High Court: 2018 default judgment granted against borrower to be set aside

About this case:

• Citation:
  [2026] IEHC 249
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Ms Justice Siobhán Phelan

Delivering judgment for the High Court, Ms Justice Siobhán Phelan was satisfied that “the special circumstances threshold has been crossed having regard to the serious solicitor failings for which the First Defendant is blameless, the contended for earlier settlement of the debt and the question mark which arises as to the circumstances in which a default judgment was obtained in view of undisclosed correspondence with a solicitor who had instructions to defend proceedings but failed to do so”.

Background

The defendants defaulted on a commercial loan of €224,000, resulting in the issuing of summary proceedings in 2018.

Judgment was entered in default of appearance as against the first defendant in November 2018.

On 10 June 2024, Mr Justice Paul Coffey granted leave to issue execution on foot of the judgment to the plaintiff.

In circumstances where the motion papers had been served on the first defendant’s former solicitor, who had never entered an appearance, had been struck off and was no longer in practice, the first defendant succeeded in his application seeking to vacate that order.

By further motion dated 4 December 2024, the First Defendant applied for an order pursuant to Order 13, Rule 13 of the Rules of the Superior Courts (RSC) setting aside the judgment entered in default of appearance against him some six years previously.

The first defendant relied upon solicitor failure, procedural irregularities, a prior agreement to settle the alleged debt and the availability of real lines of defence in support of his application.

The High Court

As to whether the judgment was irregularly obtained, Ms Justice Phelan considered that the plaintiff was fully entitled to apply for judgment in default and irregularity could not be assumed on the basis that there was some correspondence, the content and extent of which was unknown, at the time as between solicitors.

The judge highlighted: “It has not been established that this correspondence took place before judgment was entered. Nor has it been established that there was any confusion at the time as to whether there was a solicitor on record. There is no evidence that judgment was obtained in some secret or clandestine manner.”

As to the first defendant’s next argument, the court was not satisfied that an alleged deficiency in proof of ownership of the debt established an irregularity in the way judgment was obtained such that the default judgment should be set aside, noting that this was “a factor which I may consider when assessing the merits of the defence which the First Defendant might have available to him were judgment set aside and liberty to defend the proceedings granted”.

Ms Justice Phelan then addressed the special circumstances alleged by the first defendant, which included that he was, unbeknownst to him, effectively unrepresented by his former solicitor who had led him to believe that the case was being handled over a protracted period.

The judge considered that the first defendant’s evidence in this regard was unusual and concerning, finding it clear that the first defendant had contacted his solicitor shortly after proceedings were served on him and instructed the defence before an application for judgment in default was made.

The court also pointed out that notwithstanding an express averment to the contrary on behalf of the plaintiff, there had in fact been correspondence from the first defendant’s former solicitor in November 2018, where he mentioned that his understanding was that the matter had been resolved sometime prior.

Ms Justice Phelan determined that special circumstances arose, in that “judgment was entered in default of appearance due to serious solicitor omissions in circumstances where it is contended that the said solicitor agreed to take steps necessary to defend the proceedings having been instructed that the underlying claim was the subject of a prior settlement agreement and where there was formal engagement with the Plaintiff on behalf of the First Defendant in this regard by his former solicitor in and around the time judgment was entered, albeit the extent of this engagement is unclear”.

As to the interests of justice, the court explained that if the judgment was not set aside, the first defendant would be deprived of an opportunity to defend the claim.

The court also considered that the interest of justice were not safeguarded by the existence of a claim in professional negligence as against the first defendant’s former solicitor, highlighting that judgment was entered due to the solicitor’s default more than six years before any enforcement steps were taken by the plaintiff and the passage of time would impact on the prospect of success of any such negligence proceedings.

Ms Justice Phelan opined: “it occurs to me that by waiting until more than six years from the putative settlement, to take any steps on foot of the judgment obtained in default, the prospect arises that in addition to depriving the First Defendant of a viable claim in professional negligence as against his former solicitor, the Plaintiff (whether by design or accident) also potentially avoided the precipitation of separate proceedings in which the First Defendant sued on the settlement agreement in accordance with time limits under the Statute of Limitations, 1957.”

The court expressed its concern that allowing the judgment to stand would offend the interests of justice having regard to the plaintiff’s actual knowledge as to the sustainability of the judgment obtained in default, “notwithstanding the assertion of a viable defence that the claim had been settled”.

As to the issue of delay, the court was prepared to accept that the first defendant “was lulled into a false sense that further steps would be required whereby he could be heard as to his defence of the underlying claim before judgment could be enforced against him”.

The court was also mindful that a significant period of inaction occurred on part of the plaintiff in seeking leave to execute on foot of the judgment obtained, noting: “Inaction on the part of the Plaintiff can never justify delay on the part of a defendant in moving to set aside a default judgment but it is a relevant factor in this case because it explains why the First Defendant did not find it necessary at an earlier stage to seek alternative legal advice.”

Ms Justice Phelan was also satisfied that several of a series of potential lines of defence identified by the first defendant were “sufficient to cross the arguability threshold and a real prospect of success has been demonstrated.”

Conclusion

Accordingly, the High Court indicated that there was a legitimate basis for the exercise of its discretion to set aside the judgment obtained in default of appearance and listed the matter at a later date for the making of final orders.

Pepper Finance Corporation (Ireland) DAC v Ward & Ors [2026] IEHC 249