Re: Sean Dunne (a bankrupt) -v- Yesreb Holding & anor: Celtic Trustees -v- Sean Dunne (a bankrupt), [2018] IEHC 745 (2019)

Docket Number:2016 10991 P: 2017 2146 P
Party Name:Re: Sean Dunne (a bankrupt), Yesreb Holding & anor: Celtic Trustees -v- Sean Dunne (a bankrupt)


COMMERCIAL[2016 No. 10991 P.]







COMMERCIAL[2017 No. 2146 P.]





Judgment of Mr. Justice Robert Haughton delivered on the 19th day of December, 2018

1. This judgment covers two rulings in respect of applications challenging privilege claimed in the above entitled related proceedings:-

(i) The section 21 challenge: in the proceedings second named in the title hereof (“the Celtic proceedings”) the plaintiff (“Celtic”) challenges litigation privilege claimed by the defendant (“the Official Assignee”) over the transcript of an examination carried out by the Official Assignee pursuant to s. 21 of the Bankruptcy Act 1988 of Ms. Caroline Crowley dated 28th October, 2014. In the proceedings first named in the title hereof (“the Lehane proceedings”) the defendant (“Yesreb”) joins with Celtic (as Notice Party) in mounting, inter alia, the same challenge to the same privilege claimed by the Official Assignee (as plaintiff in those proceedings) in respect of the same transcript.

(ii) In the proceedings secondly named in the title hereof, an application by the Official Assignee challenging litigation privilege claimed by the plaintiff, Celtic Trustees Limited (“Celtic”) in respect of three of five documents (“the Celtic documents”) listed in the affidavit of discovery of Suzanne McNulty sworn on 14th May, 2018, and also challenging legal advice privilege claimed by the plaintiff in respect of the other two Celtic documents.

(i) The section 21 challenge

2. The background to both sets of proceedings is that Sean Dunne (“the bankrupt”) was adjudicated a bankrupt in the US on his own application on 29th March, 2013, after the Ulster Bank had presented a petition in this jurisdiction in February 2013. He was later adjudicated bankrupt in Ireland on 29th July, 2013, and he remains in bankruptcy in both jurisdictions.

3. The bankrupt is the husband of Gayle Dunne (nee Killilea) and the father of John Dunne. The bankrupt’s estate was extensive and complex. Investigations by the Official Assignee disclosed that by Memorandum of Agreement dated 1st July, 2005, made between Caroline Crowley and Eamon Walsh, as vendors and the bankrupt as purchaser, the bankrupt agreed to purchase a property known as Walford, 24 Shrewsbury Road, Dublin 4 (“Walford”) from the vendors for the sum of €57,950,000.

4. The Lehane proceedings were commenced by Plenary Summons issued on 9th December, 2016. It is pleaded in the Statement of Claim that on 1st July, 2005, the bankrupt paid the said sum of €57,950,000 to the vendors, but the bankrupt did not then take a conveyance of Walford from the vendors in whom the legal title remained.

5. On 12th and 13th December, 2013 and on 28th February, 2014, the bankrupt gave evidence in the US in what are known as s. 341 examinations. On 13th December, 2013, he gave evidence that he had transferred a large proportion of his assets to his wife for love and affection. On 28th February, 2014, he gave evidence that he was buying Walford in trust for his wife and that she was the beneficial owner.

6. It is further pleaded in the Statement of Claim that the defendant Yesreb is a company having its registered office in Limassol, Cyprus and that it was incorporated on the instructions of the bankrupt and/or Gayle Dunne and/or John Dunne on 21st February, 2015, It is pleaded that by a purported Memorandum of Agreement dated 22nd March, 2013, made between the bankrupt as trustee for Gayle Dunne, and Yesreb, the bankrupt purported to agree to sell Walford to Yesreb for €14m. The Memorandum of Agreement was executed by Ross Connolly as attorney of the bankrupt. By Deed of Conveyance dated 29th March, 2013, Caroline Crowley and Aidan Walsh then conveyed Walford to Yesreb. The Deed of Conveyance records, inter alia, that pursuant to a Declaration of Trust dated 23rd July, 2005, the bankrupt declared and confirmed that he held the interest in Walford acquired on 1st July, 2005, in trust for Gayle Dunne, and that by a Nominee Agreement made between Matsack Nominees Limited and Gayle Dunne of 9th October, 2006, Gayle Dunne nominated Matsack Nominees Limited to hold the premises on her behalf under the terms of the Nominee Agreement. The receipt clause in the Deed of Conveyance recorded payment of the consideration of €14m to Gayle Dunne.

