Bonice Property Corporation v Oakes
| Jurisdiction | Ireland |
| Judge | Mr Justice David Keane |
| Judgment Date | 29 July 2016 |
| Neutral Citation | [2016] IEHC 461 |
| Court | High Court |
| Docket Number | [2014 No. 6176P] |
| Date | 29 July 2016 |
[2016] IEHC 461
THE HIGH COURT
Keane J.
[2014 No. 6176P]
AND
Property & Conveyance – Historical associations – Arrangement for restoration of property – Misappropriation of fund – Breach of duty – Risk of dissipation of assets – Mareva injunction.
Facts: The plaintiffs sought an interlocutory application for a Mareva injunction. The plaintiffs alleged that the respondent engaged in fraudulent conduct and wrongly appropriated funds. The defendant argued that the plaintiffs breached the duty that they owed to the Court to make full and frank disclosure in seeking a Mareva injunction. The plaintiffs contended a risk of the dissipation of assets by the defendant in order to defeat the plaintiffs' claim.
Mr. Justice David Keane held that the application for an interlocutory application for a Mareva injunction would be granted. The Court found without hesitation that the plaintiffs had made out a good arguable case. The Court concluded that it would be appropriate to draw from it the inference that, if not restrained by the Court, there would be a risk of dissipation or disposal of the defendant's assets to defeat the plaintiffs' claim.
This is an interlocutory application for a Mareva injunction.
The first and second named plaintiffs (‘Bonice’ and ‘Octara’, respectively) are each non-trading property holding companies incorporated under the laws of the British Virgin Islands. The third plaintiff, Mr Evans-Freke, is the controlling director and ultimate owner of both Bonice and Octara. That ownership is exercised through Laxton Holdings Limited (‘Laxton’), of which Mr Evans-Freke owns the entire issued share capital. It is the parent company of both Bonice and Octara. On a date subsequent to the hearing of the present application, Laxton successfully applied to be added to the proceedings as a plaintiff.
Mr Evans-Freke lives and works for much of each year in the United States of America.
The defendant, Ms Oakes, is a property restorer. She currently resides in the United Kingdom but, during the period material to the plaintiffs' claim, was living in West Cork.
In or about 1999, using Bonice as a vehicle, Mr Evans-Freke acquired a then derelict property called Castle Freke near the village of Rathbarry in West Cork. As the name suggests, that property has historical associations with his family. In 2001, Mr Evans-Freke met Ms Oakes who, through Octara, then owned a property in the same area named Rathbarry Castle, which she was in the process of restoring. That property also has historical associations with the family of Mr Evans-Freke.
In or about 2004, Mr Evans-Freke and Ms Oakes agreed that she would become the project manager of the restoration of Castle Freke. In the same year, Mr Evans-Freke purchased Rathbarry Castle from Ms Oakes. This was accomplished by the transfer to Mr Evans-Freke of a controlling interest in Octara, the vehicle through which Rathbarry Castle was held by Ms Oakes. Thereafter, the agreement between them was that Ms Oakes would manage the restoration and maintenance of both buildings. Ms Oakes contends that she assumed additional responsibilities as, in effect, caretaker, housekeeper and personal assistant to Mr Evans-Freke.
The arrangement between the parties involved Ms. Oakes assuming responsibility for the payment of the tradesmen, casual labourers and third party contractors who were engaged in connection with the restoration works. Ms Oakes kept a handwritten record of those payments in notebooks that she maintained for that purpose. Mr Evans-Freke made transfers into Ms Oakes' bank account in Clonakilty in line with regular payment summaries that she provided to him and, during the course of his frequent visits to Ireland, sat down with her to reconcile those payments with the contents of the notebooks.
Ms Oakes was paid €3,000 per week by Mr Evans-Freke in the period between 2004 and 2009 and €1,500 per week thereafter. Mr Evans-Freke contends that Ms Oakes agreed the reduction in that weekly payment in 2009 in line with a reduction at that time in the scale of the works she was managing. Ms Oakes contends that, rather than agreeing a reduction of €1,500 in the weekly payment due to her, she agreed to accept the indefinite deferral of payment of that amount in response to the plaintiff's request that she do so by reference to his personal financial position at that time.
