THE HIGH Court has rejected the Minister for Finance’s bid to halt two legal challenges to the Government’s recapitalisation of Irish Life & Permanent.

Mr Justice Kevin Feeney yesterday dismissed the Minister’s preliminary application to stop actions by investment fund Horizon Growth, which bought six million shares in IL&P between February and July 2011, and former investment banker Piotr Skoczylas, whose company bought €200,000 of IL&P shares in autumn 2010.

The Minister claimed neither Horizon nor Mr Skoczylas had the required legal standing to bring the proceedings on grounds neither was a “member”, within the meaning of the Companies Act 1963, of IL&P or Irish Life & Permanent Group Holdings (ILPGH) when they brought their challenges to the recapitalisation order in August 2011.

The Minister argued, because both Horizon and Mr Szocyzlas held their shares through intermediaries or nominees and were not listed in the register of members of either IL&P or ILPGH when they brought their challenges, they were not members and therefore could not bring challenges.

Both Horizon and Mr Skoczylas disputed that claim. They argued the Minister’s approach ignored prevailing market practice, including the fact that shareholders held shares through brokers or nominees, and contended the meaning of “member” in the Credit Institutions Stabilisation Act 2010 must be construed as a person affected by a recpitalisaiton order.

They claimed the manner in which they hold the ILGH shares represents a well-established norm in international financial investment for many years, the Minister’s construction of membership was restrictive and he was seeking to circumscribe the rights of shareholders. In a detailed judgment yesterday, the judge ruled that, taking into account the context, wording, purpose and “far-reaching” provisions of the 2010 Act, the meaning of the word “member” in that Act must be given a broad construction.

The motion is among a number of key preliminary issues to be decided by the court in the challenges to the recapitalisation. The judge will deal with outstanding preliminary issues, plus costs issues, at a later date.

Mr Skoczylas and his Maltese-registered firm Scotchstone Capital are challenging the July 2011 recapitalisation on grounds including it unlawfully imposes an unacceptable €2.7 billion burden on Irish and EU taxpayers and hinders the free movement of capital.