Exhibit AF

Case 2:24-cv-00021-JRG Document 54-33 Filed 07/18/24 Page 1 of 16 PageID #: 3540
© Copyright 2024, vLex. All Rights Reserved.

Pepper Finance Corporation (Ireland) Ltd v Michael 

Macken and Patricia Watson

Jurisdiction: Ireland

Judge: Mr. Justice Murray

Judgment Date: 25 January 2020

Neutral Citation: [2021] IECA 15

Reported In: [2020] 1 JIC 2501

Date: 25 January 2020

Court: Court of Appeal (Ireland)

Docket Number: Court of Appeal Record No.: 2018/360

vLex Document Id: VLEX-861587984

Link: https://justis.vlex.com/vid/pepper-finance-corporation-ireland-861587984

Text

Between

Pepper Finance Corporation (Ireland) Ltd

Plaintiff/Respondent

and

Michael Macken and Patricia Watson

Defendants/Appellant

[2021] IECA 15

Haughton J. 

Murray J. 

Collins J. 

Court of Appeal Record No.: 2018/360

High Court Record No.: 2013/46 S.P

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THE COURT OF APPEAL

JUDGMENT of Mr. Justice Murray delivered on the 25 th day of January 2020

1

. The original plaintiff in these proceedings (in which orders are sought for possession of a 

property comprised in Folio 11582F County Roscommon) was Danske Bank A/S trading 

as Danske Bank. Following her judgment of 15 June 2018 ( [2018] IEHC 356, [2019] 1 IR 

677) Costello J. made an order (a) substituting Pepper Finance Corporation (Ireland) DAC 

(‘Pepper’) as plaintiff in the action and (b) setting aside a judgment obtained in the 

proceedings on 2 November 2015. In this appeal, Mr. Macken, contends that Costello J. 

erred in making the first of these orders (itself made on foot of an appeal by Mr Macken 

against a decision of the Master) because, he argues, Pepper had failed to adduce sufficient 

evidence to ground its asserted entitlement to proceed with the claim.

2

. The basis on which Pepper sought to be substituted in the case was set forth in an 

affidavit of one of its directors, Cormac Ryan, sworn on 31 January 2018 to ground its 

substitution application. In the course of that affidavit Mr. Ryan made the following 

relevant averments:

(i) The application arose from the ‘ sale’ of the loans and security alleged to give 

rise to the entitlement to the relief claimed in the action by Danske Bank, to 

Pepper;

(ii) On 23 October 2017 Danske Bank executed a loan portfolio sale and purchase 

deed whereby it agreed to sell and Proteus Funding DAC (‘PF’) agreed to purchase 

certain assets (‘ the purchased assets’). The purchased assets included those loans 

and security. This deed was duly exhibited.

(iii) That deed provided that the purchase of the assets in question was subject to 

the proviso that legal title to those assets shall be transferred to Pepper, which 

would hold those assets on trust for PF. It was averred by Mr. Ryan that ‘ legal title 

shall be held by Pepper with beneficial title being transferred to and held by [PF]’.

(iv) On 15 December 2017 Danske Bank assigned to Pepper (insofar as not 

otherwise granted, conveyed, assigned, transferred and assured pursuant to certain 

transfer deeds and life policy assignment) all such rights, title and interest as 

Danske Bank may have had in the purchased assets. That deed was exhibited.

(v) On 15 December Danske Bank executed a deed of transfer of charge in the 

form of Land Registry Form 56 whereby it transferred to Pepper as purchaser, the 

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charges listed there, including the charge asserted to ground the relief claimed in 

the action. The Form 56 was exhibited.

