THE SUPREME COURT
[Appeal No.037/2009]
[Appeal No.110/2009]
[Appeal No.111/2009]
[Appeal No.113/2009]
O’Donnell J.
McKechnie J.
MacMenamin J.IN THE MATTER OF THE COMPANIES ACT, 1963/2006
TWEEDSWOOD LIMITED, GLOBAL TEST AND SURVEY TECHNOLOGIES LIMITED, M. J. POWER CONSTRUCTION (WEXFORD) LIMITED, GROUPCO MANAGEMENT SERVICES LIMITED
APPLICANTS/APPELLANTS
RESPONDENT
Judgment of Mr. Justice John MacMenamin dated the 7th day of December, 2017
1. On the 7th July 2008, the Revenue Commissioners, who are the respondents to these appeals, presented petitions to the High Court for the winding-up of the four appellant companies, which will be referred to hereafter as “Tweedswood”; “Global”; “Construction”; and “Groupco”. Later, on 13th October, 2008, the High Court, (Roderick Murphy J.), made orders for the compulsory winding-up of three of the companies, with the exception of Tweedswood. After a number of adjournments, the same judge ordered on the 8th December, 2008 that Tweedswood also be compulsorily wound-up, and rejected an application to set aside the earlier winding-up orders. The companies seek to appeal all these orders now after an elapse of nine years. The appellant companies contend the High Court judge erred in law. Relying on the legal principle that even on an insolvency, the courts maintain a residual discretion as to whether or not to order a winding-up, the appellants say that this discretion should have been exercised in their favour, and that the judge should have refused to make or affirm the winding-up orders. As the authorities referred to below make clear, a court may exercise such a discretion if it is shown there was, in fact, such an ulterior motive and improper purpose in petitioning for such an order.
2. At the relevant times, all of the companies were substantially indebted to the Revenue Commissioners. But the companies submit that the Revenue Commissioners in seeking the orders acted on foot of an ulterior motive and improper purpose. Additionally, by motion, the companies now seek to adduce new evidence in this appeal.
Residual Discretion
3. On one view, these cases might be characterised as almost byzantine in their detail. In the context of the motion to adduce new evidence, this Court has been presented with significant quantities of material regarding a complex series of company law and property transactions said to be relevant. It is, therefore, essential first to establish a clear framework of reference. Identifying the legal principles is an essential consideration. Relevance can only be determined by reference to the legal issues which a court must consider.
4. That the courts do hold such a residual discretion is well established. (See Re Bula Mines Limited [1990] 1 I.R. 440; Genport Limited [1996] IEHC 34, The High Court, McCracken J.). In general, the burden of proof devolves on a respondent company to establish impropriety. Once indebtedness and the statutory proofs are satisfied, a petitioner is, prima facie, entitled to a winding-up order ex debito justitiae. In Bula, however, this Court (Finlay C.J., Henchy J., McCarthy J.), held that, on the facts, the evidential burden had shifted. But that determination was made on the facts of that case as a consequence of admissions of ulterior motive made by the petitioners. In general, the situation is otherwise. Speaking for the Court in Bula, McCarthy J. pointed out these cases are pre-eminently ones of special facts, but this does not mean that legal principles must not be the framework for any decision.
The Test
5. As the two main authorities make clear, the first step is that a petitioner must be shown to be, in fact, actuated by a motive different from the ostensible purpose of the petition. The mere absence of goodwill, or even the presence of ill-will between the parties, is not sufficient. Then, a company must go further, and establish on cogent evidence, that not only is the petition actuated by reasons other than the ostensible motive, but that the actual underlying motive is improper in the sense of being tantamount to an abuse of process. (Bula). Thus, the company must establish there is conduct, generally proximate to the initiation of the petition, which amounts to abuse of process. Frequently, a respondent will show that the effect of the petitioner’s case may be to bring about detriment to the interests of the class of creditors to whom the petitioning creditor belongs. A court must have regard to the entire context in which the allegations are made. It will examine the evidence adduced to see if there is either proximity in time, causal connection, or both, between the bringing of the petitions, and the matters said to show impropriety. In both Bula and Genport, the evidence showed such a proximate, clear, direct, connection. In Bula, the petition was brought to prevent one creditor obtaining priority as a secured creditor over securities held by other creditors who were the petitioners. This was held to be improper. In Genport, the High Court (McCracken J.) held that the true motive behind the petition was not to satisfy the petitioner’s own debt, but rather, to prevent further litigation against another company, Crofter Properties Limited. Crofter held the head lease of the hotel Genport operated, which would have been forfeited to Crofter in the event that Genport was placed in liquidation. He held this would have been to the detriment of other creditors who considered their interests were best protected by the hotel continuing to function as a business. (See, generally, Keane Company Law, 5th Edition, Bloomsbury, 2016, para. 36.40 et seq., Courtney, The Law of Companies, 4th Edition, Bloomsbury, 2016, para. 24.094, Lynch Fannon & Murphy, Corporate Insolvency & Rescue, para. 2.92 et. seq.)
6. A court will necessarily have to distinguish between events which are genuinely connected to the bringing of the petition, and those which are merely contemporaneous with it. The test is an objective one. Mere assertion, or subjective belief on the part of the director of a company, will not, therefore, be sufficient. The impugned conduct and motive must be the petitioner’s own, or someone acting on that petitioner’s behalf, or at their behest. A mere allegation that some person entirely outside the ambit of the proceedings has engaged in some form of misconduct will obviously be irrelevant. A subject company must show, either by clear evidence, or by necessary implication, that the ulterior motive and improper purpose were present to the mind of the petitioner at or about the time of presentation of the petition to court. A court will be justified in carefully assessing events within what it identifies as a relevant timeframe, and especially in scrutinising events in the immediate lead-up to the presentation of the petition. If some form of ongoing or long-term motive is alleged, a court may look to less proximate events, always asking whether such events are consistent or inconsistent with the narrative of the claim of impropriety. A court must also, therefore, assess whether there is evidence contrary to, or inconsistent with, the company’s case of abuse of process. A company must, therefore, establish its case of impropriety or abuse of process on evidence which is cogent and clear, as was the case in both Bula and Genport.
