Pleadings Overview

 

Cases

O’Flynn -v- Buckley & ors

[2009] IESC 3 (22 January 2009)

Kearns J

 

DECISION

 

I believe it is possible to decide this case other than by reference to the delay on the part of the defendants in seeking relief. The case argued on behalf of the MIB relies almost entirely on two unreported cases in the High Court, namely, Devereux v. Minister for Finance and MIBI (Unreported, High Court, O’Sullivan J., 10th February, 1998) and Kavanagh v. Reilly and the MIBI (Unreported, High Court, Morris J., 14th October, 1996). Both cases are referred to by Jones in Counsel’s Note: ‘Citing the M.I.B. of Ireland as a co-defendant’, (1998) 9 (3) B.R. 450.

 

In the Devereux case, the plaintiff was a passenger in a troop carrier truck owned by the first named defendant. The troop carrier made a stop to avoid an unidentified and untraced motorist and in the process the plaintiff was thrown forward and badly injured. The Bureau was sued due to the clear involvement of the unidentified and untraced motorist along with the Minister for Finance who was responsible for the driver of the troop carrier.

 

In those circumstances, the High Court (O’Sullivan J.) had no difficulty in reaching the conclusion that he should dismiss the proceedings on the basis that the same were misconceived and not in accordance with clause 2 of the Agreement. In delivering judgment he stated:-

“In this case the Bureau must be cited as a sole defendant under Clause 2.3, therefore the proceedings are misconceived.”

O’Sullivan J. considered counsel’s note of the ex tempore judgment of Morris J. in Kavanagh v. Reilly and M.I.B. This was another case where the M.I.B. had been joined as a co-defendant in circumstances where there was an identified driver and an untraced driver. In that case Morris J. stated:-

“I believe that the Bureau is entitled to make complaint in relation to this. The Bureau have no intention of taking the plaintiff short in its requirement that it be sued as sole defendant, and the claims of the plaintiff against the Bureau will be dealt with on its merits. At this stage the provisions of the statute will not be raised as the Bureau considers that it does not arise.

In my view the court should not intervene with the provisions of the Agreement which have been set forth between the Minister and the Bureau or put an inappropriate burden on the Bureau in relation to its responsibility under the Agreement. The Agreement has been worked out carefully between the parties and there is in my view a logic and good business sense behind the provisions of the Agreement. In these circumstances I believe it is correct and proper that the plaintiff should conform with it and I will therefore strike out the proceedings but I will make no order as to the costs of this application.”

However, neither of these cases speak to the unusual facts of this case where there is a combination of insured and uninsured drivers and the possible involvement of an untraced driver. In so far as the plaintiffs claim lay against an uninsured but identified driver, they were perfectly entitled to join the M.I.B. as a co-defendant in the proceedings under and by virtue of Clause 2.2 of the Agreement. The difficulty arises because the M.I.B. is also involved in its capacity as a body responsible to compensate the plaintiff in respect of the driving of an untraced motorist who may also have caused or contributed to the deceased’s injuries. The M.I.B. is thus involved wearing two different hats. Without going into detail, Mr. Edward Comyn, senior counsel on behalf of the M.I.B., pointed out that different practical consequences could arise for the M.I.B. depending on whether it was involved on behalf of an uninsured driver directly or where its involvement arose through an “insurer concerned” in circumstances where there was a policy (but one which did not cover the particular driver) or where its only involvement was as the body amenable to an injured plaintiff where the entire responsibility attached to the untraced driver. He also submitted, I think correctly, that the M.I.B. is entitled to require that litigants respect the strict conditions laid down in the Agreement as a pre-condition to the recovery of compensation.

 

Even taking Mr. Comyn’s arguments and submissions at their highest point, they do not seem to me to meet or overcome the very simple rejoinder offered on behalf of the plaintiffs which is to the effect that the High Court, either prior to trial or at the trial itself, is entitled as a matter of equity and fairness to direct the disjoinder of the issues complained of by the appellant pursuant to Order 18, rule 1 of the Rules of the Superior Courts, 1986. That rule provides as follows:-

“Subject to the rules of this Order, the plaintiff may unite in the same action several causes of action; but if it appears to the court that any such causes of action cannot be conveniently tried or disposed of together the court may order separate trials of any such causes of action to be had or may make such other order as may be necessary or expedient for the separate disposal thereof.”

In addition Order 18, rule 8 of the Rules of the Superior Courts provides:-

“Any defendant alleging that the plaintiff has united in the same action several causes of action which cannot be conveniently disposed of together, may at any time apply to the Court for an order confining the action to such of the causes of action as may be conveniently disposed of together.”

Having considered all the circumstances, I am satisfied that the interests of justice and all of the legitimate concerns of the M.I.B. would be met by an order prior to trial providing for the disjoinder of issues under Order 18 of the Rules of the Superior Courts. In my view it would on the facts of this case be a superfluous requirement verging upon the absurd to require the plaintiffs to institute a second set of proceedings where the M.I.B. had been validly joined in a particular capacity in the first instance and where the possible involvement of an untraced motorist had been flagged from the time of the originating letter notifying the claims to the M.I.B. without any suggestion from M.I.B. that a second set of proceedings might be necessary. On the face of it there was and is no irregularity in the form and constitution of the proceedings.

 

I would also accept the arguments put forward on behalf of the plaintiffs that the delay in moving for relief in this case is such as to disentitle the M.I.B. to the relief sought. As far back as the initiating letter of 12th December, 2000, the plaintiffs’ legal advisors had made it clear that they were seeking to attach blame for the accident not only to two identified drivers, one of whom was uninsured, but flagged also the possibility (however remote it might have been) that a further unidentified driver might also have been involved. This may be seen as a prudent ‘belt and braces’ type approach to the proposed proceedings by the plaintiffs’ advisors. There was thereafter a delay of four years on the part of M.I.B. in moving for the relief now being sought. During that lengthy period of time, the MIB had its interests represented by three different insurance companies and two different firms of solicitors and at no time prior to 13th December, 2004 did it indicate that it had a difficulty with the form of the proceedings. This was the position notwithstanding that the M.I.B. had invoked its rights under Clause 3(7) of the Agreement in August, 2002 to require the plaintiffs to join the fourth named defendant to the proceedings. No point was taken at that time that the form of the proceedings was incorrect. It is difficult to understand how, when sued in 2001 both in respect of insured and uninsured drivers in proceedings which also took into account the possible involvement of an untraced driver, the MIB could only ask in 2002 that a co-defendant be joined and then leave it until December 2004 to make the case that they should not be in the proceedings at all because of the reference to the possible involvement of an untraced driver in the accident. Quite apart from the obvious distress to Mr. O’Flynn’s family occasioned by the M.I.B.’s failure to raise the point now in issue in timely fashion, the suggestion made during the course of argument that it was open to the plaintiffs to start fresh but separate proceedings against the M.I.B. in respect of the untraced driver (the involvement of whom is at best a possibility only) strikes me as wholly unimpressive given that no undertaking is forthcoming from the M.I.B. not to raise the Statute of Limitations by way of defence in any such further proceedings.

 

This Court has made clear in a number of recent cases that delays in procedural matters which may have been tolerable in previous times may no longer be tolerated. In this context, I refer to decisions delivered by this Court in Gilroy v. Flynn [2005] 1 ILRM 290, Stephens v. Flynn Ltd [2008] IESC 4 and Desmond v. MGN Ltd [2008] IESC 56, all of which demonstrate an ever increasing reluctance on the part of this Court to condone delays in procedural matters. In truth the only response to the arguments on delay in this case has been to suggest that the plaintiffs were also guilty of delay, a contention which, having regard to the nature of the point taken, is one singularly lacking in persuasive weight, not least because it is a point which could have been taken at the outset, that is to say either before or at the time proceedings were commenced. I would dismiss the appeal on grounds of delay also.

 

 

 

 

 

 

 

 

 Adam v. Minister for Justice, Equality and Law Reform

[2001] IESC 38; [2001] 2 ILRM 452

 

McGuimess J

 

Submissions of Counsel

27. Senior Counsel for the Applicants in the Adam proceedings, Mr Shipsey, submitted that the entire scheme of judicial review proceedings, as governed by Order 84 of the Rules of the Superior Courts was radically different from that of ordinary plenary proceedings. The approach of the Court in the case of Barry v Buckley [1981] IR 306 was not suitable for judicial review proceedings and was not applicable to them. In ordinary plenary proceedings the originating pleadings – plenary summons, statement of claim – were produced solely by the Plaintiff and as such were governed by Order 19 Rule 28 of the Rules of the Superior Courts which enabled the Court to order any pleading to be struck out on the ground that it disclosed no reasonable cause of action. This provided a necessary “filtering mechanism” whereby the Court could prevent cases with no rational basis coming to hearing.

 

28. In the case of judicial review, however, this “filtering mechanism” was already in place. Order 84 set out the necessity for the Applicant in judicial review proceedings to obtain leave from the High Court before his proceedings could be issued. Leave would not be granted in the first place if the proceedings were baseless, vexatious or frivolous. The test to be applied by the Court in granting leave had been set out by the Court in G v Director of Prosecutions [1994] 1 IR 374 . In his judgment in that case Finlay C.J. had set out the test as follows:

 

“An Applicant must satisfy the Court in a prima facie manner by the facts set out in his affidavit and submissions made in support of his application of the following matters:-

(a) that he has a sufficient interest in the matter to which the application relates to comply with Rule 20(4).

(b) That the facts averred in the affidavit would be sufficient, if proved, to support a stateable ground for the form of relief sought by way of judicial review.

(c) That on those facts an arguable case in law can be made that the Applicant is entitled to the relief which he seeks.

(d) That the application has been made promptly and in any event within the three months or six months time limits provided for in Order 84 Rule 21(1), or that the Court is satisfied that there is a good reason for extending the time limit…….

(e) That the only effective remedy, on the facts established by the Applicant, which the Applicant could obtain would be an order by way of judicial review or, if there be an alternative remedy, that the application by way of judicial review is, on all the facts of the case, more appropriate method of procedure.”

 

29. In the same case Denham J. had referred to the burden of proof in an application for leave to issue judicial review proceedings as follows:

 

“The burden of proof on an Applicant to obtain liberty to apply for judicial review under the Rules of the Superior Courts Order 84 Rule 20 is light. The Applicant is required to establish that he has made out a stateable case, an arguable case in law. The application is made ex parte to a judge of the High Court as a judicial screening process, a preliminary hearing to determine if the Applicant has such a stateable case.”

 

In the Adam proceedings the Applicants application for leave had been carefully considered by Kinlen J. The learned judge had obviously considered the matter fully, since he had permitted only a portion of the reliefs sought by the Applicants in their statement of grounds. O’Donovan J. in his judgment in the High Court had accepted that this process of evaluation and filtering had been carried out by Kinlen J. This being so, Counsel argued, it could not be open to a second High Court judge to set aside the decision of Kinlen J. and to discharge the leave granted by him. This was akin to one High Court judge acting as an appellate Court from the decision of another High Court judge. The proper route would be for the Respondent to appeal to this Court against the grant of leave.

30. Mr Shipsey conceded that the High Court had an inherent jurisdiction to set aside the grant of leave in judicial review proceedings where there had been material non-disclosure or other conduct which was akin to lack of bona fides on the part of the Applicant, and in this connection he referred to the judgment of Kelly J. in Adams v Director of Public Prosecutions (unreported High Court April 12th 2000). This, he said, was an exception to the general rule and there was no suggestion of lack of bona fides in connection with the present application. In his judgment in the instant case O’Donovan J. had accepted that the case was not covered by Order 19 Rule 28 but had held that the Court had a wide ranging inherent jurisdiction to set aside the grant of leave and, indeed, to strike out the entire proceedings. In so doing the learned trial judge had relied on the judgment of McCracken J. in Voluntary Purchasing v Insurco Limited [1995] 2 ILRM 145 . That case was not, however, a judicial review case and there had been no comparable filtering and evaluation procedure applied to it. It did not, therefore, provide an authority for the proposition that the Court had an inherent jurisdiction to set aside the leave already granted in judicial review proceedings. Indeed there was no authority for such a proposition.

 

31. Mr Shipsey also argued that, if this Court held that there was an inherent jurisdiction to set aside leave which had already been granted, this should be done only in extreme circumstances, where it was crystal clear that the application did not meet the test set out in G v DPP. Order 84 already provided a number of protections for public authorities who were likely to be subject to judicial review. The filtering process of seeking leave existed to prevent undue and unnecessary harrying of public authorities.

 

32. As far as the second issue was concerned, Mr Shipsey submitted that the application as set out in the pleadings met the tests set out in G v DPP . He referred to the decision of Keane J. (as he then was) in Irish Permanent Building Society v Caldwell [1979] ILRM 273 where the learned judge held that the jurisdiction to strike out proceedings ought not to be exercised in cases raising complex and novel issues of law. Mr Shipsey submitted that in the instant case important new issues of law were raised in regard to the relationship between Irish law, the Treaty of European Union, and the European Convention on Human Rights. He accepted that the averments of the Applicants solicitor, Mr Pendred, in his original grounding affidavit were somewhat bare, but submitted that the pleadings were open to amendment and that further affidavits could be filed.

 

33. Senior Counsel for Mr Iordache, Mr Horgan, adopted Mr Shipsey’s arguments. He went on to refer to the judgment of Kelly J. in Landers v Garda Siochana Complaints Board [1997] 3 IR 347 where the learned judge had accepted that the Applicants’ judicial review proceedings could be amended and that their departure from the procedure provided in Order 84 was not fatal to their claim in circumstances where the procedure actually adopted did not amount to abuse of process of the High Court. Kelly J. had held that an action should not be dismissed if the statement of claim admitted of an amendment which might save it. Mr Horgan submitted that undue obstacles should not be put in the way of an Applicant seeking leave to issue judicial review proceedings; amendments of the pleadings should be permitted and there was power to extend time where necessary. Counsel went on to argue that by virtue of its ratification of the Treaty of the European Union the State was estopped from asserting that the Irish Courts had no part in the enforcement of the provisions of the European Convention on Human Rights. The jurisprudence of the European Court of Justice together with the provisions of Title 1 of the of Treaty of the European Union contradicted the proposition that an argument on behalf of the Applicant that the State had violated his rights under the European Convention was doomed to failure before an Irish Court. It was open to an Irish Court to draw inspiration from the European Convention in order to determine whether an Applicants’ right to fair procedures had been violated.

