McCaughey v Irish Bank Resolution Corporation Ltd (In special liquidation) & ors

Factual and Procedural Background

This opinion concerns an application for leave to issue proceedings against Company A (in special liquidation) pursuant to statutory provisions and the Court’s inherent jurisdiction. The applicant seeks specific performance of an alleged settlement agreement made on 28th April, 2015, purportedly settling all claims between the applicant and Company A, including costs from various hearings across multiple courts.

Company A is undergoing winding up under a statutory scheme enacted in 2013, which includes a prohibition on issuing further proceedings without court consent. The applicant had longstanding litigation history with Company A and associated entities, involving investment disputes and claims for damages. Key proceedings include a dismissed claim relating to New York hotel investments and summary proceedings by Company A claiming a substantial debt, parts of which were granted summary judgment and parts sent to plenary hearing. The applicant’s loans were sold to Company B during ongoing litigation, leading to substitution of Company B as plaintiff in certain proceedings.

Subsequent correspondence between the parties’ solicitors concerned discovery requests and settlement discussions. The applicant contends that a settlement agreement was reached with representatives of Company B, who allegedly acted with authority over Company A’s interests. Company A denies involvement or authorization of any settlement. The application for consent to sue Company A arises from this dispute over the existence and scope of the alleged settlement agreement.

Legal Issues Presented

1. Whether the applicant has established a prima facie stateable claim against Company A for specific performance of the alleged settlement agreement.
2. Whether it is right and fair to grant consent to issue proceedings against Company A under the Irish Bank Resolution Act 2013.
3. Whether the claim can be conveniently determined within the liquidation process.

Arguments of the Parties

Applicant's Arguments

• The applicant claims a binding settlement agreement was reached on 28th April, 2015 with representatives of Company B, who invited the applicant to assume they had taken over the entire connection relating to Company A.
• The applicant relies on correspondence and a draft settlement agreement prepared by Company B’s solicitors, which includes Company A as a party.
• The applicant’s solicitor asserts that Company B and Company A were jointly represented by the same law firm at the material time, indicating Company B acted with Company A’s knowledge and consent.
• The applicant contends that the settlement covers all claims and costs between the parties, including those involving Company A.

Respondent's Arguments

• Company A denies any involvement in or authorization of settlement negotiations with the applicant.
• There is no signed or oral settlement agreement to which Company A is a party.
• Company A’s actual legal representation was by a different firm than that representing Company B at the time of the alleged settlement.
• Correspondence prior to the alleged settlement made clear that Company A was represented separately and did not consent to discovery requests or settlement terms.
• The inclusion of Company A in the draft settlement agreement was without its knowledge or consent and is a matter between Company B and the applicant.
• The applicant’s solicitor knowingly misrepresented the identity of Company A’s legal representatives to the Court, undermining the credibility of the claim.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Wright-Morris v. Irish Bank Resolution Corporation Limited (in special liquidation) [2013] IEHC 385	Criteria for granting consent to issue proceedings under s.6(2)(b) of the Irish Bank Resolution Act 2013	The Court adopted the criteria set out by Laffoy J., focusing on what is right and fair, and whether the claim can be conveniently determined within the liquidation.
McGuinness v. Kenmare Property Company Limited [2015] IECA 299	Endorsement of the criteria for consent to issue proceedings under s.6(2)(b) of the Irish Bank Resolution Act 2013	The Court noted the endorsement of the Wright-Morris criteria by the Court of Appeal, confirming their general application.

Court's Reasoning and Analysis

The Court first recognized that if a claim exists, it cannot be conveniently or appropriately resolved within the liquidation process, given the timing and multi-party nature of the alleged settlement. However, the Court found the applicant failed to establish even a prima facie stateable claim against Company A.

The Court expressed concern regarding the credibility of the applicant’s solicitor’s evidence, noting material misrepresentations about the identity of Company A’s legal representatives. The solicitor repeatedly averred joint representation by the same law firm for Company B and Company A, despite correspondence months earlier showing distinct representation.

The Court interpreted the phrase from the applicant’s solicitor’s own letter—inviting the assumption that Company B had taken over Company A’s connection—as a limited assumption for discussion purposes, not an indication of authority to act on Company A’s behalf.

All subsequent correspondence supported the conclusion that Company A was not a party to the settlement negotiations. The applicant’s repeated requests for documents to clarify what Company B had purchased further undermined any claim that Company B had authority to settle on behalf of Company A.

Consequently, while the applicant might have a claim against Company B, no evidential basis existed to assert a claim against Company A. The Court saw the application as an attempt to implicate Company A without foundation, constituting an abuse of process.

Holding and Implications

The Court REFUSED the application for consent to issue proceedings against Company A pursuant to s.6(2)(b) of the Irish Bank Resolution Act 2013.

The direct effect is that the applicant may not proceed with claims against Company A relating to the alleged settlement agreement. The Court did not establish any new precedent but reaffirmed the importance of truthful representation in affidavit evidence and the strict application of criteria for consent to litigate against entities in liquidation.