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Judgment

Title:
Irish Bank Resolution Corporation Limited & ors -v- Quinn & ors
Neutral Citation:
[2012] IEHC 507
High Court Record Number:
2011 5843 P & 2012 120 COM
Date of Delivery:
12/05/2012
Court:
High Court
Judgment by:
Kelly J.
Status:
Approved

___________________________________________________________________________



Neutral Citation Number: [2012] IEHC 507

THE HIGH COURT

COMMERCIAL

[2011 No. 5843 P]

[2012 No. 120 COM]





BETWEEN

IRISH BANK RESOLUTION CORPORATION LIMITED,

QUINN INVESTMENTS SWEDEN A.B. 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 A.B., FORFAR OVERSEAS S.A., LOCKERBIE INVESTMENTS S.A., CLONMORE INVESTMENTS S.A., MARFINE INVESTMENTS LIMITED, BLANDUN ENTERPRISES LIMITED, MECON FZE, CJSC, VNESHKONSALT, OOO STROITELNYE TEKHNOLOGII, OOO RLC-DEVELOPMENT AND KAREN WOODS

DEFENDANTS

JUDGMENT of Mr. Justice Kelly delivered on the 5th day of December, 2012

Introduction
1. These are my reasons for dismissing an application made by the second to seventh, ninth and twentieth defendants (the Quinns) to remove receivers appointed by the court and to prohibit those receivers’ solicitors from acting for them. The receivers are Mr. Declan Taite and Ms. Sharon Barrett. Mr. Taite was appointed as receiver over the assets of the second, third, fourth, fifth, sixth, seventh and ninth defendants. Mr. Taite and Ms. Barrett were appointed as joint receivers over the assets of the twentieth defendant. The solicitors who act for the receivers are Messrs. Arthur Cox.

2. Earlier in the litigation, the moving parties were professionally represented. That is no longer the case. For the most part it was the defendant, Niall McPartland, who is legally qualified, who presented the case but I also heard from two other defendants.

3. The defendants presented their case in a competent and courteous fashion. It is clear that they have a deep-seated distrust of the plaintiff bank (the bank), the receivers (the receivers) and the receivers’ solicitors (the solicitors).

4. The case that the Quinns make is that the receivers and the solicitors ought not to be permitted to continue in those roles because of an alleged real or apparent conflict of interest and partiality.

5. In order to appreciate the basis for these contentions it is necessary to set out a short account of the proceedings to date.

The Proceedings
6. The bank contends that the defendants have conspired to wrongfully convert and have wrongfully converted and appropriated assets which are defined in the first schedule to the plenary summons. In addition to the declaratory reliefs sought the bank also seeks injunctions and orders requiring the defendants to account.

7. Before these proceedings were sought to be admitted to the Commercial List, interim and interlocutory orders were made in June 2011 and July 2011 by Clarke J. It was alleged that a number of the defendants were in breach of those orders and Dunne J. heard and determined an application seeking committal to prison of three of the defendants on 29th June, 2012. She found that a contempt of court had been committed and ordered the imprisonment of two of the defendants. (Subsequently a third defendant was directed to be imprisoned.) She also made disclosure orders and granted injunctions in the proceedings. In addition, she appointed Mr. Taite as receiver over the assets of Seán Quinn Jr. and Peter Darragh Quinn wheresoever situate. Her order also set out the powers of the receiver. The appointment of the receiver was expressly stated to be in aid of the disclosure orders made against the relevant defendants. Those disclosure orders require information to be furnished on affidavit of all assets of whatever nature or kind situate in Ireland or worldwide and all documents relating to the material which was specified in the order of Dunne J.

