The wife of former Anglo Irish Bank chairman Sean Fitzpatrick is claiming some € 40 million investments he had were mostly funded from loan accounts in their joint names before he was declared bankrupt in 2010, the High Court heard.
Catriona Fitzpatrick, Whitshed Road, Greystones, Co Wicklow, says that under family law she has a beneficial interest in these investments regardless of the bankruptcy. The court heard some € 45million was realised from the sale of those assets.
The official assignee (OA) in bankruptcy, Chris Lehane, Irish Bank Resolution Corporation (IBRC), which acquired Anglo after its collapse, say she has no legal, equitable, or beneficial interest in assets held in the sole name of her husband. They say she is not entitled to rely on that alleged interest to make her claim under family law.
Mrs Fitzpatrick has brought proceedings against the OA and her husband (as the bankrupt) claiming she has an entitlement to various assets which the court heard include property, shares and bonds.
The OA, in the estate of Mr Fitzpatrick, has brought his own proceedings against Mrs Fitzpatrick and the couple’s three children, David, Jonathan and Sara Fitzpatrick while IBRC has brought separate related proceedings against Mrs Fitzpatrick.
Mr Fitzpatrick was declared bankrupt with assets of some €47 million and debts of €147million and is now out of bankruptcy.
Opening the case yesterday, Gerard Durcan SC, for Mrs Fitzpatrick and the children, said Mrs Fitzpatrick’s case relates to her claim under Section 36 of the 1995 Family Law Act covering a spouse’s entitlement to property. Counsel said there were were established principles that this entitlement was from a “resulting trust” ( arising from transfer of an asset from one person to another without obtaining anything in return).
Mrs Fitzpatrick would also be arguing in relation to the IBRC proceedings that a 2009 loan facility letter was issued which provided a “non-recourse” clause meaning the bank could not have recourse to her or her children in event of default.
IBRC denies she is entitled to claim non recourse and wants the court to grant rescission of the clause on grounds of alleged mistake and/or misrepresentation along with damages.
The OA, in his proceedings, says he is not bound by the non-recourse clause and wants the court to set it aside under bankruptcy law as a disposition aimed at defeating claims of Mr Fitzpatrick’s creditors.
The court heard direct evidence and cross examination of Frank Walsh, a forensic accountant employed by Mrs Fitzpatrick seven years ago, in relation to a “source of funds” document he prepared covering 18 loans/investments between 2000 and 2009. The source document was drafted seven times with the participation of all parties, Mr Walsh said.
The investments, Mr Walsh said, were all in Mr Fitzpatrick’s sole name.
However, the loan funding was in their joint names and payments of the loans were made mainly through a deposit account also in their joint names. The loans were in a consolidated Euro loan account of € 40 million and in November 2009 some € 8.5 million was transferred from the deposit account to reduce that debt, he said.
The investments, in Euros, Dollars and Sterling, were with names including Digicel, Project Walnut, Pilotview Investments, Berlin Property Investment, Strongbow Capital Investment Fund, BNP Parisbas, and Ulster Bank Private Equity.
Asked by Mr Durcan how much was realised from the sale of those assets, Mr Walsh said it was around € 45 million.
Cross examined by Paul Gallagher SC, for the OA, Mr Walsh agreed he had not read all of the loan facility letters as they related to the individual investments as part of his work but said this was because all other facility letters had been superseded by one issued in February 2009.
He said he was not a banking expert and his role was to assist in the preparation of the “source of funds” document.
He said he never discussed with Mr Fitzpatrick a statement of affairs, which is required as part of bankruptcy proceedings, because the value put on the the investments in the source of funding document was agreed between the parties.
There may have been a lien in favour of Anglo on the €8.5 million which was paid from the Fitzpatrick’s joint deposit account to the €40 million loan account but he was not sure.
Cross examination of Mr Walsh by Paul Gardiner SC, for IBRC, has begun and continues on Wednesday.
