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You are here: BAILII >> Databases >> Irish Court of Appeal >> Irish Bank Resolution Corporation Ltd (In Special Liquidation) & Ors -v- Quinn & Ors [2015] IECA 84 (29 April 2015)
URL: http://www.bailii.org/ie/cases/IECA/2015/CA84.html
Cite as: [2015] IECA 84
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Judgment
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THE COURT OF APPEAL Neutral Citation Number: [2015] IECA 84
Appeal No. 2014/73 Appeal No. 2014/1464 Peart J Irvine J Mahon J IRISH BANK RESOLUTION CORPORATION LIMITED (IN SPECIAL LIQUIDATION) AND OTHERS PLAINTIFFS AND
SEAN QUINN, CIARA QUINN, COLETTE QUINN, SEAN QUINN JUNIOR, BRENDA QUINN, AOIFE QUINN, STEPHEN KELLY, PETER DARRAGH QUINN, NIALL MCPARTLAND, INDIAN TRUST A.B., FORFAR OVERSEAS S.A., LOCKERBIE INVESTMENTS S.A., CLONMORE INVESTMENTS S.A., MARFINE INVESTMENTS LIMITED, BLANDUN ENTERPRISES LIMITED, MECON FZE, CJSC VNESHKONSALT, 000 STROITELNYE TEKHNOLOGII, 000 RLC - DEVELOPMENT, KAREN WOODS, SENAT FZC, SENAT LEGAL CONSULTANCY FZLLC AND MICHAEL WAECHTER DEFENDANTS AND
DECLAN TAITE AND SHARON BARRETT RECEIVERS Judgment of Mr. Justice Mahon delivered on the 29th April 2015 General 2. Both relate to Orders made by McGovern J. concerning the process of the inspection of documentation and other material by the receivers of Irish Bank Resolution Corporation Limited (in Special Liquidation) (“IBRC”), namely Orders made on 24th November 2014 and on 9th December 2014. 3. The background to these Appeals is the plaintiffs’ claim that the personal defendants have placed assets which ought to have been available for the liquidation of IBRC, beyond reach. These proceedings are part of major and contentious litigation arising out of the interaction between the former Anglo Irish Bank and members of the Quinn family, and companies owned and controlled by them. 4. A particular feature of these proceedings (and indeed other related litigation) is the enormous amount of documentation that has been discovered, or awaits discovery or inspection. 5. The receivers who are the Respondents in these appeals are Mr. Declan Taite and Ms. Sharon Barrett (“the receivers”). Mr. Taite was appointed a receiver by Orders of the High Court in June/July 2012 on the application of IBRC, over the assets of the relevant defendants, with the exception of the twentieth personal defendant/appellant, Karen Woods. Ms. Barrett was appointed as joint receiver with Mr. Taite over the assets of Ms. Karen Woods. In their capacity as court appointed receivers they are separate parties to the plaintiffs, and act independently of them. The receivers were appointed in aid of Mareva injunctive relief granted by order of the High Court on 14th June 2012. 6. The common backdrop to both appeals is an Order of the High Court (Kelly J) dated 9th November 2012. That Order directed the personal defendants to deliver up to the receivers all books, records or documents relating to the assets or the financial or tax affairs of the personal defendants, and included all devices on which such may be stored. 7. The High Court Order of 9th November 2012 provided for a process (the High Court Process) for the review of such documentation and material by the receivers, and which directed the receivers to review all documentation collected from the personal defendants, and then divide the documents into three categories, namely
(ii) those documents which appear to be privileged or arguably so; and (iii) those documents considered to be irrelevant (non-relevant documentation). 9. The High Court Order of 9th November 2012 was the subject of an appeal to the Supreme Court. By order of the Supreme Court on 26th February 2014, the High Court Order of 9th November 2012 was varied. The Supreme Court Order provided for a process for dealing with downloaded material and which it referred to as ‘the Supreme Court process’, in substitution for the original ‘High Court process’. This variation of the High Court Order by the Supreme Court is the focus of one of the Appeals to this court. The Appeal relating to the High Court Order of 24th November 2014 (The First Appeal) 11. The first Appeal relates only to that part of the Order of McGovern J. which dealt with the fifth of the six categories of information sought, namely 1.5, and which ordered the disclosure of “the subject title, heading to communications and names of attachments and documents over which privilege is claimed.” The submissions of the personal defendants in the first Appeal 13. By way of an alternative means of assisting the receivers in identifying the type and nature of the documentation over which privilege is claimed, the personal defendants state that they prepared:
The submissions of the receivers in the First Appeal 16. The receivers instanced examples in the personal defendants A3 spreadsheets relating to individual documents, and more particularly the descriptions outlined in the last column for each entry. They pointed to the many instances where the description provided was inadequate and effectively prevented the receivers from being able to adequately identify the class or nature of the document over which privilege was being claimed, such as would enable them make a decision whether or not to challenge such assertion. The receivers pointed to the nature of the litigation and the fact that it had been well established that purposeful steps had been taken by the personal defendants to place assets out of their reach. They argued that the lack of trust created by the actions of the personal defendants/respondents understandably created a degree of scepticism and concern that the personal defendants intended to be as evasive as possible in providing information for the processing of the litigation. It was the case, they pointed out, that the receivers were officers of the Court, and were independent of the plaintiff. Such information as was provided in accordance with the High Court Order and which might assist, even in some remote manner, to identify the content of the document (or the likely content of the document) would not be provided by them to the plaintiffs (IBRC) where a legitimate claim of privilege existed, and there was therefore no risk that IBRC would gain any insight into the nature or content of such privileged documentation or any description provided of such documentation in accordance with the High Court Order. 17. A number of authorities were opened to the Court on behalf of the personal defendants including Fyffes v. DCC plc and Others [2005] IESC3, para. 23, Ahern v. Mahon and Others [2008] I.R. 704 at 719, Bula Limited v. Crowley and Others [1991] I.R. 220 at 222. The following passage from the judgment of Kelly J in Duncan v. The Governor of Portlaoise Prison [1997] I I.R. 558 at 576 was referred to, thus
Quite apart from the objection in principle, Mr. McEntee’s formulation has many practical difficulties attendant upon it. If he is correct in his submission, any case in which legal professional privilege is claimed may, on the simple request of the opponent, result in the Court being called upon to go through the entire of the documents with a view to ascertaining, not the validity of the claimed legal professional privilege, but rather to engage in the work of editing the documents with a view to extracting from them factual material to be disclosed to the other side. This exercise would have to be conducted at a time in advance of the trial when no Judge can be fully apprised of the entire factual matrix against which the action is brought. The conduct of such an exercise would, in my view, be much more likely to work against the administration of justice than in its favour.”
21. By Notice of Motion dated 25th November 2014 the receivers sought certain orders relating to the ongoing inspection process, and on 15th December 2014 the High Court (McGovern J) made the following orders:
By way of variation of the step set out at point 7 of p. 8 of the Supreme Court Order of 26 February 2014 (which varied the High Court’s Order of 9 November 2012) that “documents which have been identified as falling outside the ambit of Order 1 and/or Order 2 (i.e. identified as “non relevant”) may be inspected forthwith by the Receivers (and up to four personnel from Duff and Phelps on their behalf) and up to ten persons from the Receivers’ Solicitors (Arthur Cox) to enable the Receivers satisfy themselves that they do in fact fall outside the ambit of those orders; in the event of any dispute as to whether any document is Non Relevant and therefore falls outside Order 1 and/or 2, the Receivers will bring an application for directions before the High Court on notice to both the Relevant defendants and the plaintiffs.” That the relief sought at paragraph 3 of the said Motion do stand adjourned for mention to Monday 26th day of January 2015 at 11 o’clock in the forenoon. (The personal defendants/respondents were ordered to pay the costs of the Motion to the receivers.)
And it is ordered that the relevant defendants having produced and delivered up to Espion Limited (“Espion”) any computers or other electronic devices (including laptops, sim cards, discs, memory boards, smart phones, ipads or similar devices and any other software or hardware of any kind) upon which Books and Records or copies thereof may be stored for the purposes of Espion firstly accessing same so as to download the information therefrom (which occurred on 11th and 12th December 2012) and secondly to carry out the process hereinafter set out in this Order (the Supreme Court Process) it being agreed between the Parties that the information stored on those devices or downloaded therefrom remains the property of the relevant defendants and within their custody and control (Order 2). And the Court doth direct that the Receivers may provide the plaintiffs with any non legally privileged information that they receive either from the relevant defendants or any third party in their capacity as Receivers over the assets of the relevant defendants which they have being appointed over pursuant to Orders dated 29th day of June 2012, 30th day of July 2012 and 31st day of July 2012.
