Promontoria (Arrow) Ltd v Cathal Mallon

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 20 April 2021
• Neutral Citation: [2021] IECA 130
• Date: 20 April 2021
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record Number: 2018/431

Between/

Promontoria (Arrow) Limited

Plaintiff/Respondent

and

Cathal Mallon

Defendant/Appellant

and

Michael Shanahan

Defendant

[2021] IECA 130

Noonan J.

Haughton J.

Ní Raifeartaigh J.

Court of Appeal Record Number: 2018/431

High Court Record Number: 2017/2440S

THE COURT OF APPEAL

Summary judgment – Grounds of appeal – Amendment – Appellant seeking to amend his grounds of appeal – Whether any injustice would arise in the absence of the new grounds being permitted

Facts: The EBS Building Society issued a letter of loan offer to the defendants, Mr Mallon and Mr Shanahan, on the 28th June, 2006. The amount offered was €1.8M for the purposes of the purchase of a one acre development site at Mill Lane, Shankill, County Dublin. The loan initially was to have been a two year interest only loan but its terms were extended in 2008 and again in 2009. The facility letter was executed by both defendants, the money was drawn down and the site purchased. The subsequent amended loan offer letters dated respectively the 2nd November, 2008 and the 24th March, 2009 were also executed by both defendants. The loan was ultimately transferred to NALM and on to the plaintiff, Promontoria (Arrow) Ltd, on the 11th December, 2015. Thereafter a demand for payment was made by Promontoria on the 7th July, 2016. A summary summons was issued on the 7th November, 2017 followed up by motions for summary judgment. The claim against Mr Shanahan came before the Commercial Court on the 22nd March, 2018 when McGovern J granted judgment against him. The claim against Mr Mallon came before Twomey J who gave an ex tempore judgment on the 11th October, 2018 granting a decree in the sum of €1.9M against Mr Mallon. This was subject to a stay pending appeal on terms. Mr Mallon served a notice of appeal raising essentially three grounds: first, that there was evidence of a meeting on the 27th July, 2006 between Messrs Butler, Boyle and the defendants wherein it was agreed that the loan would be non-recourse; second, that Mr Mallon did not appreciate that he was entering into joint and several liability and that there was a contest on the facts in this regard which should have entitled Mr Mallon to a plenary hearing; and third, that the evidence put before the court by Mr Mallon did give rise to a right of discovery and thus a right to a plenary hearing. The notice of appeal was filed on the 16th November, 2018. A motion was issued on the 25th February, 2021 seeking an order pursuant to O. 86, r. 10(1) of the Rules of the Superior Courts giving Mr Mallon leave to amend his notice of appeal. It was proposed to add two new grounds in the following terms: “4. The plaintiffs have not properly pleaded the particulars of the amount claimed. The plaintiffs have not relied on documents created in the course of dealing and the court has not been told how the third party deponents have access to information from the plaintiff or the original lender. 5. There was insufficient evidence before the court of the type of business records carrying indications of reliability and there was not evidence sufficient to establish a course of dealing between Promontoria and the appellant.”

Held by the Court of Appeal (Noonan J) that there was nothing exceptional about the facts of the case or indeed the circumstances giving rise to this application. It seemed to Noonan J that in reality no valid reason had been advanced why the new arguments sought to be made could not have been made in the High Court. Having considered Ennis v Allied Irish Bank plc [2021] IESC 12 and the authorities canvassed therein, Noonan J held that Mr Mallon had not satisfied him that any injustice would arise in the absence of the new grounds being permitted.

Noonan J held that the application would be refused.

Application refused.

JUDGMENT ( ex tempore) of the Court delivered by Mr. Justice Noonan on the 20th day of April, 2021

1 The application before the court today is one brought by the first defendant/appellant, Mr. Mallon, to amend his grounds of appeal in this appeal from an order of the High Court granting summary judgment against him.

2 Promontoria's predecessor herein, the EBS Building Society, issued a letter of loan offer to the defendants on the 28th June, 2006. The amount offered was €1.8M for the purposes of the purchase of a one acre development site at Mill Lane, Shankill, County Dublin which was proposed to be purchased for the sum of €2.5M. The loan initially was to have been a two year interest only loan but its terms were extended in 2008 and again in 2009. There is no dispute but that the facility letter was executed by both defendants, the money was drawn down and the site purchased. The subsequent amended loan offer letters dated respectively the 2nd November, 2008 and the 24th March, 2009 were also executed by both defendants.

