Businessman sues Friends First

A businessman has sued Friends First Life Assurance Company over allegedly threatening to pursue him for almost $10 million under an alleged guarantee over funds issued to buy a hotel in Washington DC.

Dómhnal Slattery, Ailesbury Road, Ballsbridge, Dublin 4 - who is chief executive of Avolon Airspace Ltd - claims Friends First threatened to sue him and also moved to discredit and undermine him with Avolon shareholders and others.

He claims Friends First acted after he refused to consent to rectification of a July 2009 deed which allegedly limited the assurer recourse to him under the guarantee.

He claims the deed provides Friends First with limited recourse to him arising from his alleged guarantee of March 2008 related to a promissory note via which Friends First advanced about US$9.5m to Claret Capital Holdings LLC, a Delaware company, towards purchase of the St Regis Hotel in Washington.

In an affidavit, he said Friends First and its solicitors have been making threats to sue him arising from the deed of pledge since April 2011. He claimed the situation has led to nervousness among financial institutions and others with whom he does business and could have “devastating financial consequences” for him.

On the application of John Gordon SC, for Mr Slattery, and with consent of Lyndon MacCann SC, for Friends First, Mr Justice Peter Kelly agreed today to transfer the case to the Commercial Court. The judge made directions for exchange of legal

documents and returned the case for mention in June.

In an affidavit, Mr Slattery said the background to the case was a $14.05m loan advanced by Friends First to Claret Capital in March 2008 via a promissory note to fund the purchase of the St Regis Hotel in Washington DC.

At no stage during negotiation of the promissory note was he asked by Friends First to provide a personal guarantee, Mr Slattery said. It had since transpired, on the date the transaction was finalised, that he had signed a large number of signature pages without seeing the associated documents to which those pages related.

One such document was a deed of guarantee and indemnity, the effect of which was to render him and others personally liable for the debts of Claret Capital under the promissory note, he said

Under a later Deed of Pledge document executed on July 20th 2009, Mr Slattery said he agreed to pledge shares in Jetbird Ltd, a new airline company launched by him, for the benefit of Friends First. A clause in that document provided his liability to Friends First under the deed was limited to the charged assets, he said.

In April 2011, A & L Goodbody, solicitors for Friends First, asked him to consent to rectification of the deed so as to achieve deletion of that limited recourse clause, he said.

He said Goodbody’s had informed him, if he did not consent within 14 days to rectification as sought, legal proceedings would be taken against him.

After he refused consent to rectification, he was advised by A & L Goodbody that Friends First would have no option but to issue legal proceedings to protect its interests, he said.

His solicitors had replied that Friends First had engaged A&L Goodbody to advise it on the negotiating, drafting and execution of the deed of pledge and stated any redress that Friends First sought should be addressed to that firm and not Mr Slattery.

In September 2011, Friends First had written directly to him and formally demanded repayment of the sum allegedly outstanding under the promissory note.

Despite the repeated threats, no legal proceedings have been commenced, he said. However, he believed the continued threats and certain other actions of the defendant concerning his alleged indebtedness were having serious adverse effects on his ability to conduct his affairs and business.

He believed the defendant’s actions were unreasonable and unfair and might involve a breach of his right to confidentiality in its dealings with him. In those circumstances, he had decided to bring his own action against the defendant and, among the reliefs sought, wanted a declaration he is not liable for the $9.5 sum.