Cornec -v- Morrice & Ors, 2012 IEHC 376 (2012)

Docket Number:2012 4 FTE
Party Name:Cornec, Morrice & Ors
Judge:Hogan J.
 
FREE EXCERPT

THE HIGH COURT[2012 No. 4 FTE]

IN THE MATTER OF THE FOREIGN TRIBUNALS EVIDENCE ACT 1856, AND

IN THE MATTER OF CIVIL PROCEEDINGS NOW PENDING BEFORE THE COLORADO DISTRICT COURT OF THE CITY AND COUNTY OF DENVER CASE NO. 2008 CV 10169 (CONSOLIDATED WITH NO. 09 CV 8277)

BETWEEN/

JEAN CORNECPLAINTIFFAND

SUSAN MORRICEDEFENDANT/COUNTER CLAIMANT AND

JEAN CORNEC, MARIE LAWLOR, JOHN VINCENT FENNELLY AND SHEILA McCAFFREY

ADDITIONAL COUNTER CLAIMANT/THIRD PARTY PLAINTIFFAND

MARIE LAWLORADDITIONAL COUNTER

CLAIMANT/THIRD PARTY DEFENDANT AND

SUSAN MORRICE AND JOSHUA STEWARTADDITIONAL COUNTER

CLAIMANT/THIRD PARTY DEFENDANTS

JUDGMENT of Mr. Justice Hogan delivered on the 18th day of September, 2012

  1. It might seem surprising that litigation presently pending in the District Court of Denver, Colorado (“the Colorado litigation”) concerning a disputed share purchase contract of the shares of an oil company registered in St. Kitts and Nevis and which is currently operating in Belize should give rise to an application in this jurisdiction for evidence to be taken on commission of an investigative journalist and a former theologian who specialises in the investigation of cults. This, nevertheless, is the background to the present application under s. 1 of the Foreign Tribunals Evidence Act 1856 (“the Act of 1856”).

  2. While this application raises many difficult questions of evidence, procedure, conflict of laws and the scope of journalistic privilege, it is necessary first to set out the background to this application.

    The background to the Colorado litigation

  3. So far as can be gleaned from the Colorado pleadings, it seems that Ms. Morrice, a British national, is a petroleum geologist who, along with Mike Usher, a Belizean seismic surveyor, had long believed that Belize had (then undiscovered) oil reserves. To that end they set up a series of companies which are now controlled by International Natural Energy LLC (“INE”). A subsidiary of INE, Belize Natural Energy Ltd. (“BNE”) was granted a prospecting licence by the Belizean Government in January, 2003 and, to the surprise of industry observers, BNE discovered significant quantities of oil in June, 2005. Oil was then extracted and BNE commenced production and sale in January, 2006. In the words of Mr. Justice Bannister of the East Caribbean Supreme Court (Nevis Circuit) in SM Life Ventures v. Morrice, in a judgment delivered on July 16th, 2012, BNE has since “been astonishingly successful”. The decision in SM Life Ventures provides an invaluable guide to the background to the subsequent dissension within INE, since it concerns an oppression petition brought in the Nevis courts by the dissident shareholders in the company.

  4. One of the other dissident shareholders is the present plaintiff in the Colorado proceedings, Jean Cornec. Mr. Cornec is a mining engineer who had previously worked in Belize identifying its strategraphy. Mr. Cornec and Ms. Morrice were among the five original promoters of the company and were among a handful of Class A shareholders. It would be tedious and unnecessary to chart the dissension which afflicted the company, but many of these difficulties appear to date back to 2002 when Ms. Morrice was introduced to Mr. Tony Quinn by another Class A shareholder, Ms. Shelia McCaffrey.

  5. Although Mr. Quinn is not a party to the litigation (and, hence, not represented before me), it is fair to say that his career has engendered some controversy. While it would be inappropriate to dwell on these matters in circumstances where he was not represented before me, the evidence before me nonetheless suggests that he professes what many might regard as rather unorthodox religious views. His supporters appear to subscribe passionately to these views and often participate in what are described as “Educo” seminars run by Mr. Quinn and his close associates. In this regard and to anticipate somewhat, it may be observed that Ms. Tallant, an investigative reporter with the Sunday World newspaper has penned several articles in that newspaper in which she brands Mr. Quinn as a sham who exploits the religious sensibilities of the vulnerable for financial gain, often using hypnosis and other techniques subverting the will and reason. Mr. Cornec (and others) maintain that Ms. Morrice herself has come under what they see as the baneful influence of Mr. Quinn and that she herself has effectively gifted large amounts of stock to him, while also permitting him to use the assets of the company in a wholly unorthodox fashion. Thus, for example, Bannister J. found that some US$1.8m of INE money had been spent in the last few years on security and surveillance personnel, thus allowing Mr. Quinn to hire what the judge described as virtually his own “private army”.

