The High Court refused to dismiss Kevin Anderson’s claim against Cloosh Valley Wind Farm Ltd, finding there was a sufficient basis to examine whether corporate transactions affected security agreed for his loan. It ordered that proceeds from any sale of shares in the company must not be paid, distributed or disposed of without notice to Anderson and his consent, pending the hearing of the action.
The ruling does not decide whether Anderson has a valid lien over the shares or whether the transactions were unlawful. The court said those matters remained open to examination at trial. It also gave counsel an opportunity to agree the form of the restraining order.
Anderson lent Can$1.5 million to Finavera Renewables Incorporated in 2010. The written loan agreement provided for security in the form of a lien over 110 shares in Cloosh Valley Wind Farm Ltd. The company was later renamed Finavera Renewables Galway Ltd, while Galway West Wind Farm Ltd became a company with the same Cloosh Valley name. The judgment described uncertainty about how the shares and wind farm interests moved between the companies.
Anderson claimed that the loan remained unpaid and that the shareholding in the defendant company was held subject to a constructive trust in his favour. The third defendant sought dismissal, arguing, among other things, that it did not exist when the loan security was agreed, that the borrower did not own its shares, and that the pledge had not been executed and could not take effect without consent under the shareholder arrangements.
The court noted that Anderson did not allege wrongdoing by the third defendant, but had joined it to protect the security he claimed. It concluded that he might establish an entitlement to a lien and that dismissing the claim at this stage would risk depriving him of agreed security without examining how it was allegedly lost. The transactions could be challenged as to their legal and contractual validity; the court did not find them unlawful.
The judge also found it arguable that the transactions could give rise to a constructive trust over the shares, and that there was sufficient ground to explore whether SSE Renewables Ireland Ltd was, or ought to have been, on notice of Anderson’s interest. The motion to dismiss was dismissed, and the court granted interlocutory protection limited to proceeds from a sale of the third defendant’s shares.