(vi) Mr. Ryan averred that a notification was sent to the defendants on 18 October 

2017, which he described as a ‘ Notification of Agreement to Sell’. This notification 

was exhibited. It described PF as ‘ the beneficiary’ and stated that details relating 

to the defendants' accounts would be provided to ‘ the Beneficiary’ and that these 

details would be used by Pepper and ‘ the Beneficiary’ for the continued 

administration of the defendant's accounts and for related legal and regulatory 

purposes. It stated (and Mr. Ryan averred accordingly):

‘ Pepper ... will hold the benefit of your Account(s) on trust for the 

benefit of [PF]’

(vii) Mr. Ryan averred that a further letter was sent to the defendants on 18 

December 2017. This letter was exhibited. Mr. Ryan said that this letter outlined to 

the defendants ‘ that, from 15 December 2017 Pepper held the benefit of the 

defendants' facilities ... on trust for [PF]’. In point of fact, the letter was worded 

differently from that sent on 18 October. It not merely stated that Pepper held the 

benefit of the assets on trust for PF, but made it clear that at some point this might 

change:

‘ From 15 December 2017, Pepper holds the benefit of the Account(s) 

and Finance Agreements on trust for [PF], or such other beneficiary 

of such trust from time to time ...’.

(Emphasis added).

(viii) Mr. Ryan finally exhibited a letter sent by Pepper's solicitors – Maples & 

Calder – on January 9 2018. The purpose of that letter was to advise the defendants 

of Pepper's intention to apply to be substituted as plaintiff to the proceedings. That 

letter inter alia referred to the Loan Sale Deed, and the fact that it provided that the 

legal title to the assets in question would be transferred to Pepper which should 

hold the assets on trust for PF.

3

. The essential basis for the application was then described by Mr. Ryan as follows:

‘ as a consequence of the Deed of Assignment, the Form 56 and the 

Notification of Agreement to Sell, an event has now occurred since the 

commencement of the within proceedings whereby the interest of the Plaintiff 

in the Facilities, the Charge and the within proceedings has been transferred 

to Pepper’.

4

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. Mr. Macken swore two affidavits in response to Mr. Ryan's affidavit. There, (and insofar 

as relevant to the issues on this appeal) he said inter alia the following:

(i) Pepper did not have locus standi and if they had they did not show any evidence 

of such standing as ‘ purported Trustees’;

(ii) Pepper had averred that they were the purchasers of the loan and security;

(iii) Pepper was not the purported purchaser of the loans and securities and, in fact, 

it was more likely to be ‘ a mere Bare Trustee’ and that the evidence Pepper had 

adduced merely established that they were ‘ merely Bare Trustees and nominees on 

behalf of Proteus’.

(iv) Pepper had exhibited no documentation or supporting evidence of the Trust or 

their powers under the Trust.

5

. Pepper did not reply to these affidavits, and the evidence I have thus summarised 

represented the material before Costello J. when she made the order the subject of this 

appeal. On the basis of the authorities to which I refer below, she concluded that, as a 

matter of law, the Court in application of the kind in issue was concerned only with 

whether the applicant had adduced evidence in a prima facie fashion of its entitlement, by 

reason of the purported assignments, to pursue the existing claim on the underlying 

facilities alleged to have been transferred to it. She stressed that the procedural application 

to substitute a new plaintiff did not determine the issue of the validity of the assignment 

from the plaintiff and that the Court was not rendering any adjudication upon either the 

validity of or efficacy of the sale agreement or of the notice given to the defendants of the 

assignment of the facilities and underlying security.

6

. From there, Costello J. reviewed the evidence disclosed by the affidavit of Mr. Ryan and 

the documentation exhibited therein. She said the following of that evidence (noting that 

where the Court referred to ‘ Proteus’ it was referring to the entity I have been describing 

as PF) (at para. 44):

‘... they show that if they are valid and effective documents there has been a 

sale of the loans and associated securities of the defendants by Danske Bank 

to Proteus and that the parties agreed that the legal interest in the loans and 

associated securities was to be transferred to Pepper and that Proteus was to 

be the beneficial owner of the facilities and associated security’.

7

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. That being so, and having regard to the legal principles identified by the trial Judge, she 

concluded (at para. 49):

‘ I am satisfied that the applicant, Pepper, has adduced evidence on a prima 

facie basis that there was a sale and assignment of their loans to Pepper on 

18 December 2017. The defendants were notified by Danske Bank of the 

assignment of their loans to Pepper on the 18th December 2017. On this basis 

I conclude that the applicant is entitled to be substituted as plaintiff in these 

proceedings in place of Danske Bank and is authorised to continue the 

proceedings as plaintiff’.

