O'Donoghue v Matin ; O'Donoghue v Martin

• Jurisdiction: Ireland
• Judge: Ms. Justice Pilkington
• Judgment Date: 24 July 2019
• Neutral Citation: [2019] IEHC 598
• Date: 24 July 2019
• Court: High Court
• Docket Number: [2016 No. 9712 P.] [2016 No. 11154 P.]

[2019] IEHC 598

THE HIGH COURT

Pilkington J.

[2016 No. 9712 P.]

[2016 No. 11154 P.]

AS CONSOLIDATED BY AN ORDER OF THE HIGH COURT DATED 3RD APRIL, 2017

BETWEEN

BRENDAN O'DONOGHUE

PLAINTIFF

AND

PATRICK MARTIN

AND

NOEL MARTIN

DEFENDANTS

BETWEEN

BRENDAN O'DONOGHUE

PLAINTIFF

AND

PATRICK MARTIN, NOEL MARTIN

AND

BEN GILROY

DEFENDANTS

Defence – Counterclaim – Amendment – Defendants seeking a declaration that they do not require the leave of the High Court to deliver and serve the amended defence and counterclaim in the proceedings – Whether a substantial issue had been raised by the counterclaimants

Facts: The first and second defendants, Messrs Martin, by notice of motion dated the 17th April, 2018, sought the following reliefs: (a) a declaration that they do not require the leave of the High Court to deliver and serve the amended defence and counterclaim in the proceedings on National Asset Loan Management DAC (NALM); (b) in the alternative, insofar as the court may deem necessary, an order granting them leave to bring an application pursuant to s. 182(2) of the National Asset Management Agency Act 2009 in respect of the non-damages reliefs sought against NALM in the amended defence and counterclaim; (c) further, an order pursuant to s. 182(2) of the 2009 Act, permitting them to seek reliefs in the amended defence and counterclaim other than for damages against NALM and to deliver and serve the amended defence and counterclaim on NALM.

Held by Pilkington J that, on the matters pleaded within their counterclaim, the documentation exhibited to the affidavits and the arguments advanced within them, together with the written and oral submissions before the court, she was not satisfied that a substantial issue had been raised by the counterclaimants within the matters pleaded in paras. 7, 8, 9 and 10 of their counterclaim, such as would be sufficient for them to be entitled for leave pursuant to s. 182 of the 2009 Act. Moreover, in her view there was no basis for reliefs to be granted within s. 182 (4)(b). Whilst she had based her judgment upon the criteria advanced within s. 182(4), she was also satisfied that damages would constitute an adequate remedy pursuant to s. 182(6) of the 2009 Act.

Pilkington J held that she would hear the parties as to any subsequent orders and reliefs required.

Reliefs refused.

JUDGMENT of Ms. Justice Pilkington delivered on the 24th day of July, 2019

1 By notice of motion dated the 17th day of April, 2018, the first and second named defendants seek the following reliefs: -

(a) A declaration that the first and second named defendants do not require the leave of this Honourable Court to deliver and serve the amended defence and counterclaim in the within proceedings on National Asset Loan Management DAC (‘NALM’);

(b) In the alternative, insofar as this Honourable Court may deem necessary, an order granting the first and second named defendants leave to bring an application pursuant to s. 182(2) of the National Asset Management Agency Act, 2009 in respect of the non-damages reliefs sought against NALM in the amended defence and counterclaim herein;

(c) Further, an order pursuant to s. 182(2) of the National Asset Management Agency Act, 2009, permitting the first and second named defendants to seek reliefs in the amended defence and counterclaim herein other than for damages against NALM and to deliver and serve the amended defence and counterclaim on NALM.

2 To initially set out the background facts and circumstances: -

(a) The defendants and counterclaimants Patrick Martin and Noel Martin together with Mardon Property Developments Limited (‘Mardon’) had been extended loan facilities between March 2007 and September 2008 by Bank of Ireland. Patrick and Noel Martin are also the guarantors of Mardon.

(b) All of those loan facilities were acquired by NAMA in 2010.

(c) In April and May 2015, the plaintiff receiver was appointed by NALM over the interests of Mardon, Patrick and Noel Martin over certain commercial and residential properties in counties Monaghan and Louth.

