Gerard Dowling and Others v Minister for Finance and Others

 
FREE EXCERPT

[2014] IEHC 595

THE HIGH COURT

Record No. 9908P/2014
Dowling & Ors v Min for Finance & Permanent TSB
No Redaction Needed
IN THE MATTER OF APPLICATIONS FOR INJUNCTIONS
Between/
GERARD DOWLING, PADRAIG McMANUS AND PIOTR SKOCZYLAS
Plaintiffs

AND

THE MINISTER FOR FINANCE
Defendant

AND

(By order of the Court)
PERMANENT TSB (GROUP HOLDINGS) PLC and PERMANENT TSB
Notice Parties

Finance - Preliminary ruling - Court of Justice of the European Union - Injunctive relief sought - Okunade v The Minister for Justice Equality and Law Reform[2012] 3 IR 152 applied - Shareholding rights - Recapitalisation - Effective remedy - Adequacy of damages - Where the greatest risk of injustice lay-Public interest

2014/9908P - O'Malley - High - 18/12/2014 - 2014 IEHC 595

Facts A direction order was made in the High Court in July 2011. The order brought about a situation whereby the Minister owned 99.2% of the shares in the company, in return for an investment by him of €2.3 billion, a "standby" investment of €1.3 billion and €400 million in contingent capital notes. In the substantive proceedings, the plaintiffs sought to have the direction order set aside. The plaintiffs had at all times made it clear to the court, the defendant and the notice parties that they might wish to seek injunctive relief pending the CJEU ruling and a hearing date was reserved by the court for that purpose. By virtue of a direction order made by the High Court in March 2012 on foot of an application by the Minister, the bank was directed to sell the Irish Life insurance company and its subsidiaries to the Minister for the sum of €1.3 billion. An application by the plaintiffs to set aside that direction order was unsuccessful and the sale was completed. Subsequently, the plaintiffs sought an injunction to prevent the Minister from selling the Irish Life group pending the outcome of various other proceedings including the substantive application to set aside the July 2011 direction order. Much of their argument concentrated on issues of European Union law regarding the rights of shareholders. In considering whether to grant injunctive relief the Supreme Court applied the test set out in Okunade v The Minister for Justice Equality and Law Reform[2012] 3 IR 152. The plaintiffs submitted that Okunade did not sufficiently protect their interests. Having considered its own jurisprudence and that of the ECJ, the Supreme Court determined that the proper approach was to apply Okunade, having regard to the question of whether it could be said that a party might be deprived of an effective remedy. The court considered the question of adequacy of damages. In conclusion, the Court found that there was indeed a risk of injustice to the plaintiffs, in that, assuming that they were ultimately successful; it might not prove possible for a court to reverse the sale of Irish Life.

Held The court did not accept that the only basis upon which the defendant could succeed before the CJEU was if the court retrospectively altered the jurisprudence on the Second Company Law Directive. In considering where the greatest risk of injustice lay, the court was obliged to "give appropriate weight to the orderly implementation of measures which were prima facie valid". In this instance, the judge said the "measure" was the direction order, which was valid unless set aside or varied. The judge said there was a real and serious risk, if the Minister was prevented from selling his shares, that the bank"s efforts to meet the regulatory requirement would fail. This would leave it open to sanctions, including a fine, suspension or revocation of its banking licence. The judge did not find, on the evidence presented, that there was a serious risk that the bank would go into resolution but said the consequences of such sanctions would certainly make it considerably more difficult to access funding and attract investment and thereby cause significant damage.

Having regard to the very large amount of public money invested in the bank, the judge considered that it would not be in the public interest that the Minister be restrained from seeking to utilise his shareholding in the manner best calculated to ensure the required recapitalisation. The judge held that damages were available to the plaintiffs in the event of a successful outcome should they wish to amend their proceedings to claim them and that damages would constitute an adequate remedy.

-Reliefs sought refused

1

Judgment of Ms Justice Iseult O'Malley delivered the 18th of December, 2014

Introduction
2

1. These proceedings are, in effect, an offshoot of the proceedings between the same parties in Dowling and ors. v. The Minister for Finance (Record No. 2011 239 MCA) in which this court delivered a written judgment on the 15 th August, 2014 ( [2014] IEHC 418 - hereafter "the earlier judgment"). The decision of the court at that time was to request a preliminary ruling from the Court of Justice of the European Union on two questions. The plaintiffs now seek injunctive relief pending the receipt of the ruling.

