IBRC can appeal ruling in Quinn case

IBRC may proceed with its appeal against a High Court decision allowing Sean Quinn's family litigate claims that Anglo Irish Bank unlawfully "shovelled" €2.34 billion loans into Quinn companies to shore up its plummeting share price, the Supreme Court has ruled.

Patricia Quinn and her five children had argued the special liquidators of IBRC (formerly Anglo) were not entitled to appeal that February 2012 decision of Mr Justice Peter Charleton until after their main action denying liability for the loans was heard.

Yesterday, a three judge Supreme Court rejected those arguments and ruled there was nothing to prevent IBRC appealing Mr Justice Charleton’s decision prior to the hearing of the full action.

Giving the court's ruling, Mr Justice Nial Fennelly said there was no basis to arguments that the High Court could, at any stage, have imposed any restriction on the timing of the appeal.

He found Mr Justice Peter Kelly, when dealing with issues in the Commercial Court litigation between the family and the bank, had not placed any restrictions on the bank's right to appeal.

While Mr Justice Kelly had referred at one point to a “modular” hearing, it was clear thet judge was deciding a specific point should be decided as a preliminary issue of law in advance of the trial, he added.

In their main action, the Quinns claim Anglo illegally made €2.34 billion loans from September 2007 to fund margin calls on Contract for Difference positions built up by Sean Quinn senior in Anglo from 2005 through a Madeira-registered company, Bazzely, owned by the Quinn children.

In February 2012, Mr Justice Charleton ruled the Quinns may litigate claims the loans breached Section 60 of the Companies Act and the Market Abuse Regulations.

IBRC had argued the Quinns should not be allowed make those claims but Mr Justice Peter Charleton in February 2012 said it would be contrary to public policy to shut out the Quinns from responding to the “flagrant illegality” alleged against Anglo and Sean Quinn.

He ruled the family are entitled to advance claims they can avoid liability for loans if they prove those loans were made for “wholesale” market manipulation in breach of Irish and European law.

He added there may be a portion of “legitimate debt” involved, a reference to the bank’s claim that €500m loans are unrelated to the allegedly unlawful loans. That could result in a proper apportionment of legitimate and illegitimate debt at the end of this case if the Quinns proved their claims, he noted.

He rejected the bank’s claims that the EC 2003 Market Abuse Directive and other laws “ring-fenced” matters to the extent the courts cannot prevent enforcement of an illegal contract.

The illegality defence rests ultimately on principles of public policy that courts will not assist a plaintiff guilty of illegal or grossly immoral conduct of which the courts should take notice, he said.

The main action has been deferred pending the hearing of criminal proceedings against former Anglo Chairman Sean Fitzpatrick and other former senior executives.