Re Custom House Capital Ltd (No.2)

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Hogan
Judgment Date28 October 2011
Neutral Citation[2011] IEHC 399
Date28 October 2011

[2011] IEHC 399

THE HIGH COURT

[No. 219 MCA/2011]
Custom House Capital Ltd (No.2), In Re
IN THE MATTER OF CUSTOM HOUSE CAPITAL LTD. (No.2)
AND IN THE MATTER OF AN APPLICATION UNDER ARTICLE 166 OF THE EUROPEAN COMMUNITIES (MARKETS IN FINANCIAL INSTRUMENTS) REGULATIONS 2007 AND IN THE MATTER OF AN APPLICATION BY THE CENTRAL BANK OF IRELAND

EUROPEAN COMMUNITIES (MARKET IN FINANCIAL INSTRUMENTS) REGS SI 60/2007 ART 166(1)

CUSTOM HOUSE CAPITAL LTD, IN RE UNREP HOGAN 18.7.2011 2011 IEHC 298

EUROPEAN COMMUNITIES (MARKET IN FINANCIAL INSTRUMENTS) REGS SI 60/2007 ART 171(1)

EUROPEAN COMMUNITIES (MARKET IN FINANCIAL INSTRUMENTS) REGS SI 60/2007 ART 171(2)(C)(II)

EUROPEAN COMMUNITIES (MARKET IN FINANCIAL INSTRUMENTS) REGS SI 60/2007 ART 171(3)

EUROPEAN COMMUNITIES (MARKET IN FINANCIAL INSTRUMENTS) REGS SI 60/2007 ART 171(2)

NATIONAL IRISH BANK LTD (NO.3), IN RE 2004 4 IR 186

EUROPEAN COMMUNITIES (MARKET IN FINANCIAL INSTRUMENTS) REGS SI 60/2007 ART 11

COMPANIES ACT 1990 PART XIII

COMPANIES ACT 1990 S12

COMPANY LAW

Liquidation

Investment firm - Power of court - Application for order for winding-up - Public interest - Whether in public interest to make order - In re Custom House Capital Ltd [2011] IEHC 298, (Unrep, Hogan J, 18/7/2011) and Re National Irish Bank Ltd (No.3) [2004] IEHC 287, [2004] 4 IR 186 approved - European Communities (Markets in Financial Instruments) Regulations 2007 (SI 60/2007), arts 11, 166, 171 and 172 - Companies Act 1990 (No 33), s 12, Part XIII - Investment Intermediaries Act 1995 (No 11) - Order for winding-up granted (2011/219MCA - Hogan J - 28/10/2011) [2011] IEHC 399

In re Custom House Capital Ltd (No 2)

Facts: On 15 July 2011 the High Court made an order pursuant to Article 166(1) European Communities (Market in Financial instruments) Regulations 2007 on the basis ofan ex parte application by the Central Bank of Ireland. Two inspectors were appointed to Custom House Capital Limited (CHC). The Court had delivered its reason for the appointment of the inspectors and the Court sought to provide reasons for the direction of a liquidation. CHC was authorised under Article 11 of the Regulations of 2007 to carry out the provision of asset, portfolio and investment management and it had 1,500 clients in the State. The inspectors found in their report that there had been systematic abuse of client funds. CHC did not dispute those findings.

Held by Hogan J. that there was no alternative to the immediate winding up of CHC in the public interest. CHC was exhibiting some of the classic characteristics of a Ponzi scheme. The risk of injustice to innocent investors was considerable, as none of the cash client statements could be taken at face value. The only solution was an immediate court sanctioned liquidation.

Reporter: E.F.

1

1. In the late evening of 15 th July, 2011, on the ex parte application of the Central Bank of Ireland, I made an order pursuant to Article 166(1) of the European Communities (Market in Financial Instruments) Regulations 2007 ( S.I No. 60 of 2007) ("the 2007 Regulations") providing for the appointment of two inspectors, George Treacy and Noel Thompson, to Custom House Capital Ltd. ("CHC"). Mr. Treacy is the head of the Investments Service Providers Supervision division of the Central Bank and Mr. Thompson is an authorised officer within that division. I shall refer to the Mr. Treacy and Mr. Thompson as the inspectors.

