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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Quinn & Ors -v- Quinn & Ors [2013] IEHC 1 (07 January 2013)
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Judgment Title: Quinn & Ors -v- Quinn & Ors Neutral Citation: 2013 IEHC 1 High Court Record Number: 2011 58453 P & 2012 120 COM Date of Delivery: 07/01/2013 Court: High Court Composition of Court: Judgment by: Charleton J. Status of Judgment: Approved |
Neutral Citation 2013 [IEHC] 1 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 TECKNOLOGIL, RLC-DEVELOPMENT AND KAREN WOODS DEFENDANTS JUDGMENT of Mr. Justice Peter Charleton delivered on the 7th day of January, 2013 This is a motion by the defendant Mecon FZE to stay these proceedings on the basis that it, as a corporation registered outside the European Union, has been improperly joined. Overall, this case has its origin in enormous loans made by Anglo Irish Bank, now nationalised as the first plaintiff, to the Quinn family and to an entity which has been referred to as the International Property Group which was controlled by them. On the 14th April, 2011, Anglo Irish Bank called in those loans. A plenary summons was issued against some of the defendants, up to and including Indian Trust AB, in June, 2011. Later that month, the High Court heard an application to join the rest of the defendants in the title of these proceedings. That was granted together with injunctive relief preventing the disposal of assets. On the 30th July, 2012, a statement of claim was served on the defendants. Leave was sought from the High Court to serve a number of these defendants as they were outside the jurisdiction, and not within the European Union; variously in Belize, the United Arab Emirates and Russia. The defendant Mecon is a United Arab Emirates company. It has brought this motion because since December, 2011 it has been a defendant before the High Court of India in Hyderabad in proceedings brought on behalf of these plaintiffs. Those proceedings in India resulted in an injunction on the 5th January, 2012, restraining on an interlocutory basis any dealing which the company might have in shares through which a valuable property in a place in Hyderabad called Hi Tech Park is ultimately owned, it is alleged, by the Quinn family defendants and their entity the International Property Group. After considerable delay, Mecon entered an appearance to that action in India on the 4th December, 2012. Any participation of that company in these proceedings in Ireland is under protest that it should never have been joined. Mecon argues that the proper forum for the disposal of any issue as to the ownership of the shares through which the property in Hyderabad is owned is the High Court of India. The plaintiffs argue that the proper forum is Ireland and assert that this is so, not only because they allege a wider issue of which this defendant is merely a part, but also because Council Regulation E.C./44/2001 of 22 December, 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, O.J. L 012/1 16.1.2001; commonly called the ‘Brussels I Regulation’ allows the court no discretion but to hear and dispose of this claim. Mecon was joined in these proceedings under Order 11 Rule 1 (f), (g) and (h) of the Rules of the Superior Courts. This provides that service outside the European Union may be made of notice of an originating summons in respect of any action founded on a tort committed within the jurisdiction; where an injunction is sought as to anything to be done within the jurisdiction; and where an entity which is outside the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction. The wrongs alleged The main claim is in conspiracy. This is alleged to have been perpetrated through:
2) an agreement to breach the share pledges to Anglo Irish Bank through the means described at (1) above; 3) undermining and disregarding the orders of Clarke J. granted by the High Court in Ireland on the the 27th June, 2011; 4) forging and backdating documents in a plan of deception in furtherance of the aims in the foregoing paragraphs; and 5) generally engaging in a scheme to make the defendants that apparently held valuable assets, and the individual defendants owning shares in them, judgment proof. In an application of this kind, it would be inadvisable to simply take the statement of claim as being capable of proof as against the individual defendant Mecon. Rather, the court should come to a view as to whether it has been established on affidavit that whatever is alleged may be reasonably capable of being proven in evidence and amounts to a case upon which a judge could reasonably hold in favour of the party asserting the wrong or wrongs. Much of what is alleged arises from evidence given in proceedings for contempt of court against individual members of the Quinn family, particularly Seán Quinn. Other evidence comes from investigations into instructions allegedly given by that defendant to members of his family. This is coupled, it is claimed, with independent scrutiny of various transactions. The delay in serving a statement of claim, and the late joinder of many of the defendants