Hibernia REIT v Companies Act 2014 [2020] IEHC 144 (25 March 2020)

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IN THE MATTER OF A PROPOSED REDUCTION OF CAPITAL PURSUANT TO SECTIONS 84

JUDGMENT of Mr. Justice David Barniville delivered on the 25th day of March, 2020

1. This is my judgment on an application by Hibernia REIT Public Limited Company (the

“Company”) for orders under part 3, chapter 4 of the Companies Act, 2014 (as amended)

(the “2014 Act”) confirming a special resolution approving a reduction of the Company’s

2. As I explain below, the Company’s application was opposed by Richard Farrington who

claims to be a creditor of the Company. Mr. Farrington sought to oppose the Company’s

application on various grounds. Among the grounds relied upon by Mr. Farrington were

that the Company was indebted to him in the sum of in excess of €2 billion (on foot of an

invoice sent by Mr. Farrington to the Company in late January, 2020) and that the

Company’s accounts were prepared on an unlawful and improper basis, such that they

could not properly be relied upon by the court in determining the Company’s application.

Various other grounds of opposition were put forward by Mr. Farrington (with the support

of Cormac Butler, a person put forward on his behalf as an expert). The grounds of

opposition put forward by Mr. Farrington (some of which were supported by Mr. Butler)

were strongly resisted by the Company in affidavit evidence before the court and in

3. I will in the course of this judgment attempt to summarise the evidence before the court

which is relevant to the Company’s application. I stress the word “relevant”, as much of

the material and purported evidence on which Mr. Farrington sought to rely was not

evidence in any meaningful sense of the term and was entirely irrelevant to the court’s

consideration of the Company’s application. I will then outline the statutory provisions

relevant to the Company’s application and to some of the cases relevant to the

interpretation and application of those statutory provisions. Having done so, I will

consider the grounds of objection sought to be relied upon by Mr. Farrington in the

context of my consideration of the application of the relevant statutory provisions. I will

4. It will also be necessary for me, in the course of this judgment, to make certain

observations about the purported expert evidence relied upon by Mr. Farrington as, in my

view, the expertise of Mr. Butler, in the particular area relevant to this application, was

not established. Nor did he make any attempt to demonstrate to the court that he

understood the particular duties and obligations of an expert. Furthermore, Mr. Butler

went far beyond what is appropriate for an expert and, in truth, became an advocate for

Mr. Farrington. In so acting, Mr. Butler made a number of entirely improper and

inappropriate assertions without any justification and which were unsupported by any

5. For the reasons set out in detail in this judgment, I have concluded that the Company has

complied with the statutory requirements which must be met in order for the court to

confirm a reduction of capital and to make the ancillary orders sought. I have concluded

that there is no basis whatsoever for any of the grounds of objection raised by Mr.

Farrington. I am not satisfied that Mr. Farrington is a creditor of the Company. Even if,

contrary to that conclusion, Mr. Farringdon is a creditor, he has not established an

entitlement to object to the Company’s application under the applicable statutory

provisions. Furthermore, I have concluded that there is no basis whatsoever for any of

the other grounds of objection sought to be raised by Mr. Farrington (with the support of

Mr. Butler). Finally, insofar as Mr. Farrington requested the court to make a reference to

the Court of Justice of the European Union (CJEU), pursuant to Article 267 TFEU, I have

concluded that there is no issue of EU law on which the court requires assistance or

guidance from the CJEU under the preliminary reference procedure. I have, therefore,

declined to make a reference to the CJEU as requested by Mr. Farrington.

6. In conclusion, therefore, I will make the orders sought by the Company.

7. By an originating notice of motion, issued on 25th September, 2019, the Company sought

various orders under ss. 85 and 86 of the 2014 Act. The principal relief sought by the

Company was an order pursuant to s. 85(1) of the 2014 Act confirming a special

resolution approving the reduction of the Company’s capital by reducing the share

premium account by €600,000,000 or by such lesser amount as the court might

determine, such that the reserve resulting from the reduction of capital could be treated

as profits available for distribution within the meaning of s. 117 of the 2014 Act. The

Company also sought an order pursuant to s. 85(5) of the 2014 Act that s. 85(4) should

not apply as regards any of the classes of creditors of the Company (or should not apply

in respect of such class or classes of creditors of the Company as the court might

determine). Ancillary orders were also sought under s. 86 of the 2014 Act.

8. The Company’s application was grounded on an affidavit sworn by Thomas Edwards-Moss

on 25th September, 2019. Mr. Edwards-Moss swore four further affidavits in support of

the Company’s application. On the same date as the originating notice of motion was

issued, a motion was issued on behalf of the Company seeking to have the proceedings

entered in the Commercial List. On 14th October, 2019, the High Court (Haughton J.)

made an order that the proceedings be entered in the Commercial List. The court listed

the Company’s reduction of capital application for hearing on 5th November, 2019 and

made a number of further directions in respect of the hearing. In addition, the court was

satisfied that the provisions of s. 85(2) of the 2014 (as amended) had been complied with

by the Company. Those provisions are designed to ensure that creditors are informed of a

company’s proposal or intention to apply to the court for an order confirming a resolution

authorising a reduction of the relevant company’s capital. The court was satisfied that

creditors of the Company were duly notified in accordance with the provisions of section

85(2). No issue arises in relation to the Company’s compliance with section 85(2). Mr.

Farrington has not suggested that the relevant requirements were not complied with. In

any event, in my view, Haughton J. correctly concluded, on the evidence, that the

requirements of s. 85(2) had been complied with by the Company. Among the directions

made by the court on 14th October, 2019 were that any person intending to appear in the

proceedings had to give notice in writing of his or her intention to the Company’s

solicitors by close of business on 1st November, 2019 and, if such person wished to rely

on affidavit evidence, such affidavit evidence had to be provided by the same time. Before

coming to what occurred on 5th November, 2019, and on subsequent dates on which the

Company’s application was before the court, it is necessary to say something about the

9. The basis for the Company’s application was outlined in Mr. Edwards-Moss’s first affidavit.

The Company sought an order from the court confirming a reduction of the amount

standing to the credit of the Company’s share premium account by €600,000,000 and

stated that it was intended that the reserves resulting from the proposed capital reduction

would be treated as realised profits which would be available for distribution pursuant to

10. The Company was incorporated on 13th August, 2013 as a private company limited by

shares, under the name Hibernia REIT Limited. It was re-registered as a public limited

company on 8th November, 2013. The Company was established as a “Real Estate

Investment Trust” (REIT) and its principal activity is investment in, and development of,

real estate in Ireland (mainly in Dublin) for rental income. It also acts as the holding

11. The Company has an authorised share capital of €100,000,000 divided into 1 billion

ordinary shares of €0.10 each of which 689,450,277 ordinary shares are in issue. The

Company’s ordinary shares are admitted to trading on various markets including Euronext

Dublin, the regulated market operated by Euronext Dublin, and on the Main Market, being

the regulated market operated by London Stock Exchange plc. The Company was

admitted to those markets in December, 2013 following an initial public offering of its

shares. The Company has 16 subsidiaries. It is a leading Irish listed property investment

company. As a REIT, the Company is required to comply with certain ongoing statutory

requirements under the Taxes Consolidation Act, 1997 in order to maintain its REIT

12. Mr. Edwards-Moss exhibited a copy of the audited financial statements and annual report

of the Company and the group of which it forms part (the “Group”), for the financial year

to 31st March, 2019 (the “2019 Annual Accounts”). He explained that the Company had

been advised that the 2019 Annual Accounts were prepared “in accordance with IFRS as

adopted by the European Union and the 2014 Act” (para. 15 of his first affidavit). I

specifically note this here as Mr. Farrington repeatedly contended on affidavit, in his

written submissions and in his oral submissions that the Company had not prepared its

accounts in accordance with the relevant International Financial Reporting Standards

(IFRS) “as adopted by the European Union”. He was mistaken in that regard.

13. The 2019 Annual Accounts themselves (exhibited at Exhibit “TEM6”) contain numerous

references to the standards by which its financial statements were prepared. A few

examples will suffice. In the “Directors responsibility statement”, the directors stated (at

“Irish Company law requires the Directors to prepare financial statements for each

financial period. Under that law, the Directors are required to prepare the Group

financial statements in accordance with International Financial Reporting Standards,

as adopted by the EU (IFRSs) and have elected to prepare the Company financial

statements in accordance with IFRSs and Article 4 of IAS Regulations.

Under Company law, the Directors must not approve the financial statements

unless they are satisfied that they give a true and fair view of the assets, liabilities

and financial position of the Group and Company as at the financial year end date

and of the profit or loss of the Company for the financial year and otherwise comply

14. The directors further confirmed (on the same page) that, to the best of their knowledge

“ The Annual Report and consolidated financial statements, prepared in

accordance with IFRSs as adopted by the European Union, give a true and fair view

of the assets, liabilities, financial position for the Group and Company as at 31

March 2019 and of the result for the financial year then ended for the Group and

15. In their “Report on the Audit of the Financial Statements”, the independent auditors,

Deloitte Ireland LLP (“Deloitte Ireland”), expressly confirmed that, in their opinion, the

give a true and fair view of the assets, liabilities and financial position of the

Group and Company as at 31 March 2019 and of the profit of the Group for the

have been properly prepared in accordance with the relevant financial reporting

framework and, in particular, with the requirements of the Companies Act, 2014

and as regards the Group financial statements, Article 4 of the IAS Regulation.”

“The relevant financial reporting framework that has been applied in the

preparation of the Group and Company financial statements is the Companies Act,

2014 and International Financial Reporting Standards (IFRS) as adopted by the

European Union (‘the relevant financial reporting framework’).”

17. Later, the “Notes to the consolidated financial statements” describe the basis of the

“The consolidated financial statements of Hibernia REIT plc have been prepared in

accordance with International Financial Reporting Standards (IFRS) as adopted by

the EU and the Companies Act 2014. IFRS as adopted by the EU differ in certain

respects from IFRS as issued by the International Accounting Standards Board

(IASB). The Group financial statements therefore comply with Article 4 of the EU

IAS Regulation. The consolidated financial statements have been prepared on the

historical cost basis, except for the revaluation of investment properties, owner

occupied buildings and derivative financial instruments that are measured at fair

value at the end of each reporting period. Historical cost is generally based on the

fair value of the consideration given in exchange for goods and services. The Group

has not early adopted any forthcoming IASB standards (note 3).”

