Peter Roger Wright-Morris v Irish Bank Resolution Corporation Ltd (in special liquidation)

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 15 August 2013
• Neutral Citation: [2013] IEHC 385
• Docket Number: [2013 No. 75 IA]
• Court: High Court
• Date: 15 August 2013

[2013] IEHC 385

THE HIGH COURT

[No. 75 I.A./2013]

Wright-Morris v Irish Bank Resolution Corp Ltd (in special liquidation)

BETWEEN

PETER ROGER WRIGHT-MORRIS

PLAINTIFF

AND

IRISH BANK RESOLUTION CORPORATION LIMITED (IN SPECIAL LIQUIDATION)

DEFENDANT

IRISH BANK RESOLUTION CORP ACT 2013 S6

IRISH BANK RESOLUTION CORP ACT 2013 S6(2)(B)

COMPANIES ACT 1963 S222

IRISH BANK RESOLUTION CORP ACT 2013 S10(2)(C)

MISREPRESENTATION ACT 1967 S2(1) (UK)

SUPREME COURT ACT 1981 S35A (UK)

MACCANN & ORS COMPANIES ACTS 1963-2012 2012

COMPANIES ACT 1948 S231 (UK)

EXCHANGE SECURITIES & COMMODITIES LTD & ORS, IN RE 1983 BCLC 186

ARO CO LTD, IN RE 1980 CH 196 1980 2 WLR 453 1980 1 AER 1067

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 3ED 2012 PARA 6.69

KUTCHERA v BUCKINGHAM INTERNATIONAL HOLDINGS LTD 1988 IR 61

COMPANY LAW

Winding up

Special liquidation order - Leave to commence proceedings against defendant in other jurisdiction - Exercise of court's discretion - Applicable criteria - Burden of proving foreign law on party basing case on foreign law - Whether fair and right to give consent to proposed proceedings - Whether issues could be decided in course of winding up - Whether fair that foreign plaintiff be put to expense in this jurisdiction of proving application of foreign law to claim - Re Aro Co Ltd [1980] Ch 196 and Re Exchange Securities and Commodities Ltd [1983] BCLC 186 approved - Kutchera v Buckingham International Holdings Ltd [1988] IR 61 followed - Companies Act 1963 (No 33), s 222 - Irish Bank Resolution Corporation Act 2013 (No 2), s 6 - Consent to commencement of proceedings given (2013/75IA - Laffoy J - 5/8/2013) [2013] IEHC 385

Wright-Morris v IBRC (in special liquidation)

Facts: These proceedings concerned an application brought by the applicant that sought an order to allow the commencement and initiation of proceedings against the defendant pursuant to the inherent jurisdiction of the Court or, alternatively, under s. 6 of the Irish Bank Resolution Corporation Act 2013 ('the 2013 Act'). This application was brought because s. 6(2)(b) of the 2013 Act (which was enacted when the respondent entered special liquidation) stated that the issue of proceedings against the IBRC ('IBRC') required the leave of the Court. The applicant sought leave to initiate proceedings in the United Kingdom jurisdiction as he had at all times conducted his banking business with Anglo Irish Bank Corporation plc (the forerunner of the respondent) there. A Private Customer Services Agreement executed on the 7th July 2004 which explained the terms of business between the applicant and Anglo Irish Bank also outlined how any dispute between the parties in regards to the agreement between them should be settled before the Courts of England and Wales.

The applicant"s claim against the respondent was for, amongst other things, negligent misrepresentation and/or negligent misstatement in the sale of an interest rate derivative product to him in August 2004. It was argued that in breach of contract, the Financial Service Authority"s Conduct of Business Rules and the statutory duty owed to him, the interest rate derivative product had been mis-sold to him which had resulted in him incurring losses. The applicant sought a recovery of these losses, which were said to be greater than the outstanding debt he owed to IBRC, and a cancellation of the Swap transaction. A proposed Claim Form was exhibited which outlined the basis of his action and which the applicant intended to submit before an English court if his application was granted. The Special Liquidators for the respondent argued that there was a strong possibility that the applicant"s claim was statute-barred therefore IBRC should not be forced to incur costs by defending the action in the United Kingdom jurisdiction. It was also said that the applicant had failed to explain the basis for a right to set off of any potential award against the debt he owed to IBRC; the consequence of not having such a right meant that the best the applicant could hope for was an unsecured judgment debt against IBRC in liquidation, a debt that was unlikely to be paid given IBRC"s financial circumstances. Finally, it was argued that because the applicant had failed to substantively respond to a number of issues that had been raised, the Special Liquidators were forced to contest the application.