 

In the Iordache proceedings the order granting leave had permitted the Applicant to seek an order of mandamus compelling the second and third named Respondents to institute proceedings against Romania under the provisions of the European Convention. Hr Horgan stated that this relief was no longer sought by the Applicant.

34. Senior Counsel for the Respondents in both cases, Mr O’Donnell, dealt first with the issue of the jurisdiction of the learned High Court Judges to discharge the leave to issue judicial review proceedings which had already been granted by the High Court. He submitted that the conclusions reached by O’Donovan J. and Morris P. in their judgments were justified by fundamental principle, as well as by the authorities referred to in the judgments. It had been suggested that where a Respondent in judicial review proceedings was aggrieved by the making of an order granting leave the correct remedy was to bring an appeal to this Court. In practice such an appeal would raise serious difficulty and would necessarily involve this Court considering arguments in evidence that had never been considered by the High Court. In such circumstances this Court would effectively be acting as a Court of first instance rather than a Court of appeal, a role which the Court had repeatedly and empathetically rejected.

 

35. Counsel for the Applicants had conceded that the High Court had jurisdiction to discharge the order giving leave where there was a lack of uberrima fides in the original ex parte application. Once the principle of inherent jurisdiction was accepted it must extend to other situations where the case made at the ex-parte stage could be shown , on application by the Respondent, to be unstateable, without basis, or vexatious. He agreed with Mr Shipsey that this course should only be taken in a very clear case but he was in no doubt that the jurisdiction existed.

 

As far as the Adam and Iordache cases were concerned, Mr O’Donnell submitted that it was entirely suitable for the High Court to exercise its inherent jurisdiction to discharge the leave and strike out the proceedings. These were judicial review proceedings, not appeal proceedings; it was the method whereby the Asylum authorities had reached their decisions that was under challenge rather than the decisions themselves. In the pleadings in both cases no attempt at all had been made to identify particular defects in the procedure used; there was no assertion that unfair procedures had been used; there was no suggestion that the decisions were unreasonable in the sense defined in the Stardust and O’Keeffe decisions, and no concrete evidence was provided to establish the danger of persecution (as defined by the Geneva Convention) which would be faced by the Applicants if they were returned to Romania.

36. The essential complaint made by the Applicants in the proceedings was that the Minister was obliged to take into account the provisions of the European Convention on Human Rights in exercising his powers in regard to Asylum seekers and refugees. It was common case that the Convention had not as yet been incorporated into domestic law in this state. Mr O’Donnell referred to the decision of this Court in In Re O’Láighleis [1960] IR 93 and to the judgment of Barrington J. in the more recent decision in the case of Doyle v Commissioner of An Garda Siochana [1991] 1 IR 249 . Barrington J. had stated (at page 263):-

 

“Ireland is a signatory of the European Convention on Human Rights and accepts the right of individual petition. But Ireland takes the dualistic approach to its international obligations and the European Convention is not part of the domestic law of Ireland. The Convention may overlap with certain provisions of Irish constitutional law and it may be helpful to an Irish Court to look at the Convention when it is attempting to identify unspecified rights guaranteed by Article 40.3 of the Constitution. Alternatively, the Convention may, in certain circumstances influence Irish law through European community law. But the Convention is not part of Irish domestic law and the Irish Court has no part in its enforcement.”

 

37. Mr O’Donnell accepted that both this Court and the High Court had had recourse to Convention jurisprudence in, for example, constitutional proceedings, but such recourse to the Convention did not involve its enforcement by an Irish Court as was sought in the present proceedings.

 

38. As far as Mr Horgan’s argument on the effect of Title 1 of the Treaty on European Union was concerned, Mr O’Donnell did not accept that Article F.2 of the Treaty had the effect of incorporating the European Convention into the domestic law of the State. In particular it could not do so in relation to an area of law such as immigration policy which fell outside the field of Community law.

 

 

The Law and Conclusions

39. Through their Counsel, the Applicants in both sets of proceedings argued that, once leave to issue judicial review proceedings has been granted, the High Court has no jurisdiction to discharge that leave. At the stage of the ex parte application for leave the necessary filtering procedure has taken place, and the Court has decided that the application has met the tests set out in G v DPP which I have quoted above. If the Respondent wishes to challenge this decision, the correct remedy is to appeal to this Court.

 

40. In the instant cases both O’Donovan J. in the Adam case and Morris P. in the Iordache case held that the High Court had an inherent jurisdiction to discharge the order giving leave and to strike out the proceedings. Both judges relied in the main on the decision of McCracken J. in Voluntary Purchasing v Insurco Limited [1995] 2 ILRM 145 , and in particular on the passage at page 147 of the report where the learned judge stated:-

 

“In my view, however, quite apart from the provisions of any rules or statute, there is an inherent jurisdiction in the Courts in the absence of an express statutory provision to the contrary, to set aside an order made ex parte on the application of any party affected by that order. An ex parte order is made by a judge who has only heard one party to the proceedings. He may not have had the full facts before him or he may even have been misled, although I should make it clear that that is not suggested in the present case. However, in the interests of justice it is essential that an ex parte order may be reviewed and an opportunity given to the parties affected by it to present their sides of the case or to correct errors in the original evidence or submissions before the Court. It would be quite unjust that an order could be made against the party in its absence and without notice to it which could not be reviewed on the application of the party affected.”

 

41. Both Mr Shipsey and Mr Horgan correctly point out that Voluntary Purchasing v Insurco is not a judicial review case, and that the pleadings in that case had not been subjected to the filtering process of the application for leave. So far as I am aware they are also correct in saying that there is no specific Irish authority prior to the present cases which establishes that the High Court has jurisdiction to discharge an order for leave already given.

 

42. Even if it is true that the jurisdiction point has not specifically been argued and decided, there are, however, cases where the inherent jurisdiction of the Court to discharge leave has been assumed and put into effect. Mr Shipsey himself has referred to the judgment of Kelly J. in Adams v DPP (High Court unreported 12th April 2000), where the learned trial judge discharged the leave earlier granted by O’Neill J. as against the third named Respondent, described in the pleadings as “Her Majesty’s Secretary of State for Home Affairs” . Mr Shipsey distinguished the Adams case as being a case where there was material nondisclosure or other conduct akin to a lack of bona fides on the part of the Applicant. He accepted that the Court had jurisdiction to discharge the leave in such circumstances.

 

43. In the first place, in my view, Kelly J’s decision in the Adams case was by no means solely dependant on material nondisclosure or lack of bona fides . In his judgment he dealt in detail with the lack of any proper service of the proceedings and the nature of the proceedings themselves before turning to consider what he saw as lack of bona fides . Secondly, the Adams decision was under appeal at the time when the instant cases were heard before this Court. Judgment has now issued on the appeal (6th March 2001); this Court upheld the learned High Court judge. However, this Court dealt with the matter as being one where the Court lacked basic jurisdiction and where the case was unstateable; it did not deal, other than by a passing reference, to the matter of bona fides .

 

44. In the earlier case of Landers v The Garda Complaints Board [1997] 3 IR 347, which was also a judicial review case in origin, the third named Defendant applied to have the claim against him struck out, relying on the inherent jurisdiction of the Court. While the circumstances were not the same, and in the event Kelly J. refused to strike out the proceedings, it does not appear to have been suggested that the Court had no jurisdiction to strike out what were basically judicial review proceedings.

 

45. In their book Administrative Law in Ireland, Hogan and Morgan discussed this question at pages 708 to 709 under the heading “Appealing or setting aside the grant of leave” , as follows:-

 

“But is it also the case that a putative Respondent could appeal the grant of leave? The existence of such a right of appeal is more doubtful and not supported by present practice. In this regard we may note the comments of McCarthy J. in The State (Hughes) v O’Hanrahan [1986] ILRM 218 at 211 where he doubted that without giving any reason whether anyone (other than the Applicants) can appeal against an order ex parte. The proper course of action for a Respondent to object to the grant of leave would seem to be to bring a motion seeking to have it set aside. The existence of such a jurisdiction was recognised by Carswell J. (as he then was) in Re Savage’s Application [1991] NI 103 . While recognising that the burden on a Respondent who moved the Court to have the grant of leave set aside was a ‘heavy one’, nevertheless:-

‘If on mature consideration of the facts, and that the benefit of the arguments presented to me by both sides, I now accept that there is not an arguable case on the facts, then I think that I should set aside the grant of leave.’

In effect, therefore, this jurisdiction to set aside is but an example in this particular context of a more general power to strike out on the ground that the proceedings are ‘clearly unsustainable’. If anything, however, this jurisdiction to set aside must be even more sparingly exercised, in that the granting of leave by the High Court presupposes – in a way that the mere issuing of a plenary summons does not – that the case is at least an arguable one.”

 

46. In England the rules governing the application for leave to issue judicial review proceedings differ considerably from the Irish rules; nevertheless the issue of the discharging of leave once given has also arisen for consideration. In the most recent edition of Lewis: Judicial Remedies in Public Law, the author states at page 283 para 9-060:

 

“There is an inherent jurisdiction in the Court to set aside orders made without notice having been given to the other party, including the grant of permission to apply for judicial review. That is the appropriate and usual method for challenging the grant of permission. The Courts have emphasised, however, that the jurisdiction is to be exercised sparingly and that they will only set aside permission in a very plain case.”

 

47. In De Smith, Woolf and Jowell: Judicial Review of Administrative Action the question is dealt with at page 667 para 15.025 as follows:-

 

“Where leave has been granted, a Respondent may apply to set aside a grant of leave on the grounds that the application discloses absolutely no arguable case or that there has not been frank disclosure by the Applicant of all material matters both of fact and law. However except in very clear cases such applications are not looked on with favour by the Courts.”

 

48. Both English authors refer to the case of R v Secretary of State for the Home Department (ex parte Chinoy) [1991] C.O.D. 381 . In that case the Applicant sought to judicially review the decision of the British Home Secretary to surrender him to the United States authorities. Leave was granted by Simon Brown J. and the Home Secretary subsequently sought to set aside that leave. His application was heard by two judges of the Queens Bench Division. In the course of his judgment Bingham L.J. referred to the argument made by Counsel on behalf of the Applicant, who had submitted that if there was any jurisdiction to set aside the order giving leave it was a jurisdiction which might only be exercised in the case of nondisclosure or in the case of new factual developments since the date of the grant of leave. The learned judge commented:-

 

“I would unhesitatingly accept that those are grounds upon which the Court could exercise its discretion to set aside leave previously given. But I would not accept the suggestion that the Court’s jurisdiction may only be exercised where nondisclosure or new factual developments are demonstrated. It seems to me that it is a jurisdiction which exists and which the Court may exercise if it is satisfied on inter partes argument that the leave is one that plainly should not have been granted.

 

I would, however, wish to emphasise that the procedure to set aside is one that should be invoked very sparingly. It would be an entirely unfortunate development if the grant of leave ex parte were to be followed by applications to set aside inter partes which would then be followed, if the leave were not set aside, by a full hearing. The only purpose would be to increase costs and lengthen delays, both of which would be regrettable results. I stress therefore that the procedure is one to be invoked very sparingly and it is an order which the Court will only grant in a very plain case. I am, however, satisfied, as I have indicated, that the Court does have discretion to grant such an order if satisfied that it is a proper order in all the circumstances.”

 

49. In my view the learned trial judges in the instant cases, O’Donovan J. and Morris P. , were correct in deciding that this Court has a jurisdiction to set aside an order granting leave which has been made on the basis of an ex parte application. However, I would accept the submission of Mr Shipsey, with which Mr O’Donnell agrees, that this jurisdiction should only be exercised very sparingly and in a very plain case. The danger outlined by Bingham L.J. in the passage quoted above would be equally applicable in this jurisdiction. One could envisage the growth of a new list of applications to discharge leave to be added to the already lengthy list of applications for leave. Each application would probably require considerable argument – perhaps with further affidavits and/or discovery. Where leave was discharged, an appeal would lie to this Court. If that appeal succeeded, the matter would return to the High Court for full hearing followed, in all probability, by a further appeal to this Court. Such a procedure would result in a wasteful expenditure of Court time and an unnecessary expenditure in legal costs; it could be hardly said to serve the interests of justice. The exercise of the Court’s inherent jurisdiction to discharge orders giving leave should, therefore, be used only in exceptional cases.

 

50. Should, then, the inherent jurisdiction be used in the instant cases? I would accept that Mr Shipsey is correct in referring the Court to the tests set out by the then Chief Justice in G v DPP and to the burden of proof as set out by Denham J. in the same case. The first test is whether the Applicants have “a sufficient interest in the matter”. In the Adam proceedings it is established by the affidavit of Michael Quinn that quite a number of the listed Applicants either no longer have a proper interest in the proceedings because they have been permitted to remain in this country, or have not yet acquired such an interest, since their applications for refugee status have not yet been decided. Even if one considers the remaining Applicants, they have in common the fact that they are Romanian nationals; that they are now, one presumes, in this country; and that they do not wish to return to Romania. These simple facts do not go far enough to show, in the case of each Applicant, what is his or her specific “interest” in the proceedings. I would be in agreement with O’Donovan J. in this case in holding that it is a most unsuitable procedure to have the applications of a large number of Applicants grouped together in one set of pleadings, grounded on one non-specific affidavit, as they are here.

 

51. However, the most serious difficulties for the Applicants in both cases arise under tests (b) and (c) as set out in G v DPP – that the facts averred in the affidavit would be sufficient, if proved, to support a stateable ground for the form of relief sought by way of judicial review and that on those facts an arguable case in law could be made that the Applicant was entitled to the relief which he sought.

 

52. In the present cases the applications were initially grounded on the affidavits of Mr Pendred, Solicitor, which are couched in the most general terms. He avers that the Applicants are subject to persecution in Romania in various ways which reflect the wording of Articles of the ECHR. Subsequent to the granting of leave a number of further affidavits were sworn by individual Applicants. Again these were in very general terms, simply expressing a fear that if the Deponent is returned to Romania he or she will suffer persecution and abuse of his or her human rights. The affidavits exhibit in each case the documents relevant to the Applicants’ application for refugee status and its rejection by the authorities. It is, it seems, left to the Court itself to peruse these documents and to extract from them what might be actual grounds for judicial review. This is in no way a satisfactory procedure. It cannot be too often said that judicial review is not a further appeal against a decision which the Applicant wishes to overturn. It is a review of the manner and method whereby that decision was reached to ascertain whether correct procedures were used which were intra vires the decision maker and in accordance with natural and constitutional justice, and, in some cases, whether the decision was “reasonable” in the sense defined in the Stardust and O’Keeffe decisions. In an application for leave to issue judicial review proceedings in regard to a decision made by a public authority the Applicant must set out on affidavit at least sufficient detail to establish the manner in which he claims the decision making procedure was flawed or in error.