Factors to be Weighed
7. As is all too clear, the events described in this appeal took place well before the enactment of the Companies (Amendment) Act, 2014. Again, speaking for this Court in Bula, McCarthy J. explained that the discretion contained in the then s.216 of the Companies Act, 1963, (see now s.569(1) Companies Act, 2014), was to be exercised “in a principled way which is fair and just”. (See also Re Forrest Lennon Business Support Services Ltd. [2011] IEHC, Laffoy J., Re WMG (Toughening) Ltd. [2001] 3 IR 113, Re Goode Concrete Ltd. [2012] IEHC, Laffoy J.). In Bula, this Court additionally criticised the fact that on the appeal the petitioners sought to rely on reasons for bringing the petition which had not been raised in the High Court at all. This point has a resonance in this appeal, where there is now an application, 9 years after the petition, to adduce new evidence. In general, a party is not entitled to make a case which had not been made in the court below. Moreover, to seek to adduce such new evidence may even be self-defeating for a company. If an appellant company finds it necessary to “expand” the case, then it may beg questions as to why a cogent case was not made in the first place. If, ex post facto, a company seeks to establish a new range of facts, or some deeper ulterior motive and improper purpose, it may, in some circumstances, raise the question as to whether the original alleged impropriety was, itself, merely a contrivance.
Fair Procedures
8. A further observation is particularly relevant to these appeals. It goes without saying that the duty of a court, both at first instance, and on appeal, is to ensure that fair procedures are observed. The rules of evidence are but one means of bringing this about. Thus, although a number of persons and parties are identified in this judgment, it is important to point out that what is set out here as “the appellants’ case” contains only averments by way of affidavit. These cannot be taken as findings of fact established by a court of law. Save for the Revenue Commissioners, other parties who are identified directly or by implication, were not given the opportunity of responding to the allegations made. Thus it would be entirely unfair to draw any adverse conclusion regarding any such person or party on foot of what is untested material.
The Application to Admit New Evidence
9. One other aspect of the framework of reference must be considered. The four companies seek to adduce new evidence. It is necessary to emphasise that the power given to a court to admit such evidence is discretionary. (Order 58, Rule 8, Rules of the Superior Courts). Thus, in exercising its discretion, a court will require to be satisfied of each of the tests identified by this Court in Murphy v. The Minister for Defence [1991] 2 I.R. 161. It must be shown that the evidence sought to be adduced must have been in existence at the time of the trial; must be such that it could not have been obtained with reasonable diligence for the High Court; and that, if given, it would probably have an important influence on the result of the case, even if not a decisive influence. I would wish to add that, in exercising its discretion, a court may well, in the future, wish to consider as additional factors the very fact of elapse of time, and the nature of the appeal itself. I express no view on these points, and am content to apply the established principles.
Credibility and Reliance
10. One particular criterion does arise. Critically in these appeals, the “new evidence” must be of such quality that it is “presumably to be believed”. In other words, it must be apparently credible, though it need not be incontrovertible. But, as Keane J. pointed out in Re Greendale Developments Limited (No. 2) [1998] 1 I.R. 8, “evidence” must also be understood as relevant material, which would have had an important influence on the result, and which was not available to the court below. A court may often also have to assess carefully the distinct question as to whether, even on an application to admit new evidence, the grounding affidavit on which the application is moved is, itself, admissible evidence or hearsay.
11. There are a number of further unusual features to the content of this appeal. The Court is invited to infer that the petitioning Revenue Commissioners, and other persons, were part of a conspiracy, or cover-up, effectively to “stifle” the companies. But no particular Revenue official is identified as having had this intent. The Court is invited to make inferences. There is, in fact, no concrete evidence of some connection between the petitioners and the other persons who are suggested to be part of this conspiracy. Mr. Maher, solicitor who represented the companies in this appeal, also makes the case that a number of people, “third parties”, who were not parties to these proceedings at all, were, themselves, the victims of “underhand dealings” by the Wexford Borough Council and others. These people did not make such claims. The “third parties” just mentioned were never joined as notice parties to these petition proceedings. They did not swear affidavits in the proceedings. They were, however, referred to in subsequent investigations into the acquisition of the large administrative site (defined later), which was ordered by Wexford County Council. This investigation found no irregularity. It was simply not open to the respondents to rely on some form of “ius tertii”, that is, to assert the rights of persons who were never involved in the proceedings, and whose alleged concerns, even if they had ever been established, were very distant from the true issues in this appeal.
12. One of the main issues in controversy was a series of transactions in relation to the Custom House Quay building in Wexford town. This formed part of a larger block where, ultimately, the Office of Public Works constructed administrative offices. It is self-evident that the Office of Public Works is an entirely distinct statutory body from the Revenue Commissioners.
13. Yet a further unusual aspect is the extraordinary elapse of time between the petitions and the hearing of this appeal. Not all of this is the fault of the parties. There were delays in the court list which have been eliminated. But there is a strong public interest in ensuring that winding-up orders do not remain in some form of suspense, as occurred here. There must be finality. Here, very unusually, the High Court made an order staying the liquidation process if notices of appeal were filed as they ultimately were. These compulsory winding-up orders have been in a state of “suspense” now for a period of 8 years. No blame attaches to the Revenue Commissioners, who, on several occasions, sought to bring on the appeals expeditiously; but were met by a series of objections and obstacles.
The Claim of Ulterior Motive and Improper Purpose
14. It is necessary now to outline the essential elements of the companies’ case. This comes under a number of headings. Mr. Maher, the solicitor who acted in the appeals, submitted to this Court that the Revenue Commissioners had acted vindictively by tendering wrong advice to Mr. Martin Power, who is a Director and Secretary of Tweedswood, and was the moving spirit behind each of the companies. Details of this allegation are set out later. Mr. Power claimed also that, in that process, the Revenue Commissioners obstructed the conveyance of a property “Custom House Quay” property to Tweedswood, preventing its timely sale. Mr. Power says that, by 2008, this property was, on the face of things, owned by Tweedswood, and that, at the time the petitions were brought to the High Court, there was a potential purchaser in the wings, a Mr. Edward Murphy, who was prepared to pay over €2 million for the building. Mr. Power claims that the Revenue Commissioners, in effect, sabotaged or obstructed this sale. The clear implication of the case is that this occurred intentionally, with an ulterior motive and improper purpose. This, too, is considered later in the judgment. In fact, one can only be guarded in arriving at a view as to what person, or what entity, could claim actual ownership of this property.
