Introduction
The McDonaghs have been involved in prolonged litigation with Ulster Bank over a €22 million loan for the purchase of a site in Kilpedder Co Wicklow, with the dispute spanning almost a decade. The High Court ruled in favour of Ulster Bank four years ago, a decision which was upheld by both the Court of Appeal and the Supreme Court, who refused to hear further appeals on the matter.
Court of Appeal decision - 2022
In Ulster Bank Ireland Limited & Ors v McDonagh & Ors [2022] IECA 87, the Court of Appeal considered whether a lender’s entitlement to judgment against a borrower could be affected by a separate claim for damages the lender has against another party.
Ulster Bank, along with appointed receivers, brought proceedings against the McDonagh brothers for repayment of a loan. The Bank had also sued a valuer, alleging negligence in valuing the property for the loan. The valuer settled, and the settlement amount paid to the Bank was applied to reduce the McDonaghs' debt.
On this basis, the McDonaghs argued that, under Section 17 of the Civil Liability Act 1971 (CLA), the Bank could not claim the full debt from them because it had settled with another wrongdoer (the valuer). However, the court disagreed, ruling that the CLA provisions on concurrent wrongdoers are "concerned exclusively with the allocation of responsibility between wrongdoers facing legal action for the recovery of damages" and only apply to the allocation of responsibility between parties for damages, not to debt recovery. The court emphasised that a claim for debt recovery is not the same as a claim for damages. Even if the CLA were applied to debt recovery actions, a claim against a debtor on foot of a loan and a claim against a valuer whose negligence is alleged to have resulted in the granting of the loan are not actions to recover the same damage. Therefore, the Bank could still pursue the full debt from the McDonaghs, despite the settlement with the valuer. This decision was of significant interest to banks and other creditors as it laid to rest significant concerns regarding the impact of settling with one but not other debtors who were liable on a joint and several basis.
January 2024
On 30 January 2024, an Isaac Wunder Order was issued against the McDonaghs, prohibiting them from bringing further legal actions regarding the site without the approval of the High Court. The test for the grant of such an order is "where the court is satisfied that a person has habitually or persistently instituted vexatious or frivolous civil proceedings". The court was satisfied that the McDonagh's behaviour had met this test.
Latest decision – October 2024
In October 2024, Justice Twomey delivered judgment, criticising the McDonaghs for abusing the court process by repeatedly bringing meritless claims. The McDonaghs' application to set aside previous judgment was described as futile, as it sought to reverse decisions made by superior courts, which is beyond the power of the High Court. Previous attempts at appeal had been rejected by both the Court of Appeal and the Supreme Court, with the latter stating the McDonaghs’ actions were unjustified and merely aimed at delaying enforcement. The High Court rejected their application, stating it lacked the authority to overturn appellate decisions, and to do so would undermine the judicial system. It also deemed the McDonaghs' claims as meritless and vexatious. The court noted that individuals, unlike corporations, face fewer financial consequences when pursuing weak claims, leading to potential abuse of the legal system. Despite the judgment being affirmed at every level, the McDonaghs continued to litigate, causing delays and additional costs to Ulster Bank. The court pointed out that while Ulster Bank had succeeded in defending its position, it had not achieved "true justice" because the McDonaghs had managed to delay the enforcement of the judgment, further burdening the bank with legal costs. Ultimately, the High Court reaffirmed the original ruling, dismissing the McDonaghs' application.
Comment
It is worth noting the court's attitude in this instance is largely driven by the decade long litigation brought by the McDonagh's and is not to be considered a rule against lay litigants in general. It is a useful reminder though of the benefit of Isaac Wunder orders in cases where one is dealing with a serial lay litigant who seeks to abuse the system to their advantage.
For more information, please contact Daniel Cashman or your usual contact in Beauchamps LLP.
Article written by Daniel Cashman, Partner and Sally Mac Cann, Trainee Solicitor.
Ulster Bank DAC & Ors -v- McDonagh & Ors [No.3] [2024] IEHC 609