8

. In advance of the hearing of this appeal, Mr. Macken swore a further affidavit disclosing 

additional information regarding the purported transfer of the loans and securities giving 

rise to this application. He derived that information from publicly available documents, a 

number of which he exhibited. He said that this information disclosed the following 

components of what he described as ‘ the scheme’, all of which occurred on December 15 

2017:

(i) Danske Bank sold beneficial and legal title in the relevant assets to PF;

(ii) PF ‘ put the legal title into a Bare Trust’ to which Pepper was appointed as 

Trustee;

(iii) Pepper signed Form 56 ‘ on behalf of the Bare Trust’:

(iv) PF then sold all its rights, beneficial and legal, to another ‘ Proteus’ entity, 

Proteus RMBS DAC (‘ PR’);

(v) Pepper then transferred any and all of its rights as Trustee for and on behalf of 

the Bare Trust to PR;

(vi) PR then converted all its rights to Notes and issued Notes. He says that this 

conversion nullified and expunged the individual rights, including the beneficial 

and legal rights, to each individual mortgage and charge. He says that PR:

‘effectively expunged the assets of the Bare Trust by the conversion 

and eliminated all rights, including beneficial and legal, that the Bare 

Trust may had briefly had earlier in the day’.

(vii) PR appointed Pepper as a Servicer on its behalf to collect monies;

(viii) PF and PR both then reverted to €1 shell companies.

9

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. Pepper did not file any responding evidence in advance of the hearing of this matter on 

January 12 2021. While it did not accept Mr. Macken's interpretation of the legal effect or 

consequence of the events he thus describes, it did not dispute that some elements of the 

transaction I have outlined above in fact occurred. In particular, it was clear (based upon 

the documentary evidence before the Court) that there was on December 15 a transfer of 

interest from PF to PR, and a subsequent conversion of that interest to notes. It is also 

undisputed that all of these steps occurred on the same day.

10

. This is of relevance insofar as Pepper objected to the Court receiving evidence from Mr. 

Macken that was not before the High Court. Specifically, it now appears that that Court 

was furnished with only a partial account of the transactions. The details of the 

transactions as contained in the affidavit evidence tendered by Mr. Ryan stopped at the 

signing on behalf of Pepper of the Form 56. This means that the High Court was left with 

the impression that PF remained the beneficial owner of the relevant assets when, on the 

very day that the transactions that were disclosed to the Court occurred, in fact it divested 

itself of that interest to PR, which then proceeded to create various rights in favour of the 

noteholders. This resulted in a situation in which Costello J. recorded in her judgment facts 

that were in fact untrue. Throughout her judgment the only Proteus entity to which she 

refers is PF (see para. 34) and she proceeds on the basis that it was PF that was the 

beneficial owner of the facilities and associated security (see para. 44). This was an 

inevitable consequence of the manner in which Mr. Ryan's affidavit was phrased. That 

affidavit only makes reference to PF, it makes no reference to PR and yet he avers at para. 

21, in particular, of the letter of December 18 that it:

‘ outlined to the Defendants that, from 15 December 2017, Pepper held the 

benefit of the Defendants' facilities .. and all agreements relating to the 

Facilities, on trust for Proteus.’

11

. In point of fact – for whatever reason – the deponent does not completely record the 

entire of the relevant sentence from this letter of December 18. As I have quoted it above, 

that letter actually states that the facilities were held on trust ‘ for Proteus Funding DAC or 

such other beneficiary of such trust from time to time’. Costello J. correctly quotes the 

letter at para. 46 of her judgment. What she did not know was that at the time that letter 

was written ‘ such other beneficiary’ had actually been identified and a transfer of some 

kind effected in its favour.

12

. All members of this Court fully understand how, in the course of preparing affidavits 

seeking to provide reasonably clear explanations of complex transactions, details can be 

omitted and that judgments are necessarily made as to what it is, or is not, helpful to record 

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on affidavit. Inevitably it may happen that with hindsight those judgments might have been 

made differently. However, in an application of this kind a partial explanation of a 

transaction – however complex it may be – should never be tendered, and the Court should 

be advised properly of all key elements thereof. It is striking that Costello J. went through 

each of the documents with which she had been provided in some detail, unaware that they 

disclosed only part of what occurred on December 15. It is not acceptable that the Court 

should be left with an impression that is false (however irrelevant a party may think the 

impression to be), it is doubly unacceptable that when it becomes apparent that the Court is 

under such a false impression that it is not corrected, and it is most surprising that when 

points of objection of the kind raised by Mr. Macken were presented on affidavit before 

the High Court and this Court, that they were not properly responded to and the features of 

the transaction that had not until then been disclosed, were not explained to the Court.

