MPS Global Ltd ((in Liquidation)) v Paraic Muldowney
| Jurisdiction | Ireland |
| Judge | Mr. Justice Barrett |
| Judgment Date | 30 May 2014 |
| Neutral Citation | [2014] IEHC 318 |
| Court | High Court |
| Date | 30 May 2014 |
[2014] IEHC 318
THE HIGH COURT
BETWEEN:
AND
COMPANIES ACT 1990 S139
COMPANIES ACT 1990 S139(2)
COMPANIES ACT 1963 S286
SOMERS v W 1979 IR 94
LE CHATELAINE THUDICHUM LTD (IN VOLUNTARY LIQUIDATION) v CONWAY 2010 1 IR 529 2008/35/7566 2008 IEHC 349
DEVEY ENTERPRISES LTD & STAFFORD v DEVEY 2012 1 IR 127 2011/13/3057 2011 IEHC 340
COMPANIES ACT 1990 S139(1)(A)
COMPANIES ACT 1990 S139(1)(B)
MURPH'S RESTAURANTS LTD, IN RE 1979 ILRM 141
COMPANIES ACT 1963 S213(F)
EBRAHIMI v WESTBOURNE GALLERIES LTD 1972 2 AER 492 1973 AC 360 1972 2 WLR 1289 1972 116 SJ 412
LA MOSELLE CLOTHING LTD & ROSEGEM LTD v SOUALHI 1998 2 ILRM 345 1998/23/8886 1998 IEHC 66
CONNEMARA MINING CO PLC, IN RE UNREP LAFFOY 10.5.2013 2013 IEHC 225
DUBLIN CINEMA GROUP LTD, IN RE UNREP CHARLETON 25.3.2013 2013 IEHC 147
COURTNEY & ORS THE LAW OF COMPANIES 3ED 2012 PARA 23.092
HARRAHILL v SWAINE UNREP BARRETT 28.2.2014 2014 IEHC 94
AER RIANTA v RYANAIR 2001 4 IR 607 2002 1 ILRM 381
Fraudulent disposition of company funds - Just and Equitable - Payment of money - Transfers of Money - Signed Agreements - Company Liquidator - Declaration - Bona Fide - Section 139 Companies Act 1990 - Restoration of Money to Company - Procedural points-
Facts: This case concerned whether it was just and equitable to require an individual to pay a sum of money equivalent to that which was paid to him by an allegedly fraudulent disposition of company funds. The sum of €760,000 was transferred from a bank account of Muldowney Property Services Limited (MPSL) to a bank account of Mr Jas Kalsi(Mr K) (at the time a director of the company) and paid directly from company funds. Two transfers in the sum of €103,500 were then made from Mr K”s account to his second account. The value of these transfers were paid to Mr Paraic Muldowney (Mr M) who claimed these monies were used to settle outstanding personal loans made by Mr M and members of his family to Mr K. Mr M averred he had no involvement in MPSL. Mr Justice Barrett referred to evidence before the court such as the signed and witnessed investment and guarantee agreement between Mr M and MPSL, signed for the company by Mr K. Mr M asserted this signed agreement had been a fraudulent action against him. Mr Justice Barrett stated the court was not persuaded by Mr M”s averment that the cheque by which the outstanding loan monies were paid was a personal cheque drawn on Mr K”s personal account nor that he had no reason to believe or know that such monies came out of Mr K”s company. The liquidator of MPS Global Limited sought a declaration the sum of €103,500 received by Mr M from MPS Global Limited was a fraudulent disposition according to section 139 of the Companies Act 1990(1990 Act) and an order requiring Mr M to pay the said sum to the liquidator. Mr Justice Barrett cited s.139 of the 1990 Act and stated s. 139(2) was irrelevant as there was no suggestion Mr M was a creditor, a surety or guarantor of MPS Global Limited for the debt due. Mr Justice Barrett stated the court did not believe Mr M acted bona fide in accepting the payment of €103,500 indirectly from MPS Global Limited, that the level of his involvement with MPS Global Limited and Mr K was such that the court did not consider he could neither have known nor suspected the source of the repayment monies and that it was not clear Mr M had actual knowledge of the source of the monies paid. Mr Justice Barrett referred to case law relevant to s. 139 of the 1990 Act such as Le Chatelaine Thudichum (In liq) Ltd v Conway [2010] and distinguished the case of Devey Enterprises Ltd v Devey [2012]. Mr Justice Barrett referred to the concept of just and equitable and to guiding case- law such as Ebrahimi v Westbourne Galleries Limited [1973], La Moselle Clothing Ltd (in Liquidation) v Soualhi [1998], Re Connemara Mining Company plc [2013], Re Dublin Cinema Group Limited [2013] and held the case-law afforded court an opportunity to do what was correct by reference to the parties” actions within legal constraints.