18. Note 3 concerns the application of new and revised IFRSs, and refers to some standards

and interpretations which were effective for the Group from 1st April, 2018. However, the

note states that they “did not have a material impact on the results or financial position of

the Group”. Note 3 specifically refers to IFRS 9 Financial Instruments (which replaced IAS

39) and IAS 40 (amendment) Investment Property. These particular standards are

expressly referred to and discussed in note 3, but the point is made that they did not

have a “material impact” on the results or the financial position of the Group.

19. Mr. Edwards-Moss explained in his first affidavit how the Company’s share premium arose

through a series of transactions and events in the period following its incorporation. There

was no dispute in relation to the creation of the share premium account and it is,

therefore, unnecessary to outline in any detail the circumstances in which it arose. As of

the date of his first affidavit, the sum of €630,276,449 stood to the credit of the

Company’s share premium account. Under s. 71(5) of the 2014 Act, that share premium

had to be credited to and form part of the Company’s undenominated capital and, for that

purpose, transfer to the Company’s share premium account. It is an undistributable

20. Mr. Edwards-Moss further explained in his first affidavit that the Company’s Constitution

permits the Company to reduce its share capital. This is provided for in Article 46 of the

articles of association of the Company (which he exhibited at “TEM 2”). He also confirmed

that, even on the basis of the capital reduction initially sought, the Company’s capital

would at all stages exceed the authorised minimum for the purpose of s. 1084 of the

21. On 31st July, 2019, the Company’s shareholders passed a special resolution at its 2019

“That, subject to and with confirmation from the High Court in accordance with

sections 84 and 85 of the Companies Act 2014, the company capital of the

(a) Subject to (b) below, up to €600,000,000 of the amount standing to the credit of

the share premium account of the Company immediately preceding the passing of

this resolution or such lesser amount as the High Court may determine, be

cancelled and extinguished such that the reserve resulting from such cancellation

be treated as profits available for distribution as defined by section 117 of the

(b) The Directors of the Company (or any duly authorised committee thereof) be and

they are hereby authorised to determine, on behalf of the Company, to proceed to

seek confirmation from the High Court to a reduction of up to €600,000,000 of the

share premium account or such lesser amount or number as the Directors of the

Company (or any duly authorised committee thereof) may approve in their absolute

discretion, or to determine not to proceed to seek confirmation of the High Court at

As matters transpired, for reasons explained below, the reduction of capital for which the

Company now seeks confirmation from the court is a reduction in the Company’s share

premium account of €50,000,000, such that the balance remaining credited to that

22. That resolution was passed unanimously by the shareholders at the AGM and was

subsequently filed in the Companies Registration Office on 30th August, 2019. Notice of

the AGM, together with a circular, had been sent by ordinary prepaid post to the

shareholders of the Company on 28th June, 2019 and was published on the Company’s

website. That documentation included a letter from the Chairman of the Company setting

23. Following the resolution at the AGM, a committee of the Board of Directors met to

consider the resolution and determined to seek confirmation of a reduction in the

Company’s share premium account in the amount initially sought, such that the balance

remaining credit to that account would be €30,276,449. Mr. Edwards-Moss explained in

his first affidavit that in the event that the then proposed capital reduction was approved

by the court, it would result in a realised profit of the Company, as contemplated by s.

117 of the 2014 Act, and a corresponding increase in the distributable reserves of the

Company. He explained that that increase would give flexibility to the Company and put it

in a better position to consider making further distributions or other returns of capital to

shareholders or to redeem or repurchase shares or otherwise to deploy distributable

reserves, as and when determined appropriate by the Board. He further explained that

the proposed capital reduction would have no impact on the number of shares held by the

shareholders, or on their proportionate interests in the issued share capital of the

Company. Nor would there be any change in the number of shares in issue. He also

explained that the Board was satisfied that the proposed reduction would not have any

impact on the working capital or other funding requirements of the Company or of the

24. Mr. Edwards-Moss set out in some detail the financial position of the Company at section

G of his first affidavit. He again explained (at para. 46) that he had been advised that the

financial statements, contained in the 2019 Annual Accounts, had been prepared in

accordance with IFRSs “as adopted by the European Union and the 2014 Act” and that

they showed that, on a consolidated basis, the Group had positive net assets of

€1,218,538,539 as at 31st March, 2019. He exhibited an unaudited single entity pro

forma balance sheet for the Company (derived from the 2019 Annual Accounts) which

was prepared as at 31st August, 2019 and set out the financial position of the Company

as of that date, as well as the prospective financial position of the Company in the event

that the reduction of capital sought was approved by the court. This pro forma balance

sheet was subsequently replaced by an updated document showing the prospective

financial position of the Company in the event that the court approved the reduction of

capital in the lesser amount now sought. Even with the reduction of capital initially

sought, Mr. Edwards-Moss stated (and I accept) that the proposed capital reduction would

not adversely affect, in any manner, the discharge by the Company of its liabilities. I will

return to this issue when considering the updated pro forma balance sheet prepared to

reflect the reduction of capital in the lesser amount for which confirmation is now sought.

It is also relevant to note at this stage that Mr. Edwards-Moss explained that the

Company’s lenders had been informed about the proposed capital reduction (and

furnished with a copy of the AGM documents) and had raised no objection to the

reduction. He confirmed that the proposed reduction did not conflict with or breach any

25. As regards the impact of the proposed capital reduction (in the amount initially sought)

on the Company’s creditors, Mr. Edwards-Moss explained that the Company had made

sufficient provisions and put in place suitable safeguards for the Company’s creditors. He

explained the arrangements made for the provision of notice to the Company’s creditors

of the passing of the capital reduction resolution at the AGM for the purposes of s. 85(2)

of the 2014 Act. This was addressed at paras. 58 to 60 in his affidavit. As noted earlier,

Haughton J. was satisfied that the provisions of s. 85(2) of the 2014 Act were duly

complied with by means of the advertisements exhibited at Exhibit “TEM11” to Mr.

Edwards-Moss’s first affidavit and so noted in the Order of 14th October, 2019. While no

issue was taken by Mr. Farrington in relation to compliance with that provision, for

completeness, I should state that I have considered this issue again and am satisfied that

the Company did comply with the provisions of s. 85(2), both in relation to the

advertisements placed in the relevant publications and in relation to the notification to

creditors (all of which were described at paras. 58 to 60 of Mr. Edwards-Moss’s first

affidavit). I confirm, therefore, that the Company duly complied with the provisions of

26. In its order of 14th October, 2019, entering the proceedings in the Commercial List, the

court fixed the hearing of the Company’s application for 5th November, 2019 and gave

further directions concerning persons who wished to appear at the hearing of the

27. In advance of the hearing date of 5th November, 2019, Haughton J. was informed that

the Company would be making an application to adjourn its capital reduction application

on 5th November, 2019. By that stage, Mr. Farrington had been in contact with the

Company’s solicitors and had communicated his intention to request the court to strike

out or stay the Company’s application until certain other proceedings which he had

brought (albeit not at that stage against the Company) were determined. Mr. Farrington

also took issue with the notification he had received about the call over of the case on 1st

November, 2019. I have read the relevant email exchanges between Mr. Farrington and

the Company’s solicitors and am satisfied that nothing improper or untoward occurred

and that no prejudice was caused to Mr. Farrington by reason of his absence from the call

28. In advance of the initial hearing date of 5th November, 2019, Mr. Edwards-Moss swore

his second affidavit on 4th November, 2019. In that affidavit, he explained the basis for

the Company’s adjournment application. In the period between 14th October, 2019 and

the hearing date of 5th November, 2019, the Company became aware of the contents of

the Finance Bill (no. 82 of 2019 (the “Finance Bill”)). The Finance Bill contained provisions

affecting Irish REITs. The Company took the view that until the terms of the Bill were

finalised, and the Finance Act 2019 (the”2019 Act”) enacted, it could not be certain of the

full effects of the changes on the Company and its shareholders and on the capital

reduction application. In those circumstances, the Company sought an adjournment of

the application so that it could examine the legislation when ultimately enacted. Mr.

Edwards-Moss also referred to and exhibited to that affidavit the correspondence

exchanged with Mr. Farrington to which I have just referred. He explained that the

Company was of the view that Mr. Farrington had no claim against it and no bona fide

interest in the proceedings as he is neither a shareholder in, nor a creditor of, the

Company. Without prejudice to that contention, the Company had furnished Mr.

Farrington with a copy of the papers in respect of the capital reduction application.

29. The Company’s application was listed before me on 5th November, 2019. It was

confirmed that, apart from Mr. Farrington, no other person had given an indication of an

interest in or an intention to appear at the hearing of the Company’s application. Mr.

Farrington appeared in person on that date. An application for an adjournment was made

on behalf of the Company for the reasons set out in Mr. Edwards-Moss’s second affidavit.

It was suggested that the proceedings be adjourned for mention to a date in late January,

2020, when the position in relation to the Finance Bill/the Finance Act would be clearer.

Various ancillary directions were also sought. Having heard from counsel on behalf of the

Company and from Mr. Farrington (who did not oppose the adjournment application), I

granted the adjournment and listed the Company’s application for mention on 28th

January, 2020. Having noted that the Company had agreed to publish an updated notice

on its website, I directed that no further advertisement or notification of the adjournment

of the Company’s application was necessary. I further directed that in the event of any

person, other than Mr. Farrington, intending to appear in the proceedings, notice of such

intention had to be given to the Company’s solicitor by 24th January, 2020 and that, in

the event that Mr. Farrington or any other person intended to rely upon affidavit evidence

in respect of the Company’s application, that evidence had to be made available by the

30. In compliance with the directions made on 5th November, 2019, Mr. Farrington swore an

affidavit on 24th January, 2020 in response to the Company’s capital reduction

application. This was the first of two affidavits sworn by Mr. Farrington in respect of the

Company’s application. The affidavit was short and contained a number of exhibits. Mr.

Farrington exhibited a copy of a motion which he had issued on 23rd January, 2020 in

separate plenary proceedings which he had issued against a number of defendants,

namely, Stephen Tennant, Grant Thornton, Ulster Bank DAC (“Ulster Bank”) and

Promontoria (Oyster) DAC (Record No. 2019 no.816 P) (“Mr. Farrington’s proceedings”).

The motion sought to join the Company and its solicitors as parties to Mr. Farrington’s

proceedings. It also sought to “adjoin” the Company’s capital reduction application to Mr.