8. Following the acceptance of the litigation into the Commercial List, an application was made to me for Mareva type injunctions restraining the Quinns (except Karen Woods) from reducing their assets below the sum of €50m pending trial. I granted those orders as well as disclosure orders. In addition, I appointed Mr. Taite as receiver over the assets of the Quinns (except Karen Woods) and specified the powers which he would have. These powers permitted the receiver to take possession, control and to secure and collect all assets in or out of the jurisdiction including but not limited to shareholdings of the Quinns and power to take steps to secure any credit balances in any bank accounts in or out of the jurisdiction in the names of the Quinns or any aliases or bank accounts held on their behalf. On 30th July, 2012, Dunne J. by consent granted similar and somewhat more extensive powers to Mr. Taite as receiver over the assets of the fourth and eight defendants.

9. On 31st July, 2012, I granted injunctive relief against Karen Woods and appointed the receivers over her assets with similar powers to those contained in my earlier order of 25th July, 2012.

10. It is not without significance that the orders made by me on 25th July and 31st July were grounded upon extensive affidavit evidence setting out very serious allegations of wrongdoing on the part of the relevant defendants. Although a full opportunity was provided for replying affidavit evidence to be sworn by those defendants, no such evidence was forthcoming. Neither did they object to the making of the orders sought.

11. At a vacation sitting of the Commercial Court on 3rd September, 2012, application was made by the receivers to Charleton J. for a series of orders requiring delivery up of identified material. The relevant defendants were given time to respond to that application and on a further vacation sitting on 24th September, the matter came before me. The Quinns on that occasion intimated a desire to apply for the reliefs with which I am dealing in this judgment. I fixed a date for the hearing of that application and affidavit evidence was exchanged between the parties.

12. On 2nd November, 2012, I refused the reliefs sought.

The Application
13. This application is grounded upon a lengthy affidavit sworn by Nial McPartland. It runs to some 94 paragraphs (45 of which are directed to this application) and sets out the factual background to this application. It also contains material in defence of the application brought by the receiver which is the not the subject of this judgment.

14. The basis of the application for the removal of the receivers is an alleged demonstration of a lack of independence in the performance of their duties and an alleged conflict of interest. Insofar as the receivers’ solicitors are concerned the allegation is that they also have demonstrated a lack of independence and have a conflict of interest.

15. The Quinns contend that they have a full defence to this action. They assert that the security which the bank is relying on is tainted with illegality and is unenforceable. They rely on allegations made in related proceedings where the Quinns are plaintiffs and the bank defendant, bearing record No. 2011/4336 P. The Quinns say that the assets were purchased from Quinn family resources and not as a result of any borrowing from the bank. In addition, they say that any purported security that the bank has over the assets is as a result of lending made by it to support its own share price which is alleged to be in breach of s. 60 of Companies Act 1963 and the Market Abuse (Directive) 2003/6/EC Regulations 2005.

Events of 29th June, 2012
16. It is on this day that Dunne J. appointed Mr. Taite. The events giving rise to that appear to have caused considerable concern to the Quinns. Mr. Taite was not the bank’s first nominee for appointment. Rather it sought to have Mr. Kieran Wallace of KPMG appointed. That was objected to by the Quinns then counsel. Dunne J. appeared to have accepted that the objection raised was valid.

17. The bank’s second nominee was Mr. Eamon Richardson also of KPMG. The judge rejected that nomination and stated that she did not “want to impugn the reputation of any individual in any firm in any practice in any shape or form, be it solicitors, accountants or whatever, and went on to say that she “was not a great believer in Chinese walls”. She indicated that the bank should nominate somebody who was independent. Mr. Taite was nominated and appointed.

Subsequent Correspondence
18. On 13th July, 2012, the Quinns former solicitor wrote to Mr. Taite and asked for the identity of the legal advisers whom he was proposing to retain. The letter pointed out that the legal adviser to Mr. Taite should not be Messrs. McCann Fitzgerald because that firm already acted for the bank. The letter drew attention to the comments made by the judge concerning the appointment of the receiver and the necessity for independence. Similar considerations ought to apply to the receiver’s legal adviser, it was stated.