 

53. In the instant cases I am not to be taken as saying that grounds for judicial review could not in any circumstances be made out by any or all of the Applicants. Coincidentally, very shortly after the hearing of the present appeals by this Court, a judgment of the English Court of Appeal in an asylum case was reported – R v Secretary of State for the Home Department, ex parte Turgut [2001] 1 All ER 719 . This case concerned a Turkish Kurd who had entered the United Kingdom illegally and claimed asylum. His claim was rejected by the Secretary of State and on appeal by the special adjudicator. After the Immigration Appeal Tribunal had refused him leave to appeal, Mr Turgut applied to the Secretary of State for exceptional leave to remain. This too was refused. The Applicant challenged these decisions on the grounds of irrationality and the judgments of Simon Brown L.J. and Schiemann L.J. (with both of whom Thorpe L.J. agreed) contain a most interesting and far reaching consideration of the approach of the Courts to the rationality or otherwise of decisions in asylum cases in the light of the European Convention on Human Rights. In that case some 1500 pages of specific evidence were submitted to the Court relating to the danger that the Applicant’s human rights would be abused if he was returned to Turkey, and the challenge to the rationality of the Respondent’s decision was fully pleaded.

 

54. On the pleadings in the instant cases, however, there is no way in which either this Court or the Court below could assess whether the facts support a stateable ground for the relief sought, because in neither the Adam proceedings nor the Iordache proceedings did the pleadings set out any specific evidence that the Minister had failed to have regard to the situation in Romania when considering the position of the Applicants. Nor was there any evidence that appropriate procedures had not been complied with or that there was any breach of the principles of natural or constitutional justice. It is not so much that the Applicants have not put forward a stateable case as that they have not put forward any case at all within the confines of judicial review proceedings.

 

55. For these reasons I would dismiss both appeals and affirm the orders of the learned High Court judges. In the circumstances it is unnecessary to consider such arguments as were made concerning the European Convention on Human Rights and the Treaty of European Union.

 

Barrett t/a Corporate Recovery Services v Beglan & Anor

[2007] IEHC 188 (14 June 2007)

 

 

 

 

Judgment of Mr Justice Michael Peart delivered on the 14th day of June 2007:

 

 

 

 

The first named defendant seeks an order striking out the plaintiff’s proceedings against him pursuant to either O. 19, r. 27 RSC or O.19, r. 28 RSC. I shall refer to the first named defendant as “the defendant” as he is the sole moving party of the present motion. The second named defendant is not a party to this motion and may be no longer trading.

 

The former rule permits the Court to strike out any matter in any indorsement or pleading which may be “unnecessary or scandalous, or which may tend to prejudice, embarrass, or delay the fair trial of the action”.

 

The latter rule on the other hand permits the Court to strike out the plaintiff’s claim where “it discloses no reasonable cause of action”, and “in any such case or in the case of an action ………being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed”.

 

I will proceed with this application on the basis of the latter rule, namely O. 19, r. 28 RSC.

By way of brief background to this application, it appears that the plaintiff and the defendant came into contact at a time when the defendant was in some financial difficulty. The plaintiff appears to have been willing to lend him some money to assist in these difficulties at the end of November 2001.

 

The papers filed on this application reveal that on that date the two parties signed an agreement which has been exhibited. This is a hand-written document prepared and written by the plaintiff. It has been signed by each party. It simply states that in consideration of a drawdown of loan facilities referred to in a letter from the defendant’s solicitors of the same date a sum of €3000 was received by the defendant, and that the defendant offered as security for this loan certain property comprised in Folio 157 of the Register of Freeholders, Co. Westmeath. The defendant also acknowledged in this document that his property was “at risk of sale should the loan be defaulted upon in the terms of such agreement “(sic). There is another annexed document relating to a facility fee and an applicable interest rate of 10% and there is mention of a repayment date of the 30th May 2002.

 

There is also among the papers exhibited an attendance note made by the defendant’s solicitor on the 30th November 2001 in which the solicitor notes that he had a meeting with the defendant that morning and that he was instructed that the plaintiff was willing to lend a sum of £8000. The solicitor also notes that he rang the plaintiff to discuss this, and, inter alia, that the solicitor explained that he was willing to give an undertaking in relation to the title deeds of the lands which were being offered as security; but that he could not advise his client until he knew the full terms of the loan.

 

Since that meeting with the defendant is noted as having taken place at 9.40am, I am assuming that the agreement written out by the defendant and signed as of that date by both parties was written out after 9.40am on that date, since it purports to set out the details of the loan arrangement.

 

A form of “Client Authority and Retainer” also appears to have been prepared by the defendant’s solicitor and sent as a draft to the plaintiff by letter dated 30th November 2001. As matters developed, no undertaking was ever given by the defendant’s solicitor to the plaintiff. However, the plaintiff has exhibited from his own file a copy of the “Client Authority and Retainer” form referred to and which appears to have been signed by the plaintiff and defendant. However, the solicitors say that this document was never sent to them, and that they never acted upon it by giving any undertaking in respect of the title deeds to the lands referred to. In fact it appears that the first occasion on which they saw the copy of the signed Client Authority and Retainer form was when the plaintiff sent this to them on the 11th June 2003. It would appear that by that date the plaintiff had lent further sums from time to time to the defendant, and was seeking security for a sum of about €16500. The solicitors stated that they would need to get their client’s instructions in relation to that request.

 

It appears to be not in dispute that between the 30th November 2001 and 30th December 2001 a sum of £8000 was loaned to the defendant by the plaintiff. It is also not in dispute that it was not repaid by the 30th May 2002. This is the only sum referred to in the agreement dated £8000. The loan facilities referred to in that document are those referred to in the letter of the same date from the defendant’s solicitors, and that letter refers to a loan of “approximately £8000” only and not to any future advances.

 

There was correspondence between the defendant’s solicitors and the plaintiff in June/July 2003 as to the amount which may be due to the plaintiff and the terms on which the solicitor was prepared to give an undertaking. In this regard the defendant was maintaining the position that only a sum of €8157.90 remained owing to the plaintiff on foot of the original loan, and that an undertaking over the deeds of the property would have to be limited to such a sum and not the much larger sum being claimed as owing by the plaintiff. This was unacceptable to the plaintiff.

 

Before the matter of any undertaking was resolved, however, the defendant’s solicitors by letter dated 17th July 2003 sent to the plaintiff a cheque in the sum of €8157.90 in discharge of the balance of the original advance of £8000 referred to in the agreement dated 30th November 2001. The original sum of £8000, when converted into Euro became the sum of €10157.90. A sum of €2000 was repaid by the defendant on the 30th June 2002, leaving this balance of €8157.90. Upon receipt of this cheque the plaintiff wrote to these solicitors stating that he was not accepting this cheque in full settlement of the loan, as there was no allowance made for interest, and it ignored also the additional advances made from time to time since the date of the original advance. The cheque however was retained by the plaintiff and encashed by him.

 

The position is therefore that by the 17th July 2003 the principal of the original loan which was the subject of the agreement dated 30th November 2001, namely £8000 had been repaid. That payment did not address the question of interest on that sum up to the date of payment, or any other sums which may have been advanced from time to time in fairly small amounts subsequent to the original loan.

 

That is a general background against which the plaintiff’s claim as stated in the Plenary Summons and Statement of Claim must be viewed.

 

One could reasonably expect that the plaintiff might have issued proceedings in either the District Court or Circuit Court, as may be appropriate, for the recovery of interest on foot of the original agreement, and perhaps further proceedings for the recovery of other sums advanced outside the agreement dated 30th November 2001. However, the plaintiff chose instead to issue High Court proceedings by way of Plenary Summons against both the defendant, Michael Beglan, and a company called ERT Foundation Limited which in November 2001 was a company operated by Michael Beglan, and for which the loan from the plaintiff was needed to assist in financial difficulties at that time. These proceedings which commenced on the 27th January 2005 (i.e. some eighteen months after the repayment of the original loan) seek orders for specific performance under three headings, as well as other reliefs. It is best if I set out verbatim the text of the Indorsement of Claim because of the unusual nature of the claims being made therein:

 

The Indorsement of Claim on the Plenary Summons:

“1. An order for specific performance that the first named defendant shall deliver to the plaintiff all the lands comprised in folio 157, area E o/s 34/1 and consisting of approx 0.562 acres, and which was charged to the plaintiff on the 30th November 2001, by way of loan agreement, committed to writing, as witnessed.

 

2. An order for specific performance against the first named defendant of an agreement brokered at Leinster House, Kildare Street, by Fergus Finlay, Philip Mulville and Michael Mulcahy, that the first named defendant Michael Beglan was (a) to immediately assume personal and sole responsibility and sole responsibility for all the debts of the ERT, (b) that Michael Beglan was to find employment in Ireland, to contribute to the accumulating debts, (c) that Michael Beglan would immediately apply for planning permission with a view to selling the aforementioned site to discharge his debts and the debts of the Foundation.
3. An order for specific performance that Michael Beglan, Fergus Finlay and Philip Mulville will personally assume the role of guarantor(s) to Allied Irish bank, Lower Baggot Street and the role of guarantor(s) to the landlords of 34 Upper Fitzwilliam Street, Dublin 2 in place of the plaintiff and/or indemnify the plaintiff herein against any and all claims of the bank, in relation to an overdraft currently standing in the sum of €9062.23, plus accruing interest.

 

4. An order that the first named defendant will cease and desist in setting up a phoenix syndrome activity of the ERT Foundation Limited, or the European Russian Trust, until the hearing of the action herein before this Honourable Court.

 

5. A judgment mortgage in favour of the plaintiff, against the named defendants in the amount of €67,718.74 being the amount legally due and owing to the plaintiff herein.

 

6. Such other order as this Honourable Court shall make.

 

7. Interest pursuant to the Courts Acts.

 

8. Damages.

 

9. Costs.”

 

Some days after these proceedings were issued, they were registered as a lis pendens against the first named defendant.

 

On the 9th March 2005 a Statement of Claim was delivered. This document pleads the original loan agreement dated 30th November 2001 and that the sum loaned thereunder was not repaid in full until July 2003. It is pleaded also that other sums were advanced by the plaintiff in the meantime, and that “it was a term of the agreement(s) that all loans would stand equal to be repaid along with and including any interest accrued over the length of the agreement(s)”. A reading of the documents prepared by the plaintiff and dated the 30th November 2001 does not reveal any such term, and there is no other agreement is pleaded by the plaintiff.

 

The Statement of Claim goes on to plead that “the plaintiff was assured that he would receive the agreed undertaking from the defendant’s solicitors, and that he believed at all times that the defendant was aware “of the agreed undertaking” and “that only when it appeared reasonable that he would be required to transfer his property to meet his indebtedness that Michael Beglan attempted to renege on the agreement”.

 

Thus, the plaintiff is attempting to turn the undertaking referred to into an agreement to transfer the property to the plaintiff, hence the claim at paragraph 1 of the Indorsement of Claim set out above.

 

There follows in the Statement of Claim pleas about the failure of the defendant’s solicitor to provide the undertaking sought by the plaintiff regarding the title deeds to the property, as well as pleas as to the dates and amounts of other sums loaned to the defendant. These are pleaded not to constitute gifts by the plaintiff.

 

Included in this Statement of Claim is then a claim that persons referred to therein as “respondents” owe the plaintiff certain sums in respect of rent and refurbishment of offices at 34, Upper Fitzwilliam Street, Dublin. It is pleaded that an agreement was reached whereby the plaintiff would advance sums required to open these offices and that these sums would be “repaid jointly and severally by the respondents”. These “respondents” are not named as such, but presumably refer to the named defendants herein. It is further pleaded that the plaintiff guaranteed the rent and service charge to the landlord and that a sum of €15650.49 is owed to the plaintiff under this heading.

 

Other sums are pleaded to be owed by the “respondents”, and a claim is made for “special damages” (later quantified as being €1,000,000) for damage “suffered in the breakdown of a 22 year relationship with Allied Irish Bank………on the event of having introduced the respondents to such Branch and having suffered because of the respondents failure to repay the overdraft to the said Bank, standing at present in the sum of €9062.23, plus accruing interest, resulting in the bank” (sic)

 

It is important to note that nowhere in these proceedings is a claim made by the plaintiff for judgment for any liquidated sum representing what the plaintiff claims is the total of the sums allegedly lent to the defendants or respondents referred to. The prayer in the Statement of Claim seeks only the following reliefs:

 

“1a/ An order for specific performance that the first named Respondent shall execute the agreed charge with the plaintiff in all and those lands comprised in Folio 157, area ‘E’ o/s 34/1 in the County of Westmeath.

 

2a/ A judgment mortgage in favour of the plaintiff in the amount of €70,704 being the amount legally due and owing by the first, and second named respondents.

 

3a/ Such other order as this Honourable Court shall make.

 

4a/ Interest pursuant to the Courts Acts.

 

5a/ Special Damages in the sum of €1million euro.

 

6a/ Costs”

These amount to the reliefs now being claimed by the plaintiff despite the other matters set forth in the Indorsement of Claim on the Plenary Summons itself.

 

Before dealing with the substance of the application now made that these proceedings be stayed or dismissed, there is a matter which arises from the documentation filed in these proceedings and which I feel cannot be overlooked and ought to be the subject of comment by me. By the conclusion of argument on this application and after the pleadings and grounding affidavits and exhibits had been opened in full, it appeared to me that the drafting of the documents on the plaintiff’s side fell considerably short of the quality which would normally be expected of solicitor and Counsel. Indeed it seemed to me that had no solicitor or Counsel would have advised and drafted the claims being made in the manner in which they appear. For example the claim for a judgment mortgage over the lands is one simply not known to the law. It is equally clear that a great deal of extraneous matter has been sucked into the pleadings and affidavits, and I will have the opportunity to express a view on the reasons for that later in this judgment.

