A Warning to Credit Servicing Firms
Late last year Mr Justice Barrett delivered a warning to a credit servicing firm in the High Court that they were in “yellow card territory” as a result of their failure to expeditiously prosecute their case. The case (Promontoria (Aran) Limited v Patrick (orse Paddy) O’Connor and David O’Connor [2017 IEHC 780]) concerned the plaintiff seeking judgment against the second named defendant in respect of a personal guarantee given in February 2005. The proceedings commenced in March 2011 and were described by Barrett J. as proceeding “pretty much apace” until June 2015 at which point the loan facility, to which the guarantee in question was subject, was sold and a successful application was made to have Promontoria (Aran) Limited substituted as the plaintiff. No further action was taken by the plaintiff until 2017. In May 2017 an application was made by the second named defendant seeking a strike-out of the proceedings as a result of the delay on foot of the Rules of the Superior Court (1986). It was generally agreed between the parties that the applicable test in this instance would be that set down in Primor plc v Stokes Kennedy Crowley, which required that, for the order to be granted, the delay be inordinate and inexcusable and the striking out be necessary for the balance of justice. Based on relevant case law, Barrett J. considered the delay to be both inordinate and inexcusable. However, having applied the principles regarding balance of justice laid down by Quirke J. in O’Connor v John Player and Sons Ltd, Barrett J. concluded that justice would not be best served by the striking out of the action. Barrett J. did note that further delay should be allayed by way of “vigorous case management” of the proceedings, with costs also being awarded against Promontoria (Aran) Limited.
While Mr O’Connor failed in his application in this instance, credit servicing firms should take note that the High Court may look unfavourably on any lengthy delay in prosecuting proceedings. It is also clear from the decision of Barrett J. that such a delay will not be excused simply based on a transfer of the debt in question.
For more information, please get in touch with your usual Whitney Moore contact, Jamie Enright or any member of our Banking and Finance team.