2. In preparing the said list (“The List”) Espion will ascribe each document an identifying number and thereafter identify in respect of each document, where possible.
(b) The sender or author of the document (c) The date of the document (d) The type of the document namely letter, email, Word document, Excel document, bank statement, invoice PDF etc and a brief description of the document. 4. The List and a copy of the documents on that List will be supplied to the Solicitors for the relevant defendants. The List (save for the brief description of the document) will be supplied to the Receiver. 5. The Solicitors for the relevant defendants will within four weeks from receipt of the List and documents write to the Solicitors for the Receivers identifying by reference to the List the documents firstly, over which no claim to privilege is asserted, secondly the documents over which any claim to legal privilege is asserted and thirdly the documents falling outside the ambit of Order 1 and/or Order 2. 6. Documents on the list over which no claim to privilege is asserted and within the ambit of Order 1 and/or Order 2 will then be identified by the Solicitors for the relevant defendants to Espion who will release those documents but only those documents to the Solicitors for the Receivers forthwith and thereafter to the plaintiffs. In this regard the Solicitors for the relevant defendants will endeavour to identify to Espion these non privileged and relevant documents on a piece meal basis as these documents have been reviewed. 7. Documents which have identified as falling outside the ambit of Order 1 and/or Order 2 may be inspected by the Receivers in conjunction with the personal defendants to enable the Receivers satisfy themselves that they do, in fact, fall outside the ambit of those Orders. 8. In the event of any dispute as to the basis for any privilege objection the receivers will bring an Application for directions before the High Court on Notice to both the relevant defendants and plaintiffs.”
The first Appeal (the review of the documentation in respect of which privilege is asserted 26. In Paragon Finance v. Fresh Fields [1999] 1WLR 1183 at 1188, Lord Bingham C.J. stated:
29. The process, from the prospective of the parties seeking the production of documentation in the course of litigation, and where the existence of specific documentation can often be the determining factor in such litigation, can be fraught with risk and, in particular, there is the possibility that a claim to privilege will be made inappropriately. The difficulty arises from the fact that documentation over which privilege is asserted is not usually available for inspection by the party seeking its discovery, and the scope for improperly concealing documentation under a false veil of privilege is therefore significant. In this case, the history of evasiveness and lack of candour on the part of the personal defendants (as so found by the High Court) has undoubtedly given rise to a concern on the part of the receivers, and indeed a suspicion, that documentation which is claimed to be privileged may not in fact be so, and that unless an unusually transparent system of identifying documentation is put in place, and imposed on the personal defendants, the receivers’ ability and entitlement to adequately and sufficiently identify documentation, and where appropriate, challenge assertions of privilege, will be frustrated. 30. At the core of this appeal is the extent to which a party seeking privilege in respect of a document should be obliged to reveal information which may, of its nature, serve to identify, to a greater or lesser degree, its content. 31. The A3 spreadsheets provided by the personal defendants identify a great number of documents. In relation to those in respect of which privilege is asserted, a ‘description’ is provided in the last column of each spreadsheet. While some of these descriptions identify a document in a manner which is sufficient to identity the class of document referred to, and thereby justify an assertion of privilege in relation thereto, others clearly do not do so. To this extent the Court is satisfied that the receivers criticism of a lack of clarity on the part of the personal defendants in their descriptions of many of the documents over which a claim of privilege is asserted, is reasonable. In his Order of 24th November 2014 the learned High Court Judge directed that six separate categorisations were required of each document over which the personal defendants was asserting privilege, and the fifth of these (which is the categorisation under appeal in this case) is a requirement to provide, in relation to each document, “the subject title heading to communications and names of attachments and documents over which privilege is claimed”. 32. The personal defendants contend that in many instances such a requirement will result in a disclosure of information which will act to reveal the content of the document, and in so doing, will dilute or destroy the privilege attaching to the document. They are, in particular, concerned with emails and other electronic communications which may not have a subject title heading such as might appear, for example, in more formal correspondence, and that there may be attachments in respect of which a description such as would satisfy the Order of 24th November 2014, would potentially reveal the documents’ content. This is not accepted by the receivers who, in any event emphasised that they are not the plaintiffs in the case and that no document or part of a document deemed privileged will be released to the plaintiffs. 33. There are many examples of cases where the courts, both in this jurisdiction and elsewhere, have emphasised the risks associated with any attempt to weaken the entitlement of a party to prevent the disclosure of a privileged document, and resisted efforts to do so. 34. In Duncan v. The Governor of Portlaoise Prison [1997] IR 558, at 576, Kelly J. emphasised the importance of preserving the concept of legal professional privilege, and avoiding any requirement on a party asserting same to disclose factual matter in such documentation. (Cf para. 17). remarked as follows: 35. Finlay C.J. stated the following in Bula Limited (in receivership) and Others v. Laurence Crowley and Others [1991] 1 I.R. 220 at p. 222.
