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Default Judgement (to 22)

Mooney v The Old Shebeen Ltd

[2016] IECA 151

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 25th day of May 2016
1. This is an appeal from a decision of the High Court (O’Malley J.) delivered ex tempore on the 6th July, 2015 which rejected an application to extend the time in order to permit the defendant company (“Old Shebeen”) to appeal against a decision of the Master of the High Court on the 9th March 2012. In his decision on that day the Master had struck out the defendant’s defence for failure to make discovery within the eight week period which had been previously permitted in an earlier order which had been made by the Master on 20th January 2012.

2. While late applications to set aside orders of this kind are not always sympathetically received, the background to this application is decidedly unusual. The essence of the present appeal brought by Old Shebeen against the order of the High Court is that it had no knowledge at all at the time of the making of the order of 20th January 2012, even though that order recites that the company was represented on the day in question by solicitor and counsel. The company says that the firm of solicitors which was then representing it was, unbeknownst to it, at the same time being wound down in a disorderly fashion. The company insists that it received no communication from those solicitors regarding the making of such an order. Subsequent endeavours to locate the identity of counsel instructed by those solicitors have proved unavailing.

3. The underlying proceedings concern an action brought by the plaintiff for a workplace accident which he contends happened as far back as March 2005. On 4th April, 2007, an authorisation issued from the Personal Injuries Assessment Board pursuant to s. 14 of the Personal Injuries Assessment Board Act 2003. On the 2nd October, 2007 the plaintiff issued a personal injuries summons against the defendant company.

4. At para. 1.2 of the personal injuries summons it is pleaded that the defendant is a limited liability company having its registered address at Main Street, Moate, Co. Westmeath. Among other things the company owns, operates and maintains a licensed premises known as the Old Shebeen. It is further pleaded that all material times, the plaintiff was employed by the defendant at the said premises as a maintenance handyman. The claim is thus made that on the 15th March 2005, while the plaintiff was working at the premises, he was directed to move some items from the back store of the licensed premises to a small store at the rear. This task involved small drums of chemicals and while doing so it is contended that liquid from one of the drums spilled onto his foot. It is said that this accident resulted in chemical burning which required surgery and hospitalisation.

5. The plaintiff brought a motion on 20th April 2009 for judgment in default of defence. A defence dated the 19th March, 2009, was delivered by Henry Arigho, solicitors, then solicitors for the defendant. Paragraph 1 of that defence puts the plaintiff’s solicitors on notice that at the time of the accident complained the plaintiff was not employed by the defendant. The defence contends that the accident occurred on premises known as the “Auld Shebeen Public House” owned by one Liam Claffey. Mr. Liam Claffey is the brother of the principal of the defendant company, Mr. John Joe Claffey. It is further pleaded that the defendant does not own any interest in the said premises and has no legal connection of any kind whatsoever with the premises. The defendant objects that the plaintiff is estopped from continuing the proceedings against the defendant.

6. By motion dated the 12th March, 2010, the plaintiff sought an order for discovery from the Master of the High Court. The motion was returnable to the 8th June, 2010. What was sought was documentation in relation to the plaintiff’s employment record with the defendant, all supporting documentation and all or any documentation relating to the accident. The grounding affidavit from the plaintiff’s solicitor refers to efforts to advance the issue in relation to discovery through correspondence and, in particular, refers to the fact that a number of reminder letters issued. Some of those reminder letters refer to the fact that it is the plaintiff’s case that he had a contract of employment with the Old Shebeen Ltd. and that while employed by that company was sent on a casual basis to do occasional work in the public house premises known as The Auld Shebeen. The comments is made in the correspondence that the recipient knows there is a close relationship between the two businesses and the confusion arises because of the use of the same name for both the company and the licensed premises.

7. On the 6th July, 2010, an order for discovery was made by the Master. The defendant was given six weeks to make discovery and the affidavit was to be sworn by Mr. John Joe Claffey. Discovery was not in fact made and a motion was brought dated the 15th June 2011, returnable for the 2nd December 2011, to strike out the defence by reason of the failure to make discovery. The motion was eventually dealt with by the Master of the High Court on the 20th January 2012.

8. On that occasion the Master made an order extending by eight weeks the period within which discovery was to be made and he adjourned the motion to the 9th March, 2012. It seems beyond doubt or controversy at this stage that the defendant was legally represented in the Master’s court on the 20th January 2012. There was, however, no appearance on the 9th March 2012 and on that occasion the defence was struck out and there was an order for costs in favour of the plaintiff.

9. The next event of significance was the service of a notice of intention to proceed by the plaintiff dated the 20th November, 2013. The notice of trial for Galway was then served dated the 8th April 2014. On the 12th May 2014, a new firm of solicitors, Byrne Carolan Cunningham, came on record on behalf of the defendant.

10. The matter was listed for hearing during the October 2014 High Court sittings in Galway. The defendant contends that it was only then that it first became aware of the fact that the defence had been previously struck out. A motion issued dated the 4th December 2014, returnable for the 12th January 2015 by which the defendant sought to set aside the order of the Master striking out the defence. The defendant also sought an order extending the time within which that application to re-instate the defence could be brought.

11. The defendant’s new solicitor, Mr. Niall Cunningham, set out the company’s position in an affidavit grounding that motion. He explained that the defendant is a limited company operating a hotel in Moate, Co. Westmeath, called the Grand Hotel. Mr. Cunningham also stated that the defendant accepts that it previously employed the plaintiff in 2004 as a maintenance man/handyman for a period of approximately 34 weeks from May 2004 until January 2005 when that employment ceased and that the employment did not recommence. In that regard the appropriate documentation is exhibited.

12. Mr. Cunningham also contends that the plaintiff was employed by Liam Claffey Ltd. from January 2015 until the date of the alleged incident on 15th March 2005. Mr. Cunningham maintains that this was an unrelated limited liability company which then operated a public house and nightclub in Moate called The Auld Shebeen. Liam Claffey Ltd. subsequently went into liquidation in or around the 20th January, 2012, i.e., approximately seven years after the accident, the subject matter of the proceedings.

13. Mr. Cunningham sought to explain why no appeal had been taken from the order of the Master lodged by the defendant’s then solicitor. It appears that his then solicitors, Henry Arigho and Co., had ceased to operate from in or about September 2011. It would seem that Mr. Arigho is no longer a practicing solicitor and that when he ceased practise, this did not occur in an organised way. According to Mr. Cunningham this came to the company’s attention on the 6th December, 2013, when the plaintiff’s solicitor wrote to the defendant directly enclosing the notice of intention to proceed. It would seem that it was at that time that the defendant was prompted to seek legal advice from his new firm of solicitors.

14. While the plaintiff says that both local businesses (i.e., the hotel business and the public house/nightclub business) were run by the collective Claffey family, the defendant riposted by maintaining that both businesses were operated by separate legal liability companies which did not share common directors. If the defendant is correct, then the factual position would seem to be that Mr. John Joe Claffey was the manager of the Grand Hotel and his brother, Mr. Liam Claffey, operated the Auld Shebeen public house and nightclub through the company known as Liam Claffey Ltd.
The judgment of the High Court
15. In ruling on this matter the High Court judge indicated that the application was presented on the basis that some form of injustice was done to the defendant in the circumstances in which the defence came to be struck out in the Master’s Court. O’Malley J. observed that she did not agree with that suggestion. She noted that there was no evidence at all from Mr. Claffey that he did not know what had happened in the Master’s Court or that he did not know that there had been an extension of time to make discovery or that his solicitor did not tell him about the strike out application.

16. O’Malley J. stated that if she had considered that there was a real risk of an injustice happening in the case, despite all that had happened, she would have been inclined to exercise her discretion to permit the defence of the proceedings. It nonetheless seemed to her that the defence being put forward in this personal injuries case was a highly technical one where there was no real injustice to be done in permitting the plaintiff to proceed as things stand. She concluded by saying that if in fact the defendant had been so poorly served by its legal representatives that it was unaware of all the foregoing matters – and she had no evidence of that – then the defendant had a remedy.

