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Goodman v. Kenny [1996] IEHC 52 (30th July, 1996)
THE
HIGH COURT
1990
No. 2206S
BETWEEN
LAURENCE
J. GOODMAN 1st A.B.P. HOLDINGS LIMITED 2nd ANGLO BEEF PROCESSORS LIMITED AND
GEMON LIMITED
PLAINTIFFS
AND
JOSEPH
KENNY
DEFENDANT
Judgment
delivered the 30th day of July, 1996 by Kinlen J.
1. Initially
these proceedings were commenced by a Summary Summons dated the 18th September,
1990. The Plaintiffs therein were named as Laurence J. Goodman and A.B.P.
Holdings Limited. The Special Indorsement of Claim reads as follows:-
"The
Plaintiffs and each of them claim against the Defendant for:-
(a) The
sum of £22,830,000 in sterling currency being the amount due and owing
by the Defendant to the Plaintiffs under a loan advanced by the Plaintiffs to
the Defendant which requires repayment by the Defendant on or before the 13th
June, 1990 which sum is still due and owing by the Defendant to the Plaintiffs
and notwithstanding the expiry of the said repayment date and requests and
demands for payment of same the said sum is due and owing by the Defendant to
the Plaintiffs as money lent by the Plaintiffs to the Defendant or as monies
had and received by the Defendant for the use of the Plaintiffs or as monies
paid for a consideration which has wholly failed.
PARTICULARS
(b) Under
and by virtue of a letter of the 13th March, 1990 from the Defendant to the
first named Plaintiff the Defendant agreed he would pay the sum of
£22,830,000 in sterling currency on or before the 13th June, 1990 to an
account to be designated by the first named Plaintiff which was in
consideration of the money being advanced to the Defendant at his request on or
about the said 13th day of March, 1990 and under the terms of the said letter
it was provided that in consideration of the said payment the Defendant would
require the return of cancellation of a Promissory Note of £25,000,000
from Mercantile Credit to the 13th March, 1990 which ostensibly purported to
secure the advance of the said loan of money by the Plaintiffs to the Defendant
but the said Promissory Note was not affected properly or at all by the
Defendant notwithstanding the requirements of the said loan agreement and in
the circumstances the said monies were advanced for a consideration which had
wholly failed and the said monies were had and received by the Defendant to the
use of the Plaintiffs.
(c) Interest
on such sums as are awarded pursuant to Section 22 of the Courts Act of 1981.
An
appearance was entered on the 21st January, 1991. The matter seems to have
lain fallow until late in 1994. By a Motion paper dated the 9th November, 1994
returnable for the 15th December, 1994, application was made to the Master for
an Order adding Anglo Beef Processors Limited as a Plaintiff and changing the
name of the second named Plaintiff to 1st A.B.P. Holdings Limited and for an
Order giving the Plaintiffs liberty to enter final judgment against the
Defendant in the sum of £22,830,00 in sterling currency (or the equivalent
thereof in Irish currency as of the date of judgment) being the amount due and
owing by the Defendant as monies lent or given in trust by the Plaintiffs to
the Defendant at his request and, if necessary, an Order directing that
interest on same under Section 22 of the Courts Act, 1981 should be determined
by a judge and transferring the matter to a judge for determination of the
issue in relation to interest. This was grounded on the Affidavit of Tom Walsh
sworn the 8th November, 1994 with two exhibits attached thereto. Mr. Walsh is
the former group treasurer of the Anglo Irish Beef Processors Group ("AIBP
Group") and he held that position from January, 1986 to August, 1990. He makes
the Affidavit on behalf of and with the authority of the Plaintiffs. He avers
that on or about the 26th of February he was approached in his capacity as such
group treasurer by Mr. Desmond Lamont of L & P Financial Trustees of
Ireland Limited on behalf of their client the Defendant herein, Mr. Joseph
Kenny. Mr. Lamont stated that the Defendant was a representative of property
investors in Ireland with a property portfolio in this country worth
£25,000,000 and that the investors wished to use that portfolio as
security to consummate a property transaction off-shore. Mr. Lamont
represented that the Mercantile Credit Company of Ireland Limited were holding
the title deeds to the property portfolio. Mr. Lamont further stated that the
Defendant required funds for a period of three to four months and that security
in the form of a Promissory Note was to be provided by Mercantile Credit
Company of Ireland Limited which was to be payable to a limited liability
company in the AIBP Group to be nominated by the Plaintiffs (which in the event
was to be the second named Plaintiff herein). He further avers that on the
13th March, 1990 the Defendant was advanced by way of a loan or trust the sum
of £22,830,000 the said sum to be repayable on or before the 13th June,
1990. Prior to advancing the said loan or trust the Plaintiffs had received
and approved the text of the Promissory Note from Mercantile Credit Company of
Ireland Limited and in addition had received a draft of a letter from the
Defendant guaranteeing repayment of the monies. Copies of the said Promissory
Note and letter are exhibited as "TW 1".
2. Mr.
Walsh further avers that:-
"The
said sum was advanced to the Defendant by the first named Plaintiff with monies
obtained from the second named Plaintiff acting as his agent to a bank account
nominated by the said Defendant namely, City Project Financier's Bank Account
at National Westminster Bank in London. On the 14th day of March, 1990 the
Plaintiffs received a formal acknowledgement in writing signed by the Defendant
that the said monies were repayable to the first named Plaintiff on or before
the 13th June, 1990."
3. A
copy of the said letter is exhibited as TW 2 in this Affidavit.
"The
repayment date has long since passed. In the event it has transpired that no
security was at any material time provided by Mercantile Credit Corporation of
Ireland Limited or otherwise. The monies were subsequently dissipated and the
Defendant herein has failed to repay the said monies or any part thereof
notwithstanding requests and demands for payment of same. The AIBP group of
companies went into receivership in August of 1990 resulting in a number of
changes within the group structure."