  6. Bannister J. also rejected the suggestion that Mr. Quinn was an original Class A shareholder or that he had been validly appointed to the board. It nonetheless seems clear that several members of the Board at least endeavoured to transfer some US$15m. worth of stock to Mr. Quinn in 2007. Bannister J. held that a 2007 operating agreement was invalid, since it trenched on the ownership rights of Class A shareholders and, furthermore, had stipulated that Class B shares were freely transferable only to other members who had completed one of Mr. Quinn’s Educo training courses. This is a classic example of oppression of minority shareholders, since it is impossible to see what legitimate reason there might be for such an eccentric – and there is, I fear, no other word for it – requirement.

  7. Bannister J. also found that the company had operated what was described as a loan release programme, whereby INE lent the members funds to be set-off against future profits. This arrangement – unorthodox in itself – was found by the judge to have been operated in a highly partial and selective manner and was “designed to punish INE members of which or of whom Ms. Morrice or Mr. Quinn disapproved”.

  8. This forms the general background to the Colorado litigation. In essence, the dissension in the company was damaging to the members. The minority objected strongly to Mr. Quinn’s involvement and considered that his presence as an eminence grise within the company dissuaded outside investment and damaged the share price. From their perspective, they felt that they had no option but to get out of a company which, while very successful, was nonetheless being operated by Ms. Morrice and Mr. Quinn in a partial and autocratic fashion. So far as Ms. Morrice was concerned, the minority – represented by Mr. Cornec - were dissatisfied and determined to cause trouble and there was little alternative but to buy them out.

  9. This ultimately led to the agreement reached in August, 2008 whereby Ms. Morrice agreed to purchase Mr. Cornec’s shares in INE for a sum just under US$17.6m. This was financed by an immediate cash payment of $2m and a promissory note for just under $15.6. The loan notes were payable in 12 instalments. Ms. Morrice made two principal payments, but has made no further payments since October, 2008. To date, therefore, Mr. Cornec has received a sum in excess of $4.7m.

  10. At the heart of Mr. Cornec’s claim, therefore, is a claim for breach of contract for a liquidated amount just under $13m., together with other related claims. For present purposes, however, what is most critical are the terms of Ms. Morrice’s counter-claim. In essence her case is that Mr. Cornec immediately violated the terms of the share purchase agreement in a material respect, thus entitling her to repudiate the agreement.

  11. Critically, the agreement provided for a non-disparagement clause. Clause 5.4 of the Share Purchase Agreement accordingly provided that Mr. Cornec agreed that:-

    “He will not in any way, costs to be made or otherwise disclose any disparaging comment, statement of communication about purchaser [Ms. Morrice] or any director or member of INE or their respective affiliates (a “Negative Remark”) either verbally or in writing to any person, entity or authority.”

    The Share Purchase Agreement went on to provide that breach of the Clause is deemed to be a material misrepresentation and Clause 6.1.2 in particular provides that:-

    “Purchaser may offset any amounts due from Seller to Purchaser under this Section 6 against payments due under the Note.”

    Central to Ms. Morrice’s counterclaim, therefore, is the contention that, the non-disparagement clause notwithstanding, Mr. Cornec arranged or organised for critical comments to be made in the media and elsewhere aimed at herself, Tony Quinn and INE. Specifically, Ms. Morrice contends that Mr. Cornec’s attorney, Ms. Katrina Skinner, travelled to Ireland at his behest in November, 2008 and there met a number of individuals who were broadly antipathetic to Mr. Quinn and, by extension, to Ms. Morrice. Particulars were given in the pleadings as to the nature of these contacts from November, 2008 onwards. For present purposes it suffices to say that it is contended Ms. Skinner met with Mr. Garde and Ms. Tallant and that as a result of these contacts critical articles were published by Mr. Garde on the one hand and Ms. Tallant from the Sunday World, on the other.

  12. This may be a convenient point to say something about Mr. Garde and Ms. Tallant. Mr. Garde is a director of a charity known as “Dialogue Ireland”. He has a particular interest in new religious movements, especially those where there is reason to suspect that undue psychological pressures or influence have been used over adherents.

  13. Ms. Tallant is an investigative reporter with the Sunday World. As already indicated, she has written extensively about Mr. Quinn in that newspaper. Two articles in particular were the subject of some debate in the hearing before me. The first of these is from the 1st March, 2009, which contains a lengthy interview with a disaffected former follower of Mr. Quinn, Marie Lalor. Ms. Lalor contends that she was effectively indoctrinated...

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