17. In the wake of the decision of the High Court, Mr. John Joe Claffey swore an affidavit dated the 4th August, 2015. No leave had been granted either by the High Court or this Court for the filing of such an affidavit.

18. At the hearing of this appeal an issue arose as to whether the order made by the High Court judge was a final order such that leave to file an additional affidavit dealing with matters which took place prior to the decision of the High Court was required by the terms of Ord. 86A, r. 4(b). Given that I consider that the appeal should be allowed for reasons which I will shortly set out, it is not necessary to express a view on this matter or, for that matter, to have regard to the terms of this subsequent affidavit.
Jurisdiction to set aside a judgment obtained in default
19. It is clear from the authorities that the courts’ jurisdiction to set aside a default judgment of this kind is, generally speaking, a free one: see generally Delany & McGrath, Civil Procedure in the Superior Courts (Dublin, 2012) at paras. 4.42-4.56. The courts have nevertheless traditionally required evidence that the default judgment was obtained by surprise or mistake and that the defendant has reasonable prospects of defending the action before that judicial discretion is favourably exercised.

20. The leading contemporary authority on this point is probably that of Costello P. in Fox v. Taher, High Court, 24th January 1996. In that case the plaintiff’s solicitor sued his erstwhile clients for professional fees due in respect of complex commercial litigation. The plaintiff then obtained judgment in the Central Office for a specific sum (namely, US$600,000) on foot of a certificate of no appearance coupled with the filing of a statement of claim. The defendants were not aware that such a judgment had been marked in the Central Office and they were at all times labouring under the impression that they would had to have notice of the application before judgment could be obtained given the nature of the proceedings. Costello P. nonetheless found that the defendants were genuinely shocked that a default judgment had been entered against them in this manner.

21. In these circumstances Costello P. held that he should set aside that default judgment. He stated:

“I do not think it matters very much whether I come to the view that the judgment was obtained by mistake or by surprise because the court has to do justice in this situation. The court has a very wide discretion in setting aside judgments and I think that an injustice would be done to the defendants by allowing the judgment to stand. I am quite satisfied that at all times the defendants wished to contest the jurisdiction of the Irish courts to hear the plaintiff’s claim and that they were waiting for some procedural step to be taken by the plaintiff to enable the situation to be brought to the notice of the court.”
22. While the specific facts of the present case are, of course, very different, it seems to me nevertheless that the underlying principles articulated by Costello P. in Fox are also highly relevant to the present case. There seems little doubt but that so far as this case is concerned the defendant company at all stages intended to defend the proceedings. It likewise depended on its former solicitors to take all appropriate steps to protect its position.
23. I do not overlook the fact that the defendant was legally represented at the hearing before the Master on 20th January 2012. It nevertheless seems clear that by this stage the defendant’s former solicitors were in a wind-down mode and the extent to which proper instructions were obtained and given in respect of that hearing before the Master must be at least open to question. There is, indeed, much evidence to support the defendant’s contention that the practice was wound down in a disorderly fashion. It may be noted, for example, that when the plaintiff’s solicitors served a notice of intention to proceed in November 2013, they also ensured that the transferred practices section of the Law Society were formally notified, of this development the Law Society itself having assumed responsibility for the files of Arigho and Co. It is also striking that the Law Society indicated in subsequent correspondence with the plaintiff’s solicitors that it could not locate the appropriate files from the Arigho and Co. office relevant to these present proceedings.

24. All of this tends to support the defendant’s contention that it had it no knowledge of the manner in which its affairs were being represented by its former solicitors at the time. It is true that the exact details of what occurred during this period from late 2011 to early 2012 are, in some respects, unclear. Enough has been said on affidavit to demonstrate that this case comes squarely within the Fox principles on the basis that, through no personal fault of the defendant, it was not aware of the making of the order and that the fact that its defence had been struck out had come as a surprise.
Whether the defendant has a reasonable prospect of defending the proceedings
25. In exercising this jurisdiction to set aside this default judgment, the court will normally require evidence that the defendant has a reasonable prospect of defending the proceedings: see, e.g., O’Callaghan Ltd. v. O’Donovan, Supreme Court, 13th May 1997. It is, I think, clear that the defendant has such prospects: the case for the defence at all times has been that the plaintiff has elected to sue the wrong defendant and it has, moreover, sought to support its contention by pointing to the plaintiff’s employment records for the period leading up to 15th March 2005. It would, of course, be inappropriate to express a view on the substantive merits on such a defence save to the extent that it is necessary to do so. It is sufficient for this purpose to say that the defendant has demonstrated that it has such a defence.
Imposition of terms
26. If this Court were to extend time and re-instate the defendant’s defence, it should, of course, only do so on terms in the manner envisaged by Ord. 13, r. 11. What, therefore, are the terms which should be imposed upon the defendant such as would endeavour fairly to weigh the interests of the plaintiff as well as the defendant?

27. In the first place, the defendant should be required to file an affidavit of discovery within four weeks of the delivery of this judgment.

28. Second, the delays in this litigation to date have been quite unacceptable and it would be only appropriate that the defendant should be required to take steps as would ensure that this case came on for hearing as quickly as possible. To this end, I would require the defendant to issue a motion for direction in the High Court seeking an early date for the trial of the action. I appreciate that the plaintiff may wish to consider his position in relation to a speedy trial following receipt of the affidavit of discovery from the defendant, but given that eleven years have elapsed since the alleged incident, there is very little room for any further delay in the conduct of this litigation. If, however, any further latitude is to be given, it should be afforded to the plaintiff only, as there can be no room for any further delay on the part of the defendant.

29. Third, it is clear that the plaintiff has been put to further expense and delay by reason of the non-compliance by the defendant with the Master’s order. I would accordingly direct that the defendant should bear the plaintiff’s costs in this litigation from December 2011 to date, such costs to be taxed in default of agreement. I would also require the defendant to make a payment to the plaintiff of €7,500 on account of those costs within two months of the delivery of this judgment.
Conclusions
30. In summary, therefore, I would allow the appeal and re-instate the defendant’s defence. I differ from the views expressed by the High Court in that I think it is clear that the defendant was taken by surprise by reason of the unusual sequence of events I have sought to describe in this judgment.

31. In these circumstances, I believe it would be unjust to the defendant not to re-instate the defence. I would, however, do so conditional only on strict compliance by the defendant on the terms imposed pursuant to Ord. 13, r. 11 which I have just indicated.

McNamara v Sunday Newspapers Ltd

[2016] IECA 140

JUDGMENT OF MR JUSTICE MICHAEL PEART DELIVERED ON THE 11TH DAY OF MAY 2016
1. This is an appeal against an order of Binchy J. dated 12th January 2016 granting judgment to the plaintiff in default of defence on foot of a motion issued on the 25th September 2015 pursuant to the provisions of O. 27 of the Rules of the Superior Courts. This was the second such motion issued by the plaintiff, the first having come before the High Court on 13th July 2015 when by consent it was struck out following an agreement between the parties that the time for delivery of defence be extended by three weeks, with costs of the motion to the plaintiff.

2. Order 27, r. 8 (1) of the Rules of the Superior Courts provides:

“8(1) In all other actions than those in the preceding rules of this Order mentioned, if a defendant being bound to deliver a defence, does not do so within the time allowed, the plaintiff may, subject to the provisions of rule 9, set down the action on motion for judgment; and on the hearing of the first such application the court may give to the plaintiff such judgement as upon the statement of claim it considers the plaintiff to be entitled to, or may make such other order on such terms as the court shall think just; and on the hearing of any subsequent application, the court shall give to the plaintiff such judgment as upon the statement of claim it considers the plaintiff to be entitled to, unless the court is satisfied that special circumstances (to be recited in the order) exist which explain and justify the failure and, where it is so satisfied, the court shall make an order:-
(a) extending the time for delivery of a defence,

(b) adjourning the motion for such period as is necessary to enable a defence to be delivered within the extended time, and on such adjourned hearing:-

(i) if the defence has been delivered within the extended time, the court shall allow the plaintiff the cost of and in relation to the motion at such sum as it may measure in respect thereof,
(ii) if a defence has not been delivered within the extended time the court shall give to the plaintiff such judgement as upon the statement of claim at considers the plaintiff to be entitled to.

