Neutral Citation:  IEHC 470
THE HIGH COURT
[2011 No. 1548 S]
[2011 No. 86 COM]
IRISH BANK RESOLUTION CORPORATION LIMITED (IN SPECIAL LIQUIDATION)
JUDGMENT (No. 3) on Quantum due on Facilities of Ms. Justice Finlay Geoghegan delivered on the 29th day of October 2014
1. The background to this judgment, even since the commencement of proceedings is lengthy and complex but must be set out in order to explain where the proceedings have reached and what the Court is now determining in this judgment.
2. The proceedings were commenced by the issue of a summary summons by Anglo Irish Bank Corporation Ltd. (“Anglo”) on 13th April 2011. Anglo sought judgment in the sum of €36,787,674.37 plus interest. The amount claimed was alleged to be the aggregate of sums due and owing by the defendant to Anglo pursuant to facilities granted since 2000. The most recent facility letter, which covered all the then facilities, was dated 5th February 2009.
3. The proceedings were admitted to the Commercial List, and on 14th July 2011, Anglo’s application for summary judgment was refused and the proceedings remitted for plenary hearing. Thereafter, a defence and counterclaim was delivered and further pleadings, notices for particulars and replies thereto. The plaintiff became Irish Bank Resolution Corporation Ltd. (“IBRC”) and the title of the proceedings changed.
4. The defendant in the defence and counterclaim delivered on 21st November 2011, admitted at para. 1 that a loan was made to him by the plaintiff “in the amount and at the times alleged in the special endorsement of claim on the summary summons”, but continued to plead that he was not then liable for the payment of any monies thereon to the plaintiff. He also counterclaimed for a number of reliefs.
5. Following further procedural exchanges, the High Court (Kelly J.) made an order on 23rd January 2012, setting down for trial and determination in advance of the determination of any other issues in the proceedings, two issues, namely:
6. Following further procedural preparation, including the exchange of witness statements in accordance with Commercial List Directions, those issues came on for trial before me at the end of January 2013.
7. On 7th February 2013, whilst the matter was still at hearing and the defendant under cross examination, the Oireachtas enacted the Irish Bank Resolution Corporation Act 2013. On the same day, the Minister for Finance made the Special Liquidation Order pursuant to s. 4 of the Act, and appointed Mr. Kieran Wallace and Mr. Eamonn Richardson as joint special liquidators (“the Special Liquidators”). The following morning, Counsel for the Bank informed the Court that they had been instructed by the Special Liquidators to continue the proceedings against the defendant. The evidence was completed and the Court then permitted an adjournment to allow, in particular, Counsel for the defendant consider the impact of the 2013 Act, and the appointment of the Special Liquidators on the issues being determined in the first module of the trial pursuant to the order of 23rd January 2012.
8. On 19th February 2013, the Court heard closing submissions on the modular issues and submissions on the impact of the Act, including the defendant’s contentions that the plaintiff’s claim was now stayed pursuant to s. 6 of the Act; if not, that the Special Liquidators were not entitled to continue the claim against the defendant and that the Court should exercise its discretion not to determine the issues set down for hearing by the order of 23rd January 2012, by reason of the passing of the Act. Each of those contentions were rejected and the reasons therefore given in the reserved judgment delivered by the Court on 14th May 2013.
9. In that judgment, the decisions on the issues set down were:
10. There were subsequent hearings in relation to directions to be given for the determination of the remaining issues in the proceedings, and ultimately, a hearing for the purposes of determining:-
11. In addition, at the same time, the defendant brought a motion seeking liberty to amend his defence at the hearing in June 2013. For reasons given in an ex tempore ruling on the day, I refused the application to amend.
12. At that hearing, the plaintiff submitted that there were no further issues to be decided and that the plaintiff was entitled to judgment against the defendant in the sum of €31,971.343.14. The defendant submitted there were multiple issues yet to be decided.
13. I delivered a supplemental reserved judgment on the outstanding issues on 12th November 2013, and determined that the order to be made was the declarations on the issues set down by the order of 23rd January 2012, already set out above. I further determined, for the reasons set out in that judgment, that there were further issues to be decided relating to the amount to which the plaintiff was entitled to judgment, but the only such issues were:
14. The plea at para. 11 of the defence stated:-
15. The further issues submitted by the defendant were all rejected, having regard to the pleadings in the proceedings and the judgment already delivered on 14th May 2013, for the reasons set out in the supplemental judgment of 12th November 2013. It is important to note, in relation to further issues sought to be raised at the hearing in June 2014, that the only dispute permitted to be pursued by reason of alleged incorrect or wrongful interest rates was a challenge to the amount of interest charged. The reason for the second issue was that the defendant had given security to the plaintiff over a significant number of properties for the facilities the subject matter of the proceedings. A receiver had been appointed by the plaintiff and realisations had been made. Hence, the plaintiff had to prove the net amount due at the relevant date for which it was seeking judgment. However, at para. 36 of the judgment, I made clear that there was “no outstanding issue in relation to the validity of the appointment of the receiver, and, on the pleadings, no challenge to the steps taken by the receiver (who is not a party to the proceedings) in the realisation of properties . . .”
“The Accounts and Bank Statements of the Plaintiff on foot of which the sums claimed herein are inaccurate. Interest on foot of the Facility Letter of 2009 and all preceding Facility Letters were charged at the Plaintiff’s stated rate which wrongfully and unlawfully included an undisclosed additional margin over the EURIBOR rate.”
16. Directions were then given in relation to the exchange of experts’ reports in relation to the interest quantum issue, witness statements and for meetings between the experts and preparation of a joint report. The matter was before the Court on a number of occasions in the 2014 Hilary term. The defendant also brought a motion seeking further discovery and liberty to deliver interrogatories. The plaintiff made substantial information available and it was unnecessary to determine the discovery and interrogatories applications. Whilst the motion may not have been formally disposed of, the defendant did not proceed with same.
17. On 25th March 2014, the experts, having met, prepared a joint report for the Court. The Court directed the parties to prepare an issue paper in relation to the outstanding issues identified in the judgment of 12th November 2013, for determination. This was done and the solicitors’ exchanged correspondence.
18. On 2nd May 2014, when the directions motion was next before the Court, both parties sought to raise further issues in part by reason of matters considered by the joint experts in their report. The Court, in a ruling, left over for determination at the hearing of the final issues three such issues:
19. On that day, I fixed the hearing of the outstanding issues for three days, commencing on 3rd June 2014, and gave further directions in relation to the delivery of witness statements, including the delivery of a witness statement from the defendant by 15th May 2014.
(i) Whether the plaintiff was entitled to maintain that the Court, in considering the question of overcharging of interest, should not look behind the rolled up amount stated in the facility letter of February 2009 and accepted by the defendant at the time;
(ii) whether the defendant was entitled to pursue a defence that the amount claimed should be reduced by reference to issues concerning ‘swap agreements’ entered into and referred to in the experts’ joint report, and
(iii) to a limited extent, the entitlement of the defendant to challenge any aspect of the work done by the receiver insofar as it affected the quantum now recoverable from the defendant.
