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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Irish Bank Resolution Corporation Ltd & Ors -v- Quinn & Ors [2012] IEHC 510 (11 December 2012)
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Cite as: [2012] IEHC 510
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Judgment Title: Irish Bank Resolution Corporation Ltd & Ors -v- Quinn & Ors Neutral Citation: [2012] IEHC 510 High Court Record Number: 2011 5843 P & 2012 120 COM Date of Delivery: 11/12/2012 Court: High Court Composition of Court: Judgment by: Kelly J. Status of Judgment: Approved |
Neutral Citation Number: [2012] IEHC 510 THE HIGH COURT COMMERCIAL [2011 No. 5843 P]
[2012 No. 120 COM] BETWEEN IRISH BANK RESOLUTION CORPORATION LIMITED, QUINN INVESTMENTS SWEDEN A.B. AND LEIF BAECKLUND PLAINTIFFS AND
SEÁN QUINN, CIARA QUINN, COLETTE QUINN, SEÁN QUINN JR., 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, OOO STROITELNYE TECKNOLOGH, RLC-DEVELOPMENT AND KAREN WOODS DEFENDANTS JUDGMENT of Mr. Justice Kelly delivered on the 11th day of December, 2012 Introduction 2. In the motion paper grounding this application there is a second relief sought. It is sought in addition to or in the alternative and without prejudice to the first. It is for an order requiring each of the said defendants to make full and proper disclosure and/or further and better disclosure of the matters required at paras. 4, 5 and 6 of the orders of the court of 25th July, 2012 and 31st July, 2012. 3. That second relief was not and is not being pursued at this time. Background 5. In addition to seeking declaratory relief and damages, the plaintiffs sought and were granted injunctions at an earlier stage in the proceedings. These injunctions were granted in June and July 2011 by Clarke J. 6. It was alleged that a number of the defendants had breached those injunctions. Dunne J. heard and determined an application in respect of that alleged contempt of court in June 2012. She found that a contempt of court had been committed. In addition to dealing with that issue, she made a number of other orders, one of which involved the appointment of a receiver over the assets of certain of the defendants. She also made disclosure orders requiring information to be furnished on affidavit of all assets of whatever nature or kind situate in Ireland or worldwide and all documents relating to the material which was specified in her order. 7. Subsequently, the plaintiffs applied to transfer the litigation into the Commercial List. That order was granted. An application was then made seeking Mareva type injunctions restraining the second to the ninth defendants from reducing their assets below the sum of €50m. I granted those orders and also appointed receivers over the assets of these defendants. Those orders were made on 25th July, 2012. On 31st July, I made similar orders against the twentieth defendant, Karen Woods. 8. It is important to set the context in which the orders of 25th July and 31st July, 2012, were made. 9. Prior to 25th July, 2012, the Mareva type orders had been granted by me on an interim basis. The hearing of the application for similar orders on an interlocutory basis was fixed for 25th July, 2012 and three days were set aside for that hearing. The application was grounded upon extensive affidavit evidence which set out in great detail very serious allegations of wrongdoing on the part of the relevant defendants. Despite ample opportunity being given to the defendants to respond to those allegations, no replying affidavit of any sort was filed by any of the defendants. The orders sought were not resisted by the defendants. 10. I gave judgment ex tempore on 25th July, 2012. In the course of that ruling, I pointed out that I had already granted freezing orders on an interim basis and that I was now asked to do so on an interlocutory basis. I recounted that since the granting of the interim orders, a number of things had happened. This is what I said:-
‘What has never been in dispute is the fact that a sum of €455 million approximately is due to Anglo. Instead of trying to repay the admitted debt due, the Quinn family and in particular the respondents have taken every step possible to make it as difficult as can be to recover any amount due. They have engaged in a complex, complicated and, no doubt, costly, series of steps designed to put the assets of the IPG beyond the reach of Anglo, in a blatant, dishonest and deceitful manner. They have consciously misled courts here and elsewhere. They have sought to deprive Anglo of the assets which would go some way to discharging an admitted indebtedness. The behaviour of the respondents outlined in evidence before me is as far removed from the concept of honour and respectability as it is possible to be.’ As a result of the findings in that judgment one of the defendants has been sent to jail and the other is now a fugitive from justice. The second matter that has occurred is that further evidence has been put before me by the bank. In the case of one of the defendants it shows a willingness on his part to lie about his activities, even to a court and under oath. I quote from the transcript which has been extracted from the video which had been put in evidence where that defendant laughingly said ‘I would have to lie. That wouldn’t overly worry me.’ That is in the context of a lie being told to the court. The third development which has taken place is that in the most recent evidence one finds payments of extraordinary sums of money, just short of €2.8m, paid to a number of the defendants and that is dealt with at paragraph 10 of the second supplemental affidavit of Mr. Woodhouse…‘this occurred after the order of Clarke J. made on 27th June, 2011. Peter Quinn specifically avers that he personally received €474,974.84 by way of net salary from Finanstroy in the period 1st April, 2011 to 15th February, 2012’. And he then quotes from what had been said by Mr. Quinn, that this had fairly recompensed him for the work he actually undertook. Mr. Woodhouse says this is an extraordinary statement given the facts that have now emerged regarding the steps he was taking in furtherance of the scheme during this period. Mr. Woodhouse says:- ‘I am not aware of any work done by Karen Woods in relation to the various companies, for example, to justify a salary of €320,297.22 after tax. The total extracted is a very substantial sum, but accounts for just a small proportion of the total rent rolls. The balance of in or around $32m is unaccounted for and its whereabouts remain unexplained. Significantly, Seán Quinn Jr. himself describes the withdrawal of these salaries as a ‘cash extraction mechanism’ at para. 63 of his affidavit.’ There is a further significant element in the matters before me. The defendants have chosen not to file any replying affidavits at all. They were given ample opportunity to do so. They did not avail themselves of it. Thus, there is no denial, refutation or explanation of the large volume of evidence and exhibits which have been put before the court. Whilst the court does not and cannot at this stage of the proceedings make any final or binding determinations, it has to be said that all of the evidence before the court points in one direction. That is itself somewhat unusual in applications of this type. Normally the court has to deal with disputed facts and disputed evidence and has to adjudicate in the light of such disputes. On the evidence which is before me and which is not controverted, it appears that the Quinn family have created and operated a scheme of mesmeric complexity on a deliberate and premeditated basis which has cynically sought to achieve a twofold purpose. I regret to say that the scheme reeks of dishonesty and sharp practice. Its first object is to place assets which should be available to the plaintiff bank beyond that bank’s reach. Its second is to feather the Quinns own nest. Faced with this kind of conduct, any court worthy of the name and worth its salt would, if asked, make whatever orders it could legitimately make in order to bring an end to such wrongdoing and to frustrate the intentions of the wrongdoers.” The Orders 13. The fifth paragraphs of the orders require the defendants to disclose all bank accounts in Ireland or worldwide in which they have any direct or indirect legal and/or beneficial and/or other interests, such disclosure to be made on oath by the specified dates. The sixth paragraphs require the relevant defendants, their servants or agents to disclose on oath all documents relating to the actions taken by them or on their behalf to place IPG assets beyond the reach of the bank by agreed specified dates. 14. All of the relevant defendants filed affidavits purportedly complying with the obligations imposed upon them pursuant to paras. 4, 5 and 6 of the orders. 15. In addition, the relevant defendants filed replying affidavits to the extensive affidavit of Mr. Richard Woodhouse grounding this application which I will deal with in a few moments. These replying affidavits in a number of instances assert compliance with the July orders subject to certain modifications. Other deponents disclosed and exhibited further material over and above that disclosed in the original affidavits of disclosure. 16. Late in the evening on 28th November, with this motion due to be heard the following day, a further series of affidavits were sworn by the defendants disclosing further material, which it is said they did not previously believe fell within the obligation to disclose on foot of the court’s orders. 17. Thus, it can be seen that the bringing of this motion has elicited from the defendants the disclosure of additional material in their affidavits sworn on 22nd November and 28th November, 2012. 18. Notwithstanding this additional disclosure, the plaintiffs contend that they have demonstrated the necessary grounds to warrant this Court exercising its discretion in favour of permitting cross examination of the relevant defendants in respect of the affidavits of disclosure sworn by them. 19. The defendants take issue with this. Mr. Woodhouse’s Affidavit 21. Those areas are as follows:-