41. In this case, the substantive claim against the personal defendants is that they have attempted to place assets beyond the reach of the court appointed receivers. Indeed, the Courts have already found as a fact that some of the personal defendants have engaged in acts of defiance in respect of court orders. However, other than an expression of concern, suspicion and apprehension by the receivers that the personal defendants will engage in activity which will have the effect of concealing documentation in the course of these proceedings under false claims of privilege, no compelling case has been made that such has occurred, at least in any deliberate fashion. Apprehension on behalf of the receivers that the inspection process will be intentionally abused by the personal defendants falls short of proof that such activity has already been deliberately engaged in by them. 42. The receivers are, of course, entitled to bring an application to the High Court expressly seeking a declaration that the entitlement of the personal defendants to assert privilege over particular documentation should be denied to them for stated reasons of abuse or dishonesty relating to the process on their part. 43. Prior to the hearing of this appeal the personal defendants suggested that, as an alternative to the relevant part of the Order of the High Court under appeal, they would provide a short narrative in respect of each document over which privilege was claimed sufficient to demonstrate to the receivers the legitimacy of such claim. They maintain that they have since provided such a narrative (and which they maintain is adequate for this purpose) in respect of each document under the column headed ‘Description’ in their A3 spreadsheets. The Court has had the opportunity to consider whether these narratives (under the ‘Description’ column) advance the asserted requirements of the receivers. 44. The personal defendants are entitled to assert privelege in relation to the documents which they believe are correctly privileged, and their entitlement in this regard has not in my view, at this point in time, been defeated. Neither should it be significantly curtailed because of any proven allegations of fraud, dishonsty or other moral turpitude on their part, in relation to the inspection process. 45. I accept the submissions made on behalf of the personal defendants that the requirement in that part of the Order the High Court which requires them to provide the subject title heading to communications and the names of attachments and documents over which privilege is claimed carries with it a very real risk that the content of such documentation, in whole or in part, will be divulged, thereby significantly diluting or removing the right to privilege where it properly exists. 46. The background to these proceedings and the circumstances in which the receivers were appointed are extremely unusual. The issues in the litigation are, to say the least, complex and the action itself is likely to involve a prolonged hearing with very substantial attendant legal costs. Further, significant difficulties have arisen in relation to the disclosure and inspection process to date particularly having regard to the large volume of documentation which must be scrutinised by the receivers. In these circumstances it is vital that the personal defendants comply with their disclosure obligations in as complete a manner as is possible while consistent with their entitlement to claim privilege over documents which they have been advised properly fall within such category. To make the process purposeful in the context of seriousness of the matters at stake, the receivers must be provided with the most detailed description possible of each document, albeit one which does not disclose any detail as to its privileged contents, so as to enable them form a reasoned judgment as to whether the document has been validly categorised. 47. This brings me to the description/narrative of the priviliged documents contained in the affidavit of Aoife Quinn. It is undoubtedly the case that in relation to the greater number of documents over which privilege is claimed, the personal defendants could not reasonably be expected to furnish any further detail. For example where the narrative claims that a document contains “litigation strategy” or is a “draft affidavit” clearly nothing more could be required of the defendants as those documents are so obviously privledged. However, in many instances the narratives are of little use to the receivers and much greater and more meaningful detail could be provided without disclosing the content of the document. 48. Firstly, in respect of every document, its date should be identified. It is not clear from the spread sheets that the dates referenced to each documents necessarily identifies the date of the document itself as opposed to the date upon which it was either inputted or accessed within the computer programme being used for the disclosure process. Secondly, in respect of correspondence, it is insufficient to, for example, refer to “letter” as the narrative relied upon to demonstrate that the document is privileged. A meaningful narrative requires that at least some generic category of correspondent be identified. For example, “letter from junior counsel to the defendant’s solicitor “, or “letter from one of the personal defendants to their solicitor” is at a minimum required. 