3

2. The substantive case concerns a direction order made under the provisions of the Credit Institutions (Stabilisation) Act ("the Act"), in respect of Irish Life and Permanent Group Holdings (now Permanent TSB (Group Holdings), hereafter "the company") and Irish Life and Permanent (now Permanent TSB, hereafter "the bank"). The company was and is the sole shareholder in the bank. The bank was the owner of the Irish Life group. The plaintiffs are shareholders in the company.

4

3. The direction order was made in July 2011 by the High Court, on foot of an application by the Minister for Finance. In brief, the order brought about a situation where the defendant now owns 99.2% of the shares in the company, in return for an investment by him of €2.3 billion, a "standby" investment of €1.3 billion and €400 million in contingent capital notes.

5

4. In the substantive proceedings, the plaintiffs are seeking to have the direction order set aside. The evidence, submissions, legal rulings and findings of fact upon which the decision to request the ruling from the CJEU was based are set out in the earlier judgment and will not be repeated here save where necessary - however, it should be noted that a significant part of the argument concerned the provisions of the Second Company Law Directive and a number of European Court of Justice rulings thereon.

6

5. After the delivery of the earlier judgment, the matter was put back for submissions on the terms of the reference to be made. Those were heard on the 30 thOctober, 2014 and the court handed down its decision, and the reference, on the 12 th November, 2014. The plaintiffs had at all times made it clear to the court, the defendant and the notice parties that they might wish to seek injunctive relief pending the CJEU ruling and a hearing date was reserved by the court for that purpose. The plaintiffs (with the exception of Scotchstone Capital, a company owned by Mr. Skoczylas) then issued the within proceedings. The injunction application was heard on the 9 th and 10 th December, 2014.

The reliefs sought
7

6. Pursuant to the plenary summons issued on 21 st November, 2014. The plaintiffs' claims are for the following:

8

(i) A declaration that the Defendant is precluded from completing, whether by himself or by his agents or servants, any irreversible disposal, transition or cancellation of his shareholding in Permanent TSB Group Holdings plc ("ILPGH"), before the court proceedings record number 2011 239 MCA have been adjudicated upon following the preliminary ruling of the Court of Justice of the European Union pursuant to Article 267 TFEU.

9

(ii) An injunction restraining the Defendant from completing, whether by himself or by his agents or servants, any irreversible disposal, transition or cancellation of his shareholding in ILPGH, before the court proceedings record number 2011 239 MCA have been adjudicated upon following the preliminary ruling of the Court of Justice of the European Union pursuant to Article 267 TFEU.

10

(iii) A declaration that the Defendant is precluded from using, whether by himself or by his agents or servants, the voting rights attached to his ILPGH shareholding to overrule a relevant majority of votes of the other outstanding ILPGH shares in respect of special business at a general meeting of ILPGH regarding any further irreversible diminishing of the stake in ILPGH of the current ILPGH minority shareholders (whose stake in ILPGH was reduced for the benefit of the Defendant from 100% to less than 0.8% as a result of the ex parte provisional direction order effected by the Defendant on 26 July 2011). Until the court proceedings challenging the said ex parte provisional direction order effected by the Defendant (the High Court record number 2011 239 MCA) have been adjudicated on following the preliminary union of the Court of Justice of the European Union pursuant to Article 267 TFEU.

11

(iv) An injunction restraining the Defendant from using, whether by himself or by his agents or servants, the voting rights attached to his ILPGH shareholding to overrule a relevant majority of votes of the other outstanding ILPGH shares in respect of special business at a general meeting of ILPGH regarding any further irreversible diminishing of the stake in ILPGH of the current ILPGH minority shareholders (whose stake in ILPGH was reduced for the benefit of the Defendant from 100% to less than 0.8% as a result of the ex parte provisional direction order effected by the Defendant on the 26 July 2011), until the court proceedings challenging the said ex parte provisional direction order effected by the Defendant (the High Court record number 2011 239 MCA) have been adjudicated upon following the preliminary ruling of the Court of Justice of the European Union pursuant to Article 267 TFEU.

The Supreme Court judgment in Dowling v The...

To continue reading

REQUEST YOUR TRIAL