Quinn & Others v Irish Bank Resolution Corporation Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Kelly |
| Judgment Date | 04 July 2012 |
| Neutral Citation | [2012] IEHC 261 |
| Court | High Court |
| Date | 04 July 2012 |
BETWEEN
AND
AND
[2012] IEHC 261
THE HIGH COURT
Bankruptcy - Bankrupt - Official assignee in bankruptcy - Assignee involved in litigation as defendant - Whether bankrupt entitled to submit defence where assignee has refused to defend claim - Bankruptcy Act 1988
Facts: The plaintiffs were relatives of the first named third party ("Mr. Quinn Sr.") and with him had made a number of share charges and guarantees in respect of substantial loans issued by the first defendant. Following well publicised financial difficulties, the first defendant had appointed the second defendant as receiver in respect of the charges of shares. The plaintiffs contended that the charges and guarantees should be declared invalid, and also sought to have the appointment of the second defendant declared invalid.
The first defendant had issued notices to the third parties, claiming inter alia an indemnity from Mr. Quinn Sr. in respect of the proceedings. The second defendant had signalled his intention to not defend that third party claim, and Mr. Quinn Sr. now sought leave to defend the matter personally.
Held by Kelly J, that the parties did not widely dispute the effect of the adjudication of bankruptcy on an individual. Mr. Quinn Sr. however made a number of additional submissions as to the right to defend the third party claim. Firstly, he submitted that as the third party claim involved serious allegations of dishonesty, the right to defend the claim was personal to him and had not been transferred to the second defendant. The Court found this submission was without merit having considered relevant case law. De Alwis v Kum [2010] NZHC 418 applied.
Mr. Quinn Sr. also contended that his constitutional right of access to the courts would be infringed if he was prevented from defending the third party claim. The Court considered that the granting of a judgment in the matter did not entail any finding of dishonesty, and that the bankruptcy legislation entailed that the protection of the bankrupt entailed costs to the bankrupt. Such costs would include not being able to defend third party claims such as the present.
Finally Mr. Quinn Sr.'s submission that not being able to defend the third party claim would also infringe his rights to a fair trial under art 6 of the European Convention on Human Rights. However, the Court found that the European Court of Human Rights had permitted restrictions on access to courts in cases such as this, but had criticised restrictions that were lengthy in time. This was not the same as the current case, and the restrictions did not infringe art 6. Luordo v Italy (app no 32190/96) (2005) 41 EHRR 26 distinguished.
Mr. Quinn Sr. therefore would be refused permission to defend the third party claim.
QUINN v IRISH BANK RESOLUTION CORP LTD UNREP CHARLETON 23.2.2012 2012 IEHC 36
EEC 1346/2000 ART 3(1)
BANKRUPTCY ACT 1988 S44
BANKRUPTCY ACT 1988 S61(3)
BANKRUPTCY ACT 1988 S61(3)(B)
BANKRUPTCY ACT 1988 S61(3)(C)
BANKRUPTCY ACT 1988 S61(3)(D)
BANKRUPTCY ACT 1988 S136
FLETCHER LAW OF INSOLVENCY 4ED 2009 PAR 7-008
HEATH v TANG 1993 1 WLR 1421
EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 6(1)
HOWARD v CROWTHER 1841 8 M & W 601
BECKHAM v DRAKE 1849 2 HLC 579
WILSON v UNITED COUNTIES BANK LTD 1920 1 AC 102
EXPARTE VINE 1878 8 CH 364
SIROKO v MURPHY 1955 IR 77
NEW ZEALAND BILL OF RIGHTS ACT 1990
ILLEGAL IMMIGRANTS (TRAFFICKING) BILL 1999 2000 2 IR 360
CONSTITUTION ART 26(5)
CONSTITUTION ART 26(10)
EAST DONEGAL COOP v AG 1970 IR 317
CONSTITUTION ART 40.3.1
CONSTITUTION ART 40.3.2
HAUGHEY, IN RE 1971 IR 218
CMSNTO INQUIRE IN TO CHILD ABUSE, IN RE 2002 3 IR 459 2003 9 1901
MAGUIRE v ARDAGH 2002 1 IR 385 2001/14/3995
BARLOW & ORS v FANNING & UNIVERSITY COLLEGE CORK (UCC) 2002 2 IR 593 2003 1 ILRM 29
FINCORIZ SAS v ANSBACHER & CO LTD 1987 2 592
YAP v CHILDRENS UNIVERSITY HOSPITAL TEMPLE STREET LTD 2006 4 IR 298 2006 IEHC 308
GOLDER v UNITED KINGDOM 1975 1 EHRR 524
HOLY MONASTERIES v GREECE 1994 20 EHRR 1
LUORDO v ITALY 2003 ECHR 372
1. Does Seán Quinn (Mr. Quinn), the first named third party, who is a bankrupt, have an entitlement to defend these third party proceedings brought against him in circumstances where the Official Assignee in Bankruptcy (the Assignee) has declined to defend them? That is the question that I have to answer.