13

. Pepper may well have adopted the position that it was not proposing to respond to the 

affidavit sworn by Mr. Macken for the purposes of this appeal because he did not have 

liberty to deliver fresh evidence. However, given that Pepper should itself have outlined 

the essential elements of the transaction to the High Court, there can be no objection to Mr. 

Macken ensuring that this Court has a complete picture of the various steps that occurred 

on that date. That being so, it was less than satisfactory that the Court was not provided at 

the first hearing of this matter with any clear explanation by Pepper of the legal effect of 

these various transactions.

14

. In the course of that hearing on January 12 the issue was raised by the Court as to 

whether a Perfection Triggering Event as defined in the prospectus issued in connection 

with the notes issued had occurred. Such an event would, pursuant to the provisions of that 

prospectus, have divested Pepper of any legal interest it then held. Pepper was requested to 

address this matter by affidavit and such an affidavit (sworn by Seamus Dowling, head of 

primary servicing with Pepper) was prepared and an unsworn copy of it was delivered on 

January 18 2021. This was relied upon by Pepper at the adjourned hearing of this appeal 

on January 21. There, Mr. Dowling said the following:

(i) that no such triggering event had occurred and that Pepper was ‘ the Legal Title 

Holder’;

(ii) that Pepper remains the legal title holder and was such as of the date of the 

substitution application;

(iii) that the transfer of beneficial interest to PR ‘ was not in focus at the time of 

seeking to substitute the Plaintiff ... into these proceedings’. That transfer, he says ‘ 

remains immaterial for the purposes of the underlying application the subject of 

this appeal’.

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(iv) He further avers in respect of the failure at the time of the initial application to 

make reference to those parts of the transaction occurring after the filing of the 

Form 36 by Pepper as follows:

‘ I say and believe and am informed that this was not part of a 

deliberate attempt by the Plaintiff to mislead the High Court or any 

party, including the Defendants, as appears to be alleged by Mr. 

Macken’.

(v) He says that the transfer of the beneficial interest to PR ‘ remains immaterial 

for the purposes of the underlying application the subject of this appeal’ suggesting 

that what he described as ‘ the securitisation transaction’ was not ‘ in focus’ at the 

time of the application to substitute Pepper as plaintiff.

(vi) He referred to his own affidavit sworn on 14 November 2018 for the purposes 

of obtaining judgment in which he stated the following:

‘ the interest of Danske in the Facilities, the Charge and the within 

proceedings was transferred in December 2017 to Pepper which holds 

the benefit of same on trust for Proteus Funding DAC’ (para. 4)

(Emphasis added).

‘ the Plaintiff ... holds the benefit of the Facilities and the Charge ... 

on trust for Proteus as beneficiary’ (at para. 21).

Of the latter averment, Mr. Downes said in his affidavit as delivered on January 18 

‘ [t]his error was entirely inadvertent and ... was not done with the intention to 

mislead the Court or any party’.

15

. The averment to which I refer at para. 14(v) fails to comply with the provisions of Order 

40 rule 4 Rules of the Superior Courts, which in interlocutory applications, enables the 

tendering of evidence as to belief ‘ with the grounds thereof’. Mr. Dowling does not 

identify by whom he has been informed of the matters to which he refers.

16

. Mr. Macken replied to this affidavit in further submissions delivered on January 20. He 

said:

(i) That Mr. Dowling's supplemental affidavit should be disregarded;

(ii) That the prospectus exhibited by Mr. Macken in that affidavit was ‘ doctored’;

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(iii) That the appeal should be allowed inter alia because Pepper had ‘ misled’ the 

High Court ‘ by only revealing a small part of the transaction’ and not provided ‘ 

proper, honest and true’ evidence and that in consequence the substitution order 

was obtained ‘ through deceit’;

(iv) The effect of the foregoing was to conceal inter alia the ‘ disappearance of 

Pepper's entitlement to legal title’.