20. In the course of the hearing on 2nd May 2014, Counsel for the plaintiff also informed the Court, prior to the Court fixing the hearing date, that an agreement for the sale of loans by IBRC, including the facilities the subject matter of these proceedings, had been entered into at the end of March 2014, and that the sale was due to complete on 11th July 2014. He told the Court that the plaintiff was anxious to have the matter dealt with as expeditiously as possible, in any event and before 11th July 2014. He also stated that he had been instructed that the plaintiff was still “contractually entitled and obliged”, as he understood it, to pursue these proceedings. Counsel also indicated that his solicitor proposed writing to the solicitor for the defendant in relation to the sale agreement.
21. By letter dated 7th May 2014, Arthur Cox Solicitors for the plaintiff wrote to the defendant’s solicitor stating:
22. Following the directions hearing on 2nd May, it was not intended that the matter come back before the Court until the hearing on 3rd June. However, it was first back before the Court without a listing at the plaintiff’s behest, I think, on 16th May, as the defendant had failed to deliver his witness statement by the due date, and the defendant had, on the previous day, issued a notice of motion returnable for the Commercial List on Monday 26th May. On 16th May, I extended time in the prior directions for the witness statement and submissions to enable the hearing fixed for 3rd June proceed. On 26th May, in the Commercial List, Kelly J. adjourned the plaintiff’s motion for hearing before me on 27th May.
“We refer to the Proceedings and to the hearing before Ms. Justice Finlay Geoghegan on 2 May 2014 during which Counsel for IBRC indicated that IBRC’s solicitors would write to you setting out the position in respect of the sale by IBRC of your client’s loans.
As indicated to the Court, we are instructed that a loan sale deed was executed by the parties on 31 March 2014. The sale is expected to complete on 11 July 2014.
We are also instructed that under the terms of the loan sale deed, the purchaser is, within 30 days of the completion of the sale, to apply to the Court to be substituted as Plaintiff in any outstanding litigation.”
23. The notice of motion issued on behalf of the defendant on 15th May, sought wide-ranging reliefs. It was grounded on an affidavit of the defendant sworn on 15th May. There was one replying affidavit sworn by Mr. Ambrose on behalf of the plaintiff on 26th May. At para. 1 of the notice of motion, the defendant sought liberty to issue proceedings seeking certain reliefs against the plaintiff. However, at the hearing, Counsel for the defendant accepted that such an application could not be pursued in these proceedings. There were other reliefs sought which were not in any way grounded by the affidavit of the defendant or other relevant document. Following intervention from the Court, Counsel for the defendant accepted that, in reality, the reliefs being sought were those at paras. 2 and 3 of the notice of motion, which sought:
and also disclosure of the loans sale agreement entered into by the plaintiff in March 2014.
“2. An Order vacating the date for trial of an Issue of 3 June 2014 on the basis that the non-disclosure to this Honourable Court of relevant facts:
(i) Interfered with the judicial process;
(ii) Prejudiced and handicapped the Defendant in his conduct of the litigation in protection of his constitutional rights and
(iii) Was unfair and oppressive in all the circumstances.
3. An Order for a stay of the trial on the 3rd June 2014 on the grounds that the said non-disclosure to this Honourable Court is an abuse of the judicial process.”
24. Counsel for the defendant sought the orders vacating the hearing date or a stay on the proceedings, primarily on two grounds. Firstly, that the plaintiff, in entering into the loan sale agreement and in seeking to have a hearing date fixed by the Court and taking various other steps to bring the matter to final hearing, interfered with the judicial process or such steps constituted an abuse of process. Secondly, Counsel submitted that from the limited information available, that as a matter of probability, the plaintiff was guilty, both of the tort and crime of maintenance and champerty, such that the proceedings were now unlawful and the plaintiff should not be permitted to continue to trial. However, he accepted that there could be no final determination on that issue until after disclosure of the loan sale agreement. He submitted on a number of grounds that the loan sale agreement should now be disclosed.
25. Counsel for the plaintiff rejected as groundless the allegations of interference with the judicial process or abuse of process, and submitted that there was no basis in law, even on the limited information available for the allegations of maintenance and champerty. He submitted that the purchaser of the underlying loan facilities granted by the plaintiff to the defendant was clearly an interested person in relation to these proceedings which seek judgment on the facilities it was acquiring, and hence, totally outside relevant principles of maintenance and champerty.
26. Counsel for the plaintiff, upon instructions, disputed the necessity of disclosure of the loan sale agreement, whilst at the same time maintaining that the plaintiff’s entitlement to pursue these proceedings to judgment remained unaffected by the loan sale agreement. However, he also indicated to the Court that he was instructed that if required by the Court, the loan sale agreement would be disclosed with appropriate redactions to protect the necessary commercial confidentiality and sensitivity of the document.
27. Following the hearing, having considered the matter further and the law to which I was referred, I gave an ex tempore ruling later in the day on those parts of the motion pursued by the defendant. A copy of the ruling, approved by me, is included as an addendum to this judgment. I refused the application of the defendant to either vacate the hearing date or for a stay on the proceedings upon the grounds submitted. In relation to the submission based upon an alleged interference with the judicial process, abuse of process or any deliberate attempt on behalf of the plaintiff to bring forward the trial date for the remaining issues in the proceedings, I rejected same entirely and found them to be groundless.
28. I determined that the hearing on 3rd June should proceed provided a copy of the loan sale agreement of March 2014, redacted in accordance with the order I was making, was produced to the defendant on or before the following Thursday at 5.00pm. I obtained from Counsel for the defendant an undertaking on his behalf that the redacted loan sale agreement would be treated as confidential and would only be used by the defendant for the purposes of the within proceedings.
29. The order made pursuant to the ruling provided that the “loan sale deed” which was the term used for the loan sale agreement of March 2014, should be redacted of all commercially sensitive and confidential information which did not relate to:-
30. In the ruling, I also directed that the certified copy of the loan sale agreement, redacted in accordance with the Court’s ruling, was to be certified as so redacted by a solicitor in Arthur Cox.
“(i) The nature of the interest in the loans and related rights of actions being sold or transferred pursuant to the deed;
(ii) the position of the plaintiff or the vendor in relation to the loans pending completion of the sale;
(iii) the respective rights and obligations of the vendor or plaintiff, if the plaintiff is not the vendor and the purchaser, whether monetary otherwise in relation to the rights of actions the subject of the loan sale deed, both prior to and after completion of the sale.”
31. In the ruling, I stated that I was not expressing any view on the defendant’s submission that the loan sale agreement “constitutes or probably constitutes maintenance or champerty”. I was of the view that it would not be appropriate to express any view in the absence of knowing the relevant terms of the agreement, but I indicated that I would permit the defendant to raise certain limited issues at the hearing on 3rd June. Whilst this permission is not reflected in the order drawn of 27th May 2014, I did permit the defendant to pursue the allegation of maintenance and champerty once the redacted loan sale agreement had been produced to him in accordance with the order of 27th May.
