Day of judgment
In considering applications to set aside default judgments pursuant to order 27 of the Rules of the Superior Courts, the courts will engage in a two-stage process. Peter Shanley is raptured
On 13 November 2021, order 27 of the Rules of the Superior Courts was amended. This introduced significant changes to the pace at which civil litigation can be conducted by providing that judgment in default of defence will be granted on the first return date, except where justice requires an extension of time.
Where an extension is granted, the court will make an ‘unless order’. In the context of applications for judgment in default of defence, an ‘unless order’ means that, unless the defence is delivered and filed within that extended period of time, judgment shall be entered for the plaintiff in the Central Office without any further application to the court.
The wording of order 27, rule 9(1) is prescriptive, and judicial discretion has been removed: on hearing an application for judgment in default of defence, the court “shall” give judgment unless it is satisfied that the interests of justice require that an extension of time for the delivery of a defence is necessary.
If so satisfied, the court “shall” make an order (a) extending time for the delivery of the defence, and (b) providing that, unless the defence is delivered and filed within that extended period, judgment shall be entered for the plaintiff in the Central Office without any further application to the court.
These rules will be well known to practitioners. Practitioners may be less well-acquainted with the rules that govern the circumstances in which such a default judgment can be set aside.
Rules of the Superior Courts
Order 27, rule 15(2) makes provision for a default judgment to be set aside by the court if it is satisfied that, at the time of the default, ‘special circumstances’ existed that explain and justify the failure.
The question that then arises is what might amount to ‘special circumstances’ that can explain and justify the failure to deliver the defence within the extended period.
Four cases from last year provide guidance as to what might amount to such ‘special circumstances’ and also provide an insight as to how the courts approach such applications.
O’Brien v McMahon
In this case, O’Moore J rejected as inadequate the explanations that had been proffered for not delivering a defence: (a) the defendant was hoping to resolve the matter through negotiation and the defendant’s solicitor, therefore, did not engage with the litigation in the hope that the negotiations would bear fruit; (b) there was a bald assertion that the defendants did not attend the hearing of the motion for judgment in default of defence “due to the unfortunate circumstances of COVID in our office affecting staff at that time” (the court found that explanation to be “so vague as to be effectively meaningless”).
In the premises, the court did not consider that special circumstances had been made out. Additionally, the court was very clearly of the view that the proposed defence was “one which is simply unstateable and, therefore, permitting the defendant to plead it would be pointless”.
In the circumstances, the court refused the application to set aside the default judgment.
De Souza v Liffey Meats
In De Souza, which was a personal-injuries action, the defendants sought to set aside a default judgment on foot of an ‘unless order’ dated 23 May 2022, which required the defence to be delivered by 31 July 2022. The defence was not delivered until 20 September 2022.
The solicitor acting on behalf of the defendant relied on the following matters by way of explanation for the default:
- First, he was not aware that an unlesstype order had been made, because the staff member who was dealing with the matter did not understand the nature of an ‘unless order’,
- Second, when the ‘unless order’ was sent to him, the solicitor averred that he had not reviewed the order,
- Third, counsel for the defendant had been instructed to finalise a defence, but difficult personal circumstances involving the serious illness and subsequent death of his mother delayed the finalisation of a defence,
- In determining whether ‘special circumstances’ existed, such as would allow for the setting aside of the judgment, Ferriter J engaged in an extensive analysis, and the following principles emerged from his judgment:
- The test of ‘special circumstances’ is “generally accepted [as being] a higher test than that of ‘good reason’, and “while this does not raise the bar to ‘extraordinary’, it nonetheless suggests that some fact or circumstance that is beyond the ordinary or the usual needs to be present”, There was a two-stage test involving whether the court could be satisfied (a) that there were special circumstances, and (b) those special circumstances explained and justified the failure to deliver the defence.
Ferriter J concluded that the inadvertence on the part of the solicitor did not give rise to ‘special circumstances’.
However, he found that the personal difficulties faced by the defendant’s counsel at the relevant time did amount to such special circumstances.
He was encouraged in this view by the fact that, prior to these personal difficulties, the defendant’s counsel “had dealt with matters with considerable alacrity”.
Having found that ‘special circumstances’ had been made out, Ferriter J turned to the balance of justice, asking whether setting aside of the judgment in default was justifiable.
The judge duly found that the circumstances of the case justified the setting aside of the judgment and that the defendants had an arguable defence.
Accordingly, Ferriter J set aside the judgment obtained on foot of the non-compliance with the ‘unless order’.
Costern Unlimited Company v Fenton
This case concerned professional negligence proceedings. The plaintiff issued a motion seeking judgment in default of defence. This motion was disposed of in May 2023 by way of an ‘unless order’. Ultimately, the defence was not delivered in accordance with the terms of that order.
In discussing the legal principles applicable to the application, O’Donnell J referred to the decisions in O’Brien and De Souza.
He considered that the authorities provided the following guidance, namely:
- The question of special circumstances falls to be addressed principally at the date of judgment by default,
- What amounts to ‘special circumstances’ must be decided on the facts of a particular case, and it would be unwise to lay down a hardand-fast rule,
- The court engages in a two-step analysis – first assessing whether there were special circumstances and, second, the analysis of justification that imports consideration of prejudice and the interests of justice,
- Inadvertence or inattention on the part of a solicitor will rarely constitute ‘special circumstances’.
