The High Court has allowed Permanent TSB Group Holdings plc and Permanent TSB plc a limited role in proceedings brought by shareholders challenging the State’s 2011 recapitalisation of the bank.
The case arose after the Minister for Finance decided in 2011 to inject €2.7 billion into what was then Irish Life and Permanent, despite shareholders voting about 60:40 against the intervention at an extraordinary general meeting on 20 July 2011. A further €1.3 billion was injected in March 2012, bringing the total referred to in the judgment to €4 billion.
Gerard Dowling, Padraig McManus, Piotr Skoczylas and Scotchstone Capital Fund Limited began proceedings on 3 August 2011 seeking to set aside the July direction order under section 11 of the Credit Institutions (Stabilisation) Act 2010. They claimed, among other matters, that alternative funding was available and that the intervention had reduced the value of their shares from about €0.33 each to less than one cent.
Mr Justice Charleton made no finding on those substantive allegations.
On the first procedural issue, the court held that Permanent TSB and its holding company did not need a general right to participate in defending the Minister’s original decision. However, their involvement would be necessary if the court later had to consider replacing or varying the direction order. They were therefore joined as notice parties for that limited purpose only.
The applicants also sought to amend their case to challenge provisions of the 2010 Act as unconstitutional and incompatible with the European Convention on Human Rights. The court ruled that section 11 proceedings were too narrowly defined for that purpose. Any constitutional challenge had to be brought separately by plenary action.
Finally, the court directed that these proceedings and a related challenge brought by Horizon Growth Fund NV should travel together, with overlapping issues heard together where practical. Any new plenary constitutional proceedings were also to be coordinated with them.