A judge has jailed for contempt one of two car dealers against whom the Revenue Commissioners earlier this year won unprecedented summary judgment orders for more than €10 million arising from unpaid Vat and interest.
On the application of the Revenue, Mr Justice Peter Kelly today jailed John Kane, also known as Alex Kane, for one week for contempt.
Revenue accused Mr Kane of “flagrant” and continuing disregard of freezing orders and conduct including providing false invoices to the receiver appointed over his business and assets.
Contempt proceedings against Pauraig Kane, brother of John Kane, were adjourned for two weeks to allow him file replaying affidavits to similar contempt claims by the Revenue against him.
In John Kane’s case, Anthony Collins SC, for the Revenue, outlined a litany of incidents since the freezing order was granted, including an alleged incident where a set of registration plates fell off a SUV being driven out of Mr Kane’s premises in Granard, Co Longford revealing another set of plates underneath.
False invoices were provided to the receiver who was also told vehicles were on loan when they were in fact sold and other vehicles were recorded as sold to persons who, on investigation, did not exist, counsel said. The Revenue had had to spend considerable public monies investigating all these breaches and there was “almost a fraud on the receiver at one point”.
The Revenue had no confidence the freezing order would be honoured into the future and had brought the contempt proceedings in an effort to enforce compliance, counsel said.
In evidence, Mr Kane, a father of four young children, admitted breach of the orders and apologised for those. He said he had had to pay mortgages and bills and was also obliged to honour warranty commitments relating to vehicles.
He knew he was “not 100 per cent across the board” but he had been trying to run the business himself in recent months after the receiver had left. “If you’re hanging by a rope, you’ll catch on to anything,” he said.
Mr Kane also offered to pay a sum of about €23,000 which he estimated was due to the receiver as a result of his conduct. He said he had collected some €300,000 for the Revenue but was “treated like a dog”. He agreed with Mr Collins that he was owner
or part owner of a number of properties in Co Longford, including four residential units in Granard, and that he received rental income from these.
Diretcing that Mr Kane be jailed, Mr Justice Kelly said he had attempted to portray himself as a victim but was no such victim and was not candid in the witness box.
The judge said Mr Kane was involved in an elaborate car racket on the Border which had generated a lot of money for him and one would have thought, after the Revenue moved against him, he would have made a clean breast of it and brought the racket to an end.
Instead, he had engaged in covert and underhand activities throughout the summer, laughed at the Revenue, devised various schemes and strategies, “played ducks and drakes with the system” and attempted to “brazen it out”. This was “not a pretty picture,” the judge added.
Mr Justice Kelly said his concern was not punishment but to ensure future compliance with the court’s order. A week’s imprisonment would give Mr Kane a chance to reflect on his behaviour and to outline what measure he was prepared to take to take to comply with the order and co-operate with the Revenue. It was time to “put his hands up” and bring this racket to an end as none of this augured well for the running of a civilised society.
The judge also discharged William O’Riordan as receiver over the assets and businesses of the Kanes in Granard, Co Longford, after being told the receiver had gone as far as he could in his efforts to realise the assets. The judge made further orders for payments to the Revenue of more than €660,000 from the receivership and accounts of the defendants as part-satisfaction of the judgment order against both brothers and he also continued account freezing orders.
The summary judgment application brought earlier this year against the brothers was the first of its kind by the Revenue, which moved before the Commercial Court because of the “very substantial liability” due and because that court could make orders resulting in the “effective collection” of the unpaid tax.
Mr Justice Kelly ruled last July the brothers had no arguable defence and the Revenue was entitled to summary judgment for some €5.27 million against Pauraig Kane and some €4.95 million against John Kane.
The defendants started their motor sales businesses in 2000 and claimed to be one of Ireland’s top 4 X 4 specialists. The Revenue began investigations in 2004 and, after examination of extensive documents seized from the premises, the tax assessments were raised.