(d) There has been significant interaction between Mardon, the first and second named defendants and NALM from the acquisition of the loan facilities by NALM in 2010, the appointment of the plaintiff receiver and thereafter. This interaction is considered below. The first and second named defendants rely upon certain events that occurred within this timeframe to contend that they were furnished with certain binding assurances by NALM upon which they relied and on foot of which they expended monies such as would preclude the appointment of the plaintiff receiver. More importantly, for this application, they argue that these assurances raise significant issues as to the entitlement of NALM to pursue the first and second named defendants personally or as guarantors of Mardon, in respect of any residual indebtedness.

(e) These proceedings issued in 2016 and essentially seek orders in respect of alleged trespass by the defendants, accounts for rents and profits, delivery up of certain items and an order confirming the validity of the appointment of the receiver. The proceedings were issued in November 2016. No reliefs arising from any indebtedness of the first and second named defendants is sought within those proceedings.

(f) These proceedings then necessitated certain injunctive reliefs sought by the plaintiff receiver against Patrick and Noel Martin in one set of proceedings and Patrick Martin, Noel Martin and Ben Gilroy in respect of a second set of proceedings (relating to the Martins' residential and commercial property interests respectively). These reliefs were granted by the High Court following a fully contested hearing on the 7th day of February, 2017.

(g) On 3rd April 2017, an application to consolidate the proceedings was granted by the court.

(h) The defence was filed in May 2017 in respect of these consolidated proceedings. There was no counterclaim.

(i) The first named and second named defendants together with the third named defendant to the second proceedings Mr. Ben Gilroy were acting without legal representation in respect of the matters set out above. In or about October 2017 the first and second named defendants retained solicitor and counsel.

(j) In January 2018, an application by the defendants Patrick and Noel Martin to adjourn a proposed hearing date in order to advance their counterclaim was granted.

(k) The amended defence and counterclaim was delivered to the plaintiff on the 2nd March 2018, service of the pleading was accepted. NALM was served with the defence and counterclaim on the 6th March, 2018. On the 12th March, 2018, solicitors on behalf of NALM wrote pointing out the requirement to seek leave of the court pursuant to s. 182 of the National Asset Management Agency Act, 2009 (‘the NAMA Act’) in order to advance the counterclaim. Thereafter, following interparty correspondence, it was agreed that rather than initially move the application ex-parte as provided for within the legislation that NALM would be on notice of it from the outset.

3 The notice of motion as set out above issued on 17th April, 2018 and is grounded upon: in chronological order, the grounding affidavit of Patrick Martin sworn on 16th April, 2018, a replying affidavit of Renee Duggan of 1st May, 2018, a second affidavit of Patrick Martin of 9th May, 2018, a replying affidavit of Stephen McHugh on 17th May, 2018, a further affidavit of Renee Duggan on 23rd May, 2018 and a third and final affidavit of Patrick Martin on the 12th April, 2018.

The NAMA Act

4 Section 181(1) of the Act provides: -

‘(1) The provisions of this Chapter apply in relation to legal proceedings commenced on or after 30 July 2009 by a person who is a debtor, associated debtor, guarantor or surety in relation to a bank asset, or a participating institution in connection with a bank asset if the bank asset is specified (whether at the commencement of the proceedings or afterwards) in an acquisition schedule.’

5 Section 182 of the NAMA Act provides: -

‘(1) Subject to subsection (2), a claim to which this Chapter applies gives rise only to a remedy in damages or other relief that does not in any way affect the bank asset, its acquisition, or the interest of NAMA or the NAMA group entity or (for the avoidance of doubt) any property the subject of any security that is part of such a bank asset.

(2) A person may apply for an order that the person may apply for a remedy other than or in addition to that permitted by subsection (1) in relation to a claim to which this Chapter applies.

(3) An application for an order mentioned in subsection (2) shall be made only by leave of the Court. An application for such leave may be made ex parte.

(4) Leave shall not be granted to apply for an order under subsection (2) unless the Court is satisfied that the application raises a substantial issue for the Court's determination and—

(a) the application for leave is made to the Court within 30 days after the later of—

(i) the notification by the participating institution to the relevant debtor, associated debtor, guarantor or surety under section 96, and

(ii) the accrual of the cause of action in respect of which the legal proceedings arose,

or

(b) the Court is satisfied that—

(i) there are substantial reasons why the application was not made within that period, and

(ii) it is just and equitable in all the circumstances to grant leave having regard to the interests of any affected person.

(5) If the Court grants leave to apply for an order under subsection (2), the applicant shall serve on NAMA the order granting leave and the application.

(6) The Court shall make an order under subsection (2) if and only if the Court is satisfied that if the applicant's claim were established, damages would not be an adequate remedy.

(7) For the avoidance of doubt, this Chapter applies to proceedings in being at the time...