The Court of Appeal has dismissed Garrett Kelleher’s appeal against an order preventing him from pursuing a damages counterclaim in National Asset Loan Management Limited’s claim under guarantees worth €46.8 million. The case will proceed to a plenary hearing on Kelleher’s estoppel defence alone.
In a judgment delivered on 15 April 2016, Ms Justice Finlay Geoghegan said the court had jurisdiction under Order 37 of the Rules of the Superior Courts to restrict both the defences and counterclaims pursued after a summary judgment application. The judgment was joined by Peart J. and Irvine J.
NAMA sought €46,834,472.35 under guarantees Kelleher had given to Irish Bank Resolution Corporation Limited for facilities advanced to companies of which he was the ultimate beneficiary. Kelleher did not dispute the guarantees or the amounts due. He argued that NAMA was prevented from enforcing the guarantees because, he said, it had represented that it would not do so if he cooperated. The High Court found that this estoppel defence met the threshold for an arguable defence.
Kelleher also sought to rely on a counterclaim concerning NAMA’s sale of a loan connected to the Chicago Spire development. He alleged that the loan was sold for $35 million despite having a face value above $90 million, and that the site could have realised $350 million if properly handled. He said the alleged loss prevented companies in the “Shelbourne Connection” and himself from discharging debts and guarantees. These were allegations, not findings by the Court of Appeal.
The High Court found that the counterclaim did not meet the arguability threshold and concluded that the Spire loan sale could not have generated enough to clear the liabilities. It remitted the case for a plenary hearing on estoppel. When asked to clarify whether the counterclaim could still be pleaded, the High Court said only estoppel could be raised.
The Court of Appeal held that the High Court could impose that restriction as a condition of leave to defend. It also decided that the court could bar the counterclaim itself where appropriate. On this case, the counterclaim raised legal and factual issues beyond those in the estoppel defence and would likely add substantially to the hearing’s time and cost. Given that the guarantees and amounts were undisputed, the court concluded that the claim should be determined on the estoppel issue alone.
The appeal was dismissed. The Court of Appeal did not determine whether the High Court’s ruling on duties under the National Asset Management Agency Act 2009 was res judicata; it said that question had been referred to but was not argued and need not be decided for the appeal.