19. The response from the receiver was to the effect that he had indeed retained McCann Fitzgerald to act as his legal advisers. His letter went on:-

      “As you suggested, I have reviewed the transcript of the hearing before the High Court on 29 June 2012. The court did not seek to impose any stipulations in relation to the proposed receiver’s professional advisers, but instead indicated a position should be avoided whereby an adviser was required to put Chinese walls in place, in order to avoid a possible conflict of interest. I am aware that McCann Fitzgerald also represent IBRC in this matter. I am however satisfied that no conflict arises between McCann Fitzgerald’s role as advisers to the bank and advisers to me as court appointed receiver and accordingly the concern expressed by the court does not arise in this case. Further, you’ll appreciate that McCann Fitzgerald’s background knowledge of this matter will greatly facilitate the smooth and efficient operation of the receivership, which will assist in minimising costs. This is clearly in the interest of the parties.”
20. This was not a view shared by the Quinns.

21. The matter was again before Dunne J. on 20th July, 2012 and the issue was raised before her. There was a debate before the judge with views being expressed by counsel on behalf of the receiver, the Quinns and the bank. In the event, the judge expressed herself as follows:-

      “I think there should be a separate solicitor dealing with the matter. It may increase the costs and that is a matter to be regretted, but having said that, I think that if the receiver is to retain his position as an independent individual it should be dealt with by independent solicitors.”
22. Following that ruling, the receiver proposed Mr. William Day of Arthur Cox Solicitors to act for him. That was notified to the Quinns then solicitors who replied on 23rd July, 2012 saying:-
      “Given the extent of the receivers powers sought, the sensitive nature of this instruction for all concerned and the consequent necessity for complete independence of appointees including legal advisers (as emphasised by Dunne J.) can you confirm that Mr. Day, or indeed Arthur Cox, have not previously been involved in any aspect of the Quinns/IBRC (Anglo) connections. Naturally, it would be inappropriate that any firm and/or individual would be instructed that previously had any involvement whatsoever (be it through the giving of advice, agreeing to take instructions/appointments or otherwise) with Anglo in the context of the Quinn enforcement (which for the avoidance of doubt includes the enforcement against any company within the Quinn group/connection or against its ultimate shareholders (the Quinn family)).”
23. The receiver responded to this communication stating:-
      “in relation to your query regarding the receivers appointment of an alternative legal adviser for the purposes of this assignment, Arthur Cox have confirmed that they have not acted for IBRC (Anglo) in relation to the Quinn/IBRC (Anglo) connection, and they do not believe that they have any conflict in advising me as court appointed receiver of the assets of the above named individuals.”
24. Mr. McPartland says that the Quinns and their then legal advisers accepted these assurances and did not contest the appointment of Arthur Cox as solicitors to the receiver.

25. Information subsequently obtained by the Quinns, it is said, casts a different light on the alleged independence of the receivers and their solicitors which would justify their removal.

26. It is appropriate that I should record here the receiver’s explanation of his initial attempt to appoint Messrs. McCann Fitzgerald as his solicitors. His stated intention in so doing was to save costs and time because those solicitors were familiar with the asset position of the Quinns. Mr. Taite points out that in any role involving the location and preservation of assets, it is always necessary to move as quickly as possible to locate those assets and to secure them against dissipation. Because McCann Fitzgerald already had substantial knowledge regarding the defendant’s assets and their location, he felt it was appropriate to make use of that information in seeking to locate and secure the assets.

27. Mr. Taite points out the different role of the receiver as distinct from their legal advisers. It is the personal responsibility of the receivers to locate and secure the assets. Legal advice is tendered by the solicitors but the decision is that of the receivers.

The Receivers
28. The allegations made against the receivers are to the effect that (a) they have not acted impartially and/or in a way which demonstrates independence from the bank and (b) that employees of RSM Farrell Grant Sparks (Sparks), the firm to which the receivers belong, have some connection with either the bank or Quinn finance. I will deal with these allegations in turn.

29. Mr. Taite points out that neither he nor his co-receiver was a party to the action in which the Quinn family have brought proceedings against the bank nor is he a party to these proceedings. The receivers are disinterested as to the outcome of all of these proceedings.