32. Subject to that one issue arising out of the motion heard and determined on 27th May being left over to the trial, in my judgment, the order of 27th May, which includes an order for the costs of the motion, disposed fully of that motion.
33. By reason of the loan sale agreement, there were two additional issues then added to the issues for determination on 3rd June:
34. A certified copy of the redacted loan sale agreement was produced by the plaintiff to the defendant. A certificate of Richard Willis, a partner in Arthur Cox Solicitors, accompanied it. In his certificate, Mr. Willis, having referred to the order of the Court of 27th May, and the direction for a certificate from a solicitor in Arthur Cox, stated at paras. 4 to 6:
35. The defendant objected to the extent of the redactions made. Counsel for the defendant sought to raise the matter at the commencement of the hearing on 3rd June. I refused to entertain any separate application at that time and indicated that I would hear submissions as part of the overall submissions on the outstanding issues, having heard the evidence intended to be adduced by both parties.
“4. In order to comply with the Court’s ruling I engaged with the solicitors for the Joint Special Liquidators (Messrs. A&L Goodbody). A&L Goodbody act for the Plaintiff and the Joint Special Liquidators in connection with the loan sale. In this regard the solicitors for the Joint Special Liquidators made an un-redacted copy of the loan sale deed available for review by me and have themselves available to address any questions that I had in relation to the loan sale deed.
5. As a result of this process a redacted copy of the Agreement has been prepared by the solicitors for the Joint Special Liquidators which, in my opinion, is in accordance with the ruling of this Honourable Court dated 27 May 2014 (‘the Redacted Agreement’).
6. Accordingly, I hereby certify that in my opinion the Redacted Agreement is so redacted in accordance with the ruling of this Honourable Court dated 27 May 2014.”
Hearing 3rd to 5th June
36. In the events which had happened and prior judgments and rulings in these proceedings, the issues remaining to be determined at the hearing which commenced on 3rd June 2014, fell into two parts. The first were issues pertaining to the quantum of the liability of the defendant on the facilities which he accepts he was given by Anglo, culminating in the facility letter of 5th February 2009 i.e. the two issues identified in my supplemental judgment of 12th November 2013, and the three issues in the ruling of 2nd May 2014, set out above. Secondly, issues pertaining to the entitlement of the plaintiff to obtain judgment against the defendant for whatever amount was determined as due on the facilities advanced to the defendant. At the commencement of the hearing, these second set of issues were the plaintiff’s proof that it remained entitled to obtain judgment against the defendant, notwithstanding the terms of the loan sale agreement of March 2014; the defendant’s objection to the legality of the continuation of the proceedings after March 2014, upon the grounds that they contravened the prohibition on maintenance and champerty, and the defendant’s objection to the Court determining these issues without production of an unredacted copy of the loan sale agreement or by reason of the extent of the redactions made to the loan sale agreement produced by the defendant.
37. As witnesses for the plaintiff, the Court heard evidence from Mr. Mark Ambrose, a manager of the plaintiff responsible for the day-to-day management of the loans of the defendant; Mr. Paul Jacobs, a partner in Grant Thornton, head of the Forensic Investigation Services Department, retained as an expert, and Mr. Colin Gaynor, an accountant with Kavanagh Fennell working with Mr. Tom Kavanagh, the receiver and manager appointed by the plaintiff over properties of the defendant. For the defendant, the Court heard evidence from the defendant, Mr. Morrissey, Mr. Eddie Fitzpatrick, a director of Bankcheck, with experience in the field of forensic banking since 1997, retained as an expert on behalf of the defendant, and Mr. John O’Connor, who had previously been retained as an expert by the defendant and had produced a report but not a witness statement. The plaintiff objected to the defendant calling the latter, and notwithstanding the objection, the Court permitted Mr. O’Connor to give evidence in relation to the matters in the report which had been furnished to the defendant and further figures produced by reason of the evidence heard by him on the second day of the hearing.
Further Hearing 19th June 2014
38. The hearing of 3rd June lasted three days. At the end of the evidence, there were closing submissions in the course of which Counsel for the defendant repeated their objections to the manner in which the loan sale agreement had been redacted, and in particular, drew attention to clause 11.1.8 which referred to litigation in respect of an asset, the subject matter of the sale, part of which was redacted. Counsel for the defendant also made submissions to the effect that the continuation of the proceedings by the plaintiff subsequent to the loan sale agreement were illegal as constituting maintenance or champerty. Counsel submitted that the Court was not in a position to fully determine that issue by reason, inter alia, of the redactions made to clause 11.1.8.
39. Upon the Court expressing concern about the extent of the redaction to clause 11.1.8, Counsel for the plaintiff indicated that he would take instruction as to whether the previously redacted portion could be disclosed and the Court gave a direction that if it was to be disclosed, it was to be done on or before a specified date, and thereafter gave the defendant an opportunity of considering the further portion, if produced, and making further submission, and if he sought to do so, adducing any additional evidence.
40. At the hearing on 19th June, further submissions were made and both parties confirmed that no additional evidence was intended to be called. At that point, I reserved my judgment on all issues then outstanding for decision.
Motion for Substitution
41. I was unable to deliver judgment prior to 31st July. On 11th August 2014, a motion was issued on behalf of LSREF III Stone Investments Ltd. and the plaintiff that Stone be substituted for Irish Bank Resolution Corporation Ltd. (In Special Liquidation) as plaintiff in the proceedings. That motion was returnable for 1st September 2014. On that day, the parties were not in a position to proceed with the application. The defendant required to put in further affidavits, and ultimately, that motion was heard on 7th October 2014, and will be the subject of a separate judgment.
42. In the meantime, when the matter was before me for mention on 30th September 2014, I indicated that as I had heard all the evidence in relation to the disputes as to the amount due on the facilities granted by the plaintiff to the defendant as at 3rd June 2014, that I would give judgment and make a finding as to the amount owing but would not determine any outstanding issue relating to the entitlement of the existing plaintiff or Stone to obtain judgment against the defendant, notwithstanding that I had heard submissions in relation to the entitlement (or not) of the existing plaintiff to judgment.
43. This judgment, accordingly, is confined to a determination of the amount due on the facilities the subject matter of these proceedings as at 3rd June 2014 and insofar as necessary, clarification of any outstanding issues in the proceedings.
