Slattery v Friends First Life Assurance Company Ltd

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Brian J. McGovern
Judgment Date15 Mar 2013
Neutral Citation[2013] IEHC 136

[2013] IEHC 136

THE HIGH COURT

[No. 2092 P/2012]
[No. 51 COM/2012]
Slattery v Friends First Life Assurance Co Ltd
No Redaction Needed
COMMERCIAL

BETWEEN

D ÓMHNAL SLATTERY
PLAINTIFF

AND

FRIENDS FIRST LIFE ASSURANCE COMPANY LIMITED
DEFENDANT

LEOPARDSTOW CLUB LTD v TEMPLEVILLE DEVELOPMENTS LTD UNREP EDWARDS 29.1.2010 2010/29/7048 2010 IEHC 152

A ROBERTS & COMPANY LTD v LEICESTERSHIRE COUNTY COUNCIL 1961 CH 555

LUCEY v LAUREL CONSTRUCTION CO LTD UNREP KENNY 18.12.1970 1966-1975 WJSC 2842

RIVERLATE PROPERTIES v PAUL 1975 CH 133

THOMAS BATES & SON LTD v WYNDHAMS LINGERIE LTD 1981 1 WLR 505

IRISH LIFE ASSURANCE COMPANY v DUBLIN & IRELAND SECURITIES 1986 IR 332

O'NEILL v RYAN (NO 3) 1992 1 IR 166

MONAGHAN CO COUNCIL v VAUGHAN 1948 IR 306

LITTMAN v ASPEN OIL (BROKING) LTD 2006 2 P & CR 2 2006 L & TR 9

COLES v HILL 1999 L & TR 14

HURST STORES & INTERIORS LTD v ML PROPERTY LTD 2004 94 CON LR 71

QR SCIENCES LTD v BTG INTERNATIONAL LTD 2005 AER (D) 196

EUNETWORKS FIBER UK LTD v ABOVENET COMMUNICATIONS UK LTD 2007 AER (D) 373

NAI GENOVA, IN RE 1984 1 LLR 353

COMMISSION FOR THE NEW TOWNS v COOPER (GB) LTD 1995 2 WLR 677

JJ HUBER (INVESTMENT) LTD v PRIVATE DIY CO LTD 1995 NPC 102

GEORGE WIMPEY UK LTD v VI CONSTRUCTION LTD 2005 103 CON LR 67

WEEDS v BLANEY 1978 2 EGLR 84

TEMPLISS PROPERTIES LTD v HYAMS 1999 AER (D) 404

CRANE v HEGEMAN-HARIS CO INC 1939 1 AER 662

WALFORD v MILES 1992 2 AC 128

O'SULLIVAN ELLIOTT & ZAKAREZWESKI THE LAW OF RESCISSION 2007 PARA 7.07

O'SULLIVAN ELLIOTT & ZAKAREZWESKI THE LAW OF RESCISSION 2007 PARA 7.08

O'SULLIVAN ELLIOTT & ZAKAREZWESKI THE LAW OF RESCISSION 2007 PARA 7.11

TOURIER v NATIONAL PROVINCIAL & UNION BANK OF ENGLAND 1924 1 KB 461

BANK OF TOKYO v KAROON 1986 3 AER 468

WALSH v NATIONAL IRISH BANK 2008 2 ILRM 56 2007/59/12726 2007 IEHC 325

NATIONAL IRISH BANK LTD v RADIO TELEFIS EIREANN 1998 2 IR 465

HERRITY v ASSOCIATED NEWSPAPERS (IRELAND) LTD 2009 1 IR 316

SHORTT v CMSR OF AN GARDA SIOCHANA 2007 4 IR 587

CONWAY v IRISH NATIONAL TEACHERS ORGANISATION 1991 2 IR 305

HAUGHEY v MORIARTY 1999 3 IR 1

CALDWELL v MAHON 2007 3 IR 542

AG v GUARDIAN NEWSPAPERS (NO 2) 1988 3 WLR 776

CAMPBELL v MGN 2004 2 WLR 1232

MOSLEY v NEWS GROUP NEWSPAPERS LTD 2008 NLJR 1112 2008 AER (D) 322

MCINTIRE v LEWIS 1991 1 IR 121

W (F) v BRITISH BROADCASTING CORP UNREP BARR 25.3.1999 1999/25/7970

High court litigation - Joint venture - Personal guarantees - Deed of pledge - Unilateral mistake - Liability - Rectification - Duty of confidentiality - Damages

