Sheehan v Breccia
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 27 May 2020 |
| Neutral Citation | [2020] IEHC 256 |
| Docket Number | Record No. 2014/10816 P |
| Court | High Court |
| Date | 27 May 2020 |
AND
[2020] IEHC 256
Quinn J.
Record No. 2014/10816 P
THE HIGH COURT
Breach of contract – Breach of statutory duty – Conspiracy – Plaintiff alleging conspiracy, breach of a duty of confidence, breach of contract and inducement of breach of contract, misrepresentation and breach of statutory duty – Whether the defendants had acted negligently
Facts: The plaintiff, Dr. Sheehan, on 22 December, 2014, commenced proceedings. The plaintiff claimed, inter alia, that the repayment of the loan of the fourth defendant, Dr. Duffy, on 4 April, 2014, with funding provided by the first defendant, Breccia, followed later by the purchase of the plaintiff’s loans by Breccia amounted to a conspiracy between Dr. Duffy and Breccia and others. He also alleged, inter alia, breach of a duty of confidence, breach of contract and inducement of breach of contract, misrepresentation and breach of statutory duty. He claimed these actions caused him to lose the opportunity to complete the acquisition of his loans and to gain a controlling shareholding in the third defendant, Blackrock Hospital Ltd, and exposed him to liability for repayment of the deposit borrowed and other amounts. These allegations were denied by all the defendants and the first defendant counterclaimed for judgment against the plaintiff in the amounts demanded by it together with interest which as of 27 November, 2019, stood at a total sum of €19,026,588.
Held by the High Court (Quinn J) that the plaintiff had failed to establish that in the matter of the repayment of Dr. Duffy’s loan on 4 April, 2014, and the acquisition of the plaintiff’s loans by Breccia, and their actions related to those events, the defendants or any of them had acted negligently, in breach of contract, or had been party to inducement to breach of contract, breach of duty, including statutory duty or fiduciary duty, conspiracy, intentional interference with the plaintiff’s economic interests, misrepresentation, or misuse of confidential information. Quinn J refused the claims for the following declarations, namely: (1) that the first defendant, its servants or agents or any person acting in concert with it is not entitled to acquire the plaintiff’s loan facilities dated 28 March, 2006, 12 November, 2008, and/or the Guarantee and Indemnity dated 28 March, 2006 (the Benray Guarantee) by reason of their unlawful and/or illegal conduct (para. 4 of the prayer for reliefs), by reason of its involvement in the bidding process (para. 5), by reason of breach of the plaintiff’s constitutional rights and/or his rights under the European Convention on Human Rights and/or his rights under the Charter of Fundamental Rights of the European Union (para. 6); (2) a declaration that any sale or transfer of the plaintiff’s loan facilities was null, void, invalid and/or illegal (para. 7); and (3) a declaration that the defendants have conspired to adversely and prejudicially affect the property interests of the plaintiff in divesting, selling and seeking to enforce against the shareholding of the plaintiff’s [sic] (para. 22). Quinn J also refused the plaintiff’s claims for damages and for accounts and inquiries.
Quinn J held that he accepted the evidence of Mr Sheeran, a director of Breccia, in relation to the facilities, the mortgage, the Benray Guarantee, the notices of assignment, the letters of demand and the statement of balances due at the hearing. Quinn J granted judgment on the counterclaim in the amounts claimed by Breccia namely the amount of €17,507,742.28, due pursuant to the plaintiff’s loans, and the amount of €1,518,846.57 due by the plaintiff pursuant to the Benray Guarantee together with interest up to the date of judgment calculated in the manner evidenced by Mr Sheeran.
Plaintiff’s claim dismissed. First defendant entitled to judgment in the amount of its counterclaim.
In November 2013, the Special Liquidators of Irish Bank Resolution Corporation Limited (“IBRC”) put up for sale as part of a process described as “Project Stone” the loans of the plaintiff, Dr. Joseph Sheehan, and of the fourth named defendant, Dr. George Duffy. These loans had been granted to the plaintiff and Dr. Duffy in connection with the acquisition by them of increased shareholdings in Blackrock Hospital Limited, the third named defendant, on 28 March, 2006, and were secured by mortgages on those shareholdings.
The successful bidder for the loans was JCS Investment Holdings XIV (“JCS”), a company controlled by the plaintiff.