5. Mr.
Walsh was informed and believes that the second named Plaintiff, a Northern
Ireland Registered Company, sold by way of an Asset Purchase Agreement dated
3rd September, 1990 its entire business as a going concern together with the
undertakings property rights, assets, contingent assets, liabilities and
obligations whatsoever to Shoreditch Limited, a company registered in the
Republic of Ireland. On the 27th September, 1991 Shoreditch Limited sold all
of its business undertakings, property rights, assets, contingent assets,
liabilities and obligations to Rusper Limited, a company registered in England.
That company subsequently changed its name to Anglo Beef Processors Limited.
6. The
aforesaid company is entitled to be a Plaintiff in these proceedings. On the
11th October, 1991 the second named Plaintiff had changed its name to 1st ABP
Holdings Limited.
7. By
an Affidavit sworn the 5th January, 1995 the Defendant avers:-
"In
March 1990 persons representing me had negotiations with representatives of the
Plaintiffs concerning raising funds in order to finance an investment
transaction and a broad agreement was reached orally that certain funds should
be advanced.
It
was a pre-condition of any liability on my part that any monies advanced
should
be:-
(i)
paid
into a bank account which I would designate, and entirely
control,
and
(ii) loan
will be secured by a Promissory Note from a financial
institution
furnished
in advance.
Neither
of these conditions were fulfilled for reasons entirely beyond my
control.
The
Plaintiffs in breach of the aforesaid agreement,
(i)
neglected to obtain the security which had been agreed and recklessly advanced
the said funds without any security
and
(ii) did
not lodge the said funds into a bank account designated by me or over which I
had full control but recklessly paid into some other bank account.
By
reason of the aforesaid the Plaintiffs had contravened fundamental conditions
of the aforesaid oral agreement and there is no liability on my part in respect
of their alleged loan.
4. "Regarding
my letter of the 13th March, 1990 to Laurence J. Goodman
exhibited
by the Plaintiffs,
(i)
The
said letter was written on the understanding that each of the aforesaid
preconditions of any liability on my part would be fulfilled. As neither of
these were fulfilled I am advised by Counsel that there has been an
entire failure of consideration.
(ii) The
explicit and only consideration therein for my agreeing to pay approximately
£23,000,000 was that there would be returned to me or cancelled a
Promissory Note for £25,000,000 as described. No note for that, or any
other sum, was so returned or cancelled and I have been advised by Counsel that
there has been a total failure of consideration.
5.
"In
any event neither of the Plaintiffs have any title to the money which they seek
to recover. I have been informed by their former solicitor Rory O'Donnell of
16 Fitzwilliam Place, that by deed of assignment dated the 21st June, 1990
Laurence J. Goodman acting presumably as agent for ABP Holdings Limited had
assigned the aforesaid alleged debt and all interest due and to become due
thereon to a company called Gemon Limited. I am more than surprised that this
vital fact is not stated in the particulars set out in the Summary Summons
herein issued some five months later or in the Affidavit herein of Tom Walsh.
In a letter dated 24th June, 1990 from the said Rory O'Donnell to my then
solicitor James O'Higins it is stated (4th para).
"Our
client Laurence J. Goodman has assigned the benefit of the loan agreement to
the company called Gemon Limited by Deed of Assignment dated 21st June, 1990.
This is a shelf company which has never traded before and will enable me to
more conveniently instruct our agents abroad and not restrict our client who
travels a lot".
9. "I
have been advised by Counsel, accordingly, that even if (which is denied) the
Plaintiffs did have a right of action against me in respect of the alleged loan
or on foot of my aforesaid letter they have assigned away all their rights
thereto"
8. He
refers to a copy of the said letter in exhibit A.
He
continues:-
6. "Additionally
I say that on or about the time the aforesaid loan was made the Plaintiffs were
engaged in financial speculations and in the business of money lending. This
is a matter which I say and believe will be confirmed when discovery is duly
made by them and accordingly I am advised by Counsel that any claim they may
have against me would be barred by the Moneylenders Act."
7. "Finally
insofar as my aforesaid letter may be regarded as a guarantee to ABP Holdings
Limited (a foreign company). I have been advised by Counsel that exchange
control approval by the Central Bank of Ireland was required therefor. I doubt
very much that such approval was sought and obtained and say that this is a
matter which will be confirmed when discovery is duly made; if no approval was
granted. I am advised by Counsel that any claim that the
company
may have against me is barred by the Exchange Control Acts."
9. In
the exhibited copy letter from Rory O'Donnell & Company to James F.
O'Higgins, Solicitor dated the 24th June, 1990 there is an additional line in
paragraph 4. It reads:-
"I
confirm that the share in Gemon Limited are now held in trust for our client
and that the company will be under his control."
10. The
next Affidavit is that sworn by John O'Donnell on the 11th January, 1995. He
is the Financial Director of the second named Plaintiff and he confirms the
Affidavit of Tom Walsh. He also avers that he has read the Affidavit of Mr.
Kenny. He accused Mr. Kenny delaying tactics and says his behaviour was
consistent with his attempts to evade and frustrate these proceedings.
4. "In
this Affidavit Mr. Kenny makes, I think, five points:-
(a) that
there was some pre-condition which was not fulfilled.
(b) that
there was a failure of consideration.
(c) that
there was an assignment of Gemon.
(d) that
there was a possible contravention of the Moneylenders Act.
(e) that
there was a possible breach of the Exchange Control Acts..
I
believe that these points are completely without merit and that they are only
raised by Mr. Kenny for the purposes of delay and obfuscation".
5. "I
say and believe that the entire dealings between the parties hereto when the
loan was negotiated took place in the period between the 26th February and the
13th March, 1990. I say and believe that Tom Walsh was approached by Mr.
Lamont of L & P Financial Services on behalf on an undisclosed party with a
view to obtaining a short-term loan. The security for that loan was to be
provided by the borrower (as it transpires Mr. Kenny) and was to be a
Promissory Note from Mercantile Credit Company Ireland for £25,000,000.
All negotiations in relation to this matter were carried on by L & P
Financial Services. Mr. Kenny took no part in negotiations and I am advised
never dealt with Tom Walsh or spoke to him or any person on behalf of the
Plaintiffs and
indeed
his identity was not disclosed and confirmed until the 13th March when the
transaction was due to be carried out.