As part of the arrangements between the parties, Ms Oakes was permitted to reside rent free in an apartment in the stable block at Rathbarry Castle.
Mr Evans-Freke provides what he considers a conservative estimate of the amounts that he transferred to Ms Oakes during the period between 2004 and 2014, inclusive of her own remuneration, in the total sum of €3,407,901.
In June 2014, an employee of Mr Evans-Freke informed him of his belief that there was a discrepancy between what was recorded in the notebooks held by Ms Oakes concerning the level of payments made to certain tradesmen and what those tradesmen had told that employee about the payments they had actually received. In response, Mr Evans-Freke began to carry out enquiries.
As a result of those enquiries, Mr Evans-Freke alleges that the Ms Oakes engaged in the following fraudulent conduct:
(a) Paying tradesmen that she engaged at significantly lower rates than those recorded in the notebooks by reference to which she obtained reimbursement from Mr Evans-Freke.
(b) Recording in the notebooks that certain tradesmen were employed and paid all year round and claiming reimbursement accordingly when those tradesmen were not employed or paid all year round.
(c) Recording in the notebooks that certain tradesmen were involved in the relevant restoration works for particular periods and claiming reimbursement accordingly when those tradesmen were engaged instead during those periods in works for Ms Oakes' sole personal benefit at a property that she owned near Glandore or at a property in which she has an interest in France.
(d) Recording in the notebooks that payments were made to certain tradesmen in respect of holiday periods and claiming reimbursement accordingly when no such payments were made.
(e) Recording in the notebooks that certain tradesmen were still working on the restoration project after those tradesmen had ceased working on it and claiming reimbursement accordingly
(f) Recording in the notebooks that higher payments had been made to third party suppliers of goods and services than those that actually were made and claiming reimbursement accordingly.
Ms Oakes denies each and every one of these allegations.
The plaintiffs' original estimate of the amount wrongly appropriated by the defendant was €1,076,000. However, in the course of the hearing before me the defendant drew to the Court's attention certain mistakes in the assumptions and the documentation underpinning the relevant calculations. This prompted Mr Evans-Freke to swear a corrective affidavit, which he did on the 3rd July 2015, acknowledging that a more accurate current estimate is €855,000.
A plenary summons issued on the plaintiffs' behalf on 17th July 2014. In the general indorsement of claim that it contains, the plaintiffs seek against the defendant: damages for deceit, breach of contract, negligence and negligent misstatement; equitable compensation for breach of trust and breach of fiduciary duty; all necessary accounts, inquiries and directions; and various ancillary reliefs.
On the same date, the plaintiffs sought and obtained, on an interim ex parte basis, a worldwide Mareva injunction, restraining the defendant from removing from Ireland, disposing of, dealing with or diminishing the value of her assets to the sum of €1,076,000.
On the 30th July 2014, the Court made a further order, the effect of which was to amend a proviso in the original order to permit the defendant to spend €8,000 per month towards her ordinary living expenses; €20,000 towards the discharge of a debt owed to Lisavaird Co-op; and a reasonable sum on legal advice and representation in relation to these proceedings.
On the 29th July 2015, subsequent to the hearing of the present application, the Court made a further order permitting the sale of the defendant's property in Glandore; directing that the proceeds of sale be lodged in an identified bank account of the defendant; and, in effect, permitting up to 40% of the sum representing those proceeds to be applied for the purposes of the proviso already described.
The necessary criteria to obtain a Mareva injunction are those endorsed by the Supreme Court in O'Mahony v. Horgan [1995] 2 I.R. 411 at 416. As the judgment of Hamilton C.J. records, the trial judge in that case (Murphy J.) had listed them as follows:
“1. The plaintiff should make full and frank disclosure of all matters in his knowledge which are material for the judge to know.
2. The plaintiff should give particulars of his claims against the defendant, stating the grounds of his claims and the amount thereof and fairly stating the points made against it by the defendant.
3. The plaintiff should give some grounds for believing that the defendant had assets within the jurisdiction. The existence of a bank account is normally sufficient.
4. The plaintiff should give some grounds for believing that there is a risk of the assets being removed or dissipated.
5. The plaintiff must give an undertaking in damages, in case he fails.”
As Hamilton C.J. went on to point out in O'Mahony, these are the five criteria that were laid down by...
To continue reading
Request your trial