Maureen Hughes v Hitachi Koki Imaging Solutions Europe

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 21 July 2006
• Neutral Citation: [2006] IEHC 233
• Court: High Court
• Docket Number: [2001 No. 11447 P]
• Date: 21 July 2006

[2006] IEHC 233

THE HIGH COURT

[No. 11447P/2001]

HUGHES v HITACHI KOKI IMAGING SOLUTIONS EUROPE

BETWEEN

MAUREEN HUGHES

PLAINTIFF

AND

HITACHI KOKI IMAGING SOLUTIONS EUROPE

DEFENDANT

AND

STANDARD LIFE ASSURANCE COMPANY

THIRD PARTY

BAMBRICK v COBLEY 2006 1 ILRM 81 2005/3/573

O'MAHONY v HORGAN 1995 2 IR 411 1996 1 ILRM 161

BENNET ENTERPRISES INC v LIPTON 1999 2 IR 221

TRACEY v BOWEN UNREP CLARKE 19.4.2005 2005/56/11866

AEROSPARES LTD v THOMPSON & ORS UNREP HIGH 13.1.1999 1999/1/22

MCCOURT v TIERNAN UNREP CLARKE 29.7.2005 2005/41/8601

FREDERICK INNS LTD, RE 1994 ILRM 387

COMPANIES ACT 1990 S150

MCLOUGHLAN v LANNEN 2006 2 ILRM 217

EQUITY:

Injunction

Interlocutory application - Mareva - Whether appropriate to grant interlocutory order - Whether requirements for Mareva injunction met - Criteria to establish in case of insolvent corporate entity - Whether inference that defendant intended to deal with assets in manner which would defeat plaintiff's entitlement to damages - Whether defendant intended to deal with assets in breach of obligations of company and directors imposed by provisions of Companies Acts1963-2005 - O'Mahony v Horgan [1995] 2IR 411 and Bambrick v Cobley [2005] IEHC43, [2006] ILRM 81 approved - O'Mahony v Horgan [1995] 2 IR 411; Bennet Enterprises Inc v Lipton [1999] 2 IR 221; Tracey v Bowen [2005] IEHC 138, [2005] 2 IR 528; In Re Frederick Inns Limited [1994] ILRM 387 and McLaughlin v Lannen [2005] IEHC 341(Unrep, Clarke J, 4/11/2005) considered - Application refused (2001/11447P - Clarke J- 21/7/2006) [2006] IEHC 233, [2006] 3 IR 457

Hughes v Hitachi Koki Imaging Solutions Ltd

21/7/2006 2001 No. 11447P [No. of pages 12]

Practice & Procedure - Mareva Injunction - Wrongful termination of disability benefit - Insolvent employer - Whether plaintiff could obtain Mareva injunction to retain sufficient funds for her claim

Facts: The plaintiff claimed that the defendant company wrongfully terminated disability benefit payment that she alleged she was entitled to pursuant to contract. The defendant company ceased to trade. The plaintiff sought a Mareva type injunction to require that sufficient sums be retained by the insolvent defendant to meet her eventual claim.

Held by Clarke J., that while in principle it was open to a plaintiff to seek this form of relief, the plaintiff here was not entitled to absolute security. The directors of the company had ample reason to believe that adequate funds would exist to meet the plaintiff's claim if successful. The conditions necessary for the grant of a Mareva injunction had not been met.

Reporter: E.F.

1. Introduction

2 1.1 The plaintiff ("Ms. Hughes") is employed by the defendant company which is, I understand, now called Ricoh Printing Systems Europe ("Ricoh"). In the substantive proceedings Ms. Hughes claims that Ricoh has been guilty of a wrongful termination of a disability benefit payment to which, Ms. Hughes claims, she was entitled under the terms of her contract of employment. While such a payment was made for an initial period of time, the amount of the payment was subsequently reduced and ultimately the payment was discontinued. The payment was subsequently reinstated. Up to date there is, therefore, a claim which is based on the contention that Ms. Hughes should have been in receipt of full disability benefit from the time when she was first in receipt of same. The claim to date would appear to involve a sum of approximately €133,000.

3 1.2 Ricoh joined the third party ("Standard Life") basing it's claim on an agreement entered into between Ricoh and Standard Life for the provision of disability benefit to nominees of Ricoh. Ricoh's claim against Standard Life centres around a contention that, in substance, the decision as to whether Ms. Hughes was to be treated as qualifying for disability benefit was made by medical assessors appointed by Standard Life. In those circumstances it is contended, that if those decisions were incorrect in a manner which entitles Ms. Hughes to compensation, Standard Life is obliged to indemnify Ricoh against any sums awarded. Ms. Hughes contends that there is no privity of contact between her and Standard Life and, for that reason, has not brought any direct claim against the third party.

