Sheila McCaffrey as found in Justice Bannister’s Judgement

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Dialogue Ireland believes that most reliable way to address an issue is to read a judgement. Here we outline all references to Sheila McCaffrey as found in Justice Bannister’s judgement. We make no comments and will in due course draw some conclusions looking at the judgement as a whole.  We will also attach the posts we have already produced. We hope to do the same exercise in regard to Quinn and Morrice. This part of our mission to educate the public:

http://eccourts.org/judgments/decisions/2012/HC/stkitts/SMLifeVenturesvSusanMorriceetal.pdf

[21]

In October 2006 Mr Quinn paid his one and only visit to Belize. At a ceremony on 10 October 2006 held at the head of the first producing well, Ms Morrice and Ms McCaffrey presented him with a certificate for 64,000 Class A shares in INE. Ms McCaffrey made an enthusiastic speech to mark the occasion. No contract of allotment was entered into between INE and Mr Quinn in respect of these shares and he gave no consideration, executed or promissory, in exchange for their issue.

[24]

On the contrary, all appearances point to the shares as having been intended as a gift from Mr Quinn’s admirers, Ms Morrice and Ms McCaffrey.

[25] There is in evidence a curious document on the letterhead of BNE. It is dated 20 June 2006. In gushing terms, it invites Mr Quinn to accept an originating shareholding in BNE equal to those held by each of the signatories, the value of which the letter puts at US$16 million. The letter has space for the signatures of Ms Morrice, Mr Cornec, Ms McCaffrey, Mr Marriott and Mrs Usher. It is purportedly signed by Ms Morrice, Mr Cornec and Ms McCaffrey alone. It was pointed out that to the inexpert eye Ms Morrice’s signature is strikingly different from that which one finds endorsed on other documents to be found in the documentary evidence and Ms McCaffrey flatly denied that the signature against her name on the letter is hers.

[27] I have no doubt that this letter, which sits uncomfortably with the other part of Ms Morrice’s case, that Mr Quinn was universally treated as a Class A member of INE from the outset, is a clumsy forgery. By this I mean to say that while Ms Morrice and Mr Cornec may have signed it (although that appears improbable) Ms McCaffrey did not and, even if she did, the document is plainly an after the event concoction written in an unsuccessful attempt to legitimize the allotment

 [28] Whatever the true position about the purported allotment of 10 October 2006 there can be no doubt that Ms McCaffrey, having signed the resolution, joined in the ceremony of 10 October 2007 and held Mr Quinn out as a Class A member, can have no personal standing to complain of it. SM Life can be in no better position. There remains, however, a serious question whether INE itself or members of INE who did not participate in this purported allotment are bound by it.

(c) The Hamhaugh House meeting

[29] It appears that until the autumn of 2006 Ms McCaffrey who, like the other INE Originators, was also a director of BNE, had managed BNE’s administration in Belize, together with Mr Cornec and Mr Marriott. Mr Marriott described the three as multitasking, but he and Mr Cornec had their responsibilities in the field and I find that the bulk of the administrative work in the early years fell to Ms McCaffrey. By the summer of 2006, after oil had started to flow in quantity, it was generally agreed that BNE needed a full time professional CEO and a Dr Gilbert Canton (‘Dr Canton’), a native of Belize, was appointed to that position in September. Although Ms McCaffrey agreed that BNE needed a full time CEO, she objected to Dr Canton’s appointment on the grounds that he had no industry experience. Despite that, his appointment was supported by the other Originators and must have been supported by CHx and, one supposes, the Government of Belize. Dr Canton remains in post and the impression I was given is that he is an excellent and assiduous CEO.

[30] Although the details are incomplete, it is clear that Ms McCaffrey came to resent the fact that Dr Canton had, as she saw it, ousted her from her position of command in Belize. She complains that he withheld information from her. He says it was there for her to look at if she wanted to. Although the reasons are obscure, it is also plain that there was friction between Ms McCaffrey and Mr Cornec. Success, therefore, had brought the beginnings of division.

31] Over 16 and 17 August 2007 a meeting was held at a property belonging to Mr Quinn on Hamhaugh Island in the River Thames. It was attended by the Originators and, obviously, by Mr Quinn himself. It appears to have been convened by Ms McCaffrey. Mr Marriott described its object as being to discuss differences about the management and direction of BNE. All are agreed that the meeting took place in a fraught atmosphere. The accounts of what took place cannot be reconciled but I find that while dissatisfaction was expressed by Mr Cornec and Ms Morrice at the part played by Ms McCaffrey in the affairs of BNE (Dr Canton had, of course, been in post now for nearly a year) no decision was made to remove her either from the BNE board or from managerial responsibilities.