(2) In the event of the court giving judgement to the plaintiff as aforesaid, any damages to which the plaintiff may be entitled shall be ascertained by the Judge with a jury, in case any party requires and is entitled to one, but otherwise without a jury, and, if without a jury, either by the Judge or by the Master or by the Examiner, as the Judge may direct, on evidence by affidavit or otherwise” [emphasis added]
3. It is worth drawing attention at this stage to the fact that under this rule, while the Court has an uncircumscribed discretion as to what order it may make on the first such motion, it is constrained on any subsequent such motion by the requirement that the Court shall grant judgment “unless the court is satisfied that special circumstances (to be recited in the order) exist which explain and justify the failure.”
4. When faced with a second such motion the onus is clearly on the defendant to identify some special circumstances which not only explain the delay in delivering the defence but also justify it. The special circumstance if established must be specified in any order which the Court might make. Absent such special circumstances the Court is required to grant the plaintiff’s application.

5. In these proceedings the plaintiff claims, inter alia, damages for defamation and certain related declarations arising from the publication in the Sunday World newspaper on the 21st December 2014 of certain statements and/or photographs. The details of that allegedly defamatory material do not matter for the purposes of the present appeal.

6. Having heard the plaintiff’s second motion for judgment at which both parties made submissions, Binchy J. was not satisfied that the defendants had established any special circumstances which explained and justified the delay. In fact, the defendants had not even filed an affidavit in response to the motion, and therefore did not adduce any evidence which might have enabled the Court to conclude that there were any special circumstances which might explain and justify the failure to deliver a defence.

7. Nonetheless, submissions made by counsel for the defendants referred to the fact that following the service of the second motion upon them, their solicitors had sent a letter to the plaintiff’s solicitor purporting to comprise “an offer to make amends” as provided for in s. 22 of the Defamation Act, 2009, and a copy of that letter was produced to the Court. The sending of this letter of offer to make amends, albeit after the second motion for judgment had been issued and served, was submitted to constitute a special circumstance which both explained and justified the delay in the delivery of a defence since under s.22 of the Act of 2009 any such offer may not be made after the delivery of a defence.

8. A chronology of events following the publication of the material complained of is informative, and is, I believe, uncontroversial. The article and photograph was published in the Sunday World on 21st December 2014. On the following day the plaintiff’s solicitors wrote to the newspaper pointing out the defamatory material and the serious damage done to the plaintiff’s reputation, and called for an admission of liability and an apology. On 4th January 2015, without having made any contact with the plaintiff or his solicitor, the defendants published what purported to be an apology. However, according to the plaintiff at least, this failed to match the prominence of the material complained of, and failed to mitigate the damage caused. These proceedings were commenced on 25th February 2015, and were served along with a statement of claim on 26th February 2015. The defendants entered their appearance on 9th March 2015. Prior to the issue by the plaintiff of his first motion seeking judgment in default of defence, the plaintiff’s solicitor wrote three warning letters on 30th March 2015, 30th April 2015 and on 25th May 2015 each warning that if a defence was not delivered within a time specified in each letter a motion would be issued. I should add that the final letter dated 25th May 2015, as required by the Rules, called for the defence to be delivered within 21 days of that letter, and consented to late delivery within that time. There was no response received to any of these letters. The plaintiff therefore issued his first motion for judgment on 30th June 2015, made returnable in the High Court on 13th July 2015.

9. Prior to that return date the defendants sought an extension of three weeks for the delivery of their defence, to which the plaintiff’s solicitor consented. An order was made by consent to this effect on the return date. While that order refers to a two week extension of time, the parties are agreed that the extension sought and consented to by the plaintiff was three weeks. Nothing turns on that clerical error in the order as drawn up and perfected, since in any event the defendants again failed to deliver a defence prior to 3rd August 2015 (i.e. 3 weeks from 13th July 2015).

10. On 25th August 2015 the plaintiff’s solicitor once again wrote to the defendant’s solicitor, to which a reply was sent the following day which having stated that the solicitor handling the matter was on leave went on to state:

“… we have reminded counsel to finalise the drafting of the Defence in this matter and we shall revert to you within fourteen days and in the circumstances would ask if you could hold off issuing any Motion until such time.”
11. Having once again heard nothing from the defendant’s solicitor within that fourteen days or at all, the plaintiff’s solicitor issued and served a second motion for judgment on the 25th September 2015 returnable in the High Court on 9th November 2015.
12. The next event was that the defendants’ solicitor wrote to the plaintiff’s solicitor by letter dated 30th October 2015. This letter made no reference to either the previous correspondence or the motion which by then had been served, and sought no agreement to a further extension of time for delivery of defence. It simply stated as follows:

“Dear Sir,
We act for Sunday Newspapers Limited in the above entitled action.

Our client hereby offers to make amends pursuant to Section 22 of the Defamation Act 2009 in respect of the article complained of in the Statement of Claim. In accordance with Section 22, our client offers:

(a) to make a suitable correction and a sufficient apology;
(b) to publish that correction and apology in such manner as is reasonable and practicable in the circumstances; and

(c) to pay such compensation or damages (if any), and such costs, as may be agreed or be determined to be payable.

We look forward to hearing your client’s response to our proposals so that we may seek to agree the above matters as soon as possible.
Yours faithfully etc.”

13. According to an affidavit filed by the defendant’s solicitor on this appeal, when the matter came before Mr Justice Gilligan on 9th November 2015 (the return date) the court indicated that if necessary it would fix a date to hear and determine the question as to whether the plaintiff must respond to an offer to make amends prior to the delivery of a defence but went on to indicate that it was desirable that the parties, if possible, could seek to resolve the matter between themselves. The motion was adjourned to another date for hearing. That affidavit went on to state that on foot of the court’s suggestion, the defendant’s solicitor wrote to the plaintiff’s solicitor on 10th November 2015 noting first of all that there had been no reply to the offer to make amends contained in their letter dated 30th October 2015, and that it was considered reasonable for the defendants to await that response prior to delivering a defence. The letter went on to indicate that a defence would be delivered immediately upon receipt of such response to the offer and conceded the costs of the motion.
14. One can note, as did the trial judge, that the letter of offer to make amends lacked any specifics and simply replicated the precise provisions of s. 22(2) of the Act of 2009. It is correct that the plaintiff’s solicitor had not responded to this letter by the time the defendant’s solicitor wrote the letter dated 10th November 2015 which was in the following terms:

“Dear Sir,
We refer to the above matter and to the plaintiff’s application for judgement in default of defence which is listed before Mr Justice Gilligan on Thursday, 12 November. In the interests of the expeditious resolution of the plaintiff’s claim, our client made an offer of amendments under section 22 of the Defamation Act 2009 by letter of 30 October 2015. We note that you have not replied to the defendant’s offer to make amends.

As you will be aware, section 22 (3) of the Defamation Act 2009 provides an offer to make amends under section 22 shall not be made after delivery of the defence. While a person who makes an offer is not required to plead as a defence (section 23 (4)), section 23 (2) provides that it shall be a defence to a defamation action for a person to prove that he or she made an offer to make amends under section 22 and that it was not accepted, unless the plaintiff proves the matters set out in that section. Where the offer to make amends is pleaded, a defendant is not entitled to plead any other defence (section 22 (5)). In the light of the foregoing, we believe it was and is reasonable for the defendant to await the plaintiff’s response to the offer to make amends before delivering a defence. Our client will deliver a defence immediately on receipt of your client’s response to the offer to make amends of 30th of October, 2015. We acknowledge that the offer to make amends was made subsequent to the plaintiff’s application having issued, and under the circumstances, our client will consent to your client receiving the costs of the motion with a stay on execution until the trial of the action.

