In Allied Irish Bank plc v Aqua Fresh Fish Limited IESC 49 the Supreme Court reaffirmed the decision in Battle v Irish Art Promotion Centre Limited I.R. 252 that companies and bodies corporate require legal representation in court save for exceptional circumstances.
Background
AIB loaned monies to Aqua Fresh Fish Limited (the “Company”) and secured the loan by way of a mortgage over certain lands owned by the Company. AIB alleged that the Company defaulted on the loan and issued a letter of demand to the Company seeking repayment. AIB then proceeded to issue a special summons seeking an order for possession and sale of the lands secured by the loan in the absence of repayment.
Mr Adrian Flynn, the managing director and principal shareholder of the Company, applied to the court for permission to enter an appearance to the summons and to represent the Company in the proceedings. This was refused by the High Court and also on appeal by the Court of Appeal in reliance on the principles set out in Battle.
Supreme Court Judgment
The Supreme Court reaffirmed the principles in Battle and determined that a company must be represented by a lawyer with a right of audience before a court in the interests of justice and in accordance with the principles of fair procedures.
While an individual can represent themselves in proceedings, this is not the case for a company as a company is an artificial person with a separate legal personality distinct from its shareholders and directors. The Court commented that directors and shareholders benefit from the separate legal personality and limited liability of a company but are also subject to the disadvantages in forming a company including that it cannot represent itself as it is not a natural person.
The Supreme Court further upheld the decision in Stella Coffee v the Environmental Protection Agency 2 I.R. 125 that a court retains a discretion pursuant to its inherent discretion to regulate its own proceedings to allow a company be represented by a third party other than a lawyer in exceptional circumstances.
The Supreme Court chose not to define “exceptional circumstances”, although it did consider that if the person who wished to represent a company was a party to the proceedings or willing to be joined as a party, this could be taken into account to determine whether there were exceptional circumstances. The Supreme Court also stated that it did not consider the following to be exceptional circumstances that would allow a third party, other than a lawyer, to represent a company:
- inability of a company to pay for legal representation;
- where a company has a good arguable defence to the proceedings;
- where the third party who wishes to represent the company is its principal shareholder and director.
Implications
If a company does not hire legal representation, it cannot be represented by a non-lawyer director or shareholder of the company or third party in proceedings save for exceptional circumstances. Accordingly, if a company does not obtain legal representation, the company will be undefended in proceedings and runs the risk of a judgment being awarded against it.
For further information, please contact Zara West.
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