. This is €88,157,351 against each of them.

They also accepted that IBRC (formerly Anglo Irish Bank) had valid and enforceable claims on the Quinn assets which were the subject of the securities.

 

Avoiding Summary Judgments-a Credible Defence is Required, Mere Statements Are Insufficient

 

summary judgment

You might have come across a particular type of individual since the property/economy crash in 2007/2008.

He, for it was normally a man, was up to his eyeballs in debt and was a type of amateur lawyer who had decided that easy, technical defences could be put forward if and when the crap hit the fan and the lender brought him to Court to seek Judgment against him.

These technical defences, if you could call them that, included allegations of forged signatures on loan documents, claims of being forced to sign mortgages under duress, and so forth.

As well as these ‘defences’, which were bound to fail, you may recall the Kilkenny Trust which was a most capital swizz which promised to make your debt disappear by putting your property into a trust and subsequently leasing it back at a nominal rent, thereby staying in your home and putting it beyond the reach of the big, bad banks who had made a bad decision in giving you the money in the first place.

While some might generously describe this individual as an amateur lawyer others would call him a charlatan, a chancer, a snake oil salesman, a swindler, a huckster, a con artist, a mountebank-choose your poison.

Anyway, these technical defences, if you could call them that, were put forward in Court from time to time. And what happened?

Summary legal proceedings and summary judgment

Summary proceedings are the type of legal proceedings used to pursue a liquidated sum or specific debt. An application for a summary judgment will succeed if it is clear the defendant/debtor has no arguable defence. The defendant debtor, if he claims to have a defence, will seek, on that basis, to have the case heard in a plenary hearing in the High Court, and to avoid judgment.

The test of what is required in respect of the defence has been considered by the High Court in Aer Rianta v. Ryanair [2001] 4 I.R. 607 where it was held that the test was there is no probability of a bona fide defence.

In a 2014 case, IBRC v. McCaughey [2014] 1 IR 749, it was held that it must be clear there is no arguable defence.

The Court of Appeal has now issued a judgment in May 2018 which deals with the issue again in AIB v Stack & Stack [2018] IECA 128. AIB were seeking a judgment against the Stacks for approximately €3,000,000.

The Stacks resisted the application and argued that they had a defence to the claim and wished the case to be transferred to the High Court for a plenary hearing. The basis of their defence included the following claims of the Stacks:

  • Mrs Stack’s signature was a forgery
  • no proof that the company had accepted the terms set out in the letter of loan sanction
  • the loan was not conditional on guarantees being provided
  • Mrs. Stack had no involvement in the day to day running of the company
  • Mrs. Stack had never received any independent legal advice.

The High Court refused to transfer the case for a plenary hearing and held that the mere assertion of an alleged fact, such as the claim of the forged signature, did not make it true and there was no evidence to support the assertion. In like fashion the High Court held that putting forward statements or assertions without supporting evidence or documentation was not enough to prove they had a genuine defence to the claim.

The Stacks appealed to the Court of Appeal and a decision was delivered on 10th May, 2018 in AIB v Stack & Anor.

The Court of Appeal agreed with the High Court and dismissed the appeal.

It held that the Court must be very clear that there is no defence to the proceedings before it will grant judgment. It acknowledged that the bar to have the case sent into a plenary hearing was a low one but the Stacks had failed to clear that hurdle as they were unable to put forward anything but bald assertions and statements.

The Court of Appeal confirmed that there must be a credible defence based on facts. In this case the Court held that the Stacks failed to put forward any evidence to support the facts which they alleged-for example, the allegation of the forged signature.

Conclusion

The bar to overcome to avoid judgment is a low one but the defendant must have a real defence based on facts supported by evidence. Statements or denials or assertions will not be enough.

And if you are approached in a bar by a middle aged man who claims to have found an easy way to avoid judgment for an eye watering debt, treat him with great caution.

Debt Claims in the District Court-How to Obtain Judgment in Default

judgment in default district court

Do you need to pursue a debt in the District Court?

Are you being pursued for a debt?

Confused about what’s involved in obtaining a judgment where the debtor just ignores the Claim Notice and does not enter an Appearance or Defence?

Let’s take a look at what happens then.