15. Then there is a further plank, perhaps the central part of the appeal. It is said the building became Tweedswood’s property in 2002. This was on foot of a transaction entered into between Mr. Tony Dempsey (then a T.D.), and Tweedswood. Mr. Power’s assertion is that the Revenue Commissioners acted irregularly and unlawfully, in its treatment of certain VAT transactions regarding the sale of this property to Tweedswood. He claims that the Commissioners allowed Mr. Dempsey to make misleading returns to the Standards in Public Office authorities in Dail Eireann. He claims that in bringing the petitions the Commissioners were seeking to “cover up” what they did. It needs emphasis that Mr. Dempsey was not a party to this appeal, and has had no chance to answer any of these claims. Even at risk of repetition, what is claimed on affidavit cannot be taken as established fact. This particular allegation must be seen in light of other documentary evidence referred to later in this judgment, concerning legal proceedings which Mr. Dempsey brought against Tweedswood and Mr. Power. These proceedings later settled, with judgments and orders made in Mr. Dempsey’s favour.
The High Court Proceedings
16. Before the High Court, the companies responded to the petitions by a series of affidavits sworn both by Mr. Power, and by other legal and accounting professionals then acting for, or advising, Tweedswood. These are considered below. There are other factors which are, however, very illuminating.
Correspondence Prior to the Petition
17. However, it is instructive to first look to the correspondence which took place in the lead-up to the presentations of the petitions. Hypothetically, a court might be entitled to give weight to, or draw adverse inferences, if correspondence from the companies made some contemporaneous claim of ill-will, or improper motivation on the part of the Revenue Commissioners. A fortiori, a court might give real weight to evidence of impropriety emanating from a petitioner; if there was such evidence. If any of these factors existed here then, as in Bula, the onus of proof might possibly shift to the petitioners to disprove the existence of ulterior motive. In fact, here, there is no such indication.
18. There is no suggestion whatever in this correspondence of ulterior motive on either side. Mr. Power never disputes that the monies were due. Many of the pre-petition communications between Mr. Power and the Revenue officials appears to be on friendly, even first name terms. On the 17th June, 2008, Mr. Power wrote to one official, asking for further forbearance and more time in order to make more concrete proposals for a final settlement of the revenue debts outstanding. By that stage, hundreds of thousands of Euro were owed, not only by the appellant companies, but also by four other companies which Mr. Power controlled. Mr. Power explained that the main reason for the delay in filing Companies Act returns had been that Tweedswood had been involved in High Court litigation concerning the ownership of the Custom House Quay site, where Mr. Tony Dempsey had been the plaintiff. Mr. Power wrote that Mr. Dempsey had claimed ownership of the Custom House Quay property, and that his claim of ownership had been subsequently rescinded. Mr. Power told the Revenue Commissioners that Mr. Dempsey had initiated proceedings against Tweedswood in December, 2004, and that the matter had been settled in May, 2008. He explained, quite correctly, that Mr. Dempsey had accepted a financial settlement. The net result of this, he said, was that the Custom House Quay building was now unquestionably Tweedswood’s property, and that it would, therefore, be available for sale.
The Settlement of Litigation in 2008
19. A further background factor also must be considered. It is not part of this Court’s function to determine where the truth lies in what was obviously an acrimonious business relationship between Mr. Power and Mr. Dempsey. But the Court is entitled to look at the material available to it as part of the exhibits. This material included the Statement of Claim in Mr. Dempsey’s case. On his behalf, it was pleaded that on the 4th February, 2002, he had entered into a contract with Tweedswood, in which he then held a 50% shareholding, along with Mr. Power. Tweedswood was to buy Custom House Quay from Mr. Dempsey for a total of €1,285,610.63. It was said that Tweedswood had actually paid only €864,664, but no more. Thereafter, the plea was made that Mr. Dempsey had opted to rescind the contract. The statement of claim says that this course of action had been agreed between Mr. Dempsey and Mr. Power in October, 2003. Mr. Dempsey’s claim was that Mr. Power failed to implement the rescission, and that the defendants, Tweedswood and Martin Power, had proceeded to process the deed of conveyance of the property as if they were its full owners, and had thereafter registered the deed. The case was made that subsequently, on the 30th December, 2003, Mr. Dempsey and Mr. Power entered into another agreement, whereby Mr. Power agreed to buy out Mr. Dempsey’s 50% share in Tweedswood for a total sum of €200,000, payable in two instalments. However, it was claimed that neither tranche of this had been paid. In the proceedings, therefore, Mr. Dempsey claimed rescission of the contract for sale of the property, damages, and, specifically, payment of the sum said to be outstanding of €200,000.
20. The proceedings (19691P 2004) were subsequently settled on terms four years later. Before the Court is an order made on 1st May, 2008 by Laffoy J. It records that Mr. Dempsey was to recover judgment in the sum of €600,935 against Tweedswood, and judgment €263,057 against Mr. Power personally.
21. While it might be said that the transactions were, to a degree, reflected in the correspondence with the Revenue Commissioners, the documents reflecting the court proceedings and orders made show, at minimum, there were two sides to that story. Thus, a court would be justified in being slow to proceed, still less act upon, allegations made against Mr. Dempsey based on or drawn from these transactions, without his having an opportunity to answer the claims. This Court is now invited to draw some adverse inference of impropriety on the part of the Commissioners. But, in fact, at the very minimum, there are indications that there might be good cause for an absence of goodwill between Mr. Power and Mr. Dempsey, who was made to figure as a main character in the 2008 petition proceedings. In fact, the terms of the settlement speak for themselves.
