The liquidator of stockbroking firm Money Markets International Ltd (in liquidation) yesterday failed to secure a High Court order compelling one of its directors, who is alleged to have misappropriated more than £900,000 (€1.1 million) to discover details of all his financial accounts and other assets.
Mr Tom Kavanagh, MMI liquidator, has alleged in earlier proceedings that he believes MMI directors misappropriated £1.9 million from the company. He alleged he could trace sums of £936,816 and £106,842 respectively to directors, Mr Oisin Fanning and Mr John Curran.
Both Mr Fanning and Mr Curran have denied the allegations. They are among seven directors being sued by the liquidator for alleged fraudulent conversion and breach of fiduciary duty.
Last week, the High Court lifted orders restraining both men from reducing their assets below the sums allegedly misappropriated after they undertook not to reduce their assets below those same amounts.
Yesterday, Mr Bill Shipsey SC, for Mr Kavanagh, applied for an order directing Mr Fanning, of Forenaughts House, Forenaughts, Naas, Co Kildare, to discover, from November 26th, 1996, details of all his financial accounts, shares, property and other assets held in Ireland and outside.
Counsel said he was not proceeding against Mr Curran, of Kingsley Mews, Raglan Road, Dublin, with an order directing similar discovery from May 28th, 1998, because Mr Curran was prepared to give an undertaking to that effect. Mr Shipsey said the alleged misappropriation by Mr Curran occurred after May 28th, 1998.
Mr Brian O'Moore SC, for Mr Curran, said his client was quite happy to give the information sought by the liquidator but required three weeks to comply
Mr Michael Collins SC, for Mr Fanning, resisted the "remarkable" application for discovery on the grounds it was a "fishing expedition". Counsel argued any claim by the liquidator against his client would be covered by Mr Fanning's undertaking not to reduce his assets below £936,816.
Mr Collins said Mr Fanning's house at Forenaughts had been valued at not less than £3.2 million. There was a mortgage of £1.75 million on it and this meant there was ample equity in the property alone without having to have recourse to his other assets.
Counsel said Mr Fanning and other directors had sold MMI to K & H Options before MMI went into liquidation.
Mr Shipsey said the liquidator considered it necessary to establish what assets the defendants held so he could establish what money belonged to MMI. He was unaware if Mr Fanning owned the Forenaughts House exclusively or whether it was a family home and there might be claims on the property.
Mr Collins said it was unjustifiable to seek broad discovery in support of a "tracing" claim. The high water mark of the liquidator's claim was a common law claim for damages. Mr Fanning had said there was no encumbrance on Forenaughts House. Mr Fanning was separated and had reached agreement with his wife. Another lady lived in the property but she had no claim to it.
Counsel said Mr Fanning would swear on affidavit that the property was not a family home and was not subject to any claim by a third party. He would further swear that, should there be such a claim, he would notify the other side.
Mr Shipsey said this was a general damages claim for fraud. Mr Kavanagh did not know what had become of certain money and wanted to find out. It was implicit that the liquidator was claiming a proprietary interest in that money.
Mr Justice Kelly said the sole issue to be determined was the entitlement of the liquidator, at this stage, to the order for discovery sought against Mr Fanning. The issue was really of timing and, once pleadings were exchanged between the sides, discovery would be available to all.
On the basis of the limited evidence before him at this point, the judge said it seemed he should not make the discovery order sought against Mr Fanning. He was satisfied that, on the present state of the assets, there was adequate protection for the £936,816 claim against Mr Fanning.
The judge also directed that Mr Fanning should submit, by tomorrow evening, an affidavit setting out the present situation regarding his house at Forenaughts, whether it was a family home and whether there was any other claim on it.
