Summary judgment granted against bankrupt defendant for admitted debts, adjourned for disputed balance pending Official Receiver's input.

Neutral Citation Number: [2011] IEHC 428

THE HIGH COURT

2011 4510 S

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED

PLAINTIFF

AND

SEÁN QUINN

DEFENDANT

2011 4511 S

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED

PLAINTIFF

AND

SEÁN QUINN

DEFENDANT

2011 4513 S

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED

PLAINTIFF

SEÁN QUINN AND PATRICIA QUINN

DEFENDANTS

JUDGMENT of Mr. Justice Kelly delivered on the 23rd day of November, 2011

Introduction

1. These are applications for summary judgment against Seán Quinn (the defendant) who is the sole defendant in the first two

actions and a co-defendant with his wife Patricia in the third action listed above.

2. On any view, the amounts involved are enormous. In the first action, the amounts claimed are (a) €1,050,515,072.78; (b)

US$808,201,435.07; and (c) JPY¥13,818,511,901.

3. These sums are alleged to be due on foot of a deed of guarantee and indemnity of 22nd November, 2007. By that instrument, the

defendant guaranteed the liabilities of Quinn Finance in respect of borrowings made by it from the plaintiff to finance ventures in,

inter alia, Russia and India.

4. The second action seeks to recover a total sum of €372,236,748.15, due on foot of four deeds of guarantee and indemnity

executed by the defendant. The first was dated 14th January, 2003, in respect of monies due and owing by Quinn Group Properties

Limited. Two are dated 6th January, 2005, in respect of all liabilities of Quinn Hotels Praha A.S. and in respect of Shamrock

Investments Properties Praha A.S. The fourth is dated 7th February, 2007 and is in respect of money advanced by the plaintiff to

Slieve Russell Hotel Property Limited.

5. The third claim, although large, is much less than the other two. It is in respect of a sum of €3,049,361.33 being monies allegedly

borrowed by the defendant together with his wife.

History of Proceedings

6. All three sets of proceedings began on 2nd November, 2011 and were the subject of motions returnable for hearing on 14th

November, 2011. The motions in each case sought to transfer the litigation to the Commercial List and also sought summary judgment

for the respective amounts.

7. On Friday, 11th November, 2011, the defendant petitioned the High Court of Justice in Northern Ireland seeking to have himself

adjudged bankrupt. That petition was granted. It was granted on the basis of an affidavit sworn by the defendant.

8. In that affidavit, the defendant swore:-

“Although I am not now resident in Northern Ireland, my centre of main interest, being the place where I conduct the

administration of my interests, is located within the United Kingdom, at Gortmullan, Derrylin, Co. Fermanagh, Northern

Ireland BT92 9AU, which is the registered office and place of business of the companies in the Seán Quinn Group of which

I have been a director and from where I have performed my duties and conducted my business affairs. I am domiciled

for taxation purposes in Northern Ireland and my tax affairs are conducted within the United Kingdom under UK National

Insurance and Tax References.”

9. The order made by the High Court in Northern Ireland recites as follows:-

“And the court being satisfied that the EC Regulation does apply declares that these proceedings are main proceedings

as defined in Article 3 of the EC Regulation.”

(The Regulation is Council Regulation 1346/2000 on insolvency proceedings – hereinafter “the Regulation”)

The Hearing of Monday 14th November, 2011

10. At the hearing of the three motions on 14th November, the defendant was represented by senior counsel and solicitor. Counsel

accepted that he had a difficulty in seeking to represent the defendant since on his own petition he had been adjudicated a bankrupt

in Northern Ireland. He indicated that there had been contact with the Official Receiver there but that he was not himself appearing

for the Receiver.

