Judge steps back from Blackrock Clinic case over comments in judgment

A High Court judge who criticised the conduct of Breccia, a company linked to businessman Larry Goodman, in the marathon litigation over control of Dublin's Blackrock Clinic has agreed to cease his involvement in the case.

Breccia had formally applied to Mr Justice Robert Haughton to recuse himself from further dealing with the litigation arising from certain comments made by him in a judgment last November, including stating Breccia displayed a "lack of candour" in seeking injunctions against Dr Joseph Sheehan concerning his shareholding in Blackrock Hospital Ltd (BHL).

BHL owns the share capital of Blackrock Clinic Ltd, co-founded in 1986 by Dr Sheehan with his fellow surgeons James Sheehan and Maurice Nelligan, and Dr George Duffy. The shareholdings of Dr Joseph Sheehan and of businessman John Flynn and his company Benray are at the centre of litigation involving them and Breccia.

At the Commercial Court on Friday, Mr Justice Brian McGovern was told that Mr Justice Haughton had said he would no longer deal with the litigation.

Mr Justice McGovern noted another High Court judge, Mr Justice David Barniville, could not be assigned as he had dealt with a mediation involving some of the parties while Mr Justice McGovern himself knew Dr Duffy.

After directing the litigation will now be case managed by Mr Justice Michael Twomey, the making of further directions was adjourned for three weeks.

Change of control

In a separate development, Mr Flynn and Benray have brought an application to establish exactly who owns and controls Breccia. They claim there has been a change of control in breach of restrictions on share transfers set out in a 2006 shareholders agreement concerning BHL.

They claim the effective control of Breccia has been placed offshore and say they have made several requests for the identity of the ultimate beneficiaries of various trusts which, they claim, through the Rabena Foundation in Liechtenstein, own and control Breccia.

In their application, they want orders requiring Breccia to disclose the identity of all individuals entitled to assert a legal or beneficial ownership or interest in its shares in BHL. They want further orders providing all of Breccia’s shares in BHL should be subject of an irrevocable transfer notice and are also claiming damages, including for alleged breach of contract.

Dr Joseph Sheehan and Mr Flynn/Benray initiated separate actions against Breccia over the price sought by it for redemption of loans made by Anglo Irish Bank from 2006 to buy shares in the clinic. The loans were sold by Nama to Breccia, which also bought shares in 2006.

In his November judgment, Mr Justice Haughton refused Breccia’s application to lift injunctions granted in 2014 which prevent Breccia calling in Dr Sheehan’s loans before a full hearing of his case.

‘Lack of candour’

The judge said Breccia had not come to court “with clean hands”, there was “a lack of candour” and Breccia’s real target was acquisition of Dr Sheehan’s shares following on receivership.

He dismissed arguments by Breccia that Dr Sheehan – as a result of an earlier Court of Appeal finding Breccia was entitled to a €8.7 million judgment against Mr Flynn and Benray – had no bona fide case remaining to be tried at a full hearing.

The Court of Appeal had found a receiver appointed by Breccia in 2014 over Benray’s shares in BHL was entitled to sell those shares. It also overturned High Court findings that the 2006 BHL shareholders agreement included an implied term the shareholders owe each other “mutual general duties of good faith and fair dealing” and limited a shareholder’s right to recover monies under another shareholder’s loan.