High Court dismisses plaintiff's ex parte application to add late evidence after judgment on lis pendens motion.

[2018] IEHC 575

THE HIGH COURT

[2018 3606 P.]

BETWEEN

PATRICIA HINDE

PLAINTIFF

AND

PENTIRE PROPERTY FINANCE DESIGNATED ACTIVITY COMPANY AND TOM KAVANAGH

DEFENDANTS

JUDGMENT of Ms. Justice Costello delivered on the 19th day of October, 2018.

The Facts

1. The plaintiff commenced these proceedings by a plenary summons issued on the 24th April, 2018. She delivered her statement of

claim on the 18th June, 2018. The defendants issued a motion on the 5th June, 2018 seeking an order vacating a lis pendens

registered on the 24th April, 2018 in relation to a dwelling house and premises known as 22 The Beeches, New Road, Straffan, County

Kildare and an order striking out the plaintiff’s proceedings either pursuant to O. 19 r. 28 of the Rules of the Superior Courts or

pursuant to the inherent jurisdiction of the court on the grounds that the proceedings are frivolous, vexatious and bound to fail. The

application was grounded upon the affidavit of the second named defendant sworn on the 1st June, 2018. The plaintiff replied to this

affidavit and Mr. Jeremy Irwin, solicitor for the defendants, in turn replied to her affidavit. The matter was listed for hearing and was

heard over two days on the 25th and 26th July, 2018.

2. Counsel for the defendants produced written submissions dated the 29th June, 2018. Counsel for the plaintiff replied to those

submissions on the 9th July, 2018.

3. In these circumstances, the plaintiff had the benefit of legal advice from solicitor, junior and senior counsel before she commenced

her proceedings and in responding to the defendants’ motion to dismiss her proceedings on the basis that they were frivolous,

vexatious and/or bound to fail. She was fully informed of the case to be advanced by the defendants from the affidavit sworn on the

1st June, 2018 and the written submissions of counsel for the defendants dated the 29th June, 2018. At the hearing of the motion

there was no indication that she was not fully prepared to meet the application and there was no application to adjourn the motion.

4. The motion proceeded in the normal way for hearing over two days. At the end of the hearing I reserved judgment.

5. After the hearing had concluded and before judgment had been delivered the plaintiff wished to adduce further evidence in relation

to a factual issue upon which the plaintiff relied on making her submissions to the court. The solicitor for the plaintiff applied to me on

an ex parte basis on 30th July, 2018 for leave to adduce further evidence while I was sitting as the bankruptcy judge. I gave the

plaintiff leave to bring a motion seeking leave to adduce further evidence and directed that the matter be heard on notice to the

defendants. Upon my return from vacation I wrote my judgment as I had no note or recollection of the fact that the plaintiff had

liberty to issue a motion seeking to adduce further evidence. The parties were contacted when I intended to deliver my judgment on

25th September, 2018. The plaintiff’s solicitor wrote to say that he had made an application to me sitting in the chancery list on

30th July 2018 and that he had been given leave to adduce further evidence. This was incorrect. My attention was not drawn to

the order I in fact made. I proceeded to deliver judgment on 25th September, 2018 in the absence of representatives of the plaintiff,

though they were aware of the fact that the matter was listed for judgment. The matter was put back for mention and no order was

perfected. Subsequently, the sequence of events was clarified and I agreed to hear the plaintiff’s application for leave to adduce

further evidence in the circumstances. This is my judgment on this application.

The Plaintiff’s case

6. The new evidence sought to be introduced by way of an affidavit sworn by the plaintiff’s solicitor, Mr. David Turner, is with a view

to establishing the relationship between an English company, CarVal UK Ltd and the first named defendant. The relevance of this

evidence has to be assessed by reference to her case. The plaintiff sets out her case in paras. 4 to 10 of the statement of claim as

follows:

“4. In or about June 2006, Bank of Scotland (Ireland) Ltd (“BOSI”), an entity which has since been dissolved, advanced

sums to the plaintiff to purchase the property by way of a mortgage. As and from 31st December, 2010, BOSI merged

with Bank of Scotland Plc (“BOSUK”) according to a court approved cross-border merger and, in consequence, the assets

of BOSI (including the relevant mortgage) became assets of BOSUK.

5. By way of a purchase deed dated 29th November, 2014, CarVal Investors UK Ltd, a company incorporated in the

United Kingdom number 5863476 and whose registered office is based at 25 Great Pulteney Street, London W1F 9LT,

agreed with BOSUK to acquire a number of assets from BOSUK, including the facility agreement and the mortgage

connected to the property (“the agreement”).

6. CarVal Investors UK Ltd (“CarVal”) was not, at the time of the said agreement, an authorised/licensed person

pursuant to the United Kingdom’s Financial Services and Markets Act, 2000 (“FSMA”). The agreement for the sale of

assets, including assets connected to the property, constituted a regulated activity, at the time of the agreement, in

the United Kingdom.

