Lehane v Dunne

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Costello
• Judgment Date: 25 November 2016
• Neutral Citation: [2016] IEHC 690,[2016] IEHC 679
• Docket Number: [2014/7820P],[2014 No. 7820 P] [2014 No. 164 COM
• Date: 25 November 2016

[2016] IEHC 679

THE HIGH COURT

Costello J.

[2014/7820P]

BETWEEN

CHRISTOPHER LEHANE AS OFFICIAL ASSIGNEE IN BANKRUPTCY

IN THE ESTATE OF SEAN DUNNE

PLAINTIFF

AND

GAYLE DUNNE

DEFENDANT

Bankruptcy – Property & Conveyancing – Practice & Procedures – Discovery of documents – O.31, r. 12 (1) (a) and 5 of the Rules of the Superior Courts – S. 10 of the Statue of Charles – Inferred intent

Facts: The plaintiff sought an order for discovery of certain documents pertaining to the transfer of wealth by the bankrupt to the defendant/the wife of the bankrupt. The plaintiff contended that the transfers of monies by the bankrupt were done with the intent to defraud the bankrupt's creditors and thus, those were void transactions. The defendant objected to the said contention and averred that the primary purpose of entering into the relevant agreements was to make her independently wealthy, which was already agreed between the bankrupt and the defendant prior to their marriage.

Ms. Justice Costello granted an order for the discovery of most categories of documents. The Court held that the discovery should not be refused where the documents were needed to resolve the issues between the parties. The Court observed that there must be some proportionality between the extent of documents needed to be discovered and the degree to which those documents were likely to advance the case. The Court found that the validity of the alleged transactions entered into between the bankrupt and the defendant would be a central issue for the trial and thus, the discovery of concerned documents ought to be made.

JUDGMENT of Ms. Justice Costello delivered on the 25th day of November, 2016

1 This is my judgment on the plaintiff's application for discovery against the defendant, the wife of the bankrupt.

2 The plaintiff seeks discovery of 13 categories of documents and the defendant objects to making any discovery. She argues that the discovery sought is speculative and it is being sought for the purpose of making a case against the defendant. If she is incorrect in that assertion, she consents to make discovery in terms of categories 6, 9, 11, 12 and 13 of the notice of motion. She has proposed alternative categories in respect of categories 1, 2, 4, 5, 7 and 8, and she objects to discovery in respect of categories 3 and 10.

3 I have given a judgment previously in these proceedings where the facts are more fully set out. I do not propose to repeat them here.

Relevant legal principles

4 The discovery sought must relate to a matter in question in the proceedings. The issues in the proceedings are defined by the pleadings. The discovery sought must be necessary for disposing fairly of the cause or matter or for saving costs. The Court shall not make an order for discovery if insofar as the court shall be of the opinion that it is not necessary either for disposing fairly of the cause or matter or for saving costs. (Rules of the Superior Courts, O. 31, r. 12(1)(a) and (5))

5 It has long been established that the test in this jurisdiction is whether the documents sought may lead the parties seeking the discovery directly or indirectly to advance his own case or to damage the case of his adversary. This means that it is not confined to the issues arising from the plaintiff's case but extends also to issues arising from the defence: Compagnie Financiere et Commerciale du Pacifique v. Peruvian Guano Company [1882] 11 Q.B.D. 55.

6 In Framus Ltd.v.CRH plc. [2004] 2 I.R. 20, Murray C.J. stated that there must be some proportionality between the extent or volume of the documents to be discovered and the degree to which the documents are likely to advance the case of his or her opponent in addition to ensuring that no party is taken by surprise by the production of documents at trial. In considering whether or not the discovery sought is proportionate in the sense identified by the Chief Justice the burden is upon the party asserting that the discovery ought not to be ordered and to establish that the requested discovery is so burdensome upon that party as to outweigh the benefit that might accrue to the requesting party if the discovery were to be made.

7 Finally, the courts do not permit discovery of what is usually described as 'fishing'. A party may not seek discovery of a document in order to find out whether the document may be relevant. The party is not permitted to engage in a general trawl through the documents of the other party. See Hannon v. Commissioners of Public Works and Others [2001] IEHC 59.

