Bank of Scotland PLC v McDermott

Factual and Procedural Background

The Plaintiff issued summary summons proceedings against the Defendant seeking recovery of a sum close to €7 million. The Defendant entered a formal appearance but neither attended nor was represented at the hearing on 29th July 2013, at which the Plaintiff sought and obtained summary judgment. The court accepted substituted service of the motion papers on the Defendant. The order granting summary judgment was perfected on 7th August 2013.

Approximately 18 months later, the Defendant filed a notice of motion seeking to set aside the judgment and order, extend the time for such an application, obtain leave to defend, and ancillary relief. The Defendant alleged that he was mentally and psychologically unwell at the time of the hearing, was unable to secure legal representation within the short timeframe, had a good defence on the merits, and that enforcement of the judgment would cause severe prejudice.

The Plaintiff disputed the extent of the Defendant's ill-health. The Defendant's affidavit was supported by a medical report from a consultant psychiatrist, which the court found credible.

The set-aside application was initially refused by the High Court, and an appeal was lodged with the Court of Appeal. The Court of Appeal identified procedural difficulties and vacated the earlier order, directing that the set-aside application be reheard by the High Court.

Legal Issues Presented

1. What are the rules applicable to setting aside a summary judgment obtained after a hearing at which the defendant neither attends nor is represented, despite having entered a formal appearance?
2. Whether the court's inherent jurisdiction applies to set aside such a judgment in the absence of express provisions under the Rules of the Superior Courts.
3. What is the appropriate legal framework and burden for setting aside a summary judgment in these circumstances?

Arguments of the Parties

Defendant's Arguments

• The Defendant was mentally and psychologically unwell at the time of the hearing and unable to attend.
• The short timeframe between service of the motion and the hearing prevented obtaining legal representation and denied procedural fairness.
• The Defendant had a good, unheard defence, including challenges to the Plaintiff’s figures and the admissibility of evidence under the Banker’s Book Evidence Acts.
• Enforcement of the judgment would cause severe and irreversible prejudice to the Defendant.
• The Defendant did not recall receiving the motion papers due to his mental health condition, undermining the effectiveness of service.

Plaintiff's Arguments

• The Defendant was capable of attending court and had not demonstrated sufficient incapacity to justify setting aside the judgment.
• The Plaintiff complied with the court-ordered substituted service procedures, which were proper and sufficient.
• The affidavit grounding the summary judgment, though sworn by a person not strictly competent under the Banker’s Book Evidence Acts, was legally sufficient as the Plaintiff is not obliged to comply with those Acts to prove the debt.

Table of Precedents Cited

Court's Reasoning and Analysis

The court recognized that the summary judgment was obtained after a hearing at which the Defendant, despite having entered a formal appearance, neither attended nor was represented. The Rules of the Superior Courts do not provide an express mechanism to set aside summary judgments obtained under Order 37, unlike plenary trials under Order 36. Consequently, the court’s inherent jurisdiction to set aside final orders was invoked.

The inherent jurisdiction is procedural, exercised summarily, and designed to prevent injustice and ensure due process. It is exercised only where necessary and subject to constitutional and legal norms, with appeal mechanisms as safeguards against misuse.

The court applied the principles from Re Greendale Developments Limited (No. 3) and related authorities, emphasizing the heavy burden on the Defendant to justify setting aside a final order. The Defendant’s claim of mental ill-health and inability to recall service was accepted as credible, supported by a detailed medical report, distinguishing this case from others where non-attendance was deliberate.

The court found that although the procedural mechanics of substituted service were complied with, true notice was lacking due to the Defendant’s mental condition. The court noted the improbability that a person sued for a substantial sum would ignore the proceedings if aware. This absence of effective notice and the Defendant’s incapacity justified setting aside the judgment in the interests of justice.

The court also addressed the Plaintiff’s argument regarding the affidavit evidence, concluding that the procedural irregularity alleged was not legally fatal since the Plaintiff was not required to comply strictly with the Banker’s Book Evidence Acts to prove indebtedness.

Holding and Implications

The court GRANTED the Defendant’s application to set aside the summary judgment and order made on 29th July 2013.

The judgment was set aside on the basis that the Defendant lacked true notice of the motion due to mental ill-health, and that the inherent jurisdiction of the court to prevent injustice warranted such relief. The court emphasized that the Defendant now has full awareness of the proceedings and ample opportunity to prepare a defence.

The matter was directed to proceed expeditiously to a hearing on the Plaintiff’s motion for summary judgment, subject to any appeal by either party. No new legal precedent was established; rather, the decision reaffirmed the court’s equitable inherent jurisdiction to set aside final orders in exceptional circumstances to avoid injustice.