7. The said agreement constituted an agreement (according to Part 1, Schedule 2 of FSMA) to buy/sell investments in

particular (as is brought within the rubric of FSMA by way of Part 2 of Schedule 2 thereof), loans and other forms of

credit, including loans connected to the property. An agreement for the sale and/or purchase of investments (as

described in the FSMA) may only be conducted by authorised persons. CarVal was, at the time it agreed to purchase the

relevant assets, not so authorised.

8. Pursuant to s. 26 of FSMA, the said agreement as between BOSUK and CarVal is not enforceable against another party

to the transaction, including the plaintiff. The plaintiff, arising from her position as a party to the facility

letter/mortgage, is a party to the said agreement (on the basis, inter alia, of the singular import in the plural by way of

the relevant statute and by way of the plaintiff’s position as a party to the underlying documents purportedly

transferred and whose assent to the transfer is ordinarily required, whether or not abrogated by the contract) and,

therefore, the said agreement is unenforceable as against the plaintiff.

9. On or about 12th December, 2014, the assets and/or obligations of CarVal were purportedly transferred, by way of

novation, to the first named defendant (“Pentire”). As the antecedent asset transfer agreement providing CarVal was an

authority to hold the assets connected to the property for the purposes of novation was, at that stage, unenforceable

as against the plaintiff, the purported transfer of the assets connected to the property as between CarVal and Pentire,

on or about 12th December, 2014 was ineffective and futile in law as regards the relevant assets connected to the

property.

10. Arising from the foregoing, the relevant assets, i.e. the mortgage and the facility letters, together with the

associated data and documentation, did not validly pass to the first named defendant on or about 12th December, 2014

or at all. In the foregoing circumstances, the first named defendant had no authority to appoint the second named

defendant as receiver over the property and, therefore, the second named defendant has not been validly appointed as

receiver over the property.”

7. In the written submissions filed on her behalf the plaintiff argues:

“Ms. Hinde was a party to the agreement to transfer her loan from BOSUK to CarVal Investors UK Ltd as evidenced by

the fact that, in the absence of clause 27 of the mortgage, Ms. Hinde’s agreement to the transfer would have

been required to enable the agreement to be effective. She is a necessary party to the contract. In the foregoing

circumstances, Ms. Hinde is in a position to plead that the transfer agreement is unenforceable as against her.”

8. Having noted that the loan purchase agreement between BOSUK and CarVal was novated by a deed of novation involving BOSUK,

CarVal and Pentire the plaintiff then submitted that if the loan purchase agreement “is found to be infirm for the reasons set forth in

the statement of case, then it is the case that CarVal would not have been in a position to enter into a deed of novation and/or

transfer with Pentire.” At para. 43 of the written submissions it was argued:

“Having regard to the foregoing, the full nature of the relationship between the parties described in the unredacted

versions (absent personal material related to parties other than Ms. Hinde) of the two deeds, together with any

relationships described otherwise than in the two documents which may be relevant and necessary, will be an issue at

the trial of this action.”

9. This represents the height of the case advanced by the plaintiff that the relationship, if any, between CarVal and Pentire is

relevant to her case other than the fact that they were parties to the deed of novation of December 2014.

The present application

10. On the 9th July, 2018, well before the motion was due to be heard, solicitors for the plaintiff wrote to the solicitors for the

defendants in the following terms:

“We note Goldman Sachs and CarVal purchased 2 billion of Irish portfolio from Lloyds, however the accounts of Pentire

Property Finance DAC only hold assets of circa 282 million. CarVal’s accounts identify the sale of Irish assets at 2 billion.

However, it seems that Pentire DAC only purchased a portion of the loan book from CarVal. Perhaps you might explain.

We also note Karen McCabe was a director of Pentire Property Finance DAC and a number of other companies regulated

by Pepper, such as Promontoria (Aran) Ltd, Pentire Launceton Property Finance, Promontoria Eagle Ltd, Bellamy Property

Finance, Kenmare Property Finance, Stable Fort Finance Ltd, Launcestown Property Finance and Pentire Finance.

Furthermore, the same director, Karen McCabe, is also a director of CarVal Investors (Ireland) Ltd, a wholly owned

subsidiary of CarVal Investments UK Ltd.

We also note that on the execution of the documents, at the directors of the company, who do not appear on the

company’s list as Directors, namely Mr. Johnston, attended in the UK when Karen McCabe executed the documents.

It is very clear to us that all of the companies who purchased Irish assets in which Karen McCabe was a director, are

actually owned directly by CarVal Investors UK Ltd.

Perhaps you might explain the position and in particular our request for your confirmation that all these companies

identified above are actually connected to each other and are wholly owned subsidiaries of CarVal Investments UK Ltd.”

