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The Supreme Court has opened the way for Larry Goodman to call in loans of over €17 million from the surgeon and Blackrock Clinic founder Dr Joseph Sheehan, marking the endgame of a long-running legal dispute between the hospital shareholders.
The court has refused Sheehan’s urgent application to continue an injunction that for years blocked the beef baron from calling in loans secured on the surgeon’s lucrative 28 per cent stake in the exclusive Co Dublin hospital. The injunction was lifted late last year by order of the Court of Appeal.
While there are other modules still live in the case, the court’s decision closes a central limb of Sheehan’s lengthy internecine battle with Goodman, his fellow Blackrock shareholder, over the businessman’s alleged intent to move in on his substantial and highly valuable hospital holding.
The ruling, denying Sheehan leave to appeal the Court of Appeal’s decision on the injunction, would appear to strengthen Goodman’s hand considerably.
The interlocutory injunction shielded the surgeon and his Blackrock shares while the dispute was live.
If the loan securities were ever to be enforced against Sheehan, the Chicago-based medic could be sidelined as a shareholder, leaving Goodman with a controlling stake in Blackrock Hospital Limited (BHL). The Louth businessman already has a 36 per cent interest in the clinic.
Of course, this may never happen. Sheehan has previously stated in court that he has backers who are willing to assist him in redeeming his multimillion-euro loans. Separately, an undetermined row over whether surcharge interest applied by Goodman on the liabilities amounts to a penalty clause may serve to maintain the status quo in the short term.
Goodman’s private health interests
Goodman has shown a keen appetite for private health investments in recent years. His hospital interests include major stakes in the Galway Clinic (75 per cent), and the Hermitage Clinic (31.4 per cent) in west Dublin.
He has also fought legal battles against shareholders in Galway.
When former Mater chief executive Gordon Dunne left the post last August to work as an advisor for Goodman, there was increased speculation that the Louth billionaire was consolidating his health sector interests for a future sale to a foreign buyer.
Blackrock Hospital is a particularly valuable healthcare enterprise. According to the most recent filed accounts for 2017, the hospital generated pre-tax profits of €9.5 million and delivered dividends of around €3.75 million to investors.
The genesis of the row
Sheehan had borrowed from Anglo in 2006 to buy more shares in Blackrock at a time when Bupa was divesting its majority interest in the hospital. Sheehan took out another Anglo loan in 2008 before the bank was amalgamated and liquidated under the name of Irish Bank Resolution Corporation (IBRC).
Breccia conducted a similar strike on the Nama loans of Florida-based developer John Flynn, a former eight per cent shareholder in the hospital. The move essentially scuppered attempts by Sheehan and Flynn to buy back their loans with backing from US fund Talos Capital.
Sheehan and Flynn took on Goodman in the Commercial Court, initially with some success. But on appeal, Goodman won out when the Court of Appeal ruled that the hospital’s shareholder agreement did not include an implied term that the stakeholders owed each other mutual duties of good faith and fair dealing. Flynn subsequently bowed out of the legal row and Goodman acquired the developer’s eight per cent shareholding in the clinic.
While the battle over the loans was being litigated, Goodman was blocked by a court injunction from calling in Sheehan’s debt. The interlocutory injunction shielded the surgeon and his Blackrock shares while the dispute was live. However last year, following Breccia’s success, the Court of Appeal agreed to discharge the injunction with effect from 5pm on Friday, November 29, 2019.
The court could not find any issue of general public importance and was critical of the surgeon’s attempt to “invent a wholly new case”.
Sheehan’s side unsuccessfully argued before the court that the injunction should remain in place while he litigated another limb of his case against Goodman. This leg of the dispute revolves around claims that Breccia and other hospital-related parties conspired to damage Sheehan’s interests. The case is currently ongoing before the Commercial Court with the surgeon opting to represent himself as a lay litigant.
The Court of Appeal disagreed with Sheehan and found that damages would be an adequate remedy for the surgeon if he were to emerge from the case victorious. However, the court did agree to temporarily extend the life of the order, giving Sheehan breathing space before the injunction was formally lifted at the end of November.
Aware his shares were “under threat”, the Blackrock founder urgently applied for leave to challenge the lower court’s ruling before the Supreme Court.
Inventing a new case
On the written application form, Sheehan ticked the box requesting a priority hearing before the Supreme Court. He claimed his case raised important points of law and should be heard in the interests of justice.
“This prolonged litigation has adversely affected the functioning of the Blackrock Clinic and it is in the interests of all parties that it be resolved as soon as possible.”
Breccia submission
Specifically, he argued the laws around the granting of interlocutory injunctions (orders that stay in place while a case is being heard) were unclear. Other arguments included a question as to whether the loss of property rights by a shareholder could ever be remedied by awarding damages. He claimed such issues were uncertain in law and that the outcome of his appeal would have a “significant impact on large numbers of other parties, including minority shareholders, lending institutions and borrowers.”
He also sought to challenge the constitutionality of the fast-track Commercial Court, in terms of its “fast access to justice” and case management structures, a move described as “wholly untenable” by the Supreme Court in the circumstances of the case.
In a written reply, Breccia dismissed most of the points raised by Sheehan on the grounds that the law in such areas was long settled. The Supreme Court agreed.
Breccia’s law firm Matheson then set out what it called the “essential facts” of the case. These included assertions that the surgeon no longer disputed that he owed Breccia in excess of €17 million or that it would be lawful for Goodman’s side to call in his loans and enforce the security on them.
“Furthermore, this prolonged litigation has adversely affected the functioning of the Blackrock Clinic and it is in the interests of all parties that it be resolved as soon as possible,” the legal submission from Breccia concluded.
Having given the matter urgent consideration, a Supreme Court panel of three judges, led by Chief Justice Frank Clarke, dismissed Sheehan’s leave application out of hand. The court could not find any issue of general public importance and was critical of the surgeon’s attempt to “invent a wholly new case” by raising points about the constitutionality of the Commercial Court that had not been raised by him before in either the High Court or the Court of Appeal.
“It should be noted that it was Mr Sheehan who applied to have these proceedings admitted to the Commercial Court. Against those facts, it is wholly untenable for him now to seek to challenge, for the first time and on a second appellate hearing, matters relating to the jurisdiction and practice of that court,” the determination found.
The court could find no legitimate basis to grant leave.
