Irish Permanent Building Society v. Cauldwell

The Irish Life Assurance Company (Assurance) (defendant) was a large insurance company. Assurance formed the Irish Life Building Society (Life Society) (defendant) pursuant to the Building Societies Act 1976 (BSA) by inviting 10 of its executives (defendants) to become the Life Society’s requisite founding members. Assurance provided the money for the executives’ share subscriptions, and each executive acknowledged that he held his Life Society shares in trust for Assurance, would pay over any financial benefits to Assurance, and would vote his Life Society shares as directed by Assurance. The Irish Permanent Building Society (Permanent Society) (plaintiff) was the largest building society in Ireland. The Permanent Society sued Seamus Cauldwell (defendant), the registrar of Building Societies (defendant), Assurance, and the Life Society, seeking a declaration that the Life Society did not qualify as a building society under the BSA because the Life Society was not autonomous but was instead effectively a subsidiary of Assurance. Per the Permanent Society, this was impermissible because building societies were meant to be autonomous cooperatives by which people of modest means could help each other build homes. The Permanent Society further contended that Assurance’s control over the Life Society had led or could lead to abuses regarding (1) the manipulation of the Life Society’s expenses in order for Assurance to improperly retain the Life Society’s surplus, (2) Life Society’s failure to disclose that Life Society was able to show a profit due only to Assurance’s agreement to waive an interest payment, and (3) the potential unlawful intertwining of the Life Society’s and Assurance’s businesses. Life Assurance, the executives, and Cauldwell responded that because the Life Society was an incorporated body, the court should consider only whether the BSA’s formal requirements were met and should ignore the relationship and agreements between Assurance and the executives.