The High Court has refused the Central Bank of Ireland’s application to strike out a third-party claim brought by former Irish Nationwide Building Society director John S. Purcell in litigation over the society’s management and lending.
In a judgment delivered on 24 October 2014, Mr Justice Cregan said several claims against the Central Bank were stateable and not bound to fail. The ruling addressed only whether those claims could proceed; it did not determine whether the allegations were true or establish liability for INBS’s losses.
Irish Bank Resolution Corporation and Irish Nationwide Building Society are suing former directors, alleging breaches of duty in the society’s management, including excessive delegation of powers to its chief executive and inadequate oversight of lending. The plaintiffs’ allegations are disputed. Purcell denied wrongdoing and said the Central Bank had approved or accepted the delegation. The Central Bank disputed his account, though for the strike-out application it did not contest his factual account of its involvement as presented in his affidavit.
Purcell’s third-party claim said the Central Bank should indemnify or contribute to any liability he might face, alleging negligence, breach of duty and misfeasance in public office. The judgment records that these remained allegations, not findings after trial.
The judge concluded that there was a stateable case that the Central Bank owed statutory duties to INBS, and that it could face claims for negligent breach of statutory duty and under the common-law tort of negligence. He also found stateable claims that the Bank owed directors a duty of care, including claims for negligent breach of statutory duty and negligence. But he held that directors had no stateable claim for breach of statutory duty without negligence.
The court also ruled that the misfeasance claim was sufficiently stateable to remain in the case. It held that the Central Bank’s statutory immunity from damages did not, at this stage, prevent it from being joined as a third party.
There was a limit to the ruling on the director’s personal claims. The judge held that a third-party claim for indemnity or contribution could not include a separate, stand-alone claim for damages owed directly by the Central Bank to Purcell. Such a claim would have to be brought in separate proceedings.
The application to strike out the third-party statement of claim was dismissed. The judgment did not decide whether Purcell or the Central Bank was ultimately responsible for any loss.