Michael Fingleton fails to stop trial over alleged INBS mismanagement

Former Irish Nationwide Building Society (INBS) chief executive Michael Fingleton can face a long-awaited civil trial over alleged negligent mismanagement of the failed lender, even though the 85-year-old is incapacitated and unable to contribute to his defence, the Court of Appeal has ruled.

Mr Fingleton, acting through his wife and son under their powers of attorney, “has not established that there is either a real or serious risk of an unfair trial or an unjust result”, according to a judgment issued by the court on Wednesday.

It added that the former building society chief had not shown “that there is a clear, patent risk of asking him to defend the proceedings, or that, to do so, would place upon him an inexcusable and unfair burden”.

The judges – Ms Justice Caroline Costello, Mr Justice Robert Haughton and Mr Justice Donald Binchy – said that they have dismissed Mr Fingleton’s appeal against a previous High Court ruling that the case can proceed.

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Irish Bank Resolution Corporation (IBRC), which took over INBS in 2011, sued Mr Fingleton the following year for alleged negligent mismanagement of the failed lender, and put its statement of claim at €6 billion, the amount lost by the building society after the 2008 property crash.

However, it emerged in court in December that IBRC had narrowed its claim to about €290 million, relating to a group of specific loans issued between 2006 and 2009.

“Much of the evidence to be adduced in defence of these proceedings will not depend on the appellant’s personal evidence, even if he were well and in a position to give evidence on his own behalf,” the Court of Appeals ruling said. “This is apparent from the nature of the defence pleaded as well as the now-limited nature of the claim advanced by the respondents. Many of the facts can be independently established without the need for evidence from the appellant.”

[ Fingleton faces ‘serious risk of unfair trial’ if Irish Nationwide case proceeds, court hears ]

IBRC’s “abandonment” of large part of its original case “will significantly reduce” the length of the trial from earlier estimates that it would take six months, it said. The trial is due to take place this year.

IBRC, which also became home to the remnants of Anglo Irish Bank during the financial crisis, was put into liquidation in early 2013.

Mr Fingleton led Irish Nationwide between 1971 and 2009, holding the role of managing director for much of the period, though his title was changed to chief executive close to the end of his time in charge. In 2021, the High Court rejected a challenge by Mr Fingleton aimed at stopping a trial going ahead on grounds of his ill-health.

Mr Fingleton’s wife and son took charge of his appeal early last year, after they secured enduring power of attorney due to the fact that the octogenarian is mentally incapacitated after suffering a stroke in 2019.

While the judgment said that Mr Fingleton’s inability to give instructions or assistance as the trial progresses “is a significant litigation disadvantage”, this is not “determinative”.

“If it were, a person under a legal disability could neither sue nor be sued, which is not the law. Further, the Oireachtas has provided for the continuance of actions against a deceased defendant,” it said.

[ Michael Fingleton’s wife and son may take over defence of IBRC case ]

Lawyers for Mr Fingleton also argued that case should be halted due to the “unusual nature of the proceedings, their unprecedent scale and gravity and breadth of allegations” as well as the “historic nature and age of the allegations, with associated risk of injustice due to elapse of time”.

However, the court said these arguments are now redundant as the case has now been narrowed to five series of loans issued between 2006 and 2009.

Although the court noted that documents relating to the loans “might not be as complete as one might expect of a financial institution of the nature of INBS”, it added that it has received no evidence that they are so incomplete that it would be unfair to Mr Fingleton to allow proceedings to continue.

“The question of whether the authorising of these loans on the terms set out amounted to negligence on the part of the appellant will largely turn on expert testimony, once the terms of the loans and the agreement of the appellant to issue the loans on these terms are established,” the ruling said, adding that this will be a matter for IBRC to prove.

The court said Mr Fingleton’s side did not establish through affidavits that he could not continue to privately fund his defence.

Counsel for Mr Fingleton argued in court in December that if the case was being pursued with the idea of getting hold of funds in a “vast pension pot”, that would appear to be “misplaced”, as he previously agreed to “cash in his pension” and sell property to pay down Ulster Bank borrowings on foot of a court order.

However, Tuesday’s ruling stated: “The State has pursued the litigation at taxpayers’ expense, with possibly little chance of recovering the costs or damages even if successful. It is not for this court to intervene and say it is unjust to pursue the proceedings because of the costs to the public purse. The wisdom or otherwise of pursuing litigation must always be a matter for the litigant.”