6. "I
say and I am advised by Tom Walsh that at no stage during his discussions with
L & P Financial Services did any person on behalf of Mr. Kenny attempt to
suggest that there were any pre-conditions to Mr. Kenny's liability. It would
have been ludicrous to do so. In any event I believe that the monies were paid
into the pay account directed by L & P Financial Services, Mr. Kenny's
representatives. On the 13th March, 1990 Mr. Lamont instructed
Tom
Walsh to transfer the funds to the account of Alexios Trust. He did so and
confirmed his instructions to the second named Plaintiff's bank in London
namely, AIB Plc, at 12 Old Jewry. The following day Mr. Lamont changed his
instructions and instructed Mr. Walsh to pay the money into the account of City
Project Financiers in London. This was done".
11. He
refers to copy of the instructions from Mr. Lamont on the 30th March. Tom
Walsh's confirmation of the same date and Mr. Lamont's further instruction of
the 14th March which were stapled together as exhibit JOD 1. He further avers:-
7. "It
is also quite ludicrous to suggest as Mr. Kenny now attempts to do that it
was
in some way a pre-condition to his liability that a Promissory Note would be
furnished in advance. As Mr. Kenny well knows his liability arose when the
loan was made. The Promissory Note was the very security offered to the
Plaintiffs by L & P on behalf of Mr. Kenny and it was not suggested to be,
and
could
not have been, a pre-condition to his liability. In fact, had that security
been provided and called upon, then in all likelihood Mercantile Credit would
in turn seek to recover the loan from Mr. Kenny.
8. "It
is true that the first named Plaintiff made an assignment of rights in respect
of Mr. Kenny's indebtedness to Gemon Limited a company which is a wholly owned
subsidiary of the second named Plaintiff. In fact Mr. Kenny also executed such
an assignment in 1990 and the purpose of the assignments was to facilitate the
prompt commencement of proceedings overseas for the recovery of the monies.
However Mr. Goodman did not attempt to seek or assign the rights of the second
named Plaintiff and indeed in proceedings
which
were subsequently commenced in Cyprus in which Mr. Kenny is a Plaintiff both
Gemon Limited and the second named Plaintiff are co-Plaintiffs. Mr. Goodman
acted at all times as an agent of the second named Plaintiff who are entitled
to maintain these proceedings. In the circumstances I do not believe that the
point raised by Mr. Kenny is a genuine one but for the avoidance of doubt I
pray to this Honourable Court for an Order joining
Gemon
Limited as a co-Plaintiff in these proceedings...."
9. "I
am advised by the Plaintiffs' Solicitors and Counsel and believe that the
transaction here was not a contract effected by the Moneylenders Act. It was a
short term loan negotiated by the Plaintiffs and was the first and only time in
which the Plaintiffs did so. Accordingly I believe it is clear that (and I
believe Mr. Kenny knows) the Plaintiffs were not engaged in financial
speculation or in the business of moneylending and that this claim is not
effected by the provisions of the Moneylenders Act.
10. Finally,
I note that Mr. Kenny also seeks to raise some unspecified issue under the
Exchange Control Regulations. Even this tentative suggestion is predicated on
the assumption that his letter could be regarded as a guarantee. In fact I
believe it is manifestly clear that the letter on the 13th March is not a
guarantee. It is a confirmation of Mr. Kenny's obligation to repay the loan
made to him. In fact as the documents exhibited at JOD 2 above makes clear the
loan was made from one account in the United Kingdom to another
and
could
have been made and repaid either in that jurisdiction or this. In the
circumstances even if this claim could be characterised as a claim on foot of a
guarantee (and I am advised and believe it could not) I am advised by the
Plaintiffs' Solicitors and Counsel and believe that the transaction does not
contravene
any applicable exchange control regulations.
"
12. Mr.
Tom Walsh swore a supplemental Affidavit on the 25th January, 1995. He avers:-
"I
say there is absolutely no merit in Mr. Kenny's contention that there was some
pre-condition which was not fulfilled. It was I who was approached by Mr.
Lamont of L & P Financial Services on behalf of an undisclosed party with a
view to obtaining a short-term loan. The security for that loan was to be
provided by the borrower which later transpired to be Mr. Kenny and was to be a
Promissory Note from Mercantile Credit Company Ireland for £25,000,000.
To suggest that the security was to benefit the borrower rather than the lender
is absurd in the extreme. All negotiations in relation to this
matter
were carried on by L & P Financial Services. Mr. Kenny took no part in the
negotiations and never dealt with me or spoke to me or any person on behalf of
the Plaintiff. His identity was disclosed and confirmed on the 13th March,
1990 when the transaction was due to be carried out.
4. At
no stage during my negotiations with L & P Financial Services did any
person on behalf of Mr. Kenny attempt to suggest that there were any
pre-conditions to Mr. Kenny's liability. I complied in full with the
instructions received from L & P Financial Services in respect of the
transfer of money ..."
(and he refers to Mr. O'Donnell's exhibit "JOD 1").
13. The
Defendant brought a Motion dated the 20th January, 1995 to strike out the
Plaintiff's claim as it disclosed no cause of action on the basis that the
first named Plaintiff acted at all times as agent of the second named Plaintiff
and the Plaintiffs have assigned such rights as they may have against the
Defendant to a third party. There is then the Supplemental Affidavit of Joseph
Kenny sworn the 8th July, 1995. At paragraph 2 thereof the following averment
appears:-
"Sometime
in 1990/1991 proceedings were brought in the District Court of
Paphos in Cyprus relative to money allegedly lent to me by Laurence J.
Goodman in March, 1990. The Plaintiffs there were:-
(i)
ABP
Holdings Limited.
(ii) Gemon
Limited (suing personally and on my behalf under a
Power
of Attorney given by me).
There
are five Defendants the principal ones being Andreas Kitalides, a South African
financier and his father, Nestor Hadzi Arodotou of Paphos."
14.