30. Mr. McPartland’s affidavit deals in great detail with various items which he contends are supportive of this application. Since I am of opinion that this application misunderstands the independence which is required of the receivers it is not necessary to deal with them in minute detail. Rather, I will deal with the major elements of the complaints made.

Bazzely
31. Mr. McPartland alleges a lack of independence and partiality in favour of the bank on the part of the receivers, particularly in relation to a Portuguese company called Bazzely. The receiver’s solicitors raised a series of detailed questions concerning this company. It is alleged that this was inappropriate and furthermore that Arthur Cox have a conflict of interest in respect of it.

32. Insofar as the receiver is concerned, he points out that Bazzely was used by members of the Quinn family to purchase contracts for difference in the bank. Bazzely is beneficially and legally owned by a number of the defendants in these proceedings. That being so, it is incumbent on him as receiver of the Quinns’ assets to investigate their shareholding in it. That was why his solicitors wrote to the defendants’ former solicitors seeking such details. The information was not requested because of any instruction issued to him by the bank in a direct or indeed indirect form. The information, rather, was directly relevant to his investigation of the defendants’ assets. He does not share Mr. McPartland’s view that because Bazzely is allegedly valueless that it is not of any relevance to the receiver’s inquiries. He makes a similar point concerning allegations made regarding information sought by him in respect of Quinn Group (ROI) Limited. This was, he says, part and parcel of him doing his job of gathering information in furtherance of his work and not because he was in any way influenced by the bank.

Sparks
33. Mr. McPartland alleges that Sparks “has already been instructed in matters in relation to the Quinn/Anglo dispute”. The receivers accept that Sparks was instructed by Quinn Finance to prepare reports on certain transactions that had been entered into concerning shares in and loans to certain Quinn Finance Group companies. It was asked to comment on whether, in its opinion, certain transfers of shareholdings in and loans to various companies within the Quinn Finance Group to third parties would have taken place for less than full value, and to comment on any commercial rationale for such transactions. That report was requested by Quinn Finance when a court case was ongoing but no representative of Sparks was called to give evidence at the trial. The particular engagement was not carried out by either of the receivers and neither they, nor any member of their team, were involved in the engagement. It is the receiver’s belief that no conflict arises as a result of this and he reiterates that he has no knowledge of the basis of an action by Quinn Finance’s against Mr. McPartland. Sparks have no involvement in that case. The fact that a former client of Sparks has sued Mr. McPartland he says cannot prevent him from acting as receiver in this case.

34. Mr. McPartland also averred to having carried out a web search with a view to identifying employees of Sparks who might have some connection to the bank. There are indeed persons who once worked for the bank and now work for Sparks and vice versa.

35. Two of the individuals named by Mr. McPartland are former employees of Sparks and now work for the bank. Four more once worked for the bank and now work or have worked for Sparks. None of these individuals have any involvement in the current engagement. Two of them ceased to be employees of the bank a number of years ago and a third, whilst formerly an employee of the bank, subsequently became an employee of Irish Nationwide Building Society and moved from there to Sparks.

36. The receivers contend that there is no actual or apparent conflict of interest and that they have not acted in a manner inconsistent with the duties imposed upon them by the court order. The receivers believe that having regard to the task imposed upon them they have acted properly and independently and are objective in their approach to their work.

37. The Quinns also contend that the receivers ought not to pass onto the bank any information which they may acquire. The intention to do so is alleged to be evidence of bias. The receivers say that in so doing in respect of relevant non-privileged information they are merely carrying out their task.

The Solicitors
38. The allegations made against the solicitors are that they have conflicts of interest and have demonstrated a lack of impartiality and independence and furthermore have attempted to mislead the Quinns.

39. Mr. William Day, a partner in Arthur Cox retained by the receivers has sworn a detailed affidavit dealing with these various allegations.