22. The correspondence and that litigation are interconnected therefore. When writing to the Revenue Commissioners before they began proceedings, Mr. Power’s contention was that the companies had been unable to make returns due to “knock-on effects” of this litigation. He made reference to what he characterised as an “impasse” between Tweedswood, and Mr. Dempsey. However, in the same correspondence he went on to assure the Revenue Commissioners that, in circumstances where the “Dempsey case” had by then been settled, this event, along with the sale of other properties he held, would allow his companies to arrange an asset disposal plan. Thus, he hoped an orderly disposal would allow all the creditors of Tweedswood, including the Revenue Commissioners, to be satisfied.
23. A significant number of companies connected to Mr. Power owed a substantial amount of money to the Revenue Commissioners. His expressed hope then was that all his companies would, in the relatively near future, be in a position to discharge their revenue indebtedness. But this largely hinged on Tweedswood being able to successfully carry through the impending sale of the Custom House Quay property, which Mr. Power hoped would discharge a significant portion of the revenue debt. The sale of other properties would, he said, discharge the balance.
24. Even at the eleventh hour, on the 18th June, 2008, three weeks before the petitions were presented, one Revenue Commissioners’ official wrote to Mr. Power saying the debts had been outstanding over several years, and despite this, were still not up to date. The letter says that the Revenue Commissioners are not prepared to wait any longer, and would be proceeding to liquidate the companies. Mr. Power asked how long the liquidation proceedings might take to get to finality. This letter was also in first name terms.
25. There is, demonstrably, nothing whatever in this correspondence which suggests any form of malice or ill-will, still less ulterior motive or improper purpose either toward the companies, or Mr. Power himself. There was no assertion of mala fides on the part of the Revenue Commissioners, or anyone else at that stage. The entire tenor of the correspondence simply reflects a desire to obtain as much leeway as possible in order to progress the Custom House Quay sale.
The Petition Proceedings from October to December, 2008
26. Mr. Maher submits the petitions were, in effect, rushed into court. In fact, the petitions were, unusually, adjourned until after the long vacation. This was two months further leeway. In the meantime, further affidavits were filed. In fact, this Court has not been referred to any suggestion of there being ill-will in the case until 17th October, 2008. One is left to wonder why? If bad motives, valid or not, only emerged two months after the petitions were presented, this raises questions. The first is, whether it can be said the bringing of the petitions was improper? A second question relates to the weight the Court ought to place on the events said to have occurred after the petitions were presented?
27. On behalf of the companies, Mr. Maher submits to this Court that the petitions were moved vindictively, and with too much expedition. He says that the ulterior motive was to stifle complaints which Mr. Power had regarding the Revenue Commissioners. Yet, none of those complaints were made prior to, or even within 3 months of, bringing the petitions. Proximity must be one of the tests.
28. A number of other features militate against drawing any adverse conclusions against the Revenue Commissioners during the early stage of the proceedings, that is, prior to 17th October, 2008. First, the petitions were initiated on the 7th July, 2008. But, in fact, Mr. O’Brien, another solicitor then acting on behalf of the respondent companies, was allowed an unusually long time in order to take instructions. As mentioned, the companies were allowed the entirety of what is called the “long vacation”, that is an additional period of some two months, before the winding-up applications were presented to the High Court. The Revenue Commissioners did not bring any application to wind-up during that the “vacation”, even though, in fact, there are courts available each day which would have entertained any applications were matters thought to be urgent, or if the petitioners, in fact, wished to act with undue speed. Unfortunately, in the relevant time, petitions during vacation bringing with them lost jobs were a fairly frequent occurrence.
29. Mr. Power made the case that the Revenue Commissioners treated Mr. Dempsey favourably on VAT and other liabilities arising from the Custom House Quay transaction in 2002/2003. It is worth remarking upon the source of parts of the evidence on which the companies now seek to rely. Some of the letters, apparently, came from a financial advisory firm. These were written to Mr. Dempsey and to the Revenue Commissioners, some of them perhaps even on Mr. Dempsey’s behalf. How these emerged is not clear. It may well be as a result of Mr. Martin Power’s previous close business partnership with Mr. Dempsey, and no more. There may be some other source. It is said there is evidence of irregularities to be found in the letters. This is by no means clear. Mr. Dempsey has not been given the opportunity of making observations on the correspondence. Much of the evidence contained in these letters can only be described as hearsay evidence. This is not a mere legal technicality. The existence of correspondence does not necessarily prove that the contents are truthful. But, more tellingly, whether true or not, the events that are described there took place in the years 2002 and 2003, and well before the settlement of Mr. Dempsey’s case in 2008.
The Allegations regarding the Revenue Commissioners’ Contacts with Mr. Tony Dempsey
30. The gist of the complaints, as expressed in affidavits sworn six years after 2002, that is, in the year 2008, is that Mr. Dempsey had, in fact, sold his interest in the Custom House Quay block to Tweedswood earlier, in 2002. But, in 2008, Mr. Power claimed that, in 2002, having conveyed the property, Mr. Dempsey commenced a process of “reversing” or rescinding the sale in September or October of 2002, and that the Revenue Commissioners subsequently wrongly approved this. The claim is made that the Revenue Commissioners agreed to treat Mr. Dempsey’s VAT, and any other liability arising in a manner which was not permitted under law, and that, in dealing with Tweedswood, the Revenue Commissioners treated the sale as closed, but when dealing with Mr. Dempsey, they treated the sale as having been rescinded by him. Mr. Power claims that as a result of this Mr. Dempsey benefited financially, and was in a position to make tax returns which assisted his financial position, thereby allowing him to make appropriate returns as to his financial interests to the Standards in Public Office authorities in the Oireachtas.
31. But this claim falls to be seen in light of what is said in the Statement of Claim, and the subsequent order of the High Court reflecting the settlement of the claim between Mr. Dempsey, on the one part, and Tweedswood and Mr. Power, of the other part. At the very least, what transpired between the parties in 2002 and 2003 was an open-ended question. To ask a court to infer, five years later, or now on appeal, fifteen years later, that all this gave a basis for some ulterior motive, or improper purpose, on the Commissioners’ part, goes much too far. What happened must also be seen in light of how the Revenue Commissioners responded to the accusations, which is outlined later in this judgment. This evidence falls very far short of what is required, even to begin to shift the onus of proof on to the Revenue Commissioners.