We await hearing as soon as possible.

Yours faithfully etc”

15. On receipt of this letter the plaintiff’s solicitor replied on the same date as follows:
“Dear Sirs,
We refer to the above-mentioned matter and yours of today’s date and further to your counsel’s appearance in court yesterday, in response to our motion for judgement, and yours of 30th October, we note as follows:

Your letter of 30th rehearses the wording of section 22 (5) of the Defamation Act, 2009.

It would assist us in considering your letter (and specifically, whether our client will accept the same) were you to clarify your clients’ initial proposals as to what is being offered in this specific case. In other words,

(a) What correction is being proposed as being a ’suitable’ one in this case and/or what apology is being proposed as ‘sufficient’?
(b) What are the terms of publication which are being put forward as ‘reasonable and practicable’ in this case?

(c) What compensation is being suggested?

While it is understood that the foregoing matters will be a matter of discussion and/or negotiation between the parties (as contemplated by both section 22 and 23) it would be helpful (and in our contention, is necessary) for the offer to make amends to be in terms which are actually referable to the case and not simply a statement of the general terms contained in section 22.
You will appreciate that this enquiry is without prejudice to any argument which may arise by reason of the offer to make amends being delivered well outside any time period permitted for the defence of this action.

Yours faithfully etc.”

16. In response to that letter, the defendant’s solicitor wrote back on the same date, 10th November 2015, noting that the offer contained in the letter of offer to make amends dated 30th October 2015 was an offer within the meaning of and in compliance with s. 22 of the Act of 2009, and went on to state:
“If the offer to make amends is accepted, the matters that you refer to will either (a) the agreed or (b) will be approved or determined, as the case may be, by the Court.
Respectfully, it is for your client to either accept or not accept the offer to make amends.

Please note that Section 22 (3) refers to the delivery of the defence in the defamation action concerned and not to the time delimited by the Rules for the delivery of the defence.

We await hearing from you as soon as possible.

Yours faithfully etc”

17. The second motion ultimately came on for hearing before Mr. Justice Binchy. Written submissions were directed and were filed in advance of the hearing. Before I refer to his conclusions, it would be helpful to set forth the provisions of s. 22 and s. 23 of the Act of 2009. They are as follows:
“22(1) A person who has published a statement that is alleged to be defamatory of another person may make an offer to make amends.
(2) An offer to make amends shall:-

(a) be in writing,
(b) state that it is an offer to make amends for the purpose of this section, and

(c) state whether the offer is in respect of the entire of the statement or an offer (in this Act referred to as a “qualified offer”) in respect of:-

(i) part only of the statement, or
(ii) a particular defamatory meaning only.

(3) An offer to make amends shall not be made after the delivery of the defence in the defamation action concerned.
(4) An offer to make amends may be withdrawn before it is accepted and where such an offer is withdrawn a new offer to make amends may be made.

(5) In this section “an offer to make amends” means an offer:-

(a) to make a suitable correction of the statement concerned and a sufficient apology to the person to whom the statement refers or is alleged to refer,
(b) to publish that correction and apology in such manner as is reasonable and practicable in all the circumstances, and

(c) to pay to the person such sum in compensation of damages (if any), and such costs, as may be agreed by them or as may be determined to be payable, whether or not it is accompanied by any other offer to perform an act other than an act referred to in paragraph (a), (b) or (c).

“23(1) If an offer to make amends under section 22 is accepted the following provisions shall apply:-
(a) if the parties agree as to the measures that should be taken by the person who made the offer to ensure compliance by him or her with the terms of the offer, the High Court or, where a defamation action has already been brought, the court in which it was brought may, upon the application of the person to whom the offer was made, direct the party who made the offer to take those measures;
(b) if the parties do not so agree, the person who made the offer may, with the leave of the High Court or, where a defamation action has already been brought, the court in which it was brought, make a correction and apology by means of a statement before the court in such terms as may be approved by the court and give an undertaking as to the manner of their publications;

(c) if the parties do not agree as to the damages or costs that should be paid by the person who made the offer, those matters shall be determined by the High Court or, where a defamation action has already been brought, the court in which it was brought, and the court shall for those purposes are all such powers as it would have if it were determining damages or costs in a defamation action, and making a determination under this paragraph it shall take into account the adequacy of any measures already taken to ensure compliance with the terms of the offer by the person who made the offer;

(d) no defamation action shall be brought or, if already brought, proceeded with against another person in respect of the statement to which the offer to make amends applies unless the court considers that in all the circumstances of the case it is just and proper to so do.

(2) Subject to subsection (3), it shall be a defence to a defamation action for a person to prove that he or she made an offer to make amends under section 22 and that it was not accepted, unless that the plaintiff proves that the defendant knew or ought reasonably to have known at the time of the publication of the statement to which the offer relates that:-
(a) it referred to the plaintiff or was likely to be understood as referring to the plaintiff, and
(b) it was false and defamatory of the plaintiff.

(3) Where the defendant in a defamation action made a qualified offer only, subsection (2) shall apply in relation to that part only of the action that relates to the part of the statement or the meaning as the case may be, to which the qualified offer relates.
(4) A person makes an offer to make amends is not required to plead it as a defence in a defamation action.

(5) If the defendant in a defamation action pleads the defence under this section, he or she shall not be entitled to plead any other defence in the action, and if the defence is pleaded in respect of a qualified offer only he or she shall not be entitled to plead any other defence in respect of that part of the action that relates to the part of the statement or the meaning, as the case may be, to which the qualified offer relates.”

18. In his judgment, the trial judge noted that the defendants had filed no affidavit setting out any special circumstances to explain and justify the delay in delivery of the defence since the order on the first motion extending time by three weeks. He referred also to the defendants’ submission that there were in fact two special circumstances which explained and justified the delay – firstly, the fact that the offer to make amends had been neither accepted nor rejected by the plaintiff, and that the defendants had given an assurance that once the offer was either accepted or rejected a defence would be delivered immediately; and secondly, that the first relief sought by the plaintiff, namely a declaration that the statements and/or photograph complained about and published are false and untrue is a relief which may be given only by the Circuit Court as provided for in s. 28 of the Act of 2009, and accordingly that the proceedings are not maintainable in their present form. The trial judge noted also the defendants’ submission that by neither accepting nor refusing the offer of amends, the plaintiff was acting unreasonably, was manufacturing the default of which he complains, and engaging in an impermissible exercise of approbation and reprobation.
19. Having considered these submissions and relevant provisions of the Act of 2009, the trial judge concluded firstly that the fact that certain declaratory reliefs which the High Court could not grant had been included in the claim was not a special circumstance for the purpose of the rule. With that conclusion, I readily agree, and given its obvious lack of merit it is unnecessary to examine it further.

