knowledge | 23 December 2019 |

Loan Sales: Clarification for Incoming Plaintiffs on “global” or “omnibus” Substitution Orders

The High Court has set out the procedures for obtaining “global” or “omnibus” plaintiff substitution orders for a loan book purchaser seeking to replace a loan seller in proceedings involving a large numbers of debtors.

One of the legacies of the financial crash has been the proliferation of sales of non-performing loans over subsequent years. However, where proceedings have been commenced by a financial institution against a debtor, before a loan sale has taken place, this will necessitate an application to the court to substitute the purchaser of the loan as plaintiff in those proceedings.

Where large numbers of loans and separate sets of proceedings are involved, making separate substitution applications could be a considerable burden. However, the recent case of Friends First Finance v Moloney1 sets out the procedure for obtaining a “global” or “omnibus” order in these circumstances.

In that case, an order for substitution of the plaintiff was sought not only in the proceedings before the court but in 368 other actions listed in a schedule to an affidavit sworn on behalf of the loan purchaser. In the absence of a “global” or “omnibus” order, there was the prospect of a separate substitution application in each of the 369 actions involved with the necessity for 369 separate orders to be drawn up by the courts service.

The court recognised the considerable administrative burden that this would involve. However, it added a note of caution saying that the matter could not be decided on the basis of administrative convenience.

Meenan J pointed out that as applications for substitution are made ex parte, in other words without the defendant being present, the court had to pay particular attention to safeguarding the rights of the defendant(s) involved. However, citing previous case law, he was satisfied that if a procedure could be adopted which allowed for the making of “global” or “omnibus” orders which would not limit or diminish the rights of the defendant(s) involved, then there was no objection to doing so. He set out how this could be achieved.

Procedure for seeking a "global" or "omnibus" order

  • When a particular case came before the court, a schedule of other actions could be exhibited in an affidavit, as was done in the instant case.

  • The schedule should set out sufficient information to identify each of the actions involved, including record numbers.

  • Cases where proceedings had been served and cases where proceedings had been issued but not served should be scheduled separately.

  • There should be an affidavit, from a solicitor instructed in the matter, deposing that in respect of each action listed in the schedule he/she had personally satisfied himself/herself that:

    • there had been a valid transfer of the loan and/or security involved to the party being substituted as plaintiff; and

    • valid notice had been given by way of “goodbye” and “hello” letters to the persons involved.

  • The documentation evidencing this should be exhibited in the grounding affidavit. 

  • The number of actions listed in a schedule ought to be limited to no more than 100 to reduce the chances of errors occurring.

Service of the order

If the court was satisfied that a “global” or “omnibus” order could be made, the following steps should be taken in respect of each of the actions listed in the schedule.

  • A copy of the order substituting the plaintiff should be served on each of the defendants concerned, and

  • Each defendant should be informed by notice in writing of the following:

    • that a copy of the affidavit and exhibits relevant to the particular action grounding the application were available on request;

    • that an application could be made to court, on notice, to set aside so much of the order as affects the defendant involved; and

    • the defendant’s entitlement to contest the transfer of the loan and/or security involved at the hearing of the action.

Where proceedings had been issued but not served, the above steps could be taken when the proceedings were being served.

Where judgment already obtained

Meenan J went on to add one possible caveat to the above. He took the view that where judgment had already been obtained, an application to substitute a plaintiff should be made in each individual case and that a “global” or “omnibus” order should not be available. However, as this issue did not arise in the case before him, he did not rule on the matter.

Notice of intention to proceed

In essence, Order 122, r. 11 of the Rules of the Superior Courts states that where proceedings have been dormant for a period of one year, a party who desires to reactivate them or to “proceed” must give a month’s notice to the other party of his intention to do so. This is done by serving a document called a “Notice of Intention to Proceed”.

The issue for the court was whether or not a Notice of Intention to Proceed was required in advance of the making of an application for substitution of the plaintiff here?

Meenan J said that as an application to substitute one plaintiff for another was procedural in nature and could be made ex parte, a notice of intention to proceed was not required. Instead, this notice should be served in the name of the newly substituted plaintiff along with service of the order of substitution and any other documents being served at that stage.

Comment

This judgment should be welcomed, by loan purchasers in particular, as a sensible and pragmatic ruling designed to avoid unnecessary administrative work for loan purchasers and the courts service alike.


  1. [2019] IEHC 844.

This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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