4 1.3 The proceedings have been ongoing since 2001 but have now been complicated by the fact that Ricoh has made a decision to cease to trade and is in the course of winding down its business. In those circumstances Ms. Hughes contends that she is entitled to require that sufficient sums be retained by Ricoh to meet her potential claim and has brought an application for a mareva type injunction designed to secure that eventuality. In those circumstances it is necessary to turn to the procedural history of the application for a mareva type injunction.

2. The Mareva Application

2 2.1 In the grounding affidavit sworn in support of the application for an interlocutory injunction, Ms. Hughes" solicitor deposed to the background matters referred to above and also referred to the fact that Ms. Hughes had a further claim in respect of what she contended was an ongoing disability. It was stated that a further sum of €500,000 should be retained to cover the eventuality that disability payments might be wrongly stopped in the future. As appears from that affidavit, Ricoh, on 3rd May, 2006, wrote to Ms. Hughes indicating that Ricoh's operations in Ireland (and indeed Europe) would cease as of 30th June, 2006 . The letter included a number of options in relation to redundancy. As a result of correspondence with Ricoh's solicitors it was confirmed that it was not intended to seek to have Ricoh placed in liquidation at this time.

3 2.2 As a result of a replying affidavit, it is clear that Ricoh is part of a large group of companies. The relevant detailed corporate structure was deposed to in that affidavit by Mr. John Doyle the Finance Director of Ricoh. The ultimate parent company is called Ricoh Co. Limited and is a Japanese public company with, it would appear, assets of €13 billion and 75,000 employees in 318 companies across 150 countries. The immediate parent of Ricoh is Data Products (Santa Clara) which is in turn a subsidiary of Ricoh Printing Systems America Inc. Ricoh is an unlimited company having share capital and thus, in the event that it might be dissolved in circumstances of insolvency, its shareholders would be required, under the provisions of the Companies Acts, to contribute any shortfall (including the costs of liquidation).

4 2.3 It appears from the affidavit of Mr. Doyle, that while the operations of Ricoh ceased on 30th June, 2006, no decision has yet been made as to whether Ricoh is to be dissolved. The stated principal reason for that state of affairs centres around a defined benefit pension plan which Ricoh sponsors and which has assets of approximately €17 million. It is stated that there are many complex issues to be addressed relating to whether the pension plan should be wound up or not and that it is intended to keep the company in existence, at least until all such matters are resolved.

5 2.4 One aspect of Ms. Hughes concerns was resolved at the time of the swearing of Mr. Doyle's affidavit. It was made clear in that affidavit that Standard Life has agreed to maintain Ms. Hughes" disability cover beyond the 30th June, 2006, notwithstanding the termination of her employment on that date. That matter has been confirmed by Standard Life. It is clear, therefore, that with effect from 1st July, 2006 Ms. Hughes is entitled to claim disability benefit directly from Standard Life. If any dispute arises in the future as to whether she is entitled to the payment of any benefit, that dispute can be resolved in proceedings directly between Ms. Hughes and Standard Life. Any question of the necessity of Ricoh to make a provision in respect of a possible future claim no longer arises in those circumstances.

6 2.5 The affidavit of Mr. Doyle further makes clear the current financial status of Ricoh. He suggests that Ricoh has realisable assets of approximately €7,200,000 with liabilities of approximately €10,700,000. Those liabilities include the costs associated with the winding down of the business of the company. In his affidavit Mr. Doyle indicated that it was the company's intention to meet the entire liabilities of €10,700,000 by the conversion of the assets into cash and by borrowing the deficit (which it would appear would be of the order of €3,500,000) from its parent Ricoh Printing Systems America. The affidavit also notes that Ricoh already owes that parent company €12,700,000 so that the debt, after the anticipated borrowing to meet the shortfall, would increase to €16,200,000. It was also indicated in the affidavit that it was the intention to make further borrowings above and beyond the above sum of €3,500,000 from the parent company in the event that further liabilities emerge (including any liabilities that might arise to Ms. Hughes).

7 2.6 At the time of swearing his affidavit Mr. Doyle was dealing with an application on behalf of Ms. Hughes to freeze €700,000 of assets to meet her claim (including the possible claim in respect of future...