Scotchstone shareholder cannot represent firm, judge says

A HIGH Court judge has ruled that a man whose company bought some €200,000 worth of shares in Irish Life Permanent (ILP) in 2010 is not legally entitled to represent the company in proceedings challenging the Government’s recapitalisation of the bank.

Piotr Skoczylas, the controlling shareholder of Maltese-registered Scotchstone Capital Funds Ltd, indicated yesterday he may appeal Mr Justice Kevin Feeney’s ruling to the Supreme Court. In those circumstances, the hearing of preliminary issues in the challenge by Mr Skoczylas and others to the recapitalisation was adjourned to today.

Scotchstone, Mr Skoczylas, two ILP shareholders – Gerard Dowling and Pádraig McManus – and, in separate proceedings, investment fund Horizon Growth NV, are all challenging the recapitalisation on grounds including that it unlawfully imposes an unacceptable €2.7 billion burden on Irish and other EU taxpayers.

Yesterday, the judge rejected Mr Skoczylas’ application to be permitted to represent Scotchstone in the case. Mr Skoczylas had argued that the company did not have funds to hire lawyers as the costs being sought were “enormous”. One law firm indicated representation costs would amount to some €850,000, plus VAT, and it would cost about €35,000 just to file two legal documents, he said.

He said the Minister for Finance’s side “know about costs” as the Minister’s solicitors, Arthur Cox, had been paid fees of about €15 million relating to advice on the financial crisis. His company would be bankrupt if it had to hire lawyers. Twelve firms had been approached unsuccessfully to run the case on the basis they would be paid only if it was successful, he said.

While he himself bought shares in ILP in March 2010, the “hurt” inflicted by the recapitalisation on Scotchstone, which bought its shares in autumn 2010, was of greater magnitude and not comparable to that suffered by himself, he said. Scotchstone was one of the largest shareholders in ILP and the recapitalisation breached Irish and EU law as it hindered the free movement of capital.

Patrick McCann SC, for the Minister, said it appeared Scotchstone, while suffering an unrealised loss of €200,000, still had funds in securities of some €100,000 and it could hire lawyers if it “cut its cloth to suit its measure”. The law here clearly provided a company must be represented by a lawyer and cannot be represented by a managing director, shareholder or other officer of the company, he submitted.

Mr Justice Feeney said he was bound by a Supreme Court decision of 1968 (the Battle case) which found a limited company could not be represented in court proceedings by an officer of that company. The claim of inability-to- pay-lawyers did not constitute a rare and exceptional circumstance allowing Mr Skoczylas to represent the company, he added.