[32] Ms McCaffrey’s version of the meeting, supported to a very limited degree by Mr Marriott, was that Mr Quinn spent time over the two days advocating a number of sharp business practices which he suggested should be put in place in BNE. For example, she says that he suggested that the parties set up their own offshore bank, which they would indirectly own and for which they would raise funds to be lent on to BNE at inflated rates of interest, thus creaming off profit for themselves at the expense of the B shareholders, the Government of Belize and CHx. She says that Mr Quinn recommended the setting up of so-called profit centres, which would operate similar scams, presumably in the provision of plant, personnel and equipment. Although Mr Marriott supported Ms McCaffrey on this issue, I reject this evidence in its entirety. BNE’s financial statements were professionally audited and were required to stand scrutiny by Standard Bank, the Government of Belize and CHx. Mr Quinn cannot have supposed that there could be any possibility of such arrangements going undetected. I find that he did not make these suggestions.

[33] In any case, it is common ground that none of the supposed suggestions was put into place. The purpose of this part of SM Life’s evidence about the Hamhaugh meeting seems to have been to blacken Mr Quinn’s reputation.

(d) The 2007 Operating Agreement

[35] On 13 December 2007 Ms McCaffrey, Ms Morrice, Mr Marriot and Jean Cornec signed what purported to be a written consent of members of INE replacing its Operating Agreement with an amended and restated version dated 12 December 2007 (‘the 2007 Operating Agreement’).

[40] The meeting convened on 12 December 2007 in the Radisson Hotel at Belize City. Present were Ms Morrice, Ms McCaffrey, Mr Cornec and Mr Marriott. Ms Williams was in attendance. The meeting is described as having been very heated and broke up without a decision having been made. It reconvened at BNE’s office in Belmopan on the following day. The upshot was that a draft, containing some relatively insignificant manuscript amendments added during the meeting, was signed by the individuals present. Ms McCaffrey claims to have signed under duress, the pressure being the alleged threats to INE from Class B members or persons standing behind them and posing a threat to the company.

[41] Following signature, resolutions were prepared of an INE board meeting proposing the adoption of the amended Operating Agreement together with the written consent of members to which I have already referred. An unsigned document prepared from information provided by Ms McCaffrey at the time purports to show 637,037 voting units held by those attending the meeting and by Mr Quinn (who attended by proxy) cast in favour out of a total of 952,698.

[42] In her witness statement Ms Williams said that Ms McCaffrey gave her the document bearing the manuscript amendments for her to engross and take back for Mr Quinn’s signature.12 In cross examination, Ms Williams said that two documents bearing identical manuscript amendments were signed on 13 December 2007. She says that she took back these two manuscript amended copies, the signature page of each of which had been completed by the four signatories. Her stated reason for this change of evidence was that she had listened to earlier evidence contrasting the signature page of the amended Operating Agreement which had been used in proceedings in, I think, Denver with the signature page of the same document to be found elsewhere in the trial bundles and realized that these differences must mean that two signature pages of the same document had been signed.

___________________________________________________________________

12 there was an issue whether Mr Quinn had already signed the signature page of the drafts, but I find that he signed only when the engrossment was presented to him by Ms Williams for signature on 6 January 2008

[44] That does not mean that the signature page was not subsequently removed and attached to a version of the Operating Agreement different from that signed at Belmopan. The difficulty with that hypothesis, however, is that Ms McCaffrey alone of the witnesses suggests that that was the case and that, when asked to summarise the differences between the document now in evidence and the document which she says she actually signed, she was quite unable to do so. Although she received a copy of the document in around June 2008, she never protested then or until very much later in the course of these proceedings that it was not what she had signed

[45] I find accordingly that Ms McCaffrey signed the document referred to as the 2007 Operating Agreement on 13 December 2007 at Belmopan. That document bound her as having been signed by her voluntarily, even if it was signed under pressure. The validity and effect of the document as an act of INE is another matter.

[48] There is another problem. It was a requirement of the 2002 Operating Agreement that written resolutions had to be signed by every member entitled to vote.14 The resolution dated 12 December 2007 purportedly amending the 2002 was not so signed. If the 2002 Operating Agreement in its original form governed the position it was therefore prima facie invalid. Mr Macdonald QC relies in this regard upon a resolution passed on 7 August 2006 which (among other things) purported to amend clause 9.09 of the 2002 Operating Agreement to allow written resolutions to be passed by a bare majority. The resolution was supposedly passed at a special meeting of the members of INE held, once more, in Belmopan, rather than, as one would expect, in Dublin, where the majority of the Class B membership were to be found and where they could most conveniently have attended. There is in the trial bundles a notice of this meeting, but it is unsigned and there is no evidence that it was ever sent out. The list of those present at the meeting mentions Ms McCaffrey, Ms Morrice, Mr Cornec, Mr Marriott ‘et al’ and refers to a Schedule said to contain a full list of members present in person or by proxy. There is no such schedule in the trial bundles.

