Lehane v Dunne

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 26 July 2017
• Neutral Citation: [2017] IEHC 511
• Docket Number: [2014 No. 7820 P.]
• Court: High Court
• Date: 26 July 2017

[2017] IEHC 511

THE HIGH COURT

COMMERCIAL

Costello J.

[2014 No. 7820 P.]

BETWEEN

CHRISTOPHER LEHANE AS OFFICIAL ASSIGNEE IN BANKRUPTCY IN THE ESTATE OF SEAN DUNNE

PLAINTIFF

AND

GAYLE DUNNE

DEFENDANT

Bankruptcy – Interlocutory injunction – O.40, r.1 of Rules of the Superior Courts – Mareva Injunction – Cross-examination – Exceptional circumstances – Exclusion of evidence – S. 21 & s. 59 of the Bankruptcy Act, 1988 – Void Transfer

Facts: The defendant sought an order under the inherent jurisdiction of the Court and pursuant to o.40, r.1 of the Rules of the Superior Courts to cross-examine the plaintiff/official assignee in relation to the contents of the plaintiff's affidavits sworn against the defendant while seeking a worldwide Mareva injunction restraining the defendant from disposing of her assets. The defendant contended that there was unfairness in the procedures adopted by the official assignee. The defendant contended that the transcripts of the evidence given by two solicitors of the bankrupt to the official assignee should have been excluded in evidence as they were also the lawyers of the defendant. The defendant contended that the plaintiff had made overstated inferences and drawn misleading conclusions in his affidavit for which the cross-examination of the plaintiff was necessary and that the plaintiff was guilty of culpable non-disclosure as he failed to disclose relevant materials.

Ms. Justice Costello dismissed the application of the defendant. The Court held that the defendant had failed to establish exceptional circumstances and that the Court saw no reason to permit the cross-examination at the stage of hearing of an interlocutory injunction. The Court held that there was no merit in the application of the defendant to exclude the transcripts of the two solicitors given as evidence to the official assignee. The Court held that the plaintiff was performing his obligation under s. 21 of the Bankruptcy Act, 1988 as the purpose of the provision was to ensure that the bankruptcy process was not frustrated during the investigation by lack of cooperation by either the bankrupt or any other person who might have knowledge or information relevant to his or her trade, dealings, and affairs of the property.

JUDGMENT of Ms. Justice Costello delivered on the 26th day of July, 2017

Introduction

1 The defendant seeks liberty pursuant to O. 40, r. 1 of the Rules of the Superior Courts and/or pursuant the inherent jurisdiction of the court to cross-examine the plaintiff in relation to the contents of his affidavits sworn on the 28th January, 2017 and 23rd March, 2017 to ground his application for a worldwide Mareva injunction against the defendant restraining her from disposing of her assets up to a value of €50,000,000.

Background

2 The plaintiff is the wife of Sean Dunne. Sean Dunne filed for a Chapter 7 bankruptcy in the United States of America on the 29th March, 2013. He was also adjudicated a bankrupt in Ireland on the 29th July, 2013, and the plaintiff is the Official Assignee in bankruptcy in the estate of Sean Dunne (‘the bankrupt’). There are thus two bankruptcy proceedings in two jurisdictions in respect of the bankrupt.

3 The Chapter 7 Trustee, Mr. Richard Coan, and the Official Assignee have each instituted the proceedings seeking to recover certain assets of the bankrupt into the estate of the bankrupt. In these proceedings the Official Assignee challenges certain share transfers and shareholder loans which he alleges were legally or beneficially owned by the bankrupt and were transferred by him to the defendant and/or companies controlled by the defendant. The Official Assignee says these transfers are void by virtue of the provisions of s. 59 of the Bankruptcy Act 1988 and/or by reason of s. 10 of the Irish Statute of Fraudulent Conveyances 1634 and various ancillary reliefs.

4 The proceedings have given rise to a number of applications and written judgments already. The issues raised are complex both factually and legally. The facts have been set out more fully in previous judgments. Here, I propose to set out only those matters that are relevant to the issues for decision in this judgment.

