Sheehan v Breccia (Approved)

Factual and Procedural Background

In November 2013, the Special Liquidators of Irish Bank Resolution Corporation Limited (“IBRC”) initiated a sale process (“Project Stone”) for the loans of the Plaintiff and a fourth defendant, secured by mortgages over shareholdings in Blackrock Hospital Limited (“BHL”). The Plaintiff’s controlled company, Company A, was the successful bidder and executed a Loan Sale Deed on 4 April 2014, with a deposit paid on 7 April 2014. Financing for the bid was provided by Talos Capital Limited (“Talos”), conditioned on acquiring the loans of both the Plaintiff and the fourth defendant and 56% of the BHL shareholding.

On the same day the Loan Sale Deed was executed, the fourth defendant repaid his loan to IBRC using funds provided by the first defendant, Company B, a shareholder in BHL. Subsequently, Talos declared Company A in default for breach of conditions precedent and demanded repayment of the deposit. Company A failed to complete the loan purchase, leading Talos to secure judgment against the Plaintiff and another guarantor.

Later in 2014, the Special Liquidators conducted a second sale process (“Project Amber”), in which Company B successfully acquired the Plaintiff’s loans and security. Company B demanded repayment of the outstanding loan balance and an amount under a guarantee related to another company, leading to the commencement of these proceedings on 22 December 2014.

The Plaintiff alleges conspiracy, breach of duty, misrepresentation, breach of contract, and other claims arising from these events, all of which are denied by the defendants. Company B counterclaims for the outstanding loan amounts and interest.

The Plaintiff initially obtained an interlocutory injunction restraining Company B from enforcing its security, which was ultimately discharged following appellate decisions. The Plaintiff conducted the trial personally after discharging legal representation in September 2019.

Legal Issues Presented

1. Whether the repayment of the fourth defendant’s loan on 4 April 2014, funded by Company B, and the subsequent acquisition of the Plaintiff’s loans by Company B constituted a conspiracy or unlawful conduct injuring the Plaintiff’s interests.
2. Whether any breach of contract, breach of duty (including statutory and fiduciary duties), misrepresentation, or misuse of confidential information occurred in relation to the loan transactions and shareholdings.
3. Whether Company B is entitled to judgment on its counterclaim for the outstanding loan amounts and interest.
4. Whether the Plaintiff is entitled to any declarations regarding the invalidity or illegality of the loan transfers or related transactions.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court conducted a detailed examination of the factual matrix and legal claims, focusing on the events surrounding the repayment of the fourth defendant’s loan and the acquisition of the Plaintiff’s loans by Company B.

The court found that the Plaintiff and Company A were aware, prior to the Loan Sale Deed becoming effective, that the fourth defendant had redeemed his loan using funds from Company B. The repayment was lawful, and the fourth defendant consistently expressed an intention to repay his debt. There was no binding agreement preventing the repayment, and the Loan Sale Deed expressly contemplated redemption.

The court rejected the Plaintiff’s allegations that the Tullycorbett Transfer of shares was unlawful or the root cause of his losses, noting that the transfer was a permitted family transfer under the Shareholders’ Agreement and was approved by the board and registered appropriately. The Plaintiff’s attempt to introduce claims about the illegality of the transfer was outside the pleaded case and unsupported by evidence.

The Plaintiff’s claim of a “unified approach” or joint venture with the fourth defendant was contradicted by evidence showing deliberate exclusion and misinformation provided to the fourth defendant regarding the loan purchase and financing. The court found no duty of confidentiality or good faith owed in the manner alleged.

The court also analyzed the Plaintiff’s claims of misrepresentation and inducement to breach contract, finding no evidence of a binding contract or agreement that was breached. The alleged representations were either accurate or made in a context where the Plaintiff was aware of the true circumstances.

The conspiracy claim was broad and formulaic, lacking particulars of unlawful acts or intent. The court applied established legal principles on lawful means and unlawful objects conspiracy, concluding that the Plaintiff failed to prove any unlawful agreement or predominant intention to injure.

The Plaintiff’s failure to disclose to Talos the redemption of the fourth defendant’s loan constituted a breach of the financing facility, causing the loss of the deposit and the failure to complete the loan purchase. However, this loss was attributable to the Plaintiff’s own actions and omissions, not unlawful conduct by the defendants.

Regarding the counterclaim, the court accepted the unchallenged evidence of Company B concerning the outstanding loan balances, guarantees, and associated interest, and granted judgment accordingly.

Holding and Implications

The Plaintiff’s claims are dismissed. The court refused all claims for declarations of illegality or conspiracy, damages, and other reliefs sought by the Plaintiff in this module.

Judgment is granted in favor of the first defendant, Company B, on its counterclaim for the outstanding loan amounts and interest, as evidenced and unchallenged.

The decision directly resolves the disputes concerning the repayment of the fourth defendant’s loan and the acquisition of the Plaintiff’s loans by Company B. No new legal precedent was established, and the ruling primarily affirms the application of established principles regarding loan sales, security enforcement, and economic torts in the context of shareholder loan arrangements.