 

I inquired of Counsel for the plaintiff if I was correct in having formed the view that although the summons was issued by solicitors acting for the plaintiff, and although Counsel’s own name appeared as having signed the Statement of Claim (though not the summons), the fact was that it is the plaintiff himself who substantially prepared the documents which have been filed and served in this case to date. Counsel stated that this was correct. The Court was informed in this regard that in order to keep down costs the plaintiff had essentially drafted the papers in the case, even though they went out under the name of solicitor and Counsel. In my view it is professionally inappropriate for solicitor and Counsel to allow papers to go out in their name in this way, particularly where neither clearly have scrutinised and advised in relation to the contents of same. In this case, it is clear that either the contents were not scrutinised at all, or that even though they were scrutinised by solicitor and/or counsel the plaintiff was not advised in relation to same and they were allowed to be filed and served in their present form without amendment, or finally that any advice which may have been given to the plaintiff in relation to how the documents were drafted was not heeded by the plaintiff and the papers were filed and served in unaltered form. Either way, it is inappropriate, particularly where the claims being made are unusual to say the least and always had little chance of success given the way that they have been worded and framed. No professional, be it solicitor or counsel should allow his or her name to be put to documents prepared by a client for proceedings in any court without ensuring that they are drafted in a way which they can stand over professionally, and in a way which does not constitute an abuse of the process of the Court. In my view the documents filed by the plaintiff in this case to date bear all the hall-marks of amateurism, and no solicitor or counsel should have co-operated in the manner appearing.

 

Conclusions:

 

Clearly while in 2001 the plaintiff was prepared to assist the defendant with his financial difficulties in relation to his business, and did so, relations between the parties have broken down. I am satisfied about a number of things. Firstly, I am satisfied that the defendant has repaid the principal sum of money referred to in the agreement dated 30th November 2001, and did so about eighteen months prior to the issue of these proceedings. On foot of that agreement there may be an outstanding claim for interest. That claim, if being pursued, is one capable of pursuit in the Circuit Court or District court, whichever is appropriate, and certainly does not justify the present proceedings.

 

Secondly, I am satisfied that no undertaking was ever given by the defendant’s solicitor in relation to the deeds to the property referred to, and any attempt to drag those solicitors into this case in the manner which the plaintiff has sought to do in the pleadings and affidavits is misplaced. It is true that the agreement refers to an offer of the lands as security for the loan, and that the defendant acknowledged that his property was at risk should he default on the loan, but no security was put in place on foot of that agreement.

 

Thirdly, I am satisfied that while the plaintiff pleads in the Statement of Claim that a large number of other sums of money were paid by him from time to time for the defendant and that he is owed these sums since they were never a gift, he does not seek judgment for any such amount, but merely “a judgment mortgage in favour of the plaintiff in the amount of €70,704.45”. This claim fails in limine, as being one which any Court could not in any circumstances grant. If on the other hand the plaintiff wishes to sue the defendant for the total of these amounts which he says he has paid for or loaned to the defendant, then he should sue for those amounts in the appropriate way in the appropriate court. At the moment these sums are simply pleaded by way of facts to support the claim for the relief prayed for in the prayer of the Statement of Claim, namely “an order for specific performance that the first named Respondent shall execute the agreed charge with the plaintiff in all and those lands comprised in Folio 157, area ‘E’ o/s 34/1 in the County of Westmeath”, as well as a “judgment mortgage in favour of the plaintiff in the amount of €70,704 being the amount legally due and owing by the first, and second named respondents.

 

The Statement of Claim appears to have abandoned by default any claim as sought in either paragraph 2, 3, or 4 of the Indorsement of Claim. The prayer in the Statement of Claim is limited in the way which I have set out already.

 

Based on the affidavit filed by the plaintiff by way of answer to the defendant’s motion, and based on my understanding of the true nature of any claim which the plaintiff may have against the defendant, I am satisfied that these proceedings are misconceived and an abuse of process. It is clear to me that the plaintiff feels aggrieved that he has helped the defendant and has been left high and dry for his money. But the proceedings issued in any court jurisdiction must not be abused, or used for some collateral or ulterior motive. In my view the plaintiff is using these proceedings in a way which oppressive to the defendant and in a way designed to expose the defendant to expense in order to put additional pressure on him to settle the sums claimed.

 

He has attempted also to drag the defendant’s solicitors into the net, by alleging that they have failed to honour an undertaking and have failed in their professional duties, and has even threatened to make a complaint to the Law Society in that regard. In my view, this is an attempt through these proceedings to pressurise the solicitors into trying to resolve matters for the plaintiff. That is an abuse of process also.

 

The plaintiff in his documentation has displayed a propensity to refer to certain persons whose names would be publicly well-known, and his correspondence has in some instances sought to drag these persons into the claim against the defendant. I believe that the plaintiff is attempting to drag these persons also into the picture so that perhaps they also might through some anticipated embarrassment put pressure upon the defendant to settle matters in dispute with the defendant. That is an abuse of process, particularly where those persons are not parties to this suit and are not in a position to defend them selves, and such contents of the plaintiff’s affidavits may well come within the sort of content covered by O.19, r. 27 RSC, already set forth at the commencement of this judgment, as being “unnecessary or scandalous, or which may tend to prejudice, embarrass……”.

 

However, I am satisfied that the appropriate order to be made in this case is that the present proceeding should be dismissed on the basis that it discloses no reasonable cause of action, and that in part at least the claim is shown by the pleadings to be vexatious. That order is not to be taken as preventing the plaintiff from pursuing any remaining claim he feels he has against any defendant for judgment for a liquidated sum said to be due and owing to him. He has not made such a claim in the present proceedings. Had he done so, this Court may have been in a position to leave in tact such part of the proceedings as sought judgment for a liquidated sum and transferred that claim to the appropriate court for determination. But that is not the case. So the order of the Court is that these proceedings be dismissed.

 

 

 

Behan v. The Medical Council

 

Morris J. [1993] 3 IR        525

 

.

23rd October 1992

 

 

This is an application brought by the plaintiff seeking an order against the first defendant pursuant to O. 19, r. 7 (1) of the Rules of the Superior Courts, 1986, directing it to give further and better particulars to the plaintiff. The letter for particulars is dated the 23rd April, 1992. The background to this case is of importance in considering the issues which arise. The plaintiff is a consultant psychiatrist. One of his patients considered that he had behaved in an unprofessional manner and made a complaint to the Medical Council, which matter came before the Fitness to Practice Committee for an inquiry into the plaintiff’s conduct. Upon the committee communicating with the plaintiff, he questioned a number of matters relating to the inquiry which the committee proposed to carry out, and took issue with the holding of such an inquiry. However on the 5th February, 1990, the plaintiff received notice of the holding of an inquiry by the Committee in accordance with s. 45, sub-s. 3 of the Medical Practitioners Act, 1978. The plaintiff thereupon sought and obtained an order for judicial review and an order staying the holding of the inquiry. He delivered his statement of claim pursuant to this order in which he set out in a comprehensive manner the facts of the case and the complaints which he had as to the manner in which the first defendant

 

had conducted itself in this transaction. To this statement of claim the first defendant entered a defence which, with the exception of paras. 2 and 3 (in which the facts are admitted) and para. 4 (in which a complaint about the plaintiff’s delay is made) the entire thereof, which runs to 24 paragraphs, constitutes a direct traverse and denial of the plaintiff’s claim as set out in his statement of claim and no more.

The defence having been delivered by the first defendant on the 13th July, 1990, on the 23rd April, 1992, the plaintiff served a notice for particulars which runs to 152 paragraphs and a number of these paragraphs are themselves sub-divided into sub-paragraphs. In considering the time gap between the delivery of the defence on the 13th July, 1990, and the service of the notice for particulars on the 23rd April, 1992, it is of importance to appreciate that this is not the first notice for particulars raised by the plaintiff. A previous notice was served but was later withdrawn by the plaintiff either voluntarily or as a result of an undertaking given to the court on his behalf, by counsel who was then acting for him on the occasion of the hearing of the second motion brought by the first defendant to have the plaintiff’s action dismissed for want of prosecution. The plaintiff denies that he gave counsel authority to give any such undertaking to the court. However, this is not material because the first notice for particulars was in fact withdrawn but was replaced by the existing notice for particulars of the 23rd April, 1992, which is no more than a more comprehensive form of the existing notice for particulars which was withdrawn.

The first defendant replied to the notice for particulars on the 25th May, 1992, but the plaintiff being dissatisfied with these particulars now brings the motion to the court to compel the first defendant to give further and better particulars.

Counsel for the first defendant submits that while the first defendant did answer the notice for particulars it was under no obligation to do so and it gave these answers in the hope of expediting the hearing of the case and he now argues that the first defendant should not be required to give any further or better particulars on the grounds that the defence delivered constitutes no more than a traverse to the plaintiff’s claim and he submits that it has never been the practice to require particulars in such circumstances. He relies on  Weinberger v. Inglis  [1918] 1 Ch. 133. That was a case in which the plaintiff sought re-election as a member of the Stock Exchange in London but objection was lodged to his re-election in accordance with the Rules of the Stock Exchange “on the grounds of enemy birth”. The committee of the Stock Exchange then embarked upon the appropriate procedure for considering that objection. However the plaintiff commenced an action impugning the committee’s decision and made various allegations concerning the committee and in the course of the action sought particulars, arising from a traverse in the committee’s defence, of the allegations which he made in his statement of claim. In the course of his judgment, Astbury J. says at p. 137:

“As a general rule the Court never orders a defendant to give particulars of facts and matters which the plaintiff has to prove in order to succeed and this is especially the case where the defendant has confined himself to putting the plaintiff to the proof of allegations in the statement of claim, the onus of establishing which lies upon him.”

This statement must be taken as subject to the purpose or object of particulars and pleadings in general as stated by the Supreme Court in Mahon v. Celbridge Spinning Co. Ltd.  [1967] I.R. 1 in which Fitzgerald J. (as he then was) at p. 3 said “the whole purpose of a pleading, be it a statement of claim, a defence or reply, is to define the issues between the parties, to confine the evidence at the trial to the matters relevant to these issues, and to ensure that the trial may proceed to judgment without either party being taken at a disadvantage by the introduction of matters not fairly to be ascertained from the pleadings. In other words a party should know in advance in broad outline the case he will have to meet at the trial”. That was a case in which the court was considering for the first time after the passing of the Civil Liability Act, 1961, the necessity to give particulars of contributory negligence and found that they should be given so as to remove the possibility of the plaintiff being taken by surprise and to enable him to arm himself to meet such allegations of contributory negligence as might be necessary.

Applying the general rule therefore that a party is entitled to such information as will ensure that he is not taken at a disadvantage “by the introduction of matters not fairly to be ascertained from the pleadings”it appears to me that the plaintiff in the present case now finds himself in the position of being fully informed of all matters arising from the first defendant’s defence, to which he is entitled and having considered in detail the notice for particulars of the 23rd April, 1992, and the replies of the 25th May, 1992, I am of the view that the notice for particulars is fully answered and accordingly I refuse the application.

 

 

 

Bula Holdings Ltd & Ors -v- Roche & Ors

 

[2008] IEHC 208

 

 

Edwards J

The Statement of Claim discloses no reasonable cause of action and/or is frivolous and/or vexatious.

 

 

 

96. Introduction

The first relief sought on behalf of the defendants is an Order pursuant to Order 19, rule 28 of the Rules of the Superior Courts, striking out or dismissing the plaintiffs’ claims on the grounds that the Statement of Claim delivered herein discloses no reasonable cause of action and/or the action is shown by the pleadings to be frivolous and/or vexatious.

 

97. The jurisdiction conferred by Order 19, rule 28 of the Rules of the Superior Courts

Order 19, rule 28 of the Rules of the Superior Courts provides as follows:

“The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just.”

It is clear from the decision of the Supreme Court in Aer Rianta v. Ryanair [2004] 1 IR 506 that the jurisdiction conferred by Order 29, rule 28 is a jurisdiction to strike out the whole (as distinct from part only) of a claim. It is also clear from the decision in that case that, although, “[a] court will exercise caution in utilising this jurisdiction”, “if a court is convinced that a claim will fail [the] pleadings will be struck out” at 509 (per Denham J.)

 

98. In Adams v. Minister for Justice, [2001] 2 ILRM 452, the Supreme Court had to consider whether the applicants’ claims disclosed any reasonable cause of action against the respondents, were frivolous or vexatious or doomed to fail. In concluding that the claims were frivolous, vexatious and doomed to fail, Hardiman J. stated, inter alia, as follows:

“The Applicants’ proceedings are of the baldest kind, without any basis in law or fact, and, with the exception of Mr. Iordache’s case, without any attempt to rely on proved individual circumstances either in relation to attacking the decisions taken in respect of the individual applicants or on the broader aspects of their claim. In my view they are all frivolous, vexatious and doomed to fail: indeed they are scarcely recognisable as legal proceedings at all.”

As regards the appellant’s contention that the proceedings should not be struck out if they were capable of being saved by amendment, Hardiman J. stated as follows:

“In my view, nothing which could properly be described as amendment could save these proceedings. If, hypothetically, the applicants or any of them have any statable cause of action, it would require to be expressed in proceedings in which bear no resemblance whatever to those presently under consideration.”

 

99. In O’Siodhachain v. O’Mahony, (Unreported, Supreme Court, 7th December 2001), the Supreme Court upheld a decision of the High Court striking out a claim of deceit against the third named defendant who had acted as solicitor for the first and second named defendants in respect of a property transaction the subject of the proceedings. In delivering the ex tempore judgment of the court, Keane C.J. stated, inter alia, as follows:

“The statement of claim delivered in the proceedings and in which the third named defendant was joined as a defendant, claims in paragraph 4b an order for damages against the first, second and third named defendants for deceit. That is effectively a claim of fraud against the third named defendant and the court is satisfied having examined with care the statement of claim filed on behalf of the plaintiff that even if the facts there alleged were proved, it would not in any way substantiate so grave an allegation as an allegation of fraud against any person but particularly a solicitor and an officer of this court.

 

…

 

The court is satisfied that the learned High Court judge was perfectly correct in dismissing these proceedings. The court is so satisfied not only because they disclose no cause of action against the third named defendant but because they are also satisfied that in the inherent jurisdiction of the High Court it was proper to strike the proceedings out as being a clear abuse of the process of the court.”