[51] Following this botched attempt to amend the Operating Agreement there was a period of around six months during which board members other than Ms Morrice found it impossible to obtain copies of the alleged new agreement. A copy emerged only in the course of some litigation being conducted by Mr Cornec. The reasons for this never became clear and must be supposed to have originated in a desire to conceal the amended Operating Agreement from the Class B members for as long as possible by withholding it from those Class A members (including Ms McCaffrey) who were suspected of colluding with the Class B membership against the interests of (primarily) Ms Morrice and Mr Quinn.

[53] It was clear from the evidence that Ms McCaffrey was progressively sidelined from the management of BNE. Dr Canton clearly found her difficult to work with and I find that she became effectively excluded from all participation in the management of BNE.

[54] In July 2008 Ms McCaffrey was removed, without her knowledge, as a signatory on the JP Morgan Chase accounts through which the proceeds of the Standard Bank facility were operated.

[55] The split between Ms McCaffrey and Mr Marriott on the one hand and the remaining directors on the other widened at a board meeting held in Nevis on 11 and 12 August 2008.

[57] On 28 August 2008 Ms Morrice was appointed to act as INE representative at all meetings of BNE. At an Extraordinary General Meeting of BNE held on 5 September 2008 Ms McCaffrey and Mr Marriott were removed from the BNE board and Mr Stewart and Mrs Usher were appointed in their stead. At the same Extraordinary General Meeting Ms McCaffrey was asked whether she retained any BNE property, including its corporate seal. BNE subsequently made a complaint to the police in Belize, which resulted in her home being searched in January 2009 and the discovery of assorted documents which may or may not have been copy documents and which may or may not have belonged to BNE. It appears that a seal of each of BNE and INE was also discovered. A further complaint was made alleging that Ms McCaffrey had drawn upon BNE bank accounts following her removal from the BNE board. A warrant for her arrest is apparently outstanding in Belize.

[59] On around 20 January 2009 Ms McCaffrey was purportedly suspended as a director of INE. There is no power to suspend a director of INE. Mr Marriott resigned as a director of INE on 12 February 2009.

[60] Later that year INE announced a so-called Loan Release Programme (‘LRP’). Ms Morrice and Mr Quinn contended it was open to all, but I find that it was withheld from SM Life and certain Class B members of whom they disapproved. Under the programme INE lent members funds to be set off against future profits. It is claimed that this was forced upon the BNE board as a result of the refusal of Standard Bank to permit payment of dividends. There was no evidence from any lending institution supporting this contention. I find that this bizarre arrangement was designed to punish INE members of which or of whom Ms Morrice and Mr Quinn disapproved, including SM Life/Ms McCaffrey. Funds were distributed through the LRP later in 2009. Mr Quinn received US$1.6 million.

(f) Alleged misappropriations

[64] SM Life makes complaint about a number of items of expenditure in each of INE and BNE, whose existence has been disclosed in these proceedings and which it says amounted to misfeasance on the part of the respective boards. It seeks permission to bring derivative proceedings in respect of them.

65] Between June 2009 and April 2010, after Ms McCaffrey had been effectively excluded, a company called White Knight Enterprises LLC (‘WK’), owned by Mr Stewart, was paid a total of US$365K supposedly pursuant to a contract under which WK was to be paid US$125 per hour for consultancy work. Despite these arrangements, most of the amounts paid were paid in rounded sums. Ms Morrice claimed that this was for work done in an attempt to obtain a large investment from a businessman in Abu Dhabi who is said to have subsequently broken off negotiations. The amounts were then reclassified as advances on directors fees and finally returned to INE when it was decided that no directors fees were to be paid.

[67] INE paid some US$264K to a company called Round Table Management Inc (‘Round Table’) in 2010, again after Ms McCaffrey had effectively been removed from the scene. Ms Morrice said that Round Table was set up to ‘facilitate administration’ in the United States and that most of the money went to consultants. It is striking that these payments ceased as soon as Maranco commenced the proceedings which led to the redemption of its shares. Ms Morrice explained that by saying that they were advised that for tax reasons a Nevis company could not have a US base. I do not think that there is sufficient evidence for me to conclude that these payments were unratifiable peculations by Ms Morrice.