31. As well as exhibiting a copy of the motion (which had a return date of 24th February,

2020), Mr. Farrington also exhibited a copy of the affidavit he swore for the purpose of

grounding that motion on 23rd January, 2020. That affidavit was difficult to follow but, as

far as I could determine, it contained a number of allegations against various persons and

entities. Much of the affidavit concerned allegations concerning a property in Limerick

from which Mr. Farrington alleged items and documents had been unlawfully removed.

The affidavit contained allegations and claims apparently being made by Mr. Farrington

against Ulster Bank in the course of those proceedings. Ulster Bank and the other persons

and entities referred to in that affidavit were not parties to the application before me and

it would be unfair, in those circumstances, to outline in any detail the extent of the

allegations and claims made by Mr. Farrington in that affidavit. In any event, those

allegations appear to me to have nothing whatsoever to do with the Company.

32. Insofar as the Company is concerned, Mr. Farrington asserted (at para. 32) that he was

“previously registered as the owner of Block 1, Clanwilliam Court, Clanwilliam Place,

Dublin 2, a property that (Hibernia Reit plc) claim they now own”. At para. 33, he stated

that an invoice relating to that property had been provided to Ulster Bank and to the

Company and that he had informed the Company, prior to its purchase of the property,

that there was “an investigation taking place”. At para. 39 of that affidavit, Mr. Farrington

referred to the motion papers in respect of the Company’s capital reduction application. In

that paragraph, he stated that in the motion papers “it is consistently stated that the

company known as (Hibernia Reit plc) uses the economic measurement IFRS ‘as adopted

by the EU’”. He then stated, at para. 40, that “IFRS ‘as adopted by the EU’ is the correct

Economic Measurement as set down by European law”. He continued, at para. 41, that

Ulster Bank was “using IFRS and not IFRS ‘as adopted by the EU’” and at para. 42 he

stated that “using IFRS was illegal”. He then stated (at para. 43) that “the proceeds of

this illegal practice” by Ulster Bank (being its alleged failure to use the correct accounting

standard) “are being enjoyed” by the Company whose solicitors are the same as those

acting for Ulster Bank. Mr. Farrington went on to state (at para. 43) that he had

“cancelled” certain contracts and facilities with Ulster Bank, including contracts referable

to Block 1, Clanwilliam Court and the property in Limerick (although he did not explain

what he meant by cancelling those contracts). Mr. Farrington concluded that affidavit by

asserting breaches of various legal provisions, including the European Convention on

33. That was the affidavit which Mr. Farrington exhibited to the affidavit which he swore in

response to the Company’s application. He also exhibited a copy of the invoice referred to

in that affidavit. The invoice is dated 21st January, 2020 and was issued to the Company.

In the subject line, it was stated that the invoice was “for the return of capital and return

on capital and damages relating to, Block 1, Clanwilliam Court, Clanwilliam Place, Dublin

2”. Under the heading “Invoice Description”, it was stated:-

“In accordance with Hibernia Reit Public Limited Company Memorandum and (sic)

association 3 (b) and 3 (p) to undertake all liabilities relating to Block 1, Clanwilliam

The payment terms were stated to be “Demand to pay in full within seven days” and the

due was stated to be 21st January, 2020 (being the date of the invoice). Under the

heading “Invoice Calculation from Initial Consideration 2005”, there were two entries. The

“Initial return of capital of €7,000,000 and return on capital of 13% per annum

compound from 2005 as set down by the EU. Contracts and related facilities were

cancelled ab initio with Ulster Bank Ireland Limited under European Directive

The sum sought in respect of this item on the invoice was €38,743,257.00.

34. Under item two of the invoice, which claimed the amount of €2 billion, the following was

“In accordance with of (sic) Hibernia REIT Public Limited Company Memorandum

and (sic) Association 3 (b) and 3 (p) to undertake all liabilities relating to Block 1,

(€2 billion damages) Ref: High Court Record No. 2019/816 (Beneficiaries) 1 (8)”

35. The invoice then contained a subtotal which was stated to be €2,038,743,257.00 and a

total of €2,038,414,148.00 (the difference between the subtotal and the total was

36. At the foot of the invoice (after Mr. Farrington’s name and address), it was stated that Mr.

Farrington was a creditor of the company. Below that, it was stated that:-

“Terms and Conditions of Prompt Payment Act apply. Rate of return on capital 13%

37. On the basis of that invoice, it was asserted by Mr. Farrington in the affidavit he swore on

24th January, 2020 in response to the Company’s application that he is an “outstanding

creditor” of the Company. He then referred to the memorandum of association of the

Company and, in particular, to paras. 3(b) and 3(p) of the memorandum (which set out

two of the objects of the Company). It was not was not clear from his affidavit why Mr.

Farrington was referring to those objects of the Company, but it appeared to be his case

(at that stage at least) that by virtue of those objects of the Company, the Company had

accepted some form of liability to Mr. Farrington (in the sum of €2 billion) on its

38. In addition to referring to the invoice, and relying upon those objects in the memorandum

of association of the Company, Mr. Farrington also drew the court’s attention to the fact

that reference was made in the motion papers in respect of the Company’s capital

reduction application to IFRS standards “as adopted by the European Union”. It was

unclear what Mr. Farrington meant by that but it may have been intended to link in with

Mr. Farrington’s contention (in the other affidavit which he had exhibited) that Ulster

Bank were not using the correct accounting standards in respect of its accounts. The

relevance of all of this to the Company, it has to be said, was not readily apparent, at that

stage, nor has its relevance become clear since then. I will, however, set out my

conclusions in relation to the contentions made in Mr. Farrington’s affidavit, so far as I

could understand them, later in this judgment. At the conclusion of his affidavit, Mr.

Farrington asked the court to stay the Company’s application pending the determination

39. Mr. Edwards-Moss swore a short affidavit (his third affidavit) on 28th January, 2020. In

that affidavit, he stated that, in light of the Finance Act, it was no longer in the interests

of the shareholders for the Company to hold distributable reserves in the amount

originally contemplated. He explained that the Company’s intention to seek a reduction of

capital in the amount of €600 million had been revised due the provisions of the Finance

Act and that, as a result, the Company intended to seek a reduction in a lower amount

than previously envisaged. He sought a new date for the Company’s application and

informed the court that the Board of Directors of the Company would be meeting on 4th

February, 2020 and would determine at that meeting the amount by which the Company

would seek to reduce its capital. He explained that a further affidavit would be sworn

following that meeting and that that affidavit would also respond in detail to Mr.

Farrington’s first affidavit. Mr. Edwards-Moss did, however, provide an initial response to

that affidavit. He rejected the suggestion that the Company’s application be adjourned

pending the determination of Mr. Farrington’s proceedings. He commented on the invoice

sent by Mr. Farrington on 21st January, 2020 and contended that Mr. Farrington had

failed, on the basis of that invoice, to prove or establish himself to be a creditor of the

Company and that his claim to that effect was vexatious and/or frivolous. He also

explained that the Company was opposing Mr. Farrington’s application to join it as a co-

defendant to Mr. Farrington’s proceedings. He concluded by asserting that Mr. Farrington

had no connection with, and no claim against, the Company and no bona fide interest in

the proceedings as he is neither a creditor of, nor a shareholder in, the Company and did

40. The Company’s application was listed for mention before me again on 28th January,

2020. On that occasion, the Company was represented by counsel and solicitors and Mr.

Farrington appeared in person. There is a transcript of the hearing before me on that

date. While Mr. Farrington subsequently contended, in correspondence with the

Company’s solicitors that he did not receive a fair hearing on that occasion, he never

repeated that submission to the court. In any event, having reviewed the transcript of the

hearing on that occasion, I am satisfied that there is no basis for any suggestion that the

hearing was anything other than scrupulously fair, both to the Company and to Mr.

41. An order was made and perfected following the hearing on that occasion. While Mr.

Farrington took issue with the terms of the order, in correspondence with the Company’s

solicitors, I am satisfied that the order correctly reflects the orders and directions made

that day. The Company sought a new hearing date for its application. Mr. Farrington

asked that the Company’s application be struck out. I acceded the Company’s application

to fix a new date for the hearing of the Company’s application and fixed 4th March, 2020

as the date for the hearing of that application. I refused Mr. Farrington’s application to

strike out the proceedings. I should add that, in the course of doing so, I indicated that

one of the issues at the hearing would be whether Mr. Farrington was a creditor of the

Company and entitled to be heard on the application and that another would be whether

the application should be struck out. I declined to strike out the application that day. I

made further directions in relation to the exchange of affidavits and submissions and in

relation to the publication of an updated notice on the Company’s website.

42. Mr. Edwards-Moss swore a fourth affidavit on 6th February, 2020. The purpose of that

affidavit was essentially threefold. First, it explained that in light of the recent legislative

changes under the 2019 Act, the directors of the Company decided to seek the court’s

confirmation of a reduction in the Company’s share premium account of €50,000,000 in

place of the original amount of €600,000,000, such that the balance remaining credited to

that account would be €580,276,449. On that basis, the Company prepared an updated

single entity pro forma balance sheet which set out the financial position of the Company

as at 30th September, 2019 and its prospective financial position in the event that the

court were to approve the proposed capital reduction in the amount of €50,000,000 (a

copy was exhibited at “3TEM2”). Mr. Edwards-Moss reconfirmed that the proposed capital

reduction in that amount would have no impact on the number of shares held by

shareholders, or on their proportionate interests in the issued share capital of the

Company and also that there would be no change in the number of shares in issue.

43. Second, the affidavit provided evidence of compliance with the directions made by the

court on 5th November, 2019 and 28th January, 2020, as regards notification of the

developments in the proceedings on the Company’s website. Mr. Edwards-Moss confirmed

that, other than Mr. Farrington, the Company had not received notification from any other

person of an intention to appear at the hearing of the Company’s application.

44. Third, the affidavit addressed Mr. Farrington’s claims and exhibited the correspondence

exchanged between the Company and its solicitors, on the one hand, and Mr. Farrington

on the other. The Company disputed Mr. Farrington’s claim to be a creditor and

contended that Mr. Farrington had not disclosed that the Company had any liability to

him, whether in relation to Block 1, Clanwilliam Court or otherwise. Mr. Edwards-Moss

commented on the invoice sent by Mr. Farrington on 21st January, 2020 and confirmed

that at no stage had the Company dealt with Mr. Farrington, nor with any agent on his

behalf in respect of any matter and that the Company had not acquired Block 1,

Clanwilliam Court from Mr. Farrington, or from any receivers appointed over any interest

of Mr. Farrington in that property. He further stated that it was impossible to discern the

nature of the claimed legal connection between Mr. Farrington and the Company, or any

legal wrong allegedly committed by the Company against Mr. Farrington. He rejected the

contention that the proceeds of some allegedly illegal practice on the part of Ulster Bank

were being used by the Company. Finally, he pointed to the apparent misunderstanding

on the part of Mr. Farrington as to the objects clause in a memorandum of association

and that the objects stated in the memorandum of association are permissive only and do

not confer a right of indemnity on a third party, as apparently claimed by Mr. Farrington.

