Judgment amended in case involving former Davy employees

A High Court judge has agreed to amend his judgment to remove a reference incorrectly alleging Tony O’Connor, one of the so-called Davy 16, was at a series of meetings in 2015 where fraudulent misrepresentation is alleged to have occurred.

Mr Justice Michael Twomey gave a ruling last month in a case taken by Belfast-based developer Patrick Kearney alleging former J&E Davy employees misled him over the onward sale of bonds he held in Anglo Irish Bank.

Mr Kearney says the bonds were sold by Davy to the “O’Connell Partnership”, comprising the 16 former Davy employees, who, he says, went on to make a secret windfall profit from the onward sale of the bonds.

The claims are denied.

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No connection

The judge last month refused an application by 15 of the 16 partnership members, who are being sued along with Davy itself, seeking to strike out the action on grounds including that the case was bound to fail and/or was unsustainable.

The 16th partnership member, Mr O’Connor, reserved his position in relation to the strikeout application.

However, he was listed, alongside Tony Garry and Barry Nangle, in Mr Justice Twomey’s ruling as allegedly attending a series of meetings at the Merrion Hotel in December 2015. Mr Kearney alleges he was told at these meetings that the O’Connell Partnership had no connection with Davy.

Mr O’Connor, through his counsel Brian Conroy, successfully brought an application late last month seeking to correct the judgment.

Mr Conroy submitted that Mr Kearney never alleged that Mr O’Connor had attended these meetings.

The judge said he was happy to amend the ruling on the terms agreed, which includes removing references to Mr O’Connor allegedly attending these meetings.

In refusing to strike out the case last month, Mr Justice Twomey said the 15 raised doubts about Mr Kearney’s claims he was induced by a fraudulent misrepresentation to settle a previous case in 2015 over the bond sale.

However, he refused to dismiss the case because Mr Kearney alleged fraud and therefore there was “the possibility of clandestine activity on the part of the defendants, combined with the fact that there is prima facie evidence of a lack of candour on the part of Davy, regarding the transaction in dispute”.

The court could not say it was “clear beyond doubt” that Mr Kearney will not succeed in his case, the judge added.

The case arose after Mr Kearney and his company, Kilmona Holdings, approached Davy to sell his bonds, known as subordinated floating rate notes, held in Anglo Irish Bank.

Davy employees

The bonds were sold for €5.3 million in November 2014 to the O’Connell Partnership, which Mr Kearney says he later discovered comprised Davy employees.

The 16 told the High Court they made a profit of €9.3 million from the onward sale of bonds.

He brought High Court proceedings in 2015 alleging, among other things, his bonds were sold at an undervalue and that there was a conflict of interest on the part of Davy. That case was settled with Mr Kearney and Kilmona receiving €1.125 million.

Mr Kearney and Kilmona brought new proceedings against Davy and members of the O’Connell partnership after Davy was fined €4.13 million by the Central Bank for regulatory breaches and failures to flag potential conflicts of interest arising from the Kearney/Kilmona bond transaction.

Mr Kearney now claims a further fraud took place at the December 2015 meetings when the previous case was settled.

The defendants deny the claims and have pointed to what they argue are inconsistencies in Mr Kearney’s allegations.