High Court refuses receiver's application to vary Mareva injunction living expenses orders and requires updated means statements.

Neutral Citation: [2016] IEHC 357

THE HIGH COURT

COMMERCIAL

[2011 No. 5843 P.]

BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED,

QUINN INVESTMENTS SWEDEN AB AND LEIF BAECKLUND

PLAINTIFFS

AND

SEÁN QUINN, CIARA QUINN, COLETTE QUINN, SEÁN QUINN JR., BRENDA QUINN, AOIFE QUINN, STEPHEN KELLY, PETER

DARRAGH QUINN, NIALL MCPARTLAND, INDIAN TRUST AB, FORFAR OVERSEAS SA, LOCKERBIE INVESTMENTS SA, CLONMORE

INVESTMENTS SA, MARFINE INVESTMENTS LIMITED, BLANDUN ENTERPRISES LIMITED, MECON FZE, CJSC, VNESHKONSALT,

OOO STROITELNYE TEKHNOLOGII, OOO RLC-DEVELOPMENT, KAREN WOODS,

DEFENDANT

JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 21st day of June, 2016

1. In this application, the receiver over the assets of the second to ninth named defendants and the twentieth named defendant

(“the personal defendants”) seeks to vary orders of the High Court dated 31st July, 2012, (“the living expenses order”) which varied

the orders of the court dated 28th June and 25th; 30th; and 31st July, 2012 (“the Mareva injunction”) and seeks:-

(a) a direction that the amounts of monthly living expenses specified for the personal defendants in the living expenses

order be discharged from the excluded account for each relevant defendant;

(b) a direction that the personal defendants not be entitled to call for the transfer of any sum under the living expenses

order until the sums in the excluded accounts be dissipated; and

(c) a direction that, in the event that Karen Woods seeks the permission of the receivers to liquidate her shareholding

held by Jeffries, the proceeds of sale must be paid into the receiver account as an asset captured by the Mareva

injunction.

2. The receiver further seeks that the personal defendants provide updated statements of means including (a) assets; (b) liabilities;

(c) monthly income; and (d) monthly expenditure.

3. The personal defendants have a motion due for hearing before the court on 26th July, in which they seek to discharge the receiver

and to vary the Mareva injunction so as to exclude the SMC salaries and, in the case of Ciara Quinn, her nurse on call salary. To some

extent, the outcome of that motion may be affected by the decision given in this application.

4. There is agreement between the parties that the purpose of the Mareva injunction is preservative and not punitive. The court was

taken through a large number of interlocutory orders that have been made since the commencement of these proceedings and, in

particular, since the Mareva injunction was first granted on 14th June, 2012, and extended by further orders up to and including 31st

July, 2012. Since that date, a number of orders have been made varying the terms of the Mareva injunction having regard to the

circumstances of the personal defendants and their need to meet day to day living expenses.

5. By order of Kelly J. dated 25th July, 2012, the personal defendants were restrained from reducing their assets below the sum of

€50,000,000.00, subject to an appropriate arrangement at the discretion of the court permitting expenditure on reasonable living

expenses and legal fees. The order provided for Declan Tate of RSM Farrell Grant Sparks to be appointed as receiver over the assets

of the personal defendants and he was given certain powers set out in that order including:-

(i) power to take possession and control of and to secure and to collect all assets in or out of the jurisdiction, including

but not limited to shareholdings of Ciara Quinn, Colette Quinn, Brenda Quinn, Aoife Quinn, Stephen Kelly and Niall

McPartland; and

(ii) power to take steps to secure any credit balances in any bank accounts in or out of the jurisdiction in the names of

Ciara Quinn, Colette Quinn, Brenda Quinn, Aoife Quinn, Stephen Kelly and Niall McPartland or any aliases or bank accounts

held on their behalf.

6. The powers set out in (i) and (ii) above, excluded:-

(a) the private dwellings and mortgage accounts listed in Schedule 1 to the order and also excluded the bank accounts

held in the names of Neala McPartland and Cadhla McPartland with RaboBank and Permanent TSB listed in the attached

Schedule 1 subject to full disclosure to be made in accordance with paras. 4, 5 and 6 of the order including the balance in

each such account; and

(b) the future earnings from the specified sources detailed in Schedule 2 of Colette Quinn and Brenda Quinn which are

unrelated to these proceedings and the assets of IPG (International Property Group) subject to full disclosure to be made

in accordance with paras. 4, 5 and 6 of the order.

7. In a subsequent order, Karen Woods, the twentieth defendant, was joined in the proceedings and by order of Kelly J. dated 31st

July, 2012, was included in the Mareva injunction so as to restrain her from reducing her assets below the sum of €50,000,000.00

pending further order. The receiver was given power to collect any income payment dividends, benefits or other entitlements due to

Karen Woods in or out of the jurisdiction. On the same date, Kelly J. made adjustments to the Mareva injunction so as to permit living

expenses to be drawn down by the various personal defendants and liberty was given to all parties, including the receivers appointed

by the court, to apply.

8. On 27th February, 2014, a further variation of the Mareva injunction was made by Kelly J. which included a direction that the

shareholdings held by the twentieth defendant (Karen Woods) through accounts with the following stockbrokers be excluded from the

orders of the court but not from the control or remit of the receivers appointed on 25th July, 2012:-

(a) Davy Stockbrokers.. value €2,500 (EST);

(b) Jeffries & Co. Stockbrokers.. value €100,000 (EST); and

(c) Subject to the twentieth and fourth named defendants complying with the four conditions set out in the order.