17

. This sequence takes Mr. Macken to three essential points. First, he says that Pepper was 

only ever the Trustee to a Bare Trust, the implication being that this meant it did not have 

a sufficient interest to be joined as plaintiff to the case. This argument is based on a 

misconception. A ‘ bare trust’ or ‘ simple trust’ is a term used to distinguish some 

arrangements in which there has been a division of the legal and beneficial ownership of 

assets, from a ‘ special trust’. While the authorities disclose differences of approach to the 

application of these definitions, the better view is that a bare trustee has no interest in the 

assets of the trust other than that existing by reason of the office and legal title as trustee 

and that such a trustee either never had active duties to perform or had ceased to be subject 

to such duties: ‘ ...express trusts may be ‘bare’ trusts, where trustees are essentially 

passive recipients of the trust property without any management responsibilities’ (Keane, ‘ 

Equity and the Law of Trusts in Ireland’ (3rd Ed. 2017) at para. 10.01). In either case, the 

property effectively awaits transfer to the beneficiaries or at their direction ( Christie v 

Ovington [1875] 1 Ch D 279). In a ‘special trust’ in contrast, the trustee has special duties 

which require him to take an active role in administering the affairs of the trust.

18

. What is relevant for present purposes is that in a bare trust, the trustee retains a legal 

estate in the assets and there is at the very least a prima facie case that, accordingly, it is in 

a position to join to legal proceedings of the kind in issue here relating to those assets (see 

for an example of the implications of such a trust, McCracken J.'s discussion in Bayworld 

Investments v. McMahon O'Brien Downes [2004] IESC 39, [2004] 2 IR 199 at para. 20). 

So, the fact that Pepper is or was a ‘ bare trustee’ is neither here nor there insofar as this 

application is concerned. Even if that is a correct description of its status and relationship 

to the assets in issue in this case, there is at the very least a prima facie case that that is a 

sufficient estate to enable it to proceed to be joined to the case and to proceed to seek the 

relief claimed in this action.

19

. Mr. Macken's second point relates to the proofs for an application of this kind which, he 

says, Pepper has not met. Here, he advances a number of different, but related, 

propositions. For a start, he observes what he suggests are different explanations tendered 

in Mr. Ryan's affidavit of Pepper's status, noticing its description variously as a purchaser, 

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assignee and trustee. He contends that as one part of the scheme, on 15 December 2017 

Pepper transferred any and all of its rights as Trustee for and on behalf of the Bare Trust to 

PR and further says that when PR converted all rights, including beneficial and legal 

interests, to Notes and issued Notes this conversion ‘ nullified and expunged the individual 

rights, including the beneficial and legal rights, to each individual mortgage and charge’. 

He explains this proposition on the basis that the noteholders do not have any rights over 

the individual assets.

20

. Order 15, rule 14 Rules of the Superior Courts provides as follows:

‘ An application to add or strike out or substitute a plaintiff or defendant may 

be made to the Court at any time before trial by motion or at the trial of the 

action in a summary manner.’

21

. Order 17, rule 4 Rules of the Superior Courts is as follows:

‘ Where by reason of death, or any other event occurring after the 

commencement of a cause or matter and causing a change or transmission of 

interest or liability, or by reason of any person interested coming into 

existence after the commencement of the cause or matter, it becomes 

necessary or desirable that any person not already a party should be made a 

party, or that any person already a party should be made a party in another 

capacity, an order that the proceedings shall be carried on between the 

continuing parties, and such new party or parties, may be obtained ex parte 

on application to the Court upon an allegation of such change, or 

transmission of interest or liability, or of such person interested having come 

into existence.’

22

. The applicable test for the substitution of parties after a transmission of interests has 

occurred was explained by Kelly J. (as he then was) in Irish Bank Resolution Corporation 

v Comer [2014] IEHC 671. The Court, he said, must be satisfied that there is prima facie

evidence of this transfer of interests having occurred. The rule, he said, does not need an ‘ 

elaborate argument’; it simply requires sufficient evidence to justify the making of the 

order (at para 36). Kelly J. also discussed the onus of proof in a procedural motion of this 

kind. He held that it would not be in the interests of justice to make ‘ far reaching 

decisions’ concerning the efficacy and validity of the underlying sales agreement in the 

case (at para 43), as this would turn the action into a sort of ‘ mini-trial’, especially given 

that this is a procedural motion which can be made ex parte (at para 44).