[69] Next, Ms McCaffrey complains that INE paid Ms Morrice travel and accommodation expenses of some US$603K between 2008 and 2011. Ms Morrice’s response was that she did do an awful lot of travelling. While that is no doubt true, the business of INE does not require its directors to travel to any significant extent. It is noticeable that there was no charge for travel and accommodation before 2008, which was of course the time when Ms McCaffrey was eased out. While the figures for 2010 and 2011 may not be self evidently unreasonable, I do not accept that INE’s business required Ms Morrice to incur travel and accommodation expenses of US$119K in 2008, still less of US$376K (over US$1K per day) during 2009.

[70] No serious attempt has been made by Ms Morrice

[72] Ms McCaffrey complains about payments made to Mr Quinn’s companies by BNE for Educo seminars (US$718K over three years), Dr Canton gave evidence, which I accept, that he regarded this expenditure as beneficial to the workforce and to productivity and that it was supported by the Government of Belize. In those circumstances it seems to me to be contrary to principle for the Court to attempt to set aside such expense and in any event it does not lie in the mouth of Ms McCaffrey to complain about the expenditure of a company of which neither she nor SM Life is a member.

[73] During 2009 and 2010 INE spent US$538K on public relations services. It is striking that these payments, too, commenced after Ms McCaffrey had been effectively disposed of and that they ceased at around the time when Maranco commenced its proceedings. I do not think that it is for me to say that INE was not entitled to make use of public relations consultants in its dispute with the Class B members (or some of them) and others. The fact that the expenditure ceased once Maranco brought its complaint may show no more than common prudence, but this expenditure, unlike the previous items, does not seem to me to have the character of an unauthorized withdrawal.

Remedies

(a) Buy out

[75] Ms McCaffrey seeks an order that INE, Ms Morrice or Mr Quinn buy her out at an independent valuation with no minority discount. Her principal ground for seeking this relief is her exclusion from participation in the management and affairs of INE, although she relies upon the payments which I have dealt with in the preceding section of this judgment as showing that the affairs of INE have been conducted in a manner prejudicial to herself as well as to other members.

[76] So far as exclusion is concerned, I consider that the origins of her grievances were less the result of oppressive conduct directed against her, than of the fact that upon the discovery of marketable oil by BNE she was inevitably, as she herself admitted,(16) going to have to hand over the reins of administration. I do not consider that she can claim to have been oppressed as a result of the inevitable fact that BNE became too big for her to continue to handle on her own.

(16) ‘I needed help’

[77] Later events, however, do show deliberate discriminatory conduct and, indeed, a policy of deliberate attempts, which I have not recounted in detail, to make her life as an Originator as difficult as possible. She has also been discriminated against by the exclusion of SM Life from the LRP, although it has been said in open court that the scheme remains available to SM Life.

[84] Such an entitlement begs the question what circumstances would justify the Court in ordering a return of capital. As has been seen, clause 13 of the Operating Agreement makes redemption by the company conditional upon the agreement of the majority of the remaining members. It may be asked why SM Life alone should be entitled to a return of capital because Ms McCaffrey has been excluded from management or because there has been grossly extravagant expenditure by or at the instance of Ms Morrice when other members are not so entitled or what it is about Ms McCaffrey’s personal circumstances which justifies discrimination of this sort? In my judgment it is not possible to rationalize an order of this sort on the basis of exclusion, still less of improper withdrawals, the latter of which affect all members equally. In my judgment there is neither jurisdiction nor an equitable basis in the circumstances of this case for ordering INE to redeem Ms McCaffrey’s shares.

[85] Even if I took the view that INE is to be treated as a close corporation, which for the reasons I have given I do not, I would not regard myself as having the power to direct another member of the company to purchase Ms McCaffrey’s shares – on the grounds of exclusion or otherwise. Such a coercive power can only, in my judgment, be conferred by the legislature. No participator in INE had any reason to expect that by becoming a member it would find itself liable to pay to provide members wishing to retire with a benefit which the NLLCO precluded them from obtaining from the company directly.

[86] For these reasons I decline to order INE, Ms Morrice or Mr Quinn to purchase SM Life’s shares

[96] Thirdly, I would not exercise the power to dissolve INE on the application of SM Life/ Ms McCaffrey. First, because the manner in which her case has been put shows, to my satisfaction, that dissolution is not what she really wants. Her opening written submissions did not mention dissolution and no developed argument was advanced on her behalf why dissolution would be appropriate in this case. I am of the view that the claim for dissolution was made in order to apply pressure so that she could achieve her real aim, which is to be bought out.

