Investor Mel Sutcliffe’s asset vehicle Goldstein attempted to “weaponise” the threat of hefty legal costs in an attempt to intimidate an innocent third party auctioneer into ceasing to act for receivers selling one of its valuable Dublin properties, a High Court judge said.
Judge Michael Twomey said Goldstein Property, an asset management vehicle, which he said was insolvent and beneficially owned by Sutcliffe, had made the threat through its lawyers, William Fry, to Savills when the estate agents were marketing Shelbourne House, a commercial building in Ballsbridge.
The building was one of 47 at the centre of a dispute between Goldstein and companies in the RELM loan group over the appointment of receivers over the properties. Goldstein provided the property as part of the security for its borrowings of some €143 million from RELM.
The letter from William Fry on February 19th last, the judge said, contained a threat that the auctioneer could be sued by Goldstein in the future if it did not stop acting for the receivers in relation to the sale of Shelbourne House, in light of a legal challenge by Goldstein to the validity of their appointment.
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The judge said while the court was not informed if the threat to Savills – which was not party to the Goldstein/Relm dispute – was successful, a month later Goldstein did bring proceedings challenging the appointment over all the properties.
He said many auctioneers in such a situation might simply do as demanded, irrespective of the merits of Goldstein’s challenge.
This was because, he said: “High Court costs can, in many cases, be in the hundreds of thousands of euros” and in circumstances where Goldstein had access to sufficient money to fund the expensive litigation.
“For this reason, this letter could be seen as amounting to a weaponisation of High Court costs by Goldstein in order to achieve its objectives,” he said.
The first thing it does is it forces the party to spend money on getting legal advice it would not otherwise have to spend, he said.
While it was not unlawful and fell short of strategic use of the legal system, or “lawfare” as it is known, it shared one important lawfare ingredient.
This was because, irrespective of the strength of the legal claim underlying the threat, the letter sought to get the recipient to do what is demanded, out of a fear that it might otherwise have to incur significant legal costs, he said.
“Unfortunately, this type of high-grade weaponisation of costs would appear to be much easier in Ireland than in other jurisdictions,” he said. This was because of the concentration of civil litigation in Ireland in the High Court rather than in the much less expensive District or Circuit Courts.
It is out of step with international norms which the judge previously outlined in a judgment in 2024. In the absence of a reduction in the concentration of civil litigation in the High Court, and a reduction of the costs in that court, “this high-grade weaponisation of legal costs will continue,” he said.
The threat to Savills was one of three attempts by Goldstein to stop the receivers selling the properties, he said.
Another was the lodging of a legal block on the sale, known as a lis pendens. However, the High Court lifted the lis pendens saying Goldstein had a very weak case.
The third was the case dealt with by Twomey, in which he highlighted the threat letter, seeking to stop the sale until a dispute over the redemption sum for the properties had been resolved. Goldstein argued it was around €125 million and had secured a funder for the majority of that sum while RELM said it was more than €146 million.
The judge said the balance of justice favoured refusing the injunction preventing the sale.
He said the letter to Savills, for which William Fry was not criticised because it was acting on instructions from Goldstein, did not assist Goldstein when the court came to deciding where the balance of justice lay.
It was however not a determinative factor in the court’s decision.
Those factors were the weakness of the substantive claim that the receivers were invalidly appointed and the delay by Goldstein in seeking the injunction, he said.
