Loan Portfolio Price A Relevant Factor In Irish Unjust Enrichment Claim

• Published date: 07 May 2020
• Author: Mr Kevin Harnett and Karole Cuddihy
• Subject Matter: Litigation, Mediation & Arbitration, Disclosure & Electronic Discovery & Privilege, Trials & Appeals & Compensation
• Law Firm: Maples Group

In this update, Kevin Harnett and Karole Cuddihy examine the recent decision of the Irish Court of Appeal in Promontoria (Aran) Ltd v Sheehy [2020] IECA 104.

Introduction

In our previous client update we reported on the High Court decision in Promontoria (Aran) Ltd v Sheehy ([2019] IEHC 613), in which the court ordered discovery of documents relating to the price paid by a plaintiff for the transfer of a loan portfolio from the original lender. That decision has been affirmed by the Court of Appeal in a decision handed down on 16 April 2020 (Promontoria (Aran) Ltd v Sheehy [2020] IECA 104).

The courts have held that a creditor is entitled to rely on redacted documents, if the unredacted parts establish the transfer of the loans. Generally therefore a borrower needs a good reason as to why the court should order documents to be unredacted. It is not enough for a borrower to say that there might be something in the redacted portions of the document which would undermine the transfer.

High Court Decision

The key factor which led to the High Court ordering discovery of loan sale documentation concerning the price paid for the loans was the way parties had pleaded their case. Specifically:

1. In addition to relying on the contract, the plaintiff ("Promontoria") sought judgment based on the doctrines of restitution and unjust enrichment.
2. The borrower pleaded that Promontoria was not entitled to rely on those doctrines because it had not made a "payment of substance" when it acquired the loans from the original lender.
3. In reply, Promontoria denied the claim that it had not made a payment of substance.

The High Court ruled that the price paid for the loans was therefore (unusually) a relevant - or potentially relevant - issue in the proceedings.

Court of Appeal Decision

Haughton J, giving the judgment of the Court of Appeal, acknowledged the right of a loan purchaser to protect commercially sensitive information such as the purchase price and that it is only in "special circumstances" that discovery of price will be ordered.

Haughton J concluded that Promotoria had failed to demonstrate that the High Court judge erred in principle or in his approach, as the High Court was entitled to distinguish between the wider discovery relevant to the unjust enrichment claim and the more limited discovery that would apply if the claim were grounded only in contract.

The Court of Appeal held that discovery of documentation containing information on the price paid for the loans...