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23

. In Irish Bank Resolution Corporation v Morrissey [2014] IEHC 527 [2014] 2 IR 399

Finlay Geoghegan J. agreed that the applicant should be required to adduce sufficient 

prima facie evidence, leaving to the trial the question of whether there was adequate 

evidence to enable the substituted plaintiff to obtain the reliefs sought in the proceedings. 

While the application in issue there had been made at a different stage in the proceedings 

from the point at which it was made in Comer, she pointed out that the entitlement of the 

plaintiff to judgment had not been determined in either case and she applied similar 

principles, making an order for substitution pursuant to Order 15, rule 14. She said (at 

paras. 17 and 18):

‘Insofar as the application is dependent upon facts, I agree that there should 

be put before the Court sufficient prima facie evidence to justify the making of 

the order leaving over to the trial of the action, or in this instance, any 

remaining issues to be tried, the question as to whether the evidence is 

sufficient to enable the substituted plaintiff obtain the reliefs sought in the 

proceedings.

As pointed out by Kelly J. at paras. 43 and 44 of the ex-tempore judgment in 

Comer, that it would not 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... should be made.” Further, he expressed a view, with which I 

agree, that if one were to do this, it would turn the procedural application into 

a sort of mini-trial which is not envisaged by the Rules of Court, and in 

particular, the rules of the Commercial Division of the Court.’

24

. The better view is, I think, that an application of the kind in issue here is more 

appropriately treated as made pursuant to Order 17, rule 4. In Irish Bank Resolution 

Corporation v Lavelle [2015] IEHC 321 Baker J. accepted the submission that the purpose 

and effect of Order 15, rule 14 is to fix the time at which an application to add, strike out 

or substitute a party may be made and said that it is not an empowering provision. She 

further held that Order 17, rule 4 permits an application to be made to add or substitute a 

party who has taken a legal assignment of a loan book from the original plaintiff. On the 

basis that there had been a change or transmission of the interests of the plaintiff in loan 

facilities, she made an order in that case pursuant to Order 17, rule 4 instead of Order 15, 

rule 14. This conclusion was confirmed on appeal by the Court of Appeal in Stapleford 

Finance Ltd v Lavelle [2016] IECA 104.

25

. However, the clarification of the jurisdictional basis for such an application has no impact 

on the test, and central to that test is the meaning and import of the phrase ‘ prima facie 

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evidence’. As McMenamin J. observed in Ulster Bank v. O'Brien [2015] IESC 96 [2015] 2 

IR 656 (at para. 2) as a general principle, a prima facie case will be made out when, on the 

evidence available, it would be open to a tribunal of fact, if no other evidence was given, 

or if that tribunal accepted that evidence even though contradicted in its material facts, to 

enter a verdict for that party (citing O'Toole v. Heavey [1993] ILRM 343 at p. 344). These 

decisions are directed to a prima facie case in contexts and for purposes different from 

those at issue here – the sufficiency of a case to withstand an application for a direction (as 

in O'Toole v. Heavey) or to sustain an application for summary judgment (the issue in 

O'Brien). However, the essential definition is the same.

26

. When applied to the discrete issue presenting itself in this case, what this means is that 

the party seeking to be substituted as plaintiff has produced evidence capable of 

substantiating its claim that it has legal title to the assets in question so to enable it to 

sustain a claim for the relief sought in the action and to enable the trier of fact to determine 

that issue in its favour at hearing. It might be usefully aligned to the test applied in 

deciding whether a claim is sufficiently stateable at law to withstand a dismissal 

application under either Order 19 Rules of the Superior Courts or the inherent jurisdiction 

of the Court. The Court is not concerned to establish whether the plaintiff will prove its 

claim, but whether it has adduced a sufficiently cogent case that it should be permitted to 

do advance it. As Kelly J. put it in IBRC v. Comer ‘ [i]n 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 the applicant. Consistently with the position stated in the authorities 

that it is not the function of the Court in an application of this kind to embark upon a 

detailed inquiry into the facts or to resolve disputed issues of fact, the fact that there is 

other evidence appearing to contradict that evidence adduced and relied upon by the 

applicant does not mean that it has not established a prima facie case: the resolution of 

those conflicts is a matter for the ultimate trier of fact.