(b) Assets and bank accounts in which the personal defendants have an interest which have not been disclosed. (c) Documents relating to salaries that the personal defendants took from Russian IPG companies in 2011 and 2012, including bank statements for the Ocean Bank accounts in Moscow into which those salaries were paid. (d) Documents in the possession of the personal defendants’ legal advisers and documents relating to the payment of legal costs.” 22. His affidavit sets out the general background to the application. He then proceeds to the disclosure made by the defendants to date. He deals with two groups of disclosure affidavits. The first is the affidavits of means whereby the personal defendants were to disclose all assets and bank accounts pursuant to paras. 4 and 5 of the orders. Secondly, he deals with the disclosure required at para. 6 which required them to disclose all documents relating to the actions taken by them or on their behalf to place IPG assets beyond the reach of the bank. 23. Mr. Woodhouse’s affidavit then deals with new evidence obtained since the orders were granted. This, inter alia, relates to the control of the IPG assets and transferees followed by the assets and bank accounts allegedly not disclosed. Documents relating to payments from IPG companies are dealt with next. Finally, he deals with documents held by agents and legal advisers of the defendants. He also deals with disclosure of emails and text messages. 24. The affidavit concludes that Mr. Woodhouse does not believe that the relevant defendants have told the whole truth in relation to their assets and their ability to procure relevant documentation. He points out that a final opportunity was provided to the defendants to remedy deficiencies in their disclosure before 28th September, 2012 and that date was later extended to 2nd October, 2012. His invitation was responded to by letters from the defendants but no additional disclosure was provided. Each defendant maintained the position that they had made proper disclosure. This assertion was made notwithstanding the contents of the later affidavits sworn by the defendants on 22nd and 28th November, 2012. Resistance The Nature of the Order Sought 27. There is no allegation that the defendants are in contempt of court. Objections to the cross examination based on an assertion to the contrary are misplaced. 28. The order which is sought has two objects. The first is to elicit information in respect of which the plaintiff believes there to be a deficit. This will assist the bank to superintend and police the injunctive relief already granted. Second, if the court concludes that there has not been sufficient compliance with its earlier orders, the second relief in the notice of motion will be triggered. Such an order could only be obtained in circumstances where the court was satisfied that the disclosure made to date is deficient. If there is conflict on affidavit evidence it can only be resolved by cross examination. 29. I now turn to the jurisdiction which is sought to be invoked and the criteria applicable to its exercise. Cross Examination on Affidavits 31. In the case of affidavits in support of a summary or special summons the entitlement to cross examine is absolute (see O. 37, r. 2 and O. 38, r. 3). In such cases, a party who wishes to cross examine a deponent simply serves a notice to that effect. The deponent must then be produced for cross examination. Unless that is done his affidavit cannot be used as evidence except by leave of the court. No leave of the court is necessary to serve such a notice to cross examine. 32. The position is different in respect of petitions, motions or other applications where evidence may be given by affidavit. There the court may, on the application of either party, order the attendance for cross examination of the person making any such affidavit (see O. 40, r. 1 RSC). No absolute right to cross examine arises in such cases. 33. The leading authority in this jurisdiction on the circumstances where cross examination on an affidavit will be permitted by the court pursuant to O. 40, r. 1 is the decision of O’Donovan J. in Director of Corporate Enforcement v. Seymour [2006] IEHC 369. 34. In that case, the Director of Corporate Enforcement sought a disqualification order pursuant to s. 160 of the Companies Act 1990 against the respondent arising from the report of inspectors who had been appointed under s. 8 of the Companies Act 1990 to investigate the affairs of National Irish Bank Limited and a related company. A number of adverse findings had been made against the respondent. He had been the chief executive of the bank for a period of a little over two years. Mr. Seymour swore a number of affidavits in response to the application. He did not materially dispute the facts averred to in the affidavits sworn on behalf of the Director. But he strenuously disputed the inferences drawn from those facts and the opinions which the inspectors had formed. The Director applied for leave to cross examine Mr. Seymour on those affidavits in relation to such inferences and opinions. O’Donovan J. had to consider whether as a matter of discretion he ought to allow that application. 35. In the course of his judgment he pointed out that the applicant conceded that Mr. Seymour raised few (if any) material points of factual disagreement with the averments in the Director’s affidavits. It was clear that he disputed all and any criticisms of his conduct in the report and the inferences and opinions which the inspectors drew from the evidence before them. The judge said this:-
37. This decision was criticised by counsel for the respondent as having gone “beyond what the existing case law provided for”. I do not believe that to be correct. There can be no argument but that the court is invested with a discretionary power to order cross examination of a deponent in an appropriate case. O’Donovan J. in the case just cited has identified what the approach of the court ought to be on such an application. 38. As I have already pointed out, the purpose of such a cross examination in this case is twofold. First, to provide the plaintiffs with full information so as to enable them to police the injunctions and also, if appropriate, to proceed to the second relief prayed for in the notice of motion. Policing the Injunctions