32. A court might next look at other evidence regarding the intervening period between 2003 and 2008, and enquire whether any other evidence of ulterior motive can be found, or is there, rather, evidence of ordinary interaction? Is there possibly evidence inconsistent with the claim of impropriety?
An Earlier Winding-up Petition in 2006
33. In fact, the evidence shows conduct which is inconsistent with any ill-will, impropriety, or abuse of process. The report of the High Court judge, in fact, notes that, in the year 2006 the Revenue Commissioners apparently brought an earlier petition for outstanding taxes against certain of Mr. Power’s companies. But those proceedings were actually settled. The fact of a settlement in 2006 is hardly consistent with concern about impropriety, or a desire to stifle the companies, or to silence them, by having them wound-up in 2008.
The Consequence of bringing the Petitions
34. Mr. Maher submits that there was a “cover-up”, where, embarrassed at having dealt favourably, and allegedly unlawfully, with Mr. Dempsey, the Revenue Commissioners wished to stifle Mr. Power’s companies, including Tweedswood in order to shut down the allegations. But, this hypothesis too is flawed for one obvious reason: if the Commissioners were acting improperly, it would be a matter of utter inevitability that the question of any improper motivation would be raised by Mr. Power, or a legal representative of the companies, in response to the petition, as, in fact, happened in 2008. One might rhetorically ask, why would the Revenue Commissioners risk pressing on the petitions as they did in 2008, rather than withdrawing them or adjourning them, or settling the case, as they did in 2006? The court proceedings foreseeably provided a public platform, perhaps in circumstances of absolute privilege, for Mr. Power to make allegations against the Commissioners. This, too, is surely inconsistent with a “cover-up”.
Ex Debito Justiciae
35. It is necessary to clearly outline the nature of the indebtedness. Prima facie, the debts due and owing to the Revenue Commissioners were substantial. They were owed ex debito justicia. As of the 15th May, 2008, approximately 6 weeks before the petitions, Tweedswood owed the Revenue Commissioners a total of €565,318.94 under various tax headings. Global owed €144,978.23. Construction owed €232,549.78. Finally, Groupco owed a total of €72,611.37. The material before the Court shows that these debts had accrued over a period of years. The figures did not take account of accrued interest.
Further Claims made during the High Court Proceedings
36. It is necessary to focus next on how the proceedings were conducted when they were heard in the High Court. Mr. O’Brien, solicitor who then acted, averred then that the sale of the Custom House Quay premises was proceeding, and that the potential purchaser was Mr. Edward Murphy of Dublin. Mr. O’Brien deposed then, that he had obtained written authority and instructions from Tweedswood, which would enable him to take up the title deeds and, thereafter, to complete the sale. He deposed that he was, at that stage, awaiting a signed contract from Mr. Murphy, and that, on completion, there would be adequate sums available to discharge the companies’ indebtedness. There was no imputation of ulterior motive or improper purpose then either.
37. Mr. Power says that subsequently there were misunderstandings in the legal instructions given to Mr. O’Brien, or to counsel acting for the companies. What these misunderstandings were is unclear. Mr. O’Brien deposed on affidavit that Global, Construction, and Groupco had long since ceased trading. Thus, it was, that, apparently on consent, the High Court, Murphy J., made an order on the 13th October, 2008 for the winding-up of those three companies. The Tweedswood petition was adjourned. Very often petitioners seek to have their claims dealt with urgently. But the court gave Tweedswood considerable latitude.
38. From the 17th October, 2008 onwards, however, the proceedings took a quite different turn. Mr. Power then filed an affidavit. In the first place, he swore that the consent order had been entered into on foot of a misunderstanding between himself and the companies’ solicitor. He deposed that he himself went before Mr. Justice Murphy to explain the difficulties, and asking that the petitions regarding the three companies in liquidation be re-entered and adjourned to the same date as that of Tweedswood, viz. the 3rd November, 2008. The High Court did not make any such order. In fact, it appears Murphy J. decided to hear applications next on the 15th October 2008. There, counsel for the Revenue Commissioners objected to any reversal or setting aside, of the three winding-up orders already made, pointing out that the matters had been ongoing since the summer of 2008, and that Mr. Power had already had sufficient time to deal with the outstanding matters.
39. But matters took a different turn when, on 17th October, 2008, Mr. Power made other serious allegations. He claimed that the difficulties and delays in dealing with the title of the Custom House Quay, had been directly caused by what he characterised as gross negligence on the part of the Revenue Commissioners. By then, his accusations fell into two categories. First, he reiterated allegations regarding the conduct of the Revenue Commissioners in the year 2002, that is, in relation to Mr. Dempsey’s VAT liability on foot of the “rescission transaction” may have arisen and been treated. This has been outlined.
Allegations against the Revenue Commissioners regarding Adjudication
40. But by October, 2008 Mr. Power also complained of more immediate events which, he said, had occurred in September/October of that year. He claimed that the Revenue Commissioners had been negligent in not seeking a warrant for adjudication relating to the conveyance between Mr. Dempsey, as vendor, and Tweedswood, as purchaser. He claimed that such a warrant was required by law, as Mr. Dempsey was both the vendor of the property and, at that time, had been a director of Tweedswood, along with Mr. Power. One might have thought this should have been a matter dealt with by the company’s professional advisers at that time.
41. Mr. Power complained that because the Revenue Commissioners had been negligent in failing to adjudicate on the conveyance in 2002, he had been compelled to rectify the title in 2008. Tweedswood apparently had solicitors, other than Mr. O’Brien or Mr. Maher, acting for it in 2002. It is surprising that those solicitors do not appear to have played an active, or any, role in the events of 2008, in circumstances where, it might be thought, that if, as claimed, there had been a mishap through loss of a deed between solicitors and a building society, a solicitors firm might, at least, have had a sense of concern, if not legal responsibility, and involved itself in remediation work in 2002.