11. Having heard both sides, I made an order transferring all three cases to the Commercial List pursuant to O. 63A, r. 1(a)(i) of the

Rules of the Superior Courts. I did not, however, proceed to enter summary judgment against the defendant. Rather, I took the view

that given the very recent involvement of the Official Receiver, I ought to extend him the courtesy of having an opportunity to

consider his position and to decide whether or not he wished to participate in these proceedings. Whilst the plaintiff indicated its

anxiety to proceed, counsel on its behalf said if the court thought that it might be appropriate to allow the Official Receiver a short

time to consider the position, no strenuous objection would be raised. In the course of my ruling, I said this:-

“I think in the circumstances, it would be more prudent to give a short period of time, in which the Official Receiver, if

he wishes to do so, can come into this jurisdiction and seek whatever orders are appropriate or he may decide not to do

so. Indeed that may well be the course the Receiver takes. I propose to grant a short adjournment so as to afford that

courtesy to a court officer of an adjoining jurisdiction, where there is mutual respect between the courts of this State

and the courts of Northern Ireland. I would not wish it to be said that the Official Receiver was taken short by any order

that I might make today. So I do it in that context, with a view to ensuring that the mutual respect between our

respective courts is observed and that the Official Receiver gets at least an opportunity to consider the position.”

12. I should also point out that during that hearing, counsel for the plaintiff made it clear that it was its intention to apply to the High

Court in Northern Ireland to seek to have the bankruptcy order in respect of the defendant annulled. The basis for such an application

was the assertion that, contrary to what was sworn to by Mr. Quinn in the affidavit grounding his petition for bankruptcy, his centre

of main interest was, in fact, in this State. An affidavit was placed before me setting out a great deal of factual information which the

plaintiff contends supports such a view. It is of course no part of my function to express any view on this question, still less to

adjudicate upon it. That is entirely a matter within the jurisdiction of the High Court of Justice in Northern Ireland.

The Hearing on 21st November, 2011

13. The plaintiff’s application for summary judgment recommenced on this day. The Official Receiver was represented by counsel

different to those who represented the defendant on 14th November, 2011.

14. In the course of the week which had elapsed a number of things had occurred.

15. First, the plaintiff did indeed apply to the High Court of Justice in Northern Ireland seeking to have the defendant’s bankruptcy

annulled. That application is listed before a Judge in Chambers I am told on 24th November, 2011, although the motion paper refers to

25th. Counsel for the Official Receiver informed me that on that occasion there is no question of the substantive application being

heard. Rather, directions will be given for such a hearing. It is not possible to be certain but the likelihood is that such hearing will not

be heard or determined prior to Christmas.

16. Second, the defendant’s bankruptcy in Northern Ireland was the subject of an application to the Official Assignee in Bankruptcy in

this jurisdiction. On 18th November, 2011, the defendant’s name and appropriate information was inserted on the Personal Insolvency

Register maintained by the Official Assignee in Bankruptcy in this jurisdiction pursuant to the European Communities (Personal

Insolvency) Regulations 2002.

17. Third, correspondence was exchanged between solicitors acting for the Official Receiver and the plaintiff’s solicitor.

The Correspondence

18. In a letter of 18th November, 2011, the Official Receiver’s solicitors set out the basis upon which they would ask this Court to

adjourn the application for summary judgment until a date after 24th November, 2011. The basis for such a request was a lack of any

perceived injustice to the plaintiff by such an adjournment and an apprehension that should the plaintiff press ahead while the

bankruptcy order in Northern Ireland remained extant then the plaintiff would “effectively seek to cut across the jurisdiction of the

High Court of Justice in a manner which is not permissible”.

19. The letter made it clear that if the bankruptcy order in Northern Ireland is valid then the plaintiff will have to prove its debt in

accordance with the bankruptcy procedure in that jurisdiction. The letter went on to say:-

“We respectfully suggest that your client is not entitled to oust the proof of debt process by means of a summary

judgment application in this jurisdiction. If the bankruptcy order is annulled of course, then these proceedings will

continue unimpeded after what will have been a relatively brief hiatus.”

20. The letter went on to say that if the adjournment request was not acceded to then the Official Receiver would intend to apply for

an adjournment in any event so as to enable him to present an application to stay these proceedings.

21. The plaintiff’s solicitors responded by letter dated the same date.

22. Insofar as it is relevant it stated:-

“We do not accept that by obtaining judgment our client will ‘cut across the jurisdiction of the High Court of Justice in a

manner which is not permissible’. It is accepted by all parties that the adjudication in Northern Ireland does not result in

an automatic stay of proceedings against the bankrupt. Accordingly, the Bank is entitled to proceed with the application

for summary judgment.