Apparently Mr. Kenny changed his lawyers and he also withdrew his Power of
Attorney. The main point of this Affidavit is that basically in Cyprus it was
revealed that Laurence J. Goodman had assigned all his rights concerning the
said money and/or debt to Gemon Limited. The Affidavit contends that this
information provided in Cyprus contradicts what is being told in this Court.
It was a highly material fact which was not disclosed. In that Affidavit also
the Defendant was expecting copies of a relevant file from Cyprus to be sent to
him by the latest the date of the swearing of the Affidavit, being the 8th
July, 1995. His lawyer was due in Dublin the following Monday and the
Defendant stated that he would bring all the relevant papers with him. This
Affidavit exhibits letters in relation thereto. One of the exhibits is of a
fax sent from the Defendants former solicitors, Messrs. Ronan Daly Jermyn who
states at paragraph 10.
"The
said Mr. Goodman has agreed with the said Joseph Kenny to lend and/or entrust
the latter with the hereinbefore mentioned monies. In respect of this loan
and/or trust and in accordance with the relevant oral agreement the said Joseph
Kenny promised in writing to Mr. Goodman to pay and/or repay and/or send or
transfer backto the latter £22,830.00 sterling".
15. In
the affidavit of Laurence J. Goodman sworn the 22nd May, 1996. He confirms
what Mr.Walsh had already stated. He states:-
“I
was made aware that security for the loan was to be a promissory note from
Mercantile Credit Company of Ireland for £25 million. I was also made
aware that Mercantile Credit Company of Ireland was a sister company of
Barclays Bank Plc.
“The
second named Plaintiff was the source of the funds for this transaction.
However since the transaction involved the provision and receipt of securities
and in order to take it outside the usual lines of credit for the AIBP Group
and avoid breaching negative pledges the AIB Group had given to its lenders
including Barclays Bank Plc, the bank lending the funds to the Second named
Plaintiff for the purposes of the loan, the transaction was structured in such
a way that I was to become the holder of the promissory note to be provided as
security for the loan. Accordingly the letter Mr. Kenny signed on the 13th
March, 1990 was addressed to me. However, I can confirm that at all times I
was acting in relation to these funds as an agent of the Second named
Plaintiff. Although I have been advised that the said letter does not require
to be stamped I believe that Mr. Kenny's representatives sought to raise in
these proceedings an issue as to the stamping of this document. The letter was
accordingly submitted to the Revenue Commissioners for stamping and was
subsequently adjudged by them not chargeable with stamp duty”.
16. He
exhibits two copies of the letter as “LG1”.
6. I
am aware that the sum of sterling £22,838,00 advanced to Mr. Kenny has
never been repaid. I am also now aware that the promissory note was never
issued or received. However the majority of the funds advanced was
subsequently traced to Cyprus and are now the subject matter of proceedings in
that jurisdiction and initially Mr. Kenny fully co-operated with the Plaintiffs
in these proceedings and indeed assigned any possible claim he might have to
the monies to Gemon Limited which is a wholly owned subsidiary of the Second
named Plaintiff. I also assigned any rights I might personally have had in
respect of the funds to Gemon Limited to facilitate the pursuit of a claim. ...
As will appear from the document's original it has been stamped. I believe
that Mr. Kenny's representatives sought to raise an issue as to the absence of
any stamp on this document. While I do not believe that this is relevant or
appropriate the document has nevertheless been stamped for the avoidance of
doubt. Morally while I believe that the Second named (which is also a
Plaintiff in the Cyprus proceedings) and its successors is the correct party
to recover judgment in this matter for the avoidance of doubt I seek leave to
join Gemon Limited as a co-Plaintiff in these proceedings.
7. Finally
Mr. Kenny has also sought to contend that the Plaintiffs herein have been
engaged in unlicensed money lending. This is simply untrue. It is set out in
the affidavit of John O'Donnell.
“The
loan in this case was a once-off transaction and neither I nor the Second
named Plaintiff nor the proposed Plaintiffs were engaged at that time or indeed
since in the business of money lending”.
17. It
is intriguing to wonder why Mr. goodman either as principal or agent lent
£22,830,000 without security and the Defendant facilitated the transfer of
part, at least, of it to a South African Cypriot. However these interesting
queries are not before this Court.
18. In
an affidavit dated the 21st May, 1996 by John McLoughlin who is company
secretary of the Anglo Irish Beef Processors Group (AIBP) he sets out the
history of structural changes which took place as a result of the AIBP group of
companies going into examinership in August 1990.
