Paul Mccann and Others v Trustees of Victory Christian Fellowship

• Jurisdiction: Ireland
• Judge: Ms. Justice Donnelly
• Judgment Date: 17 December 2014
• Neutral Citation: [2014] IEHC 655
• Judgment citation (vLex): [2014] 12 JIC 1705
• Court: High Court
• Date: 17 December 2014

[2014] IEHC 655

THE HIGH COURT

[No. 5608 P./2013]

McCann & Ors v Trustees of Victory Christian Fellowship

PAUL MCCANN AND PATRICK DILLON AND BANK OF SCOTLAND PLC

PLAINTIFFS

AND

THE TRUSTEES OF THE VICTORY CHRISTIAN FELLOWSHIP BEING BRENDAN HADE, SHEILA HADE AND GERRY BYRNE

DEFENDANTS

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC 2011 3 IR 615 2011/38/10818 2011 IEHC 117

IRISH BANK RESOLUTION CORP LTD & ORS v QUINN & ORS 2012 4 IR 381 2012/18/5283 2012 IEHC 510

THEMA INTERNATIONAL FUND PLC v HSBC INSTITUTIONAL TRUST SERVICES (IRL) LTD & ORS 2011 3 IR 654 2012 1 ILRM 250 2011/47/13324 2011 IEHC 357

FOLEY v BOWDEN & COMMISSIONER OF AN GARDA SIOCHANA 2003 2 IR 607 2004 1 ILRM 22 2003 IESC 38

RSC O.42 r36

Commercial Law – Company Trustees – Third Party Funding – Discovery and Disclosure

Facts: This case involved two motions by the third plaintiff, Bank of Scotland Plc (‘the Bank’). The Bank sought orders for the execution of a judgment of the High Court together with the costs of their action against the defendants. In the first motion against the defendants the Bank sought disclosure via the trustees of assets, income, liabilities, and a statement of the defendant” income and expenditure. In the second motion the Bank sought disclosure from the defendants in relation to how they funded and maintained the legal proceedings.

Held by Donnelly J: The court determined that the defendants had not engaged with the Bank after the judgment of the High Court and only engaged with them after the first motion had been issued. The court highlighted conflicts in the defendants” evidence and said the defendants had adopted a piecemeal approach to compliance with the High Court judgment. The defendants had referred to themselves in the present tense as trustees of VCF, yet they also stated that VCF ceased to exist when a receiver was appointed. They also stated that all VCF activities had ceased. However, VCF continued to receive direct debits from third parties. The court had concerns about whether VCF was still in operation. The donations made by third parties to pay the legal fees and expenses of the defendants were also of concern. The court ordered disclosure and discovery of assets and incomes qua trustees of VCF made by the defendants.

The court was of the view that the only issue to be addressed was the extent of the third party funding and the identification of the funders. The court stated that there was considerable doubt as to the source and purpose of third party funding. There was also a conflict as to whether the funding was made directly by third party funders or whether all funding had been channelled through the company. As a result the court ordered disclosure and discovery of a) all details relating to the legal and beneficial ownership of the Victory Conference Centre Ltd, and b) all correspondence between Victory Conference Centre Ltd, its servants or agents and the defendants, their servants or agents including details of all payments made from the company to the defendants, their servants or agents.

Introduction

1 1. In these two motions, the third plaintiff, Bank of Scotland Plc ("the Bank"), seek orders in aid of execution of the judgment of Gilligan J., perfected on 14 ^th January, 2014, awarding the Bank the sum of €18,758,224.88 together with the costs of their action against the defendants. The circumstances in which that Order was made are set out fully in the judgment of Gilligan J. delivered on 29 ^th November, 2013. It is unnecessary to detail the issues which arose in those proceedings. Suffice to say that the defendants are trustees of the Victory Christian Fellowship ("the VCF"). The principle aim of VCF was identified as the promotion of the Christian faith. Mr. Brendan Hade was identified as the senior pastor and a founding member of the fellowship. Sheila Hade is the wife of Mr. Hade and the other defendant is a founding member of VCF.

2 2. In the first motion dated 27 ^th February, 2014, the Bank seeks disclosure by the defendants qua trustees of assets, income, liabilities, etc., together with a statement of the defendants' current and anticipated income, identifying all sources of same, and the defendants' expenditure. The plaintiff seeks that such disclosure be made by way of affidavit and that discovery be made in aid of same.