 

100. In Fay v. Tegral Pipes Ltd., [2005] 2 IR 261 the Supreme Court allowed an appeal against a decision of the High Court refusing to dismiss the plaintiff’s claim on the grounds that it was bound to fail, disclosed no reasonable cause of action, was frivolous and vexatious and an abuse of the process of the court. In addressing the jurisdiction to strike out a plaintiff’s claim on the grounds that it is frivolous and vexatious, the court stated, inter alia, as follows:

“While the words ‘frivolous and vexatious’ are frequently used in relation to applications such as this, the real purpose of the jurisdiction is to ensure that there will not be an abuse of the process of the courts. Such abuse cannot be permitted for two reasons. Firstly, the courts are entitled to ensure that the privilege of access to the courts, which is of considerable constitutional importance in relation to genuine disputes between parties, will only be used for the resolution of genuine disputes, and not as a forum for lost causes which, no matter how strongly the party concerned may feel about them, nevertheless have no basis for a complaint in law. The second, and equally important, purpose of the jurisdiction is to ensure that litigants will not be subjected to the time consuming, expensive and worrying process of being asked to defend a claim which cannot succeed.”

 

101. In Kilcoyne v. Westport Textiles (Unreported, High Court, Finnegan P., 26th July 2006), Finnegan P. acceded to an application on behalf of the second named defendant to strike out the plaintiff’s claim pursuant to Order 19, rule 28. Finnegan P. explained his reasoning as follows:

“On the Affidavits before me, it is quite clear that the claim against the second named defendant, as at present constituted and pleaded, is unsustainable. I am satisfied that the second named defendant is entitled to relief under Order 19 rule 28, that is to have the claim against it struck out on the grounds that it discloses no reasonable cause of action. Accordingly, I propose to make the order sought.

 

It was canvassed before me that I should deal with the matter on the basis of the true nature of the claim against the second named defendant and that the plaintiff be allowed to further amend his pleadings at this stage to reflect the true cause of action. Should I accede to this, the second named defendant proposes to rely upon delay. Much of the affidavits before me deal with the subject of delay. However, I have determined that I should deal with the matter solely on the basis of the pleadings as they stand at present. On the information before me, it seems almost inevitable that the plaintiff will obtain judgment in default of pleading against the first named defendant. He can then, if so advised, institute proceedings against the second named defendant as the indemnifier of the first named defendant. In those proceedings, the defendant (the second named defendant in these proceedings) can raise the issue of delay and seek to have the proceedings struck out. Rather than proceed on the basis of a notional further amended statement of claim, I am satisfied that it is preferable that I should allow the matter to proceed on the basis of the proceedings as they stand.

 

In deciding to strike out the plaintiff’s claim, I am influenced by the circumstance that the plaintiff has had from 11th January 2005 to date, to deliver an appropriate amended statement of claim setting out in appropriate terms his claim against the second named defendant but has failed to do so: the amended statement of claim delivered, is totally defective in that it fails to disclose the true basis of the claim against the second named defendant. The defendant in this case has to meet a claim which arose more than 25 years ago and in these circumstances the onus on the plaintiff, having joined the second named defendant, was to proceed promptly and he has not done so.

 

In the circumstances, it is appropriate that the plaintiff’s claim against the second named fefendant be struck out pursuant to Order 19 rule 28 of the Rules of the Superior Courts.”

 

102. Application of the legal principles

The defendants submitted that the statement of claim delivered herein discloses no reasonable cause of action and, further, that the action is shown by the pleadings to be frivolous and/or vexatious. In this context, they have highlighted the following matters and urge upon the court to following specific submissions:

(i) In paragraph 18 of the statement of claim, it is alleged, inter alia, that the defendants made representations and averments which, “are now known to be false and or were known to be false but were not corrected at the earliest opportunity, or at all, thereby seriously and fatally misleading this Honourable Court and the plaintiffs herein, whereby this Honourable Court was induced into error to make decisions it would not or might not have made had it not been kept out of the true facts.” The plaintiffs omit to state who allegedly knew the representations and averments were false, when they were allegedly known to be false, how they were allegedly false or when they ought to have been corrected. Moreover, the representations and averments were all true, as is apparent from the pleadings and affidavits in the Section 205 proceedings. There is demonstrably no basis for the assertion that any court hearing the Section 205 proceedings was misled or induced into error as the plaintiffs allege. All of the courts were aware of the true facts and accepted those facts.

 

(ii) In paragraph 19 of the statement of claim, it is alleged that it is a “fact” that, “at all material times, the first, third and fourth named defendants … were not in fact the owners or alternatively were not entitled either directly or indirectly to the entire or any beneficial interest in the said shares, as same had been sold, transferred, assigned or otherwise disposed of to third parties or otherwise dealt with in circumstances where the defendants were no longer the owners of the said shares or entitled to the beneficial interest therein directly or indirectly.” No basis is set out for this allegation and no particulars thereof have been provided. The owners allegedly entitled to the entire beneficial interest in Crindle are not identified. Nor does the statement of claim identify the person or persons to whom it is alleged the beneficial interest “had been sold, transferred, assigned or otherwise disposed of”. Despite the significance of the said allegations in the context of the case, the plaintiffs purport to make and despite the time which the plaintiffs have had to assemble the information necessary to plead and properly particularise that case, the plaintiffs are unable even to present a properly pleaded case, let alone prove the extraordinary allegations upon which it is based.

 

(iii) Throughout the statement of claim, the plaintiffs make a series of extremely serious allegations which are wholly unparticularised. For example, in paragraphs 27, 33 and 34, the plaintiffs make allegations of conspiracy on the part of the defendants which are entirely unsupported by detail or the necessary particulars. Similarly, in paragraph 31, the plaintiffs allege that, “false averments were made deliberately to pervert the course of justice”. Again, no particulars are provided. It is notable and, for the purposes of the present application, very significant that the plaintiffs’ claims are so utterly devoid of the particulars necessary to advance the case which they purport to make.

 

(iv) As in Adams v. Minister for Justice, the plaintiffs’ claims in these proceedings “are of the baldest kind, without any basis in law or fact”. Of course, it is not surprising that the plaintiffs’ pleadings are so fundamentally defective in so many respects and that the statement of claim does not disclose any reasonable cause of action: the plaintiffs do not have any reasonable cause of action and their allegations herein are demonstrably devoid of merit. The foregoing is exemplified by the wholly unparticularised nature of the plaintiffs’ multifarious allegations in relation to the ownership of Crindle, the fact that those allegations are fundamental to the plaintiffs’ entire case and the fact that those allegations are demonstrably false and without substance.

 

103. The defendants therefore say that in all the circumstances, the court should grant an order pursuant to O. 19, r. 28 of the Rules striking out or dismissing the plaintiffs’ claims.

 

104. The second major heading:

The proceedings have no reasonable prospects of success, are bound to fail and are an abuse of the process of the court.

 

 

 

105. Introduction

The second / alternative relief claimed on behalf of the defendants is an order pursuant to the inherent jurisdiction of the court dismissing or, alternatively, striking out the plaintiffs’ claims against the defendants on the grounds that the proceedings have no reasonable prospects of success, are bound to fail and are an abuse of the process of the court.

 

106. The inherent jurisdiction to strike out a claim which has no reasonable prospects of success, is bound to fail and/or is an abuse of the process of the court

General

It is well established that, apart from the jurisdiction to strike out a claim conferred by O. 19, r. 28 of the Rules, the court also has an inherent jurisdiction to strike out a claim where it has no reasonable prospects of success, is bound to fail and/or is an abuse of the process of the court. As the High Court (Costello J.) stated in Barry v. Buckley, [1981] I.R. 306:

“But, apart from Order 19, the court has an inherent jurisdiction to stay proceedings and, on applications made to exercise it, the court is not limited to the pleadings of the parties but is free to hear evidence on affidavit relating to the issues in the case: see Wylie’s Judicature Acts (1906) at pp 34-37 and the Supreme Court Practice (1979) at para 18/19/10. The principles on which the court exercises this jurisdiction are well established. Basically, its jurisdiction exists to ensure that an abuse of the process of the courts does not take place. So, if the proceedings are frivolous or vexatious they will be stayed. They will also be stayed if it is clear that the plaintiff’s claim must fail; per Buckley LJ in Goodson v. Grierson at p 765.

 

This jurisdiction should be exercised sparingly and only in clear cases; but it is one which enables the court to avoid injustice.”

 

107. The inherent jurisdiction of the court to strike out a claim in the circumstances under consideration has been reaffirmed and analysed by the courts on a number of occasions: see, e.g., Sun Fat Chan v. Osseous Limited [1992] 1 I.R.425; Flanagan v. Kelly¸(Unreported, High Court, O’Sullivan J., 26th February 1999); Supermac’s Ireland v. Katesan (Naas) Limited, [2000] 4 I.R.273; Jodifern v. Fitzgerald [2000] 3 IR 321 and Lynch v. O’Flynn.(Unreported, High Court, Kelly J., 18th June 2003).

 

108. It is well established that in considering an application to strike out proceedings on foot of its inherent jurisdiction, the court is not limited to considering the pleadings but can consider and take into account evidence on affidavit. See Costello J. in Barry v Buckley [1981] I.R. 306 at 308; see also Tassan Din v Banco Ambrosiano [1991] 1 I.R. 569 at 572 and Landers v An Garda Siochána Complaints Board [1997] 3 IR 347 at 360. The inherent jurisdiction of the court was considered in some detail by the Supreme Court in the case mentioned in the following two paragraphs.

 

109. In Jodifern v. Fitzgerald, Barron J. made the following observations in relation to this jurisdiction of the court:

“The function of the court is to consider one question only, was it proper to institute the proceedings? This question must be answered in the light of the statement of claim and such incontrovertible evidence as the defendant may adduce. If the claim could never have succeeded, then the proceedings should be struck out. There is no room for considering what evidence should be accepted or how it should be interpreted. To do the latter is to enter on to some sort of hearing of the claim itself.”(at p.333.)

 

110. In the same case, Murray J. explained that,

“[t]he object of [an order striking out proceedings to prevent an abuse of the process of the court from occurring] is not to protect a defendant from hardship in proceedings to which he or she may have a good defence but to prevent the injustice to a defendant which would result from an abuse of the process of the court by a plaintiff.” (at p.334).

Murray J. stated that, “a primary precondition to the exercise of this jurisdiction is that all the essential facts upon which the plaintiff’s claim is based must be unequivocally identified”. Murray J. then emphasised that, “where all the essential facts have been so identified, it must also be manifest that on the basis of those facts the plaintiff’s case has no foundation in law”. In addressing the question of legal issues raised by a plaintiff, Murray J. stated as follows:

“Certainly, a plaintiff faced with an application to have the proceedings stayed or dismissed in these circumstances is likely to raise, in one form or another, legal issues in response. In a case where there is in effect an abuse of the process of the court, it is quite possible that some at least will be clearly spurious or have no relevance to the facts of the case. Any other legal issues must be clearly discernible as being without merit and readily capable of being resolved in favour of the defendant. It is for the judge hearing the application, within the scope of his discretion, to determine whether any points of law raised can be so clearly and readily resolved in favour of the defendant that to allow the action to proceed would constitute an abuse of the process of the court. Legal issues that are sufficiently substantial as to fall outside that bracket should be left to the trial of that action in those proceedings.”

 

111. The defendants further submitted that judgments of the High Court and Supreme Court in various cases brought by Denis Riordan are particularly relevant to the application before the court in this case. In this regard, the court was referred to the judgments in Riordan v. Ireland (No. 5) [2001] 4 I.R. 463; Riordan v. Hamilton, (Unreported, Supreme Court, 9th October, 2002) and Riordan v. Government of Ireland, (Unreported, High Court, 6th October, 2006).

 

112. In Riordan v. Ireland (No. 5) the High Court (Ó Caoimh J.) stated that “[i]n assessment of the question whether the proceedings are vexatious, the court is entitled to look at the whole history of the matter and it is not confined to a consideration as to whether the pleadings disclose a cause of action.” Ó Caoimh J. continued as follows:

“The court is entitled in the assessment of whether proceedings are vexatious to consider whether they have been brought without any reasonable ground. The court has to determine whether the proceedings being brought are being brought without any reasonable ground or have been brought habitually and persistently without reasonable ground.”

Ó Caoimh J. referred to the following matters which were held by Canadian courts (see Dykun v Odishaw (Unreported, Alberta Court of Queen’s Bench, Judicial District of Edmonton, 3rd August, 2000); and Re Lang Michener and Fabian (Ontario High Court) (1987) 37 D.L.R. (4th) 685 at 691.) to be matters which tended to show that a proceeding is vexatious:

SIZE=2 FACE=”Arial”>”(a) the bringing up on one or more actions to determine an issue which has already been determined by a court of competent jurisdiction;

 

(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief;

 

(c) where the action is brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

 

(d) where issues tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;

 

(e) where the person instituting the proceedings has failed to pay the costs of unsuccessful proceedings;

(f) where the respondent persistently takes unsuccessful appeals from judicial decisions.”

These principles were reaffirmed by the High Court (Murphy J.) in McCabe v. Minister for Justice, (Unreported, High Court, 29th June 2006).

 

113. In addressing the plaintiff’s “intended action to have declared unconstitutional the operation of the Supreme Court in the proceedings previously taken by the intended plaintiff”, (a p.473/474) the court concluded as follows:-

“… I am satisfied that this proposed cause of action is vexatious as it is one seeking first of all to bring one or more actions to determine an issue which has already been determined by a court of competent jurisdiction. Secondly it is one which it is obvious cannot succeed and it is one from which no reasonable person could reasonably expect to obtain relief. Furthermore, I am satisfied that this proposed action if brought would be brought for an improper purpose, namely the harassment and oppression of the parties to the earlier proceedings and not for the purpose of the assertion of legitimate rights.”

 

114. In Riordan v. Hamilton, the plaintiff sought to challenge final judgments given by the Supreme Court in proceedings in which he was a party because he was dissatisfied with those judgments. In upholding the decision of the High Court dismissing the proceedings on the grounds that they constituted an abuse of the process of the court, the Supreme Court (per Murray J.) stated as follows:

“… the fundamental point here is that he seeks to challenge previous judgments of this court and obtain declarations that they are wrong. Of this, the plaintiff said at the hearing of the appeal, ‘that is the whole basis of my case plus I am claiming damages.’ He appears to have considered that by adding a claim for damages he was entitled to reopen those issues in these proceedings. Of course, that is patently wrong. The judgments and decisions of which he complains are final and conclusive as regards the issues in those proceedings pursuant to Article 34.4.6 of the Constitution. Those issues cannot now give rise to a claim for damages and, in any event, a claim for damages as an additional form of relief cannot affect the res judicata nature of those decisions.