20. As to the second submission based on the plaintiff’s failure to have accepted or rejected the offer to make amends, and the contention that the plaintiff is contriving the defendants’ failure to deliver a defence in those circumstances since the offer to make amends may not be delivered after the delivery of defence, the trial judge stated “that might well be persuasive if that was an end of the matter, but in my view that is not so”. He went on to address the delay by the defendants. He noted that the defendants had purported to publish an apology within days of receiving the complaint from the plaintiff’s solicitors, and therefore, unlike many cases where some time would often be required in order to assemble materials, seek further particulars and take legal advice, these defendants were well aware from an early stage of all the relevant circumstances, and seemed to acknowledge that some error had been made by them in publishing the material. In such circumstances, the trial judge stated:

“… It is clear that from the very outset, the defendants were aware of the circumstances giving rise to these proceedings and of the fact that an error was made in the publication. Arising out of that realisation, the defendants published a correction just seven days later. It seems very likely therefore that in the particular circumstances of this case, the defendants had as much information as they needed to file a defence within the time prescribed by the rules and to formulate an offer of amends for the purposes of section 22 of the Act within the same period.”
21. Again, I agree with this conclusion. Indeed, in fairness to the defendants, they did not seek to say otherwise on this appeal even though it has been argued that time was needed to consider whether or not to make the offer of amends.
22. The trial judge then referred to the three unanswered letters which the plaintiff’s solicitor had written ahead of the first motion for judgment, the consent to an extension of time for delivery of defence which had been given on that motion, the failure to deliver the defence within the time agreed, the further warning letter in August 2015, the second motion that issued towards the end of the September 2015 returnable for the 9th November 2015, and the eventual letter of offer to make amends received on the 10th November 2015.

23. Having considered this chain of events and the delay, the trial judge expressed his conclusions as follows:

“26. No explanation at all has been given to the Court as to why it took the defendants so long to issue the letter of offer to make amends. That being the case, the Court can only infer that there is no explanation for the delay in doing so. The defendants now plead that the plaintiff was preventing them from filing the defence because he has yet to say whether or not he is prepared to accept the offer to make amends. It is certainly arguable, having regard to section 23 of the Act that the fact that a defendant is waiting to hear from the plaintiff as to whether or not an offer to make amends made by the defendant will be accepted by the plaintiff, constitutes a special circumstance for the purposes of Order 27, rule 8 (1) of the Rules of the Superior Courts. However, in considering this question, regard must be had to the conduct of the defendant to date in the proceedings.
27. There can be no doubt at all that the offer to make amends made on the 30th October, 2015 could have been made much earlier, and most probably could have been made within the time for the filing of a defence as prescribed by Order 21, rule 1 and certainly in advance of the issue of the first motion for judgement on 30th June, 2015, not least because the defendants have chosen to make an offer to make amends in principle and not in terms. Instead, the defendants sat on their hands and chose not to make the offer until a month after the issue of the second motion for judgement. The reason for the delay therefore cannot possibly be said to be the failure of the plaintiff to respond to the letter of amends, but rather is the dilatoriness on the part of the defendants in making the offer of amends. That could not be said to be a special circumstance for the purposes of Order 27, rule 8 (1) and accordingly I will grant judgement in favour of the plaintiff and direct that damages be assessed in due course by a judge and jury.”

24. On this appeal, Counsel for the appellants has raised three issues, one of which was not pressed, and in my view rightly so. It is the fact that the warning letter written on the 25th August 2015 threatening a second motion failed to indicate a 21 day period within which the defence should be delivered if a motion was not to follow. In that regard, O. 27, r. 9 of the Rules of the Superior Courts provides that no such motion shall be issued unless such a 21 day letter has been issued, and makes no distinction between a first, second or indeed further motion in this regard. However, as pointed out by Counsel for the respondent, the reality is that following that letter dated 25th August 2015, the defendant’s solicitor wrote on the following day stating that the solicitor handling the matter was on leave, but that counsel had been reminded about the matter, and indicated that they would reply further in 14 days time, and asked that no motion should issue in the meantime. Not only did the plaintiff’s solicitor not issue the second motion within that requested period, but in fact desisted from doing so until 25th September 2015 having heard nothing further at all. For that reason alone, it was not perhaps the defendants’ best point, but there is another reason why it was always a hopeless point on this appeal – namely that it was not raised at all in the court below. I express no view on a submission made by counsel for the respondents that in any event the failure to send a correctly worded letter may be overlooked by the court under the provisions of O. 124 of the Rules of the Superior Courts. He may well be correct, but I make no finding in that regard given the other reason for rejecting the submission made.
25. Another ground argued by the defendants was that the decision to grant judgment in default of defence in the circumstances of this case demonstrates a misunderstanding and misapplication by the trial judge of the purpose of the rules relating to motions for judgment in default of defence, namely, according to counsel, to ensure that proceedings move along at a reasonable pace, and that defendants are not shut out from defending the proceedings by an overly strict or technical application of the rules of court. In support of that argument counsel urges this court to consider the degree of the prejudice that the defendants will suffer by reason of the order made. He submits firstly that there is prejudice from the fact that damages will be now assessed by a jury and not by a judge alone as would otherwise be the case; and secondly that at the hearing before the jury for the assessment of damages the defendants will have no opportunity to put forward any defence to the claim for damages or challenge the plaintiff’s evidence. Again, this argument appears not to have been made in the court below. There is no reference to it in the trial judge’s judgment at any rate. But even if I overlook that difficulty and deal with the ground on its merits, I cannot overlook that this prejudice, if it be such at all, is one entirely of the defendants’ own making. It was within the defendants’ own control to ensure that the plaintiff’s case would be heard before a judge alone. They lost that control, or at least ceded it to the plaintiff by their dilatoriness in the delivery of their defence, and/or their dilatoriness in making a decision that they would avail of the mechanisms provided for in s. 22 of the Act of 2009.

26. In my view this consequence cannot be considered to outweigh the requirement that the defendants must, like any party to litigation, pursue their defence of this litigation with diligence, efficiency and reasonable expedition in accordance with the rules of court which are devised with that worthy objective in mind. In my view the trial judge did not misapply the rule on the facts of this case. I accept, of course, that the rules exist so that proceedings move along at a reasonable pace, and that an inflexible approach or an insistence upon strict compliance with a rule which, for example, delimits the time for the taking of a step in the proceedings, would fail to acknowledge the existence within the rules themselves of a discretion to extend time in appropriate cases. But the present case is governed by a particular rule where that discretion is circumscribed in the manner described, and the defendants have failed to bring themselves within the rule, and therefore have themselves excluded themselves from the availability of the discretion permitted within O.27, r. 8 of the Rules of the Superior Courts.

27. It has been argued that the plaintiff has caused the defendants to be prejudiced in this matter because he neither accepted nor rejected the offer of amends contained in the letter dated 10th November 2015. It is argued in this regard that the prejudice arises in circumstances where, if the offer had been rejected by the plaintiff, it would constitute a full defence unless the plaintiff could prove malice. It is further submitted that if on the other hand the plaintiff had accepted the offer to make amends, matters would have proceeded differently as provided for in the Act. But again, it has to be emphasised that these are consequences which the defendants have brought upon themselves. The plaintiff is in no way to blame for the circumstances in which the defendants found themselves before the High Court. The letter of amends was received on the day after the first return date for the second motion. It was never even hinted as a possibility following the service of the proceedings and the statement of claim as far back as February 2015. All correspondence from the plaintiff’s solicitor was completely ignored. It ill behoves the defendants in my view to seek to cast blame upon the plaintiff for the predicament in which they now find themselves.

28. There has been no explanation for the delay, or even the failure to answer the plaintiff’s solicitor’s letters. No affidavit whatsoever was filed in answer to the plaintiff’s second motion in the High Court. While an affidavit has been filed in this Court for the purpose of this appeal, there is no explanation within it which even approaches an acceptable explanation for what occurred, let alone justifies it. In reality there is no explanation in circumstances where it has to be accepted that from the very outset the defendants accepted that a mistake had been made, and published an apology in a very timely manner. As it happens, the plaintiff did not consider this apology to be adequate, but that is not the point for present purposes. The point is that they knew back in February 2015 everything they needed to know in order to make a timely decision whether or not to avail of s. 22 of the Act of 2009.

