Promontoria (Arrow) Ltd v Burke

JurisdictionIreland
JudgeMr. Justice David Barniville
Judgment Date19 December 2018
Neutral Citation[2018] IEHC 773
Docket Number[2017 No. 821 S]
CourtHigh Court
Date19 December 2018
BETWEEN
PROMONTORIA (ARROW) LIMITED
PLAINTIFF
AND
PAT BURKE, JOHN DONNELLY

AND

JOHN FLEMING TRADING AS BRIDGEFORD PARTNERSHIP
DEFENDANTS

[2018] IEHC 773

Barniville J.

[2017 No. 821 S]

THE HIGH COURT

COMMERCIAL

Summary judgment – Loan facility – Statute barred – Plaintiff seeking summary judgment against the defendants – Whether the defendants had raised an arguable defence

Facts: The plaintiff, Promontoria (Arrow) Ltd, applied to the High Court seeking summary judgment against the defendants, Mr Burke, Mr Donnelly and Mr Fleming, pursuant to O. 37 RSC in the sum of €9,687,433.70 together with further sums by way of interest. The defendants resisted Promontoria’s application and sought to have the proceedings adjourned to plenary hearing. Promontoria claimed to be entitled to summary judgment in the amount claimed having acquired a loan facility (and related security) granted to the defendants by EBS Building Society in February 2009 from National Asset Loan Management Ltd (NALM) which had itself acquired the facility (and other rights connected with it) from EBS pursuant to the National Asset Management Agency Act 2009. Promontoria asserted that it acquired all of the relevant rights, entitlements and interests in the loan facility from NALM pursuant to legal documentation executed in November and December 2015 and, principally, pursuant to a Global Assignment Deed dated 11th December, 2015 made between NALM and Promontoria. In addition to other defences raised, the defendants raised an issue as to Promontoria’s entitlement to maintain the proceedings against them.

Held by Barniville J that the defendants had raised an arguable defence to the effect that Promontoria’s claim was statute barred. Barniville J concluded that the defendants were entitled to have that matter proceed to a further hearing, which may be the trial of a preliminary issue on the Statute where the defendants were likely to be the moving parties on the issue and where the defendants may seek to obtain discovery of certain documentation in respect of the Statute defence. Barniville J concluded that it would not be appropriate for him to resolve the Statute issue on this summary application as it was not the trial of a preliminary issue and on the basis that there were disputed issues of fact in respect of which discovery may be necessary. Barniville J concluded that the defendants had not raised an arguable defence in relation to the other intended defences which they wished to raise; specifically, the defendants had not raised an arguable defence in relation to the admissibility of the evidence adduced on behalf of Promontoria on its application for summary judgment or in relation to the proof of transfer of the defendants’ EBS loan to Promontoria or in relation to the existence of an alleged joint venture agreement under which there was to be no recourse to the defendants in respect of the repayment of the loan. On each of those proposed defences, Barniville J concluded that the defendants had not raised an arguable defence and that it was clear that the defendants had no defence to Promontoria’s claim.

Barniville J held that it was open to him under O. 37 rr. 7 and 10 RSC to give the defendants leave to defend the proceedings on the grounds of the Statute only, but to refuse such leave in relation to any of the other intended defences. Barniville J was satisfied that this was consistent with the approach taken by the High Court in GE Capital Woodchester Ltd & Anor v Aktiv Kapital Asset Investment Ltd & Ors [2009] IEHC 512 and in Bussoleno Ltd v Kelly & Ors [2012] ILRM 81 and by the Court of Appeal in National Asset Loan Management v Kelleher [2016] 3 IR 568. Barniville J held that he would discuss with counsel the precise terms of the order to be made in light of his conclusions.

Judgment approved.

JUDGMENT of Mr. Justice David Barniville delivered on the 19th day of December, 2018
Introduction
1

The plaintiff, Promontoria (Arrow) Limited (‘Promontoria’), seeks summary judgment against the defendants pursuant to O. 37 RSC in the sum of €9,687,433.70 together with further sums by way of interest. The defendants, Pat Burke, John Donnelly and John Fleming, have resisted Promontoria's application and have sought to have the proceedings adjourned to plenary hearing.

