Gerard Dowling and Others v Minister for Finance and Others

JurisdictionIreland
JudgeMs Justice Iseult O'Malley,MR. JUSTICE McGOVERN
Judgment Date15 August 2014
Neutral Citation[2014] IEHC 418
CourtHigh Court
Date15 August 2014
Dowling & Ors v Min for Finance & Ors
IN THE MATTER OF IRISH LIFE AND PERMANENT GROUP HOLDINGS PLC AND IN THE MATTER OF IRISH LIFE AND PERMANENT PLC
AND IN THE MATTER OF AN APPLICATION FOR THE SETTING ASIDE PURSUANT TO SECTION 11 OF THE CREDIT INSTITUTIONS (STABILISATION) ACT 2010 OF THE DIRECTION ORDER WHICH WAS MADE ON THE 26 TH JULY 2011 PURSUANT TO SECTION 9 OF THE CREDIT INSTITUTIONS (STABILISATION) ACT 2010 AND ANCILLARY ORDERS

BETWEEN:

GERARD DOWLING, PADRAIG McMANUS, PIOTR SKOCZYLAS AND SCOTCHSTONE CAPITAL FUND LIMITED
Applicants
-AND-
THE MINISTER FOR FINANCE
Respondent
-AND-
PERMANENT TSB GROUP HOLDINGS PLC AND PERMANNENT TSB PLC
Notice Parties
IN THE MATTER OF IRISH LIFE AND PERMANENT GROUP HOLDINGS PLC

AND

IN THE MATTER OF IRISH LIFE AND PERMANENT PLC

AND

IN THE MATTER OF THE CREDIT INSTITUTIONS (STABILISATION) ACT, 2010

AND

IN THE MATTER OF AN APPLICATION BY THE MINISTER FOR FINANCE FOR A DIRECTION ORDER IN RELATION TO IRISH LIFE AND PERMANENT GROUP HOLDINGS PLC AND IRISH LIFE AND PERMANENT PLC
PURSUANT TO SECTION 9 OF THE CREDIT INSTITUTIONS (STABILISATION) ACT 2010 AND ANCILLARY ORDERS

[2014] IEHC 418

Record No. 239 MCA/2011
No. 239 MCA/2011

THE HIGH COURT

Banking – Financial institution – Recapitalisation – Ministerial proposals rejected at EGM – Direction order sought by minister under Credit Institutions (Stabilisation) Act 2010 – Second Company Law Directive

During the midst of the recent banking crisis, the respondent minister had proposed the recapitalisation of the Irish Life and Permanent group (‘ ILP’) at an EGM in 2011. This proposal was rejected by shareholders. Following the rejection, the respondent proposed a direction order to be issued under the provisions of the Credit Institutions (Stabilisation) Act 2010. This order saw the ILP group effectively come in to state ownership. The applicants, shareholders and a former director in the group, applied to have that direction order set aside alleging that the takeover was illegal and had affected their interests adversely.

Held by Mrs Justice Iseult O’Malley, that three issues were before the Court. Firstly, whether the provisions of s 7 of the Act had been complied with? Secondly, whether the respondent’s opinion on the necessity for the order was reasonable? Finally, was the opinion flawed by errors of law? Having considered the submissions by the parties, Justice O?Malley stated that the third issue was crucial, and there was no need to consider the first two issues until the error of law matter had been resolved. Having taken consideration of the EU case law on the Second Company Law Directive, the Court considered that it could not determine the matter without referring the issue of the EU jurisprudence to the CJEU. A number of findings of law and fact were therefore made to that end.