Held by Mr Justice Barrett having regard to the fraudulent use of company monies and legal and equitable principles it would be just and equitable to order the restoration of those monies to the company by Mr M. Mr Justice Barrett held Mr M made a number of procedural points such as the liquidator failed to identify the appropriate order pursuant to the Superior Court Rules upon which the instant proceedings were brought; the notice of motion had not been served on Mr M in compliance with the Rules; the proceedings ought to have been brought by originating notice of motion or fresh petition and the application was for summary judgment. Mr Justice Barrett held the aforementioned issues were without merit and declared the sum of €103,500 received by Mr M involved a fraudulent disposition of the property of MPS Global Limited and considered it just and equitable to order Mr M to pay the sum of €103,500 to the liquidator of MPS Global Limited.
Application granted
JUDGMENT of Mr. Justice Barrett delivered on the 30th day of May, 2014
1. The key issue arising in this case is whether it is just and equitable that an individual be required to pay up an amount of money equal to that which was paid to him by way of a purportedly fraudulent disposition of company funds.
2. On 2 nd July, 2007, the sum of €760,000 was transferred from a bank account of Muldowney Property Services Limited to a bank account of Mr. Jas Kalsi, then a director of the company. This money was paid directly from funds that had come into the company's possession from members of the public availing of a property investment opportunity that Muldowney Property Services had touted around the time of the transfer. On the same date, two onward transfers were made from the initial account of Mr. Kalsi to a second account in his name. The combined value of these transfers, some €103,500, was then paid to Mr. Paraic Muldowney, the subject of the present application. Mr. Muldowney claims that these monies were used to settle certain outstanding personal loans that were made on certain dates over the years 2005 to 2007 by Mr. Muldowney and various of his family members to Mr. Kalsi. The name of the company from which the repayments ultimately derived might suggest that Mr. Muldowney was somehow connected with it. However, notwithstanding that it operated from premises apparently owned by Mr. Muldowney's wife, issued promotional literature featuring Mr. Muldowney's photo, and on 1st October, 2007, entered into a signed agreement with Mr. Muldowney whereby he agreed to invest certain monies for the company and to guarantee the investment made, Mr. Muldowney avers in his affidavit evidence that Muldowney Property Services Limited was "[a] venture in which I had absolutely no involvement". It is impossible for the court to accept this averment when it is confronted with the foregoing evidence, including the signed and witnessed investment and guarantee agreement of l st October, 2007, between Mr. Muldowney and Muldowney Property Services Limited, an agreement that is signed for the company by Mr. Kalsi. Mr. Muldowney has sought to explain away this agreement by suggesting that it involved some manner of fraud upon him. Presented with an agreement that appears on its face to be valid and a claim that Mr. Muldowney has been the hapless victim of a fraud done at the initiative of individuals other than Mr. Kalsi, the court concludes that the agreement is what it purports to be and thus that there was a closer commercial relationship between Mr. Muldowney, Muldowney Property Services Limited and Mr. Kalsi than Mr. Muldowney has sought to portray in his evidence. There is suggestion in that evidence that when Mr. Padraic Muldowney became aware of Mr. Kalsi's business and, in particular, the name under which it was operating, he made complaint to the Financial Regulator, as the regulatory arm of the Central Bank and Financial Services Authority of Ireland, now the Central Bank of Ireland, was then known, and that this resulted in the company name being changed to MPS Global Limited at the behest of the Regulator. No mention is made in the affidavit evidence as to when these last events transpired but even accepting them as true, albeit curious, they do not explain away the agreement of 1 st October 2007, nor suggest that the conclusions drawn by this Court from the fact of that agreement and the various other facts referred to above are mistaken. So when Mr. Muldowney avers in his affidavit evidence that the cheque by which the outstanding loan monies were paid "was a personal cheque drawn on Mr. Kalsi's personal account… [and] I had no reason to...
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