 

The learned High Court judge firstly had regard to Order 19, rule 28 [… Having quoted Order 19, rule 28, the court continued as follows:]

 

This is not the first occasion on which this plaintiff has sought, unsuccessfully, to litigate once again, issues which have been the subject of a final order and judgment of this court. On reading of the long statement of claim delivered by the plaintiff, which raises issues already and finally decided in proceedings between the plaintiff and other parties, it is manifest that the plaintiff’s action is both frivolous and vexatious and discloses no reasonable cause of action. Nothing which the plaintiff has said during the course of the hearing of this appeal (which essentially reflected the argumentative nature of the pleadings), disclosed any ground for taking any other view.

 

In my view, the learned High Court judge was perfectly entitled to come to the conclusion which he did, namely, that these proceedings constitute an abuse of the process of the court and he was entitled to dismiss them on that basis.”

 

115. The Supreme Court also upheld the decision of the High Court to dismiss the plaintiff’s claim on the grounds that it disclosed no reasonable cause of action and had no reasonable prospect of success. In this regard, Murray J. stated as follows:

“Exercising the inherent jurisdiction of the court, the learned High Court judge also struck out the plaintiff’s claim on the grounds that it disclosed no reasonable cause of action and had no reasonable prospect of success. In respect of that conclusion he stated, ‘The position here is that these matters have already been litigated. There is no new matter and this is an effort to re-litigate the same matters and to effectively ask this court to review the decision of the Supreme Court or to ask another judge to embark on a hearing at a later stage. In my opinion, it is neither open nor would it be appropriate to do so in this case.’

 

He had before him the affidavit of Lawrence A. Farrell, Chief State Solicitor, filed on behalf of the defendants herein, to which there was no replying affidavit and had regard to the statement of claim of the plaintiff. The trial judge was perfectly entitled to make that finding on foot of that affidavit and the statement of claim. In those circumstances, he was correct in striking out the plaintiff’s claim on the grounds that it discloses no reasonable cause of action and has no reasonable prospect of success.”

 

116. The Supreme Court also upheld the order of the High Court restraining the plaintiff from issuing certain kinds of proceedings without leave of the court:

“As regards the order restraining the plaintiff from issuing certain kinds of proceedings without leave of the court, the learned High Court judge relied on the dictum of Costello J. in McSorley v. O’Mahony, (Unreported, High Court, 6th November 1996). It is an abuse of the process of the court to permit the court’s time to be taken up with litigation which can confer no benefit on a plaintiff. It is also an abuse to permit litigation to proceed which will undoubtedly cause detriment to a defendant and which can confer no gain on a plaintiff. While every citizen has a right of access to the courts, it is in the public interest and in the interest of the proper use of public resources in the administration of justice that in exceptional circumstances this right be regulated by the courts. In my view, in the circumstances of this case, the learned High Court judge exercised his discretion properly in deciding to make such an order and I do not consider that any of the arguments made by the plaintiff in this appeal disclose a basis for impugning the exercise of that discretion.”

 

117. In Riordan v. Government of Ireland, the High Court (Smyth J.) addressed the importance of the jurisdiction to strike out vexatious claims as follows:

“The right of access to the courts is to be protected, but it is not an absolute automatic right in all and every case and circumstance. In the context of this case the words of Henchy J in Cahill v Sutton [1980] I.R.269 at 286 have a particular relevance:

‘It would be contrary to precedent, constitutional propriety and the common good for the High Court or this Court to proclaim itself an open house for the reception of such claims.’

In vindicating the constitutional rights of any person, it is of importance that the rights of the community as a whole or identifiable persons or officers or offices in it are not disregarded (e.g. by being open to harassment, oppression or scandalous or vexatious litigation). The common good and the respect of society and of the community for a justice system is not served or ensured by a disproportionate concern for the rights of the individual at the almost inevitable expense of a disregard for the rights of society by an over indulgence of every or any complaint of an individual. The courts, in respecting the rights of all those who seek access to the court, must also have some self-respect. Otherwise, there is the real possibility, nay probability, that the justice system will be abused and/or manipulated for unworthy purposes.”

The doctrine of res judicata and the jurisdiction to set aside final Orders

 

118. The defendants say that the abuse of process involved in attempting to litigate matters which are res judicata merits particular emphasis in the context of the present application before the court.

 

119. As the Supreme Court stated in Dublin Corporation v. The Building and Allied Trade Union, [1996] 1 I.R. 468, “the doctrine of res judicata applicable to […] every final judgment or award of any competent court or tribunal, has the consequence that the parties are estopped between themselves from litigating the issues determined by the award again”. The court (per Keane J.) explained the rationale for this doctrine as follows:

“The justification of the doctrine is normally found in the maxim interest rei publicae ut sit finis litium and it is important to bear in mind that the public interest referred to reflects, in part at least, the interest of all citizens who resort to litigation in obtaining a final and conclusive determination of their disputes. However severe the stresses of litigation may be for the parties involved – the anxiety, the delays, the costs, the public and painful nature of the process – there is, at least, the comfort that at some stage finality is reached. Save in those exceptional cases where his opponent can prove that the judgment was procured by fraud, the successful litigant can sleep easily in the knowledge that he need never return to court again.

That finality is, of course, secured at a cost. The defendant who discovers as soon as the case is over that the award of damages against him is grossly excessive because of facts of which he was wholly unaware and was unable to bring before the court cannot, in the absence of fraud, resist the enforcement of the judgment against him. The plaintiff who similarly finds out that his damages are far less than those which would have been awarded had the court been in possession of evidence not available at the hearing, is equally precluded from disputing the finality of the judgment. The interest of the public in that finality is given precedence by the law over the injustices which inevitably sometimes result.” (at p.481).

 

120. In Tassan Din v. Banco Ambrosiano S.P.A., the High Court (Murphy J.) observed that, “[o]bviously, it would be vexatious and an abuse of the process of the court to litigate any matter which was already concluded by a final and binding order of the court”. (at p. 574) In Riordan v. Ireland (No. 5), the High Court (Ó Caoimh J.) refused the plaintiff leave to commence proceedings on the grounds that, inter alia, “[the] proposed cause of action [was] vexatious as it [was] one seeking first of all to bring one or more actions to determine an issue which has already been determined by a court of competent jurisdiction.”

 

121. In Tassan Din, Murphy J. stated that “[a]s a preliminary step towards re-opening [litigation concluded by a final and binding order of the court], it would be imperative to set aside the previous order and the judgment of the court”. (ibid) As appears from the passages from the judgment of Keane J. in Dublin Corporation v. The Building and Allied Trade Union referred to above, in “exceptional cases” where a litigant can prove that a judgment/order was “procured by fraud” the judgment/ order may be set aside. The nature of this jurisdiction has been considered in a number of cases. In this context, the judgments in the following cases are instructive: Tassan Din v. Banco Ambrosiano S.P.A.; L.P. v. M.P., [2002] 1 IR 219; Lynch v. O’Flynn, (Unreported, High Court (Kelly J.), 18th June, 2003) and, in particular, Bula v. Crowley, (Unreported, High Court, 10th June, 2005).

 

122. In Tassan Din v. Banco Ambrosiano S.P.A., the plaintiff sought an order setting aside an order of the Supreme Court in earlier proceedings on the grounds of fraud. The defendants brought an application to dismiss the plaintiff’s claim on the grounds that it disclosed no reasonable cause of action or, alternatively, it was frivolous and vexatious and an abuse of the process of the court. The High Court (Murphy J.) acceded to the defendants’ application. Having made the observations set out above, Murphy J. stated that the substantive issue on the defendants’ motion was whether Tassan Din had any reasonable prospect of impugning the order of the Supreme Court.

 

123. In addressing the defendants’ argument on the basis of Article 34 of the Constitution and the finality or conclusiveness of decisions of the Supreme Court provided for thereby, Murphy J. stated that that jurisdiction did not involve an exception to Article 34 of the Constitution since, “[a]n order obtained by fraud is a mere nullity”. Murphy J. noted that this was recognised by the Earl of Selborne in Boswell v. Coakes (1894) 6 R. 167 in the following terms:

“There are two classes of cases, perhaps, which ought to be distinguished for this purpose. One is that of which the celebrated case of the Duchess of Kingston is an example, in which by the collusion of the parties the process of the courts has been abused, and the whole proceedings may be described as it was described in language used in that case as fabula non judicium. This, at all events, is not a case of that kind. The present case falls within the second class, namely, where it is not sought to treat as a nullity what has passed, but to undo it judicially upon judicial ground, treating it as in itself, and until judicially rescinded, valid and final.”

 

124. Murphy J. also referred to the following passages from the speech of Lord Simon in the Ampthill Peerage Case [1977] A.C.547:

“As a means of resolution of a civil contention, litigation is certainly preferable to personal violence. But it is not intrinsically a desirable activity, certainly not on the scale on which it raged in the Ampthill family in the early 1920s. The picture drawn by Charles Dickens in Bleak House of the long drawn out and ruinous lawsuit, Jarndyce v. Jarndyce and of poor Miss Flite, her wits overturned by the strain of litigation, was based on fact. The law itself is fully conscious of the evil of protracted litigation. Our forensic system, with its machinery of cross-examination of witnesses and forced disclosure of documents, is characterised by a ruthless investigation of truth. Nevertheless, the law recognises that the process cannot go on indefinitely. There is a fundamental principle of English law (going back to Coke’s Commentary on Littleton) generally expressed by a Latin maxim which can be translated: it is in the interest of society that there should be some end to litigation’.

…

And once the final appellate court has pronounced its judgment, the parties and those who claim through them are concluded; and, if the judgment is as to the status of a person, it is called a judgment in rem and everyone must accept it. A line can thus be drawn closing the account between the contestants. Important though the issues may be, how extensive whatsoever the evidence, whatever the eagerness for further fray, society says: we have provided courts in which your rival contentions have been heard. We have provided a code of law by which they have been adjudged. Since judges and juries are fallible human beings, we have provided appellate courts which do their own fallible best to correct error. But in the end, you must accept what has been decided. Enough is enough.” (The second paragraph in the above passages from the speech of Lord Simon was also endorsed by the Supreme Court in L.P. v. M.P.

 

125. Murphy J. also referred to the following passages from the speech of Lord Simon in which he addressed the issue of impeaching a judgment on the ground of fraud:

“To impeach a judgment on the ground of fraud, it must be proved that the court was deceived into giving the impugned judgment by means of a false case known to be false, or not believed to be true, or made recklessly without any knowledge on the subject. No doubt, suppression of the truth may sometimes amount to suggestion of the false: The Alfred Nobel [1918] P 293 But, short of this, lack of frankness or an ulterior or oblique or indirect motive is insufficient.

 

Moreover Janesco v. Beard [1930] A.C. 298 a decision of your Lordships’ House, confirmed that, to impugn a judgment on the ground of fraud, the fraud must be alleged with particularity and proved distinctly. A person is not permitted merely to allege fraud in the hope of discovering it as the case develops.

 

You cannot go to your adversary and say, ‘you obtained the judgment by fraud, and I will have a rehearing of the whole case until that fraud is established’.

…

The impugner of a judgment as obtained by fraud must adduce evidence of facts discovered since the judgment which show a reasonable probability (which I take to mean a prima facie case) of such fraud as would invalidate the judgment, before he can call on the person whose judgment he seeks to nullify to make any sort of disclosure.”

 

126. Murphy J. also referred to the following passages from the speech of Lord Wilberforce in which he considered the nature of the fraud or collusion which would justify setting aside a judgment of the court:

“What is fraud for this purpose? Learned counsel for John Russell, without venturing on a definition, suggested that some kind of equitable fraud, or lack of frankness, was all that is meant, but I cannot accept so anaemic an ingredient. In relation to judgments, and this case is surely a fortiori or at least analagous, it is clear that only fraud in a strict legal sense will do. There must be conscious and deliberate dishonesty, and the declaration must be obtained by it. Authorities as to judgments make clear that anyone wishing to attack a judgment on the grounds of fraud must make his allegation with full particularity, must, when he states it, be prepared to prove what he alleges and ultimately must strictly prove it.”(ibid).

 

127. Against this background, Murphy J. stated that, “nothing short of fraud pleaded with particularity (and ultimately established on the balance of probabilities) would be sufficient grounds in the present case for upsetting the decision [of the Supreme Court at issue].”(ibid).

 

128. In addressing the application in Tassan Din, Murphy J. stated, “even at this preliminary stage it would be necessary for the plaintiffs in the existing proceedings to take up the challenge of demonstrating how documents, which on their face would not be admissible in evidence, could have altered the outcome of the earlier proceedings”. Having referred to a similar issue that arose in St. Albans Investment Co. v. London Insurance and Provincial Insurance Co. Ltd. (Unreported, High Court, Murphy J., 27 June, 1990), Murphy J. continued as follows:

“[In St. Albans Investment Co. v. London Insurance and Provincial Insurance Co. Ltd.] I examined the documents which it was alleged had been fraudulently omitted from the affidavit of discovery made on behalf of the defendant in that case, and concluded that there was no evidence to support the proposition that the omitted documents would have any impact on the decision which it was sought to impeach. I am equally clear that in the present case, not only the particular document referred to in the statement of claim but also the other documents exhibited in the grounding affidavits already referred to, would not have advanced the case made by Tassan Din. I do not accept the far reaching proposition that a document which was not discovered might, for some unexplained reason, have put the other party on a train of inquiry or investigation which might have resulted in the production of vital evidence, and that such a possibility would be a ground for upsetting the order of the Supreme Court. If the omitted documents had that potential, I have no doubt that such inquiries would have been made long since, with the results thereof made available to the court to demonstrate, as I believe would be necessary, that the order of the Supreme Court was obtained as a result of the alleged fraud.”

Accordingly, Murphy J. dismissed the plaintiff’s claim.

 

129. In L.P. v. M.P., the Supreme Court (per Murray J.) reviewed the jurisprudence on the jurisdiction to set aside or amend a final order as follows:

“The jurisdiction of a court at common law to set aside or amend a final order, was considered by this court in Belville Holdings Ltd. v The Revenue Commissioners [1994] I.L.R.M. 29. The substance and effect of the judgment of Finlay CJ in that case was conveniently and succinctly summarised by Hamilton CJ in In re Greendale Developments Ltd. (No 3) [2000] 2 I.R. 514 at 527. as follows:-

‘… it set out in detail the common law principle concerning [this] question holding that where a final order has been made and perfected it can only be interfered with:-

(1) in special or unusual circumstances, or

 

(2) where there has been an accidental slip in the judgment as drawn up, or

 

(3) where the court itself finds that the judgment as drawn up does not correctly state what the court actually decided and intended.’

