Irish Commercial Court decision could complicate debt collection

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Zara West, litigation expert at Pinsent Masons, said Judge McDonald’s refusal to allow Cabot Financial to enforce judgment against Niall O’Meachair outside of its original six-year deadline could “make it more difficult for lenders to collection of unpaid debts in the future”. “Under Irish law, a judgment must generally be enforced within six years of its delivery, with parties being required to seek permission from a court to enforce it after that date. The action against a judgment is prescribed by 12 years from the date of the judgment.

In November 2010, ACC Bank obtained judgment for €271,637.31 owed to it by O’Meachair, as well as partial costs of the legal proceedings. Beginning in 2014, Cabot took control of ACC’s debt through a series of transfers and assignments.

During a hearing in late 2021, Cabot explained that the delay was caused by his attempt to seek a debt collection order by forcing the sale of one of O’Meachair’s properties. He also argued that O’Meachair’s declaration of bankruptcy in 2017, along with his own attempts to find other enforcement and recovery options, delayed the execution of the judgment.

But in rendering his decision, Judge McDonald did not consider these reasons sufficient justification for Cabot’s inactivity. He said: “I am very aware that…it is not necessary to give an unusual, exceptional or very special reason to obtain permission…However, it is clear that a reason must be given.

“In this case, Cabot has completely failed to provide a reason for the long period of inactivity on his part or on the part of his predecessor in title, ACC Bank plc,” added the judge. Denying Cabot’s request to enforce the 2010 judgment, he noted that O’Meachair’s bankruptcy was no reason to justify the company’s inactivity – nor was the process of transferring control of his VAC debts.

Stephen Tunstead, of Pinsent Masons, said: “A review of the case law in this area shows that the threshold for a successful application is generally not particularly high. But Judge McDonald’s ruling makes it clear that courts will be reluctant to allow a judgment to be enforced outside the original six-year time limit.

“The decision is important for banks and other lenders who will now carefully consider this decision – and consider whether they should act as soon as possible to enforce any judgments they may have delayed to avoid the difficulties faced by Cabot Financial. ,” he said.


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