In your letter you indicate that maintaining the status quo by adjourning the within proceedings will not prejudice the

Bank. This is not in fact the case. As you will be aware the Bank’s application to set aside the bankruptcy order is

returnable for the High Court in Northern Ireland on Thursday 24th November, 2011. It is unlikely that any substantive

order will be made on this date and it could take a number of months for the application to be finally determined.

Clearly, an adjournment for an indeterminate period is not acceptable and could be prejudicial to the Bank.”

23. I pause here to point out that the application to the High Court in Northern Ireland to annul the bankruptcy is unlikely to be heard

before Christmas but there could also be an appeal with leave of that court from such an order to the Court of Appeal.

24. The letter continued:-

“The Insolvency Regulation recognises that local creditors may commence secondary or territorial proceedings in any

jurisdiction where a creditor has an establishment. The secondary proceedings (which will be bankruptcy proceedings in

this case) run in parallel with the main proceedings. In the event that the Bank sought to commence secondary

proceedings it must be in a position to establish that a liquidated sum is due and owing from Mr. Quinn. A judgment

against Mr. Quinn would greatly assist the Bank in initiating secondary proceedings in this jurisdiction.

Further, in the event that the Bank’s application in Northern Ireland is ultimately successful and the bankruptcy

adjudication is annulled, it is not acceptable to the Bank that Mr. Quinn’s status will revert to ‘normal’ as it would be

open at that stage to any creditor to seek to execute against Mr. Quinn’s assets. Accordingly, it is in the interests of all

creditors that the Bank would be in a position to immediately proceed with the bankruptcy applications.”

25. Finally, in that letter, the solicitors for the plaintiff accepted that regardless of the outcome of this application the plaintiff would

have to prove its debt in the Northern Irish bankruptcy process if the bankruptcy order stands. There is thus no question of any

attempt to “oust the proof of debt process” in Northern Ireland by a judgment being obtained here. However, the plaintiff perceives

that a judgment in these proceedings would result in certainty in relation to the claim and assist the Official Receiver in admitting the

bank’s claim.

26. A good deal of the time on Monday of this week was spent in agitating the issues which have been outlined in that

correspondence but before considering them there are a number of matters which ought to be alluded to in respect of the merits of

the case.

The Merits

27. The test to be applied on an application for summary judgment is well established in the jurisprudence of the Supreme Court and

this Court. The most recent enunciation of it is to be had in the decision of the Supreme Court in Dankse Bank Trading as National

Irish Bank v. Durkan New Homes & Ors [2010] IESC 22. The test can be distilled down to a simple question. The question is: is it very

clear that the defendant has no case? If a defendant can demonstrate an arguable defence then summary judgment should be

refused and the action sent to plenary hearing.

28. In the present case, there is no suggestion of any defence on the part of the defendant. The Official Receiver has not sought to

propound any such defence despite the adjournment of the application for summary judgment which was granted on 14th November,

2011. Rather he seeks a further adjournment until after the hearing in Belfast on Thursday and then may consider making an

application to this Court for a stay on the instant proceedings.

29. This adjournment application is strongly opposed by the bank which presses for judgment against the defendant.

30. On the merits, it must be noted that insofar as the first case is concerned the defendant has, in the affidavit which he presented

to the High Court in Northern Ireland, admitted to a liability of US$219,901,910.64.

31. In the second case, he has in the course of that affidavit admitted to owing a total sum of €253,951,810.67.

32. Thus, insofar as these amounts are concerned not merely is there no arguable defence presented but there is an admission under

oath by the defendant that he owes those sums.

33. Insofar as the balance of the first claim is concerned, the plaintiff makes a powerful case as to it’s entitlement to summary

judgment. The guarantee which the defendant executed provides at clause 2, inter alia, that the defendant unconditionally and

irrevocably guaranteed to the plaintiff the due and punctual payment and discharge in full of all monies and liabilities in whatever

currency denominated which would be owing or incurred by the borrower to the plaintiff. Furthermore, the defendant agreed as a

primary obligation to indemnify the plaintiff on demand from and against the various instances which are set out at clause 2.1.2.

