Irish Bank Resolution Corporation Ltd v Michael P. Fingleton

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Tony Hunt
• Judgment Date: 14 May 2021
• Neutral Citation: [2021] IEHC 372
• Docket Number: Record Nos: 2012/3280P 2013/74COM
• Date: 14 May 2021

Between:

Irish Bank Resolution Corporation Limited

Plaintiffs

and

Michael P. Fingleton

Defendant

[2021] IEHC 372

Record Nos: 2012/3280P 2013/74COM

THE HIGH COURT

COMMERCIAL

Dismissal of proceedings – Stay – Balance of justice – Defendant seeking an order declaring that in the interest of justice the proceedings against the defendant be dismissed in their entirety or permanently stayed – Whether the defendant’s inability to give evidence would produce an unjust outcome

Facts: The defendant applied for an order, pursuant to the inherent jurisdiction of the High Court, declaring that in the interest of justice the proceedings against the defendant be dismissed in their entirety or permanently stayed. The application was heard remotely on 23 February 2021. The defendant’s case was that his inability to give evidence in relation to the various loans pleaded in the statement of claim would necessarily produce an unjust outcome. He argued that he was a private citizen being sued for a very large sum of money by a State entity, and that there was a significant imbalance in resources between each of the parties.

Held by Hunt J that, having assessed the balance of justice and the fairness to both parties of either permitting the proceedings to continue or staying or dismissing them, and having had regard to the relatively limited extent of the prejudice that arose by reason of the absence of testimony or other input from the defendant to wide-ranging and complex litigation, which largely depended on objective factors for resolution, the balance of justice lay firmly on the side of permitting the proceedings to continue. Hunt J dismissed the application.

Hunt J refused the relief sought in the defendant’s notice of motion. As the plaintiffs, Irish Bank Resolution Corporation Ltd, had been entirely successful on the event in this application, Hunt J proposed that they be awarded their costs of and incidental to the motion, to be adjudicated in default of agreement, but with a stay on that order pending final disposal of the proceedings.

Application dismissed.

JUDGMENT of Mr. Justice Tony Hunt delivered on 14 May 2021

1 The essential nature of this uniquely wide-scale and long-running litigation is best summarised by Costello J. in her judgment delivered in this matter on 15 April 2015. As I could not improve upon that summary, I gratefully accept it to avoid unnecessary duplication. Although nearly six years have passed since that date, the parties have not been inactive during that time. A large number of documents have been discovered by the plaintiffs to the defendant at lengthy intervals according to an agreed schedule. Prolonged periods were provided for review and consideration thereof, owing to the volume of discovered documents.

2 This is an application by the defendant for an order, pursuant to the inherent jurisdiction of the Court, declaring that in the interest of justice the proceedings against the defendant be dismissed in their entirety or permanently stayed. The application was heard remotely on 23 February 2021.

3 The defendant is now aged 83 years. Unfortunately, his health has deteriorated somewhat in recent years. In 2015, he lost the sight in his right eye. In December 2017, he was diagnosed with skin cancer and treatment was scheduled in 2018. He was admitted to St. John of God Hospital in August 2018, suffering from a severe depressive episode. Most significantly, he had a stroke in May 2019 and was immediately admitted to St. Vincent's Hospital. He was transferred to the Stroke Rehabilitation Unit at St. Columcille's Hospital, Loughlinstown in August 2019. Although he was discharged from that facility in January 2020, and currently resides at home, he now requires full-time care.

4 There is no dispute as to the fact that the defendant suffers from significant incapacities as a result of this event. His physical and mental capacities have been significantly compromised. I am satisfied that the net result of his difficulties is that he is in the throes of a gradual deterioration in his condition, which will not be reversed. As a result, he will be unable to participate meaningfully in the trial of the extensive claims brought against him in these proceedings, to follow or react to the detailed and lengthy evidence that is intended to be adduced by the plaintiffs, to issue fresh instructions to his legal and other advisers in response to the evidence as it unfolds, or to give any meaningful evidence on his own behalf by reason of the symptoms and consequences of his stroke, not least due to impairment of his short-term memory. It is not clear what effect this event has had on his long-term memory, but I do not regard that as a point of significance having regard to his overall medical situation. This is a working summary of his current health, which is set out in greater detail in the motion papers and the transcript of the hearing.