3 3. The second motion dated the 1 ^st May 2004, arose out of information obtained since the date of issue of the first motion. In essence, in the second motion dated 1 ^stMay, 2014, the Bank seeks disclosure from the defendants as to the basis upon which the proceedings have been maintained and funded. The recovery of the plaintiffs' costs as against those third parties, once identified is also sought in the motion. However, the issue of recovery of costs from third parties was properly held over and is dependent on the outcome of this second motion and, more particularly, the outcome of any information received from the defendants should the order seeking disclosure be granted.

The Evidence

4 4. Christopher Arkinson, a director of a case management division within the Bank, detailed in an affidavit the post-judgment engagement between the Bank and VCF. In essence, he said that the defendants refused to co-operate with the Bank in the provision of an acceptable statement of affairs regarding the assets of VCF and failed to make any proposals to discharge the judgment. Those requests went unanswered and the first motion issued.

5 5. Shortly after the motion issued, a further statement of affairs dated 5 ^th March, 2014, was sent to the Bank's solicitors on 7 ^th March, 2014 on behalf of the defendants. The Bank's solicitors replied saying that that statement of affairs was deficient in a number of respects, including that it omitted bank account details and details of church subscriptions and membership. At a later point, a large volume of bank statements, for a variety of different church accounts, was sent by the defendants to the Bank's solicitors. The Bank submits that this statement of affairs does not assist in understanding the current position of VCF.

6 6. The solicitor for the defendants, in response to the criticism levelled at them by the Bank's solicitors, replied that "our clients are not in receipt of any subscriptions or membership revenues and Victory Christian Fellowship has ceased all activities since it was forced to leave its church at the Victory Centre referred to in previous correspondence". The defendants made further replies to the Bank's criticisms.

7 7. Mr. Brendan Hade swore an affidavit on 10 ^th April, 2014, on his own behalf and with the knowledge and consent of the second and third defendants. That affidavit makes the point that there was limited recourse to be had to the defendants in the context of the deed of mortgage involved. Counsel for the Bank has confirmed that the judgment obtained relates only to the defendants as trustees of VCF. In those circumstances, any orders that are sought would relate to the defendants only as trustees of VCF.

8 8. Part of Mr. Hade's affidavit dealt with issues relating to a stay that the defendants sought from the Supreme Court. However, such a stay was refused by the Supreme Court and, as of the hearing of the motions, the matter stood to be heard on appeal in either the Court of Appeal or the Supreme Court.

9 9. The Bank in a further letter dated 31 ^st of March, 2014, had listed six issues with the VCF response. In relation to the subscription and membership revenues, the Bank drew attention to disparities in respect of the various letters sent on behalf of the defendants. For example, the reference to the cessation of activities was said to be in conflict with the letter from the defendants' solicitors to the effect that a remnant of the congregation of VCF met for Sunday service at the Red Cow Hotel and the Alexander Hotel in Dublin each Sunday. They referred to various advertisements for these gatherings which appeared to be on a Facebook page relating to VCF.

10 10. Mr. Hade replied to these points in his affidavit. He said that many of these events had been previously booked and that while VCF was unable to organise the programme of activities for 2013, this did not prevent some such events from taking place as they were organised by former members of VCF on their own initiative.

11 11. In relation to VCF's website and Facebook account, Mr. Hade said that they were not under the control of himself or his fellow trustees. He stated that prior to the appointment of the receivers, the VCF's website and social media sites were widely used by VCF members to communicate about VCF matters and events. He said that other individuals had administrator access to VCF's website and social media sites. He pointed out that the contact details on the social media sites were given as the Victory Centre which has been in the receiver's possession since 17 ^th June, 2013, and that the landline operated by the VCF was also given but that landline was no longer operational.

12 12. Mr. Hade said that the VCF has not hosted, managed, promoted or run any events and that it was not therefore necessary to give their location, provide details of their attendance numbers, etc.

13 13. Other matters of contention concern the management and audit of accounts, the contents of the Victory Centre at Firhouse, Dublin, the bank accounts and various references to Victory Ireland Christian Fellowship by the trustees. It appears that Victory Ireland Christian Fellowship and Victory Christian Fellowship are one and the same entity. Mr. Hade says that the Victory Ireland Christian Fellowship is the formal name of the church.

14 14. A particular concern identified by the Bank in its letter of the 31 ^st of March, 2014, was...