40. When Mr. Taite first approached Mr. Day, he contacted his firms’ conflicts committee and discussed the assignment with members of that committee in detail. He did this because he knew that his firm had acted in connection with and against the bank on many occasions on separate and distinct assignments. However, he points out that the issue of client confidentiality is treated with utmost seriousness by his firm and its members do not share information gained from instructions by third parties without client consent. Because of that it is not possible for him to go into the specifics of the other instructions and activities of his firm on behalf of different clients referred to in Mr. McPartland’s affidavit.

41. He admits that Cox’s were appointed to act for a syndicate of banks who are owed significant sums by Quinn Group Limited which was the holding company of the group of companies commonly referred to as the Quinn manufacturing group. Subsidiaries of Quinn Group Limited have provided guarantees in respect of the borrowings of that company. Neither Quinn Group Limited nor any of its subsidiary guarantors within the Quinn manufacturing group formed part of the international property group which is a distinct collection of companies established by the Quinn family that forms the subject matter of the proceedings which have resulted in the appointment of the receivers.

42. Quinn Group Limited was the counter party with whom the bank syndicate was obliged to deal with on the restructuring of the debts of the Quinn manufacturing group. Quinn Group Limited negotiated a consensual restructuring of the debt due by it to the banking syndicate. Cox’s did not act for the bank in relation to that matter and it was at all times represented by separate Irish and United Kingdom solicitors. The bank was not a creditor of Quinn Group Limited nor was it either an instigator or the instructing party in relation to the creditor’s contingency planning.

43. Mr. Day says that his firm’s involvement on behalf of the banking syndicate to the Quinn manufacturing group was a matter of public record and was known to both Seán Quinn Snr and Peter Darragh Quinn, both of whom were directors of Quinn Group Limited at the relevant time. There was, therefore, no question of Arthur Cox having attempted to mislead the defendants or anyone else.

44. Insofar as the queries raised concerning Bazzely are concerned, he says that these were made with a view to ascertaining what assets the defendants own so that the receiver could fulfil the duties imposed upon him by the court.

45. More generally, Mr. Day says that he believes that Mr. McPartland is of opinion is that if an individual or firm has acted for the bank or its shareholder, the Department of Finance, at any time, such involvement conflicts that person or firm and precludes them from acting for the receivers. He says that this proposition is incorrect and is not really believed by the Quinns because their former solicitors have acted for the bank themselves on many occasions. That firm only ceased to act for the defendants due to funding issues. Indeed, he points out that the profile of one member of Eversheds (the Quinns’ former solicitors) makes specific reference to his role as adviser to the joint administrators of Quinn Insurance Limited on the sale of the general insurance business to a joint venture entity.

46. Mr. Day swears that neither his firm nor himself have any conflict of interest in acting for the receivers. His firm upholds, he says, the correct highest standards of professional conduct and that there is and will be no question of client confidentiality being breached. He furthermore indicates that if the court is of opinion that he ought to, he is quite willing to withdraw and cease to act for the receivers.

The Legal Position
47. I am of opinion that the Quinns in seeking the discharge of the receivers and their solicitors have done so on a misunderstanding of the legal position coupled with a great distrust of the bank and its approach to them.

48. The receivers were appointed in aid of orders made by the court. Those orders required the defendants to disclose all of their assets in circumstances where there was a finding by Dunne J. that the assets of the Quinns had been dealt with by them with a view to placing them beyond the reach of the plaintiffs in these proceedings. The receivers’ role is an active rather than a passive one. It is not merely to preserve such assets as the defendants have chosen to disclose. Rather, it is to collect in and preserve all of the assets of the defendants in whatever jurisdiction they may be and whether they have chosen to disclose them or not.

49. The Quinns apprehend that information is going to be furnished by the receivers to the bank. They believe that this demonstrates a lack of independence which justifies the receivers removal. I believe this to be an incorrect view.

