High Court rules chief executive of Avolon liable for up to $10m of Friends First loans to consortium

Avolon Aerospace chief executive Domhnal Slattery is liable to repay up to US$10 million to Friends First Life Assurance Company under his personal guarantee of a loan made to help buy the St Regis Hotel in Washington DC, the High Court has ruled. The exact sum will be decided later.

The company must itself pay Mr Slattery €100,000 damages for a “deliberate and conscious breach” of his right to confidentiality involving an “extraordinary, wilful and totally inappropriate” dissemination of confidential information, Mr Justice Brian McGovern also directed.

The damages award arose after Friends First parent company, Achmea, revealed in 2010 to CVC Capital Partners, a key investor in Avolon, details of Mr Slattery’s financial dealings with Friends First, at a time when Mr Slattery had just launched Avolon.

Harry van den Heuvel of Achmea had conceded he expressed the view to CVC Mr Slattery had been “underhand” in his dealings concerning the hotel investment and described him as someone “who left the kitchen when things turned too hot”.

The judge upheld Mr Slattery’s claim Friends First did this to put pressure on him to agree to the correction of a deed so it could pursue him over his personal guarantee of a loan for the hotel deal. Mr van den Heuvel’s claim the disclosure was justified on the basis of due diligence was “a threadbare excuse and a fiction”, the judge found.

Friends First permitted “improper disclosure” of confidential information to CVC for an improper purpose, the judge said. The breach of confidence was serious and deliberately intended to harm Mr Slattery’s business interests.

He was giving his reserved judgment on the action by Mr Slattery, Ailesbury Road, Ballsbridge, Dublin, against Friends First arising from the hotel investment, which later ran into difficulties.

Mr Slattery’s private equity firm Claret Capital Ltd and Friends First were part of a consortium which bought the hotel for some $180 million. To complete the deal, Friends First advanced loans to two Claret Capital related companies. Mr Slattery and other directors of Claret entered into guarantees of a $14.05 million loan and also took personal loans, in Mr Slattery’s case for $1 million, from Friends First Finance.