Re Sean Dunne (a bankrupt) v Yesreb Holding
| Jurisdiction | Ireland |
| Judge | Mr. Justice Robert Haughton |
| Judgment Date | 19 December 2018 |
| Neutral Citation | [2018] IEHC 745 |
| Date | 19 December 2018 |
| Court | High Court |
| Docket Number | [2016 No. 10991 P.] |
[2018] IEHC 745
Haughton Robert J.
[2016 No. 10991 P.]
[2017 No. 2146 P.]
THE HIGH COURT
COMMERCIAL
Litigation privilege – Discovery – Confidentiality – Plaintiff seeking to challenge litigation privilege claimed by the defendant – Whether the defendant was entitled to assert litigation privilege
Facts: The plaintiff, Celtic Trustees, in the proceedings second named in the title hereof (the Celtic proceedings), challenged litigation privilege claimed by the defendant, Mr Lehane (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 Crowley dated 28th October, 2014. In the proceedings first named in the title hereof (the Lehane proceedings) the defendant, Yesreb Holding, joined 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. In the proceedings second named in the title hereof, the official assignee challenged litigation privilege claimed by the plaintiff, Celtic, in respect of three of five documents (the Celtic documents) listed in the affidavit of discovery of Ms McNulty sworn on 14th May, 2018, and also challenged legal advice privilege claimed by the plaintiff in respect of the other two Celtic documents.
Held by the High Court (Haughton J) that, having considered the transcript of the s. 21 interview with Ms Crowley, it was not satisfied that it was undertaken under conditions of confidentiality. On that ground Haughton J was not satisfied that the official assignee was entitled to assert litigation privilege. Haughton J held that the transcript must therefore be disclosed.
Haughton J held that, having considered the first Celtic document, Celtic was not entitled to rely on common interest privilege or litigation privilege and the email must be disclosed. Haughton J concluded that litigation privilege and common interest privilege did not attach to the second document. Haughton J was satisfied that the third document did not attract litigation or common interest privilege and must be disclosed. Haughton J directed disclosure of the fourth document but permitted the following redactions: (1) the contents of the commentary at para. 1. g(v); and (2) s. 12 headed “Costs.” Haughton J held that as the fifth document was a similar document to the fourth document then he would apply the same principles.
Judgment approved.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.’
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...
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