The High Court has ordered Paraic Muldowney to repay €103,500 to the liquidator of MPS Global Limited after finding that the money came indirectly from a fraudulent disposition of company funds.
In a judgment delivered on 30 May 2014, Mr Justice Barrett declared that the payment Muldowney received from Jas Kalsi on 2 July 2007 involved a fraudulent disposition of MPS Global’s property under section 139 of the Companies Act 1990. The court ordered Muldowney to pay the sum forthwith to the company’s liquidator, Myles Kirby.
The money originated in a €760,000 transfer from an account of Muldowney Property Services Limited to an account held by Kalsi, then a director of that company. The funds had come from members of the public who took up a property investment opportunity promoted by the company. Two transfers totalling about €103,500 were then made between Kalsi’s accounts, and the money was paid to Muldowney.
Muldowney said the payment settled personal loans made to Kalsi by him and family members between 2005 and 2007. He said he had no involvement in Muldowney Property Services and had believed the repayment came from Kalsi’s personal funds. The court rejected his claim of no involvement, relying in part on a signed 2007 investment and guarantee agreement between Muldowney and the company, as well as other evidence of their commercial connections.
The judge said it was not clear that Muldowney actually knew the ultimate source of the money. However, the court found he had constructive notice: given his involvement with the company and Kalsi, ordinary prudence should have prompted further inquiry into the source of the repayment. The court concluded that company funds had been improperly used to settle private debts, defrauding the company, and that repayment was just and equitable.
Muldowney also raised procedural objections, including the form of the proceedings and service of the notice of motion. The court dismissed those objections as without merit, noting that he had participated fully with legal representation and that the case was a statutory proceeding, not an application for summary judgment.
The order is for €103,500 payable to the liquidator. The judgment does not order repayment of the original €760,000 transfer.