Ex-Davy employees want businessman’s claim struck out, court hears

The High Court has been asked to strike out a businessman’s claim that he was fraudulently misled by Davy stockbrokers and 16 of its former employees when they allegedly made a multimillion profit from the sale of his Anglo Irish Bank bonds.

The former employees say Patrick Kearney’s claim is based on pleadings that are untrue.

They claim various statements and pleadings by Mr Kearney, who was one of the so-called “Maple 10″ investors given loans by Anglo to buy shares in the failing bank, are false and warrant his case being struck out.

Mr Kearney, a Belfast-based property developer, opposes their application and says it is unmeritorious.

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Mr Kearney and his firm Kilmona Holdings claimed it employed Davy in 2014 to sell the bonds at best market price to go towards the settlement of debts.

However, it is claimed in proceedings initiated last year that 16 Davy employees and J&E Davy made a secret profit of €25 million in the onward sale of the bonds.

Members of the so-called Davy 16 previously told the High Court that a €9.3 million profit was made on the bonds.

Mr Kearney first sued Davy seven years ago claiming the bonds had been sold at an undervalue but that case was later settled.

In 2021, however, Mr Kearney said he learned something that he did not know in 2015 following a Central Bank investigation into Davy for market rule breaches which resulted in a record €4.1 million fine against the stockbroking firm.

Mr Kearney said it was only then he learned that the onward sale to the “O’Connell Partnership” was an entity comprising 16 former Davy employees. He said if he had known that when he settled the previous case, he would not have done so.

In his 2021 proceedings, he alleged, among other things, fraudulent concealment. He also sought a number of declarations including that O’Connell Partnership was under the control of Davy, which was paid €207,000 to sell the bonds, in breach of loyalty and duty to him and his company.

He claimed he did not know the partnership comprised Davy employees because when he asked Davy for details about it, he was told this could not be done because of confidentiality. The claims are denied.

On Tuesday, 15 of the O’Connell Partnership members asked the court to strike out Mr Kearney’s claim as bound to fail. The 16th partnership member, Tony O’Connor, is reserving his position in relation to the strikeout application pending the hearing of the motion brought by the others, the court was told.

Marcus Dowling SC, for the 16, said it was surprising there had been no application by Mr Kearney to amend his pleadings “because, even on his best day, some of what he says is untrue and how is he going to proceed with pleadings that are untrue”.

In seeking a strike out, counsel said he was relying entirely on what was said in papers and letters that are, or have been previously, before the court.

Counsel said Mr Kearney admitted in papers prepared for the 2015 proceedings that he knew in November 2014 the partnership was the purchaser.

Subsequently, Mr Kearney claimed what he had actually understood was that the partnership provided a loan for the purchase of the bonds but said he did not know the partnership was also the purchaser, counsel said.

However, it was specifically pleaded in the settled 2015 case that the partnership members were Davy employees, counsel said. Yet today, Mr Kearney claims this is fraudulently concealed from him, he said.

Counsel said that objectively speaking, based on documents, it was clear Mr Kearney knew the partnership consisted of Davy employees.

His case was bound to fail because it could never be said now that Davy had sought to conceal who was in the partnership.

It was also bound to fail because “a man cannot be deceived if he knows the truth”. Mr Kearney cannot succeed in his misrepresentation claim because he knew the truth from what was said in the previously settled case, counsel said.

The case continues before Mr Justice Michael Twomey.