Discovery of loan purchase price ordered on the basis of a plea of unjust enrichment

In Promontoria (Aran) Ltd v Sheehy [2019] IEHC 613, the High Court ordered discovery of documents revealing the price paid by the plaintiff to Ulster Bank for loans allegedly made to the defendant.

The court found that in circumstances where the plaintiff had invoked the equitable doctrines of restitution and unjust enrichment, it was not possible to find at an interlocutory stage that the price paid was not relevant.

Background

The plaintiff alleged that the defendant and third parties had received monies on foot of facilities granted by Ulster Bank in 2005, renewed in 2009, for the purchase of property in Romania. It had purchased the loan from Ulster Bank in 2015, and claimed to be entitled to repayment from the defendant.

The defendant alleged that his signature on the 2005 facility letter was a forgery perpetrated by one of the third parties, and he was not party to the renewal in 2009.

The Global Deed of Transfer between the plaintiff and Ulster Bank referred only to the 2009 facility, and did not make reference to the 2005 facility.

The plaintiff thus made secondary pleas for equitable remedies in its Statement of Claim, claiming restitution, and that the plaintiff was not entitled to be unjustly enriched by the monies advanced.

The defendant pleaded that the claim in restitution must fail, partly on the basis that the plaintiff (as successor to the lender) did not advance monies on foot of the facilities, and had made 'no payment of substance'. He claimed that the

'…ingredients of unjust enrichment include establishing that the defendant had been unjustly enriched at the expense of the plaintiff , and that the trial will necessitate examination of the plaintiff's conduct and actions including the transaction by which it acquired the loans and the price.'

Decision

Quinn J found that  the defendant would have to establish at trial that the price paid by the plaintiff is a factor that is relevant in assessing the relative equities of the parties, and noted that he had 'some doubt' about the prospects of his success on that front. Notwithstanding that observation, he found that to refuse discovery of the price paid would effectively determine that substantive question at an interlocutory stage, and the court should not make that determination.

He acknowledged the plaintiff's argument that the defendant had merely asserted that it had made no payment of substance for the loan, but noted that the plaintiff had made an equally bare rebuttal of that argument, and determined that the price paid for the loan had been 'fairly put in issue by the proceedings'.

The court also noted that the plaintiff had not been prepared to undertake that the information sought as to price would be provided in response to an appropriate interrogatory. It rejected a suggestion by the plaintiff that the information only be made available to the court if/when  the trial judged determined as a matter of principle that it was relevant to the claim of unjust enrichment. It determined that such a course of action would require the court to hold a hearing on a preliminary issue of law, which would be inappropriate in the circumstances.

The court considered the decision of the High Court in Courtney v OCM Emru Debtco DAC [2019] IEHC 160,  and reiterated the point that commercial sensitivity had never afforded a party the same level of protection as privilege, and that he would simply require similar undertakings to those required in Courtney as to the dissemination and use of discovered information.

For further information plase contact Ciaran Joyce, Knowledge Lawyer in the Litigation and Dispute Resolution Department.

Date published: 3 September 2019