2

2. I gave the reasons for my decision to appoint the inspectors in a judgment delivered on 18 th July 2011: see Re Custom House Capital Ltd. [2011] IEHC 298. The purpose of this judgment is to explain the reasons why I directed the liquidation of CHC with immediate effect in accordance with the powers conferred on the Court by Article 171(1) of the 2007 Regulations.

The Inspectors' Report
3

3. Subsequent to the appointment of the inspectors, they proceeded immediately to investigate into and report on the affairs of CHC. With admirable efficiency they conducted an investigation and took evidence from the directors, officers and employees of CHC. The inspectors complied rigorously with the directions and time-lines suggested by this Court. This culminated in a comprehensive and most impressive report delivered to this Court on 19 th October, 2011.

4

4. At an inter-partes hearing on 21 st October, 2011, I directed that a redacted version of that report be published pursuant to Article 171(2)(c)(ii) of the 2007 Regulations. The redactions in question were necessary to ensure that neither the investors nor their bank account details should be identified. These are precisely the type of redactions which Article 171(3) envisages should be made by the Court.

5

5. Article 171(2) requires the Court to forward a copy of the report to the Central Bank. I further directed that a copy of the report should be sent to the Director of Public Prosecutions, Director of Corporate Enforcement, the Minister for Justice and Defence, the Revenue Commissioners and the Garda Commissioner. Each of these personages and entities have a clear and obvious interest in receiving a copy of the full report and its detailed appendices (together with the confidential report supplied to me by the inspectors in accordance with Article 171(1), the nature of which I will presently describe). This is line with the approach adopted by Kelly J. in Re National Irish Bank Ltd. (No.3) [2004] 4 I.R. 186 at 191-192.

The activities of CHC
6

6. CHC was authorised under Article 11 of the 2007 Regulations to carry out the provision of asset, portfolio and investment management services, as well as pensions advisory services. Prior to the entry into force of the 2007 Regulations, CHC had also been authorised under the corresponding provisions of the Investment Intermediaries Act 1995.

7

7. CHC acted as a promoter and investment manager to CHC Investment Property Funds plc ("CHC Property"). This company was authorised by the Central Bank as a qualifying investor designated investment company under Part XIII of the Companies Act 1990 ("the 1990 Act"). A qualifying investor fund is a non-UCITS collective investment scheme which targets institutional investors and high net worth individuals, with a minimum investment of €250,000, CHC has about 1,500 clients, the majority of...

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6 cases
  • Cornec v Morrice and Others
    • Ireland
    • High Court
    • 18 September 2012
    ...v GIBNEY & ORS 2012 1 ILRM 194 2011/15/3568 2011 IEHC 10 CUSTOM HOUSE CAPITAL LTD (NO 2), IN RE UNREP HOGAN 28.10.2011 2011/10/2277 2011 IEHC 399 NOVELL INC v MCB ENTERPRISES 2001 1 IR 608 2002 1 ILRM 350 2001/18/4904 SEYFANG v GD SEARLE & CO & ANOR 1973 QB 148 1973 2 WLR 17 1973 1 AER 2......
  • RE CUSTOM HOUSE CAPITAL Ltd ((in Liquidation))
    • Ireland
    • High Court
    • 9 October 2012
    ...of investment firms. The High Court (Hogan J.) had ordered that the company be wound up and appointed an official liquidator (see [2011] IEHC 399). The client funds controlled by the company were divided into three types; equities, property investments and cash funds. Included amongst the e......
  • Wallace v Cassidy
    • Ireland
    • High Court
    • 2 December 2016
    ...172 (1) of the MiFID Regulations for the winding up of the company with immediate effect; see Re Custom House Capital Ltd. (No. 2) [2011] IEHC 399. The applicant was appointed as official liquidator and, by operation of s. 33A of the Investor Compensation Act 1998, as amended, as administra......
  • Albaniabeg Ambient Sh.p.k. v Enel S.p.A. & Enelpower S.p.A
    • Ireland
    • Court of Appeal (Ireland)
    • 26 February 2018
    ...[2007] 3 I.R. 526 and my own judgments in Doyle v. Gibney [2011] IEHC 10, [2012] 1 I.L.R.M. 314 and Re Custom House Capital Ltd. (No.1) [2011] IEHC 399. It was for this reason that I indicated that the ex parte procedure did not and could not finally affect the rights of Mr. Garde and Ms. T......
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