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Bank of Ireland must disclose more information for case brought over Davy sale, judge rules

Company representing Amber Note Unlimited Co, the parent firm that constituted the Davy Group, claimed BoI failed to make a post-completion payment

In the High Court, Ailmount Investments Ltd has sued Bank of Ireland Nominee 1 Ltd and that firm’s guarantor of the payment, the governor and company of BoI. Photograph: Bryan O'Brien

Wed Feb 21 2024 - 18:27

Bank of Ireland (BoI) must disclose more information for a High Court case taken by a company representing former J&E Davy investors who claim the bank still owes some €19.7 million for the purchase of the stockbrokers, a judge ruled.

BoI bought the Davy Group in 2022 for €427 million.

A company representing Amber Note Unlimited Co, the parent firm that constituted the Davy Group, claimed BoI failed to make a post-completion (of sale) payment first due in January 2023.

As a result, that company, Ailmount Investments Ltd, which held the legal interest in Amber Note on behalf of 722 investors, sued Bank of Ireland Nominee 1 Ltd and that firm’s guarantor of the payment, the governor and company of BoI.

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As part of its preparation for the hearing, Ailmount sought discovery of certain documents from the BoI defendants, which was refused.

Mr Justice Michael Twomey was asked to adjudicate on the discovery dispute and on Wednesday ordered BoI to provide the documents sought.

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The judge said the Davy Group was sold under the terms of a share purchase agreement between Ailmount and the two BoI defendants.

The question to be determined at the main trial seems, he said, to come down to a question of contractual interpretation of a clause in the purchase agreement.

The judge said that agreement provides for the possibility of an increase in the purchase price based on the fact that around the time of the sale of the Davy Group, there was a change in the law regarding investment firms.

This change meant there was likely to be a reduction in the capital requirements of Davy, known as the Consolidated Capital Resources Requirement (CCRR). If those new regulations led to a reduction in capital requirements for Davy, then Ailmount would be paid an “uplift” on the purchase price.

Ailmount pleads that it understands that Davy submitted its capital requirements to the Central Bank in the sum of some €47.5 million. Applying the formula in the relevant clause, it was then owed some €19.7 million, it said.

BoI argues that the amount payable by it to Ailmount under the clause in the purchase agreement is zero.

In particular, BoI claims it never received any confirmation in writing, from the Central Bank on or before December 31st, 2022, of the capital requirements/CCRR of the Davy Group, and so it does not have to pay Ailmount any money.

In its discovery application, Ailmount sought copies of all regulatory capital returns filed by Davy for 2022. It also sought any other documents evidencing or recording the amount, or the calculation, or means of calculation, of the 2022 CCRR amount.

It also sought any communications recording and/or evidencing and/or discussing the Davy Group capital resource requirements or the Davy Group’s regulatory capital returns.

BoI opposed the application.

Mr Justice Twomey ordered BoI to discover the documents sought by Ailmount subject to the temporal limits sought by it.

He said it was clear that engagement by the Davy Group with third parties including the Central Bank, regarding the CCRR in particular, was at the heart of the dispute.

Yet, thus far, he said, BoI has refused to disclose the nature of the confirmation, if any, it sought from the Central Bank regarding the CCRR. It did so on the basis that it felt the question did not “arise from the matters pleaded”, he said.

It was, he said, important to bear in mind that the basic purpose of discovery is to ensure as far as possible that justice on full information may be done, combined with the fact that the capital requirements of the Davy Group is clearly an issue in dispute.

It was also important to bear in mind that there can be a public interest involved in discovery orders being granted, namely the efficient use of court resources, he said.

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