41. Mareva type orders are of little use unless the recipient of such an order knows the true asset position of the defendant. Hence the jurisdiction exercised in this case to require disclosure of the information provided for in paras. 4, 5 and 6 of the orders in suit. 42. But if it is contended that the disclosure made is inadequate, despite assertions made to the contrary, is it permissible for the court to direct cross examination on the affidavits of disclosure to resolve the conflict? 43. That is the precise question which the Court of Appeal in England had to consider in House of Spring Gardens Limited & Ors v. Waite & Ors [1985] FSR 173. 44. That case involved proceedings for copyright infringement and breach of confidence. The plaintiffs obtained a Mareva injunction against the defendants. Vinelott J. made a subsequent order for disclosure by the defendants by affidavits of their assets. The plaintiffs, believing that there were serious inaccuracies or omissions in certain of those affidavits, moved to cross examine the defendants on the affidavits. Nourse J. granted the order by consent. At the hearing of the cross examination, Scott J. held that the application for cross examination was misconceived in that the plaintiffs did not seek to ascertain or clarify any specific issue but sought to police the court’s order. Holding that the court’s function was instead to decide issues between the parties, Scott J. dismissed the order as being a nullity. The plaintiffs appealed to the Court of Appeal. Scott J. was reversed. 45. The Court of Appeal held that the court should be able to grant any ancillary order that appears just and convenient for the purpose of ensuring that a Mareva injunction is effective. That would include making an order that the defendants be called or recalled for cross examination upon their affidavits if the facts of the case justified it. In the course of his concurring judgment, Cumming Bruce L.J. said:-
47. In the course of his judgment, Cumming Bruce L.J. referred to the Bekhor case. That is reported at [1981] 2 All ER 565. There the Court of Appeal had to deal with orders made in aid of a Mareva injunction. One of the topics the court had to deal with was whether there should be cross examination permitted in order to police a Mareva injunction. In his judgment, Ackner L.J. said:-
50. I turn now to consider the other objections which were raised against the making of such an order in the present case. The Receiver 52. It is said that in such circumstances, it is the receivers who are in effect the “policemen” of the injunction. Therefore, the argument goes, the bank should have no entitlement to proceed further in respect of the injunctive relief. Any complaint concerning non-compliance with any aspect of the orders of the court pertaining to the Mareva type relief should come from the receivers and not from the bank, it is said. 53. I do not believe that this objection is well founded. The whole object of granting the injunctions and appointing the receivers was to ensure that the defendants could not dissipate assets between now and the coming to hearing of the proceedings. The bank and the receivers have a common interest in ensuring that to be so. I do not believe that the appointment of the receivers places any fetter on the entitlement of the bank to seek to ensure that the injunction granted in its favour is effective. 54. The receivers have been appointed in aid of the plaintiffs not in substitution for them when it comes to ensuring that the injunctions are to “have effect as completely and successfully as the powers of the court can procure” (per Cumming Bruce L.J.) (op cit). 55. Furthermore during the hearing, I was told that the defendants have appealed against the order made in favour of the receivers requiring delivery up and disclosure of material. I was also told that there was to be an application in the Supreme Court seeking to stay that order to be heard in the near future. Given those circumstances it is understandable that the receivers might not be inclined to seek to enforce their order pending the resolution of that issue. Privilege Against Incrimination 57. A number of English cases were cited in support of this proposition. The first was Comet Products UK Limited v. Hawkex Plastics Limited [1971] 2 Q.B. 67. That was a passing off action in which the plaintiffs obtained an interim injunction restraining the defendants from passing off their products as the plaintiff’s. Before the trial of the action the plaintiffs alleged that the defendants were guilty of contempt of court in disobeying an injunction and applied for the committal of the second defendant to prison for his contempt. Affidavits were filed on each side and were read at the hearing of the application. The trial judge, Cantley J., made an order allowing the cross examination of the defendant upon his affidavit which had been read by counsel for the plaintiffs. The defendant appealed and the Court of Appeal held that since an application to commit for contempt had a quasi-criminal aspect and the proposed cross examination would be likely to cover broad issues in the action, as a matter of discretion, the cross examination ought not to be allowed. 