Monday 11 December 2017

IBRC fails to get court orders forcing Quinn family to provide security of costs

Sean Quinn
Sean Quinn

THE former Anglo Irish Bank has failed in its bid to get court orders requiring the family of bankrupt businessman Sean Quinn to provide security for costs in relation to a legal challenge.

The bank sought security for the cost of getting legal discovery of documents for the family's action aimed at avoiding liability for loans of some €2.34 billion.

The bank, now Irish Bank Resolution Corporation, had argued the costs of making the "vast" discovery sought by the family could be as high as €1m while the costs of discovery to which the bank had agreed would be about €600,000.

Mr Justice Michael Moriarty ruled today IBRC was not entitled to an order requiring Mrs Patricia Quinn and her five children provide security for costs of discovery of documents for their action alleging they have no liability for the €2.34bn loans because Anglo had engaged in illegal conduct to prop up its share price.

The judge said he was providing an outline of his findings only and a full written judgment would be delivered next week. He said his refusal was based on the relevant legislation and jurisprudence, including a recent Supreme Court judgment addressing the principles governing security for costs applications.

Also today, the judge made various rulings as to what documents must be discovered by the sides for the family's action, a date for which has yet to be set.

The sides had reached agreement on most of the categories of documents to be discovered but there were a small number of issues on which they disagreed, some of which related to the time periods over which discovery will extend.

Among the rulings made was one requiring the bank to discover all relevant documents circulated to the board of Anglo concerning its financial difficulties in the period from September 2007 to December 31, 2008, plus minutes of board meetings over that period. The judge also directed the bank to discover all versions of the O'Connor report into matters at Anglo.

In opposing the bank's application for security for costs during the hearing last April, Rossa Fanning, for the family, argued the bank was trying to "bleed" the family dry to prevent them exposing the "biggest corporate scandal in the history of the State".

Even the dogs in the street knew Anglo had engaged in "grotesquely illegal" conduct advancing loans of more than €2.34 billion to prop up its shares and deceiving its shareholders about their true value, counsel argued.

IBRC's approach to the litigation by the Quinns was "bizarre" in circumstances where, in other litigation, it had "vituperatively derided" the conduct of certain former Anglo executives, Mr Fanning added.

The judge was also told some former senior executives of Anglo, including former Chairman Sean Fitzpatrick, former CEO David Drumm and former head of lending Pat Whelan had refused to answer inquiries from the new management of the bank about dealings with the Quinns.

Brian Murray SC, for IBRC, argued the Quinns, while opposing security for costs, had "tellingly" not said they could not pay the money and were able to lodge some €500,000 in the courts in Cyprus last year when seeking injunctions against the bank.

Based on the bank's experiences with the family in litigation over the past year, the bank would have to chase the Quinn assets "round the globe" and the discovery costs should be "ring-fenced" and available to the bank, counsel urged.

The application should also be seen in the context of this unusual case where there was no dispute loans of €2.34bn were made to companies of the children, he said. While the family claimed those loans were illegally made to prop up the bank's share price, they had accepted another €455m of loans were not tainted by illegality.

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