High Court: Wife of bankrupt refused permission to cross-examine official assignee on mareva injunction

About this case:

• Judgment:
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Background

Ms Gayle Dunne, wife of bankrupt Mr Sean Dunne, sought liberty pursuant to O. 40, r. 1 of the Rules of the Superior Courts and/or pursuant the inherent jurisdiction of the court to cross-examine the Official Assignee in relation to the contents of his affidavits to ground his application for a worldwide Mareva injunction against Ms Dunne restraining her from disposing of her assets up to a value of €50 million.

The Official Assignee challenged certain share transfers and shareholder loans which he alleged were void by virtue of the provisions of s. 59 of the Bankruptcy Act 1988 and/or by reason of s. 10 of the Irish Statute of Fraudulent Conveyances 1634 and various ancillary reliefs.

In her defence, Ms Dunne pleaded inter alia that she and the bankrupt entered into an agreement in March 2005, whereby, in consideration of her foregoing her career and waiving any future family law claims against future assets of the bankrupt and agreeing to raise the children of their marriage, the bankrupt agreed to transfer certain assets to her. Specifically:

“As a part performance of the 2005 agreement on the basis of assets in lieu as agreed, the Bankrupt purchased and the Defendant accepted a property at Shrewsbury Road, Ballsbridge, Dublin 4 on or about July 2005. The Shrewsbury Road property was then valued at €58,000,000…”

In his reply, the Official Assignee denied that the purchase of Walford and/or the alleged gifting of Walford from the bankrupt to Ms Dunne constituted an act of part performance of the 2005 agreement.

He also pleaded that if Walford was transferred to Ms Dunne in purported performance of the alleged agreements and the agreements were deemed void that he would seek an account and repayment of all properties or monies received allegedly in the implementation of the purported agreements.

The issue of the ownership of Walford and the legal and beneficial interests played a considerable role both in these proceedings and in the administration of the bankruptcy of the bankrupt.

Mareva injunction

In January 2017, the Official Assignee sought and obtained an interim worldwide Mareva injunction restraining Ms Dunne from reducing her personal assets of whatever nature or kind and however derived including all assets in which she has any direct or indirect legal beneficial or other interest below the sum of €50,000,000 pending further order of the court.

The Official Assignee explained that the application was brought because he came into possession of information about the alleged sale of Walford.

He averred:

“… Walford was nominally owned by Yesreb Holding Ltd… I believe Yesreb to be owned and controlled by the Bankrupt and Gayle Dunne (hereinafter collectively “the Dunnes”) and to have been incorporated by their agents and utilised by them solely for the purpose of putting Walford beyond the reach of the Bankrupts creditors as part of a preplanned scheme. I believe they have now sold the asset with a view to ensuring that if judgment is obtained in these proceedings it will be frustrated.”

He explained that although the bankrupt was adjudicated in 2013, significantly more information in relation to his circumstances became available to him in 2016 in the context of the Official Assignee’s application to postpone the discharge of the bankrupt from bankruptcy.

He also received information from various parties where applications were made pursuant to s. 21 of the Bankruptcy Act 1988 including solicitor’s files and information from the Revenue Commissioners in relation to the various transactions relating to Walford.

In April 2017, Ms Dunne issued the motion seeking an order to cross-examine the Official Assignee on his three affidavits and an order deeming the transcripts of two s. 21 hearings inadmissible or on the alternative an order directing the two parties to attend for cross examination by Ms Dunne’s counsel at the hearing of the application for the Mareva injunction.

Right to fair procedures

Ms Dunne pointed to the fundamental requirement that a plaintiff seeking a mareva injunction should make full and frank disclosure of all matters in his knowledge which are material for the judge to know – as per O’Mahoney v. Horgan 2 I.R. 411 at 416.

As the Official Assignee sought equitable relief, the court may scrutinise his conduct and refuse the relief if the conduct is such that the court forms the view that it falls below that which is required when seeking a Mareva injunction.

She said that she needed to cross-examine the Official Assignee to support her argument that the Official Assignee made incorrect or overstated averments of such gravity as would justify the court in refusing to grant a Mareva injunction even if one were otherwise warranted.

She stated that she needed to cross-examine the Official Assignee in relation to these issues in support of this argument.

Thus, she submitted that cross examination of the Official Assignee on his affidavit was part of her right to fair procedures before the court.

The High Court

Justice Costello held that Ms Dunne failed to establish exceptional circumstances why cross-examination should be permitted at the hearing of an interlocutory injunction.

There was a clear distinction to be drawn between this case and other cases where it was alleged that parties failed to disclose material which ought to have been put before the court when seeking ex parte relief.

Justice Costello stated that the court would be in a position to assess the culpability or the gravity of the matters identified by Ms Dunne upon the evidence before it.

Dismissing the application, Justice Costello stated that there was no merit to Ms Dunne’s arguments.