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S9

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S7

DOWLING & ORS v MIN FOR FINANCE UNREP SUPREME 19.12.2013 2013/14/4144 2013 IESC 58

DOWLING & ORS v MIN FOR FINANCE UNREP FEENEY 2.3.2012 2012/10/2639 2012 IEHC 89

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S11

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S7(2)

CREDIT INSTITUTIONS (FINANCIAL SUPPORT) ACT 2008

EEC REG 407/2010

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 125

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 122(2)

EEC DECISION 2011/77 ART 3(5)

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF INVESTMENTS FIRMS) REGS 2006 SI 660/2006

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGS 2006 SI 661/2006 REG 70

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGS 2006 SI 661/2006 REG 3(1)(A)

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGS 2006 SI 661/2006 REG 3(1)(B)

CENTRAL BANK ACT 1971 S11(1)(B)(v)

CENTRAL BANK ACT 1942 S6A(2)

CENTRAL BANK ACT 1942 S5A(11)

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGS 2006 SI 661/2006 REG 70(1)

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGS 2006 SI 661/2006 REG 70(4)

EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGS 2006 SI 661/2006 REG 19

IRISH TAKEOVER PANEL ACT 1997 TAKEOVER RULES & SUBSTANTIAL ACQUISITION RULES RULE 9

IRISH TAKEOVER PANEL ACT 1997 TAKEOVER RULES & SUBSTANTIAL ACQUISITION RULES RULE 9(1)

IRISH TAKEOVER PANEL ACT 1997 S9

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 107

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 107(1)

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 107(3)(B)

CENTRAL BANK & CREDIT INSTITUTIONS (RESOLUTION) ACT 2011

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S63

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S63(3)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S47

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S52

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S53

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S61

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4(A)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4(B)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4(E)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4(F)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4(G)

EEC DIR 2001/24

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S4(H)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S7(4)

EEC DECISION 2011/326

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S9(4)

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 260

EEC DIR 77/91 ART 25

EEC DIR 77/91 ART 29

EEC DIR 77/91 ART 8

EEC DIR 2001/34

EEC DIR 2004/25

CHARTER OF FUNDAMENTAL RIGHTS OF THE EUROPEAN UNION ART 17

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S3

COLLINS ENGLISH DICTIONARY 11ED 2011

DOWLING & ORS v MIN FOR FINANCE UNREP PEART 28.6.2012 2012/10/2702 2012 IEHC 436

ASSOCIATED PROVINCIAL PICTURE HOUSES LTD v WEDNESBURY CORP 1948 1 KB 223 1947 2 AER 680

KEEGAN & LYSAGHT, STATE v STARDUST VICTIMS COMPENSATION TRIBUNAL 1986 IR 642 1987 ILRM 202

MEADOWS v MIN FOR JUSTICE & ORS 2010 2 IR 701 2011 2 ILRM 157 2010 IESC 3

INQUIRY UNDER THE COMPANY SECURITIES (INSIDER DEALING) ACT 1985, IN RE (NO 1) 1988 AC 660 1988 2 WLR 33 1988 1 AER 203 1988 4 BCC 35

DUNNES STORES IRL CO & ORS v RYAN & MIN FOR ENTERPRISE 2002 2 IR 60

DOWLING & ORS v MIN FOR FINANCE UNREP SUPREME 24.5.2012 2012/10/2668 2012 IESC 32

O'KEEFFE v BORD PLEANALA & O'BRIEN 1993 1 IR 39 1992 ILRM 237

HEANEY & MCGUINNESS v IRELAND & AG 1994 3 IR 593 1994 2 ILRM 420 1994/10/3029B

SYNDESMOS MELON TIS ELEFTHERAS EVANGELIKIS EKKLISSIAS & ORS v GREECE & ORS 1994 2 CMLR 348 1992 ECR I-2111

EEC DIR 77/91 ART 25(1)

EEC DIR 77/91 ART 29(1)

KARELLA & KERALLAS v MIN FOR INDUSTRY ENERGY & TECHNOLOGY & ORGANISMOS ANASYGKROTISEOS EPICHEIRISEON AE 1991 ECR I-2691 1993 BCC 677 1994 1 BCLC 774 1993 2 CMLR 865

EEC DIR 77/91 ART 41(1)

EEC DIR 77/91 ART 42

KERAFINA-KERAMISCHE-UND FINANZ HOLDING AG & VIOKTIMATIKI AEBE v GREECE & ORGANISMOS OIKONOMIKIS ANASYGKROTISSIS EPICHEIRISSEON AE 1992 ECR I-5699 1993 2 CMLR 277