50. Nobody could dispute the statement contained in Kerr and Hunter on Receivers and Administrators (19th Ed.) relied upon by Mr. McPartland where at para. 12 it is said:-

      “A receiver in a claim or other proceeding is an impartial person, appointed by the court to collect, protect and receive, pending the proceedings, the rents, issues and profits of land, personal estate or any other kind of asset which it does not seem reasonable to the court that either party should collect or receive, or for enabling the same to be distributed among the persons in title.”
51. In chapter 4 of the same work which was also relied upon by Mr. McPartland, the authors state:-
      “A receiver appointed in a claim should, as a general rule, be a person wholly disinterested in the subject matter.”
That particular passage goes on to point out that it is competent for the court in a proper case to appoint as receiver a person who is interested in the subject matter of the claim if it is satisfied that the appointment will be attended with benefit to the estate.

52. In the present case, the crucial thing to bear in mind is that the receivers have to be wholly disinterested in the subject matter of this action. The receivers have no interest in the assets of the Quinns. That is not in dispute.

53. The receivers accept that they have important obligations to the court. These are summarised by Ferris J. in Mirror Group Newspapers Plc v. Maxwell [1998] 1 BCL 638 where he said:-

      “The essential point which requires constantly to be borne in mind is that office holders are fiduciaries charged with the duty of protecting, getting in, realising and ultimately passing on to others assets and property which belong not to themselves but to creditors or beneficiaries of one kind or another. They are appointed because of their professional skills and experience and they are expected to exercise proper commercial judgment in the carrying out of their duties. Their fundamental obligation is, however, a duty to account, both for the way in which they exercise their powers and for the property which they deal with.”
54. Obviously, receivers are obliged not to place themselves in a position where their duties to the court are allowed to conflict with some other interest. The position was summarised by Millet L.J. in Bristol and West Building Society v. Mothew [1998] Ch. 1 where he said:-
      “A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal.”
55. In the present case, there is no dispute but that the receivers have no interest in the property which they are charged to preserve.

Onus of Proof – Receivers
56. It is trite law to state that he who asserts must prove. In the present case, the onus is on the Quinns to demonstrate grounds which would justify the removal of the receivers. They have to produce specific evidence of partiality or real or perceived bias.

57. In Thomas v. Dawkin [1792] 1 Ves Jun 452, Thurlow L.C., held that where an applicant seeks to set aside the appointment of a receiver on the grounds of bias there must be “some substantial objection to induce the court to overturn the appointment”.

58. Assistance as to the yardstick to be applied by the court on an application such as this can be gleaned from a number of more recent English cases. The first dealt with an application seeking to remove trustees in bankruptcy from their office on the grounds that they had colluded with a creditor of the bankrupt to work against the latter’s interest. The case is that of Doffman & Isaacs v. Wood & Hellard [2011] EWHC 4008. Proudman J. had this to say:-

      “It is common ground that cause must be shown for removal and that case law generally on the removal of office holders is relevant. Section 298 uses similar wording to that of s. 172(2) relating to the removal of a liquidator on a compulsory winding up. The question of whether to remove an insolvency practitioner of any kind must therefore be measured by reference to the ‘real substantial honest interest’ of the process, and to the purpose for which the office holder is appointed: See Adam Eyton Limited [1887] 36 Ch D. 299 per Bowen L.J. at 306 quoted with approval in Re Edennote Limited [1996] 2 BCLC 389 at 398.”
59. An older English case in which such an application was successful was in Re Sir John Moore Gold Company [1879] 12 Ch D. 325. The liquidator in that case was sought to be removed because of partiality in circumstances where he had to investigate whether proceedings should be brought against the company’s former directors. He knew both of them. He expressed his support for one of the directors in a letter and expressed the view that there would be no evidence to support the allegation that he had acted improperly. Bacon V.C. held:-
      “That is strong testimony in their favour, but it is also a proof that he takes their side very strongly. That being so, Mr. Dicker having expressed a strong view against the applicant, having himself an interest adverse to the application, and having according to his own view nothing of importance left to be done in the liquidation, I think that his continuing in the office of liquidator can have no other effect than to impede Schlotel’s proceedings. Everybody knows the difference which it makes in the conduct of such proceedings to have a liquidator who is hostile to them and disposed to put obstacles in the way. It seems to me that the case is one in which Mr. Dicker ought not to be continued as liquidator.”
60. In my view, where the removal of a court appointed receiver is sought because of alleged partiality or bias, the court has to be satisfied as to specific evidence of some improper conduct on the part of the receiver. It is not enough to suggest that the receiver will not be capable of acting independently because of a former relationship with one of the parties to the dispute. The relationship would have to be a subsisting one with evidence that the receiver will act improperly under the direction of one of the parties.