[97] The second reason why I decline to exercise the power to dissolve on the application of SM Life/Ms McCaffrey is because Ms McCaffrey was complicit in many of the steps which have, in my judgment, given rise to a seriously arguable case that INE should be dissolved. She was party to the purported resolution of 7 August 2006, which was designed seriously to undermine the protection available to the Class B members and, whether reluctantly or not, she was party to the 12 December 2007 resolution which was designed to complete the process. She was party to the questionable allotment of 64,000 shares to Mr Quinn in October 2006 and to his invalid appointment as a director of INE. It seems to me that it would be quite wrong to permit her now to take advantage of these matters in support of a claim to have INE dissolved.

(c) Other remedies

[98] I do not propose to give permission to Ms McCaffrey to bring a derivative action, and certainly not an action in the name of and at the expense of INE. While I am satisfied that Ms Morrice has spent far more than is commercially justifiable of INE’s money on travel and security it seems to me that it is not shown that there has been what amounts to outright theft – which is what, in essence, it is necessary to show before payments are unratifiable by a majority. Derivative proceedings would therefore be at best speculative.

[99] Finally, there are, as I have indicated, claims based upon the economic torts. I do not intend to deal with these in any detail. The claims are fanciful, are said to involve non-parties and are not made out. In particular, there is no evidence that BNE conspired with or combined with any person to injure INE or SM Life or that it knowingly induced any person to beak a contract with the intention of causing loss to INE or to SM Life.

Conclusion

[100] I will grant a declaration that the 2007 Operating Agreement is invalid and that Mr Quinn was never validly appointed to the board of INE. I will also declare that Ms McCaffrey has never been validly suspended from the INE board. All of the other relief claimed in this action is refused.

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5 Responses

  1. I am interested to know how many B shareholders have actually read the findings of Judge Barrister made on June 18-22; 25-27 and 29; July 16 2012 in the civil case between Sheila McCaffrey SM Life (claimant) and Susan Morrice, Tony Quinn, INE and BNE (defendant). If anyone has anything to add to these please do as I think it is important to have clarity on Sheila McCaffrey’s intentions at that time. The italics are my contribution to further clarify his findings as I understand them.

    INE’s capital structure was set out in a document called an Operating Agreement dated as of 15 August 2002 and expressed to be effective as of 2 January 2003.

    The operating agreement designated five individuals as originators. They are Susan Morrice, Alex Cranberg, Jean Cornec, Sheila McCaffrey, Paul Merriott and Michael Usher. Tony Quinn’s name is not included.

    Judge Bannister states:

    It is common ground that each of these individuals (other than Ms McCaffrey and Mr Marriott) was issued with an equal number of Class A shares. Ms McCaffrey’s entitlement was issued at her direction to SM Life.

    Judge Bannister further states that:

    The Class A shares were issued without the parties having entered into contracts of allotment, so that the shares were issued for no stipulated consideration, although it is equally the case that the first five class A members (or their representatives in the case of SM Life and Maranco) gave liberally of their unpaid efforts in driving the project forward and realising the aim of discovering oil. Tony Quinn had no input into discovering oil.

    Bannister’s opinion of the allegations made by Sheila McCaffrey as a “so-called fresh as amended claim form, served only days before trial, SM Life claims a bewildering assortment of twenty two heads of relief, including claims for damages under each of the known economic torts.

    He clarifies the allegations being made against two of INE Class A directors as:

    “in essence a Claim by SM Life (a member of INE) against two members of INE for a remedy to compensate it for unfair prejudice which is alleged to have suffered in the conduct of INE’s affairs since about 2006.

    He further clarifies what Sheila McCaffrey wants:

    “The reality however, is that what SM Life really wants is an order that it be bought out by either INE itself or by Ms. Morrice or the second defendant
    (‘Mr. Quinn’) on unfair prejudice grounds. Only if that relief is not to be granted does it seek dissolution.”

    Ms McCaffrey seeks an order that INE, Ms Morrice or Mr Quinn buy her out at an independent valuation with no minority discount. Her principal ground for seeking this relief is her exclusion from participation in the management and affairs of INE, although she relies upon the payments which I have dealt with in the preceding section of this judgment as showing that the affairs of INE have been conducted in a manner prejudicial to herself as well as to other members.

    Regarding Morrice and Quinn’s cross-examination Judge Barristers comments:

    Ms Morrice maintained that Mr Quinn was treated from the inception of the Belize project as if he was a Class A member. I reject this evidence. Mr Quinn was well aware of the project from the outset and, after initially expressing doubt, acted as a promoter of it, but it is clear that he was not ‘treated as’ a Class A member from the outset. Had he been, he would have been given Class A shares and appeared as an Originator in the Operating Agreement.