O’Donnell J was of the view that, given the status of the solicitor in question as an officer of the court, and the fact that a reasonably detailed explanation was given in his affidavits, he was prepared to accept his evidence of the material events.
He found that the defendant’s solicitor’s reasonable belief that the defence had, in fact, been delivered to the plaintiff in accordance with the terms of the ‘unless order’ amounted to ‘special circumstances’ within the meaning of order 27, rule 15(2), which would justify the setting aside of the judgment.
The court then went on to consider whether those special circumstances explained and justified the failure to deliver and file the defence.
The judge stated that this “engages questions of hardship, injustice, or prejudice flowing from a decision to set aside or refuse to set aside a judgment”.
Balance of justice
As appears from these three decisions (O’Brien, De Souza, and Costern), in deciding applications under order 27, rule 15(2), the courts have engaged in an analysis of the balance of justice and the merits of the defendant’s proposed defence.
This goes beyond the test envisaged on the face of the rule, which permits the setting aside of a default judgment by a court “if satisfied that, at the time of the default, special circumstances (to be recited in the order) existed which explain and justify the failure”.
It is not unreasonable, therefore, to ask why the High Court in these three cases approached the application by engaging with issues of (a) the stateability or otherwise of the proposed defence, and (b) the hardship, injustice, or prejudice.
The decision of Quinn J in Everyday Finance DAC and Others v White and Others articulates clearly why considerations of the balance of justice are engaged in applications to set aside default judgments.
Everyday Finance
The plaintiff obtained an interlocutory order for vacant possession of a house in Blackrock, Co Dublin. The second defendant successfully appealed this order to the Court of Appeal, which held that it had “reservations about characterising the plaintiffs’ case in this regard as a strong one”.
Subsequent to the Court of Appeal decision, a motion seeking judgment in default of defence was issued. The grounding affidavit exhibited some, but not all, of the correspondence that had been exchanged between the parties’ solicitors.
It did not mention that the High Court order granting possession on an interlocutory basis had been set aside by the Court of Appeal.
The motion for judgment in default of defence was returnable for Monday 27 February 2023 and, there having been no appearance by the defendants, judgment in default of defence was granted in favour of the plaintiff.
An application to set aside the judgment was brought on behalf of the defendants by new solicitors retained by them. As far as they could establish, the failure to attend on 27 February 2023 had been an oversight on the part of the previous firm of solicitors.
Attention was drawn to a letter dated 24 March 2023 from the defendants’ then solicitors to the plaintiffs’ solicitors, enclosing the defence and referring to the “motion returnable to 27 April 2023” and then asking the plaintiffs’ solicitors to have the motion struck out with costs reserved.
Quinn J stated that it was reasonable to conclude from this that, due to an oversight in the defendants’ former solicitors’ firm, they had incorrectly thought the motion for judgment was listed for 27 April 2023 instead of 27 February 2023. This subsequently informed the pace at which the defendants’ former
The judge first engaged in the two-stage process, looking at the ‘special circumstances’ and whether they justified the failure to comply with the order.
Then, echoing the approach of O’Donnell J in Costern, Quinn J explained that it is necessary to see the relief that can be granted pursuant to order 27, rule 15(2) in the wider context of the court’s inherent jurisdiction to set aside default judgments generally.
He reviewed the authorities dealing with the courts’ broader jurisdiction to set aside default judgments.
From this, he distilled six principles, which he said reflect a coherent body of case law governing how the courts approach the question of whether to set aside a default judgment.
Among these principles were that:
- The courts should lean in favour of determining litigation based on the merits, rather than preventing access to the courts to one party for procedural reasons,
- The object of the courts is to decide the rights of the parties, not to punish them for their mistakes, and
- The court has an inherent jurisdiction to set aside a default judgment obtained in default of appearance due to accident, mistake, or inadvertence when “it is just and equitable to do so” and to achieve “justice between parties” – and the Rules of the Superior Courts are additional to this and not “substitutive”
Two-stage process
This case law shows that, in considering applications to set aside default judgments pursuant to order 27, rule 15(2), the courts will engage in a two-stage process.
The court must be satisfied that ‘special circumstances’ exist at the time of the default. Then the court must be satisfied that the special circumstances justify and explain the failure.
In addition, the courts will assess the balance of justice. Some differences in approach can be seen as to what stage of the analysis the court will engage with the balance-of-justice type issues when deciding these applications.
Notwithstanding these differing approaches, the judgment of Quinn J in Everyday Finance clearly articulates the basis upon which the court will engage in consideration of these broader issues.
It is by reference to the principles gleaned from the jurisprudence relating to the court’s general inherent jurisdiction to set aside judgments granted in default, that the issues of prejudice, balance of justice, and the apparent strength of the defence will be considered.
This analysis incorporating justice, fairness, and equity ought to be seen as being in addition to, not substitutive of, the express provisions of order 27, rule 15(2).
Peter Shanley is a Dublin-based barrister.
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