49. In some instances the description of the document over which privilege is claimed is simply inadequate to identify the class or true nature of the document concerned and the receivers are thereby being inhibited in their ability to make a reasoned assessment as to the validity of the claims to privilege that have been made. I emphasise that the most detailed possible description of each document should be furnished consistant with the non infringement of the privilege asserted. 50. In reaching my conclusions as to how the present appeal should be resolved, I have had particular regard to the difficulties that have arisen thus far in the disclosure process, the fact that the receivers have been appointed by the court to police Mareva injunctions and the fact that the plaintiffs are not entitled to be privy to, or have sight of, documents which appear to be privileged or are arguably so. I have concluded that while the order of the High Court Order places the personal defendants at risk of disclosing information and material that may truly be privileged the balance of justice in the case cannot be served by simply setting aside the Order of McGovern J. I am quite satisfied that his order must be replaced with one that will require the defendants to set out, in respect of each document over which privilege is maintained, a meaningful [emphasis added] narrative containing a sufficient description of the document to allow the receivers make a reasoned judgment as to whether privilege is maintained. 51. The work of assembling documentation for the purpose of complying with an order for discovery is a role which is usually carried out by the party directed to make discovery, albeit with the assistance and direction of their solicitor. However, the question as to whether any such documents are ones to which legal professional or litigation privilege may attach is essentially a legal question and is one invariably answered by the proposed deponent to the affidavit with the benefit of legal advice. This being so, I have assumed that in respect of each document disclosed in the affidavit of discovery that a qualified solicitor, who is of course an officer of the court, has already inspected each document over which privilege has been claimed and has made a professional judgement that that document is correctly so categorised. That being so I am satisfied that, in addition to the order that a more meaningful narrative be provided in respect of each document over which privilege has been claimed, the court should also make an order directing the solicitor responsible for advising on the discovery process, insofar as the privileged documents are concerned, to swear an affidavit stating that they have inspected each of the documents over which privilege has been maintained and that in their professional opinion each such document has been properly so categorised. Hopefully a combination of these orders made in respect of the first appeal will meet the justice of the case having regard to all the prevailing circumstances. 52. Future applications relating to the Inspection process may, of course, be made to the High Court in the normal way, including any application seeking a modification or alternation of the inspection process as directed by this Court in the event of practical or legal difficulties arising therefrom. The second Appeal (the manner in which documentation in respect of which privilege is asserted is to be reviewed by or on behalf of the receivers)
55. In that six month period the receiver, Mr. Taite, reviewed 5,458 documents (or 4% of the total) in accordance with the process stipulated by the Supreme Court Order. It is maintained by Mr. Taite that 75 of the 126,761 documents reviewed were wrongly classified by the personal defendants as “non relevant”, and were, in fact, “relevant.” It is suggested by Mr. Taite that these miscatergorisations were not accidental. 56. In any event, the receivers determined in November 2014 that the process (as directed by the Supreme Court) and which had been essentially agreed between the parties, was unworkable, because the review could only be undertaken personally by the receivers. An application was duly made to the High Court for a review of that process, and on 15th December 2014 the learned High Court judge, having accepted the contention of the receivers that the existing review process was unworkable because of the enormous number of documents required to be reviewed, directed an alteration in the process, having expressed the following view:
I am quite satisfied from the latest affidavit of Mr. Taite that the position, indeed his earlier affidavit grounding this Motion, that the position has become almost impossible for him to advance this case by means of the protocols which were in place up until now. I am satisfied that the Court has a duty and an obligation in the public interest to ensure that in balancing efficiency and fairness to all of the parties that this litigation proceeds not at a snail’s pace but in an efficient manner.” 58. The justification for this alteration of the process is that it provides for a system of document inspection which, because of the provision for up to fourteen personnel to review the documents on behalf of the receivers, will result in it being completed much more quickly. 59. The personal defendants’ second appeal has two aspects to it. Firstly they contend that the learned High Court Judge did not have jurisdiction to amend or vary the Order of the Supreme Court, and secondly, the learned High Court judge failed to apply the correct test when considering the variation of an Order that was the product of an underlying agreement between the parties, namely, that a Court Order reflecting such an agreement could not be altered in the absence of it being established that one party to the agreement had entered into it under a misapprehension of a relevant fact. The variation of the Supreme Court Order 61. It is necessary to examine more closely the relevant part of the Order of the Supreme Court of 26th February 2014. It provided as follows:-