If a respondent who has been served with a claim notice in a debt claim does not serve and file an appearance or serve a defence within the time prescribed by Order 42, or within any other time fixed by the Court for serving and filing his or her appearance or for serving his or her defence, you may apply for an order of judgment in default. (The time prescribed by Order 42 is 28 days).

You must file your application with the Clerk and it must be accompanied—

(i) by an affidavit or statutory declaration (Form 41.01, 41.02 or 41.03, Schedule C, as appropriate) of service of the claim notice; and

(ii) by a certificate (Form 47.01, Schedule C), which may be endorsed on the affidavit of debt signed by the claimant’s solicitor or by the claimant (if acting in person) that no appearance, notice requiring particulars or defence has been received from the respondent; and

(iii) by an affidavit of debt verifying the claimant’s claim (Form 47.02 or 47.03, Schedule C, as appropriate); and

(iv) by a form of judgment (decree) (Form 47.04 or 47.05, Schedule C, as appropriate).

Where a respondent has signed a consent to judgment which has been duly witnessed, the applicant may file an affidavit (Form 47.06, Schedule C) verifying the consent instead of an affidavit of debt; and where the consent is to judgment by instalments, the form of judgment (decree) in Form 47.07, Schedule C must be used.

Your affidavit verifying your claim must be sworn (or the certificate referred to above must be given) within one month before the date of the application for judgment. Judgment may not be given where the affidavit verifying the claimant’s claim was not sworn (or the certificate was not given) within one month before the date of the application for judgment.

Where your application for judgment includes a claim in respect of value-added tax, the affidavit (or certificate) must verify whether or not value-added tax is payable by the claimant on his or her legal costs, and if payable whether or not the sum payable is recoverable by the claimant from the Revenue Commissioners.

If you apply for a Judgment as set out above, and a Judge is satisfied that an order should be made, the Judge may make such an order otherwise than at a sitting of the Court, and may fix the amount of costs and interest as is appropriate in the circumstances in accordance with the Schedule of Costs.

If a Judge is not satisfied that an order should be made, the Judge may, or if the claimant so requests, the Judge must, refer the matter to the Court for decision.

If the Judge refers an application to the Court or an application is assigned a return date, the Court may on hearing the application, and any evidence the Court considers appropriate—

(a) make the order sought in the application;

(b) direct that a further affidavit or affidavits be filed;

(c) give directions as to the application;

(d) refuse to make the order sought in the application;

(e) make any other order it considers appropriate.

(6) The Clerk must notify the claimant of any order made by the Judge or (if the application has been referred to the Court) any decision or order of the Court.

Even if you obtain an order for judgment in default against a respondent as set out above you may enforce the order and continue the proceeding against any other respondent. In the event that the claimant recovers by enforcement or otherwise the full amount of his claim including costs against any respondent, further proceedings against any remaining respondent must be stayed save in respect of any further costs as may be claimed against any other respondent.

If a respondent serves a counterclaim which is a debt claim, what’s set out above applies as if—

(a) the respondent were the claimant;

(b) a reference to the appearance in that rule were a reference to the appearance to the counterclaim; and

(c) the claimant were the respondent.

Setting aside judgment by default

A party against whom a judgment in default has been obtained under may apply by notice of motion (Form 44.02 Schedule C with the necessary modifications) to the Court  in which the judgment was obtained for an order to vary or set aside the judgment on the ground that the same was obtained by fraud, misrepresentation, surprise, mistake or other sufficient ground.

Service of the notice of motion does not operate as a stay of proceedings unless the respondent lodges with the Clerk the amount for which judgment was given and the amount fixed for costs.

If a party fails to comply with an order made by the Court in civil proceedings, the Court may, where it considers it just to do so, dismiss the civil proceedings or strike out any defence or counterclaim and proceed to give judgment or make any order (including any order for costs) as is then appropriate as if the party in default had not pleaded.

You might also want to read also about how to commence proceedings in the District Court.

Judgment in Default in Non Debt Claims

Order 47A of the District Court rules sets out how to obtain judgment in default in non debt claims.

How to Begin Civil Proceedings in the District Court

district-court-legal-proceedings

The District Court now has a jurisdictional limit of €15,000.