Decision on Quantum
44. The primary evidence of the plaintiff as to the amount due on the facilities granted to the defendant as of 3rd June 2014, was contained in a written supplemental précis of evidence by Mr. Mark Ambrose which is consistent with and is simply an update of his previous précis of evidence of 13th December 2001, and a supplemental précis of 7th May 2014. The evidence was confirmed in the oral evidence given by Mr. Ambrose at the hearing. In that evidence, he certified, for the purposes of clause 15.2 of the General Terms and Conditions applicable to the 2009 facility to the defendant, that what he terms “the judgment amount” i.e. the amount due on the facilities after certain deductions is €31,685,802.57. This was broken down as follows:
|Balance per IBRC statements as at 26 May 2014||€31,730,442.83|
|Less overcharge at 26 May 2014||(€54,394.55)|
|Plus accrued interest to midnight 2 June 2014||€66,598.47|
|Total due as at 3 June 2014||€31,742,646.75|
|Less cash on hand - Receiver||(€56,844.18)|
45. Clause 15.2 of the Terms and Conditions provides:
46. Counsel for the plaintiff submitted that it was entitled, in accordance with clause 15.2 of the Terms and Conditions, to rely upon the certificate of Mr. Ambrose. Mr. Ambrose is a manager of the plaintiff. Notwithstanding that submission, the plaintiff did not seek to rely, alone, upon the certificate of Mr. Ambrose in relation to either the balance on the IBRC statements as at 26th May 2014, or the judgment amount claimed. In respect of the balance on the statements and the overcharge, it also relied upon the evidence of Mr. Jacobs as an expert. The evidence of Mr. Jacobs, which I accept, is that he carried out a detailed forensic examination which involved creating a model whereby he applied to the amounts advanced by the plaintiff to the defendant interest in accordance with, as he perceived it, the terms in the facility letters, published rates in relation to Euribor, etc. and the General Terms and Conditions, such that his model permitted him to determine at any given time the balance on the accounts. What Mr. Jacobs, in his reports and evidence, terms as at the relevant dates an “overcharge” is the accumulated difference between the balance on the accounts in the plaintiff’s books at that date and the balance computed in Mr. Jacobs’ model.
“A certificate by any director, secretary or manager of the Bank as to the amount due from the Borrower hereunder or pursuant to any of the Security Documents or the amount of any interest, commission or other sums owing hereunder or pursuant to any of the Security Documents shall, save for manifest error, be conclusive evidence thereof.”
47. Accordingly, subject to the resolution of the dispute as to the amount of the overcharge to be deducted and the amount for which credit should be given by reason of the cash on hand by the receiver, I am satisfied, and find as fact, that the plaintiff has discharged the onus of proving that, as a matter of probability, the amount set out in Mr. Ambrose’s certificate is the amount due and owing on the facilities granted by the plaintiff to the defendant as of 3rd June 2014. I propose considering the challenge to each of the appropriate amount of the overcharge and receiver’s cash separately.
48. This issue arises out of the plea at para. 11 of the defence already set out in this judgment. In that, the defendant pleaded that the accounts and Bank statements of the plaintiff upon which the sums herein were claimed were inaccurate. The defence made one specific allegation that interest on the facility letter of 2009, and all preceding facility letters, were charged at rate which wrongfully and unlawfully included and undisclosed additional margin over the Euribor rate. The dispute only relates to the amount of interest charged.
49. The plaintiff, at the hearing of 21st June 2013, when it sought judgment against the defendant and maintained that it was so entitled without a further hearing, reduced the sum claimed by a sum of €9,869.55 in respect of what it understood to be disputed interest but without admission of liability, and indicating a willingness to reduce the amount claimed by a further sum of approximately €75,000, which they stated was in dispute in relation to interest charged.
50. The plaintiff submitted that the Court should not now go behind the amount of the facilities in the 2009 facility letter which include interest accrued and compounded, allegedly in accordance with prior facility letters. Whilst the defendant did agree to the granting of facilities in the amounts specified which include accrued interest, my conclusion is that notwithstanding such agreement, he is entitled to challenge the interest accrued in the earlier years as pleaded in para. 11 of the defence. The plaintiff itself is acknowledging in these proceedings errors made by it in the computation of interest giving rise to the overcharge figure, which goes back beyond the 2009 facility letter. In such circumstances, it does not appear to me that the Court should treat the defendant as bound by the agreement reached in accepting the 2009 facility letter as to the amounts then stated by the plaintiff to be due on his accounts.
51. The current amount which the plaintiff is deducting from its claim as an overcharge derives from a very significant forensic examination carried out by Mr. Paul Jacobs, as an independent expert, of all the accounts and facilities of the defendant with the plaintiff from 2000, and a recalculation of the interest which he considers ought to have been charged in accordance with the facility letters, the General Conditions referred to therein and the published rates referred to in the facility letters e.g. Euribor. The detailed report of Mr. Jacob dated 13th December 2013 computed the overcharge of interest up to 4th April 2011 at €48,620.15.
52. Prior to that report, the defendant had retained Mr. John O’Connor who had, as an expert, on the defendant’s behalf, computed what he considered to be the overcharge of interest at that time. He did so in a sum of €113,813.59. Mr. Jacobs considered Mr. O’Connor’s report in his report of 13th December 2013 and explained his disagreement.
53. The defendant subsequently retained Mr. Eddie Fitzpatrick as a second expert and he produced a report on 19th February 2014, in which he identified an overcharge of €969,373.15. As instructed on behalf of the defendant, he computed potential overcharges in relation to the interest rates to be applied to the accounts upon the basis of an exchange of emails between the defendant and an official of the plaintiff; the cost of swaps and an alleged failure by the plaintiff to credit a sum of €600,000 required to be placed on deposit, and subsequently, certain realisations of the receiver before charging interest on an outstanding amount.
54. Mr. Jacobs and Mr. Fitzpatrick met as experts in accordance with a direction of the Court and produced a Joint Memorandum dated 25th March 2014. Each updated their figures and the joint report indicates that Mr. Jacobs had revised his assessment of the interest overcharge to a sum of €53,755.54. Mr. Fitzpatrick revised his figures to an aggregate sum of €888,526.17. The experts jointly identified five key issues in the assessment of the overcharge as follows:
55. Following the delivery of the defendant’s witness statement, it was agreed that issues 2 and 3 no longer arose. Further, the experts agreed that the amount arising under issue 4 was small and it was not pursued at the hearing.
“• Issue 1: The methodology to be applied in deriving the total interest rate.
• Issue 2: Whether the total rate to be applied to the 01 Account should be fixed at 2.76% for the period 29 March 2004 to 28 March 2007 or (a) at 4.6763% for the period 29 March 2004 to 2 August 2005 and (b) at 4.5100% for the period 3 August 2005 to 28 March 2007.
• Issue 3: Whether the total rate to be applied to the 03 Account should be fixed at 2.92% for the period 18 October 2004 to the close of the account or (a) at 4.8363% for the period 18 October 2004 to 2 August 2005 and (b) at 4.5100% for the period 3 August 2005 to the close of the account.
• Issue 4: The rollover dates and clearing times on debits and credits.
• Issue 5: Whether the swap transactions should be included in the calculation of the interest overcharge.”
56. Mr. Jacobs and Mr. Fitzpatrick had further communications in advance of the hearing and helpfully produced an addendum to their Joint Memorandum dated 2nd June 2014. In that Memorandum, they set out further revisions. Mr. Jacobs’ assessment of the updated figure for his computation of the interest overcharge on all accounts as at 26th May 2014 is €54,394.55. Mr. Fitzpatrick’s calculations updated to 29th May 2014 (excluding issues 2 and 3 above) are:
57. The detailed oral evidence of Mr. Jacob and Mr. Fitzpatrick related to these differences and the explanations for same.