19. As
already set out earlier in this judgment it says that the Second named
Plaintiff herein, a Northern Ireland registered company, sold by way of an
asset purchase agreement dated the 3rd September, 1990 its entire business as a
going concern together with the undertaking, property rights, assets,
contingent assets, liabilities and obligations whatsoever to Shoreditch
Limited, a company registered in the Republic of Ireland. It says that on 27th
September, 1991 Shoreditch Limited sold all of its business undertaking
property rights, assets, contingent assets, liabilities and obligations to
Rusper Limited a company registered in England. That company changed its name
on 27th day of September, 1991 to Anglo Beef Processors Limited and these
developments were supported by a copy of the Asset Purchase Agreement
particularly as were incorporated on change of names JMCL2. He also avers that
the changed name (not subsequently referred to herein) is Anglo Beef
Processors Limited which changed its name on the 17th February, 1995 to 2nd
Anglo Beef Processors Limited. He also avers that on the 11th October, 1991
the Second named Plaintiff changed its name to 1st APB Holdings Limited and
says that the title of these proceedings should be amended as follows:-
“Laurence
J. Goodman, 1st A.B.P. Holdings Limited, 2nd Anglo Beef Processors Limited and
Gemon Limited -v- Joseph Kenny
”
20. There
is an affidavit from Joseph Kenny dated the 4th July, 1996 and a subsequent one
of the 19th July, 1996. The Court has been provided with a clean copy of an
Affidavit on the undertaking that it will be properly sworn and filed. It was
obviously to be sworn this month, namely, July 1996. The affidavit of the 4th
July refers to various exhibits and states that because of the inordinate and
unexplained delay on the part of the Plaintiffs in prosecuting these
proceedings, inter alia lack of candour in presenting their case to the Court
and their use of these proceedings as a mere tactical device the motion should
be dismissed and remitted to plenary hearing. He gives a history of the
proceedings. The Summary Summons was issued on the 18th September, 1990 no
further step was taken until the 8th November, 1994 and a Notice of Motion for
judgment was issued when it came before the Master in January of 1995 the
Defendant's Counsel drew attention to allegedly major deficiencies in the
Plaintiffs' pleadings and affidavits and the Master put it into the High Court
list. Additional affidavits were filed on behalf of the Plaintiff. The matter
came before this Court on the 4th May, 1995 but it was urged that not any of
the then Plaintiffs in the Action but a company called Gemon Limited to whom
apparently all relevant rights might exist against the Defendant had been
assigned in 1990. An adjournment was granted to the Plaintiffs. It was on the
22nd May, 1996 that the Plaintiffs sought to have the adjourned hearing resumed
and expressed their anxiety to have at least one aspect of it dealt with
promptly because there might be a statute of limitations difficulty - the
alleged right in respect of which summary relief is sought having occurred
almost (and now over) six years previously. The Defendant points out that in
the Affidavits there are phrases used such as “ludicrous”,
”quite ludicrous” and “absurd in the extreme” but do
not give any explanation about the inordinate delays. He avers as follows:-
“The
scene of the true explanation is as follows:-
They
hope to avoid being compelled to pay 6% ad valorem stamp duty and penalties on
a £24 million instrument. They hope to avoid making extremely
embarrassing (for them) disclosures about why the alleged loan was structured
in an unprecedented manner, they hope to achieve in legal proceedings in Cyprus
in substance the redress they now are seeking from this honourable Court and
most importantly they wanted to completely suppress from public gaze the role
of Gemon Limited in the entire affair.”
21. The
affidavit then continues with several paragraphs about lack of candour and are
basically argumentative and point out that the claim originally vested entirely
in
22. Mr.
Goodman and there was an assignment to Gemon which was under Mr. Goodman's
control and questions why was Gemon's existence in the assignment not disclosed
in the original summons and grounding affidavits? Moreover very substantial
stamp duty would have had to be paid on the alleged assignment. He also argues
about a principal and undisclosed agents and argues that if he gave a
promissory note to repay Mr. Goodman there cannot be an undisclosed principal
to a promissory note transaction under the Bills of Exchange Act. His
affidavit deals with, in an argumentative way, the history of
23. Mr.
Goodman's companies. He refers to a report of the “Beef Tribunal”.
24. This
Court has been very concerned about the proceedings in PAPHOS. Beyond the
faxed copy of alleged statement of claim filed in PAPHOS very little
information was provided by either side. The Court is gravely concerned that
it might come to a different conclusion than that of the Cypriot Court.
Alleged monies are apparently frozen in a Cypriot bank. It is eminently
desirable that the same course of action should not be pursued simultaneously
in two separate jurisdictions.
25. The
borrowers agreed to lend Mr. Kenny money. However he states that the money was
never received by him. He added that the money was not released into his
control but apparently into the control of a South African Cypriot who spirited
the money away. It was eventually traced to a bank account in his father's
name in the Bank of Cyprus in PAPHOS. He alleges that it came before this
Court on the 5th May, 1995 and was adjourned. The Plaintiffs decided rather
than move swiftly and attempt to obtain judgment against him to dislodge him
from the Cyprus proceedings. He was advised by his Cypriot lawyer that on the
9th June, 1995 an Application was heard in the District Court of PAPHOS. Mr.
Goodman's company sought in effect to remove him from these proceedings and
subsequently the matter was resumed in a hearing between the 23rd and 25th
April and he states that he is advised that
“those
three days were a virtual catastrophe for Mr. Goodman and his companies. For
instance Mr. Goodman sought to produce in evidence an assignment from me to
Gemon Limited but was met by a stamp duty objection which was upheld. This
matter is now on appeal. I am advised that the
amount
of stamp duty it involved is considerable. Presumably it was because of these
setbacks in Cyprus that Mr. Goodman and his companies once again switched their
attentions to this honourable Court last May and sought to continue
prosecuting their application herein for summary judgment”
26. However,
this Court is satisfied that Mr. Desmond Lemont of L&P Financial Trustees
of Ireland Limited dealt with Mr. Tom Walsh of the Plaintiffs and made the
arrangement and that it was he nominated the ultimate bank to which the money
was transferred. The Court is satisfied that Mr. Lemont acted as agent for the
Defendant.
27. Mr.
Kenny claims that he was the only person with a locus standi in proceedings of
PAPHOS. Money was put into the name of one Nestor Hadjierodotou and that he
has offered his assistance and offered to give evidence and that he co-operated
in every respect with Mr. Goodman and his companies in seeking to retrieve that
money in consideration inter alia that they would not sue him. He alleges that
in breach of faith and in contravention of that agreement shortly afterwards
they commenced these proceedings. He assigned to Mr. Goodman's companies such
right of action as he may have against several Cypriot defendants by deed of
the 5th July, 1990 drafted by Mr. Goodman's solicitors in consideration IR
£1.00. The defendant assigned the debt on interest due thereon to Mr.
Goodman's companies. He also gave Mr. Goodman's company Gemon power of
attorney to prosecute all necessary proceedings in Cyprus in his name. That
instrument dated the 25th June, 1990 recites the consideration given for that
power of attorney as follows:-
“In
consideration of Gemon Limited withholding the issue of proceedings against Mr.
Kenny for the moment (
although
reserving the right to do so at any time at their discretion
).
Mr. Kenny has agreed to grant this power of attorney.”