7. The Official Assignee contends that as of 1st July, 2005, the bankrupt was the beneficial owner of Walford and that he remained the beneficial owner as of 22nd March, 2013, and that the transactions whereby the property was purportedly transferred to Yesreb was part of a series of sham transactions and/or void under the Bankruptcy Acts 1988 – 2015.

8. Celtic was joined as a notice party to the Lehane proceedings because Celtic purported to purchase Walford from Yesreb on or about 6th September, 2016, for €14,250,000.

9. Yesreb delivered a full defence and counterclaim on 6th July, 2017, in which it pleads Yesreb conveyed Walford to Celtic by Deed of Conveyance dated 15th December, 2016. Yesreb further pleads that the issued share capital of Yesreb was held in trust for John Dunne. It pleads that the purchase of Walford by Yesreb was financed by way of loan made to it by Gayle Dunne, in the amount of €15m. It pleads that the 2013 purchase was subject to a side letter exchanged between Yesreb, John Dunne and Gayle Dunne, agreeing that in the event of any subsequent sale of Walford by Yesreb any proceeds of sale exceeding the amount outstanding and/or the loan agreement between Gayle Dunne and the defendant would be held on trust for four named members of the Dunne family, including John Dunne, as tenants in common.

10. Against this background, the Official Assignee in the Lehane proceedings was required to make discovery, and swore his affidavit of discovery dated 23rd May, 2018. This discloses, inter alia, a s. 21 Transcript of Caroline Crowley which is document reference number 1267982(ID) 187. The reason given by the Official Assignee for claiming privilege was as follows:-

“Internal Insolvency Service of Ireland Memo Re Caroline Crowley.

As of the date of the creation of the document, the Official Assignee was contemplating litigation in respect of the ownership of Walford. The query document was created for the dominant purpose of investigating or prosecuting said contemplated litigation.”

Further in the replying affidavit of Jennifer Fay sworn on behalf of the Official Assignee in the Lehane proceedings on 17th October, 2018, the privilege is advanced in the following terms:-

“7. …I say that having sought an independent legal opinion from Mr. William Abrahamson, B.L., the plaintiff has maintained a claim of privilege in respect of the said transcript in circumstances where the plaintiff conducted the interview in private and as part of his investigations into the property known as Walford.”

11. In a supplemental affidavit sworn by David Lynch on 18th October, 2018, on behalf of Yesreb, it was contested that the Official Assignee was entitled to assert privilege over this statutory examination (and two other section 21 examinations), or that the dominant purpose of the examination was litigation in relation to Walford, or that litigation was in contemplation at the time of the relevant examination.

12. The examination of Ms. Crowley took place on 28th October, 2014, whereas the Lehane proceedings were not commenced until the Plenary Summons issued on 9th December, 2016. There was, therefore, a gap in time in excess of two years between the interview/creation of the transcript and the commencement of the proceedings.

13. Mr. Lynch also contested the Official Assignee’s claim to privilege based on the fact that the examination was conducted in private in the offices of the Official Assignee, as opposed to within the confines of the court, as this “does not in any way alter the essential character of an examination conducted pursuant to s. 21 of the Act”.

14. The same issue as to privilege in respect of the transcript of Ms. Crowley’s s. 21 examination arises in the Celtic proceedings, commenced by Plenary Summons issued on 7th March, 2017, in which Celtic, claiming to be purchaser of Walford from Yesreb, seeks to establish good title to Walford. In that case, the Official Assignee also swore an affidavit of discovery on 23rd May, 2018, and claimed privilege over the transcripts of examinations ordered by the High Court under s. 21 of the Bankruptcy Act 1988. In a letter dated 24th July, 2018, Messrs. O’Grady’s Solicitors on behalf of the Official Assignee asserted this privilege in the following terms:-

“Regarding your query with respect to our client’s assertion of litigation privilege over the s. 21 transcript with Ms. Crowley, you might know that this is a recorded note/internal transcript of our client’s interview with Ms. Crowley pursuant to section 21. The Official Assignee is maintaining a claim of privilege in respect of the said transcript in circumstances where the plaintiff conducted the interview in private and as part of his investigations into Walford. The interview was conducted pursuant to a court order which enabled Ms. Crowley to avoid a public examination in open court. We have obtained an opinion from an independent counsel to this effect.”

15. Ms. Jennifer Fay of Grady’s Solicitors repeats this in an affidavit which she swore on 17th October, 2018 in the Celtic proceedings relying on the fact that “the interview with Ms. Crowley was conducted in private at the offices of the Official Assignee pursuant to an order of the court”. She also again relied on the “opinion from an independent junior counsel who advises that where the...

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