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Insolvency Update: New Approach to Lay Litigants, Mediation Act and More

12 January 2018

A key feature of 2017 was a deepening recognition and response by the courts to the problems associated with organised lay litigant groups and lay advisors seeking to obstruct and frustrate the administration of justice.

Other significant developments included:

  • definitive clarification of the jurisdiction of the Circuit Court in possession proceedings;

  • on-going clarification of the rights of purchasers of loans and security; and

  • the Mediation Act 2017.

Response to abuses of process

Over the past year, the courts have been moving to address the inappropriate behaviour of certain litigants in person, and their lay advisors (commonly referred to as McKenzie friends), some of whom feature in numerous cases.[1]

A practice direction was introduced relating to McKenzie friends,[2] which enhanced the ability of the courts to manage the activities of these individuals.

After a number of threatened orders, in October 2017, the High Court made an order prohibiting an individual from acting as a McKenzie friend in any proceedings, without the leave of the President of the High Court.[3] It also made an enhanced Isaac Wunder order, which prohibited the Plaintiff, or any persons acting in concert with her, from issuing proceedings, without the leave of the President.

It is to be hoped that such orders of this type, along with the possibility of costs orders being made against McKenzie friends, will cause such parties to take a more measured and realistic approach to litigation.

Circuit Court Jurisdiction in Possession Proceedings

The Supreme Court determined[4] that the Circuit Court has jurisdiction to hear possession proceedings in all case where the property either:

  • has a rateable valuation that does not exceed €253.95; or

  • does not actually have a rateable valuation.

This judgment has overturned a slightly problematic judgment of the Court of Appeal[5] and provides clarity as to the forum in which lenders can enforce security.

The rights of purchasers of loans and security

A number of challenges have been made in recent years regarding the ability of lenders to assign loans and security, the ability of purchasers to enforce loans that they have acquired and the mechanics by which this is accomplished.

Most of these challenges have ultimately been resolved in favour of the purchasers, subject to one or two procedural adaptations.

One issue that has been clarified during the year is that a sale of the loan does not affect the appointment of a receiver. In McGonagle v McAteer, [6] the Court held:

“At the time of the appointment, the Bank was vested with… and entitlements of a mortgagee …. These rights and entitlements were subsequently transferred to various other entities…. That has no impact upon the defendant's appointment…. I have not been convinced as to how his appointment and actions in respect of those loans have been undermined by a change in the number or identity of his principals.”

Accordingly, while commonly executed, no new, or novated, appointment of a receiver is required on a loan sale.

The Mediation Act 2017

The Mediation Act 2017[7] was commenced with effect from 1 January 2018.[8]

The Act, amongst other things:

  1. imposes obligations on solicitors to provide advice and information prior to instituting proceedings and to make a statutory declaration confirming this;

  2. provides an ability for courts, either at their own instance or at the request of a party to invite the parties to consider mediation; and

  3. enables the courts to consider an unreasonable refusal to consider mediation when awarding costs.

The Act has a number of issues, key among which are:

  • from the perspective of commercial parties, who are well aware of the potential to use mediation in appropriate cases, the requirement to advise on mediation and swear a declaration in each case is simply an additional procedural step, which will carry an associated incremental cost; and

  • the requirement for mutual disclosure of assets in all mediation settlements would appear to render such settlements unusable by most commercial parties. 

What’s on the horizon in 2018

A group chaired by the President of the High Court has been established to review the administration of civil law. Its key areas of work include improving practices and procedure, reviewing the law of discovery, reviewing the use of electronic communications including e-litigation and achieving more effective and less costly outcomes for court users, particularly vulnerable court users.

Given the President’s track record in introducing the highly efficient Commercial List in the High Court, there is cause of optimism in relation to this review.

For more information on the developments, please contact a member of our Insolvency team.


The content of this article is provided for information purposes only and does not constitute legal or other advice.


[3] Smith v Ireland & Ors [2017] IEHC 642.

[4] Permanent TSB v Langan [2017] IESC 71.

[5] As to which, see our review of 2016.

[6] [2017] IEHC 672.

[8] S.I. 591 of 2017 made on 8 December, published on 26 December 2017.

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