Ireland: Show Me The Money? Loan Purchase Price Only Needs To Be Disclosed To Borrower Litigants In Exceptional Circumstances

Last Updated: 4 October 2019
Article by Darryl Broderick and Hilda Mannix

In recent years, the sale of non-performing loan portfolios by banks and other credit institutions to investment funds has become more prevalent. Consequentially, such funds feature regularly in Court lists, either as plaintiffs seeking to enforce their acquired rights under the loan facilities or as defendants in proceedings brought by borrower litigants seeking to challenge those rights. Inevitably, the transactional documents which give effect to the loan transfer (often a Loan Sale Deed and Deed of Transfer) are exhibited and/or discovered in such proceedings and are usually subject to prior extensive redaction (save for the relevant clauses which give effect to the transfer and the schedule showing the relevant loan account(s)), on the basis that the redacted clauses are confidential, commercially sensitive, irrelevant to the matters in dispute and/or contain information concerning third parties unrelated to the proceedings.

One of the issues which arises frequently in such proceedings, and is often the subject of much contention, is the entitlement of the borrower litigant to inspect and/or obtain copies of the relevant documents in unredacted form, which would ultimately reveal the price paid by the investment fund for the loan(s) the subject of the proceedings and related security. Understandably, this raises concerns for investment funds in protecting their commercial position in respect of future loan acquisitions. Two recent decisions of the High Court  in Courtney v OCM Emru Debtco DAC & Anor1 and Promontoria (Aran) Limited –v- Andrew Sheehy2 provide a welcome guidance to investments funds and their legal advisors on the special circumstances in which a loan purchase price would need to be disclosed.

Courtney v OCM Emru Debtco DAC & Anor


The background to this case involved plenary proceedings instituted by Eileen Courtney (“Mrs. Courtney”) against OCM Emru Debtco DAC (“OCM”) and David O’Connor (“the Receiver”) whereby Mrs. Courtney challenged, inter alia, the validity of the assignment of her loans (originally advanced to her and her late husband by Anglo Irish Bank Corporation plc) from NALM (a subsidiary of NAMA) to OCM. Prior to the completion of the loan sale, Mrs. Courtney made an offer to purchase her loans from NALM in order to prevent the sale, however this was declined. During the course of the proceedings, Mrs. Courtney brought an application under Order 31 Rule 15 RSC to inspect unredacted copies of the relevant loan sale deed and deed of transfer which had been exhibited by OCM in the proceedings in extensively redacted form. She was particularly interested in those sections of the documents which related to the price allocated to her loans and the price paid generally. OCM opposed the application on the basis that the redacted portions contained information which was commercially sensitive, confidential and irrelevant to the matters in dispute. Further, OCM argued that the documents were documents of title which are excluded from inspection under Order 31 Rule 15.


Having particular regard to Mrs. Courtney’s pleaded claims3, and without making any determination as to whether those claims were stateable, Haughton J found that the redacted parts of the loan sale documents relating to price, including any price attributable to Mrs. Courtney’s connection, were relevant to the case that Mrs. Courtney was seeking to make and were “fairly required to afford a proper understanding of these keys documents”. Haughton J also rejected OCM’s argument that the documents were documents of title which were excluded from inspection, in circumstances where they relate to both an assignee’s title and also the title and obligations of the debtor. Finally, while the Court was generally disapproving of the practice of redactions, it accepted OCM’s position that disclosure could adversely impact OCM’s position in relation to future loan acquisitions (and, indeed, NALM’s position in future loan sales). The Court ultimately ordered full disclosure of the loan sale documents subject to limited redactions. Further, Mrs. Courtney and her solicitors/Counsel were required to give a number of undertakings to the Court following that disclosure, in order to protect the confidentiality and commercial sensitivity of the information.

