The Court of Appeal has upheld an order removing a disputed clause from a 2009 share pledge between Dómhnal Slattery and Friends First Life Assurance Company Limited. It also overturned the High Court’s €100,000 damages award for breach of confidence.
The dispute arose from a $14.05 million loan Friends First made to a Claret Capital company involved in acquiring the St Regis Hotel in Washington, D.C. Slattery and other Claret directors had guaranteed the loan. Friends First later sought a pledge of Slattery’s JetBird shares as additional security for his obligations under that guarantee.
A clause in the 20 July 2009 Deed of Pledge limited Slattery’s liability to the value recovered from the pledged assets and barred recourse to his other assets. The High Court found that Friends First and its solicitors had not noticed the clause before signing, and that Slattery and Claret’s general counsel, Leon Atkins, knew of the mistake. It ordered the deed rectified by removing the clause. The High Court separately awarded Slattery €100,000 for disclosure of information about his conduct to a third party.
Slattery appealed the rectification order, arguing that Friends First had not proved the necessary mistake, his knowledge of it or sharp practice. The Court of Appeal held that the evidence supported the High Court’s findings. It found the clause was introduced after Slattery had approved a draft for a pledge intended to provide additional security, and that Atkins removed the draft’s redlining when sending the changed version. The court concluded that Atkins and Slattery knew Friends First had not noticed the change and that the circumstances amounted to sharp practice. It dismissed Slattery’s appeal, leaving the rectification order in place.
Friends First appealed the damages award. The High Court had found that a senior executive of its parent company disclosed information about Slattery’s conduct to a representative of CVC Capital Partners, a shareholder in Slattery’s employer, intending to damage his business reputation or put pressure on him. The Court of Appeal accepted those findings but held that the information concerned Slattery’s conduct, was not derived from protected account records and did not fall within the confidentiality duty relied on. It allowed Friends First’s appeal and set aside the €100,000 award. The court did not decide whether aggravated damages could be awarded without proven compensatory loss.