27

. As applied to this case, the evidence adduced by Pepper in the grounding affidavit of Mr. 

Ryan laid the foundation for a prima facie case that it had legal title to the assets in 

question. The affidavit sworn by Mr. Dowling unequivocally asserts that this remains the 

position. The fact that Pepper's status was variously, and at points differently, described 

does not affect the issue of whether, as a matter of prima facie proof it held legal title to 

the assets. The documents that have been submitted to the Court by Mr. Macken and 

considered by it do not in any clear or certain way establish that Pepper divested itself of 

its legal interest when the transfer to PR or the issuing of the notes occurred. Both of these 

transactions appear capable of occurring without a divestment by Pepper of that legal 

interest, and Mr. Macken pointed to no provision of the documents supporting his 

assertion that such a divestment had taken place. Insofar as the Court is concerned only 

with whether Pepper has established a prima faciecase, Pepper's position is consistent with 

the assumption in the prospectus that such an interest had been retained and would be 

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divested on the happening of a ‘ Perfection Trigger Event’ which, as I have observed, its 

witness has averred has not occurred.

28

. Of course, I stress, Mr. Macken may be proven correct at the end of the day. It may well 

be that when properly construed the effect of the arrangements put in place to acquire the 

assets from Danske Bank was that Pepper either never acquired a proper legal title or, if it 

did, was subsequently divested of that interest. It is not surprising that the fact that Pepper 

chose to withhold from the Court at the time of the application for substitution the entire 

picture and was clearly intending not to volunteer a complete description of the transaction 

when seeking the relief claimed in the proceedings has fuelled Mr. Macken's suspicion that 

this was what happened. However, there is no version of the law by which the Court could 

assume the function of determining these issues on an application of this kind. Even if 

there was evidence supporting these suggestions, the Court cannot adjudicate upon a 

dispute as whether any such evidence should be preferred to the affidavit evidence 

confirming the retention by Pepper of such a legal interest.

29

. In that regard it is critical to emphasise that the reason the threshold for proof of an 

interest sufficient to sustain an application of this kind is so low, is that the defendant has 

the right to contest in full the existence of such an interest at the trial of the action. The 

position was explained by Barniville J. in the course of his judgment in. in AIB v 

McKeown, [2020] IEHC 155 at para 72:

‘ It seems to me that ... the normal position is that the court decides an 

application to substitute or add a party under O. 17, r. 4 RSC on the basis that 

a prima facie case must be established by the applicant for such an order.

That is the standard to be applied where it would be open to the opposing 

party (normally the defendant to the proceedings) to raise issues in relation to 

the assignment or transfer of the facilities in question at the subsequent 

enforcement stage. However, where that opportunity does not exist, the court 

will adopt the higher standard of the balance of probabilities.’

30

. In this case, having regard to the unusual manner in which information relating to the 

transaction was disclosed and to the contentions which Mr. Macken has signalled he 

proposes to make in relation to Pepper's interest in those assets, it follows that he must 

have a full opportunity to make that case at trial. For my part I find it difficult to see how 

he could do so on these facts without having the entitlement to cross-examine both Mr. 

Ryan and Mr. Dowling, the latter of whom, as he now accepts in his latest affidavit, not 

merely failed to make a complete disclosure to the High Court of the details of the 

transaction in his affidavit grounding the application for substantive relief, but actually 

Case 2:24-cv-00021-JRG Document 54-33 Filed 07/18/24 Page 14 of 16 PageID #: 3553
incorrectly identified the beneficial owner of the assets in that affidavit. Presumably Mr. 

Dowling will now have to swear a corrective affidavit addressing this error before the trial 

of the matter. The High Court will have to adjudicate in these changed circumstances on 

any application Mr. Macken makes to respond on affidavit.

