Promontoria (Aran) Ltd v Sheehy

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 16 April 2020
• Neutral Citation: [2020] IECA 104
• Date: 16 April 2020
• Court: Court of Appeal (Ireland)
• Docket Number: 2018/890S

BETWEEN/

PROMONTORIA (ARAN) LIMITED

PLAINTIFF/APPELLANT

-AND-

ANDREW SHEEHY

DEFENDANT/RESPONDENT

AND BY ORDER OF THE COURT DATED 4TH MARCH 2019,

NOEL TYNAN

AND

BRIAN MOLONEY

THIRD PARTIES

[2020] IECA 104

Faherty J.

Haughton J.

Ní Raifeartaigh J.

2018/890S

2020/30

THE COURT OF APPEAL

Discovery – Unjust enrichment restitution – Proportionality – Appellant seeking to resist discovery – Whether the appellant had demonstrated that the trial judge erred in principle in his decision to grant discovery

Facts: The High Court (Quinn J), in an ex tempore judgment delivered on 31 July 2019, determined that the plaintiff/appellant, Promontoria (Aran) Ltd, should make discovery, and made orders on 8 November 2019. His order was perfected on 16 January 2020. From that judgment and order the appellant appealed to the Court of Appeal in respect of Category 4 only. The primary claim in the proceedings was to recover monies claimed to be due on foot of loan facilities with Ulster Bank Ireland Ltd (the Bank), which loans together with associated security had been acquired by the appellant. There was a pleaded claim in the alternative based on unjust enrichment restitution, and it was in respect of that claim that the defendant/respondent, Mr Sheehy, sought and obtained discovery in Category 4 of all documents relating to the amount paid by the appellant for the transfer of the loans. Discovery was resisted on the basis that the documents were said by the appellant to be confidential and commercially sensitive.

Held by Haughton J that the appellant had failed to demonstrate that the trial judge erred in principle in his decision to grant Category 4 discovery subject to the limitations and undertakings set out in his order, or that the trial judge was ‘probably’ wrong. Haughton J held that the discovery so ordered was relevant to advance the defence of the case pleaded in the alternative by the appellant, and was necessary for fairly disposing of issues that arose. In that the documents may be confidential and commercially sensitive, Haughton J held that the trial judge carried out an appropriate balancing exercise in reaching his decision, and that the order made was proportionate having regard to the restrictions and undertakings which adequately protected the appellant and all of the borrowers from any wider disclosure than was necessary for the purpose of defending the proceedings.

Haughton J held that he would dismiss the appeal and affirm the judgment and order of the High Court.

Appeal dismissed.

JUDGMENT of Mr. Justice Robert Haughton delivered on the 16th day of April 2020

Introduction

1 In an ex tempore judgment of Quinn J. delivered on 31 July 2019 he determined that the Plaintiff/Appellant should make discovery, and he made Orders accordingly on 8 November 2019, and his Order was perfected on 16 January 2020. From that Judgment and Order the Appellant has appealed in respect of Category 4 only. The primary claim in the proceedings is to recover monies claimed to be due on foot of loan facilities with Ulster Bank Ireland Limited (“the Bank”), which loans together with associated security have been acquired by the Appellant. There is a pleaded claim in the alternative based on unjust enrichment restitution, and it is in respect of that claim that the Respondent sought and obtained discovery in Category 4 of all documents relating to the amount paid by the Appellant for the transfer of the loans. Discovery is resisted on the basis that the documents are said by the Appellant to be confidential and commercially sensitive. This Judgment considers the action and relevant pleas before addressing the discovery sought, the relevant law, and discussion in the context of the argument made. The discovery sought did not concern the third parties, who were not present or represented in the High Court or in this Court.

The pleadings

2 It is necessary to set these out in some detail as they establish the context in which relevance of the disputed category must be considered. While these proceedings were commenced by Summary Summons on 23 July 2018, by agreement on entry to the Commercial Court they were case managed to plenary hearing. In the Statement of Claim delivered on 21 December 2018, the Appellant seeks judgment in a sum in excess of €4.1M against the Respondent in respect of monies allegedly advanced by the Bank to the Respondent, and also to two other individuals namely the third parties. The Appellant claims to have acquired the relevant loans and associated security from the Bank.