2. The plaintiffs in the action are all members of Mr. Quinn's family (the family).
3. The first defendant was formerly known as Anglo Irish Bank Corporation (Anglo) and the second defendant (Mr. Wallace) was appointed as share receiver by Anglo on foot of a number of share pledges and charges on 14 th April, 2011.
4. In these proceedings, the family seek a series of declarations of invalidity in respect of charges of shares and personal guarantees made between Anglo and members of the family. The charges and the guarantees were given in respect of borrowings which had been made on a colossal scale. The family also seek declarations of invalidity concerning the appointment of Mr. Wallace as share receiver.
5. It is not necessary for me to dwell in any detail upon the extremely serious allegations which are made by the family against Anglo in support of their claim for declaratory relief. The allegations have already been synopsised by Charleton J. in a judgment in these proceedings which he delivered on 23 rd February, 2012, [2012] IEHC 36. He said:-
"If a series of financial transactions can be called horrific, that epithet would apply to the allegations made as plaintiffs by the Quinns against Anglo and against Seán Quinn."
6. Paragraph 74 of the family's statement of claim pleads as follows:-
"The sole or dominant motivation of Anglo in making these advances was to support and maintain its share price. Anglo senior management, including its chief executive, supported and encouraged the [contracts for difference] position built up in Anglo shares for the said purpose (including the allocation by Anglo of a significant number of Anglo shares as part of a share placing on the 1 st February, 2007, proportionate to what Mr David Drumm estimated to be Bazzely's total exposure to Anglo at that time). The requirements of Anglo in this regard were further motivated by Anglo's own knowledge that the affairs of the bank were being, and had been, managed in a fashion that paid no, or no adequate, heed to the requirements of corporate governance or the interests of its shareholders. It is the plaintiffs' case that insufficient, misleading and inaccurate information was being made available to brokers, shareholders and potential investors, some of the details which are set out below."
7. On 27 th July, 2011, Anglo delivered a defence and counterclaim. Mr. Wallace delivered a defence on the same date. All of the wrongdoing alleged against Anglo is denied and there is a counterclaim against each member of the family.
8. On 10 th October, 2011, I granted Anglo leave to issue and serve third party notices on each of the third parties.
9. The third party notice served on Mr. Quinn claims an indemnity from him in the following terms:-
"[Anglo] claims against you an indemnity against the plaintiffs' claims, insofar as same are grounded on an assertion that securities in the form of share charges and personal guarantees that were obtained by the first defendant from the plaintiffs and which are the subject of the proceedings between the plaintiffs and the first defendant were invalid or otherwise unenforceable, on the grounds that same were obtained in circumstances of improvidence, undue influence, unconscionability or lack of autonomy, to such extent as the court shall determine to be just and equitable, on the grounds that any loss and damage as was allegedly sustained by the plaintiffs (all of which is denied) was caused wholly or alternatively was contributed to by reason of your breach of warranty of authority and/or negligent misstatement and/or negligent misrepresentation and/or deceit."
10. The statement of claim fleshes out the factual basis upon which this claim is made. But it goes further. In addition to claiming an indemnity it also seeks damages for misrepresentation, breach of warranty of authority, fraud, negligence and conspiracy.
11. On 6 th December, 2011, Mr. Quinn delivered a full defence to this statement of claim.
12. Meanwhile, Mr. Quinn, on 10 th November, 2011, presented a bankruptcy petition to the High Court of Northern Ireland seeking his adjudication as a bankrupt. The petition was heard by the Master in Bankruptcy who acceded to the application. In his petition, Mr. Quinn asserted that although not then a resident of Northern Ireland, his centre of main interest was at Derrylin, Co. Fermanagh.
13. On 17 th November, 2011, Anglo filed an application in the High Court in Northern Ireland to annul the bankruptcy on the basis that that court lacked jurisdiction to open main bankruptcy proceedings under Article 3(1) of EC Regulation 1346/2000. It asserted that the ex parte bankruptcy order had been obtained through misrepresentation and/or non-disclosure.
14. Anglo's application came for hearing before Deeny J. who reserved judgment. On 10 th January, 2012, that judge, in a comprehensive judgment, acceded to Anglo's claim and annulled Mr. Quinn's bankruptcy in Northern Ireland.
15. Thereafter, Anglo...
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