Promontoria (Aran) Limited –v- Andrew Sheehy


The Courtney case was considered by Quinn J in the High Court decision of Promontoria (Aran) Limited –v- Andrew Sheehy, which involved a claim for summary judgment by the Plaintiff pursuant to facilities which it was alleged were granted to the Defendant (“Mr. Sheehy”) by Ulster Bank in 2005 (and renewed in 2009) for the purchase of property in Romania. The Plaintiff acquired the right, title and interest of Ulster Bank under the facility by Global Deed of Transfer dated 12 February 2015, however the said Deed of Transfer only expressly referred to the 2009 facility and not the 2005 facility which it replaced. Accordingly, the Plaintiff also claimed alternative equitable reliefs in the form of, inter alia, restitution and damages for unjust enrichment, claiming that Mr. Sheehy was not entitled to be unjustly enriched or otherwise benefit from the monies advanced. Mr. Sheehy alleged that the signature on the 2005 facility letter was forged by one of the other third parties to the facility and that he was not a party to the renewal in 2009. The proceedings were ultimately remitted to plenary hearing and the judgment arose out of Mr. Sheehy’s application for discovery of four categories of documents, the most contentious being the category which requested all documents relating to the purchase price for the loans the subject of the proceedings.

During the course of the submissions, Mr. Sheehy argued that one of the proofs in establishing a claim for unjust enrichment is to show that he had been unjustly enriched at the expense of the Plaintiff and it follows that at the hearing of the action, the Court would need to examine the Plaintiff’s conduct and actions, “including the transaction by which it acquired the loans and the price”. Further, Mr. Sheehy alleged that the Plaintiff had made “no payment of substance”. Conversely, the Plaintiff argued that the principle “means examining the respective equities of the parties to the loan, namely Ulster Bank and the borrowers, and not the [Plaintiff] as successor of the Bank”. It further submitted that it acquired the loans “subject to and with the benefit or burden of any equities which may be relevant”. Accordingly, it submitted that the price paid could not be relevant, in circumstances where Mr. Sheehy’s failure to repay gave rise to an entitlement on the part of Ulster Bank to repayment both under the facility letters and also to the remedy of restitution of the money advanced.


While Quinn J expressed “some doubt” about whether Mr. Sheehy would be able to establish at the hearing of the substantive proceedings that the price paid is a relevant factor in assessing the relative equities of the parties, he found that this was a matter for determination at trial, not at interlocutory stage. Further, he found that the request for discovery of documents relating to the price paid for the loan in this case was not a “fishing exercise”, but that it goes to one particular fact and that the price paid for the loan had been “fairly put in issue by the proceedings”. As regards the issue of commercial sensitivity, Quinn J. agreed with the position of Haughton J. in Courtney, whereby he held that commercial sensitivity of itself does not attract the same level of protection as a claim for privilege. Further, Quinn J. considered and agreed with Haughton J’s position that “the commercial interests of the party making the disclosure can be adequately protected by directing that no wider disclosure or use could be made without further leave of the Court”. Accordingly, Quinn J. made discovery in terms of Mr. Sheehy’s request in respect of the documents relating to the price paid for the loan and directed similar restrictions regarding access to those documents as were made by Haughton J. in Courtney. In particular, inspection was to be made only by Mr. Sheehy and his solicitor and Counsel and required undertakings by those parties “not to use or quote [the] information in open court or in any documents or electronic transmissions…..including further pleadings, requests for particulars and replies or affidavits save with the redaction agreed inter parties or with leave of the court”. 

Notwithstanding the Orders made by the Court, it is noteworthy that Haughton J. commented that it does not flow that a purchaser will be obliged to disclose a purchase price of an acquired loan (or documents relevant to that price) in every case where in enforcement proceedings an equitable remedy (such as an injunction) as well as a claim under contract is invoked.  In addition, he stressed that having regard to the unusual circumstances of the facts of the case and the particular pleas made by the parties, it was appropriate to direct discovery of the documents relating to the price paid for the loan.


The decisions are important for loan purchasers and their legal advisors. While it appears that there has been a shift in the Court’s position on the practice of redacting loan sale documents, it is noteworthy that the above cases to a large extent turn on their facts and in particular, the special circumstances of the pleas made by the parties. In that regard, it would be difficult to see how the same reasoning would be applied by the Court in considering the relevance of the purchase price in the context of a loan purchaser suing on foot of a facility letter in summary judgment proceedings and/or suing for possession on foot of related security.     


1 [2019] IEHC 160

2 [2019] IEHC 613

3 In particular, the allegations of breach of fiduciary duty by NALM in considering her offer to purchase her connection and breach of duty including claims of maintenance and champerty and sale at a price below which Mrs. Courtney was prepared to buy or offer

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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