34. At clause 10 of the deed, the defendant irrevocably waived the right to interpose any defence based upon any statute of

limitations or any claims of laches or set off or counterclaim of any nature or description. He furthermore agreed that a certificate in

writing signed by any duly authorised officer of the plaintiff stating that the amount at any particular time due and payable by the

defendant to the plaintiff would be conclusive evidence as against him save in the case of manifest error.

35. A certificate was issued on 2nd November, 2011, certifying the amount claimed in the summary summons. Furthermore, the

general conditions of the plaintiff provide that all the payments of the borrower were to be made without set off or counterclaim.

36. Insofar as the second case is concerned, the guarantee and indemnity of 14th January, 2003, in respect of Quinn Group

Properties Limited provides an irrevocable and unconditional guarantee to pay the plaintiff on demand in respect of the obligations of

the borrower. Furthermore, under clause 2.2, the defendant undertook as a principal obligor and as a separate and independent

obligation and liability to irrevocably and unconditionally indemnify the plaintiff in full. In addition, the defendant agreed under clause

3.2 that none of his liabilities under the guarantee would be reduced, discharged or otherwise adversely affected by any invalidity,

illegality or unenforceability, irregularity or frustration of any actual or purported obligation of the principal debtor and any other

person. Finally, under clause 3.3, the defendant agreed that the obligations and liabilities expressed to be undertaken by him as

guarantor were those of a primary obligor and not merely as a surety.

37. In respect of the guarantee of 6th January, 2005, concerning Quinn Hotels Praha A.S., not dissimilar obligations were undertaken.

The guarantee was not merely a guarantee but also an undertaking of a primary obligation to indemnify the bank. Under clause 4.2, it

was expressly provided that the liability of the defendant under the guarantee would be that of a sole or primary obligor and not

merely as a surety.

38. The guarantee and indemnity of 6th January, 2005, concerning the borrowings of Shamrock Investment Properties is in the same

terms.

39. The guarantee and indemnity of 7th February, 2007, in respect of Seán Quinn Properties Limited is an unconditional and

irrevocable guarantee in respect of the obligations of the borrowing company. Again, the liability of the guarantor is as a sole or

primary obligor and not merely as a surety.

40. Given these tightly drawn instruments which were executed by the defendant, it is difficult to see how any defence to them can

arise and indeed no defence is sought to be propounded by the Official Receiver, at least at this juncture.

41. I must now turn to the receiver’s application for an adjournment of the motion and the exercise of my discretionary jurisdiction as

to whether or not to grant it. Before doing so, I ought to set out a number of issues which are not seriously in dispute between the

parties.

Issues

42. Pursuant to Article 3(1) of the Regulation, the courts of Northern Ireland have jurisdiction in the defendant’s bankruptcy unless

and until that bankruptcy is annulled. All questions touching upon his bankruptcy fall to be dealt with the High Court of Northern

Ireland. Questions as to whether or not the defendant had his centre of main interests in Northern Ireland are exclusively for

determination by the courts there.

43. The exercise being undertaken by me in these cases is entirely different to that which will be undertaken by my counterpart in

Northern Ireland.

44. The defendant has an establishment in this jurisdiction (see Article 2(h) of the Regulation) and therefore the courts of this State

would be entitled to open secondary proceedings.

45. The opening of the bankruptcy proceedings in Northern Ireland does not result in an automatic stay in court proceedings. At

present there is no application for a stay before this Court. There is an application for an adjournment until after the directions

hearing in Belfast on Thursday. Counsel for the Official Receiver did, however, appear to accept that there was a likelihood that an

application for a stay might be made to this Court next week. The length of that stay would be until such time as the plaintiff’s

application in Northern Ireland seeking the annulment of the bankruptcy was finally determined. It would be at least a period of weeks

and could be months.

The Adjournment

46. At the outset I wish to state that I am quite satisfied that no decision which I make on this application whether in favour of the

plaintiff or the Official Receiver has or could have the effect of “seeking to cut across the jurisdiction of the High Court of Justice in a

manner which is not permissible” (see Official Receivers solicitors letter of 18th November, 2011). If I thought for a moment that any

order that I might make could have such an effect, I would not make it. Comity of Courts requires that this Court respect the

jurisdiction and entitlement of the courts of Northern Ireland to deal with all questions properly falling within their jurisdiction without

any hint of interference by the courts of this State. I have no doubt but that a similar respect would be demonstrated by the

Northern Irish courts to the courts of this State.