So, if you need to pursue a debt or a claim for damages for breach of contract, negligence, or on any ground for less than €15,000 you will commence proceedings in the District Court.

To do this, you file, for issue and service, a claim notice in the District Court.

What Must You Put in the Claim Notice?

A claim notice must—

(a) state the full name and address of the claimant and an address for service of documents on the claimant; and

(b) if the claimant sues in person, state an address for service of documents on the claimant; and

(c) if the claimant sues or the respondent is sued in a representative capacity, state the capacity in which the claimant sues or the respondent is sued in a representative capacity; and

(d) state the name and address of the respondent; and

(e) if the claimant sues by a solicitor, state the name or firm and business address of the solicitor and also, if the solicitor is the agent of another, the name or firm and business address of the principal.

A claim notice must contain a statement of claim which must—

(a) contain, in a summary form, a statement of all material facts on which the claimant relies, but not evidence by which those facts are to be proved;

(b) contain the necessary particulars of every fact;

(c) if the claim arises by or under any enactment, identify the specific provision of the enactment that is relied on;

(d) state specifically the amount or other relief or remedy sought; (e) state the place where and the date when the claim arose.

A statement of claim in a debt claim must state that the claim is for debt or liquidated damages, must specify the amount claimed by way of debt or liquidated damages and must include particulars of the claimant’s demand for payment.

Where the claim is founded on any written document, the statement of claim must state the date of the document and the parties to the document and:

(a) if the claim is for the payment of money, the amount claimed, or

(b) if the claim is for breach of contract, the alleged breach or breaches of the contract.

A statement of claim must contain a list of all correspondence and other documents on which the claimant will rely at the trial including the date if any and a brief description of each document.

In a debt claim, the claim notice must be indorsed with a statement as follows—

“If you pay the amount of €…… and costs of €……. to the claimant or the claimant’s solicitor within ten days and without filing and serving an appearance and defence you may avoid further costs.”.

If a claim notice is indorsed  as set out in the preceding paragraph, and the respondent pays the amounts claimed within the time limited for filing and serving an appearance and defence, then the civil proceeding is concluded.

Any claim by a consumer for damages under section 74 of the Consumer Protection Act 2007 (No. 19 of 2007) must be commenced by the issue and service in accordance with this Order of a claim notice, entitled in the matter of section 74 of the Consumer Protection Act 2007 and otherwise in the Form 40.01, Schedule C with such modifications as are appropriate.

 

Where Do You Commence Proceedings?

A claim notice must be filed with and issued by the Clerk for the Court area:

(a) in which the respondent or one of the respondents ordinarily resides or carries on any profession, business or occupation,

or at the election of the claimant,

(b) in proceedings founded on contract, (except proceedings arising from an agreement under the Consumer Credit Act 1995 or the European Communities (Consumer Credit Agreements) Regulations 2010 (S.I. 281 of 2010)) in which the contract is alleged to have been made, or

(c) in proceedings founded on tort, in which the tort is alleged to have been committed, or

(d) in ejectment proceedings, in which the lands the subject of the proceedings are situated.

Unless the Claim Notice is to be served outside the State a claim notice must be in Form 40.01, Schedule C, or in Form 40.02, Schedule C in a debt claim.

Appearance and defence

A respondent who intends to defend civil proceedings must give, or send by post, to the claimant or solicitor for the claimant an appearance and defence, in the Form 42.01, Schedule C, not later than 28 days after the service on him or her of the claim notice, and must at the same time file a copy of his or her appearance with the Clerk.

A defence must—

(a) contain a statement that the respondent intends to defend the claim notice; and

(b) state the name and address of the respondent and an address for service in the European Union at which documents required to be served on the respondent may be left; and

(c) if the respondent defends by a solicitor, state the name or firm and business address within the European Union of the solicitor and also, if the solicitor is an agent of another, the name or firm and business address of the principal.

Appearance and defence to debt claim

An appearance and defence in a debt claim must be in Form 42.03, Schedule C. A respondent who intends to defend a debt claim must give, or send by post, to the claimant or solicitor for the claimant his or her appearance and defence not later than 28 days after the service on him or her of the claim notice, and must at the same time file a copy of his or her appearance with the Clerk.