58. Mr. John O’Connor, who had previously prepared a report on behalf of the defendant in relation to the interest overcharge alone, was also, as I have indicated, called by the defendant to give evidence. His evidence only related to the interest overcharge. He did not give evidence of an aggregate overcharge. He identified an overcharge from September 2007 to March 2011, by reason of what he perceived to be the 365/360 method used by the plaintiff of €40,824.00.
Swaps and Credit of Funds
59. Prior to dealing with the interest overcharge, I propose setting out my conclusions on the reduction contended for by the defendant in respect of an alleged overcharge in relation to the cost of swaps and the failure to credit certain funds. In my judgment, in these proceedings, there is no basis for any deduction from the amount claimed by the plaintiff in respect of either of these items.
60. In respect of the swaps, there is no dispute that the amount calculated by Mr. Fitzpatrick is the amount charged by the plaintiff to the defendant in respect of the cost of swaps. What have been termed swaps in the evidence of the experts are certain hedging arrangements which were entered into by agreement between the plaintiff and the defendant and required as a condition of the facilities granted since at least the facility letter of 27th July 2007. That letter, which was accepted and signed by the defendant, required as a condition precedent at para. 5(d) “Hedging strategy satisfactory to the Bank to be agreed”. It is not in dispute that the swaps were entered into pursuant to this condition. The defendant, in evidence, maintained that he was coerced or obliged by the plaintiff to enter into the swaps arrangement. No such claim was ever pleaded in the proceedings. Other than the assertion of the defendant, there is no evidential basis for same. Under the express terms of the facility letter accepted by the defendant, it was a condition precedent. The defendant, I am satisfied, agreed to it at the time for the purpose of obtaining the facilities. There were similar provisions in subsequent facility letters.
61. Similarly, my conclusion is that there is no basis for any deduction in relation to any alleged failure to credit certain funds prior to charging interest to the defendant. The principal amount in respect of which credit is sought is a sum of €600,000, which again was both a precondition to the grant of facilities and part of the security required under the facility letter of 27th July 2007. The defendant was required to place this sum on deposit in a specified account. The security to be provided included a first legal charge over the specified deposit account with the minimum balance of €600,000. The facility letter does not provide for any set off of this €600,000 against the amount outstanding under the facility prior to the accrual, calculation or debiting of interest. Paragraph 6 of that facility letter, in relation to the facility interest rate, provides “interest on all amounts outstanding under the facility will accrue daily and be calculated by the Bank . . .” Accordingly, it appears to me that in accordance with the terms agreed, the Bank was not under any obligation to set off the €600,000 or any lesser amount which was in the specified deposit account from time to time before charging interest on the amounts outstanding under the facility.
62. Mr. Fitzpatrick also gave evidence that he included in the amount of the alleged overcharge in respect of a failure to credit funds all amounts realised by the receiver upon the day upon which they were realised by the receiver on the basis that they should have been credited on that day to the amount outstanding by the defendant under the facilities. This approach was premised on the invalidity of the appointment of the receiver which is not in issue in these proceedings. Hence, there is no basis for such reduction against the claim herein.
63. Mr. Jacobs’ evidence is that the interest overcharge which he has computed arises, principally, from an incorrect application of a three-month Euribor rate by Anglo at the end of 2007, when the relevant facility letter provided for a one-month Euribor rate which, at the time, was a lower rate. The second period of overcharging which he identified was prior to 2004, in respect of what has been termed “loading” of interest rates. This was a period in which the plaintiff had identified an overcharge following a ‘cost of funds’ project. This appears to have given rise to the concession without liability of €9,869.00 in June 2013. Mr. Jacobs confirmed that such error is included in his computation. His computations in respect of these amounts appear to be agreed with Mr. Fitzpatrick and I did not understand to be disputed by Mr. O’Connor insofar as they identified these as resulting from incorrect rates applied by the Bank.
64. The principal area of dispute between Mr. Jacobs and Mr. Fitzpatrick and Mr. O’Connor (the latter two not being in agreement on the proper approach) is the methodology according to which the plaintiff computed and accrued interest following the introduction of the Euro, and in particular, following the change in the General Terms and Conditions incorporated in the facility letter of 31st July 2003.
65. The differences in the approaches of the experts became an important point of principle between the parties and the evidence in relation thereto took considerable time and was, at points, quite confusing.
66. The issue relates to how a daily rate of interest should be computed from a rate which is expressed, either in a facility letter or as a published rate such as Euribor or a combination of both as an annual rate, and secondly, the number of days in the year during which the daily rate should be applied. It is important at the outset to distinguish between the two concepts (which at periods got confused in the evidence) of (i) computing the daily rate, to which I will refer as the computational issue, and (ii) determining the number of days in the year in respect of which, in accordance with the terms of the facility, interest should be accrued (i.e. the daily rate applied) on the outstanding balance to determine total interest payable to which I will refer as the accrual issue.
67. Counsel for the plaintiff drew attention to the explanation given in Paget’s ‘Law of Banking’ 13th Ed. at p. 234, to the different methods of computing and accruing interest, where it is stated:
Paget refers as authority for this to the American Timber & Trading Co. v. First National Bank of Oregon, 551 F 2d 980 at 982 (US Ct. of App, 9th Circ, 1974).
“There are three generally recognised bases of computing annual interest:
(1) 365/365 - Under this method the rate is divided by 365 to produce a daily interest factor. The number of days that the loan is outstanding is then multiplied by this factor. Under this method different amounts of interest are charged for months of different lengths.
(2) 360/360 - Under this method each month is treated as having 30 days, with the consequence that interest for each month is the same. However, for a calendar year the interest is exactly the same as that calculated by using the 365/365 method.
(3) 365/360 - This method is a combination of the first two. The interest rate is divided by 360 days (30 days for each month) to create daily factor. The number of days that a loan is outstanding is then multiplied by this factor. Interest charged for months of different lengths is different, and interest charged for a calendar year is greater than interest charged under the 365/365 or the 360/360 methods.”
68. Mr. Jacobs’ evidence was, and ultimately it was not in dispute, that the method applied by the plaintiff subsequent to 2003 was that identified at para. (3) above by Paget. The total interest rate (Margin plus Euribor) specified in each facility letter was divided by 360 to create the daily interest rate. That daily interest rate was then applied to the balance outstanding on each day in the full calendar year i.e. 365 days. This was also the method applied by Mr. Jacobs in his forensic examination and computation of overcharge.