3 The loan was ultimately transferred to NALM and on to the plaintiff on the 11th December, 2015. Thereafter a demand for payment was made by Promontoria on the 7th July, 2016. A summary summons was issued on the 7th November, 2017 followed up by motions for summary judgment. The application for summary judgment was grounded upon the affidavit of Lisa Burns, who is an associate director employed by Link ASI Limited, described as the servicer of the plaintiff who provides loan administration and asset management services in respect of the loans of the defendants that are owned by Promontoria. Ms. Burns says that she is authorised by the plaintiff to make the affidavit and does so from an examination of the plaintiff's books and records. This affidavit also doubled as an affidavit grounding an application to admit the case to the Commercial List of the High Court.

4 In the grounding affidavit, Ms. Burns exhibits a number of documents including the facility letter and the amendments thereto that I have described, the deed of assignment between NALM and Promontoria, the demand for payment, a statement of the balances due and a deed of appointment dated 23rd September, 2016 of a receiver over the site. Ms. Burns' affidavit was sworn on the 10th November, 2017 and in response, Mr. Mallon swore an affidavit on the 11th December, 2017. I think it fair to say that this affidavit takes no issue with anything Ms. Burns says in her affidavit, other than referring to his personal circumstances, with two exceptions. The first is that he claims that he did not enter into an “open ended joint and several personal guarantee” with the EBS. The second is a statement that: —

“13. My best recollection of lengthy bank negotiations which took place between seven and twelve years ago is that the EBS accepted an unfettered claim on the land as security for the loan.”

5 I assume that the thrust of this latter statement is intended to be that the lender's recourse was to be confined to the property rather than to Mr. Mallon, although this is far from clear. As already noted, Mr. Mallon does not deny that he executed the various facility letters, that the money was drawn down or that the site was purchased. A second affidavit was sworn by Ms. Burns on the 29th January, 2018 but significantly, it was sworn in response, not to the affidavit of Mr. Mallon, but rather to an affidavit of Mr. Shanahan sworn on the 15th January, 2018 which is not before this court. One can infer from this affidavit however that Mr. Shanahan was claiming that he did not consider that he had assumed any personal liability in executing the facility letters and was suggesting, like Mr. Mallon, that there was a limited recourse agreement.

6 It would appear that Mr. Shanahan also made claims about meetings that took place between himself and Philip Butler and Conor Boyle of EBS in 2006. Mr. Mallon makes no reference to these meetings in his affidavits. Mr. Mallon swore two subsequent affidavits on the 24th May and 26th September, 2018. The first of those refers purely to his medical condition. The second and final affidavit sworn by Mr. Mallon returns to the theme of non-recourse suggesting that he could not possibly have undertaken a personal liability given his financial circumstances.

7 He suggests that unless there is an opportunity for discovery, it would not be possible for him to show the emails dealing with what he describes as “hard negotiations” over loan terms. He then appears to make an appeal to the court for any relief the court can give him from the claim for judgment on six separate personal bases which are essentially ad misericordiam pleas as to why he would suffer hardship if judgment were to be granted against him. Of note, Mr. Mallon says that he had tried to settle the matter without admission of liability and had made various offers to Promontoria which he specifies. That is the sum total of the evidence put before the High Court by Mr. Mallon.

8 I think it important to point out that at no stage in any of his affidavits or, apparently, in his submissions before the High Court, did Mr. Mallon raise any question or issue concerning the plaintiff's claim in terms of how it was particularised or any complaint concerning the amount claimed. Similarly, he raised no issue as to the plaintiff's proofs and in particular the capacity of the plaintiff's deponents to give the evidence they purported to give.

9 It would appear that the claim against Mr. Shanahan came before the Commercial Court on the 22nd March, 2018 when McGovern J. granted judgment against him. The claim against Mr. Mallon came before Twomey J. who gave an ex tempore judgment on the 11th October, 2018 granting a decree in the sum of €1.9M against Mr. Mallon. This was subject to a stay pending appeal on terms.

10 In his judgment, the trial judge set out the facts as I have outlined them above noting that judgment had already been granted against Mr. Shanahan by McGovern J. The judge noted that Mr. Mallon accepts that the money was borrowed and not...