63. Order 31 of the Rules of the Superior Courts sets out rules of practice relating to Interrogatories, Discovery and Inspection. Order 31 rule 12(11) as substituted y S. 1 No. 93 of 2009 provides:
(ii) the discovery originally ordered or agreed is unreasonable having regard to the cost or other burden of providing discovery 65. The nature of a discovery/inspection process initiated by an Order of the High Court may require, and often does require, adjustments and changes in that process to reflect and deal with legal or practical issues or difficulties that arise, as particularly might be expected to arise in lengthy or complex litigation. The High Court retains its inherent jurisdiction to oversee and review that process in the course of litigation, and to alter or vary procedures and processes previously directed. In this case, the Supreme Court simply varied one part of a High Court directed inspection process and in so doing did not exclude the High Court from continuing to operate its inherent jurisdiction to manage and oversee the practical working of that part or any part of the order, albeit in its varied form, into the future, in the interests of justice. This Court is therefore satisfied that the High Court never lost its jurisdiction to generally manage and oversee the inspection process in this case simply because part of that process had been varied by the Supreme Court. The Supreme Court did not expressly reserve to itself the oversight of the inspection process into the future when it varied the Order of the High Court. 66. This Court is therefore satisfied that in the particular circumstances of this case, the High Court did not lose its inherent jurisdiction to vary or alter the inspection process to reflect practical difficulties that might arise in relation to that process, and which would, if left unaltered significant delay the completion of that process, and ultimately, the conclusion of the litigation. The exercise of that jurisdiction carried with it an even greater imperative in circumstances where the practical difficulties in question were likely to restrict or prolong a process designed and intended to enable Receivers appointed by the court discharge their obligations to the court. The variation of a Court Order made on the basis of an Agreement between the parties 68. In Purcell v. Trigell Limited [1970] 3 AII ER 671, Lord Denning MR, stated that an interlocutory Order made by consent may be varied by subsequent Orders in two distinct circumstances:
(b) where the Court of its volition decides that the Order should be varied.
72. Another misapprehension on the part of the Receivers was their belief that the personal defendants would engage in the process as ordered by the Supreme Court in a positive frame of mind in order to conclude that process as quickly as possible. In this regard, this Court considers the following comments made by the learned High Court Judge are germane:
74. It may be the case, and indeed probably was the case, that the Receivers were unrealistic in their assessment of the time and manpower that would be necessary to undertake the review of a great number of documents at the time they agreed the Inspection process, which was the subject of the Supreme Court variation of the relevant part of the High Court Order, and that consequently they entered into the agreed process under a misapprehension as to the time and manpower that would be required to see it concluded within a reasonable time frame, both being relevant facts relating to their agreement with the personal defendants. 75. Furthermore, it could never be the case that even in the absence of such (or any) misapprehension, a discovery or inspection process ordered by a Court for the purpose of the good management of the litigation could never be altered or varied by subsequent Court Order merely because the original process had been agreed by the parties. If this was the case, a Court would be effectively prevented from exercising its inherent jurisdiction to oversee the management of litigation because of the fact the parties had entered into an improvident or unworkable discovery or inspection process, and thereby effectively rendered the litigation impotent. That is an entirely different situation to circumstances where an agreement by parties to litigation relates to a substantive issue or matter central to that litigation. 76. The second Appeal is therefore dismissed. The Order of the High Court providing for the inspection of ‘non-relevant’ documentation by the receivers, and up to four personnel from Duff and Phelps, and up to ten personnel from Arthur Cox Solicitors is affirmed. |