He explained that the directors had determined that no provision be made in respect of

the claims made by Mr. Farrington. In those circumstances, Mr. Edwards-Moss contended

that Mr. Farrington had failed to demonstrate that he was a creditor or that there were

credible grounds for the court to conclude that the proposed capital reduction sought by

the Company would be likely to put the satisfaction of any debt or claim he might have at

45. Mr. Farrington swore a second affidavit in respect of the Company’s application on 21st

February, 2020. He exhibited to that affidavit a “submission” by Cormac Butler dated 21st

February, 2020. Mr. Farrington described Mr. Butler as a “financial expert”. When

objection was taken by the Company at the call-over on 28th February, 2020 to this

“submission” on various grounds, including on the ground that it amounted to unsworn

evidence, Mr. Farrington arranged for an affidavit in substantially the same terms to be

sworn by Mr. Butler later that day (28th February, 2020). I will come to that affidavit

shortly. Mr. Farrington then made a number of further assertions in his affidavit. He

claimed that the “accounts prepared under the International Financial Reporting

Standards, as interpreted by auditors Deloitte Ireland, are flawed and cannot be used to

support an application for a reduction of capital” (para. 4). He sought to rely on Mr.

Butler’s “submission” in support of that claim. As noted earlier, Mr. Farrington had

previously asserted (in the affidavit which he swore for the purpose of the motion to join

the Company as a co-defendant in Mr. Farrington’s proceedings) that the accounts of

Ulster Bank (not the Company) were allegedly defective, on the grounds that they used

the IFRS standards and not the IFRS standards “as adopted by the EU” (paras. 40 to 42

of that affidavit). However, he appeared to change the focus of his attack, in his latest

affidavit, to the Company’s accounts and sought to rely in support of his claims on Mr.

46. Mr. Farrington further claimed that he was “a former owner” of Block 1, Clanwilliam Court

and is an “outstanding creditor” of the Company. Again, he relied on Mr. Butler’s

“submission” in support of that contention. However, I conclude, neither the

“submission”, nor Mr. Butler’s affidavit, provides any support for that contention. Finally,

Mr. Farrington expressed the view that the court should make a reference to the CJEU

under Article 267 TFEU on “a question on the interpretation or validity of EU law”,

although he did not explain what the issue of EU law which should be the subject of that

47. Mr. Butler’s affidavit was sworn on 28th February, 2020 and served on the Company’s

solicitors on 2nd March, 2020. In that affidavit, Mr. Butler described himself as a “banking

consultant” and stated that he had “trained over 100 bank regulators” and is the author

of two books, namely, “Accounting for Derivatives” and “Mastering Value at Risk”, which

he stated were concerned with “risk management and regulation for the financial sector”.

He referred to the fact that he had given evidence on the “banking crisis” to the House of

Lords in the UK, to the European Parliament and to the Oireachtas as well as having

written a report on the “European banking crisis” for the European Parliament and having

given evidence to the Oireachtas Committee on Finance, Public Expenditure and Reform

on 28th May, 2019. That was all stated at para. 1 of Mr. Butler’s affidavit. Apart from

that, Mr. Butler gave no indication as to his professional or academic qualifications. He did

not exhibit a curriculum vitae setting out his qualifications, experience and publications.

He did not give any indication to the court as to any relevant qualifications and

experience he might have in relation to property investment companies, in general, and

REITs, in particular, still less any indication as to what relevant qualifications or

experience he may have in relation to other areas on which he sought to opine in his

affidavit. Nor did Mr. Butler give any indication in his affidavit as to his understanding of

the particular duties owed by an expert giving evidence, as would be expected in the case

of any person holding himself or herself out as an expert giving evidence before the Irish

Courts. Mr. Butler’s affidavit did not set out what information, material or instructions

were provided to him by Mr. Farrington. Nor did he state in his affidavit the particular

facts (or assumed facts) on the basis of which he was advancing the contentions set out

in his affidavit. Finally, Mr. Butler did not give any indication as to the terms on which he

was engaged by Mr. Farrington to proffer evidence to the court on his behalf. All of these

factors are relevant when it comes to assessing Mr. Butler’s evidence and, in particular,

his alleged expertise to give evidence on matters relevant to the Company’s application.

48. At para. 2 of his affidavit, Mr. Butler contended that the evidence given by Mr. Edwards-

Moss and, in particular, the revised pro forma balance sheet exhibited at Exhibit “3TEM2”

to Mr. Edwards-Moss’s affidavit of 6th February, 2020 was “unreliable”, as the figures

used were taken from the Company’s audited financial accounts for the year end of 31st

March, 2019. The basis for this contention was that the accounts were audited by Deloitte

Ireland and that it was allegedly in a conflict of interest situation because of its alleged

“interpretation” of accounting standards. No evidence was proffered by Mr. Butler in

49. At para. 3 of his affidavit, Mr. Butler contended that one of the independent non-

executive directors of the Company, Terence O’Rourke, (who is also the chair of the

Company’s Audit Committee) was in a conflict of interest situation on the basis of what he

allegedly said in relation to IFRS. That contention was based on evidence given by that

director at the Oireachtas Banking Inquiry in 2015 (paras. 7 and 8 of Mr. Butler’s

affidavit). However, no explanation was given by Mr. Butler as to how any of that is

relevant to the accounts of the Company, which is a property investment company and a

50. Mr. Butler then proceeded to make, what appear to me to be, a series of wild and

outlandish allegations at para. 4 of his affidavit alleging “potentially illegal” and “criminal”

conduct on the part of Deloitte LLP and the director concerned. The basis for that

outlandish allegation concerned the use of IFRS by the “big four accounting firms” and

references made in that regard to a report of a “UK Parliamentary inquiry” (which was not

exhibited by Mr. Butler and no context was given by him). No attempt was made by Mr.

Butler to tie what he said at paras. 4 and 5 of his affidavit to the accounts of the

51. Having made those allegations (without a shred of relevant evidence), Mr. Butler felt it

appropriate to state (at para. 9 of his affidavit) “for the reasons outlined above”, the

Company “has not portrayed its financial position correctly to the court” and that “the

application to reduce the capital is deeply flawed”. He went on to state that it is “an

offence under Irish company law to use flawed accounting standards to portray the

financial position of a company for the purpose of attempting to reduce the capital of that

company or to report to shareholders”. This was an extraordinary assertion to make and

was made entirely without reference to the actual accounts of the Company which had

been put before the court and to the statements made in those accounts as to the

52. Mr. Butler then went on to make a series of even more extraordinary and outlandish

allegations (for an alleged expert) concerning Block 1, Clanwilliam Court. At para. 10 of

his affidavit, Mr. Butler stated that “there is doubt as to the true ownership” of Block 1,

Clanwilliam Court. However, Mr. Butler’s explanation for this doubt is bizarre and entirely

unsupported by any relevant evidence. He made a series of allegations concerning Ulster

Bank and its parent, Royal Bank of Scotland, leading to the sweeping assertion that Ulster

Bank did not have the authority to acquire the property “legally” and that a sale by West

be treated as “null and void”. I am afraid that I have no idea how Mr. Butler could come

to that conclusion on the basis of what he stated at paras. 10, 11 and 12 of his affidavit

(or elsewhere in that affidavit). Nor can I understand how Mr. Butler could then state that

the “true owner” of Block 1, Clanwilliam Court is a creditor of the Company who is entitled

to object to the Company’s capital reduction application. Mr. Butler did not state who the

“true owner” was, but I assume that he was intending to refer to Mr. Farrington.

However, Mr. Butler offered no evidence in support of that contention, or any evidence on

foot of which he could responsibly have formed that view, or indeed any basis on which

53. At para. 13 of his affidavit, Mr. Butler set out an extract from evidence apparently given

before a “UK Parliamentary Inquiry” by a Mr. Connolly from “Deloitte UK”. Having set out

that extract (which he did not exhibit), Mr. Butler then stated (at para. 14) that the

evidence (set out in the extract quoted) “suggests that Royal Bank of Scotland and its

subsidiary Ulster Bank acted improperly by concealing losses”. It is not clear to me how

Mr. Butler reached that conclusion, or how it is said that it is in any way relevant to the

issues properly before the court on the Company’s capital reduction application. In the

same paragraph, Mr. Butler went on to refer to the sale of Block 1, Clanwilliam Court as

being “potentially at a possible distressed price” and that it was “therefore, illegal”. What

Mr. Butler meant by stating that the sale of the property was “potentially” at a “possible

distressed price” is entirely unclear. It is so qualified and unsupported by any actual

evidence (still less admissible evidence) as to the sale, the price, the factors involved and

to the alleged distressed price as to be utterly meaningless and of no assistance

whatsoever to the court. What Mr. Butler meant by his assertion that the sale was

“therefore, illegal” is even more difficult to understand. How Mr. Butler felt it appropriate

to seek to draw a legal conclusion is nowhere explained. If anything, Mr. Butler’s

subsequent conclusion from those unsubstantiated and unsupported assertions is even

“It follows that Hibernia REIT, may not be the true owners of the property which

makes the original owner, a potential creditor to Hibernia REIT.”

How that assertion follows from what Mr. Butler stated previously is beyond me and how

Mr. Butler felt it appropriate to suggest (albeit in a highly qualified manner – “may not

be”) is entirely unclear. In my view, nothing which Mr. Butler stated in the preceding

paragraphs of his affidavit could afford any support for the assertion made (albeit in the

qualified terms in which it was made) that the Company might not be the “true owners”

of Block 1, Clanwilliam Court. How any of that is said to “make” the “original owner” a

“potential creditor” of the Company is unclear and unexplained by Mr. Butler. Again,

assuming that Mr. Butler was intending to refer to Mr. Farrington by the term the “original

owner”, I consider it below and set out my conclusions on that issue when considering the

54. Mr. Butler concluded his affidavit by making the assertion that the Company’s accounts

are in breach of “EU Regulation 1606/2002” (Regulation (EC) No. 1606/2002 of the

European Parliament and of the Council of 19th July, 2002 on the application of

international accounting standards) and, in particular, Article 3(2) of that Regulation by

reason of the Company’s interpretation of IFRS. Mr. Butler expressed the view (although

it is unclear on what basis he felt qualified to do so) that the court was required to “refer

a question on the interpretation or validity of EU law” to the CJEU under Article 267 TFEU.

