Michael Scully, an Irish property developer and farmer from Clonalkilty, has successfully appealed against the enforcement of a €6.3 million judgment, originally awarded in Poland, following a claim by 57 Irish investors in a commercial retail venture. The investors had put forward that Scully’s management of the investment scheme had resulted in severe financial loss for them, as they failed to receive any profits, even following the shopping centre’s 2015 sale.
Scully, who also had part ownership in Castle Carbery Properties Ltd., the firm responsible for the 2009 construction of the shopping centre in Opole, Poland, had challenged a High Court ruling suggesting the Polish ruling could be actioned in Ireland. The judgement was adjourned by the Court of Appeal, following a determination that the Polish single-use company, named Coucal SP Zoo, presented an example of “the commodification of litigation” – a practice defined as contrary to Irish public policy norms.
The Opole shopping centre project was backed by 78 investors, of which 63 were of Irish nationality, and the enterprise was structured as the aforementioned SPV, Coucal SP Zoo. The consortium had secured 99.84% of the share capital, leaving 0.16% allocated between Scully and his Castle Carbery associate, Padraic Coll. The company secured a €48 million loan to support the shopping centre’s development.
Anticipating a return by 2010, the investors held the belief that the centre had been profitable since its inception in March 2009. Nevertheless, accusations surfaced that Scully had dishonestly manipulated the investors into relinquishing their stakes in the shopping centre, an allegation Scully strenuously denied. New agreements in 2011 saw the investors entrust their powers of attorney to Scully, leading to further claims that Scully participated in transactions detrimental to the investors, whilst lacking full transparency.
In 2015, Coucal was authorized by 57 investors to pursue potential claims against Mr. Scully and other offenders throughout Europe. Legal action was initiated in Poland, where Coucal sought a judicial declaration invalidating contracts entered by Mr. Scully and demanded the refund of the transaction cost.
The endeavor was not initially fruitful, however, by 2021, the Warsaw Appellate Court ruled that Mr. Scully had unlawfully and without necessary consent committed to contracts in the name of Coucal’s shareholders. The court ordered Mr. Scully to pay a penalty of approximately €6.3 million.
The Warsaw appellate authority also granted permission to Coucal to instigate proceedings against Mr Scully’s assets, including a farm in County Cork, Ireland.
Mr. Scully responded to this by initiating a case against Coucal Ltd in Ireland, rejecting the recognition and enforcement of the Polish judgment. This objection was raised under an EU legislation, Brussels I Recast, which presides over the execution of civil and commercial judgments throughout the EU.
In the interim, the sentence was challenged by Mr. Scully in the Polish Supreme Court. In February, the court planned to refer the case to the EU Court of Justice concerning issues related to judicial independence, impartiality, and particularly, the alleged independence of one of the judges from the Polish Court of Appeal.
The High Court dismissed Mr. Scully’s case in November of 2022, leading him to file an appeal, which Coucal disputed.
Justice Aileen Donnelly, on behalf of the three-judge Court of Appeals, confidently asserted that the acceptance and execution of rulings could only be denied if such enforcement starkly contradicts public policy.
This public policy is specifically tied to the administration of justice, originating from the process here that forbids third-party litigation funding, known as maintenance and champerty.
Finally, due to her findings concerning the public policy, she did not feel it necessary to discuss the matter brought forth by Mr. Scully regarding the autonomy of the Polish Judiciary.