The High Court recently provided further clarification as to whether a lender is required to produce documents, in particular loan sale documents, in order to dispose of an application for summary judgment fairly.
In the case of Everyday Finance DAC v Enda Woods and Ciaran McNamara, Mr Justice McDonald considered an application in summary summons proceedings for an order pursuant to Order 31, Rule 18 of the Rules of the Superior Courts that the plaintiff produce certain documents referred to in the indorsement of claim on a summary summons.
Everyday Finance DAC claimed payment of just over €4 million on foot of loan facilities advanced by Allied Irish Banks plc (“AIB”) to the defendants, Enda Woods and Ciaran McNamara. The Plaintiff claimed to be a successor in title to AIB by virtue of a deed of transfer dated 2 August 2018, as amended and restated by a deed of amendment dated 22 October 2018. The defendants contested the plaintiff’s title to sue them and claimed that AIB had no entitlement to assign the loans on foot of the contractual arrangements between AIB and the defendants. Further, the defendants did not accept that the deed of transfer and deed of amendment were effective. The defendants applied to the High Court for an order pursuant to Order 31, Rule 18 that the plaintiffs produce, amongst others, a copy of the deed evidencing the transfer of the defendants’ loans and security from AIB to Everyday Finance DAC.
The legal test that an applicant for an order under order 31, Rule 18 must meet is set out in sub rule 2 as follows:
“An order shall not be made under this rule if and insofar as the Court shall be of the opinion that it is not necessary either for disposing fairly of the cause or matter or for saving costs”.
In the present case, McDonald J stated that the test is essentially whether the production of the document is necessary to dispose fairly of the cause or matter. He went on to say that the case law suggests that disclosure will be necessary where:
The party seeking inspection has the burden of satisfying the court that inspection is in fact necessary.
Application of the test
Turning to the request for documents the subject matter of this case, which included a request for a copy of a mortgage deed, terms and conditions to a loan offer, a copy of a guarantee and a copy of the deed of transfer and amended deed of transfer, McDonald J considered each request as follows:
The question of redaction of loan sale documents
In the course of his judgment, McDonald J referred to the approach taken by the courts in debt recovery claims involving loan portfolio sales noting that it is well settled that lenders are entitled to redact documents for reasons of commercial sensitivity and privacy rights of third parties. The case law to date has established that what is considered by the Court to be necessary are the relevant parts of the deeds which evidence the assignment of the loans in issue. In the present case, McDonald J commented that if a defendant wishes to see more of a deed, the burden is on the defendant to show why more is necessary, and if the defendant discharges that burden the burden then shifts to the plaintiff to justify the extent of the redaction made.
In the present case, the Court concluded that the defendants would be at a “serious litigious disadvantage” if they did not see the relevant parts of both deeds evidencing the assignment of their loans and security. While the court was satisfied that the relevant parts of the agreement dealing with the assignment had been produced, the court was of the view that those parts could not be understood without the relevant definitions of the defined words which were redacted. The court further stated that the operative clause dealing with the transfer should be disclosed to the defendants and the plaintiff has the burden of showing that the redactions relate to material which is genuinely not relevant. McDonald J directed that the plaintiff address such matters by way of a further affidavit.
This case serves as a reminder that even in a standard enforcement scenario action, lenders may be required to produce any documents relied on in proceedings if the court considers it necessary to dispose of a matter fairly. Furthermore, the case re-affirms the approach consistently taken by the courts that it is only those provisions in loan sale documents evidencing the assignment of the relevant loans and security which are relevant in debt recovery claims and it is reasonable for the balance of those documents to be redacted.
Please click here for the full text of the judgment.
  IEHC 605
 Launceston Property Finance v Walls  IEHC 610, para 27
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