61. I am of the view that there is no basis established for removing the receivers because of their firm’s former involvement in the manner already described with aspects of Quinn Finance. Neither is there any case established by reference to employees who were or are employees of the bank.

62. I of the opinion that Mr. Taite did not act inappropriately in initially seeking the appointment of McCann Fitzgerald as his solicitors. While Dunne J. did not accede to that application she made no suggestion express or implied that he had acted inappropriately in seeking to do so. I have already dealt with his motivation for seeking to appoint McCann Fitzgerald and his belief that that course of action would save considerably on costs and time. Indeed, such occasionally occurs in official liquidations where liquidators have sought to instruct the solicitor who acted for a creditor which originally presented the petition. Whilst that does not happen frequently it nonetheless has had judicial approval as, for example, in Re Schuppan [1996] 2 All E.R. 664 where Robert-Walker J. held:-

      “In a case where the real difficulties that are foreseen are in connection with the identification, tracing and recovery of assets for the bankrupt’s estate, the retainer of solicitors who already had a good grasp of these difficulties can be of great advantage to all the creditors, not just the petitioning creditor.”
63. A similar view was expressed by Pumfrey J. in Re Barron Investments (Holdings) Limited (In Liquidation) [2000] 1 BCLC 272, where he accepted that whilst it was unusual for a liquidator to seek to instruct the solicitor who had acted for the petitioning creditor, it would not be prohibited simply because of a theoretical possibility of conflict. He said:-
      “I think that it is necessary to analyse the particular facts of the particular case in order accurately to identify the manner in which the conflict arising by reason of dual employment is said to occur. Then I think it is necessary to be satisfied that there is a genuine dual employment. It seems to me that if the apprehended conflict is a mere theoretical possibility, it will not always be necessary for the court to take steps to deal with it unless and until the actual conflict arises.”
64. Much emphasis was placed upon the receivers’ original decision to instruct McCann Fitzgerald. It created suspicion and soured the Quinn’s view thereafter. As I have shown there was nothing necessarily wrong with that decision, given the particular circumstances of this case. In any event, that appointment did not proceed. I am satisfied that the onus of proof to warrant the order sought has not been discharged by the applicants.

65. Likewise, I am of the view that there is no demonstration of partiality or bias by reference to the receivers’ activities concerning Bazzely. The Quinns seem to believe that the receivers are not obliged to carry out any investigative work. That is not so. In order to secure and preserve the assets, they must first locate them. I do not perceive any impropriety on the receivers’ part in this regard. Indeed, the receivers could be criticised for not pursuing this line of enquiry.

66. In due course the receivers will be entitled to disclose to the bank all relevant non-privileged information obtained by them pertaining to the assets. An intention to do so is not indicative of bias or partiality.

Onus of Proof - Solicitors
67. The onus of proof on somebody seeking to remove a solicitor is no less than that in respect of a receiver.

68. One begins with the proposition that parties are free to chose their own legal advisers. There is, nonetheless, a jurisdiction to intervene so as to ensure that a solicitor does not remain on record for any party where his doing so would not be in the interests of justice. The jurisdiction to remove a solicitor is, however, exercised sparingly. In Re Recover Limited [2003] 2 BC LC, Pumfrey J. said:-

