The High Court struck out proceedings brought by property investor Thomas Kearney against K.B.C. Bank Ireland plc and its then chief executive, John Reynolds, after finding the claims frivolous and vexatious and bound to fail.
In a judgment delivered on 16 May 2014, Mr Justice Birmingham granted the defendants’ application under Order 19, rule 28 of the Rules of the Superior Courts and the court’s inherent jurisdiction. The application sought to strike out the proceedings because the pleadings disclosed no reasonable cause of action. The court stressed that this power should not be used lightly and that proceedings capable of being saved by amendment should not be dismissed at this stage. It nevertheless concluded that the claims here could not proceed.
The dispute arose from six loans advanced by the bank to Kearney, secured against investment properties in Ireland and two apartments in Birmingham. Receivers had been appointed over the secured properties in 2012 after demanded sums were not repaid. Kearney alleged, among other things, that the bank had not proved binding loan contracts, had created currency illegally, had lost the right to enforce loans through securitisation, and had wrongfully appointed receivers. He also alleged fraud and misrepresentation concerning a Birmingham property development, and made related claims against Reynolds.
The judge found that signed and witnessed loan offers, mortgages and account records established the contractual basis for the six loans. He rejected the currency-creation argument, saying that Kearney had drawn down the funds and assumed responsibility to repay them, regardless of their source.
Only two loans had been securitised. The court held that the relevant loan and mortgage terms allowed transfers without further consent or notice, and that the bank retained legal title and the right to enforce the loans and security. Even if the bank had breached the voluntary Central Bank asset securitisation document, the judge said, that would not invalidate the loan agreements or create a right to avoid repayment.
The court also rejected the argument that the repeal of earlier legislation invalidated the receivers’ appointments or wiped out repayment obligations. It held that any alleged bank insolvency would not affect the validity or enforceability of the loans.
On the Birmingham development claim, the judge assumed in Kearney’s favour that the bank had funded the development, while noting the evidence was unsatisfactory and the bank denied doing so. Even on that assumption, he found that the alleged funding did not establish a cause of action. He also found the serious fraud and other allegations were not properly particularised and were made without the responsibility required of pleadings.
The court therefore struck out the proceedings. The judgment records no separate damages award or other order.