The High Court declined to dismiss proceedings brought by Salthill Properties Limited and Brian Cunningham over alleged secret profits connected with the sale and refinancing of the Bailey Point development in Galway. The court stressed that this was a decision about whether the case could continue at its current stage, not a finding that the alleged wrongdoing occurred.
The claims concern arrangements made in April 2008 between First Active and Bernard Duffy. Salthill and Cunningham allege that First Active agreed to receive shares of profits from sales of residential and commercial parts of Bailey Point without crediting those sums to Salthill. They also allege that the arrangements changed the commercial sale terms to Duffy’s advantage. The banks deny wrongdoing; Royal Bank of Scotland said it was not directly involved in the negotiations.
The banks applied to have the proceedings dismissed as an abuse of process or as bound to fail. They relied in part on earlier rulings in related proceedings, including a refusal to permit amendments raising claims about the 2008 arrangements. The judge distinguished those earlier decisions from the present application: the amendment had been refused because the main trial was already well advanced and further discovery was not then appropriate, rather than by a definitive ruling that the claims could never succeed.
The judge said the documents then available did not provide an evidential basis for the claims. However, he could not rule out that further material might emerge through discovery and other procedures. He also declined to dismiss the case against RBS, despite expressing considerable reservations about the evidence of its involvement, because further evidence might clarify whether it had a sufficient connection to the alleged arrangements.
The proceedings may therefore continue, including through procedural steps permitted by the rules. The court made no finding that a secret profit, transfer pricing, breach of duty or wrongdoing by either bank had been established. It also did not decide the legal questions about what remedies might be available if a secret profit were proved.
The judge warned that the evidence then available would not be sufficient to establish a prima facie case at trial. He said the plaintiffs might have difficulty surviving an application to dismiss at the opening of a trial if discovery and witness statements did not materially change the picture.