Lehane v Dunne

JudgeMs. Justice Costello
Judgment Date19 February 2016
Neutral Citation[2016] IEHC 96
Date19 February 2016
CourtHigh Court
Docket Number[2014 No. 7820 P] [2014 No. 164 COM]

[2016] IEHC 96

[2014 No. 7820 P]

[2014 No. 164 COM]



Bankruptcy – Practice & Procedures – O. 40, r. 1 of the Rules of the Superior Courts – Dismissal of claim – Forum non conveniens – Risk of conflicting decisions – Attendance of witness – Conflict on affidavit

Facts: In the present proceeding, instituted by the official assignee against the plaintiff seeking to set aside the transfer of certain assets by the plaintiff/bankrupt to the defendant in the jurisdiction of Ireland, the defendant subsequently filed a motion to dismiss the said proceedings on ground of forum non conveniens and the defendant had now applied for an order under o. 40, r. 1 of the Rules of the Superior Courts requiring the attendance of U.S. attorney appearing on behalf of the plaintiff/bankrupt for cross-examination by the defendant's counsel in relation to the contents of the affidavits sworn by him. The defendant contended that the attendance of the said attorney was essential for resolution of certain issues between the parties.

Ms. Justice Costello refused to grant the desired relief to the defendant. The Court held that in a motion to dismiss proceedings on basis of forum non conveniens, the Court must determine the forum in which the cause of action, assets and witnesses were largely based coupled with the burden and expense of running two parallel proceedings. The Court observed that the two set of proceedings in U.S. and Ireland were initiated to set aside the alleged fraudulent transfers in both jurisdictions and they were initiated by Chapter 7 Trustees in U.S. and official assignee in Ireland. The Court held that said U.S. attorney could not be cross-examined for the purported intents of the Chapter 7 Trustee and the official assignee. The Court held that the party seeking the order of cross-examination of a deponent must exhibit probable presence of some conflict on affidavits relevant to the issue that needed to be determined. The Court found that it was clear that in the present case, the cross-examination of the U.S. attorney on the relevant issues were not required at all and the other issues that needed to be determined fell outside the scope of his expertise.

JUDGMENT of Ms. Justice Costello delivered on 19th day of February, 2016.

In this case the applicant has applied to the Court pursuant to O. 40, r.1 of the Rules of the Superior Courts and/or pursuant to the inherent jurisdiction of the Court requiring Mr. Timothy Miltenberger attend court for examination by the defendant's counsel in relation to the contents of affidavits sworn by him on 28th May, 2015, and 24th June, 2015, and ancillary relief. The plaintiff sought a reciprocal order in respect of Mr. Alec Ostrow on the basis that if Mr. Miltenberger's evidence has to be challenged then Mr. Ostrow's evidence also has to be tested and cannot be left unchallenged. Order 40, r. 1 of the Rules of the Superior Courts provides:-

‘[u]pon any petition, motion, or other application, evidence may be given by affidavit, but the Court may, on the application of either party, order the attendance for cross-examination of the person making any such affidavit.’


In 2005, the defendant married Mr. Seán Dunne (‘the Bankrupt’). The Bankrupt filed for a Chapter 7 Bankruptcy in the United States on 29th March, 2013, and his Chapter 7 Trustee in Bankruptcy in the United States is Mr. Richard Coan. Under the provisions of Chapter 7 of the U.S. Bankruptcy Code the Bankrupt's estate in bankruptcy vested in the Chapter 7 Trustee and an automatic worldwide stay on all enforcement proceedings against the Bankrupt came into effect.


A petition to adjudicate the Bankrupt a bankrupt in this jurisdiction was pending at the time. The U.S. Bankruptcy Court modified the automatic stay so as to permit the petitioner to continue with the Irish bankruptcy proceedings. The Bankrupt was adjudicated a bankrupt in Ireland on 29th July, 2013. The Bankrupt challenged the adjudication by an application to show cause. The High Court refused his application to show cause and the Bankrupt appealed to the Supreme Court. On 15th May, 2015, the Supreme Court rejected his appeal.