47. This application for summary judgment does not in the slightest way interfere with the Northern Irish court in adjudicating upon all

matters pertaining to the defendant’s bankruptcy. If the bankruptcy is annulled that is an end of the matter as far as the courts in

Northern Ireland are concerned. If on the other hand it stands, then the plaintiff will have to follow the prescribed procedures for

proving its debt in accordance with the law and practice of Northern Ireland. That, I am told, will involve a proof of debt sitting and

whatever standard of proof that has to be achieved in that regard is that prescribed by the law of Northern Ireland. The plaintiff

accepts this to be the case.

48. I am thus satisfied that the contention made to the effect that any order which I might make in favour of the plaintiff would

interfere in an impermissible way with the jurisdiction of the High Court of Justice in Northern Ireland is without substance.

49. I wish to afford to the Official Receiver, the courtesy which I referred to in granting the adjournment on 14th November, 2011. I

would, therefore, not wish to take any step which might be seen as taking him short or placing him in any position of embarrassment

or disadvantage. It was for that reason that I adjourned the matter until Monday last. My approach in that regard continues.

50. Despite the efforts of the Official Receiver’s counsel, I am unable discern any disadvantage which might be suffered by him if I

were to proceed to enter summary judgment against the defendant today.

51. On the other hand I do identify some disadvantage being suffered by the plaintiff should I refuse to do so. It is, of course, true

that the plaintiff could not seek to execute against the assets of the defendant while his bankruptcy stands. His assets are not

therefore in any way prejudiced.

52. There is, however, as I perceive it, an advantage to the plaintiff if judgment is entered today. Such a judgment may be of some

assistance in any proof of debt sitting which may take place in Northern Ireland if the bankruptcy there stands. But much more to the

point, if the bankruptcy is annulled then such a judgment can be utilised to execute against the assets of the defendant. It may also

be utilised as a basis for a bankruptcy summons in this jurisdiction (although I accept that it is not an essential pre-requisite to such

an application (see Harrahill v. Cuddy (Unreported, Supreme Court, 2009)).

53. I must furthermore bear in mind that insofar as a portion of the plaintiff’s claim is concerned in two of the actions, the defendant

has admitted under oath in Northern Ireland that he has a liability in respect of them. It would require extraordinary circumstances

before I could refuse a plaintiff judgment for a sum which is admitted to be due by a defendant. In the present case, it is accepted

that the bankruptcy in Northern Ireland does not give rise to a stay of these proceedings. There is no stay application before the

court despite the adjournment which I granted a week ago. The granting of judgment for that sum does not in any way interfere with

or trespass upon the undoubted jurisdiction of the Northern Irish High Court to deal with all matters pertaining to the defendant’s

bankruptcy.

54. Insofar as the balance of the respective claims is concerned, I am very inclined to enter judgment for the plaintiff in respect of

those sums also. As I have already pointed out there is a powerful case made for summary judgment. Nothing has been suggested by

way of defence. However, in keeping with the courtesy which I would wish to extend to the Official Receiver and in the absence of a

clear admission of liability in respect of these sums, I propose to stand over the applications for summary judgment in respect of

those balances until next Monday. This affords the Official Receiver another opportunity to consider whether he wishes to participate

further in these actions or to apply for a stay of these proceedings insofar as those balances are concerned. Whilst I do not expect

him to have such an application set down for hearing by Monday next, I will require firm information to be provided to the court as to

his intentions in that regard. If it is his intention to apply for a stay, then there will have to be explained to me the basis for such an

application and what he perceives to be the advantage to be gleaned by it. To date, I have not heard of any.

Disposal

55. I enter judgment in favour of the plaintiff on the first claim in the sum of US$219,901,910.64. I enter judgment in respect of the

second claim for the sum of €253,951,810.67. I adjourn until next Monday the application for summary judgment in respect of the

balance claimed in the first two cases and for the full amount in respect of the third case.