28. He
avers that he subsequently withdrew his co-operation with Mr. Goodman and his
companies because he believes they breached faith and were in breach of the
terms of the said agreement and the power of attorney. That breach was the
institution of these present proceedings against the Defendant on the 18th
September, 1990 within ten weeks of his assigning to them a claim
worth £24 million for consideration of £1 and by granting them a
power of attorney to prosecute that claim in his name for a consideration that
they would not sue him. He avers:-
“I
therefore say and I am so advised that when these proceedings were instituted
on the 18th September, 1990 the then Plaintiffs who owned and controlled Gemon
Limited had a solemn sealed contractual agreement with me not to bring these
proceedings and therefore were legally debarred from suing me in relation to
the alleged loan and the money in Cyprus.
I
have been advised by Counsel that this gives me a complete defence against the
Plaintiff's claim herein and that when the Motion for summary judgment herein
was issued the Plaintiffs knew full well that they had broken their solemn
agreement not to sue me which I say is borne out by the substitute of Gemon and
should not be named as one of the Plaintiffs herein”
29. He
does not accept the averments that Mr. Goodman nor any of his companies were
ever involved in money lending and that this was a “one-off”
transaction and claims about the way it was “structured” and his
need for discovery.
30. This
Court has amended the pleadings to include all the Plaintiffs listed .
31. Gemon
is now a Plaintiff so much of the argument relating to it is now irrelevant.
The undated affidavit of Caroline Preston, solicitor for the Plaintiffs,
dealing with this affidavit of the 4th July, 1996 by Mr. Kenny points out that
it contains no evidence which was not available or referred to at the time he
swore his original affidavit on the 5th January, 1995 in particular Mr. Kenny
notably fails to explain his part in this transaction and his dealings with the
other parties and in particular Mr. Kitalides. She avers as follows:-
“It
remains a striking feature of Mr. Kenny's approach to this case and his latest
affidavit that he goes to such lengths to avoid explaining his part in the
transactions which gave rise to these proceedings. He does admit that parties
representing him, L&P Financial Services (“L&P”) negotiated
the loan of STG £22,830,000 from the Plaintiffs and he does not deny that
that loan was advanced and not repaid. Now, however, for the first time, he
seems to suggest that the money was somehow unbeknownst to him diverted into
the account of City Project Financiers Limited. This is manifestly untrue.
Exhibit ‘JOD1’ is the affidavit of John O'Donnell sworn on the 11th
January, 1995 herein exhibits the express instructions from L&P (Mr.
Kenny's agents who had dealt with every part of this transaction) to the
Plaintiffs expressly directing a transfer of the funds to the account of City
Projects Financiers Limited.”
4. “Mr.
Kenny now and for the first time suggests that he did not authorise this
transfer. Even if this were true (and I believe it to be manifestly false) I
do not believe it can provide an answer to the Plaintiffs' claim herein.
L&P had clear authority from Mr. Kenny to act for them and he himself took
no part in this transaction. Accordingly I believe that they had ostensible
authority to give the instructions which they did, and Mr. Kenny is not
entitled to raise against the Plaintiffs any lack of authority on their part.
More importantly, I believe that his belated suggestion of lack of authority is
simply untrue. It is absolutely inconsistent with the two documents he relies
on in defence of these proceedings, namely, his assignment and power of
attorney both of which were executed by him and both of which recite that
“Mr. Kenny lent the said sum of STG £22,830,000 to City Project
Financiers Limited” and that “City Project Financiers Limited is
indebted to Mr. Kenny in the sum of
STG
£24,000” If there is any merit in the suggestion that L&P had
not acted on Mr. Kenny's instructions and authority in directing the transfer
of the funds to the account of City Project Financiers Limited then I would
have expected that Mr. Kenny would have raised this in his first affidavit
sworn 5th January, 1995. It is also extraordinary that if this was truly the
case that Mr. Kenny has not commenced proceedings against L&P.
32. In
dealing with the allegation of delay she points out “It is not good
defence as it is in aid of the Defendant”. However, she points out that
Mr. Kenny had agreed to co-operate with the Plaintiffs pursuing the monies in
Cyprus but that in 1994 he withdrew his power of attorney and sought to
intervene in the proceedings in his own right in order to cause difficulty for
the Plaintiffs and to seek some personal advantage for himself. She avers:-
´
“In
those circumstances while Mr. Kenny was actively seeking to hinder the
Plaintiffs in the recovery of the proceeds of the loan these proceedings were
reactivated. Subsequently this matter was heard on the 4th May, 1995 and Mr.
Kenny raised a number of points including the financial status of certain
documents. To avoid further dispute on this remaining matter the relevant
document was submitted for adjudication and was so adjudicated on in February
1996 and is now exhibited in the affidavit of Mr. Goodman. The motion for
judgment was then re-entered. There was therefore no unexplained delay and I
believe nothing constituted a defence entitling the Defendant to avoid
judgment”.
33. As
regards the alleged lack of candour she explains that the immediate aftermath
of the discovery that the proceeds of the loan had disappeared a number of
proceedings were issued in short order to seek to protect the Plaintiffs'
position.
“In
those circumstances it may be that the issuance of proceedings was not
co-ordinated with the creation of any assignment. In any event I believe that
the proceedings were properly constituted in that the monies were advanced by
ABP Holdings Limited and that even if Mr. Goodman had any interest in the loan
which had been assigned to Gemon that Gemon was entitled to pursue that loan
simply in the name of Mr. Goodman or, alternatively, by being joined as a
party. In any event there can be no detriment to Mr. Kenny. All possible
parties as Plaintiffs are now joined in the proceedings for the avoidment of
any doubt”
“the
power of attorney to which Mr. Kenny refers is not an agreement or contract
whereby Gemon agreed not to sue Mr. Kenny. She said it is a solemn agreement
by Mr. Kenny appointing Gemon his attorney an agreement which Mr. Kenny then
revoked. The power of attorney recited as consideration a temporary
forbearance by Gemon to sue Mr. Kenny. This in itself does not constitute an
agreement not to sue in the future and further, in any event, the terms of a
power of attorney itself expressly reserved to Gemon that right”.