58. It is quite clear that the Court of Appeal in that case allowed the appeal because of the fact that the cross examination was in the context of an allegation of contempt which it regarded as being in the nature of a criminal charge. 59. In reaching that conclusion, however, Lord Denning M.R. pointed out that if an affidavit is filed and used before the court, the defendant, when he is threatened with cross examination, cannot get out of it by saying that he will withdraw his affidavit. If an affidavit is filed and used in court the deponent is exposed to a liability to be cross examined if the judge so rules. 60. Other English cases cited such as Den Norske Bank v. Antonatos [1999] QB 271, were likewise concerned with cross examination in the context of allegations of contempt of court or quasi-criminal wrongdoing. 61. In the present case, it is quite clear that there is no allegation of contempt made nor any relief sought in the motion pertinent to such an allegation. These decisions are not relevant to this application. 62. Indeed, in the Bekhor case, in the passage from the judgment of Stephenson L.J. which I have cited, a warning by a judge to a deponent that he may possibly be in contempt of court was regarded as no reason for not ordering him to attend for cross examination. 63. In the present case if the court directs the defendants to be cross examined, it is to be assumed that the examination will be conducted in accordance with the rules of evidence and with due regard for such defendants’ entitlements both under the Constitution and the European Convention on Human Rights. It is not to be assumed that whatever judge is presiding over such an examination will allow it to be conducted in a manner which is inconsistent with such rights. Fishing Expedition 65. The order which is sought is specifically focused on the defendants’ relevant affidavits. It is not and will not be permitted to become a trawl through material which will fall to be determined at trial. Neither will it amount to what counsel for the defendants called a deposition before trial. Depositions before trial are not part of the trial process in this jurisdiction such as they are in the United States of America. The focused and specific cross examination sought here cannot be regarded as and will not be permitted to become a pre-trial deposition. Compliance 67. This is a difficult argument to make having regard to the background to this case as already dealt with by Dunne J. and the fact that since the original disclosure affidavits were sworn and despite assertions of compliance, further affidavits demonstrating additional material have been sworn on two more occasions including the eve of the hearing of this application. How has the new material which has been disclosed come to light? How was it identified? What machinery was used to secure the information? These are but some of the questions that arise by virtue of that fact alone. 68. When, however, one looks at the affidavits which have been filed and in particular those which deal with compliance with the provisions of para. 6 of the order, I am quite satisfied that there are issues which require to be elucidated and that the only method for so doing is cross examination. A number of these issues were identified in the course of argument by reference to conflicts between what was sworn to in the proceedings and the material which is now referred to in the disclosure affidavits. It is not necessary to deal with these in extenso. On a fair reading of the defendants’ affidavits, I do not believe it can be said that they answer the complaints in Mr. Woodhouse’s affidavit with such clarity as to make cross examination unnecessary. Russian Documents 70. I reject this contention. These are documents which have been disclosed by the defendants as part of their disclosure obligation in respect of orders personally binding upon them. I cannot see why they cannot be asked questions about them pertaining to those personal obligations. Legal Privilege Individual Defendants 73. I am unable to accede to this line of argument. Such an argument might have force if the defendants were being accused of contempt of court. But, as I have already pointed out, there is no allegation of contempt made against any of these defendants. 74. Second, the cause of action which is being relied upon here is conspiracy. By its nature conspiracy is furtive and shadowy. That is indeed the sort of conduct which has already been found against a number of the defendants. 75. Third, it is quite clear from even a cursory perusal of the email traffic which has been disclosed to date that members of the Quinn family and their in-laws have over periods of time been in constant communication with each other pertaining to the assets, transactions and dealings in respect of these extensive properties situate in other jurisdictions. The allegations in the action involve them all participating in such activity to a greater or lesser extent. Conclusion 77. The making of the order, I am satisfied, does not in any way dilute or interfere with the entitlements against self incrimination which the defendants have. A question of when, how and to what extent that right can be exercised is a matter that will fall to be determined during their cross examination. |