3 It is claimed that pursuant to a request by the Respondent and the third parties for funds to assist with the purchase of a commercial investment property known as ‘NeoCity Tower I and II’ located in Bucharest, Romania, the Bank offered to advance monies on foot of a loan offer dated 21 February 2005 (“the 2005 Facility Letter”). Pursuant to the 2005 facility letter, the Bank offered the three borrowers a loan facility of €3M. It is claimed that the 2005 Facility Letter was accepted by the three borrowers and that the monies were advanced by the Bank, and that the monies were used to purchase the Romanian property.

4 In paragraph 11 of the Statement of Claim it is pleaded that the 2005 Facility Letter was replaced by a loan offer letter dated 27 May 2009 (“the 2009 Facility Letter”), which expressly referred to the 2005 Facility Letter. It is claimed that the 2009 Facility Letter 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 on a yearly basis thereafter. It is claimed that the Respondent is liable “whether pursuant to contract or otherwise” to repay the monies advanced by the Bank, and that, demand having been made by letters dated 8 May 2017, the Respondent is in default. The Appellant pleads that pursuant to a Global Deed of Transfer dated 12 February 2015 between the Bank and the Appellant (“the Global Deed of Transfer”), the Appellant acquired all the right, title, interest, estate, entitlement, benefit and obligation in and under, inter alia, each finance document related to relevant assets being disposed of, and that this included underlying loan agreements and “any and all entitlements, whether pursuant to contract, in tort, in equity, in restitution or otherwise, in respect of any claims arising on foot of the moneys advanced to the Borrowers” (paragraph 6 of Statement of Claim).

5 Most pertinent to the discovery issue, in the Statement of Claim the Appellant pleads in the alternative a claim for monies had and received, and the relevant pleas in the Statement of Claim are as follows:-

“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 moneys advanced to the Defendant as moneys 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 moneys advanced by the Bank.

EQUITABLE LIEN

18. The moneys advanced by the Bank were used, in whole or in part, to acquire the Romanian Property and the Defendant (and the Borrowers) continued 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 to fund the purchase of that property and remain unpaid.”

6 Further in the prayer in the Statement of Claim the Appellant having claimed judgment in the sum of €4,127,785.48 and damages for breach of contract and interest, then pleads the following additional claims: -

“5. A further, or in the alternative, restitution of sums advanced to the Defendant or provided for the benefit of the Defendant.

6. Damages for unjust enrichment.

7. A declaration that the Plaintiff is entitled to an equitable lien over the commercial investment property known as ‘NeoCity Tower I and II’ located at 30A Ermil Pangratti Sheet, NeoCity District 1, Bucharest, Romania and any proceeds of sale of that property.”

7 In his Defence, the Respondent denies that monies were advanced to him, and pleads that they were advanced to the third parties. He also denies that by virtue of the Global Deed of Transfer the Appellant has acquired any right or entitlement or benefit that affects him, or that the Appellant has acquired any entitlement, contractual or otherwise, involving the Defendant. In paragraph 6 the Respondent asserts that the Schedule to the Global Deed of Transfer expressly states that the loan agreement purchased was “a Facility Letter dated 27 May 2009 to which the Defendant is not a party”. It is pleaded that prior to executing the 2009 Facility Letter with Mr. Moloney and Mr. Tynan the Bank were advised in advance of the execution of the Facility Letter that it would not become a party but the Bank elected to release Mr. Sheehy from the borrowing.

8 The Respondent further pleads that monies advanced pursuant to the 2005 Facility Letter were advanced to the third parties alone and used for their purposes, and accordingly the Respondent denies any liability “whether pursuant to contract or otherwise, to repay the monies advances by the Bank”. The Respondent asserts that the signature on the 2005 Facility Letter was not his, and he denies that he executed the 2009 Facility Letter. In essence therefore the Respondent denies the contractual claim in its entirety.

9 In his defence the Respondent pleads to the Appellant's alternative claims as follows:

“13. Insofar as ‘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’...