69. As noted by Paget, the interest charged for a calendar year by this method is greater than the interest charged under either the 365/365 or the 360/360 methods. To take a simple example (as explained by Mr. O’Connor in evidence), if a facility letter specified a total rate of annual interest of 5%, and one uses either the 365/365 or 360/360 methods, the daily rate is divided by the relevant number and it is then applied over exactly the same number of days in the year so that the total interest paid in the year (ignoring any compounding in the interval) is 5%. However, if one uses the 365/360 method, and a facility letter specifies 5%, the daily rate is 5 ÷ 360 and that rate is applied on each of 365 days, such that the total interest paid in the calendar year is:
Hence, applying this method, a person pays interest at an annual rate of 5.069% (ignoring intervening compounding).
70. Each of the experts retained by the defendant objected to the methodology applied by the plaintiff and Mr. Jacobs but for different reasons.
71. What Paget refers to as the 365/360 method of computation also appears to be referred to as an Actual/360 day count convention.
72. The background to this problem appears to have been the differences in practice between, on the one hand, the Irish and UK financial markets, and the majority of EU Member States prior to the EMU. The Irish and UK Convention was to apply the 365/365 day count convention. In accordance with a 2001 explanatory note produced by the Irish Bankers Federation Irish Mortgage and Savings Association, and referred to in evidence, the majority of the EU Member States participating in the EMU applied an Actual/360 day count convention.
73. It further appears that for facilities advanced prior to 1st January 2002, IR£ and Sterling facilities continued to be quoted and to have applied to them the Actual/365 or 365/365 day count convention and Euro facilities a 360 day convention. The General Conditions of the plaintiff applicable at the time the IR£ facilities were granted to the defendant in the facility letter of 30th August 2000, provided at para. 19.3:
Hence, initially, a 365/365 convention was applied and there is no complaint in respect of that period.
“Interest shall accrue and be calculated on the basis of a 360 day year, save for drawings on certain Irish Pound facilities and in Sterling or other currencies where a 365 day year is standard market practice.”
74. Following the introduction of the Euro on 1st January 2002, Mr. Jacobs gave evidence that in a transitional period, the plaintiff continued to apply a 365 day count convention, and in arriving at the daily rate of interest, converted the Euribor rate to a 365 day rate by multiplying the then Euribor rate by 365/360. It was inherent in this method that the margin was considered to be a 365 day rate. Again, there is no complaint.
75. The facility letter of 31st July 2003, in its wording of the interest payable on the then facility and the relevant General Conditions are in a form which continued to the facility letter of 5th February 2009. In the letter of 31st July 2003, it replaced a prior clause 7 relating to the facility interest with a wording:
In the General Conditions applicable to that facility at clause 19.2 is provided:
“Interest on all amounts outstanding under the Facility will accrue daily and be calculated by the Bank at an annual rate equivalent to the aggregate of 2.083% (“the Margin”) above the European inter bank three month offered rate plus RAC and will be debited to the Borrower’s account at the end of each calendar quarter. . .”
76. In the period between that and 2009, the margins varied, the references were to different time periods of Euribor and the debit changed to the end of a calendar month. In the facility letter of 2nd February 2009, clause 7 in relation to facilities A, B and C provided:
“19.2 Interest shall accrue and be calculated on the basis of a 360 day year, save for drawings in Sterling or other currencies where a 365 day year is standard market practice.”
The relevant General Conditions at 19.2 remained the same as in 2003.
“Interest on all amounts outstanding under facility A and B will accrue daily and be calculated by the Bank at an annual rate equivalent to the aggregate of 2% (“Margin A-C”) above three month Euribor plus RAC and will be debited to the Borrower’s account at the end of each calendar month. . .”
77. The plaintiff and Mr. Jacobs have applied the interest provision in the facility letters as if it specified that interest would accrue on each day of the calendar year, but that what is specified as an “annual rate” (both margin and Euribor) is to be considered as a rate based upon a 360 day count for the purposes of obtaining the relevant daily rate. What they have done is undoubtedly what is referred to as Actual/360 or 365/360.
78. In my judgment, the interest clauses in the facility letters, when construed with clause 19.2 of the General Conditions, cannot, in accordance with the ordinary meaning of the words used, be so construed. The principal reason for this is that clause 19.2 of the General Conditions applies not only to the calculation of interest, but also in its express terms to the accrual of interest “interest shall accrue (emphasis added) and be calculated on the basis of a 360 day year”. One then comes to consider the specific provision in each of the facility letters in the form “interest on all amounts outstanding under the facility will accrue daily and be calculated by the Bank at an annual rate equivalent to the aggregate of X% above the Y month Euribor plus RAC and will be debited to the Borrower’s account at the end of each calendar month/quarter”. The plaintiff and Mr. Jacobs have applied this as meaning that the reference to “accrue daily” is to each day in 365-day year, but that in the same sentence in the next phrase, the reference to an “annual rate” is intended to be to a 360-day year. There does not appear to be any basis in the facility letter for this approach and it is not consistent with the terms of the facility letters when construed with clause 19.2 of the General Conditions.
79. In my judgment, the plaintiff and Mr. Jacobs are correct in construing the total annual interest rate in each facility letter from 2003 (both margin and Euribor) to be an annual rate quoted upon the basis of a 360-day year. This follows from clause 19.2 of the General Conditions as there is no contrary indication in the facility letter. Further, it is agreed that Euribor is and is known to be a 360-day rate. However, in my judgment, they are incorrect in construing the facility letters as permitting “daily accrual” of interest upon the basis of a 365-day year. Such construction is not warranted by the express terms of the facility letter and is inconsistent with clause 19.2 of the General Conditions.
80. Counsel for the plaintiff submitted that it would not make business sense to construe the clause as only permitting interest to accrue over 360 days in the year. He posited the comparison of two borrowers, one of whom repays after 360 days, and the other of whom repays after one calendar year and who would, in the construction which I have found to be the proper construction, pay the same amount of interest, albeit that the borrowing was for one day longer.
81. Whilst I accept that the expert evidence was that the commercial banks do not normally apply the 360/360 convention for the reasons identified, nevertheless, the evidence was that it is a well-known convention that applies to certain types of financial instruments where each month in the year is considered to be a 30-day month. However Anglo in Clause 19.2 of the General Conditions expressly provided for accrual on the basis of a 360 day year and does not refer to any exception for general practice. Insofar as clause 19.3 does, it requires the Bank to specify an amendment to it, of which there is no evidence.
82. In summary, the facility letters and General Conditions applicable to the defendant’s facilities from 2003 required the application of the 360/360 day convention, whereas the plaintiff and Mr. Jacobs have used the 365/360 or actual /360 convention giving rise to a further overcharge.
83. It follows from this conclusion that the plaintiff has charged the defendant interest for five additional days in each year since July 2003. None of the experts precisely quantified that figure up to date. Mr. O’Connor gave evidence that he identified, from September 2007 to March 2011, an overcharge of €40,824 which he attributed to the imposition of interest for the five extra days in each year. However, that does not cover the full period.
84. The total interest overcharge in Mr. Fitzpatrick’s evidence on all the accounts is a sum of €198,071.19 which does not represent an accurate computation of the overcharge by reason of the extra five days charged per annum and other matters agreed between him and Mr. Jacobs, as Mr. Fitzpatrick took a different approach to what he considered was the appropriate way to calculate and accrue the interest under the facility letters and General Conditions.
