The High Court has allowed a Galway builder amend his legal action against First Active, enabling him to lodge a claim that the bank fraudulently used securities to appoint a receiver to his group of companies.
Brian Cunningham has issued legal proceedings against the bank and receiver Ray Jackson of KPMG through a number of his companies to which Mr Jackson was appointed by the bank in 2003.
Legal proceedings have been taken against the bank and receiver by eight Cunningham group companies, including Moorview Developments, Salthill Properties and Valebrook Developments.
Mr Cunningham issued proceedings through another of his companies, Porterridge Trading, against property developer Bernard Duffy, who had agreed to buy from the receiver a residential, leisure and retail development called Baily Point in Salthill, Galway, that Cunningham's group had been building.
In the most recent judgment in the long-running cases, delivered on September 7th, Mr Justice Frank Clarke said the Cunningham group companies were looking to include an allegation that First Active had "fraudulently procured" securities from Mr Cunningham and his companies which it then used to appoint the receiver.
Mr Cunningham claimed that he and his companies agreed to the securities on assurances that further money would be made available by the bank to fund the group's projects.
Mr Justice Clarke noted that, if he allowed the Cunningham companies to amend their claim against the bank, it would have "a serious accusation of fraud pending before the courts, which it, as a licensed financial institution, is entitled to have dealt with as quickly as possible".
However, he said he was allowing all amendments sought by Mr Cunningham's companies. He said there would have to be "strict compliance with all timescales fixed in the future", given that there would "now be pending against First Active the most serious of accusations".
He said the fraud allegation was only being raised at this stage in the proceedings because it seemed to stem from documents discovered and "could only have been formulated in recent times".
Mr Justice Clarke said the various proceedings were "sufficiently connected" that they could be "tried in a single sequence".
He provisionally scheduled the cases to be heard on next April.
The judge said he was anxious that Mr Duffy should not be required to be involved in the case in relation to any issues that do not affect him.
He said that some of the issues did not relate to Mr Jackson personally, but could affect the validity of his appointment as receiver.
The Cunningham group was involved in building projects in Dublin and Galway. Former taoiseach Albert Reynolds and one-time IDA Ireland chief executive Padraic White were non-executive directors of the group.