35. As
regards the structure of the transaction she states:-
“In
the first place I believe that the source of the funds for lender is of no
concern to the person to whom the loan is made. In any event the allegation
and the innuendo which Mr. Kenny seeks to place upon it is misconceived. There
is no deception of the group's bankers involved in the obtaining of funds for
this loan. The lending bank, Barclays Bank, was one of the group lenders and
was also the parent company of Mercantile Credit which was to provide the
security. It was proposed that the promissory note to be supplied by
Mercantile Credit on Mr. Kenny's behalf would be assigned to Barclays. It was
merely this element (the giving of security) which gave rise to concern since
all the group's lending was based on the fact that no individual lender was
secured. Accordingly it was decided to advance the monies from ABP through Mr.
Goodman as an agent and Barclays Bank was agreeable to advance the monies to
ABP Holdings Limited on its usual line of credit. Indeed, when Mr. Kenny
failed to repay the loan and the promissory note provided by him (which was to
be delivered from Mercantile to Barclays) transpired not to exist. ABP
promptly repaid Barclays loan. There was therefore, no deception on the part
of the bankers and there is no basis for the wild speculation and innuendo Mr.
Kenny seeks to raise.”
36. Under
the heading “Cyprus proceedings” she avers:-
“Finally
Mr. Kenny seeks to suggest that these proceedings were somehow an improper
tactical ploy related to other proceedings in Cyprus. Again this is simply
untrue and in any event, I believe, irrelevant. It is clear from the title of
the Cyprus proceedings referred to by Mr. Kenny himself
that
contrary to the suggestion made in this Affidavit he is not a plaintiff in
his own right.
Mr.
Kenny suggested in his affidavit that he is already a party to the proceedings
is inconsistent with his efforts to intervene in the proceedings, and further,
it contradicts the terms of his own affidavit and these proceedings sworn on
the 8th February, 1995 in which he states that his Cypriot lawyers were now
taking steps to bring proceedings there in his own name and on his behalf
against the Defendants, something which should have been unnecessary if Mr.
Kenny was, as he now says, already a party to the proceedings.
Nor
do I accept even if it were relevant that the recent proceedings from the 23rd
to the 25th April, 1996 were a catastrophe for the Plaintiffs
.
Instead I believe that the outcome of these hearing were ultimately a rejection
of
Mr.
Kenny's attempts to intervene in the proceedings. Quite apart from the power
of attorney which Mr. Kenny has revoked (and until yesterday he had never
previously suggested that the issue of these proceedings entitled him to do
so), Mr. Kenny has himself assigned his debt and interest and the right to
bring proceedings to recover to Gemon Limited. It is, however, a measure of
the manner in which Mr. Kenny has approached these proceedings that at one and
the same time he appears to have sought to introduce the assignment into
evidence in these proceedings and nevertheless object to its introduction in
evidence in the Cyprus proceedings. There is also no sense in which it can be
said that the Cyprus proceedings involved the issues which arise here. Instead
the Cyprus proceedings involved the transactions which occurred in respect of
the money after it had been advanced to Mr. Kenny and indeed proceed on the
assumption that Mr. Kenny is indebted to the Plaintiffs herein. Mr. Kenny
seems to suggest that a judgment is obtained by the Plaintiffs in Cyprus that
will render these proceedings unnecessary. This is not correct. While certain
of the monies advanced to Mr. Kenny were traced to Cyprus there is a shortfall
which even if the Plaintiffs recover everything in Cyprus would still have to
be recovered. In any event I do not understand how Mr. Kenny can seriously
suggest that the existence of the Cyprus proceedings and the possibility of
recovery of judgment by the Plaintiffs against the Cypriot Defendants can in
any way be relevant as a defence to these proceedings particularly when Mr.
Kenny is devoting his energies in Cyprus to seeking to prevent, obstruct and
delay the Plaintiffs obtaining judgment in Cyprus.”
37. Mr.
Kenny brought an application against the Revenue Commissioners and as notice
parties Laurence J. Goodman and Gemon Limited. The matter came before the
President of the High Court, Mr. Justice Costello. He delivered judgment on
the 24th June, 1996. In those proceedings the Defendant herein applied for a
judicial review on the grounds that various documents on which the Revenue
Commissioners adjudicated were erroneous. He maintained that the proper amount
(including penalties) should have been £3 million not £10. The
Honourable President held that Mr. Kenny as a taxpayer has no "locus standi" to
challenge administrative decisions including adjudication made by the Revenue
Commissioners relating to the duties and tax payable by another taxpayer. The
President went on to point out that judicial review is discretionary and that
under the determination of judicial review proceedings could delay the present
proceedings by at least two years and, perhaps, a lot more. When the matter
came before me at the beginning of July I was informed by Counsel for the
Defendant that he required an adjournment until Michaelmas. The Court pointed
out that this matter only involved one issue. Was the Defendant indebted to
the Plaintiffs in the sum claimed.
38. The
Court refused to grant the adjournment and pointed out that there had been
protracted proceedings in the Court as long ago as May of 1995. The Court
stated it would receive any written submissions and supporting authorities on
or before the 22nd July and the Court intended to deal with the matter this
term. On the 22nd July the matter came into the list. Counsel for the
Defendant maintained that it would not be possible for him to present his
arguments and submissions and he would have to have an adjournment. When the
Court refused to grant the adjournment Counsel for the Defendant there and then
produced a submission and an Affidavit and a list of authorities. The Court
reserved its decision.
39. Mr.
Kenny's final Affidavit of the 19th July refers to Ms. Caroline Preston's
Affidavit and submits that most of them are legal submissions and point
scoring. He rejects a number of items in her Affidavit. He repeats that he
has always denied that the loan was advanced to him. He says that the onus is
on the Plaintiffs to prove the authority of L & P Finance and that he did
not check the recitals in the Deed of Assignment and Power of Attorney which
documents were drafted by the Plaintiff's solicitors. He also contends that
the Court should not grant an Order to deal with the delay. He gives a
different version as to what has been happening in the Cypriot Court. He
alleges that the delays in the Cypriot proceedings have been caused by the
Plaintiff's herein attempt to have him effectively removed from these
proceedings. However the Cypriot proceedings seems to devote themselves
entirely to the question of what happened to the money when it reached Cyprus,
which was long after the contract with which this Court is concerned. Counsel
for the Defendant alleges they have a good defence in the Plaintiff's claim in
that one of these proceedings were commenced in flagrant breach of a contract
they had made not to sue the Defendant. The contract to which he refers to
alleges that in the contract he concluded the money was Mr. Goodman's and none
of the other Plaintiffs can have any locus standi in proceedings apart from Mr.
