High Court strikes out defence pleas alleging void enforcement demands, allowing only estoppel arguments.

Neutral Citation Number: [2016] IEHC 331

THE HIGH COURT

COMMERCIAL

[2014 No. 1756 S.]

BETWEEN

NATIONAL ASSET LOAN MANAGEMENT LIMITED

PLAINTIFF

AND

GARRETT KELLEHER

DEFENDANT

JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 10th day of June, 2016

1. The plaintiff has brought a motion pursuant to O. 19, r. 27 of the Rules of the Superior Courts seeking to have the following pleas

struck out from the defence delivered on 30th March, 2015, on the grounds that the pleas are unnecessary and/or scandalous and/or

tend to prejudice, embarrass and/or delay the fair trial of these proceedings:-

(a) Paragraph 5, to the extent that it alleges that the demand for payment on foot of the Cratloe Facility was void and

unlawful for failure to give true and accurate reasons as to why the plaintiff was moving for enforcement;

(b) Paragraph 6, to the extent that it alleges that the demand for payment on foot of the Cratloe Guarantee was void and

unlawful for failure to give true and accurate reasons as to why the plaintiff was moving for enforcement;

(c) Paragraph 9, to the extent that it alleges that the demand for payment on foot of the Modillion Facility was void and

unlawful for failure to give true and accurate reasons as to why the plaintiff was moving for enforcement;

(d) Paragraph 10, to the extent that it alleges that the demand for payment on foot of the Modillion Guarantee was void

and unlawful for failure to give true and accurate reasons as to why the plaintiff was moving for enforcement;

(e) Paragraphs 19-28;

(f) Paragraph 35;

(g) Paragraphs 40-48; and,

(h) Paragraph 52, to the extent that it alleges that the plaintiff’s demands for payment failed to set out its true reasons

for enforcement.

2. In order to determine the issues arising on this motion, it is necessary to look back at the history of these proceedings which were

commenced by way of summary summons. The plaintiff applied for summary judgment in the sum of €46,834,472.35 against the

defendant. By order dated 24th February, 2015, Fullam J. refused the plaintiff’s application for summary judgment but granted the

defendant liberty to defend the proceedings on a sole ground identified by him as “the estoppel ground”. The estoppel ground

comprises the defendant’s contention that the plaintiff is estopped from obtaining judgment against him by virtue of certain

representations which he alleges were made on behalf of the plaintiff and/or NAMA, to the effect, that the plaintiff would not enforce

the defendant’s guarantee in respect of a group of corporate entities known as “the Shelbourne connection” provided he cooperated

with the plaintiff and/or NAMA in the disposal of certain assets.

3. The defendant appealed the order of Fullam J. to the Court of Appeal which upheld the decision of the learned High Court judge.

Two judgments were handed down by the said Appeal Court by Peart J. and Finlay Geoghegan J respectively. In para. 1 of his

judgment, Peart J. recited that Fullam J. had adjourned the summary summons proceedings for plenary hearing:-

“…but limited to the single issue as to whether NAMA is estopped from enforcing certain guarantees against Mr. Kelleher

by virtue of alleged representations and assurances given to him after the underlying loans had been transferred into

NAMA and while he was engaging with NAMA in relation to the security assets.”

4. In para. 5 of her judgment, Finlay Geoghegan J. stated that the defendant did not dispute the guarantees or the amount owing on

the guaranteed facilities but asserted two defences, one of which was a counterclaim which was not allowed. The learned Appeal

Court judge described the other defence as follows:-

“the plaintiff is estopped from enforcing the guarantees by reason of representations made that if the defendant

cooperated with the plaintiff, which he maintains he did, that it would not enforce the guarantees. This defence was

referred to as the estoppel defence.”

5. It is accepted by both parties to these proceedings that the estoppel ground is the only one which was permitted by Fullam J. to

be remitted to plenary hearing and that ruling has been upheld by the Court of Appeal. In light of that decision, the plaintiff maintains

that the relevant paragraphs referred to in the notice of motion seek to expand the issues in the defence beyond what was permitted

by Fullam J. and should be struck out.