5 Niall Clerkin (solicitor) moved the application on behalf of the defendant. In summary, his arguments in support of the application were as follows:-

• a) While it was accepted that the jurisdiction invoked by the defendant was very rarely exercised, two exceptional circumstances existed in this case.

• b) Firstly, the medical evidence demonstrated that the defendant would not be able to participate in the trial in any meaningful way.

• c) Secondly, the enormous breadth and scope of the claim was a particularly weighty factor, having regard to the highly unusual (if not unique) features of the litigation, as referred to in the judgment of Costello J. referred to above.

• d) The nature of many of the allegations made by the plaintiffs against the defendant in the proceedings were such that an effective defence would require many matters to be addressed directly by the defendant, on the basis of his particular position in, and knowledge of the affairs of, the Irish Nationwide Building Society (“INBS”) at the time of the events pleaded in the Statement of Claim.

6 Mr. Clerkin referred to the following matters in support of his application:

• a) The primary complaint against the defendant throughout the proceedings is that he enjoyed an excessive concentration of control over INBS.

• b) It is also alleged that the defendant had sole authority to approve lending decisions, and on that basis lent out amounts in excess of €1 million without consulting the board (an allegation hotly disputed by the defendant).

• c) 18 different loans are pleaded as examples of this practice. The books and records of INBS would not give a full picture of the defendant's contacts with the board in relation to these loans, and the defendant's evidence would be required to provide a full picture and explanation of these matters. In that regard, Mr. Clerkin conceded that it is “ fair to say that the Society was run in an old-fashioned manner at that point”. As a consequence, it will be necessary for the defendant to explain directly how INBS was set up and managed.

• d) The test for the exercise of director's duties is comprised of both objective and subjective factors. Particular reliance was placed on paragraph 11 of the judgment of the High Court (Charleton J.) in Bloxham v Irish Stock Exchange [2014] IEHC 93, in circumstances where that the defendant's illness will prevent him from expressing his subjective beliefs concerning the actions impugned by the plaintiffs.

• e) The unprecedented scale of the plaintiffs' allegations caused specific and exceptional unfairness in this case.

• f) In all of the circumstances outlined above, there was a real and serious risk of an unfair trial and/or unjust result, a clear and patent injustice in asking the defendant to defend, and an inexcusable or unfair burden on the defendant in so defending, by reference to the test set out by McKechnie J in Comcast International Holdings Inc. & Ors. v The Minister for Public Enterprise & Ors [2012] IESC 50.

• g) In addition, much the same matters are the subject of a statutory Central Bank Inquiry. This Inquiry decided that the defendant's cognitive capacity was such that he was unable to effectively or meaningfully participate therein, and that the public interest in that Inquiry was not so exceptional as to override the defendant's right to fair procedures. Accordingly, the members of the Inquiry decided that it would be permanently stayed as against the defendant, as a person concerned in that process. Mr Clerkin submitted that as the defendant's condition had deteriorated since that decision, the grounds for not proceeding with this litigation were stronger, particularly in the light of the financial liability and general loss of reputation entailed in an adverse judgment in this case.

7 In summary, Lyndon McCann SC (of the Inner Bar) responded as follows:

• a) The plaintiffs did not dispute the medical evidence, accepting that a gradual deterioration is evident and no reversal is anticipated. As a consequence, it was also accepted that the defendant will not be in a position to give any significant evidence in his defence, and the plaintiffs did not gainsay the difficulties that will be experienced by his legal team in obtaining instructions, and in the ongoing conduct of the defence.

• b) Notwithstanding that, the defendant's medical condition did not provide a basis for a dismissal or permanent stay of the plaintiff's claims. There was no authority for the proposition that the diminished health, mental or physical, of a defendant could be relied on to that end.

• c) These proceedings could be distinguished from the Central Bank Inquiry on the basis that the latter was punitive in nature, and therefore more akin to a criminal prosecution than ordinary civil proceedings, which justified a different approach. In this case, the plaintiffs claim an award of damages on a compensatory rather than a punitive basis.

• d) By statute, civil...