The Court of Appeal dismissed an appeal by six Quinn family members seeking to add a new argument that share pledges and personal guarantees were unenforceable even if the underlying loans were enforceable. It also partly allowed an appeal by Irish Bank Resolution Corporation Limited (in special liquidation) and Kieran Wallace, striking out pleaded claims that statutory illegality in the lending made the securities unenforceable. The court left in place the claim of negligent infliction of economic harm.
The judgment, delivered by Ms Justice Irvine on 29 January 2016, concerned two appeals from High Court orders made on 21 May 2015. It did not decide the underlying claims at trial.
The plaintiffs say they are the ultimate beneficial owners of the Quinn Group. Their 2011 action challenges six share charges and six personal guarantees given to Anglo Irish Bank as security for lending. Among other claims, they allege undue influence, unconscionable bargains and breaches of duties by the bank. These remain allegations in the proceedings.
A preliminary issue was tried on whether the plaintiffs could rely on alleged breaches of the Market Abuse Regulations or section 60 of the Companies Act 1963 to support their claims that the securities were invalid or unenforceable. The Supreme Court ruled in March 2015 that, on the case as pleaded, they could not rely on those alleged breaches for that purpose.
After that ruling, the plaintiffs sought to amend their statement of claim to argue that the securities could be unenforceable on a separate basis, even if the loans themselves were enforceable. The High Court refused the amendment. The Court of Appeal upheld that refusal, finding the proposed claim had not previously been pleaded and that the plaintiffs’ delay was not adequately explained. It also agreed the application could be refused under the principles in Henderson v Henderson: allowing it would reopen issues after the preliminary ruling and require new factual inquiries, including into what the plaintiffs knew about the transactions.
In the bank’s appeal, the Court of Appeal overturned the High Court’s refusal to strike out paragraphs 103 to 110. It held those paragraphs pleaded alleged breaches of the regulations and Companies Act as grounds for saying the securities could not be enforced, and did not support the plaintiffs’ other causes of action. The ruling did not prevent evidence about the purpose of the transactions or the bank’s alleged motives being used as background to those other claims.
The court declined to remove the claim of negligent infliction of economic harm, agreeing that it was sufficiently supported by the statement of claim and particulars. Its formal conclusion was to dismiss the first appeal and allow the second appeal to the extent described in its judgment.