"Ripped off" investors in Custom House Capital (CHC) should not have to put their hands in their pockets to pay for the costs of the investigation into the collapsed investment firm, the High Court heard.
Bernard Dunleavy SC, for the CHC liquidator, made the assertion when seeking that three directors of the firm be made jointly and severally liable for the costs of the investigation and of the court proceedings which ultimately led to lengthy disqualifications from directorships for the three.
Last December, Mr Justice David Keane handed down the longest disqualification in the history of company law – 14 years – to Harry Cassidy, CHC chief executive over the firm's misappropriation of some €66.5 million in client funds.
He also disqualified investment director John Whyte for 10 years while non-executive director John Mulholland was disqualified for 12 years.
CHC had some 2,000 investors and the “deeply dishonest” conduct of all three over a protracted period was “devastating in its impact on those innocent persons who had the grave misfortune to entrust the company with their pensions or savings”, the judge said at the time.
CHC was liquidated in 2011 after a High Court-appointed investigation by two Central Bank inspectors found the "systemic and deliberate misuse" of clients' money, the majority of which represented transfers to syndicated property investments.
CHC liquidator Kieran Wallace subsequently sought the disqualification orders.
On Thursday, Mr Dunleavy, on behalf of Mr Wallace, said that under the 2014 Companies Act, his client was entitled to seek the costs of the disqualification application along with any costs and expenses incurred in investigating the matter.
Mr Cassidy had not contested the case and Mr Whyte had been represented but was no longer, the court heard.
Tony McGillicuddy BL, for Mr Mulholland, asked the court to take into account the fact that his client had co-operated with the investigation.
Mr Dunleavy said Mr Mulholland had not put any evidence before the court to state specifically how he had co-operated.
Mr Muholland and Mr Cassidy had benefited by more than €2 million in relation to monies in an account “ripped off from clients”, he said.
It rang “hollow” for Mr Mulholland to be seeking a discount for the investigation and legal costs when he had chosen, despite having legal representation, “not to pay a penny” to the investors, he said.
Mr McGillicuddy said it was not appropriate for Mr Dunleavy to make such a point about legal representation.
Mr Dunleavy said Mr Mulholland was asking for a discount from the court in relation to costs because he knew the other two directors will not be able to make a contribution to them in the event the court finds them all jointly and severally liable.
If they are not found liable, the money would have to come from the funds in the liquidation which meant any dividend for the investors would be reduced.
“The creditors who have been defrauded should not have to put their hands into their pockets at all in relation to this application”, he said.
Mr Justice Keane has reserved his decision.