A recent High Court case considered the rules governing plaintiff substitution. The case concerned possession proceedings brought by Permanent TSB, formerly Irish Life and Permanent PLC (PTSB) against a debtor, where subsequently PTSB transferred the underlying loans associated with those proceedings to Start Mortgages DAC.
The court ruled on a number of issues that frequently arise in applications of this nature. In particular, the court considered (i) whether in cases where the plaintiff is to be substituted, the defendant should be put on notice of such an application; (ii) what proofs are required in such applications; and (iii) where an Order of substitution is granted, how the interests of the defendant(s) will be protected.
The court granted an Order substituting the plaintiff and made a number of directions to protect the position of the defendant.
The first point the court considered was whether it was permissible for the application to be brought on an ex parte basis. The court was satisfied that the application was procedural in nature and that the applicant was entitled to rely on the provisions of Order 17 Rule 4 of the Rules of the Superior Courts allowing for the substitution of one plaintiff for another. The court noted that Order 17 Rule 4 of the Rules of the Superior Courts was virtually identical to Order 22 Rule 4 of the Circuit Court Rules and that it was the practice in the Circuit Court for applications such as this to be made on notice to the defendant. Notwithstanding this, the court was satisfied that this application could be made ex parte.
The court considered the necessary proofs where an application such as that outlined above appears before it. Quoting Mr. Justice Kelly in IBRC v Comer  IEHC 671, the court noted that what was required was prima facie evidence that there has been a "valid sale of the underlying assets, a valid assignment of the chose in action which is this action, and a valid notice given".
The court opined that the prima facie evidence was satisfied by
- the Deed of Transfer (which in this case was heavily redacted in order to prevent the identification of other parties not party to the proceedings);
- the "goodbye letter" sent by the original plaintiff to the defendant;
- the "hello letter" from the party intended to be substituted; and
- the Land Registry Form 56 under which the mortgage and charge was transferred to the party intended to be substituted.
Notably, the application lodged with the Form 56 had not completed processing at the time of the application. The Court was satisfied the application was procedural and not substantive in nature and therefor the fact that Start was not yet the registered owner of the mortgage and charge would not impact on the courts decision.
Protecting the position of the defendant
The court was of the view that, even though the application before it was procedural and not substantive in nature, the rights of the defendant should be safeguarded. In that respect, the court set out a number of steps to be followed:
- A copy of the Order granting the substitution be served on the defendant; and
- The defendant be informed that:
- A copy of the affidavit and exhibits grounding the application were available on request;
- The defendant may make an application, on notice, seeking to set aside the Order of substitution; and
- The defendant has an entitlement to contest the transfer at the hearing of the action.
The judgment delivered by Mr Justice Meenan serves as helpful practical guidance to practitioners and plaintiffs as to what the courts will look for in substitution applications.