arises, the plaintiffs say, from the necessity to investigate the organs through which the strategy of alleged wrongdoing was performed. Mecon is but one of the companies through which assets held by other defendants were dissipated and in respect of which asset dilution of various kinds is claimed to have taken place. In that respect, the approach of the plaintiffs is that Mecon is no different from other foreign companies who are defendants in this case and who are joined in the proceedings because they held assets on behalf of the Quinn family and are claimed to be the subject of stratagems to dilute their value. Whether the evidence is credible or not cannot be judged at this stage. On the 31st March, 2011, the defendant Seán Quinn is claimed to have instructed the defendant Peter Darragh Quinn to begin moving assets from the Quinn family property company; what has been referred to in this application as the International Property Group. There is some degree of evidence that assets held through a complex corporate structure over several levels, of which the companies holding the real property assets would be at the lowest level, were to be transferred out of the lawful ownership of these companies and into new entities in various countries around the world. These new entities, under the alleged scheme of asset proofing, would allegedly take the value of the assets without giving value in return. Through a different structure, one that bypassed that made transparent by investigations into the International Property Group, these transferred assets would then be secretly held for individual members of the Quinn family. It is demonstrated that property appears to be owned through Quinn Investments Sweden through a chain downwards to Quinn Logistics Sweden AB to Quinn Logistics India to a corporation in India called Mack Soft. Also involved in this structure of ownership are said to be companies called Quinn Way and Quinn Land. What the plaintiffs have produced is a reasonable indication of proof in respect that assets were taken out of the relevant companies holding them. This was done through either: a dilution of the shares held by a process of issuing further share capital for minimal value that did not reflect the property balance sheet; or by running up contrived debts to straw corporations or men of straw who were thus enabled to act against the companies thereby contriving their winding up with, typically, the sale of company assets at a serious undervalue to other corporations controlled by the Quinn family. Part of the claimed proof of this is through similar fact evidence. It is alleged as part of these proceedings that Russian assets were transferred in this way to Russian individuals or companies on the basis of a gross undervalue. What happened in India is claimed to be of that pattern, but operating the unjustifiable increase in share capital stratagem. On the 10th June, 2011, an extraordinary general meeting of Mack Soft was held in Cavan, Ireland. As a consequence of resolutions passed at a meeting, 300,000 new equity shares were issued in that corporation; the plaintiffs claim for no good reason. It is then alleged that Peter Darragh Quinn travelled to Dubai and organised the acquisition of further corporate entities in Panama and Belize and perhaps other places as well. These were the corporations that were to acquire, at an undervalue, new shares issued in valuable Quinn companies. On the 22nd June, 2011, the newly issued shares in Mack Soft were transferred to the defendant Mecon. This is alleged to have been done through a Dubai company called Senat FZC. Some evidence has been produced which establishes that it is reasonably possible to prove that this company Senat FZC organised the transfer of the relevant shares in Mack Soft to Mecon. As against this disturbing narrative, the defendant Mecon has eloquently argued through counsel that:
2) merely receiving an asset is not an unlawful act and, more pertinently, the reception of an asset is not an action in furtherance of a conspiracy; and 3) such circumstantial evidence as has been produced is insufficient to further the allegations made that purport to turn a commercial transaction into a sham in furtherance of asset proofing. In order to control this alleged ruse, proceedings were issued before the High Court in India and limited injunctions were granted in January, 2012 stopping Mecon acting as true owners of the shares acquired in Mack Soft. Without that injunction, the relevant asset, it is claimed, would simply disappear through Mecon into ownership apparently, but not truly, outside the Quinn family or be held by Mecon as an asset to be dealt with through that corporate structure as if it had no relationship to the events whereby it had come to control the property. Also relevant to the defence argument on behalf of Mecon is another line of relief sought by the plaintiffs. It is claimed that Anglo Irish Bank took share pledges for consideration as security for loans over a number of the corporate defendants, including Quinn Finance and Quinn Investments Sweden AB, as to the entirety of the shares held in that way in a number