    The influence of Quinn on Susan Morrice, throughout the proceedings, is indisputable as far as I’m concerned. It is clear that Morrice either lied or was under the illusion that Quinn was a Class A member from the inception of INE and yet Quinn pleaded ignorance about this. He could not explain in a coherent fashion what exactly the case was and contradicted himself and Ms. Morrice when answering questions about how he became a director in INE.

    Judge Barrister concluded that:

    The board appointment was plainly invalid. There was no vacancy among elected members of the board since there had never been any elected members. Mr Quinn himself appears to have been wholly ignorant of this supposed appointment. He insisted in cross examination that he was not a director until asked to be so at a meeting at his house in Hamhaugh Island in the Thames in August 2007, some ten months later. He also said, confusingly, that the position was ‘formalized’ when he had been handed the share certificate at the well head some ten months earlier.

    Quinn was not capable of being honest with his answers and managed to confuse even further what exactly happened. However, we need to remember that Sheila McCaffrey agreed to Tony Quinn being a director and having shares in INE. Judge Bannister had no choice but to take this into account and, because of it, he viewed her as part of the problem in INE. She, like the other two directors, Morrice and Cornec, agreed to the shares even if it was under influence or duress and this cannot be disputed. This was an illegal act on their part. From this time Tony Quinn not only became part of INE’s A shareholders he also made every effort to take control of INE itself.

    Bannister’s lack of belief in McCaffrey in her effort to explain Tony Quinn’s business recommendations goes against her allegations and he questions her honesty:

    For example, she says that he suggested that the parties set up their own offshore bank, which they would indirectly own and for which they would raise funds to be lent on to BNE at inflated rates of interest, thus creaming off profit for themselves at the expense of the B shareholders, the Government of Belize and CHx. She says that Mr Quinn recommended the setting up of so-called profit centres, which would operate similar scams, presumably in the provision of plant, personnel and equipment. Although Mr Marriott supported Ms McCaffrey on this issue, I reject this evidence in its entirety. BNE’s financial statements were professionally audited and were required to stand scrutiny by Standard Bank, the Government of Belize and CHx. Mr Quinn cannot have supposed that there could be any possibility of such arrangements going undetected. I find that he did not make these suggestions.

    As Tony Quinn’s EDUCO seminars were not part of the case brought by Sheila McCaffrey there was no mention of Tony Quinn’s use of hypnosis on seminars or how he hijacked the minds of people attending to indoctrinate them into believing his ‘philosophy’ that is totally self-serving. It would have explained his megalomania and need to be in total control of INE. Although his reputation in Ireland was mentioned by Judge Bannister he had no details and so no knowledge of Quinn’s criminal past due to his influence on followers and the dire circumstances he left them in due to the cost of seminars and the effects of his mind-bending techniques. Nothing was mentioned about Quinn’s influence on Morrice and McCaffrey, having attended his seminars. Failure to present a clear case of mind control and the truth about Mr. Quinn’s character, I believe, closed a window of opportunity to clarify for Judge Barrister’s benefit a broader understanding of what he was dealing with.
    This becomes even clearer when Barrister continues to disbelieve what Sheila McCaffrey said about Quinn and being side-lined by Dr Canton:

    Over 16 and 17 August 2007 a meeting was held at a property belonging to Mr Quinn on Hamhaugh Island in the River Thames. It was attended by the Originators and, obviously, by Mr Quinn himself. It appears to have been convened by Ms McCaffrey. Mr Marriott described its object as being to discuss differences about the management and direction of BNE. All are agreed that the meeting took place in a fraught atmosphere. The accounts of what took place cannot be reconciled but I find that while dissatisfaction was expressed by Mr Cornec and Ms Morrice at the part played by Ms McCaffrey in the affairs of BNE (Dr Canton had, of course, been in post now for nearly a year) no decision was made to remove her either from the BNE board or from managerial responsibilities.

    Ms McCaffrey’s version of the meeting, supported to a very limited degree by Mr Marriott, was that Mr Quinn spent time over the two days advocating a number of sharp business practices which he suggested should be put in place in BNE. In any case, it is common ground that none of the supposed suggestions was put into place. The purpose of this part of SM Life’s evidence about the Hamhaugh meeting seems to have been to blacken Mr Quinn’s reputation.

    It is unbelievable and very damaging to Sheila McCaffrey that the judge did not believe what she said. As I said earlier there is plenty of evidence pointing to Quinn’s criminal behaviour in the past particularly in the running of INE. The judge did not pay any heed to what she said because he had already concluded from the evidence that she had agreed to the illegal activities of Quinn being made a director and receiving shares without the consent of the majority shareholders. Whether under duress or not the following changes were made to the Operating Agreement and Judge Barrister’s outlined them and the reasons why he would not dissolve INE at that time.

