Promontoria (Aran) Ltd v Sheehy

• Jurisdiction: Ireland
• Judge: Mr. Justice Quinn
• Judgment Date: 31 July 2019
• Neutral Citation: [2019] IEHC 613
• Docket Number: 2018 890 S
• Court: High Court
• Date: 31 July 2019

[2019] IEHC 613

THE HIGH COURT

COMMERCIAL

Quinn J.

2018 890 S

BETWEEN

PROMONTORIA (ARAN) LIMITED

PLAINTIFF

AND

ANDREW SHEEHY

DEFENDANT

AND

BY ORDER OF THE COURT DATED 4 MARCH 2019, NOEL TYNAN

AND

BRIAN MOLONEY

THIRD PARTIES

Discovery – Categories of documents – Loan facilities – Defendant seeking discovery – Whether the information could be obtained by an appropriate interrogatory

Facts: The defendant, Mr Sheehy, applied to the High Court for an order that the plaintiff, Promontoria (Aran) Limited, make discovery of four categories of documents. A total of six categories had originally been requested and agreement was reached in relation to categories 2 and 5. Category 1 was “All documents relating to the transfer by Ulster Bank Ireland Limited of the loan facilities of 21 February 2005 and 27 May 2009 to the plaintiff including (without limitation) all documents relating to the Global Deed of Transfer dated 12 February 2015, all finance documents and underlying loan agreements as referred to in paragraph 5 of the Statement of Claim, and documents related to due diligence carried out by the Plaintiff in relation to the acquisition of the Defendant’s loans.” Category 3 was “All documents and correspondence between Ulster Bank Ireland Limited and/or the plaintiff and [the third parties, Mr Moloney and Mr Tyan] or any of them, in relation to the indebtedness of [the third parties] with the Plaintiff, whether pursuant to the 2005 Facility Letter and 2009 Facility Letter or otherwise, and to include any correspondence between Ulster Bank and/or the Plaintiff, and [the third parties] about the Defendant.” Category 4 was “All documents relating to the amount paid by the plaintiff for the transfer of the loans allegedly entered into between Ulster Bank Ireland Limited and the defendant.” Category 6 was “All documents relating to borrowings by [the third parties] from the Bank and all steps taken by the plaintiff to secure repayments of amounts due from [the third parties] pursuant to any loan arrangements, including but not limited to, the borrowings alleged to have been advanced pursuant to the 2005 and 2009 Facility Letters and all documents relating to any agreement to the release by the Plaintiff of the obligations of [the third parties] pursuant to the 2005 Facility Letter and the 2009 Facility Letter or otherwise”.

Held by Quinn J that he would order discovery under category 1 in the following terms: “All documents evidencing the transfer by Ulster Bank Ireland Limited of the loan facilities of 21 February 2005 and 27 May 2009 to the plaintiff including all documents relating to the Global Deed of Transfer dated 12 February 2015 insofar as they relate to the defendant and all finance documents and underlying loan agreements referred to in paragraph 4 of the Statement of Claim”. Quinn J held that he would make an order for discovery under category 3 as follows: “All documents and correspondence between Ulster Bank Ireland Limited and/or the Plaintiff and [the third parties] or any of them, in relation to the indebtedness of [the third parties] with the Plaintiff, pursuant to the 2005 Facility Letter and the 2009 Facility Letter, including any correspondence between Ulster Bank and/or the plaintiff, and [the third parties] about the defendant”.

Quinn J held that inspection of documents under category 4 should be limited to the defendant and his solicitor having conduct of the case and counsel only, without further leave of the court, and undertakings must be given by those parties not to use or quote this information in open court or in any documents or electronic transmissions (other than secure inter parties correspondence or correspondence between solicitors and counsel) including further pleadings, requests for particulars and replies or affidavits save with the redaction agreed inter parties or with leave of the court. Regarding category 6, the plaintiff proposed that it would provide the following: (a) “A list of the outstanding liabilities of [the third parties] as at the date of their respective settlements. (b) All documents in respect of the steps taken by the plaintiff to secure repayments of amounts due from [the third parties] pursuant to the 2005 loan Facility and the 2009 Loan Facility. (c) Copies of the settlement agreements in respect of [the third parties] respectively.” Quinn J directed the modification of the plaintiff’s proposed category to include at the end of (b) the following: “and all documents relating to any agreement to the release by the plaintiff of the obligations of [the third parties] pursuant to the said facilities”.

Application granted.