Held by Laffoy J that in determining whether to use the discretion outlined in s. 6(2)(b) of the 2013 Act, guidance could be derived from the similarly worded s. 222 of the Companies Act 1963 ('the 1963 Act'), and by extension s. 231 of the U.K. Companies Act 1948 ('the 1948 Act'). Both s. 222 and s. 231 were identically worded. In the case of Re Aro Co. Ltd. [1980] 1 All ER 1067, it was said that the discretion under s. 231 of the 1948 Act should be used according to what the court considered to be right and fair. This was held to be the correct approach to follow in deciding whether to exercise the discretion under s. 6(2)(b) of the 2013 Act.

1 Judgment of Ms. Justice Laffoy delivered on 15th day of August, 2013.

The application

2 1. On this application the plaintiff seeks an order pursuant to the inherent jurisdiction of the Court or, alternatively, under s. 6 of the Irish Bank Resolution Corporation Act 2013 (the Act of 2013) to allow the commencement and initiation of proceedings against the defendant.

3 2. The provision of the Act of 2013 on which the plaintiff relies is s. 6(2)(b) which provides that, with effect from the making of the Special Liquidation Order in respect of Irish Bank Resolution Corporation (IBRC), -

"no further actions or proceedings can be issued against IBRC without the consent of the Court."

4 A similar provision, s. 222 of the Companies Act 1963 (the Act of 1963), governs the prosecution and commencement of proceedings in the case of a compulsory winding up. Section 222 provides as follows:

"When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose."

5 Section 10(2)(c) of the Act of 2013 provides that s. 222 of the Act of 1963 does not apply to IBRC.

6 3. Although, when the application was initiated, the proceedings were given an "intended action" record number, in fact, the plaintiff is seeking leave not to initiate proceedings in this jurisdiction, but to initiate proceedings in England. At all material times the plaintiff resided in England and conducted banking business with Anglo Irish Bank Corporation plc (Anglo) at its branch in Manchester. It is not in dispute that the creditor/debtor relationship of IBRC (in Special Liquidation), as successor of Anglo, and the plaintiff is governed by and is to be construed in accordance with the laws of England. Further, under a Private Customer Services Agreement executed on 7 ^th July, 2004, which set out the general terms of business on which each transaction entered into between the plaintiff and Anglo was governed, provided, inter alia, that the Courts of England and Wales should have exclusive jurisdiction to settle any dispute which might arise out of or in connection with the agreement in respect of any claim brought against Anglo. That agreement disclosed that Anglo was authorised as a banker and provider of investment services by the Central Bank of Ireland and operated in the United Kingdom through one or more branches whose conduct of business was regulated by the Financial Services Authority (FSA).

7 4. The application is grounded on the affidavit of the plaintiff sworn on 9 ^th July, 2013. The response to the application is an affidavit of Kieran Wallace, one of the joint Special Liquidators appointed to IBRC (in Special Liquidation) on 7 ^th February, 2013.

8 5. On the basis of the evidence before the Court, the plaintiff first indicated to IBRC that he has a claim against IBRC by letter dated 10 ^th August, 2012 from his then solicitors, Bracewell Law, directly to IBRC in London. Subsequently, Bracewell Law ceased to act for the plaintiff and another English firm of solicitors, BPE LLP, commenced correspondence directly with the Special Liquidators on his behalf. They have also ceased to act for him. His current English solicitors are Freeth Cartwright LLP.

9 6. Since June 2013, an English firm of solicitors, Linklaters, have been acting for the Special Liquidators in the United Kingdom in connection with the plaintiff's claim. A. & L. Goodbody, Solicitors, are acting for the Special Liquidators on this application.

The plaintiff's claim against IBRC

10 7. In outlining the plaintiff's claim against IBRC, I propose doing so by reference to the correspondence which has passed between the two sides.

11 8. The starting point is the letter dated 10 ^th August, 2012 from Bracewell Law directly to IBRC. At the outset, it was stated in that letter that the plaintiff's claim against IBRC relates to what is referred to as a "swap transaction", which, it was alleged, was mis-sold by Anglo to the plaintiff around July 2004. The letter of 10 ^th August, 2012 is very comprehensive and it enclosed copies of the various documents which were the source of the plaintiff's complaints. The basis of the plaintiff's claim was stated as follows:

"Our client has numerous issues, not only with the way that the swap transaction was sold to him and the Bank's breaches under the FSA COB Rules [Conduct of Business Rules]..., but also the terms of the Amended Facility, the swap transaction itself and the Bank's letter of 24 ^th August, 2010 informing him of his purported breach of the terms of the Amended Facility."

12 The "Amended Facility" was a Facility Letter dated 13 ^th July,...