Promontoria (OAK) Ltd v Nicholas Michael Emanuel

Hearing date: 3 December 2019

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

A. INTRODUCTION

(1) The history of this appeal

. On 25 July 2019, I heard an application for permission to appeal a decision of Mr Recorder Willetts made on 16 July 2018. In the proceedings before Mr Recorder Willetts, the Claimant, Promontoria (Oak) Limited ( Promontoria Oak), claimed as the assignee of Clydesdale Bank (the Bank) debts owed by the Defendants, Mr and Mrs Emanuel (the Emanuels). The assignment relied upon was a deed of assignment dated 16 September 2016 (the Deed of Assignment). Promontoria Oak's claim succeeded before Mr Recorder Willetts (who I shall describe as the Judge), but on the basis of secondary evidence regarding the assignment between the Bank and Promontoria Oak. Essentially, a significantly redacted assignment (the Redacted Assignment Deed) was produced to the Court and it was on the basis of this – and some other evidence – that the Judge concluded, in the face of opposition from the Emanuels, that Promontoria Oak's title to the debts had been established. The Judge, in an order dated 18 July 2018, amongst other things ordered that judgment be entered in favour of Promontoria Oak (the Order).

. The grounds of appeal were six in number, the first three grounds being very closely related ( Grounds 1 to 3). Grounds 1 to 3 concerned the extent to which the Judge erred in failing to admit properly into evidence the complete Deed of Assignment by way of which Promontoria Oak's rights against the Emanuels arose or, to put the same question another way, whether the Judge was wrong in concluding (as he did) that Promontoria Oak could succeed in its case against the Emanuels without having the original of the Deed of Assignment in evidence before the court, in circumstances where the validity of that document was in issue and where the Emanuels were not accepting that the secondary evidence of the Deed of Assignment disposed of their contentions in relation to it.

. More specifically, Grounds 1 to 3 are as follows:

(1) Ground 1. The Recorder was wrong to admit into evidence the Redacted Assignment Deed.

(2) Ground 2. Alternatively to Ground 1, the Recorder was wrong to conclude the Redacted Assignment Deed proved title.

(3) Ground 3. Overall, the Recorder was wrong to conclude that Promontoria Oak had adduced sufficient evidence to prove chain of title.

. I gave permission to appeal in relation to Grounds 1 to 3, permission having been refused on the papers by Zacaroli J. Like Zacaroli J, I declined to give permission to appeal in relation to the remaining grounds ( Grounds 4 to 6) of appeal, and it is unnecessary for me to consider Grounds 4 to 6 any further in this Ruling.

. At the hearing on 25 July 2019, there was a further application before me to admit new evidence in the appeal and – if that application were successful – to introduce a seventh ground of appeal – Ground 7. That application could not be heard on 25 July 2019, because Promontoria Oak (entirely properly) required time to adduce evidence in response to that produced by the Emanuels. The application to adduce new evidence was heard before me on 29 October 2019 and, for the reasons I gave on that occasion, 1 I declined to introduce Ground 7 into the appeal and refused to admit the new evidence said to be in support of it.

. Grounds 1 to 3 of the Emanuels' appeal were heard before me on 3 December 2019. Also before me was a Respondent's Notice on behalf of Promontoria Oak contending that the Judge's Order should be upheld. I reserved my judgment, and this is my reserved judgment.

(2) Overview of the background facts

. In order to understand the nature of and basis for this application, it is necessary to set out some of the background facts:

(1) The Emanuels were customers of the Bank and – the details are irrelevant – borrowed money from the Bank for the purposes of their business, this borrowing being secured by a legal charge dated 2 October 2008 (the Legal Charge) over a property in Cornwall.

(2) The Legal Charge contained the usual statutory powers of sale and of appointing a receiver where a demand for the secured amounts – as defined in the Legal Charge – had gone unsatisfied. The Legal Charge contained an unfettered right in the Bank to assign its rights.

(3) In April 2012, the Bank wrote to the Emanuels giving notice that – in circumstances where loan repayments were not being made – it was making formal demand for repayment of the entire outstanding loan. That repayment was not made.

