Clark Hill Advises Kirby Healy In Its Successful and Record-Breaking Prosecution of a Director for Fraudulent Trading

Jan 31, 2020

Clark Hill represented Myles Kirby, liquidator of Westman Plant and Civils Limited, in his investigation of the company and the eventual institution of fraudulent trading proceedings against Kevin Rabbitte, the director of the company.  Mr. Kirby had been appointed as liquidator by the Revenue Commissioners.

Such proceedings are extremely rare in Ireland and are hardly ever successful given the very high standard of proof required.  Consequences under the Companies Act 2014 (section 610) can extend to a declaration of fraudulent trading and personal liability for the entire debts of the company.  A simultaneous action was also brought under Section 842 of the same act to have Mr. Rabbitte disqualified from acting as a company director. 

The factual background involved allegations of Missing Trader Intra Community fraud, being one form of VAT fraud that leads to loss of €60bn per year in lost tax revenues across Europe.  In this case, the company’s VAT number was used to import massive volumes of heavy plant and machinery from the UK to Ireland at 0% VAT.  The company fraudulently filed nil VAT returns and sold the machines domestically, retaining the VAT charged on the domestic sales.  The conservative figure of lost VAT (inclusive of interest and penalties) was agreed to be at least €1.2m.  The respondent Director accepted that the company had imported approximately €8m of plant and machinery in this way over the course of an 11 month period. 

The case had been fiercely resisted by Mr. Rabbitte and his legal team. However, at the eleventh hour and in contrast to the content of his sworn affidavits, he capitulated.  It then fell to the Court to make various findings and decide on the appropriate sanctions.

Following extensive submissions by Clark Hill’s legal team and its appointed counsel, the Court this morning (30th January 2020) held Mr. Rabbitte to have been knowingly a party to the carrying on of the business of the company with intent to defraud creditors, affixed him with personal liability capped at €1.5m, and furthermore disqualified him from acting as a director or company officer for 15 years (reduced down to 14 years and 3 months when minor mitigation was considered).

The net disqualification period is the longest ever ordered in Irish history.

The Clark Hill team, comprising of Sam Saarsteiner and Karen O’Brien, ably assisted by interns Sarah O’Flynn and Emily Boyle, is delighted to have had the opportunity to deliver such a historic result for their client.

National press coverage can be found here and here.