85. The approach of Mr. Fitzpatrick, as disclosed by his report and evidence, was to ignore clause 19.2 of the General Conditions and the undisputed fact that Euribor is quoted as a 360-day rate. Mr. Fitzpatrick, for the purpose of computing his daily rate of interest, treated the total interest rate (both margin and Euribor) quoted in the facility letters from 2003 to 2009, as being quoted on the basis of a 365-day rate. He therefore added the relevant margin to the relevant Euribor rate and divided by 365 and applied the resulting daily rate on each of the 365 days in the year.
86. Whilst, for the reasons already set out, Mr. Fitzpatrick was incorrect in so construing the facility letters and the General Conditions, his resulting calculation of the overcharge is only a small amount (in relative terms) in excess of a correct computation as he accrued his lesser daily rate over 365 days in the year. The excess calculation arises from the fact that the published Euribor rate is a 360-day rate, and therefore he ought to have grossed it up by a factor of 365 ÷ 360 before adding to the margin and treating the aggregate as a 365-day rate to get his daily rate and then applying it over 365 days.
87. Mr. Jacobs and Mr. Fitzpatrick are in agreement that the overcharge, excluding the 365/360-day methodology issue is as computed by Mr. Jacobs,i.e €54,394.55 as at 26th May 3014. They are also in agreement that from an arithmetical point of view, as Mr. Fitzpatrick’s total computation of the interest charge is €198,071.19, the balance of €143,676.64 of Mr. Fitzpatrick’s computation is attributable to the difference in the respective methodologies to the 360/365-day issue. This was confirmed by Mr. Fitzpatrick in evidence.
88. Whilst Mr. Fitzpatrick’s methodology was not correct, as the Court does not have a precise figure for the overcharge, applying, correctly, a 360/360 convention, and as the daily interest rate applied by Mr. Fitzpatrick is only in excess by a relatively small amount, rather than remitting the matter for further calculation (and imposing additional costs on the parties), I propose deducting the said amount of €143,676.64 from the amount certified by Mr. Ambrose as due at 3rd June 2014. In this approach, I am also ignoring the facts that Mr. Jacobs’ computation is to 26th May, Mr. Fitzpatrick’s is to 29th May, and Mr. Ambrose’s certified amount is at 3rd June. The Court is satisfied that the approximation used in the deduction being applied favours the defendant but by a relatively small amount.
Cash held by Receiver
89. Mr. Colm Gaynor, a senior manager with Kavanagh Fennell Accountants, gave evidence that Mr. Kavanagh, the receiver, was out of the country at the time of the hearing. Mr. Gaynor is the senior manager working to Mr. Kavanagh in this receivership. He gave evidence that he was familiar with the receivership. He had prepared a précis of his evidence dated 23rd May which had been furnished to the defendant with a number of documents referred to. On the morning of the hearing, a further breakdown of the receipts and payments in the receivership as at 6th May 2014 were furnished. In the course of his oral evidence, further detail was sought by Counsel on behalf of the defendant and further information was furnished overnight in relation to the breakdown of agents’ fees.
90. I am satisfied on the evidence given by Mr. Gaynor that there is no basis upon which the Court should, in these proceedings, disallow or alter the amount for which the plaintiff is required to give credit as at 3rd June 2013, for cash in hand held by the receiver, or in respect of prior dividends received.
91. The detailed receipts and payments as at 6th May 2014, in respect of which Mr. Gaynor gave evidence, discloses that as of that date, the total receipts in the receivership were €11,310,456.00. Interim dividends in the sum of €9,605,003.00 had been paid to the plaintiff. The receiver’s expenses totalled €1,643,838.00. The funds available as at 6th May 2014 were €61,615.00. Mr. Ambrose’s evidence was that as at 3rd May, that figure had reduced to €56,844.18. Accordingly, I am satisfied that the plaintiff has discharged the onus on it of proving that it has properly given credit in the amounts claimed as due on the balance of the defendant’s account as at 3rd June 2014, in the certificate given by Mr. Ambrose on 3rd June 2014.
92. The Court’s decision is that in accordance with this judgment, for the purposes of the final determination of these proceedings in the High Court, the amount due on the facilities advanced by the plaintiff to the defendant as of 3rd June 2014 is €31,542,125.93 (i.e. €31,685,802.97 - €143,676.64).
All issues in the proceedings relating to any matter alleged to have been done or not done prior to March 2014 in relation to the plaintiff’s claim against the defendant for the recovery of the monies allegedly due and owing on the facilities advanced to the defendant have now been determined.
Note of Ex-tempore ruling by the Court on 27th May 2014
This ruling is being given on a Notice of Motion brought by the Defendant issued on the 15th of May and made returnable for yesterday, which was then directed to be heard by me today.
93. Following this judgment, the only issues remaining to be decided in the High Court in relation to the plaintiff’s entitlement to judgment against the defendant in the sum of €31,542,125.93 (plus interest since 3rd June 2014 and less further receivership receipts) are:
It was accepted by counsel on behalf of the Defendant at the commencement of the hearing that they could not proceed with the relief sought at paragraph 1 of the motion and in reality the reliefs which were being sought were those at paragraphs 2 and 3, which seek orders vacating the hearing date of the remaining issues in these proceedings fixed for the 3rd of June or a stay on that hearing.
He also seeks disclosure of documents relating to a loan sale deed entered into by the Plaintiff through its special liquidators for the sale of loans, which include the loans to the Defendant, which is the subject matter of the proceedings.
It is necessary just to set out briefly the context in which this Notice of Motion arises in these proceedings: These are summary proceedings commenced in April 2011 seeking judgment in excess of 36 million against the Defendant. They were remitted to plenary hearing and in January 2012 it was directed by the High Court, Mr. Justice Kelly, that preliminary issues be heard and determined.
That hearing took place in February 2013 and during that hearing the IBRC Act 2013 was passed. Judgment was given by this Court on the 14th of May 2013 on a number of issues, including certain issues raised in relation to the Act and declarations were made on the two preliminary issues.
On the 12th of November 2013, this Court gave a supplementary judgment by reason of issues which had arisen between the parties as to the outstanding questions which remained to be determined in the proceedings and, in that judgment, it was concluded that the only issue which remained to be determined was the amount in which the Plaintiff is entitled to judgment against the Defendant and the Court further set out the two bases upon which the Defendant was entitled, by reason of the pleadings, to advance a defence to the amounts for which the Plaintiff was seeking judgment.
That ruling has been slightly altered by rulings given by the Court on the 2nd of May which allow for the, at least raising of certain additional issues by the Defendant at the hearing on the 3rd of June and that remains the current position.
At the hearing of the 2nd of May before the Court, counsel for the Plaintiff informed the Court that the loans to the Defendant upon which the Plaintiff seeks judgment in these proceedings were the subject of a loan sale deed which had been entered into by the Plaintiff, but which had not yet been completed.
