High Court strikes out businessman’s claim against Davy and 16 former employees over Anglo bond sale

The High Court has made orders striking out businessman Patrick Kearney’s claims against J&E Davy stockbrokers and 16 of its former employees comprising the so-called O’Connell Partnership.

The orders, agreed by all of the parties as part of the settlement of the action, include a provision for 15 of the Davy individuals to pay for all of the legal costs incurred by Mr Kearney and his firm Kilmona Holdings Ltd in bringing their case over the 2014 onward sale of his Anglo Irish Bank bonds.

The 15 will also pay the legal costs of former Davy executive Tony O’Connor, the 16th individual named as a defendant in the action.

Mr Kearney’s counsel, Martin Heydon SC, said a resolution has not yet been reached in Mr O’Connor’s counterclaim alleging Mr Kearney reneged on a profit share deal. Mr O’Connor’s barrister, Patrick O’Reilly SC, asked for this to be adjourned for a month.

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The orders also specify that the other 15 former employees will indemnify Mr Kearney and Kilmona in respect of the counterclaim.

No costs order is made against J&E Davy, which will pay its own legal fees for defending the claims.

Marcus Dowling SC said his clients – 15 of the 16 individual defendants – were consenting to the arrangements, while counsel for J & Davy also indicated its agreement.

It is understood the settlement will see Mr Kearney receive about €2 million, without any liability being admitted.

Mr Justice Denis McDonald congratulated the parties on working out “all the minutiae”. He appreciated the settlement does not resolve “everything in the dispute but it resolves a very substantial part of it”.

He made the orders sought.

Belfast-based Mr Kearney and his property investment firm sued the stockbroker and the O’Connell Partnership members who were involved in the controversial trade of junior bonds in failed lender Anglo Irish Bank.

Mr Kearney claimed Davy, while acting as his agent in the sale to what he was assured was a third party, had in fact sold them to the partnership which went on to make a secret windfall profit from the onward sale.

His claims were fully denied.

The 15 told the court previously that the partnership made a €9.3 million profit from the onward sale of the bonds.

His High Court action sought to set aside a settlement of a 2015 case he brought alleging his bonds were sold at an undervalue and 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 a new action against Davy and the O’Connell partnership members after the Central Bank fined Davy €4.13 million in March 2021 for regulatory breaches and failures to flag potential conflicts of interest arising from the Kearney/Kilmona bond transaction.

His new action claimed a fraud occurred when he was allegedly told during December 2015 meetings that the O’Connell Partnership had no connection with Davy.

The 15 argued there were inconsistencies in Mr Kearney’s allegation that he was induced into signing the 2015 settlement by fraudulent misrepresentation. They also claimed he did, in fact, know Davy employees were members of the partnership.

All of the allegations were denied.