A man has claimed he and 131 other investors in a fund marketed by the former Anglo Irish Bank Private Bankers are being used as “a human shield” to protect the bank’s own interests.
The fund relates to the Whitgift shopping centre and office development in Croydon, London, the Commercial Court heard.
Irish Bank Resolution Corporation, formerly Anglo, asked Mr Justice Peter Kelly today to fast-track into the Commercial Court the action by John Spencer against the bank.
He has claimed damages for alleged negligence by the bank in relation to the Whitgift Geared Property fund in which he invested €1 million.
The fund was marketed by Anglo Irish Bank Private Bankers (now IBRC Wealth Management) to high net worth private investors in autumn 2005.
It was arranged by AIBPB in conjunction with Anglo Irish Assurance Company Ltd and involved 132 policyholders investing in life assurance policies whose value was linked to the value of the property assets of the fund.
The purchase of the Whitgift centre was financed through a combination of policyholder premiums, equity from joint venture partners and non-recourse senior borrowings, IBRC said.
It claims the investment was described in the fund brochure as “a high risk geared investment”.
Mr Spencer, it alleges, is both a solicitor and an “experienced property investor” who, it claims, completed a personal finance review in October 2005 expressing a preference for high-risk investment.
IBRC contends it has no liability in relation to Mr Spencer’s investment and says it wants the case speedily dealt with in the Commercial Court so as to avoid any unnecessary delays and expense.
Eoin McCullough SC, for IBRC, said Mr Spencer issued proceedings in August 2011 but had yet to serve a formal claim outlining his case against the bank. Mr Spencer could have used the bank’s complaints procedure instead of bringing legal action, counsel added.
Mr Spencer, a solicitor, of Lakeview, Ballina, Co Tipperary, representing himself, said he had yet to receive proper answers from the bank to about six questions put by him in a letter to it arising from his concerns about the fund.
The answer to those questions would have an effect on his decision whether to continue with his action and, in those circumstances, the bank’s application to fast-track the case was premature, he argued.
A general communication provided last August by the bank to him and the other investors did not address his concerns, he said.
Mr Spencer said he and the other investors were recruited by AIBPB to raise Stg£15 million with the intention of being used as “a human shield” against default and insolvency.
While the bank had undertaken to notify investors about developments, it appeared there were deals and transactions going on in London about which the investors were not being notified.
A circular had indicated the investments had “zero value” and he was concerned the centre would be dealt with without the investors’ interest being considered.
It appeared two developers in London wanted to redevelop the centre with IBRC supporting one developer and the owners of the centre’s freehold backing another.
Mr Justice Kelly said he would transfer the case to the Commercial Court. He directed Mr Spencer to serve a statement of claim within four weeks with the bank to reply and returned the matter for further directions in December.