29. It has been submitted by the defendants that in fact s. 22 is silent as to the time within which the offer of amends must be made, except that it must be made prior to the delivery of defence. The defendants say that they have complied with the section, and that this constitutes a special circumstance for the purpose of the rule, and that it was reasonable therefore that an opportunity be given for a response to be received to that offer before delivering a defence. I agree with the trial judge’s conclusion that in many cases where a timely offer to make amends is made, it will be reasonable to delay the delivery of a defence until such time as the plaintiff has indicated a response to that offer. Each such case will have to be considered on its own facts. But in the present case, the letter of offer to make amends came very late in the day. In those circumstances, it cannot be considered to be a special circumstance, as it might be in another case where that delay did not occur. The defendants cannot call in aid their own default as a special circumstance.

30. I would add that I am not to be taken as expressing any view on the adequacy or validity or otherwise of the letter of offer to make amends in this case. The plaintiff has made the point that it is simply formulaic and follows precisely the words of the section, but contains no substance to which the plaintiff might give his consideration as to whether to accept or reject same. That question must await another case in which the question arises more directly.

31. For all these reasons I would dismiss this appeal.

 

 

McGrath v Godfrey

[2016] IECA 178,
JUDGMENT of Ms. Justice Irvine delivered on the 15th day of June 2016
1. This is an appeal against the order of the High Court (Barr J.) made on 11th January, 2016 and perfected on 12th January, 2016, whereby he refused the defendant’s (Mr. Godfrey’s) application to set aside an order of the Master of the High Court dated 14th February, 2014. That Order granted the plaintiffs liberty to enter final judgment against Mr. Godfrey for a total sum of €1,400,000 together with interest on the sum of €1m from 8th May, 2012, and an order for their costs to be taxed in default of agreement.
Background
2. The background to the judgment is that on 19th December, 2012, the plaintiffs issued summary summons proceedings on foot of personal guarantees allegedly afforded by Mr. Godfrey to each of them dated 21st May, 2007. Those guarantees were stated to support a total sum of €1m. loaned by them to Greenhill Investment Limited, a company of which Mr. Godfrey was a director and which has an address in Bulgaria. That loan is not disputed. The company having defaulted upon its repayment obligations, the plaintiffs, by letter dated 8th May, 2012, called upon Mr. Godfrey to meet his liabilities under the guarantees.

3. It should be stated that Mr. Godfrey’s application to set aside the order of the Master dated 14th February, 2014, was supported by his own affidavit sworn on 14th December, 2015. The matters which he relied upon were replied to by Mr. Orm Kenny, the plaintiffs’ solicitor, in an affidavit of 6th January, 2016. Mr. Godfrey did not seek to file any supplemental affidavit challenging the content of Mr. Kenny’s affidavit which dealt with the service of the summary summons, notice of motion and grounding affidavit and also the matters relied upon by Mr. Godfrey to support his assertion that he had a bona fide defence to the proceedings.

4. In his notice of appeal dated 22nd January, 2016, Mr. Godfrey made a number of assertions as to fact, many of which related to the service of the proceedings, which he had not deposed to on affidavit when his application was dealt with in the High Court. Yet further factual claims were advanced by him in his written submissions. In addition, he lodged a number of further affidavits in support of his appeal.

5. The first of these affidavits was that sworn by Ms. Anne Murphy on 8th February, 2015, wherein she stated that she had accompanied Mr. and Mrs. Godfrey to Bulgaria on 17th January, 2013, and that they had remained there until 25th January, 2013. The second was an affidavit sworn by the defendant’s wife, Mrs. Margaret Godfrey, on 5th February, 2016. In her affidavit she stated that when she arrived home from Bulgaria on 25th January, 2013, she saw no document in the house with her husband’s name on it. She also confirmed that during the weeks which included 24th June 2013, and 20th January 2014, no post had arrived for her husband from the plaintiffs. She also advised that on 18th December, 2013, a man had come to their home looking for her husband. When she informed him that he was not there he allegedly put his foot in the door and was persistent to the point that she told him that she intended calling the gardai with the result that he left. The third affidavit was that of Mr. Joe Godfrey, the defendant’s son, who asserted that his father left home at 7:55 a.m. on 16th January, 2013, and did not return until 25th January 2013. He claimed that nobody had come to the door of the house that morning and that he had found no document left in the letterbox. Thankfully, for the purposes of this appeal, it is not necessary to consider the weight that a court might reasonably attach to affidavits, such as those to which I have just referred, wherein the deponents have each asserted that they are in a position to recollect what, if any, post came through the letterbox of their home on a particular day or in the course of a particular week several years earlier.

6. Given that this is not an appeal from an interlocutory order, the approach which has been adopted by Mr. Godfrey on this appeal in seeking to introduce the aforementioned new material is highly irregular and is not in conformity with the Rules of Court. However, given that he represented himself at the hearing of the appeal, I feel that I should briefly summarise the more significant matters referred to by him in the aforementioned documentation, given that I am satisfied that these matters are not critical to or determinative of the outcome of the appeal.

7. Mr. Godfrey maintains that:-

(i) he was never served with the summary summons either personally or by ordinary pre-paid post;
(ii) he was not at his home on 18th December, 2013, when Mr. McGlynn attended for the purposes of seeking to effect service of the notice of motion. His wife was present but she was not served;

(iii) the summons should have been sent by registered post because post “goes missing” in Ireland;

(iv) there were no personal guarantees and he signed no such documents;

(v) the first he knew of any court proceedings was in July, 2015 when he was advised of the existence of a European Enforcement Order, and

(vi) the effect of the judgment obtained against him has been that his shares in his Bulgarian companies have been seized and those companies are in the process of being liquidated and their assets sold off at a substantial undervalue.

Chronology and summary of the evidence before the High Court
8. The following is a brief chronology and summary of the evidence which was before the High Court Judge at the time he made his order.
9. As I have already stated, the plaintiffs issued a summary summons on 19th December, 2012. Mr. Simon Kennedy, the solicitor on record for the plaintiffs at that time, in his affidavit of 13th March, 2013, averred that he travelled to Limerick on 16th January, 2013, for the purposes of effecting service. He telephoned Mr. Godfrey prior to his arrival and told him that he had a document to serve on him. Mr. Godfrey advised him that he was going to Bulgaria and said he would phone back with the name of the solicitor upon whom the summons could be served. When he did so he advised Mr. Kennedy that he was not prepared to accept service. He did not want to be rushed in light of his travel arrangements. He then advised Mr. Kennedy that he was not at his home at Fedamore.

10. Mr. Kennedy, according to his affidavit, then drove to the defendant’s home where he states he saw a man and woman walking to a motor car. They went back into the house as soon as they noticed him. He states that he was satisfied that the man in question was Mr. Godfrey. Accordingly, he tried to telephone him again but this time his phone went through to an answering machine. He left a message stating that he intended posting the High Court writ through his letterbox.

11. Mr. Kennedy’s account of what transpired between himself and Mr. Godfrey on 16th January, 2013, was brought to the Court’s attention in the course of an application for substituted service made on 24th June, 2013.

12. An order for substituted service of the summons was duly perfected by Birmingham J. on 26th June, 2013, and this permitted service to be effected by ordinary pre paid post on Mr. Godfrey at his home address. Service was effected on 28th June, 2013, and an affidavit relating to that service was sworn on 17th July, 2013.

13. Regrettably, further difficulties were encountered when the plaintiffs sought to serve their motion for liberty to enter final judgment. At that stage, Mr. David McGlynn, a summons server, travelled to the defendant’s address for the purposes of serving the relevant documents. Mr. McGlynn, in his affidavit sworn on 6th January, 2014, deposed to the fact that when he attended at the defendant’s home the door was answered by a female who identified herself as Mr. Godfrey’s wife and that when he asked to speak to Mr. Godfrey he then came to the door. As soon as Mr. Godfrey began to read the documents handed to him, Mr. McGlynn stated that Mr. Godfrey became very aggressive and abusive. As already advised, Mr. Godfrey denies any such conduct in circumstances where he maintains that he was not present on that occasion. Regardless of the dispute between the parties as to what actually occurred, the plaintiffs’ advisers clearly concluded that proper service had not been effected and that it would be necessary to apply once again for an order for substituted service of the motion for liberty to enter final judgment.

