Settlement talks are under way in the marathon case by Sean Quinn's five adult children denying liability for some €410 million under guarantees of loans advanced by Anglo Irish Bank to Quinn companies.

Mr Justice Garrett Simons was told of the development at the High Court on Wednesday, just after he ruled the children cannot pursue claims that their father unduly influenced them to sign the securities and “effectively dictated” to them about the lending.

That ruling is a major setback for the children whose counsel Bernard Dunleavy SC argued they would be “significantly prejudiced” if not permitted to make that claim.

Irish Bank Resolution Corporation (IBRC), into which Anglo was nationalised following its collapse, strongly opposed the children being permitted to make the claim in their case against IBRC and a receiver appointed over share charges.

In his ruling, the judge disagreed a claim of undue influence against Sean Quinn snr already exists within the children’s pleaded claim and refused to permit them to amend their case and witness statements to specifically make that claim.

The proposed amendments were not necessary for deciding the “real issues” and would cause “real prejudice” to the defence as it would have to meet an “entirely different” case, he ruled.

The lack of detail in the proposed amendments meant it “is impossible for the bank to know the case that it is now expected to meet”, he added.

After his ruling, Mr Dunleavy SC, with Ciarán Lewis SC, for the Quinns, said they had used the time in recent days for discussions which are continuing. Paul Gallagher SC, with Barry O’Donnell SC, for IBRC, confirmed this.

The judge welcomed that news and adjourned the case to tomorrow to facilitate talks.

First witness

Brenda Quinn, the first witness, was due to begin evidence last Friday but that was deferred due to the procedural applications.

In his ruling, the judge noted the children sought to impugn share charges allegedly executed by them between January 2003 and March 2009 and personal guarantees of about October 2008 on grounds including undue influence and improvident or unconscionable bargain.

In some cases, they also alleged "signature switching", that they signed an earlier draft of a share pledge but the signature page was then allegedly wrongfully appended by persons within the Quinn Group to a later revised draft.

Most of the impugned transactions were entered into as part of the unwinding into Anglo shares of contract for difference positions (CFDs) in Anglo built up by Sean Quinn snr via Bazzely, a company beneficially owned by his children.

A Supreme Court 2015 decision had significantly narrowed the case as it prevented the Quinns claiming the disputed lending was unenforceable because Anglo acted illegally in breach of Market Abuse Regulations and the Companies Act.

In their existing case, the children alleged undue influence by Anglo, alleging it had insisted, through their father and senior managers of the Quinn group, that all margin calls on CFDs be met on a timely basis and provided the necessary loans, not for the good of the Quinn group but to support its own share price.

The judge said that claim of undue influence by bank officials was abandoned in Mr Dunleavy’s opening statement earlier this month which alleged undue influence was exercised by Sean Quinn snr.

Any argument the case as currently formulated includes a claim of undue influence by Sean Quinn snr is “untenable” and wholly inconsistent with the pleadings and conduct of the case to date, he ruled.

He refused to permit the children to now amend the claim to allege they took “no active role” concerning the Anglo lending, were “effectively dictated to” by their father and signed documents when he, or personnel within the Quinn group acting on his behalf, told them to.

Those amendments were not necessary to determine the real issues in dispute and introduced an “entirely new” claim inconsistent with the existing claims, he held.

New claim

This new claim that Sean Quinn snr was the “principal wrongdoer” was “crudely bolted” onto the existing case with no attempt made to withdraw the undue influence allegations against Anglo.

An allegation of undue influence was serious but this one was “entirely circular”, he said. It was alleged the children were unable to disagree with their father precisely because he exercised influence over them but there were no particulars of the circumstances of the alleged undue influence.

The amendment would cause “real prejudice” to IBRC as the focus of the case would have to shift from the children’s dealings with Anglo to their dealings with their father.

That would mean adjourning the case for a considerable period, and further delay was “unacceptable” given the history of this case, initiated in 2011, which not just involved the Quinns claims but the bank’s counterclaim for €82 million each against the children, he said.

The children would have been aware at all stages of their father’s alleged undue influence and had not explained their “inordinate” delay in advancing that claim, he said.