He did not indicate what question on the interpretation or validity of EU law he felt had to

be referred, or how it was relevant to the Company’s application. As regards Mr. Butler’s

contention that the Company’s accounts were in breach of the relevant regulation, I will

55. The final affidavit to be considered in respect of the Company’s application is a further

affidavit sworn by Mr. Edwards-Moss on 3rd March, 2020, in response to Mr. Butler’s

affidavit. This was the fifth affidavit sworn by Mr. Edwards-Moss in connection with the

Company’s application. Its purpose was to respond to Mr. Butler’s affidavit. While

disputing the admissibility of Mr. Butler’s affidavit on various grounds, and questioning

Mr. Butler’s expertise as an expert in relation to the proper application of accounting

standards to the Company, Mr. Edwards-Moss did nonetheless proceed to address the

56. At para. 7 of his affidavit, Mr. Edwards-Moss contended that any concerns regarding

capital maintenance expressed by Mr. Butler were not relevant to the Company as it does

not delay loss recognition in its accounts and that it is clear from a reading of those

accounts that the Company recognises fair value losses at the valuation date. Although

Mr. Butler appeared to be arguing that there might be a potential defect in the IFRS

accounting system whereby losses not yet occurred, but which will occur, cannot be

reflected in a balance sheet, and while that might have a particular relevance to the

banking sector, Mr. Edwards-Moss asserted that it has no relevance to the Company, as

its primary business is property investment and “it has next to no financial instruments,

and it reflects fair value losses in the accounts as at the balance sheet date” (para. 7). I

entirely accept that evidence as it specifically addressed the primary business of the

Company, which is a property investment company (a REIT) and is not a bank. It follows

that I reject any evidence, or rather assertion, to the contrary sought to be given or made

57. In subsequent paragraphs of his affidavit, Mr. Edwards-Moss rejected the allegations of a

conflict of interest on the part of the named director of the Company. I am satisfied that

no conflict of interest on the part of that director has been made out on the evidence and

that the comments made by the director related to the application of accounting

standards to banks, and other financial institutions, and not to a property investment

58. I also agree and accept what Mr. Edwards-Moss stated at para. 9 of his affidavit that Mr.

Butler had not established that the Company had failed to follow the law in relation to the

preparation of its accounts. I accept the evidence that it has complied with its legal

obligations in relation to the preparation of those accounts. In particular, I am satisfied

that neither Mr. Farrington nor Mr. Butler has raised sufficient doubt about the accounts

to prevent me from properly assessing the Company’s application in accordance with the

59. I note what Mr. Edwards-Moss stated at para. 10 of his affidavit to the effect that, as a

REIT, the relevant accounting provisions are IFRS 13 (fair value) and IAS 40 (investment

property). At para. 13 of his affidavit, Mr. Edwards-Moss repeated the averment

previously made (at para. 46 of his first affidavit), that he was advised that the 2019

Annual Accounts had been audited by the Company’s auditors and that the financial

statements were prepared in accordance with “IFRS as adopted by the European Union

and the 2014 Act”. I am not satisfied that Mr. Farrington or Mr. Butler have

demonstrated, on the evidence before the court, that that averment is incorrect. I

60. At para. 15 of his affidavit, Mr. Edwards-Moss dealt with the assertions made by Mr.

Butler in relation to Block 1, Clanwilliam Court. While taking issue with the extraordinary

character of Mr. Butler’s assertions, Mr. Edwards-Moss contended that the purchase of

that property by the Company was legal and correct and that the Company was a “bona

fide purchaser for value without notice”. He further contended (at para. 16) that no

credible evidence was provided by Mr. Butler, or by Mr. Farrington, in relation to the

allegation that the Company was anything other than a “legitimate bona fide purchaser

for value without notice of the property or indeed any property”. I agree with those

contentions and accept that nothing advanced by Mr. Farrington or by Mr. Butler has

demonstrated any doubt as to the ownership of Block 1, Clanwilliam Court by the

61. The relevant statutory provisions applicable to the Company’s application are set out in

part 3, chapter 4 of the 2014 Act and, as the Company is a plc, in ss. 1002 and 1084 of

“Save to the extent that its constitution otherwise provides, a company may,

subject to the provisions of this section and sections 85 to 87, reduce its company

capital in any way it thinks expedient and, without prejudice to the generality of the

(a) extinguish or reduce the liability on any of its shares in respect of share

(b) either with or without extinguishing or reducing liability on any of its shares,

cancel any paid up company capital which is lost or unrepresented by

pay off any paid up company capital which is in excess of the wants of the

63. By virtue of s. 84(2) and s. 1002, as a PLC, a reduction of company capital by the

Company can only be effected by the Company passing a special resolution which is then

confirmed by the court. In addition, under s. 1084, as a PLC, the Company may not

reduce its capital below the authorised minimum. On the evidence in this case, the capital

of the Company will exceed the authorised minimum in the event of the court acceding to

64. Section 85 provides for what is to happen when a company has passed a special

resolution under s. 84(2)(b) for reducing its company capital. Under s. 85(1), the

company may apply to the court for an order confirming the resolution. Section 85(2)

provides that if a company proposes to apply to the court for an order confirming the

resolution, it must cause notice of its intention to make such an application to be

advertised in a particular manner and to be notified by electronic means to all creditors of

the company who are resident, or have their principal place of business, outside the State

and to provide certain details in relation to the hearing. As noted earlier, Haughton J. was

satisfied that the provisions of s. 85(2) of the 2014 Act, had been duly complied with by

the Company. Mr. Farrington did not take any issue with that and, as stated earlier, I

have considered this issue afresh and am satisfied that the Company did comply with the

65. Section 85(3) provides that in determining any preliminary application for directions as to

the hearing of an application under s. 85, the court is required to have regard to

compliance by the Company with the requirements of s. 85(2). The Company did comply

with the requirements of s. 85(2) and, therefore, no issue arose in that regard at the

application for directions, as to the hearing of the Company’s application.

66. Section 85(4) provides that where the proposed reduction of capital involves “either

diminution of liability in respect of unpaid company capital, or the payment to any

shareholder of any paid up company capital, and in any other case if the court so directs”,

certain provisions “shall have effect (but subject to subsection (5))”. Of most relevance

(i) at the date fixed by the court, is entitled to a debt or claim that, if that date were

the commencement of the winding up of the company, would be admissible in

(ii) can credibly demonstrate that the proposed reduction in company capital would be

likely to put the satisfaction of that debt or claim at risk, and that no adequate

safeguards have been obtained from the company, is entitled to object to the

67. There is then provision for the court to “settle a list of creditors entitled to object” (ss.

“Where a proposed reduction of company capital involves either the diminution of

any liability in respect of any unpaid company capital or the payment to any

shareholder of any paid up company capital, the court may, if, having regard to any

special circumstances of the case, it thinks proper so to do, direct that

subsection (4) shall not apply as regards any class or any classes of creditors.”

69. Under s. 85(6), the court may make an order confirming the resolution “on such terms

and conditions as it thinks fit”, provided that it is satisfied that the requirement contained

in s. 85(7) is satisfied. The requirement in s. 85(7) is that “in relation to every creditor of

the company who, under this section is entitled to object to the confirmation, either –

(a) the creditor’s consent to the confirmation has been obtained, or

(b) the creditor’s debt or claim has been discharged or has terminated, or has been

70. It will be noted that this latter requirement is dependent upon the relevant creditor being

“entitled to object” to the confirmation. Such a creditor is a person who fulfils the

requirements set out at s. 85(4)(a) (set out above). The obvious question in the present

case is whether Mr. Farrington is a creditor of the Company who is “entitled to object” to

the reduction of capital or the confirmation of the special resolution of the members of the

Company. If Mr. Farrington is not such a creditor “entitled to object”, then he has no

standing to appear and to object to the Company’s application. I will address that

71. Various ancillary orders arise where the court makes an order confirming the relevant

resolution (s. 85(8) and s. 86 of the 2014 Act). No issue arises in relation to those

provisions and it is unnecessary therefore to dwell upon them in this judgment.

72. Both the High Court and the Court of Appeal have considered the approach to be taken by

the court in consideration of an application by a company for an order confirming a

resolution reducing its capital. The issue was very fully addressed by the High Court

(Barrett J.) in Re Permanent TSB Group Holdings plc [2015] IEHC 500 (“Permanent TSB

2015”). Although that case concerned an objection by a small number of shareholders to

a reduction in the company’s capital, the relevant factors were helpfully stated by the

court in general terms and some are clearly applicable to a case where a purported

creditor of the company seeks to object to the company’s application. Citing British

American Trustee and Finance Corporation v. Couper [1894] AC 399 and Re Thomas de

la Rue & Co [1911] 2 Ch. 361, Barrett J. observed that the court “enjoys a discretion to

approve or not to approve the reduction of capital”. He considered that the principles to

be applied in the exercise of that discretion were apparent from the judgment of Harman

J. in the High Court of England and Wales in Re Ratners Group plc [1988] BCLC 685. In

his judgment in that case, Harman J. identified as one of the three principles on which the

court would require to be satisfied before it could sanction the reduction of share capital

sought the fact that the creditors of the company would have to be “safeguarded so that

money cannot be applied in any way which would be detrimental to the creditors” (at p.

687). Barrett J. then set out six matters or factors with which the court would have to be

satisfied before it could confirm the proposed capital reduction. They were as follows:

“(1) In a case to which the Act of 1963 applies, the company is authorised by its articles

(2) The company duly resolved by special resolution to reduce its share capital.

(3) The reduction proposals were properly explained to the shareholders so that they

73. These factors were cited with approval in the judgment I delivered in Re Scisys Group plc

[2019] IEHC 904 and have recently been approved by the Court of Appeal in Re

Permanent TSB Group Holdings plc [2020] IECA 1 (“Permanent TSB 2020”). Although that

was another case in which objection to the reduction of capital came from a small group

of shareholders, nonetheless, in his judgment on behalf of the Court of Appeal, Collins J.

made a number of observations which are relevant to the present case. At para. 81,

“There is no doubt that the fact that a capital reduction resolution has been

approved by a large majority of shareholders is not, in itself, determinative of the

issue of whether it ought to be confirmed or not. Were it otherwise, no useful

purpose would be served by requiring court confirmation, given that the passing of

a special resolution is a statutory pre-requisite in any event. But section 85 is

equally not to be construed as conferring a minority veto on a capital reduction. An

objecting shareholder(s) is in every case obliged to establish a basis for their

objections sufficient to justify the exercise [of] the court's discretion against giving

74. With regard to the requirement that the reduction of share capital must be for a

“discernible purpose”, Collins J. commented upon the conclusion by the trial judge in that

case (Haughton J.) that the application before him was made “genuinely” and continued:

“What was required was evidence that the reduction had a discernible and bona fide

purpose and I agree with the Judge that the evidence was all one way on that

75. The balance of the judgment of Collins J. in the Court of Appeal concerned the particular

treatment of the shareholders in the Company in question and is not relevant for present

76. Before turning to consider the factors set out by Barrett J. in Permanent TSB 2015, it is

necessary to draw attention to a number of other principles which are relevant to the

exercise by the court to its discretion on a capital reduction application.