5 In her defence the defendant pleads inter alia that she and the bankrupt entered into an agreement dated the 23rd March, 2005, whereby, in consideration of her foregoing her career and waiving any future family law claims against future assets of the bankrupt and agreeing to raise the children of their marriage, the bankrupt agreed to transfer certain assets to her. At para. 34 she pleads: -

‘As a part performance of the 2005 agreement on the basis of assets in lieu as agreed, the Bankrupt purchased and the Defendant accepted a property at Shrewsbury Road, Ballsbridge, Dublin 4 on or about July 2005. The Shrewsbury Road property was then valued at €58,000,000…’

6 This property is known as Walford. In his reply at para. 18 the Official Assignee denied that the purchase of Walford on Shrewsbury Road, Ballsbridge, Dublin 4 and/or the alleged gifting of Walford from the bankrupt to the defendant constituted an act of part performance of the 2005 agreement. He also pleaded that if Walford was transferred to the defendant in purported performance of the alleged agreements and the agreements are deemed void that he would seek an account and repayment of all properties or monies received allegedly in the implementation of the purported agreements.

7 The issue of the ownership of Walford and the legal and beneficial interests have played a considerable role both in these proceedings and in the administration of the bankruptcy of the bankrupt.

8 While the proceedings have been progressing since they were instituted in 2014, it was only on the 25th January, 2017, that the plaintiff sought and obtained an interim world wide Mareva injunction restraining the defendant from reducing her personal assets of whatever nature or kind and however derived including all assets in which she has any direct or indirect legal beneficial or other interest below the sum of €50,000,000 pending further order of the court. The Official Assignee explained that the application was brought because, as he said in para. 5 of his grounding affidavit, he recently came into possession of information about the alleged sale of Walford. He averred: -

‘… Walford was nominally owned by Yesreb Holding Ltd (hereinafter ‘Yesreb’). I believe Yesreb to be owned and controlled by the Bankrupt and Gayle Dunne (hereinafter collectively ‘the Dunnes’) and to have been incorporated by their agents and utilised by them solely for the purpose of putting Walford beyond the reach of the Bankrupts creditors as part of a preplanned scheme. I believe they have now sold the asset with a view to ensuring that if judgment is obtained in these proceedings it will be frustrated.’

9 He explained that although the bankrupt was adjudicated in 2013, significantly more information in relation to his circumstances became available to him in 2016 in the context of the Official Assignee's application to postpone the discharge of the bankrupt from bankruptcy. He also received information from various parties where applications were made pursuant to s. 21 of the Bankruptcy Act 1988 including solicitor's files and information from the Revenue Commissioners in relation to the various transactions relating to Walford.

10 In support of this application the Official Assignee swore three affidavits, on the 25th January, 2017, the 23rd March, 2017, and the 3rd May, 2017. The defendant swore two affidavits, one on the 2nd March, 2017, and the other on the 25th April, 2017. On the 6th April, 2017, the defendant issued the motion seeking an order to cross examine the Official Assignee on his affidavits and an order deeming the transcripts of two s. 21 hearings inadmissible or on the alternative an order directing the two parties to attend for cross examination by the defendant's counsel at the hearing of the application for the Mareva injunction.

Submissions of the Defendant

10 The defendant seeks liberty to cross examine the plaintiff on his affidavits sworn to ground his application for a worldwide Mareva injunction restraining her from disposing of her assets up to a value of €50,000,000. The defendant points to the fundamental requirement that a plaintiff seeking a mareva injunction should make full and frank disclosure of all matters in his knowledge which are material for the judge to know ( O'Mahoney v. Horgan [1995] 2 I.R. 411 at 416). As the plaintiff seeks equitable relief, the court may scrutinise his conduct and refuse the relief if the conduct is such that the court forms the view that it falls below that which is required when seeking a Mareva injunction. She says that she needs to cross examine the plaintiff to support her argument that the plaintiff made incorrect or overstated averments in his grounding affidavit, in particular, but also in his replying affidavits, of such gravity as would justify the court in refusing to grant a Mareva injunction even if one were otherwise warranted. She states that she needs to cross-examine the plaintiff in relation to these issues in support of this argument. Thus, she submits, cross examination of the plaintiff on his affidavit is part of her right to fair procedures before the court.

Cross-Examination

11 She states that cross-examination is necessary and desirable for the resolution of three broad issues: -

(1) There are conflicts of facts between the parties which require to be resolved, clarified or explained.

(2) Whether the court ought to excuse failure on the part of the plaintiff to disclose matters which the defendant says the plaintiff ought to have disclosed and inconsistencies in his evidence, and

(3) Whether and to what extent the sworn beliefs and allegations as to the Defendant's dishonest...