Changes in claims against Fingleton put defence in an 'intolerable' position, High Court hears

Former Irish Nationwide CEO Michael Fingleton. Solicitor Niall Clerkin, for Mr Fingleton, said his client and their legal team were put in an 'intolerable' situation due to amendments in the statement of claim against his client, and had complained of missing documents and 'very relevant' witnesses not being called by the plaintiffs. Picture: Sam Boal/Rollingnews.ie

The High Court case against former Irish Nationwide chief Michael Fingleton Sr has heard that his legal team were put in an “intolerable” position by alleged changes in the approach and claims by the plaintiffs — the liquidators for the Irish Banking Resolution Corporation (IBRC) — who are pursuing the now-incapacitated defendant for €290m in damages.

The civil case against the former Irish Nationwide Building Society (INBS) chief alleges that he negligently mismanaged the building society, and engaged in property “gambles” with high net-worth individuals, in an informal and speculative manner in the mid-2000s — leading to fatal losses.

Mr Fingleton, aged 87 and who cannot give evidence due to ill-health, joined the building lender in 1971 and retired in 2009. He held the roles of both managing director and chief executive in that time. 

At its height in 2007, the INBS had reported assets of €16bn — but was a high-profile casualty of the financial crisis of 2008.

Liquidators have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement.

The total losses at INBS had been estimated to be €6bn. However, only €290m in damages is being pursued by liquidators, relating to five specific loans allegedly approved by Mr Fingleton.

The court has been told that Mr Fingleton was allegedly “nodding through” top-ups and extensions to certain clients without the knowledge of the board.

At the High Court on Tuesday, solicitor Niall Clerkin, for Mr Fingleton, said his client and their legal team were put in an “intolerable” situation due to amendments in the statement of claim against his client, and had complained of missing documents and “very relevant” witnesses not being called by the plaintiffs.

Mr Clerkin said the case was now on its fifth version of a statement of claim against his client.

The solicitor also said that “generic” or “systemic” allegations in the action had been precluded from the case at a previous hearing of the Court of Appeal.

However, Mr Clerkin said the plaintiffs were still characterising the alleged negligence in general terms and describing the five loans at issue as “emblematic” or a “manifestation” of broader alleged wrongdoing.

Mr Clerkin said the plaintiffs have said they will call two Central Bank witnesses, “who could only be giving precluded systemic evidence”, and that they could “not possibly have evidence regarding the specific five loans”. 

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The solicitor said the impression being given in the case against Mr Fingleton was that his client was “like a toxic agent”, and that “all the problems that happened were because of him [Mr Fingleton]”.

Mr Clerkin said the defence sought “clarity” in what was alleged against his client, saying the allegations were “very confusing” to defend and “heightened the amount of prejudice that we face” in defending the case.

Mr Clerkin said that the original claim against his client was for €6bn, but now only 5% of the original claim was being pursued. He said the other 95% of the claim has “fallen away in concession”, and “substantial tracts” of documents were missing from the case.

The solicitor said the defence tried to engage with an expert who said he “simply would not be satisfied he had enough information to provide a proper expert opinion”.

Regarding the use of expert finance witnesses, Mr Clerkin said: “We don’t have a reliable file set available, so the methodological foundation is broken.

“It’s corrupted from our standpoint.”

He added that expert witnesses are reliant on what is sent to them by legal practitioners.

Lyndon MacCann SC, for the plaintiffs, said any suggestion that documents were being withheld would be “scurrilous”.

Mr Clerkin responded that “massive tracts” of information were missing, that there was no allegation of bad faith towards the plaintiffs, but that it was “nearly impossible” for an objective analysis of events due to missing documents.

“I can’t change the way the world is for him [Mr MacCann],” said Mr Clerkin.

Mr MacCann said that it was the plaintiff’s case that, through discovery, amendments were made to the statement of claim against Mr Fingleton. However, he said it was “always” the plaintiff’s case that claims against the defendant could be expanded — but the five specific loans were to remain the “focus” in the case.

The case continues at the High Court.

In opening the case last week, Mr MacCann said Mr Fingelton “gambled” with the society’s money when he allegedly approved “speculative, risky” commercial loans, which sometimes had already been greenlit by him before they were taken before the board of directors or the credit committee.

The five loans allegedly approved by Mr Fingleton relate to property land development projects between 2006 and 2009 in Britain and France, despite them having no zoning or planning permission, counsel said.

It is alleged that there were no securities in place on the loans and no personal guarantee sought for or provided by the borrowers.

Mr Fingleton was reported to have been worth around €75m in 2006. However, his son has told the courts that his father is reduced to €25,000 in two personal bank accounts and has outstanding judgment debts of more than €10.7m.