      “That jurisdiction must, in my view, be exercised with caution, as in general parties to litigation are entitled to the advisers they have chosen.”
69. It is not the law that a solicitor or a firm of solicitors can never act for and against a client, even in the same matter. In Re Schuppan [1996] 2 All E.R. 664, Robert Walker J. said:-
      “It is not the law that a solicitor or firm of solicitors can never act for and against a client, even in the same matter. The law and practice in England is less inflexible that in (for instance) the United States (see Re a Firm of Solicitors [1995] 3 All E.R. 482 at 488 – 489 where Lightman J. said:-

        ‘The basis of the courts' intervention is not a possible perception of impropriety: it is the protection of confidential information’.”
70. In Farrington v. Rowe McBride and Partners [1985] 1 NZLR 83, Richardson J. said:-
      “A solicitor’s loyalty to his client must be undivided. He cannot properly discharge his duties to one whose interests are in opposition to those of another client. If there is a conflict in his responsibilities to one or both he must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting: no agent who has accepted an employment from one principal can in law accept an engagement inconsistent with his duty to the first principal from the second principal, unless he makes the fullest disclosure to each principal of his interest, and obtains the consent of each principal to the double employment. And there will be some circumstances in which it is impossible, notwithstanding such disclosure, for any solicitor to act fairly and adequately for both.”
71. That view was cited with approval by Sapolu C.J. in Apia Quality Meats Limited v. Westfield Holdings Limited [2007] 3 LRC 172.

72. Sometimes it is a former client who takes exception to his erstwhile solicitor acting against him. This has been considered on a number of occasions by the English courts.

73. In Prince Jeffri Bolkiah v. KPMG (A Firm) [1999] 2 AC 222, Lord Millett said this:-

      “In Rakusen’s case the Court of Appeal founded the jurisdiction on the right of the former client to the protection of his confidential information. This was challenged by counsel for Prince Jefri, who contended for an absolute rule, such as that adopted in the United States, which precludes a solicitor or his firm altogether from acting for a client with an interest adverse to that of the former client in the same or a connected matter. In the course of argument, however, he modified his position, accepting that there was no ground on which the court could properly intervene unless two conditions were satisfied: (i) that the solicitor was in possession of information which was confidential to the former client and (ii) that such information was or might be relevant to the matter on which he was instructed by the second client. This makes the possession of relevant confidential information the test of what is comprehended within the expression ‘the same or a connected matter.’ On this footing the court’s intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information.

      My Lords, I would affirm this as the basis of the court’s jurisdiction to intervene on behalf of a former client. It is otherwise where the court's intervention is sought by an existing client, for a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation.”

74. In dealing with the position where a former client objects to a solicitor acting for a new client, Lord Millett said:-
      “Where the court's intervention is sought by a former client, however, the position is entirely different. The court’s jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.”
75. Returning to the decision of Pumfrey J. in Re Barron Investments, he said:-
      “I think that it is necessary to analyse the particular facts of the particular case in order accurately to identify the manner in which the conflict arising by reason of dual employment is said to occur. Then I think it is necessary to be satisfied that there is a genuine dual employment. It seems to me that if the apprehended conflict is a mere theoretical possibility, it will not always be necessary for the court to take steps to deal with it unless and until the actual conflict arises.”
76. The Quinns do not allege that Arthur Cox is in breach of the prohibition against dual employment. It is not alleged that the firm is currently acting for two clients whose interests are adverse to each other. Neither is it alleged that Arthur Cox may be in possession of information that is confidential to a former client and which is relevant to the matters on which Mr. Day has been instructed by the receivers.

77. What the Quinns contend is that because of the identity of some of its former clients, Arthur Cox may give biased evidence to the receivers or part with information confidential to the receivers. But in this regard, there is no evidence of any particular incidents of improper advice being given or of any apprehended or actual disclosure of confidential information. Merely because Cox’s have in the past acted for clients whose interests may be perceived by the Quinns to be adverse to theirs is not evidence of bias.

78. I do not find any evidence of any form of wrongdoing, conflict of interest or impropriety on the part of Mr. Day or Arthur Cox to warrant the making of the order sought.

Conclusion
79. It is for the above reasons that I dismissed the application to remove both the receivers and the solicitors.



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