A legal action against four former directors of the Irish Nationwide Building Society over alleged "wholly unlawful" delegation of powers of the
board to its former chief executive Michael Fingleton has settled, the Commercial Court has been told. No terms of settlement were disclosed.
A separate action against Mr Fingleton, involving a claim by State-owned Irish Bank Resolution Corporation (IBRC) for up to €6 billion over losses suffered by the Society, is proceeding on a date yet to be fixed.
Mr Fingleton denies any liability, and has pleaded that he was not negligent and that he had prudently sought to reduce the society’s exposure.
IBRC, which took over INBS, had separately sued John Stanley Purcell and three other former INBS directors – former INBS chairman Michael Walsh and two other former directors, Terence Cooney and David Brophy – over alleged breach of contract, breach of duty and negligence over the alleged delegation of the board's powers to Mr Fingleton from 1997 to 2009.
INBS was later nationalised with losses of some €6 billion.
All four directors denied the claims and Mr Purcell last year secured orders joining the Central Bank as a third party to the case against the directors.
Failure to monitor
He alleged the bank had a liability over alleged failures to properly monitor and regulate the society. The bank and other State entities had joined together in exposing him to a “wholly unmeritorious” claim for damages of perhaps more than €1 billion, he also claimed.
Mr Purcell also complained that IBRC, in bringing its proceedings against the directors, had not joined KPMG, the former auditors of INBS, as a defendant to the case. KPMG had been joined as a third party.
Yesterday, as Ms Justice Caroline Costello was about to give judgment on discovery issues, Michael Collins SC, for Mr Purcell, said the case against the former directors had settled.
The judge agreed to adjourn proceedings to allow implementation of settlement after which proceedings will likely be formally struck out. The case was adjourned for a month and the discovery matters concerning the directors were struck out.
The judge noted the case against Mr Fingleton is proceeding and adjourned that to allow the sides consider her ruling on the discovery matters.
‘Myriad of litigation’
In that ruling, the judge noted the two related cases, even in the context of the “myriad of litigation which has been one of the fallouts from the economic crisis which has befallen the state in recent years”, were “extraordinary by any measure”.
The scope of the allegations was “extraordinarily wide” and, as many were not time limited, they could range from 1971 up to 2009, she said.
Among the claims was that, as a result of alleged unlawful delegation of the board’s powers, Mr Fingleton had very significant responsibility for the conduct of the society’s business and had the sole authority to approve decisions to lend sums of more than €1 million.
The judge commended the parties for reaching agreement on many discovery matters and noted her judgment related to some outstanding matters.
Dealing with Mr Fingleton’s discovery application, the judge ruled he was entitled to discovery of a number of categories of documents, including certain records of the INBS Board up to July 2011 when IBSS was transferred to IBRC and documents related to discussions for the sale of the society or any merger with the EBS.
The judge also noted the plaintiffs had agreed to make discovery of documents relating to Mr Fingleton’s expenses.