77. First, as noted by Barrett J. in Permanent TSB 2015, it is “well established that the onus

lies on the opponents of a petition for confirmation of a proposed capital reduction” (para.

86). In support, Barrett J. cited Lord Normand in the House of Lords in Scottish Insurance

78. Second, even where there are no objecting creditors, the court nonetheless has a

discretion as to whether or not to approve the reduction of capital sought:

Courtney: The Law of Companies (4th Edition) at para. 10.107, p. 659.

79. Third, where complaint is made in relation to the preparation of the applicant company’s

accounts, the circumstances in which a shareholder of that Company may complain about

the preparation of the accounts are “highly limited” (per. Barrett J. Permanent TSB 2015

at para. 113). Barrett J. cited with approval the following statement by Dillon J. in Devlin

“Furthermore, insofar as the formulation of the accounts involves matters of

judgement such as I have mentioned, that is a matter of business judgement.

The court does not interfere with the business judgement of directors in the

absence of mala fides. The duty of causing the accounts to be prepared and

presented to the company is laid on the directors by the Act and by the articles,

and there is no allegation of bad faith on the part of the directors.” (Per Dillon J.

Barrett J. found on the facts of that case that it was not open to the objectors to ask the

court to “look behind audited accounts that have patently been prepared in good faith by

the directors of the Company” (para. 114). While those observations were expressly

directed to the entitlement of a member of the company to complain about the

preparation of the accounts of the company, it seems to me that they apply equally to the

approach which the court should take when considering an objection made by a purported

creditor of the Company, to the extent that that person is entitled to object to the

80. I now consider those of the factors set out by Barrett J. in Permanent TSB 2015 which are

(1) In a case to which the Act of 1963 applies, the company is authorised by its articles

81. The position under s. 84(1) of the 2014 Act is that, unless the constitution of the

company otherwise provides, a company may reduce its capital. The constitution of the

applicant Company does not prevent the Company from doing so. On the contrary, Article

46 of the articles of association of the Company expressly permit the Company to reduce

its share capital by special resolution. Mr. Farrington did not suggest otherwise. I am

satisfied that, not only does the constitution of the Company not preclude the Company

from reducing its capital, it is expressly empowered to do so under Article 46 of the

(2) The company duly resolved by special resolution to reduce its share capital.

82. I am satisfied on the basis of the evidence before the court that the Company did duly

resolve by special resolution to reduce its share capital. The Company’s shareholders

passed a special resolution at the AGM on 31st July, 2019 providing for the Company

capital of the Company to be reduced, subject to confirmation from the High Court in

accordance with ss. 84 and 85 of the 2014 Act. The terms of the special resolution were

set out earlier in this judgment. The amount of the reduction sought has since been

reduced, for reasons explained by the Company and discussed by me earlier. The

directors of the Company determined, on behalf of the Company, to proceed to seek

confirmation from the High Court of a reduction of the lesser amount of €50,000,000. Mr.

Farrington did not raise any particular issue in relation to the special resolution of the

Company or in relation to the directors’ subsequent determination. In any event, I am

satisfied on the evidence that the Company did duly resolve by special resolution to

(3) The reduction proposals were properly explained to the shareholders so that they

83. The explanation for the capital reduction proposals the subject of the special resolution

put to the Company’s shareholders at the AGM were set out in a notice of AGM and

circular dated 28th June, 2019 which was sent to the Company’s shareholders and was

published on the Company’s website. This material incorporated a letter from the

Chairman of the Company which set out the details of and reasons for the proposed

capital reduction. That material was exhibited at Exhibit “TEM7” to the first affidavit sworn

by Mr. Edwards-Moss on 25th September, 2019. Mr. Farrington raised no particular issue

in relation to this material. In any event, I am satisfied that the capital reduction

proposals were properly explained to the shareholders in that material so that they could

exercise an informed judgment. The resolution was passed unanimously by the

84. The purpose of the initial reduction of capital sought by the Company was explained in the

notice of AGM and circular and, in particular, in the Chairman’s letter of 28th June, 2019

and was further explained by Mr. Edwards-Moss at paras. 37-45 of his first affidavit. The

reasons for the reduction, in the amount of the reduction of capital now sought by the

Company, were set out in the third supplementary affidavit which was sworn by Mr.

Edwards-Moss on 6th February, 2020, at paragraphs 7-13. As noted by Collins J. in the

Court of Appeal in Permanent TSB 2020, what was required was evidence that the

reduction of capital sought had a “discernible and bona fide purpose”. I am satisfied on

the evidence that the reduction of capital now sought is for a “discernible and bona fide

purpose”. Nothing advanced by, or on behalf of, Mr. Farrington has persuaded by

otherwise. I am, therefore, satisfied that this particular requirement has been complied

85. I am satisfied on the evidence that all of the Company’s shareholders are treated

equitably in relation to the proposed capital reduction. It is clear, on the evidence, that

there is no differentiation in the treatment received by the shareholders in relation to the

proposed capital reduction. The evidence establishes that the proposed capital reduction

will have no impact on the number of shares held by shareholders or on their

proportionate interests in the issued share capital of the Company. Nor will there be any

change in the number of shares in issue by the Company. Similarly, all shareholders

benefit equally from the reduction and from the corresponding increase in the Company’s

distributable reserves. I am satisfied, therefore, that this requirement has been met.

86. Of all the factors identified by Barrett J. in Permanent TSB 2015, this is the factor which is

most relevant for present purposes. Mr. Farrington claims to be a creditor of the Company

and one of the grounds on which he has sought to oppose the Company’s application is

that his interests, as a purported creditor of the Company, have not been safeguarded.

For reasons set out in the next section of this judgment, I have concluded that on the

evidence, Mr. Farrington is not a creditor, still less a creditor who is “entitled to object” to

the Company’s application, as that term is properly understood under s. 85 of the 2014

Act. As I explain below, I am not satisfied that Mr. Farrington is a creditor of the Company

at all, still less a creditor who could “credibly demonstrate” that the proposed reduction in

the Company’s capital would be likely to put the satisfaction of his alleged claim or debt

at risk. In those circumstances, for reasons set out below, I have concluded that Mr.

Farrington is not a creditor of the Company who is “entitled to object” to the Company’s

application for confirmation of the resolution reducing the Company’s capital. Nor am I

satisfied that any of the other grounds of objection advanced by Mr. Farrington,

irrespective of his status as a purported creditor of the Company, have any basis in law or

Mr. Farrington’s Grounds of Objection to the Company’s Application

87. As noted in the previous paragraph, one of the grounds on which Mr. Farrington opposed

the Company’s application was on the basis that he was a creditor of the Company. Mr.

Farrington advanced that contention on the basis of the invoice which he sent to the

Company on 21st January, 2020. While Mr. Farrington did not expressly rely upon that

invoice, or on his alleged status as a creditor of the Company, in the outline written

submissions filed by him on 2nd March, 2020, he did pursue that case in the course of his

oral submissions. As I have already outlined, the invoice sent by Mr. Farrington to the

Company sought payment of a sum in excess of €2 billion. That sum was made up of two

items. The first was in respect of an “initial return of capital of €7,000,000 and return on

capital of 13% compound from 2005 as set down by the EU” and was stated to refer to

“contracts and related facilities” which were “cancelled ab initio with Ulster Bank Ireland

Limited under European Directive 85/577”. The amount claimed in respect of this item

was in excess of €38m. The second item on the invoice sought payment of the sum of €2

billion. The basis for that claim was stated on the invoice to arise in accordance with

paras. 3(b) and 3(p) of the Company’s memorandum of association under which it was

asserted in the invoice the Company had agreed “to undertake all liabilities relating to

Block 1, Clanwilliam Court, Clanwilliam Place, Dublin 2”. Reference was made to a “claim

88. Mr. Farrington’s evidence and the affidavit sworn by Mr. Butler provided no explanation as

to how this invoice came to be sent to the Company in late January 2020. Nor was Mr.

Farrington in a position to provide any understandable explanation for the invoice during

the course of the hearing. His overarching contention was that the Company is in some

way liable to him in respect of all of the claims he has against other parties concerning

Block 1, Clanwilliam Court. The basis on which he asserted that the Company was liable in

respect of those claims was that paras. 3(b) and 3(p) of the memorandum of association

of the Company so provided. However, it is clear that Mr. Farrington has misunderstood

the legal status of the memorandum of association which sets out the objects of the

Company. It is one of the constitutional documents of the Company which, together with

the articles of association, constitutes the statutory contract binding the Company and its

members and the members as between themselves. It does not create contractual or

other legal relations between the Company and non-members, such as persons

purporting to be creditors like Mr. Farrington. Mr. Farrington does not assert the existence

89. Paragraphs 3(b) and 3(p) of the memorandum of association set out some of the

Company’s objects, as is made clear from the commencement of para. 3 of the

The paragraph then lists a series of objects in subparagraphs. (a) to (r). These are

objects of the Company and not obligations of the Company whether to its members or to

outsiders, such as Mr. Farrington. Insofar as Mr. Farrington sought to rely on the objects

of the Company set out in paras. 3(b) and 3(p) of the memorandum to confer some legal

right on him and to impose some corresponding legal obligation upon the Company, he

was fundamentally mistaken. It is not open to Mr. Farrington to rely on those objects in

90. Mr. Farrington sought to explain the basis on which the two items in the invoice allegedly

arose. However, this was not done on affidavit and his explanation was very difficult to

follow. The first item was apparently based on his alleged cancellation of contracts which

he had with Ulster Bank. No evidence was provided in respect of those contracts, or the

circumstances in which he allegedly cancelled them. In any event, whatever issues Mr.

