Who has standing? Examining jurisdiction in substitution applications before the Court of Appeal

In the recent High Court decision in Pepper Finance Corporation (Ireland) DAC v Tracey O’Reilly[1], delivered on 6 December 2024, Mr Justice Garrett Simons referred a preliminary jurisdictional issue regarding substitution applications to the Court of Appeal.

Background

The matter came before the High Court on appeal from the Circuit Court. The original Plaintiff in the proceedings, KBC Bank Ireland PLC (“KBC”) had obtained an order for possession in respect of a charge on registered land.

The Defendant appealed the order for possession to the High Court. However, before the appeal could be heard, the charge and underlying debt were transferred from KBC to Pepper Finance Corporation (Ireland) DAC (“Pepper”). On foot of this, Pepper made an ex parte (one side only) application to the High Court to be substituted into the proceedings as Plaintiff pursuant to Order 17, rule 4 of the Rules of the Superior Courts. This application was successful.

The Decision

Mr Justice Simons considered whether the substitution of Pepper as Plaintiff in the proceedings was valid, referencing the Irish Bank Resolution Corporation v Halpin[2] judgement. Halpin appeared to suggest that “in circumstances where a transfer has occurred between the date of the first instance decision and the hearing of the substantive appeal, the transferee should be joined as an additional party”, rather than substituted as Plaintiff.

In response, counsel for Pepper sought to rely on Fitzgibbon v Law Society of Ireland[3]to support the argument that there is a distinction between an appeal from the Circuit Court to the High Court, which is heard de novo (the appellate court considers the proceedings afresh as if the lower court had not already made a decision). Whereas an appeal from the High Court to the Court of Appeal, is effectively an appeal “on the record” (the appellate court considers the evidence and materials before the lower court) as the Court of Appeal will only set aside a decision of the High Court if an error in principle is identified. On this basis, counsel for Pepper argued that this distinction means that Halpin does not apply to an appeal from the Circuit Court to the High Court.

Mr Justice Simons commented that there was “some attractiveness” to the submissions made by counsel for Pepper, however, it was difficult to reconcile those submissions with the judgement in Halpin. Particularly as in Halpin, the concern was that “the making of an order of substitution mid-course an appeal, might appear to have the effect of giving retrospective judgment to the newly added party”.

The court ultimately accepted that the legal position was not clear cut and noted the pragmatic point made by counsel for Pepper, that in some instances the ‘original’ Plaintiff may no longer be in existence. For example, they may be wound up or the loan could be transferred out of their control. These points suggested that the legal test may be more nuanced than the judgement in Halpin because if it is the case that Pepper should have been joined as an additional party, rather than substituted as Plaintiff, then as a matter of law, Pepper would have no legal standing to pursue the appeal proceedings in its sole name.

Conclusion

Mr Justice Simons concluded that there is a significant point of law to be decided and that it was an appropriate case in which the High Court should exercise its discretion under section 38 of the Courts of Justice Act 1936 to state a case to the Court of Appeal.

The appeal proceedings were adjourned to allow this preliminary jurisdictional issue to be addressed.

[1] [2024] IEHC 742

[2] [2014] IECA 3

[3] [2014] IESC 48, [2015] 1 IR 516