Factual and Procedural Background
In 2007 a commercial partnership that included the Defendant obtained a €12 million property-development loan from Company B (formerly a retail bank). The loan was called in during 2011 and summary-debt proceedings were issued. In 2013 the National Asset Management Agency assigned the loan to Company A, which then became the substituted plaintiff.
Three co-defendants settled, leaving only the Defendant. In 2015 the High Court adjourned an application for summary judgment for plenary hearing. After the Defendant’s unsuccessful strike-out motion and a 2022 plenary trial, the High Court (per Judge [O’Regan]) entered judgment for €11.4 million in favour of Company A.
The Defendant appealed to the Court of Appeal. Shortly before that hearing, the Central Bank issued a public notice suggesting that Company A might be carrying on un-authorised “credit servicing” under post-2015 consumer-protection legislation. The Court of Appeal admitted the notice de bene esse but dismissed the appeal in October 2023. The Supreme Court granted leave confined to the “credit-servicing” issue.
Legal Issues Presented
- Whether the Defendant is entitled, at Supreme Court level, to raise a new argument based on the Central Bank notice when that argument had not been pleaded or evidenced in the High Court.
- If so entitled, whether Company A’s prosecution of the debt action constitutes un-authorised “credit servicing” under Part V of the Central Bank Act 1997 (as amended in 2015, 2018 and 2022).
- If both questions are answered affirmatively, what consequences follow for the enforceability of the High Court judgment and for the appeal.
Arguments of the Parties
Defendant’s Arguments
- The 2015 statutory amendments require any entity holding legal title to a loan to be authorised as a “credit servicing firm”.
- Company A is un-authorised; therefore enforcement of the loan is substantively illegal, and public-policy considerations override procedural objections to raising the point late.
- The Central Bank notice is a “supervening fact” justifying admission of the new ground on appeal.
Company A’s Arguments
- The credit-servicing point was never pleaded, never supported by evidence, and requires factual inquiry inappropriate for a court of final appeal.
- Even if Company A were credit-servicing, that would not retrospectively invalidate vested contractual rights or the existing judgment.
- The Defendant is a commercial borrower, not a consumer, so the consumer-protection rationale underpinning the legislation is inapplicable.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Lough Swilly Shellfish Growers Co-Op v. Bradley [2013] IESC 16 |
Spectrum governing admission of new arguments on appeal |
Placed current case at the restrictive end of the spectrum, militating against admitting the new illegality point |
| Ambrose v. Shevlin [2015] IESC 10 |
Need for parties to present their full case at trial; dangers of allowing new grounds later |
Quoted to reinforce that appeals are not “dress rehearsals” and new grounds impair procedural fairness |
| Moylist Construction v. Delaney [2016] IESC 283 |
Greater latitude in summary-judgment appeals |
Distinguished because present case followed a full plenary trial |
| Allied Irish Banks v. Ennis [2021] IESC 21 |
Exceptional caution in admitting new grounds after plenary hearings |
Cited to deny admission of the new defence |
| Movie News v. Galway County Council (1977) |
Historic strictness against first-instance issues in an appellate court |
Used to illustrate evolution toward, yet limits of, flexibility |
| KD (orse C) v. MC [1985] IR 697 |
“Exceptional circumstances” threshold |
Invoked to show threshold not met here |
| Birkett v. Acord Business Machines [1999] 2 All ER (Comm) 429 |
Need for “persuasive and comprehensive” evidence before refusing enforcement for illegality |
Standard not satisfied; evidence of illegality inconclusive |
| Re Mahmoud and Ispahani [1921] 2 KB 716 |
Court must refuse to enforce contracts that are ex facie illegal |
Held inapplicable because alleged illegality was not apparent on the face of the contract |
| Sweetman v. Shell E & P Ireland [2016] IESC 58 |
Presumption against retrospective application of statutes affecting substantive rights |
Applied to conclude the 2015/2018/2022 Acts do not retrospectively govern pre-existing litigation |
| Hamilton v. Hamilton [1982] IR 466 |
Constitutional limits on retrospective legislation impairing property rights |
Suggested similar constitutional concern would arise if credit-servicing provisions applied retrospectively |
| Health (Amendment) (No. 2) Bill 2004, Article 26 Reference [2005] IESC 7 |
Extinguishing vested causes of action may be unconstitutional |
Used by analogy to emphasise constitutional doubts about retrospective extinguishment of Company A’s chose-in-action |
| Delaney v. PIAB [2024] IESC 10 |
Further articulation of constitutional protection for vested rights |
Reinforced view that retrospective interference would be suspect |
| Macauley v. Minister for Posts & Telegraphs [1966] IR 345 |
Article 34.1—courts’ power cannot be undermined by executive authorisation schemes |
Cited to note potential separation-of-powers problems if litigation were halted pending regulatory approval |
Court's Reasoning and Analysis
1. Threshold question – admissibility of new ground. The Court applied the Lough Swilly spectrum and held that the Defendant’s credit-servicing argument lay at the restrictive end because it required factual evidence and had not been pleaded or explored at trial. Under authorities such as Ambrose, Ennis and KD v. MC, only exceptional circumstances justify admitting such a ground, and none were present.
2. Absence of persuasive illegality. Even if the ground were admissible, the Court was not satisfied—under the Birkett test—that there was “persuasive and comprehensive” proof that Company A’s conduct was illegal. Key factual questions (e.g., whether litigating to recover a single debt equals “credit servicing”) were never examined in evidence.
3. Statutory interpretation. Applying the presumption against retrospectivity (Sweetman, section 28 case law), the Court found no clear legislative intention that the 2015, 2018 or 2022 amendments should affect litigation commenced long before their enactment.
4. Constitutional considerations. Drawing on Hamilton, the Health Bill reference and Macauley, the Court observed that a retrospective application that deprived Company A of a vested property right (its debt claim) or made access to the courts conditional on regulatory consent would raise serious constitutional issues.
5. Conclusion on admissibility. Because the illegality defence was neither pleaded nor supported by evidence and because retrospective application was doubtful both statutorily and constitutionally, the Court refused to entertain the new ground.
Holding and Implications
APPEAL DISMISSED.
The Supreme Court affirmed the Court of Appeal’s judgment. The Defendant may not raise the credit-servicing defence for the first time at this stage, and the €11.4 million High Court judgment in favour of Company A stands. The decision turns on established principles of appellate procedure and statutory interpretation; it does not create new precedent but reiterates limits on introducing unpleaded illegality arguments and on retrospective application of regulatory statutes.