Bonice Property Corp & ors v Oakes

Factual and Procedural Background

The plaintiffs, Company A and Company B, are non-trading property holding companies incorporated in the British Virgin Islands. The controlling director and ultimate owner of both companies is Appellant, who exercises ownership through Company C, the parent company. The defendant, Defendant, is a property restorer residing in the United Kingdom, who previously lived in West Cork during the relevant period.

In 1999, Company A acquired a derelict property known as Castle Freke in West Cork, historically associated with Appellant's family. In 2001, Appellant met Defendant, who, through Company B, owned Rathbarry Castle, also historically linked to Appellant's family. In 2004, Defendant agreed to become project manager for restoring Castle Freke, and Appellant purchased Rathbarry Castle from Defendant by acquiring a controlling interest in Company B.

Defendant managed restoration and maintenance of both properties, assuming responsibility for paying tradesmen and contractors, keeping handwritten records of payments. Appellant transferred funds to Defendant’s bank account based on payment summaries and reconciliations during visits to Ireland. Defendant was paid €3,000 per week between 2004 and 2009, and €1,500 per week thereafter. The parties dispute whether the payment reduction was agreed or an indefinite deferral.

Defendant was permitted rent-free residence in an apartment at Rathbarry Castle. Appellant estimates total transfers to Defendant between 2004 and 2014, including remuneration, at €3,407,901.

In June 2014, Appellant was informed of discrepancies between Defendant’s payment records and tradesmen’s statements, prompting enquiries. Appellant alleges Defendant engaged in fraudulent conduct including: paying tradesmen less than recorded; falsely claiming year-round employment and payment of tradesmen; misappropriating payments for works benefiting Defendant personally; falsely claiming holiday pay; and inflating payments to suppliers. Defendant denies these allegations.

Originally, the plaintiffs estimated the misappropriated amount at €1,076,000, later corrected to €855,000 after Defendant identified errors.

Procedurally, a plenary summons was issued by the plaintiffs on 17 July 2014, seeking damages for deceit, breach of contract, negligence, equitable compensation for breach of trust and fiduciary duty, accounts, inquiries, and ancillary relief. On the same day, the plaintiffs obtained an ex parte worldwide Mareva injunction restraining Defendant from disposing of assets up to €1,076,000. Subsequent orders adjusted provisions for Defendant’s living expenses and permitted sale of Defendant’s property with conditions on the proceeds.

Legal Issues Presented

1. Whether the plaintiffs have made full and frank disclosure sufficient to justify the granting of a Mareva injunction.
2. Whether the plaintiffs have established a good arguable case that they will succeed on the claim against the defendant.
3. Whether there is a risk of dissipation or disposal of the defendant’s assets to frustrate the plaintiffs’ claim.
4. Whether the plaintiffs have provided an adequate undertaking as to damages.
5. The appropriate terms and scope of the Mareva injunction in light of the evidence and submissions.

Arguments of the Parties

Plaintiffs' Arguments

• The plaintiffs contend that Defendant engaged in fraudulent conduct involving misappropriation of funds through false records and claims for payments not made or for works not performed.
• The plaintiffs assert they have made full and frank disclosure, including particulars of claims and grounds, and have corrected earlier errors in the amount claimed.
• They argue there is a good arguable case based on multiple sources of evidence, including discrepancies identified by tradesmen and payments made by Defendant to conceal wrongful claims.
• The plaintiffs maintain there is a risk of dissipation of Defendant’s assets, supported by factors such as Defendant’s failure to disclose certain assets, use of an alias, abrupt departure from West Cork, and withdrawal of funds from bank accounts.
• The plaintiffs have given an undertaking to abide by any order as to damages in case of wrongful injunction.

Defendant's Arguments

• Defendant denies all allegations of fraud and misappropriation.
• Defendant challenges the sufficiency of the plaintiffs’ disclosure, particularly the failure to exhibit primary evidence such as the payment notebooks at the interim application stage.
• Defendant submits the plaintiffs have failed to establish a good arguable case, relying primarily on indirect evidence and hearsay without direct affidavits from tradesmen.
• Defendant raises concerns about the adequacy of the plaintiffs’ undertaking as to damages, citing existing and pending judgments and claims against Appellant and the companies.
• Defendant alleges material non-disclosure by plaintiffs, including failure to clarify the origin of certain funds and insufficient emphasis on Defendant’s consistent use of her own name locally despite allegations of aliases.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analysed the plaintiffs’ application for a Mareva injunction against the established criteria from precedent. It found the plaintiffs had adequately particularised their claim and provided corrected, transparent estimates of the alleged misappropriation. The presence of assets within the jurisdiction was undisputed.

Regarding risk of dissipation, the Court noted that direct evidence of intent is rarely available at interlocutory stages and that where there is a good arguable case of fraud or dishonesty, the risk may be inferred. The Court identified seven factors supporting risk, including Defendant’s failure to disclose certain assets, use of an alias without explanation, abrupt departure from the jurisdiction, and withdrawal of bank funds. Although some factors related more to the merits of the case, four factors were deemed relevant to the risk of dissipation.

On the undertaking as to damages, the Court accepted the plaintiffs’ assurances and found no basis to doubt Appellant’s averred net worth, declining to delve into contested foreign judgments or claims.

Regarding full and frank disclosure, the Court rejected Defendant’s criticisms, finding that the plaintiffs had disclosed the existence and general nature of key evidence such as the payment notebooks, and that the absence of their production at the interim stage did not amount to material non-disclosure. The Court acknowledged the constraints and haste typical of interlocutory applications and found no abuse of process.

On the good arguable case test, the Court held that indirect evidence admissible on interlocutory applications was sufficient, particularly given the paucity of evidence from Defendant to rebut the claims. The Court rejected Defendant’s submission that the absence of direct affidavits from tradesmen doomed the plaintiffs’ case.

Overall, the Court concluded that the plaintiffs had established the necessary combination of a good arguable case and risk of dissipation to justify the interlocutory Mareva injunction.

Holding and Implications

The Court’s final ruling was to grant the interlocutory Mareva injunction sought by the plaintiffs. The Court held that the plaintiffs met all the established criteria for such relief, including adequate disclosure, a good arguable case on the merits, presence of assets within jurisdiction, risk of dissipation, and provision of an undertaking as to damages.

The immediate effect is to restrain the defendant from disposing of or diminishing assets up to the corrected sum of €855,000, thereby preserving the plaintiffs’ ability to recover damages if successful at trial. The Court indicated it would hear the parties on the precise terms of the order. No new legal precedent was established beyond the application of settled principles to the facts of the case.