    I find accordingly that Ms McCaffrey signed the document referred to as the 2007 Operating Agreement on 13 December 2007 at Belmopan. That document bound her as having been signed by her voluntarily, even if it was signed under pressure. The validity and effect of the document as an act of INE is another matter. The significant changes to the Operating Agreement included:

    (1) The insertion of Mr Quinn into the definition of ‘Originator’, with a permanent seat on the board provided he retained 25,000 Class A shares (the same qualification was attached to the seats of the existing Originators)

    (2) The Originators were given a veto over the grant of Class A membership

    (3) The extent of the majority’s power of veto over the activities of the board was substantially restricted

    (4) Directors other than Originators were to be selected by the Class A members

    (5) The directors were given power to allocate profits between members otherwise than pro rata

    (6) Shares could not be transferred otherwise than to individuals

    (7) The directors had an unfettered power to refuse to register transfers

    (8) Savage restrictions on transfers of Class A shares were introduced, which effectively left the member holding Class B shares, while leaving the Company free to deal with the Class A interest

    (9) Class B shares were freely transferable only to other members who had completed one of Mr Quinn’s Educo training courses

    (10) Further amendments to the Operating Agreement could be made by the exercise of a majority of Class A voting units

    In my judgment, the amended Operating Agreement is invalid. It was a requirement of the 2002 Operating Agreement13 that any amendment to it had to be proposed either by not less than 25% of the membership or by the board of Directors ‘to the members.’ That was not done in this case. This is not merely a procedural requirement. It is crucial that the membership as a whole should have an opportunity to consider, debate and vote upon amendments to an Operating Agreement, particularly where it is proposed to deprive a whole Class of members of substantial rights, which it will have been appreciated is the effect of the 2007 Operating Agreement. It was not open to the Class A members to shut themselves away from the Class B membership in another continent and pass resolutions amending the Operating Agreement in this way without even informing the Class B members that they proposed to do so.

    Under the 2007 Operating Agreement Class B shares may be freely transferred only to persons who have attended one of Mr Quinn’s seminars and other transfers are the subject of severe restrictions and, in certain circumstances, expropriation. Mr Quinn, who has played a part in the affairs of the company since August 2007 (the LRP, for example, was his idea), turns out never to have been properly appointed to the board. Although the practice appears to have been at any rate temporarily halted, a section of the membership has felt free in the past to treat company funds much as if they were their personal property. The company’s assets purportedly stand charged with satisfaction of an obligation to buy Mr Quinn’s Class A shares (assuming that he has any) under his purported option agreement in circumstances where there is no one at board level willing to challenge that position. Finally, there is evidence that INE money is being used to fund litigation by Ms Morrice and Mr Quinn in a manner not authorised by the 2002 Operating Agreement.

    I would not exercise the power to dissolve INE on the application of SM Life/ Ms McCaffrey. First, because the manner in which her case has been put shows, to my satisfaction, that dissolution is not what she really wants. Her opening written submissions did not mention dissolution and no developed argument was advanced on her behalf why dissolution would be appropriate in this case. I am of the view that the claim for dissolution was made in order to apply pressure so that she could achieve her real aim, which is to be bought out.

    The second reason why I decline to exercise the power to dissolve on the application of SM Life/Ms McCaffrey is because Ms McCaffrey was complicit in many of the steps which have, in my judgment, given rise to a seriously arguable case that INE should be dissolved. She was party to the purported resolution of 7 August 2006, which was designed seriously to undermine the protection available to the Class B members and, whether reluctantly or not, she was party to the 12 December 2007 resolution which was designed to complete the process. She was party to the questionable allotment of 64,000 shares to Mr Quinn in October 2006 and to his invalid appointment as a director of INE. It seems to me that it would be quite wrong to permit her now to take advantage of these matters in support of a claim to have INE dissolved.

    Judge Barrister, for the benefit of B shareholders, draws attention to the following:

    This forms the general background to the Colorado litigation. In essence, the dissension in the company was damaging to the members. The minority objected strongly to Mr. Quinn’s involvement and considered that his presence as an eminence grise within the company dissuaded outside investment and damaged the share price. From their perspective, they felt that they had no option but to get out of a company which, while very successful, was nonetheless being operated by Ms. Morrice and Mr. Quinn in a partial and autocratic fashion. So far as Ms. Morrice was concerned, the minority – represented by Mr. Cornec – were dissatisfied and determined to cause

    It seems to me that these considerations make it seriously arguable that it is not reasonably practicable for the business of INE to be continued in conformity with the 2002 Operating Agreement and thus seriously arguable that the power of the Court to decree dissolution under section 52 has arisen. I do not, however, intend to exercise that power in the present proceedings, for the following reasons.