Later in his judgment at p. 529, Hamilton CJ went on to state:-

“Public policy requires a definite and decisive end to litigation. In spite of the importance of such a principle, it was accepted at common law that an action may be brought to set aside a judgment or order made by the Court which had been obtained by fraud.”

He then cited Barrington J. in Waite v House of Spring Gardens Ltd (Unreported, High Court, 6th June 1985) who stated, inter alia, “There is no doubt that an action may be brought to set aside a judgment obtained by fraud and that no leave is required of the court prior to the institution of such proceedings”. Commenting on the judgment of Barrington J. in that case, Hamilton CJ at p. 530 observed:-

“There is no suggestion in the above passage from the judgment of Barrington J. or the extracts from the judgments therein referred to that the judgment so obtained could be set aside other than in separate proceedings. They are not authority for the proposition that the Court can set aside its own decision.”

Accordingly, at common law, the grounds upon which a final order may be impugned is limited in the first instance to correcting, so to speak, the final judgment to ensure that it accurately reflected the adjudication and intention of the court which made it and, in the exercise of a wider and more fundamental jurisdiction to setting aside an order on the grounds that it had been obtained by fraud. Even the setting aside of a final order on the grounds of fraud is not a true exception to the principle of finality, as Murphy J. stated in Tassan Din v. Banco Ambrosiano S.P.A.. With reference to Article 34.4.6 of the Constitution which provides that “the decision of the Supreme Court shall in all cases be final and conclusive”, Murphy J. stated at p. 580 “the acceptance by Barrington J. in Waite v. House of Spring Gardens Ltd. that a decision of the Supreme Court can be set aside for fraud … does not truly represent an exception to this constitutional provision. An order obtained by fraud is a mere nullity.” (at pp 227-228).

 

130. In Lynch v. O’Flynn, the High Court (Kelly J.) observed that, “[i]t is in the public interest and in the interest of parties to litigation that once a final and binding determination of issues has been made, such issues should not be re-opened, save in most extraordinary circumstances such as fraud affecting such proceedings.”

 

131. The defendants submit that the judgment of the High Court (Murphy J.) in Bula v. Crowley merits particular emphasis, not least because the four plaintiffs in that case are also plaintiffs in the proceedings herein. The facts of that case are of particular relevance to the present application. The defendants point out that Mr. Wymes and others attempted in that case precisely what they have attempted to do in the present case which, they submit, represents an abuse of the process of the court. In that case, the fifth, sixth and seventh named defendants (the bank defendants) sought, inter alia: (a) an order dismissing the plaintiffs’ claim as constituting an abuse of the process of the court; and, (b) further or alternatively, and order pursuant to Order 19, rule 28 of the Rules of the Superior Courts, dismissing the proceedings on the grounds that they were frivolous and vexatious and/or disclosed no reasonable cause of action against the fifth, sixth and seventh named defendants. Murphy J. granted an order dismissing the proceedings as constituting an abuse of the process of the court. Significantly, Murphy J. also granted an order restraining the plaintiffs and each of them from instituting any further proceedings against the defendants in that case without the prior leave of the court.

 

132. The reliefs claimed by the plaintiffs in Bula v. Crowley were as follows:

 

“As against all the defendants:

(1) Damages for negligence

 

(2) Damages for unlawful interference with the economic interests of the plaintiffs and each of them.

As against the receiver, the first named defendant:

(3) Damages for breach of duty

 

(4) Damages for misrepresentation and/or negligent misstatements

 

(5) Damages for breach of contract.

 

(6) A declaration that the receiver, the first defendant, has purported to sell the property known as Bula Mine as Nevinstown, Navan, County Meath, in breach of duty.

 

(7) A declaration that the first defendant was and is prohibited from acting as receiver and manager.

 

(8) An injunction restraining the first named defendant from dealing with the proceeds of the purported sale pending the determination of these proceedings.

As against KPMG, the second defendant:

(9) Damages for breach of contract.

 

(10) Damages for misrepresentation and/or negligent misstatements.

As against the receiver and Tara Mines Limited:

(11) An order setting aside the contract dated 9th May, 2001, made between the receiver and Tara Mines Limited.

 

(12) An order setting aside any conveyance between the receiver and Tara Mines Limited pursuant to any purported completion of the contract dated 9th May, 2001.

 

(13) An order setting aside any conveyance pursuant to any purported completion of the contract.

As against Tara Mines:

(14) A declaration that Tara Mines has no good title to the property.

 

(15) An injunction restraining Tara Mines from exercising and/or asserting any rights as purchaser under the purported conveyance pending the determination of these proceedings.

 

(16) An injunction directing that Tara Mines refrain from entering onto, into or under, or extracting minerals from the property.

As against Outokumpu Oy, Northern Bank Finance Corporation Limited (NBFC) and Ulster Investment Bank Limited (UIB):

(17) Damages for breach of duty and negligence.

As against all defendants excepting Outokumpu Oy:

(18) Damages for unlawful interference with and obstruction of the course of justice.

As against Navan Mining plc. (Navan):

(19) A declaration that Navan had an interest in the security, pursuant to which the receiver purported to sell the property to Tara Mines Limited.

 

(20) A declaration that Navan was an intended beneficiary pursuant to the contract between the receiver and Tara, dated 9th May, 2001.

 

(21) An order directing that all necessary accounts and enquiries be taken.”

 

 

 

Coleman v MGN Ltd

[2012] 2 I.L.R.M. 81; [2012] IESC 20

Judgment delivered on the 15th day of March, 2012 by Denham C.J.
1. This is an appeal by MGN Limited, the defendant/appellant, referred to as “the appellant”, from the judgment and order of the High Court (Charleton J.) made on the 15th January, 2007, (perfected on the 5th February, 2007) refusing the appellant’s application.

2. The appellant had brought a motion before the High Court seeking an order that the Court has no jurisdiction, in the following terms:-

(i) An order that the Court decline jurisdiction pursuant to Council Regulation EC No. 44/2001 and/or S.I. 52 of 2002 and/or the Rules of this Court.
(ii) A declaration that in the circumstances of this case the Court has no jurisdiction over the subject matter of the proceedings.

(iii) An order striking out and/or staying the proceedings.

(iv) An order setting aside service of these proceedings on the appellant.

(v) Such further or other relief as the Court shall deem fit.

(vi) An order providing for the costs of these proceedings.

3. John Coleman, the plaintiff/respondent, referred to as “the plaintiff” had commenced proceedings by filing a plenary summons on the 7th June, 2006, claiming damages for defamation, damages for breach of contract, negligence, breach of duty and breach of statutory duty. A memorandum of conditional appearance was filed on behalf of the appellant to contest the jurisdiction of the Court.
4. In the Statement of Claim the plaintiff pleaded matters relating to tort and contract. In submissions before this Court on the 8th March, 2012, however, counsel for the plaintiff stated that the claim was now in tort alone, based on the jurisprudence in the linked cases of eDate Advertising GmbH v. X (C 509/09) and Martinez v. Société MGN Limited (C 161/10) referred to as Martinez, and on publication on the internet. Thus, the key aspects of the Statement of Claim relating to the tort, are as follows:-

“(i) The plaintiff is a gentleman and resides at Cordroon Cross, Claremorris, County Mayo.
(ii) The [appellant] is a limited liability company having its registered office at One Canada Square, Canary Wharf, London E14 5AP, England, and is engaged in the business of publishing, selling and supplying newspapers inter alia within the jurisdiction of this Honourable Court.

(iii) On or about the 13th March, 2003, the defendant falsely and maliciously published of and concerning the plaintiff an article in its Daily Mirror newspaper under a heading ‘Yob War – Boozy: Lads on a typical night out in Britain’, which contained a photograph of the plaintiff, which article further went on to state inter alia: ‘A major crackdown on yobs, drunks, litter bugs and noisy neighbours was launched by David Blunkett yesterday. His measures include £80 fixed penalty payments for teenage louts, fines for the parents of unruly under fifteens and even removal from the family to foster parents for youngsters out of control …. Mr. Blunkett said …. ‘Our streets should be free of loutishness, gangs of drunken hooligans or drug dealers. People have to live in a civilised society and if we can’t do it by persuasion, we will have to do it through enforcement.’ …. Some offenders at youth courts might lose the right to anonymity. Police will be able to shut crack dens within forty eight hours for up to three months. Private landlords will be licensed to ensure tenants are fit and proper persons’ …. Key points: Fixed penalty fines of £80 for yobs aged 16 – 18. Instant fines for parents of under fifteens who terrorise neighbourhoods. Instant fines of £40 – £80 for graffiti, littering, fly tipping, fly posting, throwing fireworks and urinating in public. Police will be able to disperse gangs of youths and escort unaccompanied kids back home if they are hanging around street corners at night.’

The plaintiff will refer in greater particularity to the said article at the hearing of this action.

(iv) The said words in their natural ordinary meaning and/or by innuendo and the juxta position of a photograph of the plaintiff and the said article meant and were understood to mean:-

(a) The plaintiff was a ‘yob’.
(b) The plaintiff was a drunkard.

(c) The plaintiff was guilty of criminal conduct.

(d) The plaintiff was a lout or part of a gang of drunken hooligans.

(e) The plaintiff was a drug dealer.

(f) The plaintiff was uncivilised.

(g) The plaintiff was being investigated by the Police or was likely to be investigated by the Police for drunkenness, hooliganism, being a yob, drunk, lout or drug dealer.

(h) The plaintiff was a person who should be convicted by the courts of criminal activity and should be imprisoned.

(i) The Plaintiff was likely to or was a person who should be investigated by the Police and should be subject to criminal sanction by way of fine or imprisonment for his criminal behaviour.

(j) The plaintiff was not a fit person with whom to be associated with.

(k) The plaintiff had engaged in and was engaging in anti-social behaviour.”

There is reference in the statement to an agreement, following which there is a plea to a second act of publication by the appellant. It is stated that the appellant:-
“… re-used the said photograph in a defamatory article in its newspaper edition of the 20th September, 2003, in an article heading ‘Binge Britain’, which again contained the same photograph of the plaintiff, which newspaper was circulated in Ireland and within the jurisdiction of this Honourable Court and was read by people in this jurisdiction, which contained phrases inter alia:
‘Brits are the biggest boozers in Europe and the problem costs 22,000 lives and £22 billion a year. 40% of men binge drink – defined as downing at least a bottle of wine in a session. The average boozer now knocks back 151% more alcohol than they did fifty years ago …. More than 17 million working days are lost each year because of hangovers and alcohol related illnesses costing firms £6.4 billion. 1 in 26 bed days in the NHS is taken up by those who have over indulged.’

The plaintiff will refer in greater particularity to the said article at the hearing of this action.”

It was pleaded that the plaintiff had been defamed by the article and photograph, and has suffered loss, damage and expense, and there is a claim for aggravated, exemplary and punitive damages. The plaintiff expressly confined his claim in respect of the second publication to breach of contract.
5. On the motion of the appellant, seeking an order that the High Court decline jurisdiction, coming before the High Court on the 15th January, 2007, the High Court refused the motion.

6. Counsel’s note of the ex tempore judgment of Charleton J. on the 15th January, 2007, which was approved by the learned High Court judge provides:-

“This is an application that the Court should exercise an extreme jurisdiction, to stop this case on the pleadings only. I have to take a statement of claim as being true in every respect. I therefore must take the statement of claim at its height, including all inferences that might be drawn from the primary facts pleaded.
This is a difficult situation and one that raises the question ‘Where does libel occur?’ With internet publications nowadays a recording from Saudi Arabia might end up in Ireland on the news. Because of the migratory movement of persons and technological age we live in, a newspaper from abroad can arrive a day later in Ireland.

Take the law as stated in Gatley, eighth edition para. 266 that ‘the original publisher of a defamatory statement is liable for its republication by another person where inter alia the repetition or republication of the words to a third party was the natural and probable result of the original publication’. [quoted from Ewins –v- Carlton Television].

In the statement of claim the plaintiff has claimed that the publication [by the defendant] caused him damage in this jurisdiction and that claim is repeated in the affidavit [filed in response to this motion]. He may therefore have a case. However, if it is clear that the plaintiff’s case must fail, my preference is of course that everyone should be put out of their misery now.

From Erwins –v- Carlton Television, the Rules under the Brussels Convention seem to be clear. In that case, Mr. Justice Barr held that where there was publication in several jurisdictions the plaintiff has a choice.

The rules as to where damage occurs can be seen in relation to a car accident in France. In terms of defamation it is different. Therefore when answering the question ‘Where did the damage occur?’ in terms of defamation, given that in the Ewins case Mr. Justice Barr followed the decision in Shevill –v- Presse Alliance SA, the plaintiff is within his rights to choose the jurisdiction. He may not be able to prove publication but he could prove it if someone brought back a copy of the paper from the United Kingdom. There could be rumours flying around from emigrants and migratory workers from the United Kingdom.

The question in contract is a lot less clear. Taking the statement of claim at its height the plaintiff should be entitled to pursue his claim. I do not know if the plaintiff will succeed in proving the terms of the contract but, insofar as it is suggested that there was an obligation to delete the [plaintiff’s] picture from the defendant’s database, presumably that database is located in the British Island, not here.

I hope I am not continuing the misery of proceedings but in my opinion the appropriate order is to refuse the motion.”

7. The appellant filed a Notice of Appeal, setting out the following as the grounds of his appeal:-
“That the learned High Court judge erred in law and misdirected himself in that he:-
(a) held that the Court had jurisdiction over the subject matter of the proceedings.
(b) Held that the [appellant’s] application fell to be considered and determined on the basis of the pleadings only.

(c) Held that the Court was obliged to take the statement of claim as being true in every respect and at its height.

(d) Held that he was obliged to allow the plaintiff’s claim to proceed unless it was clear that such claim must fail.

(e) Failed to hold that the onus was on the plaintiff to establish that the Irish courts had jurisdiction under Council Regulation (EC) 44/2001 to hear and determine his claim, having regard to Article 2.1 of that Regulation and the fact that the [appellant] is domiciled in England and Wales and/or failed to hold that the plaintiff had failed to discharge that onus.

(f) Failed to have any or any proper regard to the evidence and, in particular, the absence of any evidence that the relevant editions of the Daily Mirror were published or circulated in this jurisdiction and the unopposed evidence of the [appellant] that they were not.

