The High Court has ordered Waterford Credit Union and stockbroking firm J & E Davy to disclose specified documents in their dispute over €5.39 million invested in four bank bonds. The order concerns evidence for the ongoing proceedings; it does not decide whether Davy was liable or whether the credit union is entitled to compensation.
The judgment, delivered by Mr Justice Keane on 13 January 2017, dealt with cross-motions for discovery under the Rules of the Superior Courts. The credit union alleges that it retained Davy as an investment adviser and that the bonds did not meet agreed conditions, including capital guarantees and definite maturity dates. It also claims failures to explain the risks and an undisclosed profit on the transactions. Davy disputes most of those claims and denies that it was retained as the credit union’s investment adviser. It says the credit union relied on other sources of advice, including Dolmen Stockbrokers and its own board and investment committee.
The four investments were made between January 2005 and August 2006: €1,502,250 in a Nordea Bank AB bond, €1 million in a Jyske Bank bond, €1,910,125 in a Barclays Bank Step-Up Perpetual bond and €981,456 in an AIB Step-Up Perpetual bond. The credit union seeks damages or an indemnity for the total invested. Those remain pleaded claims, not findings made in this discovery judgment.
The court ordered Davy to disclose two Irish Stock Exchange reports, issued in June 2007 and February 2008, concerning an investigation into its conduct in selling investment bonds to credit unions. The judge found the reports could be relevant to the pleaded dispute over disclosure of bond features and risks. He concluded that the confidentiality interest did not outweigh the public interest in disclosure for the fair resolution of the case.
The judgment also addressed the credit union’s solicitors’ admission that they had used information obtained through discovery in separate proceedings, contrary to the implied undertaking governing that material. The judge said the credit union itself had not given or breached that undertaking. He nevertheless ordered discovery on the basis of the public Irish Stock Exchange statement, disregarding the improperly used information. The judgment left open whether the breach might need consideration when ancillary orders are addressed.
Davy must also disclose documents relating to its alleged disclosure that it acted as principal and earned a sum on the bond sales, including records of meetings in August 2006 and March 2008. The court said the disputed issue was whether Davy had told the credit union about its role and earnings, not whether it had acted as principal, which it admitted.
The credit union must disclose documents about the alleged contract and negotiations, Dolmen’s appointment, and communications involving its investment committee, advisers and board concerning the investments. The judge also recorded that the credit union abandoned two requested categories of documents. The court was to hear the parties later on proposed deponents, the time allowed for discovery and other ancillary matters.