Commercial Court refuses permission to execute judgment obtained more than six years ago

The Commercial Court has refused permission to a creditor to enforce a judgment from 2010, due to delay.

Cabot Financial (Ireland) Ltd (“Cabot”) sought an order under Order 42, Rule 24 of the Rules of the Superior Courts for leave to issue execution against a defendant on foot of a judgment obtained by ACC Bank plc in November 2010 in the sum of €271,637.31.

Such an application is required where a creditor wishes to enforce a judgment which is more than six years old.

The defendant, Mr. O’Meachair, argued that as a result of the time lapse, he had been led to believe that the judgment would not be enforced.

The court cited the Supreme Court judgment in Smyth v Tunney [2004] in which it was stated that the court has discretion to allow a judgment issued more than six years previously to be enforced, but that to engage this discretion, the applicant has an obligation to provide some explanation for the lapse of time. The Supreme Court stated:

“it is not necessary to give some unusual, exceptional or very special reasons for obtaining permission to execute out of time provided that there is some explanation at least for the lapse of time”

The court also cited Bula Ltd. V Tara Mines Ltd. [2008], in which it was held that where there is good reason for the delay, the court must consider counterbalancing allegations of prejudice to the defendant if enforcement is permitted.

In the Cabot case, judgment was given against Mr. O’Meachair in November 2010. That judgment was registered as a mortgage against his interest in three properties in County Mayo in 2012 and 2013. A receiver was appointed by ACC over one of the properties in 2011. The property was sold in February 2015 for €50,000.

Upon his own application, Mr. O’Meachair was adjudicated a bankrupt in 2017, at which stage his interest in properties vested in the Official Assignee, and ultimately re-vested in Mr. O’Meachair in 2020. Cabot argued that ACC could not have executed the judgment due to the bankruptcy. However, the court was of the opinion that the reasons given by Cabot did not satisfactorily explain the lapse of time in enforcing the judgment against Mr. O’Meachair’s properties. It held that bankruptcy was not an impediment to Cabot (or ACC Bank plc prior to 2019) enforcing the judgment mortgages on Mr. O’Meachair’s properties, as it is accepted that the holder of a judgment mortgage is a secured creditor for the purposes of the Bankruptcy Act 1988 and is entitled to enforce its security against the property of a bankrupt. The court considered it significant that the reason Cabot sought the court’s permission to execute the judgment was to issue well-charging proceedings and not, for example, to execute the judgment against other available assets of Mr. O’Meachair.

In relation to another of the properties over which ACC had a judgment mortgage, the court stated that the existence of a prior ranking charge did not prevent the holder of any subsequent ranking charge from seeking a well-charging order and order for sale, and therefore there was no explanation for the lapse of time.

Cabot also sought to explain the lapse of time by reference to the transmission of interest in the loan from ACC, to Rabobank, to Cabot, which ultimately acquired its interest in the loan in 2019. However, the court did not accept this and commented that there would have been nothing during that process to prevent an application being made for leave to execute after the six year period.

Conclusion

This decision will be relevant to anyone considering enforcement options relating to a judgment that is more than a few years old. While each case will be different, and delays can in some situations be explained satisfactorily, it cannot be assumed that the court will permit enforcement after the sixth anniversary of the judgment.

The authors would like to thank Andrew Tyrrell for his contribution to this article.