TREATY OF ROME ART 93

PAFITIS & ORS v TRAPEZA KENTRIKIS ELLADOS AE & ORS 1996 ECR I-1347 1996 2 CMLR 551

EEC DIR 77/91 ART 29(3)

DIAMANTIS v GREECE 2000 ECR I-1705 2001 3 CMLR 41

KEFALAS & ORS v GREECE & ANOR 1998 ECR I-2843 1999 2 CMLR 144 1998 AER (D) 205

CMSN v SPAIN 2008 ECR I-10139 (CASE NO C-338/06)

REAL DECRETO LEGISLATIVO 1564/1989 (SPAIN)

EEC DIR 77/91 ART 29(6)

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 119

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 126

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION TITLE VIII

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 119(3)

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 120

COMPANIES ACT 1963 S205

PRINGLE v IRELAND & ORS 2013 2 CMLR 2 2013 AER (EC) 1

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 267

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S60

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S9(8)

CREDIT INSTITUTIONS (STABILISATION) ACT 2010 S9(3)

EUROPEAN COMMUNITIES (REORGANISATION & WINDING-UP OF CREDIT INSTITUTIONS) REGS 2011 SI 48/2011 REG 9

MR. JUSTICE McGOVERN
CONTENTS
Section A

1. Introduction

5

2. The parties

7

3. The witnesses

7

Section B

4. Background- The economic crisis and the Irish banks

10

5. Specific evidence relating to ILP

12

Section C

6. The Programme for Support

14

7. The Memorandum of Understanding

14

8. Council Regulation 407/2010 (11 th May 2010)

16

9. The Implementing Decision

17

10. United Kingdom loan

17

Section D

11. The Prudential Capital Assessment Review 2011

18

12. The BlackRock assessment

19

13. PCAR

19

14. Legal requirements for capital adequacy

19

15. PLAR and deleveraging

20

16. Central Bank decision

20

17. The Updated Memorandum of Understanding

20

Section E

18. Developments after PCAR and PLAR

22

19. The company's reaction

24

20. Shareholder reaction to the FMPR

25

21. Irish Takeover panel approval

26

22. State Aid approval

26

Section F

23. The Extraordinary General Meeting, 20th July 2011

32

24. Correspondence between the company and the Minister

35

25. Submissions made to the Minister on behalf of shareholders

37

Section G

26. The Credit Institutions (Stabilisation) Act, 2010

39

SECTION H

27. The Proposed Direction Order

46

28. Compliance with s.7 of the Act

47

Section I

29. The application for the Direction Order

50

30. The purposes of the order

53

31. The details of the order sought

55

Section I

32. Alternative means of raising capital

58

SECTION K

33. The "False Market" Issue

63

Section L

34. The...

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12 cases
  • Dowling v Minister for Finance
    • Ireland
    • Court of Appeal (Ireland)
    • 2 October 2018
    ...The first substantive judgment was delivered by the High Court (O'Malley J.) in August 2014: see Dowling v. Minister for Finance (No.1) [2014] IEHC 418. In that case O'Malley J. made a number of important factual findings, but, critically, she made a reference to the Court of Justice pursu......
  • Dowling and Others v The Minister for Finance and Others
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    ...vitiated by error of law. 3 Two substantive judgments have been delivered in the matter. In the first ( Dowling v. Minister for Finance [2014] IEHC 418) I determined that the procedural requirements had been complied with. However, I found it necessary to refer certain issues of law to the......
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    ...directors of the group holding company and the bank. 4 The detailed background to this matter is set out in the judgment of O'Malley J [2014] IEHC 418, from which this perhaps oversimplified account is drawn, which is sufficient to identify the net legal issues to be determined in this mat......
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    • Court of Appeal (Ireland)
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    ...set out in the judgment of O' Malley J in In the Matter of Irish Life and Permanent Group Holdings plc, Dowling v Minister for Finance [2014] IEHC 418, at sections A-E. As she explains, the wider context involved the Programme for Support (commonly referred to as the “bail-out”) and variou......
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