31

. That Pepper persisted before the High Court in objecting to Mr. Macken cross examining 

these deponents is one of a number of surprising features of its approach to the case. It was 

my understanding from counsel's comments at the second day of this appeal (on January 

21) that Pepper now accepts that Mr. Macken is entitled to cross-examine as to issues of 

fact in dispute between the parties. The question of whether Pepper has an interest in the 

assets in question sufficient to allow it claim the relief sought is, it follows from what I 

have said, properly in dispute. It should also be recalled in this context that, these 

proceedings being brought by special summons, Mr Macken is presumptively entitled to 

cross-examine Pepper's deponents. Any departure from that position has to be justified by 

Pepper. In the circumstances set out above, and having regard to the concessions made by 

Pepper, it is difficult to see any basis on which the High Court could be invited to depart 

from the general rule in Order 38, Rule 3.

32

. Mr. Macken's third point is this. As I have noted, he makes the case that the Court should 

remit the matter for the High Court to determine the application afresh based on the new 

information he has adduced before it. There are two related bases on which the Court 

might do this. One is that Pepper, not having disclosed all relevant information to the High 

Court at the time of the original application, should be compelled to re-present the 

application so that the High Court can determine the issue of substitution de novo based on 

all relevant information. The second is that the High Court order should be vacated by 

way, effectively, of sanction on Pepper for proceeding with the application on the basis of 

that partial information. In advancing this argument, Mr. Macken stresses that the 

proceedings concern the family home occupied by him, the second defendant and their 

daughter.

33

. I have given careful consideration to whether the Court should determine the application 

in this way. I have come to the view that in the circumstances of this application, it is not 

appropriate to adopt this course of action. The terminus of that course of action is a further 

hearing in the High Court on the substitution application in which Mr. Macken seeks to 

conduct an exhaustive and detailed analysis of the transactions by which Pepper alleges it 

acquired the interest on foot of which it seeks to proceed with the case. This is precisely 

what the authorities make clear should not occur in such an application. While Mr. 

Macken has identified many routes by which he contends that in fact Pepper does not have 

a sufficient interest to maintain this claim, he has identified none by reference to which it 

Case 2:24-cv-00021-JRG Document 54-33 Filed 07/18/24 Page 15 of 16 PageID #: 3554
could be determined that it did not have a prima facie basis for claiming that it had such an 

interest. The documentation before the Court, the averments Pepper have made and the 

fact that at some point Pepper had vested in it a legal interest in the assets, combine to 

present a stateable basis on which the High Court could reach the conclusion that Pepper 

enjoys sufficient interest in the assets the subject of these proceedings, to maintain them.

34

. In these circumstances, and having regard to the fact that Mr. Macken will have the 

entitlement to raise all of these issues at trial, remitting the matter in this way and for this 

purpose would involve a use of Court time and resources which I do not believe could be 

justified. I would approach the matter differently if I was satisfied that either (i) the 

information was withheld from the Court as part of a deliberate stratagem to ensure that 

the subsequent parts of the transaction were concealed from it, and/or (ii) that the 

production of that information at the time of the original substitution application might 

have resulted in a different outcome. Having regard to the evidence that has been tendered 

by Pepper on affidavit I could not reach the first conclusion without oral evidence and 

cross examination and having regard to the conclusion I have reached above, and taking 

into account the relatively low threshold that Pepper has to surmount at this stage, I am not 

persuaded of the second. While I am acutely conscious in reaching this conclusion of the 

critical importance to Mr. Macken and his family of the issues presented in these 

proceedings those interests are not prejudiced by allowing the High Court to hear and 

determine Pepper's claim. He will, as I have stressed, have a right to agitate in full at the 

hearing of this matter his contention that Pepper has no entitlement to the relief claimed.

35

. In conclusion, this appeal should be dismissed. However, the manner in which 

information relating to these transactions was disclosed to the High Court was most 

unsatisfactory, and it was understandable that Mr. Macken sought to pursue an appeal 

based upon the information he had obtained which was not, but ought to have been, put 

before the High Court Judge. For this reason, and as a mark of its disapproval of the 

manner in which this application and the initial hearing of this appeal were addressed by 

Pepper, it is my view that an Order should be made (i) discharging the order for costs 

made against Mr. Macken in the High Court and (ii) ordering that Pepper discharge Mr. 

Macken's costs and expenses incurred in connection with this appeal.

36

. Haughton J. and Collins J. are in agreement with this judgment and the order I propose.

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