In a recent decision, the Irish High Court ordered a loan purchaser to produce documents relating to the price paid for loans (Promontoria (Aran) Ltd v. Sheehy [2019] IEHC 613).
The Irish courts have generally acknowledged the commercial sensitivity attaching to contractual documents entered into as part of a loan sale transaction. The courts have held that a creditor, in seeking judgment, is entitled to rely on redacted documents, provided such parts of the documents as remain unredacted establish the transfer of the loans. The courts have said that a borrower needs to present some "concrete argument" 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. That is what is classically termed a "fishing expedition".
The Sheehy decision does not disturb those general principles. In that case, the question of the price paid for the loans is potentially relevant to the issues in dispute, due to the fact that, in addition to claiming judgment as a matter of contract, Promontoria also argued that it was entitled to repayment of the monies that were lent under the doctrines of restitution and unjust enrichment. The borrower argued that restitution and unjust enrichment did not apply because Promontoria had not made a "payment of substance" in order to acquire the debt. Promontoria pleaded that this was incorrect, i.e. that it had made a payment of substance.
The High Court held that discovery of documents relating to the price paid for the loans was relevant to this issue and was necessary in order to determine the dispute. The disclosure of the documents in question was conditional on the borrower's solicitors giving confidentiality undertakings.
The key takeaway point is that parties seeking the recovery of unpaid loans need to be careful in how they frame their claims, to avoid unintended and unhelpful procedural consequences. While a claim based on restitution or unjust enrichment may offer a potentially useful back-up remedy, this needs to be weighed against the sensitivity attaching to the underlying documents and the associated risk that the court might make an order requiring documents to be discovered in unredacted form.
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