    I would not consider dissolving INE without having heard representations from the Class B membership or, at least, without having given the Class B membership the opportunity to be heard on the question.

    I would not exercise the power to dissolve INE on the application of SM Life/ Ms McCaffrey. First, because the manner in which her case has been put shows, to my satisfaction, that dissolution is not what she really wants. Her opening written submissions did not mention dissolution and no developed argument was advanced on her behalf why dissolution would be appropriate in this case. I am of the view that the claim for dissolution was made in order to apply pressure so that she could achieve her real aim, which is to be bought out.

    The second reason why I decline to exercise the power to dissolve on the application of SM Life/Ms McCaffrey is because Ms McCaffrey was complicit in many of the steps which have, in my judgment, given rise to a seriously arguable case that INE should be dissolved. She was party to the purported resolution of 7 August 2006, which was designed seriously to undermine the protection available to the Class B members and, whether reluctantly or not, she was party to the 12 December 2007 resolution which was designed to complete the process. She was party to the questionable allotment of 64,000 shares to Mr Quinn in October 2006 and to his invalid appointment as a director of INE. It seems to me that it would be quite wrong to permit her now to take advantage of these matters in support of a claim to have INE dissolved.

    Commercial Court Judge
    16 July 2012

    Judge Bannister’s findings on the above matters formed his opinion that Quinn was brought into INE illegally by the directors and given illegal shares according to the rules and regulations of INE and all further significant changes to the Operating Agreement were highly irregular and illegal.

    I don’t think we will ever understand how it actually came about unless the signed directors explain it fully. I believe McCaffrey did not want to sign the document for these changes and was put under horrendous pressure to do so. Every effort was made to weaken her resolve to bring this about.

    I have heard, and witnessed, how difficult it is to leave EDUCO even in the face of nastiness and rejection from ‘top brass’ and core members of Quinn’s educoists. It is common knowledge that when someone stands up to Quinn, as McCaffrey did, by disagreeing with what he wants, they, at some point, are rejected by Quinn. The influence of Quinn is so strong and their belief or fear of him is so imbedded it would seem that it actually takes something quite nasty to happen to them before they fully understand how dangerous he is and the depths he is prepared to go to accumulate money, by whatever means, and to protect his interests and his reputation. It must have been very difficult for Sheila McCaffrey to find she was at the mercy of Quinn’s demands which she totally disagreed with and yet still under his influence as in not actually capable of standing up for B shareholders rights and her own rights as a director, at that time.

    Rather than be seen to be the instigator of these changes, it is my opinion that Susan Morrice was used by Quinn to bring them about. Her friendship with McCaffrey could not continue under the strain of Quinn’s hypnotically suggested demands. He showed a total disregard for every member of INE when he pushed for the above changes. Note Quinn did not get rid of Sheila McCaffrey until all of the changes were in place and his methods to do so were devastating and totally life changing.

    The EDUCO system has all of the elements of a cult. Being a member of the EDUCO cult means agreeing to the leader’s every demand. If you don’t you are out. The changes in (9) of the Operating Agreement guaranteed a constant flow of earnings for Mr Quinn as he pushed for total control of the members. If this is allowed to continue every member of INE is at his mercy and their lives dictated by him through his philosophy and indoctrination techniques. As with all cult leaders, it is obvious he included INE as part of his domain and it would not surprise me if he has plans to own it at some point.

  2. Boy oh Boy Angie – you sure are the expert!

  3. Thank you Anon, I’ve had positive feedback from cult experts who take notice of what I post. I learnt all about what a cult is when attending Eccles Street and a Tony Quinn trained psychotherapist. My observations, speaking to other people who went on seminars and being at the mercy of three of them myself was enough to see through their game! I hope you never experience what Sheila, myself or other women I’ve spoken to went through and all to cover up Quinn’s and ‘top brass’ criminal behaviour.

  4. Thanks Angie, for giving more insight into the complicated INE business and the control of Quinn. His greatest and only achievement seems to be the ruination of other peoples lives.

  5. Thank you Tricia. Have you noticed that posters who belittle what I say rarely have anything helpful to say in Quinn’s defence? If there is any reference to their lives it consists of the usual indoctrinated ideas that are the hallmark of his cult and only serves to further convince us of how Quinn interfers with their ability to think for themselves.

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