Developer told he is 'personally liable' for €10m
DEVELOPER Brian Cunningham is personally liable for an estimated €10m in legal costs awarded against his companies arising from a marathon legal battle with the First Active bank, a judge ruled yesterday.
Legal sources said Mr Justice Frank Clarke's decision has significant implications for similar cases.
The judge ruled that Mr Cunningham should be held personally liable for the costs orders against the Cunningham group of companies because he had funded and directed the relevant proceedings.
The heavily insolvent companies could not have paid the costs and, had the cases succeeded, Mr Cunningham and his wife would have been the main beneficiaries, the judge said.
The conduct of the proceedings by the Cunningham group had added significantly to the legal costs and the fact the court had dismissed their central claim of fraud by direction was also a relevant factor in his decision, the judge said.
Another relevant factor was that Mr Cunningham was told by First Active, now part of Ulster Bank, at an early stage that it was considering applying to have him made personally liable, the judge added.
The judge's decision relates to costs orders made against companies in the Cunningham group in favour of First Active in certain cases in which only the companies, not Mr Cunningham, were parties.
Various costs orders have already been made against Mr Cunningham in cases where he was a party or had provided a guarantee.
The judge also yesterday directed that Mr Cunningham must attend court to be cross-examined by lawyers for First Active about the extent of his income, assets and liabilities and should produce relevant documents to First Active prior to that cross-examination.
The Cunningham group action was initiated in 2003 and involved a claim for more than €150m against First Active arising from allegations concerning its dealings with the group.
The main proceedings ran for 67 days and also involved several linked cases and some 100 pre-trial applications.
In late 2008, the judge dismissed the central claim of alleged fraud by First Active in its dealings with the group. He ruled the group had failed to establish a prima facie case against the bank or the receiver appointed to the group in 2003 as was required to allow the trial on alleged fraud to continue.
The companies had alleged loans totalling €30m were issued between 1999 and 2002 to the Cunningham group for three projects, including a site in Galway and a revamp of Finglas town centre in Dublin.
The group was put into receivership after defaulting on loans but Mr Cunningham claimed the debt could have been brought under control if flagship construction projects were completed.
Mr Cunningham claimed First Active acted as a shadow director of the Cunningham group, extinguished his power over his companies and conspired to damage his personal interests and those of the group.
After the rulings in its favour, First Active had asked the court to make Mr Cunningham personally liable for certain costs awarded against the companies.
Mr Cunningham is set to appeal and is said to be "astonished" at the ruling handed down. His lawyers have confirmed that he will appeal the judgment.