Goodman's lawful heirs and assigns who must prove their title as such.
40. Mr.
Goodman is a Plaintiff in these proceedings and the Defendant has alleged that
it should have been Gemon Limited who should be the Plaintiff. That company is
also a Plaintiff. There is no substance in this point.
41. He
alleges that the money was never received by the Defendant or put under his
control. The Court is satisfied that L & P are the agents of the Defendant
and that they gave directions as to where the money was to be placed, indeed,
changed the venue from their initial instructions. What happened after that
time is a matter purely within the knowledge of the Defendant and/or his
agents. If it was not received by him it may have caused dissatisfaction
against other parties. The onus would be on him to proved what happened the
money. The Court is satisfied that the money was given to him, his servant or
agent and is not concerned with what happened afterwards. He then alleges that
the first terms of his written contract with Mr. Goodman have not been honoured
namely the surrender or cancellation of his security for that loan. He would
appear that in fact such security never in fact was provided. Therefore it
cannot be surrendered or cancelled. That does not mean if money is lent it
cannot be recovered even though the contract provides for a security.
42. The
final point is relying on the Moneylender's Act. It will be seen from this one
judgment and the Plaintiffs have explained that this was a once off event and
there is no evidence beyond suspicion that this is untrue.
43. The
Defendant does not deny that he sought the loan, he does not deny that it was
advanced him although he alleges that it never came under his control.
44. The
Plaintiff did what was required of them. They sent the money to the nominated
account which account was nominated by the Defendant's servant or agent. Or
does he allege that the money has ever been repaid. He admits that the
negotiations were carried out between representatives of the Plaintiffs and
"separate persons representing?" him and he does not himself suggest that he
had any part in the negotiations. There is no evidence of his servants or
agents to contradict the Plaintiff's evidence. The Court added names under
Order 15 Rule 13 of the Rules of the Superior Courts that all parties possibly
having a claim to the money are in fact before the Court. Since the Judicature
Act an assignor and an assignee can both sue at law (see Chitty on Contracts
26th Ed. paras 1393, 1394 and see also Wiley Judicature Act, pp 63 to 65. The
Court is not satisfied that there is any substance in the agreement which were
preconditions to his liability. The parties in the transaction meaning the
Plaintiffs and the representatives of the Defendant have never suggested that
there was any precondition to the advance. Payment was made into the accounts
directed by the persons representing Mr. Kenny. Mr. Kenny does not contradict
or challenge that but in doing so they were not acting on his instruction.
There is no merit in the suggestion that he must get security which would be a
precondition to his liability.
45. The
advance of money is certainly a clear evidence of consideration of the
obligation to repay, in the circumstances of this case. As regards the
Moneylender's Act all the evidence contained in paragraph 9 of Mr. John
O'Donnell's Affidavit it is clear that this was the first and only time that
the Plaintiff made such a loan. In order to prove the business of moneylending
it is necessary to prove some element of system and continuity. As Hallsbury's
Laws of England 3rd Ed.Vol. 27 p8:-
"It
is a question of fact in each case whether a person is carrying on the business
of moneylending in order to establish that he is carrying on such business it
is not sufficient to prove that he has occasionally lent money at a
remunerative rate of interest; it is necessary to prove some degree and system
of continuity in his moneylending transactions ..."
See
also
D'Arcy
J. in
Great
Bullprint Cripps Warburg -v- Cologn Investment
1980 IR 321 at p 339:-
"I
find that at the material times the Plaintiffs were not carrying on the
business of moneylenders in this jurisdiction. The one isolated loan, which is
the subject matter of these proceedings, did not constitute them moneylenders
for the purposes of the Act of 1900 as amended."
46. The
Court has also referred to Westpac Banking Corporation -v- Dempsey 1993 3 IR
331. However it is agreed between the parties that this letter of the 13th of
March, 1990 was not a guarantee. If the Court were to conclude that there was
a genuine issue of fact between the parties then the Court
must
refer
this matter to an oral hearing. The corollary of that proposition is however
also true: if the Court concludes that the matters advanced by the Defendant
amount to nothing more than an artifice to delay and avoid judgment then it was
equally the Court's obligation to give liberty to enter judgment. It broached
this case should be that identified by Sir Robert Megarry in
Lady
Anne Tannant -v- Associated Newspapers
Group
Limited
(1979)
FSR 298 at 308:-
"The
desire to investigate alleged obscurities in the hope that something will turn
up on the investigation cannot, separately, or together, amount to sufficient
reason for refusing to enter judgment for the Plaintiff do not get to defend by
putting forward a case that is all surmise and micawberism ..."
47. The
Court is satisfied that power to allow cross-examination is a comparatively
rare occurrence. Also, the Defendant now seeks to cross-examine on Affidavits
which were not available and sworn in January, 1995 but which were opened to
this Court in May, 1995 without the slightest suggestion from the Defendant
that he wished to cross-examine them. I do not think it would be appropriate
in view of the decision of the President of the High Court and in the absence
of the Revenue Commissioners as a party to review the adjudication of the
Revenue Commissioners. Section 12(5) of the Stamp Act, 1891 provides that
documents stamped in accordance with the Revenue Adjudication shall be
admissible in evidence. The Court is satisfied that this money was lent to the
Defendant and was to be refunded to the lender. Accordingly, the Court enters
judgment to £22,830,000 in favour of all the Plaintiffs against the
Defendants with interest and makes an Order as laid down by the President in
Mellohide
Products Limited -v- Barry Agencies Limited
(22nd
February 1982)
© 1996 Irish High Court
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