KBC bank sold on a loan to Pepper Finance after it started possession proceedings against the borrower. But did Pepper follow the correct procedures in setting itself up as the new plaintiff?
Borrowers in recent years became used to receiving letters from their lender informing them that their loans have been acquired by a new entity to whom they should make future payments.
A common term for these new entities is vulture funds and they are not slow in taking action against defaulting borrowers through the courts.
However, sometimes the new vulture fund might purchase a loan book some time after the vendor/bank had actually issued proceedings against the borrower and even obtained judgement.
A borrower was entitled to appeal a possession judgment to the High Court but in that case, it became necessary for the new vulture fund to have itself substituted, as it were, for the original bank plaintiff in the appeal proceedings.
A recent case in the High Court highlighted that there was some legal uncertainty about the exact procedures for inserting the new vulture fund plaintiff in such proceedings and the judge remitted the issue on to the Court of Appeal for them to determine.
If the new plaintiff was incorrectly inserted into the proceedings, it followed that any resultant orders could be challenged and maybe null and void. Historically, the vulture funds had applied to the courts to have themselves
substituted as a new plaintiff in place of the old bank plaintiff.
However, the judge queried this and quoted an earlier high court case
IRBC v Halpin which suggested that in an appeal to the Court of Appeal, the correct order to be made (where a transfer of loan has occurred between the Circuit Court case and the hearing of an appeal) is that the new vulture fund transferee be joined as an
additional party to the appeal proceedings as a second plaintiff rather than merely stepping into the shoes of or being substituted for the original plaintiff.
A substitution order made midway through an appeal has the effect the judge said of appearing to give retrospective judgement to the newly added party and that would not be correct.
He therefore sent the issue of the precise form a change of party application should take on to the Court of Appeal to determine
Pepper Finance Corporation Ireland DAC v Treacey O’Neill [2024] IEHC 742

