High Court of Ireland Decisions
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Cite as: [2014] IEHc 671
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Judgment
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Neutral Citation: [2014] IEHC 671 THE HIGH COURT COMMERCIAL [2014 No. 544 S.] BETWEEN IRISH BANK RESOLUTION CORPORATION PLAINTIFF AND
NOEL COMER AND DEIRDRE COMER DEFENDANTS EX TEMPORE JUDGMENT of Mr. Justice Kelly delivered on the 30th day of July, 2014 1. I have before me an application which is brought by a company called Launceston Property Finance Limited and the notice of motion which grounds the application seeks, pursuant to O. 15 of the Rules of the Superior Courts, an order substituting that entity as plaintiff in these proceedings. 2. The proceedings began with Irish Bank Resolution Corporation Limited in special liquidation as plaintiff and Noel Comer and Deirdre Comer as defendants. 3. They began by way of summary summons which was transferred to the Commercial List and in due course an application for summary judgment came on before me. The claim is for just short of €10m. 4. At the hearing of the application for summary judgment, I declined to grant that order and instead adjourned the matter for plenary hearing and gave the usual directions. 5. This application is brought on foot of two affidavits which I will turn to in a moment. But before I consider the factual evidence which is placed before the court, it is, I think, important to indicate what this application is not and what it is. First of all, this is not the trial of these proceedings. Second, on this application I am not called upon nor do I purport to in any way make any adjudication upon either the validity or efficacy of either the sale agreement which underpins this application nor indeed of the notice which was given to the defendants and which is put in evidence before me. 6. Those matters, if they are in issue in the proceedings, will have to be dealt with at trial. 7. What is this application? It is an application brought pursuant to the relevant rules of court in which, as a result of circumstances which have occurred subsequent to the institution of the proceedings, it is sought to substitute one plaintiff for another. These are applications which occur on a fairly regular basis. 8. This particular case has given rise to a great deal of submissions both written and oral but before one gets to the legal submissions, one has to look at the facts. In this regard, it is important to point out that the evidence on this application is all one way because, although an opportunity was given to the defendants to file replying affidavits, they opted not to do so. 9. The evidence comes in the form of two affidavits, the first of which is sworn by Mr. Jonathan Hanley. This is what he says:-
10. He then says under the heading “The Facilities”:-
I am advised that on 8th May, 2014, on the application for summary judgment, Mr. Justice Kelly remitted the matter for plenary hearing and gave consequential directions in respect of the pleadings. Those directions were complied with up to 5th June, 2014, when Mr. Justice Kelly agreed to suspend the directions and granted leave to bring an application to substitute Launceston for the plaintiff. Clause 18.2 of the general conditions of personal loans as exhibited in an earlier affidavit provides that the Bank may at any time transfer, assign or dispose of the benefit of the agreement and the security documents to any person on such terms as the Bank may think fit whether as part of a loan transfer or securitisation scheme or otherwise without notice to the borrower or any other person.” 12. The affidavit evidence goes on under the heading “Assignment of the Facilities”:-
The assets which the plaintiff agreed to sell included the facilities and related security. Launceston is seeking the consent of the solicitors for the special liquidators to exhibit a redacted copy of the loan sale deed and it will be exhibited to a supplemental affidavit when and if it becomes available. Pursuant to the loan sale deed, a deed of transfer was executed as between the plaintiff and Launceston, as assignee, on 23rd May, 2014, (the deed of assignment). Launceston is seeking the consent of the solicitors for the special liquidators to exhibit a redacted copy of the deed of assignment which will be exhibited to a supplemental affidavit when and if it becomes available. Pursuant to clause 4.1 of the deed of assignment, the assignor unconditionally, irrevocably and absolutely transferred, conveyed and assigned to Launceston, all such rights, title, interest, benefits, liabilities and obligations as the assignor may have in the purchased assets subject to the benefit in each case of the related finance agreement, with effect from the completion date. I say and am advised that the assignment of the facilities and related security connected to the within proceedings from the plaintiff to Launceston completed on 23rd May, 2014. I further say I am advised that by letter dated 6th June, 2014, from the plaintiff, the defendants have been notified of:- (i) the agreement which was signed with facilities and all related security and ancillary rights; and (ii) the date upon which the assignment occurred.”
On 28th March, 2014, (the sale date) IBRC agreed to sell amounts owing to it in respect of both facilities and the facility letters guarantee and security and all other rights including any judgments and obligations relating to your facilities with IBRC (henceforth the facility documents) to Launceston Property Finance Limited (the purchaser) in accordance with the facility documents. The transfer of your facilities took effect on 23rd May, 2014. From the sale date amounts and obligations owing in respect of your facilities are owed to the purchaser. As part of the sale and in accordance with the facility documents all relevant details relating to your facilities and the facility documents have been provided to the purchaser. These details will be used by the purchaser for the continued performance and administration of your facilities.”