(4) On 24 June 2016, the Bank wrote to the Emanuels notifying them that – amongst other debts – their loan together with “all related rights and benefits, including, without limitation, guarantees and security” had been sold to Promontoria Holding 170 BV. This company – Promontoria 170 – is, like Promontoria Oak, a company within the Cerberus group of companies. It is, however, to be differentiated from Promontoria Oak. Promontoria Oak and Promontoria 170 are different companies and distinct legal persons.

(5) The full details of the transfer of this loan, together with other loans, was not before Mr Recorder Willetts. As is apparent from Grounds 1 to 3, limited documentation evidencing the chain of title between the Bank and Promontoria Oak was before the Judge at trial. It will be necessary to consider precisely what was in issue before the Judge and what evidence was placed before him. I do so in Section B below.

B. THE HISTORY OF THE PROCEEDINGS AND THE DECISION OF MR

RECORDER WILLETTS

(1) The pleadings

. Promontoria Oak's claim against the Emanuels was articulated in Particulars of Claim dated 4 April 2017. Promontoria Oak's title was asserted in paragraph 1 as follows:

“By a deed of assignment dated 16 September 2016, between (i) National Australia Bank Limited (as seller), (ii) [the Bank] and (iii) [Promontoria Oak] (as buyer), all the rights and obligations under the facilities and security referred to herein were assigned to [Promontoria Oak].”

. Paragraph 1 of the Emanuels' Defence and Counterclaim put this in issue in the following way:

“…it is not admitted that all rights and obligations under the facilities and securities referred to in the Particulars of Claim, including the Legal Charge…were assigned to [Promontoria Oak], pursuant to the Deed of Assignment…as alleged or at all:

(i) [Promontoria Oak], acting through its appointed LPA Receivers, has refused to produce an un-redacted copy of the aforementioned Deed of Assignment. A copy of the [Redacted Assignment Deed] is attached to this Defence at Schedule 1. Parts of the Assignment have been redacted, so that the [Emanuels] are unable to admit or deny the effect of that document and put [Promontoria Oak] to strict proof.

…

(iv) As [Promontoria Oak] specifically pleads in paragraph 1 of the Particulars of Claim that all rights and obligations have been assigned to [Promontoria Oak], the onus of proof lies with [Promontoria Oak] to prove the validity of the assignment and any transfer of obligations, and in the premises, the court is invited to stay the possession proceedings until such time as [Promontoira Oak] produces an un-redacted copy of the Deed of Assignment…”

. In its Reply, Promontoria Oak said this:

“4.1 It is admitted and averred that [Promontoria Oak] has produced a redacted copy of the Deed of Assignment for the purposes of this claim. The sections of the Deed of Assignment that have been redacted contain commercially sensitive material that have no bearing upon the existence and effectiveness of the Deed of Assignment and/or any rights or obligations arising thereunder and [Promontoria Oak] has a legitimate expectation that the confidentiality of such parts of the Deed of Assignment shall be protected in these – and other – proceedings where such information is irrelevant to [the] claim and where such material in no way prevents the just disposal of the proceedings.

4.2 For the avoidance of doubt, it is therefore denied, insofar as it is alleged, that the Defendants are unable to admit or deny the effect of the Deed of Assignment for the purpose of these proceedings. The [Redacted Assignment Deed] contains all the relevant provisions governing the assignment of the Facilities to [Promontoria Oak]; and, conversely, none of the redacted sections of the Deed of Assignment pertains to the effectiveness of the assignment of the Facilities themselves.” 2

(2) Disclosure

. The Claimant made standard disclosure and to this end provided a list of documents. The list was in standard form:

(1) It contained a list of documents that Promontoria Oak did not object to the Emanuels inspecting. The list did not include the Deed of Assignment, not even the Redacted Assignment Deed – although, as has been seen, this document was already in the Emanuels' possession. 3 The list did contain other letters, relevant to the assignment, which I shall refer to further below.

(2) It identified various classes of document to which Promontoria Oak objected to inspection. It is unnecessary to set these out: all that needs to be noted is that none of these classes was defined in such a way as to include...