Investment firm directors liable for costs

Three former directors of the collapsed Custom House Capital investment firm are jointly and severally liable to pay €214,457 to a liquidator for the cost of his investigation, collection of evidence and for the legal fees, the High Court has ruled.

It means liquidator Kieran Wallace can pursue either Harry Cassidy, John Whyte or John Mulholland for the total amount and they would have to sort out themselves their share of the costs.

Last December, the trio received disqualifications from involvement in companies of 14, 10 and 12 years respectively — 14 years being the longest period ever handed down under company law — over the misappropriation of some €66.5m in client funds.

The company’s chief executive Mr Cassidy, , said he could not afford legal representation and had written saying he was not contesting the liquidator’s evidence. Mr Mulholland, a non-executive director, agreed he had failed in his corporate responsibility but asked for a restriction on involvement in a company rather than a disqualification. Mr Whyte, Custom House Capital’s investment director, opposed the application.

Mr Justice David Keane found the conduct of all three was “deeply dishonest”, and had a “devastating” impact on innocent investors. The liquidator asked the court to make all three personally liable for the investigation costs and said the 2,000 investors involved should not have to put their hands into their pockets for those costs.

Mr Cassidy was again not represented during the costs application and Mr Whyte was no longer represented. Mr Mulholland’s counsel asked the court to take into account that his client had co-operated. This was disputed by the liquidator.

In finding they should be jointly and severally liable for the costs and should be paid forthwith, Mr Justice Keane said Mr Cassidy could have represented himself but had not done so, while Mr Whyte’s previous representatives said they had no instructions from him.

Tony McGillicuddy, for Mr Mulholland, asked the 12-year disqualification be backdated to 2015 when his client had resigned from directorships. He also asked for a stay on the disqualification and costs order pending appeal.

Bernard Dunleavy, for the liquidator, said there was no provision in law for backdating disqualifications. Mr Justice Keane agreed there was no power to backdate and also refused a stay.