JUDGMENT of Mr. Justice Quinn delivered on the 31st day of July 2019

1 The plaintiff claims judgment against the defendant for the sum €4,127,785.48, being the balance it claims it is due pursuant to certain facilities advanced by Ulster Bank Ireland Limited (‘Ulster Bank’) to the defendant and the Third Parties in March 2005. The plaintiff purchased the relevant facilities from Ulster Bank in February 2015.

2 The plaintiff also claims interest and damages, and alternative equitable reliefs in the form of ‘ restitution of sums advanced to the defendant or provided for the benefit of the defendant, damages for unjust enrichment and a declaration that the plaintiff is entitled to an equitable lien over the commercial investment property in Romania known as ‘Neo City Tower I and II’ located at 30 A Ermil Pangratti Street, Neocity, District I, Bucharest Romania, and any proceeds of sale of that property (‘the Romanian Property’).’

3 The action was commenced by summary summons but has been remitted for plenary hearing. A Statement of Claim, Defence and Reply have been delivered, and pleadings exchanged between the Defendant and the Third Parties.

4 This judgment relates to the defendant's application for an order that the plaintiff makes discovery of four categories of documents. I shall return later to the four categories of documents which are in dispute. The category which is most vigorously opposed by the plaintiff is Category 4, being ‘ all documents relating to the amount paid by the plaintiff for the transfer of the loans allegedly entered into between Ulster Bank Ireland Limited and the defendant.’ The first part of this judgment concerns this category.

Pleadings

5 The Statement of Claim refers to a Facility dated 21 February 2005 (‘the 2005 Facility’) for a sum of €3,000,000 offered to the defendant, together with the Third Parties (referred to collectively as the ‘borrowers’) for the purpose of assisting with the purchase of the Romanian Property.

6 The 2005 Facility was stated to have been repayable on demand and that in the absence of a demand, interest was to be paid monthly and at the expiry of a two-year period the Facility was to be repaid over a ten-year period or to be renegotiated.

7 On 27 May 2009 the 2005 Facility was ‘replaced’ by a loan offer referred to as the 2009 Facility. The 2009 Facility expressly referred to the 2005 Facility and provided that the Facility was renewable and was repayable on demand, but subject to review on or before 30 June 2009 and was to be reviewed thereafter on a yearly basis. By the 2009 Facility, the bank reserved the entitlement to seek full repayment on demand.

8 By a Global Deed of Transfer dated 12 February 2015 the plaintiff acquired the right title and interest of Ulster Bank under the Facility. It is said that the Global Deed of Transfer expressly refers to the 2009 Facility and not to the 2005 Facility which it replaced.

9 The defendant denies having signed the 2005 Facility. Insofar as his name appears on that Facility Letter it is said that it was signed in his name by Mr. Moloney. The defendant states that this was an act of forgery. The plaintiff states that the loan was being advanced to the borrowers as a partnership, that Mr. Moloney was duly authorised to sign for the defendant and accordingly that the defendant was a party to the 2005 Facility.

10 At some time between 2005 and 2009 certain disputes arose between the defendant and the Third Parties, and the defendant notified Ulster Bank that he did not regard himself as under any obligation in respect of the loan and would not be a party to any refinancing or additional Facility agreement. The 2009 Facility is not signed by or on behalf of the defendant.

11 The plaintiff maintains its contract claim for judgment against the defendant firstly pursuant to the terms of the Facilities. However, it makes alternative pleas for equitable remedies as follows in paras. 16, 17 and 18 respectively of the Statement of Claim: -

‘16. In the alternative and without prejudice to the foregoing, to the extent that the defendant is not obliged pursuant to the 2005 Facility Letter and/or the 2009 Facility Letter, to repay the sums demanded, the plaintiff's claim is for restitution of the monies advanced to the defendant as monies had and received by the defendant, to the use of the plaintiff.

17. The defendant is not entitled to be unjustly enriched or otherwise benefit from monies advanced by the bank.’

12 ‘ 18. The monies advanced by the bank were used, in whole or in part, to acquire the Romanian Property and the defendant (and the borrowers) continue to have the benefit of and an interest in the Romanian Property. In the premises the plaintiff is entitled to an equitable lien over the Romanian Property (and any proceeds of sale of that property) to the extent to which monies advanced to the borrowers were used to fund the purchase of that property and remain unpaid’.

13 The defendant puts the plaintiff on proof of all of the matters it pleads including the Facilities, the ‘underlying loan agreement’ and the Global Deed of Transfer. He pleads that the bank was aware when executing the 2009 Facility that he would not be a party to it, because prior to its...