Original lender joined as co-defendant in proceedings after loan was assigned

This case concerned an appeal by the Plaintiff of a High Court order which dismissed his application to join IBRC as co-defendant in proceedings. IBRC made loans available under "on demand" facility letters to the Plaintiff in 2007 and 2009.  In March 2014, IBRC sold the loans, together with its security, to the defendant, Kenmare Property Company Limited (Kenmare). Kenmare subsequently demanded repayment of the loans and appointed a receiver over its security which included various apartments. 

The Plaintiff was seeking damages from IBRC for breach of contractual obligations and tortious activity including breach of statutory duty, negligent misrepresentation and mis-selling and therefore wished to join IBRC in the proceedings. As IBRC is in liquidation, the consent of the High Court had to be obtained before any action or proceeding can be issued against IBRC.

The central issue to be decided was whether the transfer of the loans to Kenmare precluded the joinder of IBRC in proceedings?
The Judge noted that in earlier proceedings, Kenmare's position as acquirer of the loans, was that as Kenmare has no knowledge of any of the matters outlined by the Plaintiff, all claims lie against IBRC only.  Kenmare stated that as acquirer of the loans, Kenmare was entitled to enforce the loan by way of possession of properties and by way of application for summary judgment.  Kenmare made it very clear that the proceedings would be defended on the basis that Kenmare had no responsibility in respect of any claims against IBRC.

IBRC argued however, that as the loans had been transferred to Kenmare, any action seeking to restrain enforcement of those loans must be brought against Kenmare only.

The Judge noted that the Plaintiff, in seeking damages for breach of contractual obligations against IBRC would, if successful, set off any such damages against any moneys owed under his loan arrangements. The Judge in referring to section 28(6) of the Supreme Court of Judicature (Ireland) Act 2877, noted that Kenmare, as an assignee of a debt, took that debt subject to all equities which included rights of set off.

The Judge noted that while the content of the affidavit evidence did not provide details as to how the investment and associated loans were mis-sold or how IBRC had acted negligently, the Plaintiff had provided sufficient information to satisfy the low threshold that is required to join IBRC in the proceedings. 

The Judge noted also Kenmare's stated defence to the claims, the fact that the Plaintiff would not be able to obtain discovery against IBRC other than on a non party basis and concluded that to exclude IBRC from the proceedings would be to place the Plaintiff "at a considerable litigious disadvantage". 

The appeal was allowed and the Plaintiff was granted leave to join IBRC in proceedings.

McGuinness v Kenmare Property Company Limited [2015] IECA 299

For more information please contact Louise McNabola at lmcnabola@algoodbody.com.

Date published: 12 January 2016