On 4 April, 2014, JCS executed a Loan Sale Deed with the Special Liquidators. The plaintiff executed this deed in his capacity as “Purchaser Guarantor” to guarantee the obligations of JCS thereunder. The Loan Sale Deed provided that a deposit of ₠2.4m be paid on signing. The deposit was paid on Monday, 7 April, 2014.
JCS sourced its funding for the bid by a facility from Talos Capital Limited (“Talos”). It was a condition of the Talos facility that JCS would acquire and provide as collateral for the loan, inter alia, the loans of the plaintiff and Dr. Duffy and 56% of the shareholding in BHL which comprised the shareholding of the plaintiff, of Dr. Duffy and of another shareholder, Benray Limited (a company owned and controlled by Mr. John Flynn).
It was also a condition of the Talos facility that the plaintiff and Dr. Duffy and others would enter a certain framework agreement which would regulate the rights of the parties in relation to BHL, including the control of the flow of dividends which would fund interest payments on the Talos loan. (See judgment of Ryan J. in Talos Capital Limited v. Joseph Sheehan and John Flynn [2015] IEHC 27).
On the same day that JCS executed the Loan Sale Deed, namely 4 April 2014, Dr. Duffy repaid his loan to IBRC with the benefit of funding advanced by the first named defendant, Breccia. Breccia is also a shareholder in BHL. It was a company in a group (the “Parma Group”) owned and controlled by Mr. Laurence Goodman and his family. (In a separate module of these proceedings, still pending, the plaintiff claims that there have since been certain material changes in the ownership of Breccia.)
On 7 April, 2014, JCS drew down from Talos the sum of ₠2.4 million which was the deposit payable on signing the Loan Sale Deed and this amount was paid to the Special Liquidators, the Loan Sale Deed thereby becoming effective.
When Talos later learned that Dr. Duffy's loan had been redeemed in full before the Loan Sale Deed became effective and the deposit of ₠2.4m paid, it declared JCS to be in default and notified JCS and the plaintiff that JCS was in breach of the conditions precedent for any further drawdown of funds under the facility. Talos also demanded repayment of the deposit, together with interest and costs.
These events had the following effects:-
(1) JCS was unable to complete the loan purchase in accordance with the Loan Sale Deed,
(2) Talos pursued the plaintiff and Mr. John Flynn, as guarantors of the obligations of JCS to Talos, for the amount of the deposit already advanced together with interest and costs and secured judgment against them for these amounts, (see Talos Capital Limited v. Sheehan & Ors. op cit).
Later in 2014, the Special Liquidators again put up for sale, in a process referred to as ‘Project Amber’, the loans of the plaintiff and the attendant security comprising his shares in BHL. This time Breccia was the successful bidder and acquired the loans and security pursuant to a Loan Sale Deed dated 17 October, 2014, and a Deed of Transfer dated 10 December, 2014.
On 18 December, 2014, Breccia notified the plaintiff of its acquisition of his loans and demanded repayment of the balance then claimed on his loan facility of ₠16,144,572, together with a sum of ₠6,734,852, being an amount then claimed pursuant to a guarantee of a loan of Benray Limited, making a total of ₠22,879,424.
On 22 December, 2014, these proceedings were commenced. The plaintiff claims, inter alia, that the repayment of Dr. Duffy's loan on 4 April, 2014, with funding provided by Breccia, followed later by the purchase of the plaintiff's loans by Breccia amounted to a conspiracy between Dr. Duffy and Breccia and others. He also alleges, inter alia, breach of a duty of confidence, breach of contract and inducement of breach of contract, misrepresentation and breach of statutory duty. He claims these actions caused him to lose the opportunity to complete the acquisition of his loans and to gain a controlling shareholding in BHL and exposed him to liability for repayment of the deposit borrowed and other amounts.
These allegations are denied by all the defendants and the first defendant counterclaims for judgment against the plaintiff in the amounts demanded by it together with interest which as at 27 November, 2019, stood at a total sum of ₠19,026,588.
I have concluded that the plaintiff's claim should be dismissed and that the first defendant, Breccia, is entitled to judgment in the amount of its counterclaim.
On 22 December, 2014, the plaintiff applied for and obtained an interim injunction restraining Breccia from acting pursuant to the demand in the letter dated 18 December 2014, and/or seeking to enforce the security which it had acquired.
When the matter came before the court on 12 January, 2015, and again on 26 January, 2015, the injunction was continued on an interlocutory basis until the trial of the substantive proceedings.
Subsequently, Breccia made an application for an order discharging the interlocutory injunction having regard to findings in related cases,...
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