of subsidiary companies. The relevant transaction is claimed to be captured by this pledge. These pledge agreements required that the relevant company in the Quinn family structure would not issue shares unless the appropriate share certificates were lodged with the bank. It is asserted that the shares pledged constituted 100% of the share capital of each company. It is further claimed that each such pledge included an undertaking not to do or cause to be done anything which could reasonably be expected to materially adversely impact on the value of the shares. This, it seems reasonable on the state of the evidence before this Court to argue, extended down to shareholding in subsidiaries whereby real estate in various jurisdictions was held. In this way, breaches of contract are also alleged. Whether in tort or in contract, reasonable evidence that may be capable of proof at trial has been demonstrated that dilution of share capital in Mack Soft and into Mecon, in parallel with the relevant companies, would, if not arrested by injunctive relief in Ireland and in India, have the consequence of a gross diminution in asset value. One is entitled to wonder what it is that Mecon actually does and who controls that corporation and for what purpose? Mecon has not explained what it is beyond a bald assertion that it is not a Quinn controlled company. Nor is the apparent value discrepancy in the transaction explained away at this point. None of this, however, can be taken pejoratively against any lawyer acting in good faith on instructions. Appropriate forum It is well established that the power of the court to set aside leave to serve notice of proceedings outside the jurisdiction is a matter of discretion and that the burden of proof rests with the moving party, namely Mecon, to establish the availability of another forum which is clearly more appropriate; Analog Devices B.V. v. Zurich Insurance Company [2002] 1 IR 272. Where it is established that another forum outside the European Union is more appropriate for the resolution of the issues between the parties, the burden of proof then shifts to the plaintiff, the party joining such defendant, to demonstrate why the application to stay the proceedings should be refused; Abama and Others v. Gama Construction Ireland Ltd. and Others [2011] IEHC 308. The judgement of Lord Goff in Spiliada Maritime Corporation v. Cansulex Limited [1987] 1 A.C. 460 was cited with approval in these cases and the various principles enunciated by him have been reduced to seven propositions by the editors of Dicey, Morris and Collins, The Conflict of Laws, 15th Ed., (London, 2012) at pages 552-553. While some of these are repetitive, nonetheless they provide a handy anchor point:
As between Ireland and India, it is claimed that, since an action has already begun before the High Court of India, the principle of lis alibi pendens should bar any future action against this defendant which has been subject to injunctive relief already in that jurisdiction. The fact that a defendant has been already acted against in a foreign jurisdiction does not automatically entitle that defendant to a stay of domestic proceedings. There can be many reasons why this is so. Dicey, Morris and Collins observe at 563 that such foreign proceedings may have been initiated by the domestic defendant for the purpose of demonstrating that a competing jurisdiction exists; as where a defendant in a foreign jurisdiction initiates what would amount to a counterclaim to the domestic proceedings but as a plaintiff in the foreign action. Similarly, the court must weigh the appropriateness of the stage at which the alternative proceedings are at: this may be from, at one extreme, initiation as a prophylactic or the grant of protective injunctive relief that would otherwise be unavailable to, at the other extreme, a demonstration that both parties have substantively embarked on a course that has the hallmark of a determination to proceed expeditiously to trial. These are but relevant factors. Whereas the stage of preparation for trial before a foreign forum provides a strong indication as to how the discretion of the court to order a stay of domestic proceedings should be exercised, even still all the factors must be weighed and that issue alone is not necessarily decisive. Sometimes a plaintiff may be left with little option but to seek some form of relief before a foreign court notwithstanding that it has already brought a domestic suit against the same defendant. For the purpose of enforcement, for instance, it may be appropriate to bring proceedings in different jurisdictions if the effect of the grant of relief before the domestic forum would be problematic abroad; Karafarin Bank v. Mansoury-Dara [2009] EWHC 1217. Traditionally, while cases where an action has already begun in another jurisdiction have been treated as a special case, the more modern approach is to treat the existence of simultaneous proceedings as no more than a factor relevant to the determination of the appropriate forum; Dicey, Morris and Collins 563. Crucial to any such determination is what the case is really about. That analysis always has two elements; what wrongs are alleged and what remedies will right the wrongs complained of. It is argued that since the agreement regarding the share transaction was performed in India, subject to the laws of India, and that the objectives of the legal action initiated in that jurisdiction is to upset that transaction, thereby the natural forum for the disposal of the issue as to the validity of the dilution in the overall value of the shareholding is naturally in India. Mecon, in a written submission put before the court, expresses the matter in this way:
The conspiracy, if it exists, was formed in Ireland in respect of Mack Soft and the result was the sale of valuable shares to Mecon. The conspiracy, if it can be proven, is of a pattern of control and direction from Ireland in furtherance of individuals in Ireland and their corporate vehicles. The conspiracy, as it is alleged, is an attack on orders of the High Court of Ireland. To further the conspiracy posited, breaches are claimed of share pledges as security for loans made in Ireland. All of this is a matter of control. None of what is claimed could happen without direction and planning. That is what the case is about and Ireland is clearly the place where the witnesses are and the ultimate benefit of what are said to be unlawful actions by the Quinn family defendants will materialise and where the ultimate detriment of men or corporations of substance transmogrifying into men or corporations of straw will be felt as a detriment for the plaintiffs. Relative stage of the proceedings In contrast, the plaintiffs in these proceedings have demonstrated a determination to bring their case before the court in order to recover assets and damages. It may further be stated that, on the part of the defendants, all of their actions before the High Court of Ireland have been to attempt to vindicate their reputation and their property rights through proof of the legitimacy of relevant transactions and a clear explanation of such transactions as are impugned. This healthy attitude by all of the litigants in Ireland is in contrast to the inaction in India by Mecon which is in no sense reflective of the efficiency of the courts of that jurisdiction but, rather, the relative approach of the parties as between two different jurisdictions. Brussels I Regulation
(b) an individual is domiciled in a place in the State only if he or she is domiciled in the State and is ordinarily resident or carries on any profession, business or occupation in that place, and (c) a trust is domiciled in the State only if the law of the State is the system of law with which the trust has its closest and most real connection.
The reasoning of the European Court of Justice in Owusu was set out at paragraphs 39-43 as follows:
40. The Court has thus held that the principle of legal certainty requires, in particular, that the jurisdictional rules which derogate from the general rule laid down in Article 2 of the Brussels Convention should be interpreted in such a way as to enable a normally well-informed defendant reasonably to foresee before which courts, other than those of the State in which he is domiciled, he may be sued (GIE Groupe Concorde and Others, paragraph 24, and Besix, paragraph 26). 41. Application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of Article 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention. 42. The legal protection of persons established in the Community would also be undermined. First, a defendant, who is generally better placed to conduct his defence before the courts of his domicile, would not be able, in circumstances such as those of the main proceedings, reasonably to foresee before which other court he may be sued. Second, where a plea is raised on the basis that a foreign court is a more appropriate forum to try the action, it is for the claimant to establish that he will not be able to obtain justice before that foreign court or, if the court seised decides to allow the plea, that the foreign court has in fact no jurisdiction to try the action or that the claimant does not, in practice, have access to effective justice before that court, irrespective of the cost entailed by the bringing of a fresh action before a court of another State and the prolongation of the procedural time-limits. 43. Moreover, allowing forum non conveniens in the context of the Brussels Convention would be likely to affect the uniform application of the rules of jurisdiction contained therein in so far as that doctrine is recognised only in a limited number of Contracting States, whereas the objective of the Brussels Convention is precisely to lay down common rules to the exclusion of derogating national rules. Clearly, there is a need for a set of laws in the European Union which takes into account the needs of foreign litigants and which makes forum shopping less convenient than the choice of appropriate jurisdiction. That process is underway, I am told. It is pointless for me to attempt any reanalysis. Even were I to do so, my decision is that the joinder of Mecon to these proceedings would be correct on discretionary grounds were this Court allowed any discretion. Result |