Facts: The plaintiff was a businessman who was also the principal of a private equity firm called Claret Capital Ltd. The defendant was a financial institution. The plaintiff and defendant entered into an agreement to purchase a hotel in Washington D.C. for a price of $173.25m. In the sale, it was agreed that the vendor would retain a 10% interest in the hotel with the remaining interest split between Claret Capital and the defendant. In order to meet the purchase price, $45m of equity was provided by the defendant and Claret Capital and $135m of senior debt provided by Barclays Capital Real Estate Inc. The senior debt was made up of a $105m senior loan and a $30m mezzanine strip. To raise the necessary funds, the defendant gave loans of $22.5m and a $14.05m to two Claret Capital related companies. The joint venture ultimately failed.

The plaintiff brought these proceedings claiming that the personal liability he owed to the defendant was limited by clause 2.2 of the Deed of Pledge signed on the 20 th July 2009 to the value of 256 shares in Jetbird Ltd. pledged by the plaintiff to the defendant. Jetbird Ltd. was an aircraft leasing venture in which the plaintiff was CEO and a significant shareholder which the defendant had previously been involved with. It was ultimately wound up on the 31st May 2010. The defendant claimed that there was no agreement to restrict the plaintiff”s personal liability in such a manner, and that anything suggesting otherwise in clause 2.2 was not reflective of the intention of the parties.

The plaintiff also claimed damages for breach of confidentiality. He was CEO of Avolon Aircraft Leasing Ltd. (‘Avolon’) which launched in August 2010 as an aircraft leasing and lease management services business. It was his claim that whilst he was raising equity for this business, the defendant sought to undermine him by giving details of the financial dealings between the plaintiff and the defendant to an investor in Avolon called CVC Capital Partners (‘CVC’). It was further stated that the defendant was aware that CVC”s investment in Avolon was crucial to the business” success.

Held by McGovern J that clause 2.2 of the Deed of Pledge appeared to conflict with the Deed of Guarantee which had been signed previously. It appeared to the court from the negotiations between the parties in the run up to Deed of Pledge being signed that the plaintiff intended to include clause 2.2 at a late stage so that it might go unnoticed. It was also clear that the tactic to do so was decided at a late stage without much hope of success. When it became apparent to the plaintiff that the defendant had not noticed this addition, his response was to sign the Deed as soon as possible. It was deemed inequitable and unconscionable to hold the defendant to an agreement which was not what they intended to sign up for. As a unilateral mistake had been made, rectification was deemed to be the most adequate remedy to the proceedings and so clause 2.2 was removed from the Deed to give a truer reflection of the agreement. The plaintiff and his fellow signatories were therefore jointly and severally liable under the Personal Guarantee.

In regards to the claim for breach of confidentiality, it was held that the defendant”s parent company had indeed revealed financial details between the plaintiff and defendant to CVC in an attempt to break the stalemate between the parties. The ultimate beneficiary of this, if it had have been successful, would have been the defendant. A duty of confidentiality did exist between the parties and there was no consent from the plaintiff to allow such a disclosure. Although CVC did not act on the revelations, there was some damage to the plaintiff”s reputation. An award of €100,000 was made for damages.

€100,000 in damages awarded to the plaintiff for breach of confidentiality. Clause 2.2 removed from the Deed of Pledge to reflect the intention of the parties.

Appeal dismissed.

1

1. The plaintiff is a businessman and a principal of Claret Capital Ltd. ("Claret Capital"), a private equity firm incorporated in the State. The defendant is a financial institution. These proceedings arise out of an unsuccessful business venture, namely, the purchase of the St. Regis Hotel, Washington D.C. in the United States of America. Claret Capital and the defendant were part of a consortium involved in the purchase of the St. Regis Hotel for a total purchase cost of $173.25m.