2

Promontoria claims to be entitled to summary judgment in the amount claimed having acquired a loan facility (and related security) granted to the defendants by EBS Building Society (‘EBS’) in February 2009 from National Asset Loan Management Limited (‘NALM’) which had itself acquired the facility (and other rights connected with it) from EBS pursuant to the National Asset Management Agency Act, 2009 (the ‘2009 Act’). Promontoria asserts that it acquired all of the relevant rights, entitlements and interests in the loan facility from NALM pursuant to legal documentation executed in November and December 2015 and, principally, pursuant to a Global Assignment Deed dated 11th December, 2015 made between NALM and Promontoria. In addition to other defences raised, the defendants have raised an issue as to Promontoria's entitlement to maintain these proceedings against them.

3

For reasons which I outline in greater detail in this judgment, I have concluded that the defendants have raised an arguable case that Promontoria's claim is statute barred and that that issue should go to a further or plenary hearing (possibly with a trial of a preliminary issue on the statute point). Accordingly, I grant the defendants leave to defend the proceedings pursuant to O. 37, rr. 7 and 10 RSC confined to the issue as to whether Promontoria's claim is statute barred. I am not satisfied that the defendants have raised an arguable defence on the other issues they have raised. In particular, I am not satisfied that the defendants have made out an arguable case that the loan advanced to them by EBS in February 2009 was advanced on foot of a non-recourse joint venture between EBS and the defendants. That defence, and the averments made on behalf of the defendants in support of it, flies in the face of the loan documentation signed by the defendants. I am not satisfied that the defendants have met the low threshold of establishing an arguable defence in relation to that issue. Nor am I satisfied that the defendants have raised an arguable defence in relation to the admissibility of the evidence adduced by Promontoria on this application or in relation to the entitlement of Promontoria to maintain the proceedings in respect of the loan to the defendants.

Procedural background
4

The proceedings were commenced by Promontoria by a summary summons which was issued on 10th May, 2017. The summary summons asserts (at para. 5 of the special indorsement of claim) that the liabilities the subject of the proceedings concern a loan facility advanced to the defendants, trading as the ‘Bridgeford Partnership’, by EBS pursuant to a facility letter dated 6th February, 2009 (as amended by amendment letter dated 17th February, 2009) (the ‘facility letter of 6th February, 2009 (as amended)’) (at para. 5). The summons further pleads (also at para. 5) that as security for the facility, EBS was entitled to rely on its existing mortgage dated 5th January, 2007 over the defendants” property known as the Bridgeford Bar and Restaurant in Drogheda, County Louth and the adjoining land and site (the ‘mortgage’). Paragraph 6 then sets out the various legal agreements on foot of which it is alleged by Promontoria that it became entitled to the benefit of the loan facility and the related security. Paragraphs 7 to 13 of the special indorsement of claim outline the facility letter of 6th February, 2009 (as amended) under which EBS offered, and the defendants accepted, the loan facility of €9,400,000 to restructure an existing loan facility and to provide a capitalised loan facility. The summons pleads that the facility was repayable on or before 17th February, 2011. It is further pleaded that the defendants failed to pay the principal and interest when due and owing and that Promontoria sent a letter of demand to the defendants dated 18th January, 2017, in respect of the facility letter demanding payment of the total sum of €9,687,433.70 which it alleged was then due and owing in respect of principal and interest under the facility. It is pleaded that despite demand, no payment has been made by the defendants in respect of sums allegedly due and owing under the relevant facility letter.

5

Paragraphs 14 to 16 of the special indorsement of claim then refer to the fact that Promontoria appointed a receiver over certain of the defendants” assets under the mortgage in April 2017 and that, as of the date of the commencement of the proceedings, no amounts had been received pursuant to the receivership or applied by the receiver against the defendants” alleged indebtedness to Promontoria. Paragraph 17 then asserts the amount allegedly due and owing by the defendants to Promontoria as of 8th May, 2017, including accrued interest pursuant to the facility, as being €9,687,433.70. Paragraph 18 pleads that that sum is a sum which has fallen due and owing by the defendants to Promontoria within a period of six years prior to the commencement of the proceedings. The plaintiff then claims judgment in that amount together with further interest.

6

I have recited in some detail the terms of the summary summons as the basis on which Promontoria has brought these proceedings is relied upon by the defendants in support of their contention that the claim is statute barred. I will return to that issue later.

7

An appearance was initially entered on behalf of all defendants by Miley & Miley Solicitors. That firm continues to represent Mr. Donnelly and Mr. Fleming, the second and third named defendants. Shanley Solicitors now represent Mr. Burke, the first named defendant.

8

Promontoria applied...

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