The defendant's primary objection to discovery

8 The plaintiff sought voluntary discovery from the defendant by letter dated the 15th June, 2015. The defendant replied on the 29th June, 2015, stating that the plaintiff was not entitled to any discovery. This was on the basis that the discovery was speculative. The plaintiff was seeking discovery for the purposes of making a case against the defendant. He had not pleaded fraud against the defendant or that she had acted without the requisite good faith in relation to the transactions which he was seeking to have set aside in the proceedings. Secondly, she submitted that he had alternative means of proof as he had already obtained disclosure through other mechanisms. This was a reference to the disclosure of documents made by the bankrupt to his trustee in bankruptcy as part of the American bankruptcy proceedings. In order to assess these arguments it is necessary to consider the pleadings in some detail.

9 In these proceedings the primary reliefs sought are as follows:

'1. A declaration that the transfer of all shares in Mavior, in the legal or beneficial ownership of Sean Dunne, dated the 28th October 2008 from Sean Dunne to Gayle Dunne and/or companies controlled by Gayle Dunne is void and of no effect by virtue of Section 59 of the Bankruptcy Act of 1988 and/or by reason of the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHAS. 1 SESS. 2, C.3);

2. A declaration that the purported transfer of Sean Dunne's interest, whether represented by shares in Mavior or otherwise, in the Lagoon Beach Hotel, Cape Town, South Africa made pursuant to the Agreement of the 15th of February 2008 between Sean Dunne and Gayle Dunne is void and of no effect by reason of the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHAS. 1 SESS. 2, C.3);

3. A declaration that the purported transfer by Sean Dunne of the full book value as calculated as of the 15th of February 2008 or otherwise of all loans made by him to Mavior and all of its related companies and subsidiaries made pursuant to the Agreement of the 15th February 2008 between Sean Dunne and Gayle Dunne is void and of no effect by reasons of the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHS. 1 SESS. 2, C.3.'

10 At paras. 3 and 4 of the statement of claim it is pleaded:

'3. By transactions which are alleged to be dated the 23rd March 2005, the 15th February 2008 (the 'Transactions') and a Share Transfer dated the 28th October 2008 (the 'Transfer'), the Bankrupt purported to transfer a proportion from the profits from the sale of certain assets and / or ownership of certain assets to the Defendant.

In order to give effect to such transfers the Bankrupt and the Defendant and their servants and agents, including a number of corporate entities and trusts, entered into a series of dealings designed to give effect to the transfer of, inter alia, the beneficial ownership of the Lagoon Beach Hotel, Lagoon Gate Drive, Milnerton, Cape Town, South Africa (hereinafter the 'Hotel') from the Bankrupt to Ms. Gayle Dunne.'

11 The transaction of 23rd March, 2005 is pleaded in full and is set out as follows:

'Property Transfer Agreement between Sean Dunne and Gayle Dunne – 23rd March 2005

I, Sean Dunne, hereby undertake to give to my wife Gayle Dunne (nee Killilea), whom I married on the 11th July 2004, 70% of the profits accrued from the sale of my share of the following properties for the benefit of her and our son Bobby Luke and any future children born to us:

1. Woodtown Rathfarnham, Co Dublin

2. IGB Clonskeagh, Co Dublin

3. Lagoon Beach Hotel, Capetown, SA

4. Charlesland, Co Wicklow (residential portion only)

5. Malahide, Co Dublin (MRFC lands)

6. Rivertree (1 & 3 Shrewsbury Road, Dublin 4)

This transfer of money and/or assets is to ensure the financial independence of my wife and children for the future and to secure their independence from my own property investments. The 30% of the profits let over is estimated to cover all tax an associated ocsts in relation to these assets, and any shortfall will be covered by me, and surplus is for my account.

Lagoon Beach: In relation to Lagoon Beach which is owned by Mountbrook Homes Ltd, I have to date loaned Mountbrook Homes approximately €4m. I hereby transfer this debt owing to me from MHL to my wife Gayle.

Charlesland: In relation to Charlesland, which I hold in my own name, the transfer of profits relate to all residential lands only, and all commercial lands are for me and/or my companies.

I further confirm that I renounce on behalf of my estate all claims over or against these properties or the amount of money derived from their sale should I die before this transfer is fully completed.

I reserve the right to retain ownership of all these properties and transfer the value as cash or alternative properties at values to be agreed between us.

If no mutual agreement re values then this agreement must stand with no referral to arbitration or legal proceedings by either party, except for the enforcement of the agreement itself.

Sean Dunne: 23rd March 2005

Gayle Dunne: 23rd March 2005

Hua-Hin Thailand'

12 It is then pleaded at para. 6:

'...The O.A. is a stranger to the date of the 2005...