2

2. The vendor of the hotel was Brickman Real Estate. In the transaction, the vendor agreed to retain a 10% interest in the hotel, the defendant agreed to take a 45% interest and Claret Capital the remaining 45%. The overall requirement of funding for the St. Regis transaction was approximately $180m, split between $45m of equity (from the defendant and Claret Capital) and $135m of senior debt provided by Barclays Capital Real Estate Inc. ("Barclays"). That senior debt was split in turn in to a $105m senior loan and a $30m mezzanine strip.

3

3. In order to complete the deal, the defendant agreed to make two loans to Claret Capital related companies. The first was to Claret Capital Washington LLC ("CCW") in the sum of $US22.55 million. It was intended that client investors of the defendant would invest into a limited partnership vehicle (the Lincoln Limited Partnership or "Lincoln"), which would subscribe for shares in CCW, thereby effecting the repayment of the CCW loan. The second loan from the defendant was to another Claret Capital entity, namely, Claret Capital Holdings LLC ("CCH"), which was the vehicle through which it was intended Claret Capital would raise money from its client base and thereby repay the CCH loan. As part of the deal, Claret Capital was to become the asset manager (or General Partner) with the management of the hotel being performed by Starwood, under the St. Regis brand.

4

4. The CCH loan was originally intended to be for US$22m but was ultimately for US$14.05m as Claret Capital had arranged approximately US$8.5m of equity from their clients. In respect of this loan of US$14.05m, guarantees were entered into by the plaintiff and his fellow directors in Claret Capital. Furthermore, the plaintiff and his fellow directors each took personal loans from Friends First Finance, a company related to the defendant, with the plaintiff's loan coming to the sum of $1m.

5

5. Although the plaintiff complains that the issue of personal guarantees had not been raised with him in the discussions leading up to the loan and that he was unaware that one of the signature pages which he completed was in respect of a personal guarantee, he now accepts that he was bound by the guarantee signed on 18 th March, 2008, up until the execution of a Deed of Pledge on 20 th July, 2009.

6

6. In these proceedings, the plaintiff claims that by virtue of clause 2.2 of the Deed of Pledge, the full extent of his liability to the defendant is limited in aggregate to an amount equal to that recoverable by the defendant as a result of the Deed of Pledge, namely, the value of 256 shares in Jetbird Ltd. pledged by the plaintiff to the defendant in the said Deed. This has the effect of limiting the recourse to the plaintiff on foot of the guarantee.

7

7. The defendant claims that the parties never...

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2 cases
  • O'Mahony v Promontoria (GEM) DAC
    • Ireland
    • Court of Appeal (Ireland)
    • 19 d3 Fevereiro d3 2020
    ...of the trial judge. Exemplary damages 95 The respondents rely on the High Court decision in Slattery v Friends First Life Assurance [2013] IEHC 136 where the said judgment concluded: - “… that the Court is vested with a discretion to award compensatory damages, including aggravated damages......
  • Slattery v Friends First
    • Ireland
    • Court of Appeal (Ireland)
    • 10 d5 Julho d5 2015
    ...(1869) L.R. 8 Eq. 368. Rooney and McParland Ltd. v. Carlin [1961] N.I. 138. Slattery v. Friends First Life Assurance Company Ltd. [2013] IEHC 136, (Unreported, High Court, McGovern J., 15th March, 2013). Sweeney v. Duggan [1997] 2 I.R. 531; [1997] 2 I.L.R.M. 211. Tournier v. National Provin......
1 books & journal articles
  • If 'Mum' is the Word, is it the Law? Irish Privacy Law: A Comparative Perspective
    • Ireland
    • Trinity College Law Review Nbr. XX-2017, January 2017
    • 1 d0 Janeiro d0 2017
    ...balancing acts 109Mosley v Mirror Group Newspapers [2008] EMLR 20. 110ibid [7]. 111ibid [14]. 112ibid [44]-[72]. 113ibid [110]-[171]. 114[2013] IEHC 136 (HC); [2015] IECA 149 (CA). 115[2013] IEHC 136. 116[2015] IECA 149. 117Slattery (n 114) [100]; see also Tournier v National Provincial &am......

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