The Court of Appeal (CoA) has upheld an earlier decision of that court granting summary judgment of €22 million against three brothers over their failure to repay loans to buy lands earmarked for a data centre.
Earlier this year the CoA upheld a High Court decision granting summary judgment to Ulster Bank, and two receivers it appointed over the lands, at Kilpedder in Co Wicklow.
The action was against Brian McDonagh, Dromin House, Dromin East, Delgany, Co Wicklow, Kenneth McDonagh and Maurice McDonagh, both of Charleston Road, Ranelagh, Dublin.
The two receivers appointed by the bank over the lands were Paul McCann and Patrick Dillon of Grant Thornton.
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In its judgment, last April, the CoA comprising Mr Justice Brian Murray, Mr Justice Maurice Collins and Ms Justice Teresa Pilkington dismissed the appeals and declined to set aside the judgment made against the McDonaghs.
However, the McDonaghs applied to the CoA to have that decision reviewed by a panel of different judges from that court.
They argued that the CoA’s decision should be set aside because Mr Justice Collins, in his previous role as a barrister, had represented both Ulster Bank and Grant Thornton in other unrelated actions several years ago.
Ulster Bank and the receivers opposed the application and argued that the decision should be left undisturbed.
Dismissing the application, the CoA, comprising president of that court Mr Justice George Birmingham, High Court president Mr Justice David Barniville and Mr Justice John Edwards deemed the application to set aside the decision as being “without merit” and “bordered on, if not already, being unstateable”.
Giving the court’s decision Mr Justice Birmingham said that the question that arose in the case was “quite a narrow one. ”
It was “would a reasonable observer with a reasonable knowledge of the Irish legal system, apprehend that Mr Justice Collins would have been unable to bring an open mind to bear, but rather would have been unconsciously biased towards the position of the plaintiffs because of having acted for either or both of them”.
The answer to that question, he said, was “an emphatic no”.
Mr Justice Birmingham said that it is common in civil actions for barristers to act for and against institutional litigants such as banks.
In criminal law, barristers often act for the DPP in one case and the defendant in other actions, he added.
“It is the nature of the independent referral Bar that in general, barristers do not have [an] ongoing relationship with particular clients,” he said.
“Barristers practising on the civil side, and particularly in the commercial courts, as Mr Justice Maurice Collins did, with distinction for many years, will invariably find themselves acting for and against institutional clients,” he said.
Anyone familiar with the courts would not see anything unusual or disturbing with the fact that a member of the court when acting as a barrister had acted for a party which could be described as an institutional litigator.
‘No rational basis’
Mr Justice Birmingham, in dismissing the application further held that there was “no rational basis” for Mr Justice Collins to have recused himself from hearing the action, had such an application been made.
The plaintiff’s action arose out of the brothers’ failure to repay a 2007 loan for €21.8 million advanced to them to buy an 80-acre site in Kilpedder.
Planning permission was obtained for a data centre on the land, but the proposed centre was never built.
In 2020 the High Court granted judgment for €22 million against the defendants.
That court also found that the brothers had breached a 2014 agreement to deal with their debt and that the receivers were validly appointed over the lands.
The judge agreed with Ulster Bank that there was an attempt to deceive it, involving a company which the bank described as “a front” for one of the brothers to buy the land for just €1.5 million.
The McDonaghs have rejected all of the allegations made against them and opposed the decision to grant summary judgment against them.
The lands are the subject of other separate ongoing litigation before the courts involving the McDonaghs.
In other proceedings, the brothers have claimed that they were “cheated”.