18. There is a second affidavit sworn by a director of Launceston Property Finance Limited and she gives the authority which she has to make the affidavit. She says as follows:-
20. She goes on to say:-
22. A good deal of the difficulty which has arisen here comes from the copy redacted document which accompanies her affidavit. 23. It is correct to say that nowhere in the affidavit evidence is there any reason or justification given for the redaction of this document. It would have been more helpful if there had been an explanation indicating that the redaction had taken place for whatever reason it did. The reason why there was redaction is probably because there is commercially sensitive material in the exhibit but I will not speculate on that. 24. What the document does demonstrate is that it is a deed that was executed on 28th March. It describes the parties and sets out the recitals. There are a whole series of definitions some of which are redacted. What it does demonstrate is that under para. 2.2 in the un-redacted part, subject to and in accordance with the terms of the deed, the vendor agrees to sell the assigned accounts or convey and deliver the assets to the purchaser subject to the subsisting rights of redemption and the purchaser thereby agrees to purchase the assets and assume the assumed obligations. 25. It goes on to say, by way of setting out the actions which are required on the assignment date, that following the assignment date and prior to the completion date, the vendor shall deliver to all relevant borrowers an appropriate notice. 26. Pursuant to the deed of sale, a deed of transfer was executed as between IBRC and Launceston, again on 23rd May. Clause 4.1 of the deed of assignment provides:-
28. However, in the course of argument, it was accepted that the document which has been exhibited, read in respect of the material which is not redacted, demonstrates that there has been a sale and that there has been an assignment. Furthermore it was accepted in the course of argument that the notice which had been given by means of the letter of 6th June, 2014, on its face, (assuming of course that there is a valid underlying assignment), appears to comply with what is required by s. 28(6) of the Supreme Court Judicature (Ireland) Act 1877. That section provides:-
30. What I am asked to do is to consider a procedural application which, if it is granted, will have the effect of bringing to an end the entitlement of IBRC to further prosecute these proceedings. It will substitute for that entity, Launceston, who will take over the entitlement to prosecute the proceedings, subject to all of the imperfections that may have been present when the action was constituted as between IBRC and the defendants and subject also to proving at trial, that there has been a valid sale of the underlying assets, a valid assignment of the chose in action which is this action, and a valid notice given. 31. What I do have to satisfy myself about is whether there is prima facie evidence of that having occurred. In order to come within the relevant rule of court, there has to be evidence adduced which would justify the substitution of the existing plaintiff by Launceston. 32. That seems to me to be the standard of proof that has to be achieved. Much of the argument which took place concerning the deployment of material, the entitlement to redact, the reasons for redaction, the entitlement of the defendant to see the original document in un-redacted form are all matters, which in my view, are for another day. 33. There was also a constitutional argument made that the redactions were in some way an interference with the constitutional entitlement of the defendants. From that point of view, I want to point out that every aspect of this piece of litigation has been held in open court. I have read into the record of this judgment, every word of evidence which has been put before the court in the two affidavits grounding the application and I have referred word for word to the notice which was given and which purports to be a valid notice. I have also read into the record as far as it is necessary, material from the redacted copy documents which constitute the major exhibit in the second affidavit. 34. I want to turn now for a moment to the rules of court in this regard. 35. The motion which is brought refers in rather broad terms only to O. 15 but without reference to any of its rules. It seems to me that the relevant rule from the point of view of this application is Order 15, rule 14. It provides for the making of an application to add or strike out or substitute a plaintiff or defendant. Such an application can be made to the court at any time before trial by motion or at the trial of the action in a summary manner. 36. I do not think that the rule contemplates an elaborate argument of the type which I have had to deal with this afternoon. I think what it requires is that there should be put before the court sufficient evidence to justify the making of the order, leaving over to the trial of the action the question of whether that evidence put before the court in a prima facie fashion is sufficient to bring home the plaintiff’s claim at trial. 37. There was also reference made to O. 17, r. 4 which deals with changes in parties by death etc. Rule 4 provides:-
39. Here there has been a decision made to deal with the matter on notice and I think in the circumstances that was the wise thing to do. If the order had been sought and granted ex parte it would probably have given rise to an application to discharge that order. 40. I propose to grant the order. It seems to me that the evidence is here to justify it and is in the two affidavits which are uncontroverted. 41. I accept that there is some justification for the criticism which is made concerning the self editing of the documents which were the subject of redaction without any explanation being given as to why that editing took place. But subject to that, I cannot perceive how any other criticism can be made. I am certainly unable to discern any disadvantage which flows to the defendant as a result of the order which I propose to make. 42. Counsel on behalf of the defendants made the case that I should not be concerned about that. He is entitled to stand on his rights and if the onus of proof has not been discharged then he is entitled to succeed in his opposition to this application. Of course, that is taken as read. No application can succeed unless there is put before the court sufficient evidence and material to satisfy the court that the necessary onus of proof has been discharged. 43. In my view, the onus of proof on a procedural motion of this sort is very different to the onus of proof which is required at the trial. I do not believe that it would be either appropriate or indeed in the interests of justice that on a procedural motion of this sort, far reaching decisions concerning the efficacy and validity of the underlying sale agreement or the assignment of a notice of that assignment should be made. 44. That would turn a procedural motion which, even under the rules is contemplated as one which can be made ex parte, into a sort of mini-trial of the action. That is not what is envisaged by the rules of court and is certainly not envisaged under the rules of the Commercial Division of the court. 45. In these circumstances, I am of the opinion that there has been made out a sufficient case to warrant the application succeeding and I propose to make the order which is sought. 46. I will, therefore substitute, Launceston Property Finance Limited as plaintiff in these proceedings in lieu of Irish Bank Resolution Corporation Limited in special liquidation. 47. The effect of that is to take out of the picture completely, Irish Bank Resolution Corporation Limited. It is now forgoing its right of action and conferring on Launceston, the entitlement to continue these proceedings. But that is subject to Launceston demonstrating at trial that they have such an entitlement. Launceston will have to demonstrate to the trial judge that it is entitled to bring this action on foot of the documents which are exhibited before me albeit in their redacted form. 48. The defendants at trial will be perfectly free to raise whatever issues they think are appropriate in relation to any alleged imperfections or invalidity as they see them in any of the documents which underscore the bringing of this application and the substitution order which I now make.
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