And by a letter of the 7th of May the solicitors for the Plaintiff informed the solicitors for the Defendant that they were instructed that a loan sale deed was executed by the parties on the 31st of March 2014 and that the sale is expected to complete on the 11th of July 2014.
They also indicated in that letter that they were instructed that under the terms of the loan sale deed the Purchaser is within 30 days of the completion of the sale to apply to the Court to be substituted as plaintiff in any outstanding litigation.
The Defendants in this application seek orders vacating or staying the trial inter alia upon the basis that both the entering into that loan sale deed and various steps which had been taken to bring on the hearing are such that they constitute an interference with the judicial process or an abuse of process and submissions were made in relation to probable maintenance and champerty by reason of the terms of, or the existence of the loan sale deed.
Insofar as there is any submission made on interference with the judicial process, abuse of process, or any deliberate attempt on behalf of the Plaintiffs to bring forward the trial date for the remaining issues in these proceedings, I reject those submissions entirely and find them to be groundless. The Court itself has, since it delivered judgment on the preliminary issue back in May 2013 and certainly since the supplemental judgment in November 2013, been attempting, as far as the Court could, in a manner which was fair to both parties, to progress this litigation to the final hearing and has given very considerable case management directions and has devoted significant time to the hearing.
I am not making any ruling on the submissions in relation to maintenance and champerty for reasons that I will explain in a moment.
Nevertheless, I have determined that the Court should now direct that the Plaintiff produce to the Defendant in advance of the hearing on the 3rd of June a copy of the loan sale deed redacted of all commercially sensitive and confidential information which does not relate to:
(1) The nature of the interest in the loans and related rights of action being sold or transferred pursuant to the deed.
(2) The position of the plaintiff or the vendor in relation to the loan pending completion of the sale.
(3) The respective rights and obligations of the vendor or plaintiff, if the plaintiff is not the vendor and purchaser, whether monetary or otherwise in relation to the rights of action the subject of the loan sale deed both prior to and after completion of the sale.
Provided a copy so redacted is produced to the Defendants on or before Thursday next at 5.00pm, I have determined that the hearing on the 3rd of June should proceed.
The reasons for which I am directing now the production of a redacted copy of the loan sale deed are primarily the following:
As explained in the context of where these proceedings are, the Plaintiff still seeks judgment against the Defendant for recovery of facilities advanced ultimately in February 2009 and interest thereon. Those proceedings, whilst originally summary proceedings, were remitted to plenary hearing and therefore were subject to trial on oral evidence in public in the usual manner.
A modular trial was directed and at the initial module the Plaintiff, at the hearing, called appropriate evidence to prove the contractual arrangements subsisting with the Defendant over many years, culminating in the facilities entered into in February 2009.
The claim which is being made is that the Plaintiff is entitled to the recovery of those monies as monies due and owing to the Plaintiff. The Plaintiff, as I have indicated, has not yet obtained judgment and therefore the onus remains on the Plaintiff to establish its entitlement to judgment, albeit that it does not have to reproduce before the Court, evidence which has already been adduced before the Court at the first module of the hearing. However the Plaintiff, as has been disclosed to the Court, has now entered into a loan sale deed which the Plaintiff has informed the Court includes the loans to the Defendant which are the subject matter of these proceedings and in reliance upon which the Plaintiff is seeking judgment against the Defendant.
That undoubtedly alters the factual position and raises, in my judgment, an issue that the Plaintiff has to satisfy the Court on; that it, notwithstanding the loan sale deed, continues to be the person to whom the Defendant is now bound to repay the monies. And that, in my judgment, potentially depends on the terms of the loan sale deed.
Counsel for the Plaintiff this morning referred me to a judgment given by Mr. Justice Cooke on the 14th of November 2013 in relation to an application on different facts, but which also related to potential sales by the Special Liquidators of the Plaintiff. And, as observed by Mr. Justice Cooke in the course of his ex tempore ruling, that the position is that if loans are sold the position may alter or it possibly may not alter. And that appears to me to be an issue which the Court must be satisfied of if the Plaintiff is to obtain judgment and therefore it now forms part of the relevant proofs of the Plaintiff before the Court in pursuing its claim against the Defendant that, notwithstanding the terms of the loan sale deed, the Plaintiff remains the person who is entitled to seek judgment against the Defendant on the facilities which have been made the subject of the loan sale deed.
In accordance with the Commercial Court practice, that evidence, the relevant evidence upon which the Plaintiff will be relying, which include the relevant provisions in the loan sale deed should be produced to the Defendant in advance of the hearing. And by directing that the Plaintiffs produce the redacted copy in the form I have indicated by Thursday at 5.00pm, counsel for the Defendant will have a reasonable opportunity of considering same in advance of the hearing which has been fixed for Tuesday next.
So the order which I will make today is a direction that the Plaintiff should on or before Thursday at 5.00pm, produce a redacted copy of the loan sale agreement in accordance with the directions I gave earlier in this ex tempore ruling. I am conscious there is a stenographer and the parties will have the precise terms available to them.
It appears to me, and I will hear counsel for the Plaintiff on this, that the appropriate way for the production of a copy redacted in accordance with the Court's ruling is if I were to direct that a certified copy of the loan sale deed redacted in accordance with the Court's ruling and certified to be so redacted by a solicitor in Arthur Cox & Co be produced and I will hear whether that is appropriate. That seems to me to be the appropriate way; that a solicitor in Arthur Cox should certify that this is a copy of the agreement redacted in accordance with the Court's ruling.
I don't propose expressing any view today on the Defendant's submissions that the deed of sale constitutes or probably constitutes maintenance or champerty. It would not be appropriate to express any view in the absence of knowing the relevant terms of the deed. What I will permit the Defendants to do is to raise certain limited issues at the hearing on the 3rd of June. Again, subject to hearing counsel, it appears that the appropriate way to deal with this is that I will direct today that the Plaintiffs should provide to the Defendants with the redacted copy of the loan sale deed, supplementary submissions as to why the existence of the loan sale deed does not affect the Plaintiff's entitlement to continue with the proceedings and seek judgment in its favour against the Defendant.
And if those submissions are being produced I will then direct that the Defendant should, on or before 10.00am on Tuesday next, furnish supplementary submissions outlining any legal objection it is making by reason of the existence of the loan sale deed to the Plaintiff now being entitled to obtain judgment against the Defendant and I will permit the Defendant to pursue any legally justified objection at the hearing on the 3rd of June.
In reaching that conclusion I have taken very fully into account Mr. Collins' submissions that this is considered to be a confidential document and my ruling in relation to the redactions take fully into account those, but it seems to me that the overriding reasons, which I have outlined, in terms of the Court now having before it the appropriate proofs and appropriate evidence which would enable it, if, following the hearing it determines to grant judgment in favour of the Plaintiff, requires the disclosure which I am directing.
Following exchanges between Counsel and Court :
Counsel for defendant gave an undertaking that the document to be produced be treated as confidential and used only for the purpose of these proceedings.
The Court ruled that the costs of the motion be costs in the cause.