The High Court struck out proceedings brought by Elektron Holdings Limited and Ann Keane challenging the appointment of receiver Paul McCann over Aberdeen Lodge, a hotel in Sandymount. Mr Justice Twomey ruled on 25 July 2016 that the claims could and should have been raised in earlier proceedings.
The July 2015 case sought to challenge the receiver’s appointment on two grounds: that guarantees Elektron gave for loans to Crossplan Investments Limited were void under section 31 of the Companies Act 1990, and that a later sale of the loans to Kenmare Property Finance Limited affected the appointment’s validity. The plaintiffs also sought an injunction to prevent the receiver taking possession while the new case proceeded.
The receiver’s appointment had been confirmed in earlier High Court proceedings, and a possession order was granted in December 2013. The Supreme Court dismissed appeals against those decisions on 11 March 2016 and upheld the possession order, subject to a stay until 6 May 2016.
On the guarantees claim, the High Court noted that Elektron had issued and then withdrawn proceedings in November 2012 seeking relief that included a challenge to security for Crossplan’s liabilities. The court found that the issue was already live before the earlier High Court hearing and could have been raised in the section 316 and possession proceedings, or in the appeal. It rejected the argument that the claim could not have been made until Elektron passed a board resolution purporting to avoid the guarantees in September 2014.
The loan sale occurred in March 2014, after the earlier High Court hearing but while the appeal was pending. The court held that the plaintiffs could have brought the development to the Supreme Court’s attention under the appeal rules, which allow further evidence about events occurring after the decision under appeal.
The judge concluded that bringing the claims in a later case amounted to an abuse of process and struck out the July 2015 proceedings. The ruling concerned whether the claims could be litigated in this later case; it did not decide the substantive merits of whether the guarantees were void or whether the loan sale affected the receiver’s appointment. The judgment therefore did not grant the plaintiffs’ requested injunction.