Farrington had or has with Ulster Bank have no relevance to Mr. Farrington’s status as an

alleged creditor of the Company, or to the plausibility of any claim he may have against

the Company. Insofar as the first item claimed in the invoice is concerned, Mr. Farrington

has failed to establish any basis for a claim in respect of that item against the Company.

As regards the second item (the €2 billion damages claim), this is a farfetched and

farcical claim. From the explanation Mr. Farrington sought to provide in respect of this

claim during the hearing, it seems to relate to a potential mining deal in the United States

which Mr. Farrington brought to Grant Thornton for advice and which did not work out in

circumstances where Mr. Farrington claimed that Grant Thornton had a conflict of

interest. Grant Thornton is one of the defendants in Mr. Farrington’s proceedings. Grant

Thornton was not a party to the Company’s application and was not in a position to

respond to the allegations made by Mr. Farrington. Nonetheless, it is clear that whatever

claim Mr. Farrington has against the parties to his proceedings (and it was very difficult to

understand the claims made in those proceedings), in my view, they have no relevance

whatsoever to the Company’s reduction of capital application. While Mr. Farrington has

brought an application to join the Company as a co-defendant to his proceedings and that

motion is to be heard later this year, I do not see any basis for a claim by Mr. Farrington

against the Company in respect of any of the matters set out in the affidavit which he

swore for the purpose of grounding his application still less the relevance to the

91. As stated earlier, the onus lies on Mr. Farrington to establish that he is a creditor of the

Company in order to bring himself within the category of persons entitled to object to the

Company’s application. Mr. Farrington has failed by a country mile to discharge that initial

onus. He has failed to establish that he is a creditor of the Company on the basis of any of

the matters raised by him. I conclude that he is not a creditor of the Company.

92. If I am wrong in holding that Mr. Farrington has not established that he is a creditor of

the Company, I am nonetheless satisfied that Mr. Farrington is not a creditor who is

“entitled to object” to the Company’s application under s. 85 of the 2014 Act. I am not

satisfied that the claim sought to be advanced by Mr. Farrington on foot of the invoice (or

indeed on any of the other grounds of opposition advanced by him) amounts to a claim

that would be admissible in proof against the Company in a winding up (for the purposes

of s. 85(4)(a)(i) of the 2014 Act). If one was dealing with a winding up of the Company, I

do not believe that the claim advanced by Mr. Farrington would be admissible in proof

against the Company in that winding up, having regard to the extraordinary nature of the

93. If I am wrong about that, there is a further reason why, in my view, Mr. Farrington has

failed to establish that he is a creditor “entitled to object” to the Company’s application.

He has not satisfied the requirement in s. 85(4)(a)(ii) to “credibly demonstrate that the

proposed reduction in company capital would be likely to put the satisfaction of [the] debt

or claim at risk, and that no adequate safeguards have been obtained from the company”.

94. I agree with the submission advanced on behalf of the Company that some assistance can

be derived from the case law from England and Wales and from Scotland on equivalent

statutory provisions. It is necessary to refer only to one judgment and that is the

judgment of Norris J. in the Chancery Division of the High Court of England and Wales Re

Liberty International plc [2010] 2 BCLC 665 (“Liberty”). The equivalent section of the

Companies Act, 2006 (in England and Wales) to s. 85 of the 2014 Act is section 646. That

section requires a creditor, in order to demonstrate its entitlement to object to a

reduction of capital application, amongst other things, to show that there is a “real

likelihood that the reduction would result in the company being unable to discharge his

debt or claim when it fell due”. The requirement to establish a “real likelihood” is not

identical to the requirement in s. 85(4)(a)(ii) to “credibly demonstrate” that the proposed

capital reduction would be likely to put the satisfaction of the debt or claim at risk.

However, both provisions seek to transpose into national law the provisions of the same

EU Directive, namely, Directive 2006/68/EC of the European Parliament and of the

Council. In those circumstances, it is of assistance to see how the courts of England and

Wales have interpreted and applied the test in the legislation applicable there. In a very

helpful description of the test to be applied under s. 646, Norris J. in Liberty stated as

“[17.] Where the section calls upon a creditor to show ‘a real likelihood’ that the

reduction ‘would’ result in an inability to discharge the debt when it becomes due, it

is calling upon the creditor to demonstrate a particular present assessment about a

future state of affairs. In considering the evidence, I identified three elements:

What follows is descriptive of the course I followed, not prescriptive as a course to

[18.] First, I looked at the factual: Whatever assessment is made has to be well

grounded in the facts as they are now known. Although one is looking to the future,

[19.] Second, there is a temporal element. One is looking forward for a period in relation

to which it is sensible to make predictions. That period will, of course, be affected

by the nature and duration of the liability in question. So a continuing direct

liability under a lease may indicate that a correspondingly long-term view must be

taken. But in general the more remote in time the contemplated event that will

make payment fall due the more difficult it must be to establish the reality of the

likelihood that the return of capital will itself result in inability to discharge the debt.

For private companies’ directors are required to look forward for twelve months. I

do not suggest that implicitly the same period applies where the sanction of the

court is necessary: But I do consider that in any given case there will be a natural

temporal boundary beyond which sensible assessment of likelihood is not possible.

[20.] Third, the section obviously does not require a creditor to prove that a future event

will happen: It is concerned to evaluate the chance of the event (the company’s

inability to discharge the debt because it has returned capital). It describes the

chance as ‘real likelihood’, thereby requiring the objecting creditor to go some way

up the probability scale, beyond the merely possible, but short of the probable.

That is the ‘degree of persuasion’ (as it was put by Hoffmann J. in Re Harris Simons

Construction Limited [1989] BCLC 202 at 204) for which I have looked in assessing

95. It seems to me that this description of the test is of assistance, but is obviously not

binding upon me. In any event, bearing in mind the claim advanced by Mr. Farrington on

foot of the invoice, and having regard to the outlandish nature of that claim, I do not

accept that Mr. Farrington has put forward evidence to “credibly demonstrate” that the

satisfaction of any purported claim he might have on foot of the invoice would be likely to

be put at risk. I do not find the case advanced by Mr. Farrington on foot of the invoice to

be “credible”. Moreover, looking at each of the elements of the test discussed in Liberty,

namely, the factual, the temporal and the degree of proof required, it is very clear that

Mr. Farrington has not put forward the type of evidence required in order to bring himself

within the category of a creditor who is “entitled to object” to the Company’s application.

96. Finally, in this context, and before returning briefly to the other grounds of objection

advanced by Mr. Farrington, I should comment on the financial position of the Company.

In my view, on the basis of the evidence provided to the court, the Company is in a very

strong financial position and the satisfaction of the debts or claims of existing creditors

could not credibly be said to be put at risk by the proposed capital reduction. I form that

view on the basis of the original pro forma balance sheet exhibited to the first affidavit

sworn by Mr. Edwards-Moss and on the basis of the revised and updated pro forma

balance sheet exhibited to his third supplementary affidavit (at exhibit “3TEM2”). That

latter balance sheet (in respect of the unaudited figures to 30th September, 2019)

discloses non-current assets of just under €1.4 billion, total current assets of just over

€28 million and total assets of over €1.4 billion. It also discloses total non-current

liabilities of just under €270 million and total current liabilities of just under €23 million.

The Company’s total liabilities are stated to be just over €290 million. It is clear from

those figures that the Company’s current assets exceed its current liabilities and its non-

current assets greatly exceed its non-current liabilities. It also has an issued share capital

of just under €69 million and, prior to the proposed reduction, a share premium of just

over €630 million. In the event of the proposed capital reduction being confirmed by the

court, the share premium will stand at in excess of €580 million. These figures disclose an

extremely healthy financial position. Even if Mr. Farrington has a claim against the

Company (and it is extremely difficult to see how he does), the financial position of the

Company is such that it will be in a position to meet any claim by him, even if the

proposed capital reduction is confirmed by the court. The Company’s assets will exceed its

97. For these reasons, I am not satisfied that Mr. Farrington has demonstrated that he is a

creditor of the Company who is “entitled to object” to the Company’s application under s.

85 of the 2014 Act. Even if he were a creditor of the Company (and I do not accept that

he is), he has not credibly demonstrated that the proposed reduction of capital would be

likely to put the satisfaction of his claim at risk or that no adequate safeguards have been

obtained from the Company. The Company’s financial position is such that if the proposed

capital reduction is confirmed by the court, the Company has more than adequate

resources to meet any reasonable claim that might be advanced by Mr. Farrington. The

claim for in excess of €2 billion advanced to date by Mr. Farrington, in the manner already

described, could not be described as a reasonable claim or one requiring serious

98. I now turn to some of the other grounds of objection sought to be raised by Mr.

Farrington. I do so, notwithstanding that I have concluded that he is not a creditor who is

“entitled to object” to the Company’s application under s. 85 of the 2014 Act and without

99. As outlined earlier, when reviewing the affidavit evidence before the court in respect of

the Company’s application, apart from relying upon the invoice sent to the Company in

late January, 2020, Mr. Farrington (with the support of Mr. Butler) advanced various other

grounds of objection to the Company’s application. They centred on (1) alleged flaws in

the accounts of Ulster Bank, (2) alleged flaws in the Company’s accounts and (3) an

alleged defect in the acquisition by the Company of the ownership of Block 1, Clanwilliam

100. When reviewing the affidavit evidence, I set out my assessment of, and conclusions on,

the assertions made by Mr. Farrington and by Mr. Butler in relation to these various

issues. I do not propose to rehearse that assessment or those conclusions here. I will,

however, summarise my conclusions in relation to each of these other grounds of

101. First, as regards the alleged flaws in the accounts of Ulster Bank, I reject the contentions

advanced in that regard by Mr. Farrington. The accounts of Ulster Bank have no relevance

whatsoever to the Company’s reduction of capital application. Neither Mr. Farrington nor

Mr. Butler has demonstrated any basis on which the court could conclude that any of the

allegations made against Ulster Bank could have any material bearing on the Company’s

application. The suggestion that because the Company may indirectly have acquired one

of its properties, namely, Block 1, Clanwilliam Court from Ulster Bank, or an entity

connected with Ulster Bank (and I express no conclusion whether it did), meant that the

Company was in some way receiving the benefit of the proceeds of a crime is without

102. As regards the contention made by Mr. Farrington and by Mr. Butler that the Company’s

accounts were incorrectly prepared and that the incorrect standard was applied in the

preparation of its accounts, I also reject that contention. I referred earlier to the basis on

which the Company’s accounts were prepared by reference to express statements

contained in the 2019 Annual Accounts themselves and in the affidavits sworn on behalf

of the Company by Mr. Edwards-Moss. When reviewing the evidence put forward by Mr.

