2016 has seen the Irish High Court address the status of third-party litigation funding, and has struck a blow to funders seeking to service the Irish market by declaring it unlawful.

The Court’s judgment was handed down in April in the case of Persona Digital Telephony Ltd v The Minister for Public Enterprise.

Trouble in the Emerald Isle

Background

Any disposition of a company's property made after the commencement of its winding up, without the approval of the liquidator, is void. In a 2001 case (Re Industrial Services Company (Dublin) Ltd [2001] 2 I.R.118), the High Court held that the transfer by an account bank of monies from an in-credit account of a company in liquidation to third parties constituted a disposition and the bank could be liable to repay the value of such transfers despite not being aware of the winding up order for the Company.

Simple retention of title clauses are commonplace and generally effective in contracts for the sale of goods. However, extending their effect to the proceeds of sale of such goods requires careful drafting.

The Court of Appeal has provided some further clarity around the creation and effects of fiduciary obligations in relation to such clauses.[1]

Proceeds of sale clauses

The Office of the Director of Corporate Enforcement (ODCE) has published its Annual Report for 2015.

Key Developments from the Report: 

In AIB Mortgage Bank -v- O'Toole & anor [2016] IEHC 368 the High Court determined that a bank was not prevented from relying on a mortgage as security for all sums due by the defendants, despite issuing a redemption statement which omitted this fact.

In order to understand this case, it is necessary to set out the chronology of events:

Two recent judgments have brought further clarity in relation to the rights acquirers of loan portfolios to enforce against borrowers:

The High Court has reiterated that cross-examination will not generally be permitted on an interlocutory application, or where there is no conflict of fact on the affidavits.

In McCarthy v Murphy,^[1] the defendant mortgagor was not permitted to cross-examine the plaintiff (a receiver) or a bank employee who swore a supporting affidavit.

Background

We recently published an article entitled“Good news for financial institutions seeking to challenge Protective Certificates” which outlined the positive steps taken the High Court to prevent a Debtor from receiving the full benefit of a protective certificate (“PC”) where it would cause irreparable loss to a lending institution.

A declaration sought by the Liquidator of an insolvent company that certain payments made to a director constituted fraudulent preference has been refused by the High Court in FF Couriers Limited & Companies Acts: Keane -v- Day & ors [2016] IEHC

The perils of making a declaration of solvency by company directors, without reasonable grounds.

Summary