9. The four conditions involved affidavits being sworn setting out the source of these funds and clarifying a statement of net worth of

the twentieth named defendant between two dates specified and the involvement of various other personal defendants setting up of

the twentieth named defendant’s accounts with Jeffries & Co. Stockbrokers and the furnishing by the twentieth defendant to the

receivers of a form of authorisation in respect of the account with Jeffries & Co. Stockbrokers permitting the receivers to access

statements directly.

10. This fresh application has been brought by the receiver on the basis of a new source of income on the part of some of the

personal defendants. At the end of November 2015, Seán Quinn Jr. notified the receiver that he has received a salary payment of

€2,347 from SMC Products Limited which he anticipated monthly. The sole shareholder of SMC is Seamus McMahon, a nephew of Seán

Quinn Sr. and the directors of SMC are currently Seán Quinn Sr., Seamus McMahon and Yvonne Fitzpatrick. It seems that each of the

personal defendants, other than Ciara Quinn, are employed by SMC. Ciara Quinn is employed as an agency nurse on a part time basis

with no fixed salary.

11. In an affidavit sworn on 27th April, 2016, the receiver set out at para. 25 thereof, a table showing the amount which each of the

personal defendants is permitted by order of the court to withdraw from the receiver’s account for living expenses, the amount of

their net monthly salary and the total amount received to date. In each case, it appears that the amount of net monthly salaries is

less than the permitted monthly draw down amount. Details from the excluded bank accounts in respect of the personal defendants

showed balances ranging between €82,935 and €1,010 according to the second replying affidavit of Niall McPartland sworn on the 7th

June, 2016. It is clear that the excluded accounts contain monies not captured by the Mareva injunction.

12. Counsel on behalf of the receiver argues that the personal defendants were not entitled to place their salaries from their

respective employments into the excluded accounts but were obliged to apply to the court for an order excluding the salaries from

the Mareva injunction. It was indicated in correspondence before the court that the receiver may be supportive of such a variation

application. The receiver argues that the personal defendants should not be entitled to draw down from the receiver’s account, into

which the salaries of the personal defendants are currently deposited, until such time as the funds in the excluded accounts have

been dissipated. It is not clear to me why this should be so. Alternatively, the receiver seeks an order that the funds in the excluded

accounts be assumed into the receiver’s accounts and that the personal defendants be entitled to deposit their salaries in the

excluded accounts.

13. Having reviewed the various orders made to date concerning the Mareva injunction and variations thereto, I am satisfied that it

was intended that any earnings of the personal defendants would be excluded from the power of the receiver if they were not related

to the proceedings or to International Property Group (“IPG”). However, in view of the motion before the court on 26th July, 2016, I

am not making any finding on that issue as the matter will be argued more fully at the hearing of that application.

14. It is accepted by all parties to these proceedings that they have taken a great deal longer than anticipated to come to trial. That

is because the DPP has applied to adjourn the trial from time to time on account of connected proceedings taking place in the Criminal

Courts of Justice which might be prejudiced by disclosures made in the course of the trial of this action. In my view, it is important to

have regard to this fact in making further adjustments to previous orders relating to the Mareva injunction. While I am aware that the

personal defendants have a motion due for hearing before the court on 26th July (see para. 3 above), I can only deal with the motion

before me at this stage. But it does seem to me that between now and the hearing of the personal defendants’ motion, some thought

should be given to whether or not agreement can be reached between the receiver and the personal defendants as to what should

happen,.

15. Although the personal defendants dispute the entitlement of the receiver to bring this application, I am quite satisfied from

reviewing the earlier orders made that the receiver has been given authority to bring such an application. So far as the reliefs sought

in the notice of motion are concerned, I will deal with each of them in the order in which they appear.

16. Regarding relief (a), Counsel for the receiver argues that the personal defendants are going to receive salaries which should be

paid into the Mareva account because that is what is required by the Mareva order and he says that the living expenses should be

paid from the excluded accounts until such time as those balances are dissipated. The living expenses are paid from the receiver

account not the excluded accounts. The personal defendants will be shortly bringing a motion before the court with regard to those

sums and I have not yet had sight of the papers in that application. But since the orders provide that the living expenses be paid from

the receiver’s account, I refuse the order sought by the receiver under heading (a) in the notice of motion.

17. So far as relief (b) is concerned, I refuse the order sought by the receiver as the living expenses may be drawn down from the

sums in the receiver’s account and not the excluded accounts.

18. Regarding relief (c), I refuse the orders sought by the receiver. The shareholding of Karen Woods has been excluded from the

Mareva injunction by order. There are orders in place requiring her to furnish information to the receiver concerning the monies in that

account. This seems sufficient for the moment.

19. At this stage, all I can do is deal with the matters before me on foot of the receiver’s notice of motion. When the personal

defendants’ forthcoming application is heard it may have the effect of further amending the orders currently in place. I suggest that

the parties try and reach some agreement on the issues to be canvassed in the forthcoming motion.

20. So far as para. 2 of the notice of motion is concerned, I will make an order that the personal defendants provide updated

statement of means including (a) assets (b) liabilities (c) monthly income and (d) monthly expenditure in excess of €750. It seems to

me that this could be done quarterly or half yearly but I will hear the parties on this issue before the order is made up.

21. Pending further order, the personal defendants’ salaries are to be paid into the receiver account as sums currently captured by

the Mareva injunction. That matter and any other issues arising out of this motion can be reviewed at the hearing of the motion

before the court on 26th July, 2016.