42. Mr. Power claimed that he visited the Revenue Commissioners on the 27th August, 2008, to clarify what was required to have the deed reconstituted. He claimed that he was given misleading advice by the Revenue Commissioners. This was to the effect that Mr. Dempsey’s signature would not be required on the reconstituted deed. He referred in his affidavit to subsequent visits which both he himself, and Mr. Edward Murphy, the proposed purchaser, made to the Revenue Commissioners. Again, the non-involvement of solicitors in all of this is surprising. Mr. Murphy did not file an affidavit at any stage in these proceedings.
43. Thus, Mr. Power deposed, on a hearsay basis, that Mr. Murphy personally visited the Stamp Office of the Revenue Commissioners, on the 22nd September, 2008, to discuss the reconstitution of the lost deed. Mr. Power swore that, when he subsequently went to the Registry of Deeds on the 1st October, 2008, he was told that, contrary to advice he had received earlier, Mr. Dempsey would indeed have to sign the deed, and that if he did not do so, it would be rejected. Mr. Power deposed that there was a delay until the 10th October, 2008 while obtaining Mr. Dempsey’s signature. Even accepting any complaint as valid (and there is evidence that it was not), this would be a flimsy basis for the very far reaching claim that the Revenue Commissioners had “intentionally” misled him, and that this was all part of a plan. However, it is to be seen as part of Mr. Power’s stated concerns about the events of 2002 and 2003. What he deposed to came after he and Tweedswood settled the claim on 1st May, 2008. The settlement cannot be seen to have assisted Tweedswood or Mr. Power in their financial situations.
44. During October and November, 2008, it appears Mr. Power brought his concerns to the attention of Deputy Joe Higgins, T.D. There is no reason to doubt that, in this, Mr. Higgins acted bona fide, on the basis of information which had been given to him by Mr. Power.
Representations to the Revenue Commissioners
45. Mr. Higgins wrote to the Revenue Commissioners raising Mr. Power’s concerns as to the events of 2002 and 2008. The Revenue Commissioners responded by letter of the 25th November, 2008. They entirely refuted any accusation of impropriety. They said that their records showed that Tweedswood had, in fact, then acquired the property from Mr. Dempsey, and had included this transaction in its VAT returns for the period of May/June, 2002. The Revenue Commissioners explained that full credit had been granted in respect of the VAT liability at that stage. The Commissioners went on to explain that it was normal practise that a warrant for adjudication be submitted to them, in accordance with s.20 of the Stamp Duty Consolidation Act, 1999. This would arise where there was a business connection between a vendor and a purchaser, as was the case in the Dempsey-Tweedswood transaction. The Commissioners explained that this had been a “self-assessment” application for adjudication, which would be completed by the purchaser, (that is, Tweedswood), or a solicitor acting for that purchaser. This would have required the parties to the transaction to furnish the reason why an adjudication of the deed was being sought. The Revenue Commissioners pointed out that Tweedswood had not sought an adjudication at the time, nor had there been any disclosure that there was a connection between the purchaser and the vendor at that stage.
Mr. Power’s Role in Tweedswood
46. It is necessary to point out that, subject to the uncertainty between 2002 and 2008, Tweedswood was apparently under Mr. Power’s own control. The implication of the Revenue Commissioners’ letter was clear. It was to the effect that, if some problem had arisen in the adjudication, it was not their fault. They pointed out that, by contrast, in 2008, Mr. Power had correctly given information regarding the fact that there was a business connection between Mr. Dempsey, as vendor, and Tweedswood, the purchaser. Thus it was, that in 2008 Mr. Power had been informed of the necessity to obtain an adjudication. The Commissioners denied that there was any indication that they had failed on an earlier date to adjudicate on the deed. They denied that there was any basis for an allegation that they had irregularly dealt with a payment of stamp duty of €68,655 by Tweedswood. This remained a matter of record in the Revenue Commissioners, and there had been no credit, or claw-back, allowed to Mr. Dempsey, on the basis of some form “secret rescission”.
47. In this appeal, counsel for the Commissioners pointed out that his clients were constrained in what they could say regarding their engagement with Mr. Dempsey who, as a taxpayer, had rights. However, they denied that there had been any question that VAT liabilities had been treated in an irregular way.
48. In 2008, the Commissioners also addressed in the same correspondence the claim that Mr. Power had been given incorrect and misleading advice. They pointed out that their role in the matter was confined to ensuring that any deed presented for stamping was correctly stamped, based on information available at the time. This is what they had done. They pointed out that they had sought to facilitate Mr. Power due to the fact that the original deed had been lost, and that because there had been a difficulty in getting Mr. Dempsey’s signature. They were prepared to issue Mr. Power with a stamped substitute deed without the vendor’s signature. In the event, a substitute deed was presented to them, which incorporated the vendor’s signature, and a substitute stamped deed was issued. Finally, the Commissioners made the point that, if any difficulty had subsequently arisen with the Registry of Deeds, a separate State Agency, that was not their responsibility.
Hearings in 2008
49. The High Court judge’s report furnished to this Court sets out that a further hearing took place before him on the 4th November, 2008. Counsel for the Commissioners again objected to any further adjournment. However, Murphy J. was apparently prepared then to take into account that the intending purchaser intended to pay Tweedswood €2.25 million for the Custom House Quay building. But the judge noted in this respect that the proposed deposit was only €10,000. At the hearing, a solicitor, still at the time acting for Tweedswood, asked for more time. The suggestion was that the contracts would be signed on the following Friday, that was, the 7th November, 2008. In the event, Murphy J. granted an adjournment to the 1st December, 2008.
50. However, on the same day it appears that the Tweedswood petition also listed before Laffoy J. How this happened is unclear. In a letter to the Revenue Commissioners, Mr. Joe Higgins pointed out that, on afternoon of the 4th November, counsel for the Commissioners applied to Laffoy J. It is said that counsel for the Commissioners asked Laffoy J. to vacate Murphy J.’s order which adjourned the application for four weeks. It appears that Laffoy J. ultimately adjourned the matter for one week. Whatever happened on that occasion was unfortunate, but is not a basis for concluding there was ulterior motive or improper purpose.
