A High Court judge has rejected claims he made an error in his judgment in a case concerning an Irish architect who tried to hide assets worth millions of euro from his creditors prior to going into bankruptcy in 2012.
Jeremiah Ryan, formerly the principal of Horan Keogan Ryan Ltd, a Dublin architectural firm, had property investments that lost value during the financial crisis in 2008.
While his Irish business suffered, a company based in the United Arab Emirates that he controlled, secured a contract in Astana, Kazakhstan, for which the initial design fee was about €34 million.
Mr Ryan subsequently sold this company, HKR Middle East Architects Engineering LLC (HKRME) to businessman Barry English, the founder of the Winthrop Engineering Group.
The sale was “at an artificially deflated price” and was part of a scheme by Mr Ryan “to conceal his ongoing interest in HKRME” from his creditors, the judge said.
After Mr Ryan emerged from his one-year English bankruptcy in 2013, Mr English sold HKRME back to the architect.
Transfer to Guernsey bank account
In the meantime, $8 million (€6.5 million) belonging to HKRME had been transferred to the Guernsey bank account of a British Virgin Islands trust, Sunvit International Ltd, which was in turn controlled by a trust established for the benefit of Mr English and his family.
Mr English contested the claims from Mr Ryan that he was acting in a caretaker role in respect of HKRME after he bought the company for €100,000.
Mr English said that while he was the owner of the company, he was entitled to transfer the money from HKRME to Sunvit, and that he had earned the money through services provided to HKRME while it was in his ownership.
In a judgment in 2019, Mr Justice Denis McDonald refused an application that he order Mr English to return all the money transferred to Sunvit.
He decided that the true nature of the agreement between Mr Ryan and Mr English was that Mr English was acting as a caretaker for Mr Ryan and that Mr Ryan had directed the transfer of the money.
He decided HKRME was entitled to an order against Mr English but only to the extent of the company’s unpaid liabilities, which it had been intended would be paid out of the transferred money.
These liabilities are now estimated to be about $3 million, said Mr Justice McDonald in a second judgment delivered on Monday.
In that judgment, he rejected the claim that he was wrong to limit his order to the money needed to pay HKRME’s liabilities.
He said Mr Ryan was not before the court seeking return of the money, rather HKRME was.
“Mr Ryan could have sought to make a case on his own behalf for the return of the monies (subject to any difficulties that might lie in his path as a consequence of his attempt to hide the existence of these monies from his creditors and from his bankruptcy trustee)”, the judge said.
Last year Mr Ryan's trustee in bankruptcy, Nicholas Stewart Wood, brought proceedings against Mr English seeking a declaration that the money transferred to Mr English, at Mr Ryan's direction, should form part of the bankruptcy estate of Mr Ryan, the judge said.
“While Mr Stewart Wood will obviously have to prove his case against Mr English and to address all of the issues raised by Mr English in his defence to the claim made in those proceedings, it seems to me that, in light of the findings which I have made in the principal judgment as to the reason for making the transfers . . . if there is any basis for a claim, the trustee would appear to be a more appropriate claimant” than would HKRME, the judge said.
