High Court of Ireland Decisions

 

 

 THE HIGH COURT

      [2025] IEHC 127

[Circuit Court Record No. 2024/00661]

[High Court Record No. 2024/0000309]

 

BETWEEN

 

MARS CAPITAL FINANCE IRELAND DESIGNATED ACTIVITY COMPANY

PLAINTIFF

AND

 

ANDREW DOYLE AND GERALDINE SCANLAN (OTHERWISE SCANLON)

DEFENDANTS

 

Ex Tempore JUDGMENT of Mr Justice Liam Kennedy delivered on the 3rd day of March 2025.

1.                  On 3 March 2025 an appeal hearing took place in these Circuit Court proceedings by way of a de novo rehearing of an application for the substitution of Mars Capital Finance Ireland Designated Activity Company ("Mars") as plaintiff in lieu of the original plaintiff, Start Mortgages Designated Activity Company ("Start"). Judge Sheehan had granted such an order on 5 December 2024. I concluded that he was correct to do so, and I ordered accordingly. Neither party sought costs. I indicated that I would circulate a brief note of the reasons for my decision.

2.                  At the outset it should be noted that the defendants did not object to the joinder of Mars as a plaintiff. However, they suggested that Start should also remain a party - in other words Mars should be added as a co-plaintiff rather than being substituted for the original plaintiff, Start. The defendants made clear that their sole concern was to ensure that none of their factual and legal defences would be prejudiced by the order of substitution.

3.                  Although not an issue for determination by me, it is important to note that the defendants object to the basis on which Start originally brought these proceedings, claiming that it did not have good title from the original mortgagee, Irish Life and Permanent ("ILP"), for various factual and legal reasons. It appears the defendants will advance similar objections in respect of the alleged transfer to Mars. However, as I noted and the Plaintiff conceded, the substitution of Mars for Start will not prejudice the defendants' ability to raise such factual and legal points in respect of either the original transfer to Start or the subsequent transfer to Mars.

4.                  I explained to the defendants that if there was any issue with the validity of the transfer of title from ILP to Start (or from Start to Mars), then that would undermine the plaintiff's case. Any such evidential difficulties would be problems for the plaintiff rather than the defendants. Mars would face the same evidential burden which would have confronted ILP, but it would also have to show the validity of the transfers firstly to Start and secondly to Mars. It would have to prove all three links in the chain, whereas ILP would have simply needed to show a default under the terms of the original mortgage and loan. Counsel for Mars agreed with that analysis and confirmed on Mars' behalf that if there was any need to obtain documentary or oral evidence from or in respect of Start the plaintiff would not be resisting any such requirement on the basis that Start was no longer a party.

The Law

5.                  The correct approach to such applications was outlined by Kelly J (as he then was) in Irish Bank Resolution Corporation v Noel Comer & Deirdre Comer [ 2014] IEHC 671. In an analogous situation, Kelly J directed the substitution of the plaintiff following a loan transfer, noting at para. 2 9 that, for the purposes of dealing with the substitution application, it was not necessary for him to adjudicate on the efficacy or validity of the assignment to the new party. I respectfully agree and follow the same approach. Kelly J continued at para. 3 0 as follows:

"30. What I am asked to do is to consider a procedural application which, if it is granted, will have the effect of bringing to an end the entitlement of IBRC to further prosecute these proceedings. It will substitute for that entity, Launceston, who will take over the entitlement to prosecute the proceedings, subject to all of the imperfections that may have been present when the action was constituted as between IBRC and the defendants and subject also to proving at trial, that there has been a valid sale of the underlying assets, a valid assignment of the chose in action which is this action, and a valid notice given.

31. What I do have to satisfy myself about is whether there is prima facie evidence of that having occurred. In order to come within the relevant rule of court, there has to be evidence adduced which would justify the substitution of the existing plaintiff by Launceston.

32. That seems to me to be the standard of proof that has to be achieved. Much of the argument which took place concerning the deployment of material, the entitlement to redact, the reasons for redaction, the entitlement of the defendant to see the original document in un-redacted form are all matters, which in my view, are for another day.

...

43. In my view, the onus of proof on a procedural motion of this sort is very different to the onus of proof which is required at the trial. I do not believe that it would be either appropriate or indeed in the interests of justice that on a procedural motion of this sort, far reaching decisions concerning the efficacy and validity of the underlying sale agreement or the assignment of a notice of that assignment should be made.

44. That would turn a procedural motion which, even under the rules is contemplated as one which can be made ex parte, into a sort of minitrial of the action. That is not what is envisaged by the rules of court and is certainly not envisaged under the rules of the Commercial Division of the court.

45. In these circumstances, I am of the opinion that there has been made out a sufficient case to warrant the application succeeding and I propose to make the order which is sought.

46. I will, therefore substitute, Launceston Property Finance Limited as plaintiff in these proceedings in lieu of Irish Bank Resolution Corporation Limited in special liquidation.

47. The effect of that is to take out of the picture completely, Irish Bank Resolution Corporation Limited. It is now forgoing its right of action and conferring on Launceston, the entitlement to continue these proceedings. But that is subject to Launceston demonstrating at trial that they have such an entitlement. Launceston will have to demonstrate to the trial judge that it is entitled to bring this action on foot of the documents which are exhibited before me albeit in their redacted form." (emphasis added)

6.                  Accordingly, when considering such a substitution application, the court is simply recognising that Mars has met the very low bar of establishing a prima facie case to be entitled to pursue a claim as a plaintiff in the proceedings. I am not determining or making any assessments on the following:

(a) The merits of the action.

(b) The factual and legal defences available to the Defendants.

(c) The validity of any transfer to Start or from Start to Mars.

(d) The validity of the title to sue or the standing asserted by Mars or, indeed, Start.

(e) The validity or appropriateness of the redactions to the global deed of transfer and other documents exhibited by Mars and/or Start in relation to the alleged transfers

Such matters will need to be determined by the Circuit Court in due course.

7.                  However, there is no benefit to either side in requiring Start to remain a party since it is no longer claiming any relief and no longer has an interest in the proceedings. It would be wasteful of court resources and involve unnecessary expense and delay and burdens for the parties if superfluous parties were to be retained in the proceedings to no good end. Accordingly, in the circumstances of these proceedings, the only plaintiff who is required to continue to participate in the proceedings is Mars. The defendants will not be prejudiced in any way by my making the order of substitution in the same terms as provided for by the Circuit Court. The concluding observations of Kelly J in Comer are equally valid in this case;

"48. The defendants at trial will be perfectly free to raise whatever issues they think are appropriate in relation to any alleged imperfections or invalidity as they see them in any of the documents which underscore the bringing of this application and the substitution order which I now make."