11. In his affidavit grounding the application before the court sworn on the 19th September, 2018 Mr. Turner said that he brought the

application to inform the court of the relationship between CarVal Investors UK Ltd and Pentire Property Finance DAC (Pentire). He

explained that the matter arose at the hearing of the action on 25th and 26th July, 2018. The evidence which the plaintiff sought

liberty to adduce comprises companies office searches and documents available from Companies House in the UK. It also included

company documentation filed in Luxembourg. All of the material is publicly available online.

12. There was no reason why the plaintiff could not have placed this evidence before the court in the normal fashion prior to the

hearing of the motion on the 25th and 26th July, 2018. Mr. Turner’s affidavit does not state that the information was not available

prior to the hearing of the motion. If it was part of the plaintiff’s case that the relationship, if any, between CarVal and Pentire was

relevant to her case and accordingly to the motion before the court, this information ought to have been placed before the court. He

does not explain this failure. That is a very significant omission in the context of this application.

13. However, her application is subject to a more fundamental difficulty. I have set out her case in full and quoted extensively from

her written submissions. It is apparent that her case is not based on an allegation that CarVal and Pentire were related or connected

companies and that somehow this affects the interpretation of the relevant provisions of the United Kingdom’s legislation and this in

turn has an impact on the validity of the transfer of the loan and mortgage to Pentire. It is of course possible to amend pleadings if it

is necessary so to do. However, neither at the original hearing on the 25th and 26th July, 2018 nor at the hearing of this motion on

the 16th October, 2018 was it indicated that the proceedings required to be amended in order to plead a company relationship or

connection between CarVal and Pentire as this was part of her case against the defendants. t.

14. Both sides referred me to the decision of Clarke J. in the High Court in McInerney Homes Ltd [2011] IEHC 25. At para. 3.11 and

3.12 of his judgment he held:

“3.11. It seems to me that a similar logic applies in a case, such as this, where it is sought to ask the court to revisit a

reasoned judgment already delivered, between the time of delivery of that judgment and the formalisation of the court's

order. It would, again, be a recipe for procedural chaos if a party were entitled, at such a stage, to seek to introduce

new evidence or arguments simply because the relevant matters have not been advanced during the hearing. If it is an

abuse of process in an examinership, by analogy with Henderson v. Henderson, not to put forward one's entire case on a

petition and then seek to litigate a point not made on a second petition, then that principle applies whether consideration

is being given to allowing the new point to be advanced after the process has finally finished to the extent that a final

order has been made and perfected or, if possibly with only slightly less force, where the process has, in substance,

finished by the parties completing their evidence and argument and the court reaching a reasoned conclusion.

3.12. Different considerations might well apply where the nature of the application to the court to revisit is based on

what is said to be a simple error on the part of the judge concerned in the judgment. At its simplest a judge might, for

example, deliver a reasoned written judgment which included a clear computational error relevant to the assessment of

damages. Likewise, there may well have been materials before the court whose significance were not drawn to the

judge's attention in the course of the hearing but which might clearly affect the proper outcome in the light of the

approach of the judge to the case as disclosed in a reasoned judgment. However, where the basis for seeking that the

court revisit its judgment is to be found in the proposed presentation of additional evidence or materials, then it seems

to me that it would be inappropriate for the court to go down that road without applying, at least in general terms, a

test similar to that which an appellate court would apply in deciding whether to admit new evidence at an appeal. In

those circumstances it seems to me that the new materials must be such that same would probably have an important

influence on the result of the case, even if not decisive, and be credible. In addition, such new evidence will not

ordinarily be permitted to be relied on if the relevant evidence could, with reasonable diligence, have been put before

the court at the trial.”

15. Clarke J. established a dual test which ought to be satisfied before a court should admit new materials in circumstances where the

court has concluded the hearing of the case and has delivered a reasoned judgment. The elements of the test are:

(1) that the new materials would probably have an important influence on the result of the case, and be credible.

(2) Such new evidence will not ordinarily be permitted to be relied on if it could, with reasonable diligence, have been put

before the court at the trial.

16. It is clear that, with reasonable diligence, the evidence which the plaintiff now seeks to put before the court was available to her

and could have been put before the court at the hearing of the motion. Secondly, the new materials, even if admitted, could not

have had an important influence on the result of the motion. They do not relate to the case as pleaded by the plaintiff. They do not

relate to the case as argued by the plaintiff in her written submission. They related solely to an assertion advanced by her counsel on

his feet which was unsupported by any evidence: that CarVal and Pentire were a single economic unit or that Pentire was the agent

of CarVal and that this in turn had a relevance to the alleged effect of FSMA upon the assignment of the plaintiff’s loan to Pentire. I

should also state that my judgment did not proceed on the basis of an assumption either as to the relationship or the absence of a

relationship between CarVal and Pentire.

17. I accept the reasoning of Clarke J. that such an application, unless justified on the grounds he has set out, amounts to an abuse

of process and would lead to procedural chaos and injustice on a broad scale. I therefore refuse this application to admit the further

evidence set out in the affidavit of Mr. David Turner sworn on the 19th September, 2018.