14. That application for substituted service was made to Peart J. on 20th January, 2014, when he made an order permitting service of the motion to be effected by ordinary pre paid post at Mr. Godfrey’s home address. Mr. Orm Kenny, the plaintiffs’ solicitor, by affidavit dated 7th February, 2014, deposed to the fact that he served the notice of motion and the order of Peart J. by posting the same to the defendant at his aforementioned address on 30th January, 2014.

15. On 14th February, 2014, the defendant having failed to appear to the motion, the Master of the High Court granted the plaintiffs liberty to enter final judgment against Mr. Godfrey. Judgment was later entered in the sum of €1,543,880 on 17th April, 2014.

16. As already stated, Mr. Godfrey maintains that he only became aware of the judgment in July, 2014 and that it then took ten weeks for his solicitor to ascertain how the judgment had been obtained against him.

17. Mr. Godfrey further advised in the course of his affidavit of 15th December, 2015, that he had a bona fide defence to the proceedings including but not limited to the fact that the plaintiffs had entered into a contract with a limited liability company of which he was a director, namely Greenhill Investment Limited, which was registered in Bulgaria and which contract contained a clause giving the courts of Bulgaria exclusive jurisdiction concerning any contractual matters as might arise between the parties. Thus, he maintained that he had no liability to the plaintiffs and that the justice of the case required that the judgment be set aside and that he be given liberty to defend the action.

18. In reply, Mr. Orm Kenny in his affidavit sworn on 6th January, 2016, referred to the history concerning the service of the proceedings so as to demonstrate that Mr. Godfrey could not have been unaware of the existence of the proceedings. He maintained that it was perfectly clear that the defendant was engaged with the proceedings from the time the plaintiffs first sought to effect service of the summons upon him on 16th January, 2013. He thus challenged the credibility of Mr. Godfrey’s claim that he was taken by surprise when judgment was entered against him. Further, Mr. Kenny asserted that Mr. Godfrey could have no bona fide defence to the proceedings because the claim was against him personally and not as against his company. The claim was one based upon guarantees which were repayable on demand and lawful demand had been made by letter dated 8th May, 2012. Further, the guarantees provided that the parties thereto would submit to the jurisdiction of the Irish courts.
The relevant principles
19. The jurisdiction of the Court to set aside a judgment obtained in default of appearance is contained in Ord. 13, r. 11 of the Rules of the Superior Courts, 1986. It provides as follows:-

“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 terms as may be just.”
20. It is clear from this rule that the relief that may be afforded to an applicant is one which is at the Court’s discretion. However, the rule provides no guidance as to the circumstances in which a Judge might exercise that discretion and neither does it seek to impose any time constraints upon the intended applicant. Helpful assistance in relation to the first of these matters is however to be found in the decision of Peart J. in Allied Irish Banks plc v. Lyons [2004] IEHC 129, in which he emphasised the breadth of the discretion conferred by the rule and the necessity for the Court to seek to achieve justice for both the plaintiffs and the defendant. This is what he said at p. 4 of his judgment:-
“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 in this case.”
21. It is usual for an applicant who seeks relief under Ord. 13, r.11 to be in a position to demonstrate that there was some sort of irregularity in the proceedings or the procedure whereby the judgment was obtained. Where such an irregularity is established the Court will normally set aside the judgment without enquiring into the merits of the applicant’s proposed defence and will do so without the imposition of any terms. The logic which underpins this approach is that given that the judgment should never have been obtained in the first place the parties should rightly be restored to the position they would have enjoyed had judgment not been so obtained. This is what Clarke J. stated at para. 2.1 of his judgment in O’Tuama v. Casey [2008] IEHC 49 concerning the jurisdiction of the Court in such circumstances:-
“[W]here judgment is obtained irregularly, the court will normally set aside the judgment without enquiring into the merits of the proposed defence. 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 which the defendant would wish to put forward.”
22. It is important in this context to note that the Court will demand proof of strict compliance with the Rules of Court by a party who seeks to stand over a judgment obtained in default of appearance. This, in my view, is extremely important having regard to the potential grave consequences for any defendant against whom judgment is obtained, as is aptly demonstrated by the matters deposed to by Mr. Godfrey in the present case. In this case the plaintiffs maintain that that they strictly complied with the relevant Rules of Court and that the affidavits of Mr. Kennedy and Mr. McGlynn clearly establish that the service effected on Mr. Godfrey was in compliance with the Court orders earlier referred to.
23. If, a court is satisfied that a plaintiff obtained judgment in an entirely regular manner, the defendant who seeks to set aside that judgment faces a significantly enhanced burden of proof. The relevant principles would suggest that they must demonstrate first that they have a bona fide defence to the proceedings. After all, it would be wholly unjust to a plaintiff if a court were to set aside a judgment which they had obtained unless it was satisfied that it was doing so for the purposes of enabling a defendant mount a credible defence to the proceedings. In this regard Peart J. in Allied Irish Banks plc v. Lyons accepted that the threshold to be met by the defendant was higher than merely establishing an “arguable case”. He adopted the threshold approved of in The Saudi Eagle [1986] 2 Lloyd’s Reports 221, where it was held by Sir Roger Ormrod that it was insufficient to establish an “arguable case”. It was necessary for the applicant to demonstrate that their intended defence had a “real chance of success”. Secondly, the applicant must convince the court that, having regard to all of the relevant circumstances and in particular the interests of each of the parties, the balance of justice would favour the setting aside of the judgment.

24. Balancing the interests of the parties is far from straightforward when a court is satisfied that the applicant has established the existence of a defence which has a real chance of success. The deliberations of Peart J. in Allied Irish Banks plc v. Lyons demonstrate the dilemma for the presiding judge. In that case Peart J. had to balance the prejudice to AIB who had obtained judgment and registered that judgment as a mortgage against the second named defendant’s premises against the prejudice to be visited upon her if she were not permitted to defend the proceedings. The latter alternative would have left the second named defendant to seek to remedy her situation by suing her solicitor whose mistake it was that enabled the bank to obtain judgment and register it against her home. He referred to the stress, potential costs and uncertainty regarding the outcome of that litigation, which he noted would be ongoing at a time when the bank would be free to seek to execute its judgment against her family home.

25. Often times, in its efforts to strike a balance between the interests of the parties, the court will grant the relief sought but impose terms and conditions on the defendant in an effort to provide some type of security for the plaintiff who is likely to be prejudiced by the granting of the relief sought.

26. The most frequent example of this type of application i.e. an application to set aside a judgment which was regularly obtained is one brought by a defendant who seeks to rely upon some mistake on the part of their solicitor as a result of which judgment was obtained against them. The decision in Allied Irish Banks plc v. Lyons is one such example.
Decision
27. In the present case the High Court judge decided Mr. Godfrey’s application on the grounds that he was satisfied that the summary summons and the motion seeking liberty to enter final judgment had been validly served in accordance with the two orders for substituted service earlier referred to. In other words he was satisfied that the judgment had been obtained in a regular fashion in accordance with the Rules of the Superior Courts. In coming to that conclusion the trial judge referred to the relevant affidavits of service.

28. Mr. Godfrey’s principal complaint before the High Court was that he only became aware of the instigation of the proceedings after judgment had been obtained and that he had not been served with any notification of the proceedings. What he did not contest, however, was the plaintiffs’ assertion that service had been effected in a regular manner in strict compliance with the Rules of Court and the orders for substituted service.

29. Thus, I am satisfied that the High Court judge was correct in concluding that the judgment had been validly obtained by the plaintiffs. That being so, the only basis upon which Mr. Godfrey was entitled to seek to have the judgment set aside was to demonstrate that he had a real chance of successfully defending the proceedings and to convince the Court that in all of the circumstances and having regard to the interests of all of the parties, that the balance of justice favoured the granting of the relief sought.

