Kirby v Conlon

• Jurisdiction: Ireland
• Judge: Mr. Justice Mark Sanfey
• Judgment Date: 09 July 2021
• Neutral Citation: [2021] IEHC 475
• Court: High Court
• Docket Number: [2018 45 COS]

In the Matter of the Companies Act 2014

And in the Matter of Pembroke Dynamic Internet Services Limited (In Liquidation)

Between

Myles Kirby

Applicant

and

Peter Conlon

Respondent

[2021] IEHC 475

[2018 45 COS]

THE HIGH COURT

JUDGMENT of Mr. Justice Mark Sanfey delivered on the 9th day of July 2021.

Introduction

1 In this application, the applicant Mr. Myles Kirby (“the Liquidator”) sought a number of reliefs against the respondent, a director of Pembroke Dynamic Internet Services Ltd (“the company” or “Pembroke”), including in particular orders imposing on the respondent personal liability for the debts of the company, and an order disqualifying the respondent from acting as, inter alia, a director or officer of any company. While the matter was initiated by originating notice of motion, a plenary hearing of the application was ultimately ordered by the court, and after exchange of pleadings and discovery, the matter was listed for trial for six days on 10th June, 2021.

2 In the event, the court was informed on the morning of the hearing that the parties had agreed a document entitled “terms of settlement”. This document set out the terms of orders to which both parties consented, and which, subject to the court's approval, would be made in settlement of the proceedings. The document set out certain other terms of settlement, including certain acknowledgements and agreements as to the evidence presented to the court. Paragraph 1 of the proposed orders to which the respondent consented included an order pursuant to s. 842 of the Companies Act, 2014 (“the 2014 Act”) “… disqualifying the Respondent from acting as a director or other officer, statutory auditor, receiver, liquidator or examiner or from being in any way, whether directly or indirectly, concerned or taking part in the promotion, formation or management of any company within the meaning of s.819 (6) of the Companies Act, 2014 or any friendly society within the meaning of the Friendly Societies Acts, 1896 to 2014 or any society registered under the Industrial and Provident Societies Acts, 1893 to 2014”. However, the parties acknowledged that the duration of the disqualification period was not something which they could agree, and which must be assessed by the court.

3 I am satisfied that the orders which the parties have requested the court to make – subject to an adjustment to the order for disqualification to provide for the duration of same – are appropriate. Accordingly, the only matter to be decided is how long the term of disqualification should be, and that is the sole issue addressed in this judgment.

The evidence before the Court

4 By order of Allen J. on 18th May, 2021, the court ordered the Liquidator and the respondent to deliver witness statements in advance of the trial. Both parties duly delivered extensive statements of their respective positions. At the hearing, I was invited by Rossa Fanning SC for the Liquidator, without objection from Mr. Robert Dore, solicitor, who represented the respondent, to base my decision as regards the duration of the disqualification on the matters as disclosed in the witness statements. As the matter had been settled, neither side wished to adduce evidence in order to resolve this one issue, and were satisfied that I should proceed on this basis.

5 I made the point to counsel that, if I were not expected to make findings of fact in relation to disputed matters, I would not be in a position to resolve any conflict between the two witness statements. Counsel accepted that this was so, but expressed the view that the court would nonetheless have sufficient information, in considering matters not contested, to form a view as to the appropriate duration of the disqualification. Accordingly, I approached the matter on this basis.

Background

6 In order to assess the duration of the disqualification, it is necessary to examine the company's history and the respondent's role in it, and the liquidator's investigation of its affairs.

7 The company was incorporated in Ireland on 5th October, 2005, and changed its name from Ammado Internet Services Ltd to its present name on 1st August, 2017. The Liquidator states at para. 2 of his witness statement that “… the Company provided a technology platform aimed at the charity sector. In the course of its business, the Company handled large amounts of charitable donations in trust for a number of charities”. As we shall see, these contentions are disputed by the respondent.

