Court of Appeal: Court clarifies position as to the substitution of parties prior to the hearing of appeals

About this case:

• Citation:
  [2025] IECA 140
• Judgment:
  External link
• Court:
  Court of Appeal
• Judge:
  Ms Justice Caroline Costello

Delivering judgment for the Court of Appeal, Ms Justice Caroline Costello confirmed that in general, “the continued participation in the proceedings, even if in name only, of the alleged assignor is superfluous and unnecessary in appeals from the Circuit Court to the High Court” and indicated that in the context of appeals to the Court of Appeal, “I cannot agree with the conclusion of the court in Halpin to the effect that it was not possible to substitute a plaintiff pending appeal if the identity of the person seeking to uphold the judgment changed”.

Background

On 16 January 2019, KBC Bank Ireland plc obtained an order for possession from the Circuit Court in respect of the plaintiff’s property. That order was stayed until 31 March 2019. The plaintiff appealed the order to the High Court.

In the intervening period, KBC Bank Ireland plc had transferred its interests to KBC Bank NV pursuant to S.I. 447/2023, and KBC Bank NV in turn assigned the interest in the defendant’s loan and security to Pepper Finance Corporation (Ireland) DAC.

On 6 March 2023, the High Court granted an order substituting Pepper as the plaintiff in the proceedings pursuant to O.17 r.4 of the Rules of the Superior Courts.

Appeal to High Court

On 6 December 2024, the defendant’s appeal to the High Court came on for hearing, and was part-heard.

Mr Justice Garrett Simons raised an issue as to whether Pepper should have been joined as a co-plaintiff rather than substituted into the proceedings in light of the decision of the Court of Appeal in Irish Bank Resolution Corporation Ltd v Halpin [2014] IECA 3 and his own judgment in Permanent TSB v Morrissey [2021] IEHC 18, in which the judge applied Halpin to a Circuit Court appeal and found that it was not appropriate to substitute an alleged transferee into proceedings, but rather, they should be added as a co-plaintiff.

Counsel for Pepper argued that there was a distinction to be drawn between High Court and Circuit Court appeals, contending that the rationale in Halpin did not apply to the latter.

Mr Justice Simons stated a case to the Court of Appeal, asking whether in circumstances where there has been an assignment of an interest in a registered charge and the underlying debt following the making of an order for possession by the Circuit Court, but prior to the hearing of an appeal to the High Court, it is appropriate to substitute the transferee/assignee as plaintiff in lieu of the original plaintiff, or whether the transferee/assignee should be joined to the appeal proceedings as an additional party.

The Court of Appeal

Ms Justice Costello initially examined Halpin, finding that it was clear that the Court of Appeal was not holding that it did not have jurisdiction to substitute a party, rather it was exercising its discretion to refuse the substitution application made in that case on the facts.

Ms Justice Costello highlighted the reasoning of the court in Halpin, which was to the effect that IBRC had obtained judgments in its favour by reason of having established factual evidence to the satisfaction of the High Court as to its entitlement to such judgment, and if the Court of Appeal were to make the order of substitution sought by Kenmare Property Finance Ltd, the effect would have been to permit Kenmare to be considered (subject to the outcome of the appeals) entitled to have been granted a judgment against Mr Halpin in the High Court on 4 October 2012 and 7 November 2013, where Kenmare had no entitlement to be granted judgment in its favour on those dates.

The Court of Appeal distinguished the situation before it from cases such as Morrissey where those cases involved a de novo appeal rather than an appeal against error as occurs in the Court of Appeal, the former permitting the consideration of the case afresh on the basis of the evidence presented to the High Court on appeal and without attaching weight to the decision made by the Circuit Court.

Ms Justice Costello explained that the issue in Halpin was whether, based on the evidence before the High Court at the relevant dates, the then plaintiff was entitled to judgment and that the assignee could not make that case, as the original plaintiff was the party in whose favour the judgments were entered and the assignee was not at that time entitled to judgment against the defendant. 

The court explained that on the other hand, on a de novo appeal from the Circuit Court, the High Court is not concerned with whether the party who was plaintiff in the Circuit Court was entitled to judgment against the defendant, noting: “To that extent, it is an analogous stage in the proceedings as pertained in IBRC v Comer and IBRC v Morrissey i.e. pre-trial.”

Ms Justice Costello agreed with the proposition by counsel for Pepper that the concern in Halpin was to avoid any suggestion that the Court of Appeal was determining that Kenmare was entitled to the judgments obtained by IBRC at the time before Kenmare took the assignment, but such a concern could not arise in a Circuit Court appeal since the High Court is deciding whether the assignee is entitled to the judgment as of the date of the appeal itself.

In those circumstances, the Court of Appeal also agreed that it was neither necessary nor appropriate to join Pepper as a co-plaintiff in the proceedings before it, as it was not possible for both the alleged assignor and the alleged assignee both to be entitled to possession of the property, assuming the secured party were to succeed on appeal.

The Court then considered whether it should depart from the judgment in Halpin. 

The court explained that the key reason in Halpin for the court declining to substitute Kenmare was that Kenmare would be permitted to be considered as entitled to have been granted judgment at a time when it had no such entitlement.

Ms Justice Costello disagreed with the court’s interpretation of the effect of an order of substitution of an assignee of a loan in respect of which judgment has been granted and which was the subject of a pending appeal. 

Firstly, the court recognised that as per Dellway Investment Ltd v National Asset Management Agency [2011] IESC 14, the assignee stands in the shoes of the assignor so that at the hearing of the appeal, it will be seeking to uphold the judgments granted in favour of the assignor and to establish that the High Court was correct to enter judgment in favour of the assignor when it did.

The court also explained that if the objection was to be valid, it would equally apply where a party dies and it could not see the objection applying in the case of transmission of interest on death, and so there could be “no objection to substituting a party where the change in interest arises by reason of a transmission of interest. There has never been any suggestion that a personal representative would be added as a co-plaintiff (or co-defendant) in lieu of substitution with the deceased remaining as a party in the proceedings.”

However, the court highlighted that there will be cases where it will be appropriate to retain the assignor as a party to the proceedings, such as where there is liability which could not have been assigned: “In such cases substitution will not be appropriate because the original party remains a necessary party and there is not an identity between the interests of the assignor and the assignee.”

Finally, Ms Justice Costello confirmed that notwithstanding that O.17, r.4 does not refer to “substituting” a party, the legislative intent was to dispense with the unnecessary continuance of the assignor in proceedings in which it no longer had any interest and so the court has the power to make a substitution order where the application otherwise meets the requirements of the rule.

Conclusion

Accordingly, the Court of Appeal answered the case stated as follows:

Further, the court, applying the decision in Re Worldport Ireland Ltd [2005] IEHC 189, declined to follow Halpin where there was no requirement that IBRC remain a plaintiff and there was no bar to substitution of Kenmare in place of IBRC “merely because the assignment of the plaintiff’s interest occurred between the granting of the judgments under appeal and the hearing of an appeal. The continuance of the assignee in the proceedings is not required, save in the circumstances I have identified above, and usually substitution of the assignee rather than the addition of the assignee will be the appropriate order.”

Pepper Finance Corporation (Ireland) DAC v Tracey O’Reilly [2025] IECA 140