knowledge | 16 February 2018 |
When Can You Enter a Conditional Appearance?
A recent High Court judgment emphasises that a conditional appearance to proceedings in Ireland is only available in limited circumstances – when the jurisdiction of the court to entertain the proceedings at all is directly contested. It is not appropriate in other circumstances and a party who purports to enter a conditional appearance when it is not appropriate does so at significant risk.
In Bank of Ireland v Roarty,1 the bank had issued summary proceedings claiming debts due by the first defendant personally and on foot of guarantees by both defendants of the debts of a related company. The defendants wrote to the High Court Central Office enclosing a copy of a “conditional appearance” which stated that the defendants “vigorously contested” the claim in the summary summons and that “consenting jurisdiction are withheld” until certain conditions were fulfilled. The “conditions” included matters such as provision by the bank of copies of documentary evidence upon which it would rely and provision of accounts of the loans “for forensic examination”. The court office replied indicating that there was no basis under the rules of court for the entry of a conditional appearance in the circumstances, and that the only instance in which a conditional appearance could be entered was under Article 26 of Regulation (EC) No. 1215/2012 (Brussels I recast), where jurisdiction, in the sense of the country in which legal proceedings should be heard, was disputed, and accordingly the document could not be accepted for entry. The solicitors for the bank later obtained judgment in the office in the amount claimed, in default of appearance. The defendants applied to set aside the default judgment.
The court noted that though authority suggested it might be appropriate to set aside a default judgment where the defendant was genuinely taken by surprise,2 there was strong authority that a defendant applying to set aside a default judgment must show an arguable defence or “a defence which has a real prospect of success”,3 especially where there was nothing irregular about the default judgment.4
In this case, the court held that although the second defendant was mistaken when she thought she could enter a conditional appearance and was taken by surprise when judgment was entered in default of appearance against her, there was no “irregularity” in the process by which the default judgment was obtained. Therefore the test was whether she had a real chance of success in her defence to the bank's claim. None of the grounds put forward by the second defendant involved an arguable defence or a defence with “a real prospect of success”. No aspect of the transaction was identified which raised a potential defence under the Unfair Terms Regulations.5 Although the second defendant had signed a waiver of legal advice before signing the loan guarantee, this was not a term of the loan contract itself for the purposes of the regulations. The court doubted in any event whether the second defendant could be a “consumer” when the loans were business loans to a business of which she was a director. Accordingly, the court refused to set aside the default judgment.
This judgment underscores that a court office can correctly refuse to accept a purported appearance which is ambivalent or unclear about the reason why it is lodged, or which conflates claimed substantive defences with the much narrower issue of jurisdiction. Attempting to enter a conditional appearance will be ineffective unless there are clear grounds for doing so and the court will not set aside a judgment in default of a proper appearance unless the defendant can show some irregularity in the procedure or an arguable defence or “a defence which has a real prospect of success”.
-  IEHC 789, judgment of Ni Raifeartaigh J delivered on 2 October 2017.
- Fox v Taher (Unreported, High Court, Costello P, 24 January 1996); Stafford v J.V. Cummins (Supermarkets) Ltd  IEHC 10.
- O'Callaghan v O'Donovan (Unreported, Supreme Court, Lynch J, 13 May 1997), approving 'The Saudi Eagle'  2 Lloyd's Rep 221.
- Allied Irish Banks plc v Lyons  IEHC 129.
- European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 implementing Council Directive 93/13 of 5 April 1993. See Allied Irish Banks plc v Counihan  IEHC 752 discussing Aziz v Caixa d'Estalvis de Catalunya, Tarragona i Manresa (Case C-415/11, judgment of 14 March 2013).
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.