8 It is not disputed that the respondent was managing director and a shareholder of the company through certain corporate vehicles at the date of the commencement of its winding up on 22nd January, 2018. The Liquidator refers to an independent expert's report provided to the High Court by the company to ground an application to appoint an examiner to the company in November 2017. This report refers to the “Ammado Group”, which according to the report comprises a Swiss entity, Ammado AG, as the parent company with four subsidiaries, being Pembroke, Ammado Technology Ltd, Ammado Serbia (R & D) and Ammado Inc, which the Liquidator believes to be a Czech entity. At para. 4 of the points of defence, the respondent maintains that Ammado AG was the holding company for Pembroke, the Serbian and Czech companies, but not Ammado Technology Ltd. According to para. 5 of the Liquidator's points of claim, this latter company was a shelf company acquired to replace Ammado AG as the holding company of the other companies, but this proposed restructuring was not completed before the company went into liquidation.

9 In addition, the group established a charitable foundation for the purpose of dealing with charitable donations. This was called the Ammado Foundation Trust, and was established on 11th January, 2008 by Irish solicitors.

10 The liquidator maintains that the company provided a technology platform aimed at the charity sector. This is denied by the respondent, who states at para. 6 of the points of defence that “…the company's sole function was the provision of labour services to Ammado AG”. The respondent denies that the company had any involvement with the matters pleaded at para. 7 of the points of claim, which sets out the involvement that the group had in relation to charitable activities. However, the description of those activities as set out at para. 7 of the points of claim is not denied.

11 It appears that a technology platform was devised and provided to the charity sector. The Liquidator contends that the services offered involved:

• (a) Charitable Donation Technology: which involved the collection of donations from donors through the foundation. The foundation would make onward payment of those donations to the charities selected by the donors and, pursuant to donor terms and conditions, the foundation deducted an amount from each of the donations and remitted such amounts to the company by way of payment for services supplied by the company.

• (b) Donation Cards: the company marketed and sold pre-paid general donation gift cards, in which the recipient of the card could nominate the charity to whom it wished the pre-paid credit on the card to be donated. The amount of the donation would be paid to the foundation, who would hold the money until the recipient of the gift card selected a charity.

• (c) Charity Campaigns: The company ran charity campaigns on behalf of charities, with donations to the campaigns to be made to the foundation for onward payment to the underlying charity. The donor terms and conditions permitted deduction of an amount from the aggregate donation for the relevant campaign in respect of costs incurred by Pembroke in relation to that campaign.

12 In his witness statement, the respondent set out his personal background. According to this statement, the respondent is a chartered certified accountant, and also qualified at the Bar in 1980. In 1994, he carried out a period of devilling as a barrister. He appears to have joined the Industrial Development Authority in 1979, but left that body in 1987 to set up a technology company. His statement suggests that he set up a number of technology companies over the following 20 years or so, some of which were very successful; he refers to a company which he incorporated and subsequently sold “ for a cash consideration of €102 million”. He also refers to a number of business awards made to him both in Ireland and internationally for companies he founded and developed.

13 The respondent refers in his witness statement to discussing with a colleague “…the possibility of using technology to raise funds for philanthropic purposes and to raise the profiles of significant issues globally… to advance our agenda we paid a full-time researcher over a two year period and thereafter we put together a team of technology experts to design and develop all of the components necessary to build a global and secure technology platform. This did not come cheap and both myself and [the colleague] invested considerable personal funds”.

14 The respondent refers to the incorporation of Ammado Internet Services Ltd in 2007. He states at para. 16 of his witness statement that “… [t]he purpose of this company was then to complete the development of a global technology platform which could potentially be used for a myriad of charitable purposes. To conclude this development Ammado Internet initially employed 20/25 people. Its first premises was in fact the garage of my then residence at 31 St. Mary's Road, Dublin 4. After two years the company moved to the Trinity Corporate Centre in Pearse Street, Dublin 2. At that stage the company was employing upwards of 60 people”.

15 The respondent goes on in his statement to describe how the company owned a functioning technology platform by 2008, and went about approaching international charities and generally promoting the technology platform....