6. The differences between the parties in this motion arise out of an interpretation of what was meant by the estoppel ground. The

defendant maintains that it includes a subheading which involves the fairness of the plaintiff proceeding to enforcement. The plaintiff

rejects this interpretation and argues that this attempt to broaden the issues is not supported in either the judgment of the learned

High Court judge or the judgments of the Court of Appeal.

7. A crucial part of the learned High Court judges’ judgment is to be found at paras. 40 and 41, where he stated:-

“40. The defendant has not sought to challenge the decision to enforce by way of judicial review but has sought to

defend the plaintiff’s claim for summary judgment on the issue of estoppel.

The estoppel issue in this case has become ‘wrapped up’ in the plaintiff’s s. 193 objection and is not, in my view, an issue

which is ‘simple and easily determined’ and therefore not suitable for determination in an application for summary

judgment….

41. It seems to me that the defendant has an arguable case in relation to the private law defence of estoppel and an

arguable case in relation to the plaintiff’s objection that such defence is prohibited outside an application for judicial

review.”

8. Having read the judgment of Fullam J. and the judgments delivered by the Court of Appeal, I am satisfied that the only issue

permitted to proceed for plenary hearing is whether Mr. John Mulcahy in mid- September 2009 in the Schoolhouse Bar, Northumberland

Road, Dublin, made representations to the defendant that if he cooperated in helping NAMA obtain maximum value in realising the

assets under its control, NAMA would not enforce the guarantees. And, furthermore that Mr. Mulcahy repeated the representation at

a subsequent meeting at the Treasury Building in Dublin, on 2nd November, 2010, as did other servants or agents of the plaintiff at

various meetings between 2009 and 2013.

9. The defendant claims that these representations were made and that he acted on the representations and cooperated with NAMA

(and subsequently the plaintiff) thereby creating an estoppel on the plaintiff proceeding against him on foot of the guarantees.

10. That is the only issue permitted to go to plenary hearing and it is clear from the learned High Court judge’s judgment that that

includes a hearing on the issue as to whether the plaintiff’s s. 193 objection is fatal to the defendant’s estoppel ground.

11. Looking at the defence which has been delivered, it seems to me that it seeks to raise issues going outside the estoppel ground.

12. I will deal with the impugned paragraphs of the defence as they appear in the notice of motion:-

Paragraph 5. I will strike out the paragraph save for the following words:-

“The plaintiff was estopped from moving to enforcement having regard to its previous representations

made to the defendant.”

Paragraph 6. I will strike out this paragraph save for the words:-

“the plaintiff was and is estopped from moving to enforcement by reason of previous representations

made by the plaintiff to the defendant particulars of which are set out below.”

Paragraph 9. I will strike out that paragraph. Insofar as the last sentence deals with estoppel it is already covered in

earlier paragraphs and is unnecessary.

Paragraph 10. I will strike out this paragraph save for the words:-

“The plaintiff is estopped from enforcing in circumstances where the defendant has cooperated fully by

reason of its previous representations and arising out of the commercial relationship between the

parties.”

Paragraphs 19-28. I will strike out these paragraphs as being unnecessary or irrelevant or prolix save that I will allow the

first sentence in paragraph 20, namely:-

“The defendant cooperated in respect of maximising the recovery of all of the Connection assets for

the plaintiff.”

Paragraph 35. I will strike out that paragraph as unnecessary and irrelevant to the estoppel ground.

Paragraphs 44-46. I will strike out these paragraphs as they go to questions of value and are irrelevant to the estoppel

ground.

Paragraph 52. I will strike out this paragraph as irrelevant to the estoppel ground. Insofar as it makes reference to

estoppel, it does so in the context of a failure to set out the true reasons for enforcement which is not part of the

estoppel ground permitted by the learned High Court judge.