A defence in a debt claim must state whether the claim is:

(a) disputed as to both liability and amount;

(b) disputed only as to amount and if so, what amount is admitted to be due;

(c) admitted in full and if so, whether the respondent proposes to pay immediately or requires time for payment.

Appearance and defence in claims other than debt claims

Unless the respondent requires further particulars of statement of claim, a respondent to a claim other than a debt claim who contests or disputes all or part of a claimant’s claim must serve an appearance and defence in Form 42.01, Schedule C on the claimant at the address for service stated in the claim notice and must file a copy of the appearance with the Clerk.

A defence must state which of the facts stated in statement of claim are—

(a) admitted;

(b) denied;

(c) not admitted.

A respondent who, in the defence, does not state whether a fact stated in statement of claim is—

(a) admitted;

(b) denied;

(c) not admitted—

must be taken to admit the fact.

A respondent who states that a fact stated in statement of claim is denied must—

(a) give reasons for denying the fact; and

(b) if the respondent intends to prove a fact different from that stated in the statement of claim, state, with necessary particulars, the fact that the respondent intends to prove.

The respondent must state specifically, with particulars, any fact or matter which—

(a) makes the claim of the claimant not maintainable; or

(b) if not stated specifically, might take the claimant by surprise; or

(c) raises questions of fact not arising out of the statement of claim. (6) If the defence arises by or under any enactment, the defence must identify the specific provision relied on.

A defence must contain a list of all correspondence and other documents (other than any documents already identified in the statement of claim) on which the respondent will rely at the trial including the date if any and a brief description of each document.

The respondent may not rely on the defence of tender unless, within seven days after filing an appearance and defence, the respondent pays to the Clerk the amount alleged to have been tendered.

A respondent who has entered an appearance and defence in a debt claim which complies with the requirements of the rule above is not required to serve and file a defence which complies with the requirements of this rule unless an order has been made in the application for judgment on affidavit refusing judgment and giving permission to defend, in which case, the respondent must serve and file a defence which complies with the requirements of this rule within 21 days after the order is made.

Late filing and service of appearance and defence

A respondent may serve an appearance and defence and file an appearance at any time after the service of a claim notice with the written consent of the claimant, but an appearance and defence may not be served, except by permission of the Court, if the claimant has obtained judgment in default of appearance.

NOTICE REQUIRING COPY DOCUMENTS OR FURTHER PARTICULARS

This does not apply to debt claims.

A respondent may at any time before or at the time of delivery of a defence apply to the claimant in writing:

(a) for copies of all or any of the documents listed in the statement of claim on which the claimant relies or referred to in the statement of claim (Form 42.06, Schedule C);

(b) requiring the claimant to provide further particulars which the respondent asserts are reasonably necessary as to specified matters in the statement of claim (Form 42.07, Schedule C).

A claimant may within 28 days after delivery of a defence apply to the respondent in writing:

(a) for copies of all or any of the documents listed in the defence on which the respondent relies or referred to in the defence (Form 42.06, Schedule C);

(b) requiring the respondent to provide further particulars which the claimant asserts are reasonably necessary (Form 42.07, Schedule C).

COUNTERCLAIM

A respondent may set off or set up any right or claim the respondent alleges he or she has against the claimant as a counterclaim against the claim of the claimant, whether the respondent’s claim is a claim in damages or not.

A set off or counterclaim has the same effect as a cross action, so as to enable the Court to determine both the claim and the counterclaim at the same trial.

A counterclaim must be in Form 42.08, Schedule C.

STAY OR DISMISSAL OF CLAIM AND STRIKING OUT STATEMENT OF CLAIM OR DEFENCE

The Court may at any stage of the civil proceedings order to be struck out or amended any matter in any pleading which is unnecessary or scandalous, or which may tend to prejudice, embarrass, or delay the fair trial of the civil proceedings.

The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the claim or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the claim to be stayed or dismissed, or judgement to be entered accordingly, as the Court considers just.

What to Do Now

Sometimes, especially in debt collection matters, a solicitor’s letter to a debtor may have the desired effect and eliminate the need to bring proceedings in Court.

If you need a solicitor to handle things for you contact us.