51. Thereafter, matters were back on track procedurally, and all the proceedings were relisted before Murphy J. One could not blame Mr. Power for being very annoyed and feeling pressured by that event. But this falls short of showing that in dealing with these petitions, which by then had been outstanding since the 7th July, 2008, the Commissioners were actuated by some ulterior motive. The very fact that the petitions had been outstanding for such a period is, in itself, an unusual feature of this appeal.
52. The particular complaints now outlined were made concerning events after the petitions were brought. While it is not impossible that actions or conduct during the court procedure may indicate something untoward, it is necessary to bear in mind that litigants, or persons involved closely in litigation who are under severe pressure are not always detached and objective observers of events.
Hearing on 8th December, 2008
53. By the time the matter was ultimately dealt with by Murphy J. on the 8th December, 2008, it seems that the contract for the sale of the Custom House Quay site had gone cold. One can only have a degree of sympathy for Mr. Power. Perhaps what occurred then was a harbinger of things to come, not only for Mr. Power, but for many other unfortunate people. Whether there were other reasons, such as difficulty in making title, is not relevant, and there is no direct evidence on the point. Before Murphy J., Mr. Power, by further affidavit, sought to convey or expand the same basic complaints, to the effect that there was an ulterior purpose and improper motivation behind the petitions. Mr. Power himself sought to appear personally for all the companies, claiming a “derivative right” for himself and the companies. He was not entitled to do this.
The High Court Decision of 8th December, 2008
54. The judge’s decision of 8th December, 2008 was made where there was still no cogent evidence that the petitions had been actually brought for reasons other than an express and proper purpose. The companies’ case was evidentially unsustainable. The judge had extended a great deal of latitude. The long promised realisation of Tweedswood assets, (and realisation of other properties owned by Mr. Power), had not been completed. The judge had already exercised his discretion in granting a series of adjournments, where, in other circumstances, no adjournment at all might have been granted. Another judge might well, for example, have considered that the “Murphy sale” could have been completed by a court appointed liquidator. The companies’ banks and financial institutions neither consented to nor opposed the petitions. What was before the High Court judge was a series of allegations that there was an ulterior motive or improper purpose on the part of the Commissioners, either taken separately or together. None of these stood up to scrutiny.
55. The High Court judge did not err in ordering the winding-up of Tweedswood, or in affirming, as he did this same day, his earlier orders relating to the other three companies. Applying the Bula test, there is nothing to indicate that he did not exercise his discretion correctly and in a bona fide way. It cannot be said that, in these petitions, the onus of proof had shifted to the Revenue Commissioners. A series of events, disparate in nature, cannot be gathered together, and conflated in order to shift the onus where, seen objectively, the evidence simply does not reach the required threshold of proof even to reverse the onus, still less to set aside the winding-up orders.
Subsequent Steps
56. On the 18th February, 2009, Tweedswood appealed the order that it be wound-up. On the 27th March, 2009, Mr. Power personally lodged an appeal on behalf of Groupco. On the 29th March, 2009, he personally lodged an appeal on behalf of Construction, and Global. Whether he personally was entitled to take these steps is not material at this point.
57. The petitioners wrote to the appellants seeking Books of Appeal, and later issued a motion on the 26th October, 2010 to dismiss the appeals, for failure to file. Thereafter, Books of Appeal were filed. The appeals fell into abeyance. Much later, the appeals subsequently were listed by this Court for directions. Mr. Power, personally, sought to appear for the companies, but thereafter instructed a solicitor who came on record.
The New Evidence Application
58. By then on record for the companies, Mr. Maher subsequently brought an application seeking to amend the grounds of appeal, and also seeking to admit new evidence. He was given leave to bring a motion for that purpose. The Revenue Commissioners did not file an affidavit on this motion to admit new evidence, nor did they provide written submissions. Instead, counsel for the Revenue Commissioners submitted that none of the three arms of the test to admit new evidence in Murphy v. The Minister for Defence, outlined earlier, had been satisfied.
59. Just as in the High Court, the appellant companies were given considerable latitude in the procedure adopted in this appeal. The Court might have decided to accept or reject the “new evidence” before any other decision. Instead, this Court decided, in the circumstances, to admit this material, but without prejudice to determining the question of its relevance to the issues in the winding-up petition ultimately. No leave was granted to amend the grounds of appeal.
60. Much time and space could be devoted to the detailed submissions made in the appeal. Much was devoted to a very detailed description of the new material. What is necessary is to determine whether any of this new material could conceivably be relevant to the issues this Court has to decide. What follows is a brief summary. No more is necessary.
The New Material
61. Two decades ago, it seems, work began to assemble a site boundary. This was to provide administrative offices for various government departments in Wexford Town. The new site was bounded by Anne Street and Nunn’s Lane in Wexford town. The County Hotel and the Old Labour Exchange formed part of the site, which cam in many parcels.
62. Mr. Maher sought to rely on what can only be described as a mass of documentation, including correspondence, conveyances and other official documentation regarding compulsory purchase orders, which was gathered together and exhibited. This related to a series of property transactions in the site assembly. Some of these transactions went back more than two or three decades to the 1990’s. Others went back to 1932. Some parts of the outline went back to the latter half of the eighteenth century. It is alleged now that there were flaws and irregularities in the title assembly procedure of this site. In a new affidavit of 248 paragraphs, Mr. Power set out that the Tweedswood’s Custom House Quay property adjoined the Anne Street/Nunn’s Lane larger site. His contention is that the new material shows that the assembly of that large site adversely affected the title to this adjoining Tweedswood property, which a company named Fanbury Limited “believed” it had purchased in 1991. Mr. Dempsey was one of the directors of that company. Mr. Power deposed that, in 1996, the Fanbury partnership had “split up” believing it had acquired this adjoining property in 1991. It transferred a portion of the property to Mr. Tony Dempsey, who constructed the Custom House Quay block thereon. Thereafter, Mr. Power alleged that Mr. Dempsey sold that block to Tweedswood in 2002. Mr. Power again complained that the Commissioners facilitated Mr. Dempsey’s rescission of the sale. He made the case that the Commissioners were involved in irregularity, in that they must have had notice of what he contends were questionable compulsory purchase orders of property which was part of the site. It is said that this, in turn, should have made the Commissioners alive to the facts that Fanbury Limited did not have full title to the Custom House Quay property, and knew that Tweedswood had not acquired full title. He claimed that instead of allowing Tweedswood to sell the Custom House Quay building to Mr. Murphy, the Commissioners issued petitions against Tweedswood to have the company wound-up. He claimed that the Commissioners had knowledge of “delayed” property transactions to favour one named party over others. This included a delayed “first registration” of one parcel of the land, which prevented Fanbury from obtaining title, with the chain reaction outlined above.