In 2005 and 2008 the Bankrupt made very substantial transfers of assets to the defendant. The Bankrupt was the legal or beneficial owner of shares in an unlimited company, Mavior. The shares were transferred by the Bankrupt to the defendant and/or companies controlled by the defendant on 28th October, 2008. The Bankrupt transferred his interest in a hotel in the Republic of South Africa to the defendant pursuant to an agreement dated 15th February, 2008. He also transferred the full book value as calculated as of 15th February, 2008, of all loans made by him to Mavior and all of its related companies and subsidiaries to the defendant pursuant to the agreement dated 15th February, 2008. These transactions are subject to challenge in these proceedings and proceedings in the United States.


The Chapter 7 Trustee instituted two proceedings against the defendant and other parties referred to as Adversary Proceedings 15-5020 and 15-5019. Adversary Proceedings 15-5020 precisely mirror the claim in these proceedings. They were commenced on the last day permitted to the Chapter 7 Trustee to bring the proceedings under the U.S. Bankruptcy Code so that the claims would not become statute barred. They were commenced prior to the determination of the Bankrupt's appeal by the Supreme Court. Following the confirmation of the Irish bankruptcy, the Chapter 7 Trustee and the plaintiff decided that the matters were best pursued by the plaintiff through proceedings in Ireland rather than through the existing Adversary Proceedings 15-5020. Once the uncertainty created by the outstanding appeal to the Supreme Court in relation to these proceedings was resolved, the Chapter 7 Trustee, with the consent of the defendant, dismissed Adversary Proceedings 15-5020. He did so in order that the claims could be pursued in Ireland by the plaintiff.


Adversary Proceedings 15-5019 are being pursued in the U.S. Bankruptcy Court. In those proceedings, the Chapter 7 Trustee is seeking to recover assets in the United States, Ireland and the Republic of South Africa from the defendant herein and other parties to whom she in turn has transferred the assets. He does so on a number of grounds including that they constituted fraudulent conveyances by the Bankrupt to the defendant or that they are covered by a constructive trust in favour of the Bankrupt's creditors.


The Official Assignee instituted these proceedings seeking to set aside the transfers by the Bankrupt to the defendant and/or companies controlled by her as set out above. They relate to the shares in Mavior and the principal asset, Lagoon Beach Hotel in Cape Town, Republic of South Africa. The plaintiff seeks an order requiring the defendant and her servants and agents, including any corporate entities of which she is a director or has control, to restore any assets reportedly transferred to her by reason of the agreement dated 15th February, 2008, and/or the share transfer date of 28th October, 2008, to the estate of the Bankrupt or damages in lieu of such an injunction and if necessary an order for the tracing of all assets purportedly transferred pursuant to the agreement dated 15th February, 2008.


Thus there are two bankruptcies being administered, one in the U.S. Bankruptcy Court and one in this Court in respect of the estate of the Bankrupt. There are two fiduciaries acting to gather in the assets of the Bankrupt, the Chapter 7 Trustee and the Official Assignee. They have each instituted proceedings against the defendant seeking to recover assets they allege were wrongfully transferred to her or companies under her control by the Bankrupt. These proceedings overlap with the Adversary Proceedings 15-5019, though the precise extent of the duplication has not yet been established. In these circumstances, the defendant has brought a motion in these proceedings seeking to strike out and/or dismiss the plaintiff's claim pursuant to the inherent jurisdiction of the Court on the grounds of forum non conveniens and abuse of process.


There has been an exchange of affidavits between the parties in relation to the Motion including affidavits sworn by U.S. attorneys in relation to U.S. bankruptcy law and the proceedings in the United States, Mr. Miltenberger on behalf of the plaintiff and Mr. Ostrow on behalf of the defendant. This judgment is concerned with the Motions to cross-examine Mr. Miltenberger and Mr. Ostrow in respect of their affidavits filed in relation to the Motion to dismiss the proceedings.

Cross-examination on affidavit

The Rules of the Superior Courts expressly provide for a deponent to be cross-examined on any affidavit filed by him. The extent of the entitlement of a party to cross-examine a deponent depends upon the nature of the proceedings or the application in which the affidavit has been sworn. Where the procedures are by way of summary summons or special summons or, in the case of proceedings commenced by a plenary summons, a trial on affidavit has been directed, a party who wishes to cross-examine a deponent can serve a notice to cross-examine on the party who filed the affidavit requiring that the deponent be produced for cross-examination at trial. Unless a deponent is produced for cross-examination, his affidavit cannot be used as evidence except by leave of the court. Leave of the court to serve such a notice is not required.


On interlocutory applications and proceedings commenced by petition or originating notice of motion, a notice to cross-examine may only be served with leave of the...

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