Farrington and by Mr. Butler, on the one hand, and by Mr. Edwards-Moss, on the other,

earlier in this judgment, I outlined the evidence I was accepting and the evidence I was

103. To recap, I reject the evidence advanced by Mr. Farrington and by Mr. Butler to the effect

that the Company’s accounts were prepared on an improper or illegal basis. I accept the

evidence put forward on behalf of the Company as to the basis for the preparation of its

accounts. In my judgment, neither Mr. Farrington nor Mr. Butler have provided any basis

on which the court could conclude that the Company’s accounts were not properly

prepared. Neither provided any basis on which the court could, or should look behind the

Company’s audited accounts which, in the absence of any countervailing evidence, I

accept and find were prepared and audited in good faith. Although it may be unnecessary

to do so, I go further than that and I entirely accept the evidence adduced on behalf of

the Company that its accounts were properly prepared in accordance with the relevant

IFRS standards as adopted by the European Union, having regard to the primary business

104. The suggestion made by Mr. Farrington and, on affidavit, by Mr. Butler that the Company

(and by implication, its directors) committed an offence or offences under s. 292 of the

2014 Act by using “flawed accounting standards to portray the financial position” of the

Company is manifestly without foundation. The allegation should never have been made,

particularly by Mr. Butler, a person put forward to the court as an expert. From my review

of the Company’s 2019 Annual Accounts and from my consideration of the evidence, I

unequivocally find that the Company and its directors complied with the requirements of

s. 292 of the 2014 Act and complied with the relevant IFRS standards in the preparation

of the Company’s accounts. I completely reject the contention advanced to the contrary

by Mr. Farrington and by Mr. Butler. Accordingly, I reject any ground of opposition to the

Company’s application on the basis of any alleged flaws in the Company’s accounts.

105. As outlined earlier, both Mr. Farrington and Mr. Butler sought to impugn the Company’s

ownership of Block 1, Clanwilliam Court. I have set out my views in relation to the

evidence advanced in support of those contentions earlier in this judgment. I explained

that Mr. Farrington and Mr. Butler have adduced no evidence in support of their

contention that there was some doubt or issue in relation to the Company’s ownership of

that property. Insofar as Mr. Farrington appeared to suggest that the Company could not

have acquired ownership of the property on the basis that it represented the proceeds of

crime (by reason of some alleged flaw in the Ulster Bank’s accounts), I reject that

contention. There is simply no basis in law or in fact for it. Insofar as Mr. Butler sought,

on affidavit, to express “doubt” about the “true ownership” of Block 1, Clanwilliam Court,

I set out my views in relation to Mr. Butler’s evidence earlier in this judgment when

considering his affidavit. I find the allegations made by Mr. Butler in that regard to be

extraordinary, bizarre and entirely unsupported by relevant evidence. The contention

advanced by him (without any evidence) that the sale of the property to the Company

should be treated as “null and void” is completely misconceived and lacks any basis in law

or in fact. No evidence was advanced by Mr. Farrington or by Mr. Butler in support of their

contentions impugning the Company’s ownership of Block 1, Clanwilliam Court. No legal

principle was advanced to the court which could conceivably lead the court to conclude

that there exists any doubt in relation to the Company’s ownership of that property.

Accordingly, I reject entirely the ground of opposition to the Company’s application

advanced by Mr. Farrington, with the support of Mr. Butler, based on an alleged doubt as

to the Company’s ownership of Block 1, Clanwilliam Court. Mr. Farrington and Mr. Butler

have not demonstrated that, as a matter of fact or of law, there is any doubt as to the

106. Finally, having rejected all of the grounds of objection advanced by Mr. Farrington, it is

necessary for me to make some observations in relation to the purported expert evidence

107. I have been extremely critical of the evidence advanced by Mr. Butler and have rejected

his evidence in its entirety. Mr. Butler was held out as an expert but gave no evidence of

his professional or academic qualifications. He gave no evidence to the court as to any

relevant qualifications, or experience he might have in relation to property investment

companies, in general, and REITs, in particular. He did not acknowledge in his affidavit

whether he had an understanding of the particular duties owed by an expert giving

evidence before an Irish Court. He did not set out in his affidavit the information, material

and instructions provided to him by Mr. Farrington. He did not state in his affidavit the

particular facts, or assumed facts on the basis of which he was advancing the contentions

made in his affidavit. He did not set out the terms on which he was engaged by Mr.

Farrington. He made a series of wild and outlandish allegations in his affidavit, some of

which were directed to parties who were not before the court (such as Deloitte LLP,

Deloitte Ireland, KPMG, Royal Bank of Scotland and Ulster Bank). He made allegations in

relation to the Company’s accounts without reference to the accounts themselves. He

made no effort to comment specifically on the Company’s 2019 Annual Accounts (which

he must have seen) and yet felt it appropriate to allege that the Company (and, by

implication, its directors) had committed an offence in relation to the manner in which its

accounts were prepared. He made a series of bizarre and extraordinary allegations,

entirely unsupported by evidence, concerning Block 1, Clanwilliam Court. Without any

basis in fact, Mr. Butler sought to cast doubt on the Company’s ownership of Block 1,

Clanwilliam Court and asserted (again, without any evidence) that the “true owner” of

that property is someone else, described as “a creditor” of the Company, which I have

taken to mean Mr. Farrington. Mr. Butler provided no evidence in support of that

contention or any evidence on foot of which he could responsibly have formed and stated

108. It is worth remembering what the Supreme Court said recently in relation to the

important role played by expert witnesses in court proceedings and the importance of

persons held out as experts acting with independence and impartiality. In O’Leary v.

Mercy University Hospital Cork Limited [2019] IESC 48 (“O’Leary”), MacMenamin J. (in

“Expert witnesses have played an important role in court proceedings since the

earliest evolution of the common law. Such witnesses are often essential in

assisting courts when reaching a conclusion on complex issues, whether they arise

in a personal injury action, a commercial case, or a patent proceeding. However,

there are, unfortunately, occasions when expert witnesses do not always appreciate

their fundamental duty of independence and impartiality. Their primary duty is

always owed to the court and not to their client or the person who retains them.

The cost of obtaining expert testimony can form a significant component in overall

litigation expenses. What may not always be clear, is that some cases where the

ultimate outcome will be clear-cut actually come as far as the courtroom because of

what are called ‘hired gun’ witnesses on one side or the other. Quite often the

deficiencies in the testimony of such witnesses are discovered only at the door of

the court or in the hearing itself, by which time the parties may have incurred

significant costs. This problem not only concerns private litigants and their advisers.

At a time when litigation and insurance costs are a source of public concern, these

Those observations have a particular relevance in the present case, having regard to the

deficiencies in the purported evidence provided by Mr. Butler on behalf of Mr. Farrington.

109. Later in its judgment in O’Leary, the Supreme Court re-emphasised why the duties of

expert witnesses require “clear identification and definition” (para. 17). Unlike a witness

as to fact, who is not permitted to express and opinion in relation to the matters in issue

between the parties, an expert witness may express opinions in respect of such facts (see

AG (Ruddy) v. Kenny [1960] 94 ILTR 185). The Court referred to the earlier judgment of

Charleton J. in the High Court in Flynn v. Bus Átha Cliath [2012] IEHC 398, where he

drew attention to the fact that the entitlement of an expert to express an opinion was

“predicated upon informing the court of the factors which made up that opinion, and

supplying the court with the elements of knowledge which study and experience had

furnished, and which formed the basis of the opinion, so that, in the circumstances, the

court may be enabled to take a different view to theirs” (para. 17). Unfortunately, Mr.

110. The Supreme Court in O’Leary approved the principles applicable to, and the

responsibilities of, expert witnesses listed by Cresswell J. in National Justice Compania

Naviera S.A. v. Prudential Assurance Company Limited (The Ikarian Reefer) [1993] 2

Lloyd’s Rep 68. Amongst the duties and responsibilities of expert witnesses listed in that

“1. Expert evidence presented to the Court should be, and should be seen to be, the

independent product of the expert uninfluenced as to form or content by the

2. An expert witness should provide independent assistance to the Court by way of

objective unbiased opinion in relation to matters within his expertise… An expert

3. An expert witness should state the facts or assumptions upon which his opinion is

based. He should not omit to consider material facts which detract from his

4. An expert witness should make it clear when a particular question or issue falls

5. If an expert’s opinion is not properly researched because he considers that

insufficient data is available then this must be stated with an indication that the

111. These are amongst the duties and responsibilities of expert witnesses. I cannot be

satisfied on the evidence in this case that those duties and responsibilities were complied

with in the present case. In particular, I am not satisfied that Mr. Butler understood the

need to be, and to be seen to be, independent of Mr. Farrington. Nor am I satisfied that

the evidence he provided in the form of his affidavit was unbiased and related to matters

within his expertise. Mr. Butler acted more as an advocate for Mr. Farrington’s cause than

112. For these reasons, I have reached the conclusion that I cannot rely on the purported

evidence advanced by Mr. Butler as a claimed expert. On that basis, it would have been

open to me to refuse to admit Mr. Butler’s affidavit. However, rather than adopting that

course, I proceeded to consider the contents of Mr. Butler’s affidavit and, insofar as they

were based on that affidavit, the “outline submissions” furnished by Mr. Farrington.

Having done so, I have concluded that all of the grounds of objection advanced by Mr.

113. For the reasons set out in this judgment, I am satisfied that it is appropriate to grant the

reliefs sought by the Company. I will, therefore, make an order under s. 85(1) of the

2014 Act confirming the special resolution approving the reduction of the Company’s

capital by reducing the share premium account by the reduced sum of €50,000,000, such

that the reserve resulting from the reduction will be treated as profits available for

distribution within the meaning of s. 117 of the 2014 Act. I will further direct that

pursuant to s. 85(5) of the 2014 Act, the provisions of s. 85(4) shall not apply as regards

any of the classes of creditors of the Company. I will make an order pursuant to s. 86 of

the 2014 Act approving a revised minute of the reduction of capital to reflect the reduced

amount now sought by the Company. I will also make the balance of the orders sought in

the originating notice of motion. Finally, I will give the Company liberty to apply.

Result: The court dismissed the objection and granted the orders sought.

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Hibernia REIT v Companies Act 2014 [2020] IEHC 144 (25 March 2020) URL: http://www.bailii.org/ie/cases/IEHC/2020/2020IEHC144.html Cite as: [2020] IEHC 144

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