Background
Ulster Bank Ireland Limited (the Bank) advanced €3 million to Mr Sheehy on foot of a facility letter dated February 2005 to assist with the purchase of a commercial property in Romania.
Promontoria (Aran) Limited (Promontoria) subsequently acquired a loan book from the Bank under a Global Deed of Transfer which transferred all the rights, title, benefit, interest and obligations relating to those loans which included Mr Sheehy's loan.
In December 2018, Promontoria commenced proceedings against Mr Sheehy seeking judgment in the sum of €4.1 million arising out of his failure to repay the loan. In the alternative, Promontoria sought restitution on the basis that the moneys had been advanced to and used by Mr Sheehy and that he was not entitled to be unjustly enriched by having received the moneys. It also sought an equitable lien over the Romanian property or any proceeds arising from its sale.
Discovery application
As part of its discovery application, Mr Sheehy sought all documents relating to the amount paid by Promontoria for the loans and argued that as Promontoria was alleging unjust enrichment discovery of these documents were necessary to identify the actual amounts paid so that Promontoria's losses could be ascertained. In resisting the application for discovery, Promontoria's solicitor argued that this category of documents was commercially sensitive and should therefore not be discovered.
High Court decision
In the High Court, Mr Justice Quinn noted that a copy of the Global Deed of Transfer and Mortgage Sale Deed were furnished to Mr Sheehy during Replies to Particulars but these were heavily redacted and therefore did not disclose the amount paid for the loans. He found that if this was simply a case of a loan purchaser suing in contract on the facility agreement it would be difficult to see how the price paid would be relevant. However, in a case where the plaintiff itself invoked the equitable doctrines of restitution and unjust enrichment then the price paid is relevant. Therefore, Mr Justice Quinn directed that the documents should be discovered. However, he directed particular restrictions on access to the documents and ordered that inspection should be limited to Mr Sheehy and his legal team only and that the documents should not be used or quoted from in open court or documents without agreement between the parties or leave of the court.
Court of Appeal decision
Promontoria appealed this decision and emphasized the commercial sensitivity and confidentiality attaching to the loan sale documents. It argued that the trial judge failed to carry out an exercise of balancing the rights of the parties and if this was done, discovery of this category of documents would be neither necessary nor proportionate. Mr Justice Haughton found that when the pleadings are considered, there is an alternative claim by Promontoria for unjust enrichment and restitution which was fully contested by Mr Sheehy who claims that Promontoria suffered no loss. For Promontoria to succeed in its claim of unjust enrichment, it must first of all prove an identifiable loss and then demonstrate that Mr Sheehy has been unjustly enriched. He found that the price paid was clearly relevant to the pleaded case.
The Court of Appeal endorsed the High Court's finding that this case differs from one where a loan purchaser is simply suing in contract on a facility that has been transferred. In such a case it is only in special circumstances that discovery of the price paid will be ordered. Finally, Mr Justice Haughton found that the absence of any sworn evidence by Promontoria establishing that the documents were confidential or commercially sensitive hampered the court in its consideration of whether they were to be treated as such.