63. Mr. Maher delved into a series of transactions. The claim is now made that the Commissioners should, or ought to have been, or were actually aware of, alleged irregularities, through their involvement in the capital gains aspects of the transactions which were, inter alia, connected with the compulsory purchase orders.
Consideration
64. It is here that the adjective “byzantine” is truly apposite. One can only comment that, the involvement of the Revenue Commissioners in all these transactions was, at most, entirely peripheral. The Revenue Commissioners are a large State organisation with many sections dealing with different functions. They were not involved directly in assembling the site.
65. As is clear, the site was assembled by Wexford Borough Council. Insofar as it was developed, it appears that this work was done by the Office of Public Works. The only other concrete connection that can be made is that the Revenue Commissioners now have offices in the building. But there is no cogent evidence to indicate that the Commissioners, or any identified official of that body, had an ulterior motive in initiating these winding-up petitions in 2008. Whatever may be the validity of any claims now made regarding the title, and I make no observations whatever on this question, there is no sufficient evidential connection between them, and the decision to wind-up the companies. There is no chain of connection which would establish ulterior motive.
66. Allegations were made both in favour of some and against a number of other persons, none of whom are parties to the appeal. It is claimed innocent parties were misled into entering into transactions with Wexford Borough Council. None of these parties were deponents in these proceedings. They did not file affidavits in this Court. The “evidence” is, in the truest sense of the word, hearsay. More relevantly, however, it is entirely remote from the issue. It is suggested that certain persons actually financially gained, or may have gained. That is not established either. It is necessary to point out that there is no sustainable evidence of wrongdoing.
67. There is no indication that these third parties were aware that their names would be mentioned before this Court. As a matter of fact, two families who were referred to as having been victims of the process were both legally represented during the course of the property transactions in which they were involved, and are said to have lost out in some way. Insofar as Mr. Maher suggests that any one of them might have had a cause of action, it is not open to these companies, as appellants, to assert some form of ius tertii. Neither family sued. There is no evidence they threatened to sue. This entire series of transactions, however characterised or glossed, is far too remote to be relevant to the issue this Court must decide.
68. In fact, with no disrespect, the extremely remote and speculative nature of much of the material now said to constitute new evidence, is, in fact, counter-productive, not only because it is so remote, but because it suggests clutching at straws. It is clear it does not demonstrate any linkage to the requisite evidential standard between what is claimed to have occurred, and the decision to initiate the winding-up proceedings. The evidential chasm cannot be bridged by making broad assertions against people who are not present to defend themselves, or unnamed officials. A number of these assertions should not have been made without the parties, whose reputations are impugned, being placed on notice. Unfortunately, one can only characterise this very lengthy exercise as being something of a “trawling expedition”, seeking to elicit material, which is entirely remote from the issue, in an unsuccessful attempt to show “motive”. The material adduced falls foul of each of the tests identified in Murphy v. Minister for Defence, and Greendale, cited earlier. It is simply not relevant to the issues for this Court, and cannot be made so by broad assertions. I would hold that the evidence is irrelevant to the issue. It does not establish any basis for setting aside the orders made in the High Court.
69. As a result of considerable agitation, the concerns regarding the assembly of the Anne Street/Nunn’s Street site were ventilated at Wexford County Council meetings. The Director of Services carried out an inquiry where Mr. Power appeared with other concerned parties. The Director found that there was no evidence of irregularity either on the part of the County Council, or its predecessors, or anyone else. One does not need to rely on the Director of Services’ report as evidence, but rather as being of assistance simply in identifying the relevance or irrelevance of the material which is sought now to be relied on. The report is a public document, and is available to any member of the public who wishes to have access to it. The report sets out that Mr. Power and others put their detailed concerns to the Director of Services. There is one telling feature about this description of concerns: there is no mention of the Revenue Commissioners in the Report. It is focused on claims against other people and entities.
Conclusion
70. The Court is asked to find that the winding-up orders were brought because of an ulterior motive or improper purpose on the part of the Revenue Commissioners. The narrative in this judgment focuses primarily on the relevant events. Mr. Power can be assured that everything he put forward has been considered. But much of the case advanced is far too distant and remote to conceivably be characterised as ulterior motive or improper purpose. No matter how sincerely Mr. Power may believe something untoward occurred, the evidence does not show this to the required standard.
71. The history of litigation is filled with narratives of cases where it is thought that a party, or parties, engaged in some form of “conspiracy” or “cover-up”. Sometimes these are true. But it is only human nature that, on occasion, people who meet with mishaps, misfortune or untoward events, sometimes ascribe those to a single ill-motivated person or entity. Disconnected events are perceived as connected, especially if they have adverse consequences. But such an assertion does not make these things evidence on which a court can act. Far more would be necessary.
72. This Court is now asked, nine years later, to review the manner in which the High Court judge exercised his discretion in these cases. There is no indication that he did so other than in a true and bona fide manner. He gave the appellants an extraordinary degree of latitude. Mr. Maher, and the companies, were given a significant degree of latitude in the conduct of this appeal which would not normally be permitted.
73. It is simply not established that petitions were initiated for an improper motive, or for an ulterior purpose. The express, obvious, purpose was to gather together some hundreds of thousands of Euro which were due to the State, and, therefore, the public. Such monies, when gathered, are used to provide services and facilities for citizens. This is the statutory function of the Revenue Commissioners. The High Court judge was justified in concluding that the matters outlined to him could not, and should not, persuade him to conclude that he should exercise a residual discretion in favour of the companies. The new material does not change the situation. I would affirm the High Court decision, and dismiss the appeals.
