The High Court has allowed Patrick Kearney and Kilmona Holdings Limited to defer providing further details of their fraud claim against stockbroker J&E Davy trading as Davy until after discovery or interrogatories. The ruling concerns a pre-trial application about particulars; it does not decide whether the defendants committed fraud.
Mr Justice Twomey delivered the judgment on 23 February 2022 in the Commercial division. Davy had asked the court to order Mr Kearney to provide fuller replies to particulars 34 to 52 of its notice for particulars, under Order 19, Rule 7 of the Rules of the Superior Courts. Davy said it needed the information to defend the action. It had already filed a defence, while maintaining that the claim was insufficiently particularised.
The proceedings concern the plaintiffs’ sale of Anglo Irish Bank bonds through Davy in November 2014. The bonds were bought for a net €5.3 million by the O’Connell Partnership, which the judgment describes as 16 Davy employees and senior managers. The plaintiffs settled earlier proceedings against Davy in February 2016 for €1,125,000, with each side bearing its own costs.
After the Central Bank of Ireland fined Davy €4.13 million in March 2021 for regulatory breaches, Mr Kearney brought the current proceedings against Davy and the Partnership. He alleges that Davy and individuals associated with it concealed the purchaser’s identity and the Partnership’s connection to Davy. He seeks, among other relief, to set aside the earlier settlement, damages over an alleged undervalue sale, and an account of the Partnership’s alleged profit. Davy disputes the claims, including whether it owed a fiduciary duty, and says the plaintiffs knew the purchaser was made up of Davy employees.
The judge said fraud plaintiffs may have limited knowledge of alleged concealed wrongdoing before discovery, but must plead enough to give defendants a reasonable picture of the case and establish a prima facie case. He concluded that the pleadings set out the people, alleged statements, dates and claimed consequences. The Central Bank report also contained findings about misleading actions concerning the transaction and a potential conflict of interest. The court did not decide whether the report would be admissible at trial.
Taking the pleadings and report into account for this application, the judge found that the allegations went beyond bare assertions and established a prima facie case, while stressing that this fell well short of proving fraud on the balance of probabilities. He permitted further particulars to be deferred until after discovery or interrogatories that may be agreed or directed.
The court directed the parties to try to agree outstanding matters and provide any draft agreed order to the Registrar. The case was provisionally listed for mention one week after judgment at 10.45am if final orders remained necessary.