30. The fact that a court may be satisfied that a judgment was regularly obtained having regard to proof of compliance with an order for substituted service, does not mean that a defendant who can establish that they have a real chance of successfully defending the proceedings and can prove that they knew nothing of the proceedings might not seek to rely upon that fact to urge the that the justice of the case would favour the judgment being set aside. For example, if a defendant against whom judgment was obtained on foot of an order for substituted service which directed that service be effected by ordinary post to his home address, could establish that his house lay vacant in Ireland three months either side of the date upon which service was effected because he and his family were on a six-month sabbatical in another jurisdiction, undoubtedly the court, even though satisfied that valid service had been effected, would be entitled to consider whether those facts might, having regard to the interests of the other party, justify the judgment being set aside. However, he would only be entitled to pursue that argument if he could satisfy the court that he had a real chance of successfully defending the claim.

31. However, a plaintiff who obtains an order for substituted service does not have to prove that the defendant actually received the documents the subject matter of that order in order to satisfy the court that the judgment was regularly obtained. After all, an order for substituted service is only made if the court is satisfied that in effecting service in the manner proposed, the proceedings are likely to reach the defendant or come to his knowledge. The right to order substituted service exists, inter alia, so as to ensure that proposed defendants will not readily be able to evade service of legal documents and thus thwart a plaintiff’s right of access to the courts. It would be pointless if, in circumstances where a plaintiff had obtained judgment having complied with an order for substituted service, a defendant could seek to set aside that judgment, regardless of whether they had a bona fide defence to the proceedings, based upon an assertion that they had not actually physically received the proceedings. A wily defendant might decide to evade service comfortable in the knowledge that once advised that judgment had been obtained he would likely be in a position to successfully apply to have the judgment set aside on a simple averment that he personally had never received copies of the proceedings.

32. Accordingly, even if Mr. Godfrey had the right and entitlement to rely upon the affidavits of Margaret Godfrey, Anne Murphy and Joe Godfrey, the same could not avail him for the purposes of arguing that the judgment was obtained irregularly such that he was entitled, without any further consideration of the existence of his likely defence to the proceedings, to have the judgment set aside.

33. Notwithstanding the conclusion of the trial judge that the summons and notices of motion were properly served and the judgment regularly obtained, the High Court nonetheless enjoyed discretion to set aside the judgment if satisfied that Mr. Godfrey had a real chance of successfully defending the proceedings and that having regard to the interests of all of the parties that the justice of the case warranted such an approach. Accordingly, the second issue for this Court’s consideration is whether the trial judge’s failure to exercise that discretion in favour of the defendant can be impugned.

34. As is often stated, even though an appellate court enjoys the right to interfere with an order made by a High Court judge in the exercise of his or her discretion, significant deference should be afforded to such orders and they ought not lightly be interfered with. See the decision of this Court in Collins v. Minister for Justice, [2015] IECA 27 and that of MacMenamin J. in Lismore Builders v. Bank of Ireland Finance [2013] IESC 6.

35. As advised earlier, where a plaintiff has obtained judgment in a regular manner, prior to setting aside such a judgment, the Court must be satisfied that the defendant has demonstrated that they have a defence which has a real prospect of success.

36. Mr. Godfrey, in his only affidavit sworn in the High Court, raised only one ground upon which he might defend the proceedings. He sought to rely upon the fact that the contract entered into between the plaintiffs and Greenhill Investment Limited had an exclusive jurisdiction clause which provided that any contractual dispute between the parties thereto would be governed by the laws of Bulgaria and subject to the exclusive jurisdiction of the Bulgarian courts.

37. Mr. Orm Kenny, in his replying affidavit, drew the Court’s attention to the fact that the plaintiffs’ claims were brought on foot of personal guarantees. They were not claiming pursuant to the terms of the contract referred to by Mr. Godfrey in his affidavit. He also referred to the jurisdiction clause in those guarantees which provided that the parties thereto had agreed to submit to the jurisdiction of the Irish courts. Thus he maintained on his client’s behalf that Mr. Godfrey had no potential defence to the proceedings and that in the circumstances it would be unjust for the Court to set aside the judgment.

38. Having regard to the content of Mr. Kenny’s affidavit and the fact that Mr Godfrey advanced no other potential ground of defence in the course of the High Court hearing, I am quite satisfied there was no legal or factual basis upon which Barr J. could have exercised his discretion in favour of Mr. Godfrey.

39. Mr. Godfrey, in the course of this appeal, has sought to convince the Court, by reference to materials that were not put before the High Court, if the judgment were to be set aside that he could mount a defence to the claim which has a real chance of success. His defence centres upon his assertion that he never saw or signed any personal guarantees. However, that is nothing more than a bald averment and he has not set out any facts to challenge such evidence as has been advanced by the plaintiffs in support of their claim. For example, notwithstanding the affidavit of Mr. Kenny in the High Court, which made it abundantly clear that the plaintiffs’ claim was based upon individual guarantees, and which guarantees were exhibits to the grounding affidavit, Mr. Godfrey did not challenge the validity of that claim, or the validity of the documents themselves. Further, by letter of 8th May, 2012, (exhibit PMcG 3 to the affidavit of Padge McGrath), the plaintiffs’ solicitors wrote to Mr. Godfrey at his address at Fedamore, Co Limerick, referring to the personal guarantees which he had allegedly executed in favour of each of the plaintiffs and wherein five separate demands referring to those guarantees were enclosed. He has not denied on affidavit receipt of this letter and its contents and neither as he provided any explanation as to why he did not challenge its contents. Also, in the course of the appeal before this Court, when referred to one such guarantee Mr. Godfrey accepted that the signature thereon would appear to be his. In any event, given that these were not matters raised before the High Court they do not fall to be dealt with by this Court in its assessment as to the manner in which the trial judge exercised his discretion.

40. For my part, having regard to the evidence which was before the High Court I am quite satisfied that Barr J. cannot be faulted for the manner in which he exercised his discretion. Insofar as Mr. Godfrey has come before this Court is a lay litigant I believe that it is important for Mr. Godfrey to understand that even if he had put all of the evidence which he has sought to introduce in this Court before the High Court, it would have been well within the High Court judge’s discretion to have refused to set aside the judgment.
Conclusion
41. For the reasons stated earlier in this judgment I am not satisfied that the High Court judge erred in the manner in which he exercised his discretion when he refused the defendant’s application to set aside the judgment obtained by these plaintiffs on 17th April, 2014.

42. The judgment so obtained was procured in a regular manner and in accordance with the Rules of the Superior Courts. In particular, service of the relevant documentation was effected on the defendant in the manner provided for in the orders made providing for substituted service. These were the orders made by Birmingham J. on 26th June, 2013, and Peart J. on 27th January, 2014.

43. The High Court judge, having been satisfied that the plaintiffs had fully complied with their obligations under the Rules of the Superior Courts concerning service of the summons and the motion for judgment, was entitled to uphold the aforementioned judgment.

44. In circumstances where the judgment was obtained in a regular manner, 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. Integral to that issue was proof by the defendant that he would be in a position to pursue a defence which had a real chance of success if the order were to be set aside. For my part, I am satisfied that he did not discharge that onus in the materials which he put before the High Court. That being so there was no need to consider further whether any issues which Mr. Godfrey has raised concerning his knowledge of the proceedings might have given the Court good reason to set aside the judgment.

45. For the sake of completeness, having regard to the fact that Mr. Godfrey appeared before this Court as a lay litigant and sought to introduce evidence which he had not put before the High Court, I will do more no more than express my considered view that even if all of that evidence had been placed before the High Court judge, I am satisfied that he would have been acting well within his discretion had he refused to grant the defendant the relief which he sought.

46. For all of these reasons I would dismiss the appeal.

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