Businessman's appeal over €30.5m debt dismissed

The Court of Appeal has dismissed a businessman's appeal over whether an investment fund was entitled to sue him over a €30.5m debt it bought from Irish Bank Resolution Corporation (IBRC).

Businessman's appeal over €30.5m debt dismissed

The Court of Appeal has dismissed a businessman's appeal over whether an investment fund was entitled to sue him over a €30.5m debt it bought from Irish Bank Resolution Corporation (IBRC), writes Ann O'Loughlin.

John Morrissey had claimed the alleged general illegal conduct of IBRC'spredecessor, Anglo Irish Bank, precluded the fund, LSREF III Stone Investments, from pursuing him for the property loans debt.

The Appeal Court found Mr Morrissey, Palmerston Road, Ranelagh, Dublin, was bound by some of seven previous and unappealed High Court rulings related to the loans.

One of these, in particular, related to a finding that the conduct of Anglo was outside the scope of his action unless he could show the relationship between him and the bank was fiduciary in nature, the court said.

One of those judgments, in May 2013, found the relationship between Mr Morrisseyand the bank did not go beyond the ordinary contractual relationship between the two and there was therefore no fiduciary relationship.

The courts previously heard Mr Morrissey is a qualified actuary who worked in a number of sectors, including Guinness Peat Aviation, before setting up his own aircraft leasing business.

In 1994, he sold that leasing company to Royal Bank of Scotland before going on to study experimental physics in Trinity College Dublin. There he met the founder of a software company HAVOK, with which he also became involved, and which was later sold to computer technology giant Intel.

Around 1999, he got into the property business primarily acquiring and renovating period properties in Dublin 6 which he either sold or rented.

Dismissing his case Yesterday (thrus)Mr Justice Gerard Hogan, on behalf of the three-judge Appeal Court, said Mr Morrissey was allowed to admit fresh evidence at the outset of his appeal. This related to the conviction in July 2016 of three former Anglo executives for conspiracy to defraud.

At the heart of his appeal was that by reason of what he said was the illegal conduct of Anglo, IBRC and following the sale of his loans, LSREF III Stone, was debarred from recovering the debt, Mr Justice Hogan said.

The parameters for the defence to the claim that Mr Morrissey owed the debt had been established in a previous High Court decision which was not appealed. The wider issue of illegality could only be raised where there was a fiduciary duty, he said.

It was now too late for the wider issue of Anglo's conduct to be raised by way of defence, Mr Justice Hogan said.

Mr Morrissey, who had been successful in claiming he was overcharged €143,000 in interest, argued this had shown bad faith on the part of the bank.

This overcharging was the result of "at worst careless computation" but there was no evidence of any intention to deceive, the judge said.

There was no basis for Mr Morrissey's claim that the sale of the loan to LSREF III Stone was champertous, he said. Champerty is a form of maintenance where financial support is provided by a party with no connection to a dispute in exchange for a share in the spoils of any proceeds from litigation or some other profit.

A 2015 High Court decision striking out the majority of Mr Morrissey's defence and counterclaim was also correct, the judge said.

Mr Morrissey also had no standing to challenge the constitutionality of part of the 2013 Act setting up IBRC, permitting the sale of the loans. This was because he would not benefit in any tangible or practical way from a finding of unconstitutionality.

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