(g) Held (or appeared to hold) that, even in the absence of publication in this jurisdiction, proceedings here might be justified on the basis that the plaintiff’s reputation here was damaged because ‘there could be rumours flying around from emigrants and migratory workers from the United Kingdom.’

(h) Failed to hold that the place where the alleged harmful event occurred within the meaning of Article 5.3 of Regulation EC No. 44/2001 was in the United Kingdom and not within the jurisdiction of this Honourable Court and, in so far as relevant, failed to hold that the place of performance of the alleged obligation in question within the meaning of Article 5.1 of Regulation EC No. 44/2001 and/or SI 52 of 2002 was in the United Kingdom and not within the jurisdiction of this Honourable Court.”

8. This appeal was before the Court on the 21st October, 2010. It was indicated to the Court, in the course of the hearing, that there was evidence of circulation of the appellant’s newspaper in Ireland but that it was not before the Court. There was a belief by counsel for the plaintiff, on instructions, that the Daily Mirror newspaper in issue was available in Ireland in ordinary retail outlets. In the circumstances, time was given to the plaintiff, and to the appellant, to file evidence on affidavit. Further affidavits were filed on behalf of both parties.
9. On the 25th January, 2012, the Registrar of the Supreme Court wrote to the parties proposing 15th February, 2012, for the resumption of the hearing. Counsel for the plaintiff was not available on that date. It was then proposed, and agreed by the parties, that a different formation of the Court would resume the hearing on the 8th March, 2012.

10. On the case resuming on the 8th March, 2012, counsel for the plaintiff confirmed that the case is now simpler. The claim is now one of internet publication based on the jurisprudence in the linked cases of eDate Advertising GmbH v. X (C 509/09) and Martinez v. Société MGN Limited (C 161/10) referred to as Martinez. It was submitted that the Daily Mirror is on line every day. Counsel admitted that there was no evidence of such publication or of a person accessing such a site. His submission related to an additional site, and not to UKPressOnline which is an archival site, and which formed the substantial subject of the additional affidavit. Counsel submitted that the Daily Mirror being on line it is presumed that there would be hits on the site. Thus, the case hinges on the issue of publication on the internet.

11. Therefore, the case has changed since last before this Court. At that time counsel had instructions as to evidence available as to copies of the Daily Mirror newspaper being available in Ireland. It was to enable him to bring such evidence to this Court that the case was adjourned. However, it now transpires that those instructions to counsel were incorrect. Consequently, there was no need to adjourn to obtain the evidence, but it did give the plaintiff the opportunity to bring evidence in support of his case to this Court. The evidence related solely to access to an archival site UKPressOnline. On the hearing of the appeal, however, counsel sought to rely on the presumed publication on the internet of the relevant editions of the Daily Mirror. It followed that there was no evidence of such internet publication, or of access from Ireland.
Decision
12. The case is now one where it is the plaintiff’s case that the defamation was published on the internet. Specifically he referred to the Daily Mirror on line. There was also reference to UKPressOnline, which is an archival website, to which institutions, such as academics, have access if they subscribe, but there is no general access other than to a thumbnail miniature of part of the article and photograph. It was agreed by counsel that the plaintiff could not be recognised on such a miniature, which could not be legibly enlarged. Further, as the plaintiff’s name was not mentioned in the articles in question he could not be identified by a search on that basis. Thus, the case for the plaintiff is now based on a publication of the Daily Mirror on line in 2003.

13. There has thus been a shifting nature to this appeal in its progress in this Court.

14. There are several relevant difficulties which arise on the plaintiff’s case. First, there is no pleading that the publication alleged of the relevant articles is by internet publication of the relevant newspaper. Nor could such a pleading be inferred from the words of the Statement of Claim. Secondly, there is a need for evidence of publication to establish the tort of defamation. There is no evidence before the Court that the Daily Mirror was published on line in 2003. There is no evidence that the daily edition of the Daily Mirror was on the world wide web in 2003. Thirdly, there is no evidence of any hits on any such site in this jurisdiction. These are fatal flaws in the plaintiff’s case.
Conclusion
15. The basic grounds upon which the plaintiff now moves his case in this Court was never pleaded and is not established in evidence. In spite of the ingenuity of counsel for the plaintiff in his submissions, these difficulties are insurmountable. Neither on the pleadings nor on the evidence does the Court have jurisdiction. Consequently, I would allow the appeal, and order that in the circumstances of the case the Court has no jurisdiction over the subject matter of the proceedings.

Cuttle v ACC

[2012] IEHC 105

JUDGMENT of Mr. Justice Kelly delivered on the 30th day of March, 2012
Introduction
1. This case is one of hundreds before the court where a customer of the defendant (the Bank) has brought suit against it arising out of investments made in a financial product marketed and produced by the Bank. It was called the Solid World Bond 5 (the bond).

2. This judgment deals with the plaintiff’s application for leave to amend his statement of claim. Should such leave be granted, permission is sought to make analogous amendments to the statements of claim of other plaintiffs who are suing the Bank in similar circumstances.

3. The amendment contemplated involves a plea of fraud against the Bank. The application has been heavily contested.
Jurisdiction
4. Order 28 of the Rules of the Superior Courts permits amendment of pleadings both with and without leave of the court.

5. No leave of the court is required to amend a statement of claim once at any time before the expiration of the time limited for reply and before replying or, where no defence has been delivered, at any time before the expiration of four weeks from the appearance of the defendant who last appeared (Order 28, rule 2). Similar provisions apply in respect of the amendment of a defence which contains a counterclaim.

6. In other circumstances (of which this is one) leave of the court is required in order to effect an amendment to a statement of claim. That is provided for at O. 28, r. 1 which states:-

“The Court may, at any stage of the proceedings, allow either party to alter or amend his indorsement or pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.”
7. In Croke v. Waterford Crystal Limited [2005] 2 IR 383 at 401, Geoghegan J. described this as a “liberal rule”. The notion behind it is that justice is best served if the real matters in dispute between litigants are brought before the court and determined by it. This is clear from another passage from the judgment of Geoghegan J. in the same case where he said:-
“While undoubtedly there is a discretion in the court as to whether to make the order or not and other factors may come into play, the primary consideration of the court must be whether the amendments are necessary for the purpose of determining the real questions of controversy in the litigation.”
8. On an application of this sort, it is not the task of the court to adjudicate on the merits of the proposed amendments or to speculate on the likelihood of their success at trial. In Cornhill v. Minister for Agriculture [1998] IEHC 47, O’Sullivan J. in dealing with an application for leave to amend a statement of claim was confronted by two opposing approaches to that issue. The defendants argued that there was an onus on the plaintiffs to establish by credible evidence that the proposed amendments raised a real issue between the parties and that the plaintiffs had failed to do so. The plaintiffs argued that the appropriate test was whether the proposed plea, if part of the original statement of claim, would have survived an application to strike out in limine on the basis of having no reasonable prospect of success. O’Sullivan J. clearly preferred the submission of the plaintiffs and expressed the view that:
“an amendment of the pleadings should be allowed if it would have been appropriate in the original pleadings and would have withstood an attack under Order 19, rule 28.”
9. In the present case, the parties have agreed that the approach of O’Sullivan J. is the one which I ought to adopt. So the net question is, if these amendments are permitted will they survive an application that they be struck out under the inherent jurisdiction of the court? That jurisdiction allows the court to stop cases with no reasonable prospect of success in their tracks and not permit them to go to trial.
10. This approach of the parties in the present case is consistent with various judicial dicta on amendment of pleadings and in particular with the observations of Clarke J. in Woori Bank v. KDB Ireland Limited [2006] IEHC 156. That judge was of opinion that the court should lean in favour of allowing an amendment unless it is clear that the issue sought in the amended pleading must fail. This is not to say that the court ought to enter into the merits of the issues sought to be raised save to the extent of asking itself whether the party seeking the amendment will necessarily fail on the issue which will require to be tried as a result of the amended pleading.

11. I ought now to say a word about the jurisdiction to strike out in limine.

12. In Barry v. Buckley [1981] I.R. 306, Costello J. reanimated and confirmed the inherent jurisdiction of the court to strike out or stay proceedings over and above that contained in Order 19, rule 28. The inherent jurisdiction may be utilised if the proceedings are frivolous or vexatious or are bound to fail. He said that this jurisdiction “exists to ensure that an abuse of the process of the Courts does not take place.” If, therefore, the court is satisfied that the plaintiff’s case must fail then “it would be a proper exercise of its discretion to strike out proceedings whose continued existence cannot be justified and is manifestly causing irrevocable damage to a defendant”. Whilst this is a jurisdiction that is capable of being exercised in virtually any type of case, it must be borne in mind that it is an order that will only be made in very clear cases. As Costello J. said, the jurisdiction is one to be “exercised sparingly and only in clear cases”. A similar approach was adopted by McCarthy J. in Sun Fat Chan v. Osseous Limited, who said that “generally, the High Court should be slow to entertain an application of this kind”. The explanation for this restrained approach was as that judge said:-

“Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated at earlier stages in the proceedings; often times it may appear that the facts are clear and established but the trial itself will disclose a different picture.”
13. It follows that in approaching the exercise of my discretion here and in asking myself whether the amendments, had they been in the original statement of claim, would have survived a strikeout application, I must bear in mind the very limited circumstances in which such an application can be successfully made.
The Bond
14. The opening lines of the promotional material produced by the Bank to market the bond posed the following question:-

“Where can you get a 100% secure investment linked to 85% of an uncapped return on some of the most renowned stocks in the world? With the ACC Bank Solid World Bond 5 you can achieve this for a minimum investment of only €2,500, allowing you ease of access to equity markets.
Equity markets can be both profitable and risky. The Solid World Bond 5 gives you the potential to capitalise on any stock market growth, while you have the peace of mind that your capital is 100% protected. Allowing you the best of both worlds!”

15. In essence, an investor was invited to make a minimum investment of €2,500. The investment was for a five year eleven month term. If a basket of stocks rose, the investor would get 85% of any net growth in it. The brochure spoke about the “excellent historical performance of stocks – average return of 241.94% achieved over the last five year, eleven month periods”.
16. If, however, the stocks did not perform as hoped and there was no growth or even decline then the capital was protected and at the end of the investment term was returned to the investor.

17. From the point of view of a person who had funds that they could invest for almost six years, it was a fairly low risk affair. The worst they could do would be to have their capital returned at the end of the investment term. Their hope was that the basket of stocks would appreciate in value and give them a better return than they might have achieved by simply placing the funds on deposit.

18. Of course, if one borrowed the money in order to make the investment, an entirely different result would ensue in the event of the basket of stocks falling in value. True, the capital amount borrowed would be repaid, but in the absence of growth in the basket of shares, the interest on the borrowing would have to be paid. That is what happened to Mr. Cuttle and the many other plaintiffs who are before this Court arising out of their investment in this bond.
The Statement of Claim
19. In his statement of claim, the plaintiff alleges that representations were made to him in order to induce him to borrow money from the defendant in order to invest in the bond.

20. The representations made are taken in part from the promotional material from which I have already quoted. The alleged representations include the statement that past performance may not be a reliable guide to future performance and that investments might fall as well as rise in value.

21. The statement of claim goes on to recite that in February 2004, a Mr. Pat Allen, a manager in the Bank who had formerly dealt with the plaintiff’s account made an unsolicited direct approach to the plaintiff. The plaintiff subsequently met with representatives of the Bank who advised him in relation to the product and represented to him, inter alia, that he would at least break even as a result of his borrowing to invest in the product. The representatives of the defendant are alleged to have classified the plaintiff’s appetite for risk as medium. It is now sought to amend this so as to read “low”.

22. On foot of the representations and advice on 12th March, 2004, the plaintiff entered into a loan agreement with the defendant whereby he borrowed €100,000 and invested it in the bond.

23. The statement of claim then sets out the terms and conditions attached to the bond.

24. It contains an allegation that the Bank owed the plaintiff duties of a fiduciary nature which were necessarily implied in the terms of the agreements entered into between the parties. These included a duty to avoid conflicts of interest; a duty of fidelity to the plaintiff; a duty not to profit from the plaintiff without his informed consent; a duty of full disclosure of all relevant material information; a duty to seek to avoid conflicts of interest; a duty not to make the investment in the bond contingent on the plaintiff entering into the loan agreement with the defendant; a duty to communicate with the plaintiff in a way that was clear, fair and not misleading together with many other analogous obligations.

25. The statement of claim goes on to allege that the Bank acted as an investment business firm within the meaning of the Investment Intermediaries Act 1995 and was bound by the code of conduct introduced pursuant to s. 37 of that Act.

26. The statement of claim then goes on to identify the wrongs allegedly committed by the Bank. This part reads as follows:-

“16. Wrongfully and in breach of the various duties and contractual terms particularised ante the defendant caused the plaintiff to enter into transactions that were unsuitable for the plaintiff and caused the plaintiff loss and damage and the defendant made the representations referred to above negligently. Without prejudice to the specific particulars set out hereunder, the marketing of the Solid World Bond product as a borrow to invest product made it wholly unsuitable for the plaintiff or indeed any investor. Given that the plaintiff was borrowing money from the defendant to invest in the product taking into account the cost of the said borrowing and the tax that the plaintiff would have to pay on any gains, the product would have had to far outperform the market’s view of the likely performance of the basket of shares in order for the plaintiff to make any or any significant gain.
Particulars

(a) in offering the Solid World Bond and the related loan agreement as a single transaction, the defendant placed itself in a position where its interests conflicted with those of the plaintiff;
(b) the defendant failed to explain the said conflict of interest to the plaintiff and in particular failed to explain to the plaintiff that the Solid World Bond was not a suitable product to borrow money to invest in;

(c) the defendant failed to explain to the plaintiff that the coexistence of the loan agreement with the investment in the Solid World Bond made the transaction a hugely favourable and profitable one from the defendant’s perspective;

(d) the defendant failed to explain that a very significant percentage of the money borrowed, which the plaintiff’s experts estimate may have been as much as 79% of the sum borrowed, was placed straight back on an interest bearing deposit, an arrangement that conferred no benefit whatsoever on the plaintiff but which generated at least 0.75% fees per annum of the sum in the difference between the interest charged on the loan and interest earned on the deposit;

(e) the defendant failed to explain to the plaintiff that of the balance of the monies borrowed at least 4% was paid in fees to the defendant with the remaining 17% of thereabouts used to purchase an option which the plaintiff apprehends was sold by an entity connected to the plaintiff’s parent Rabo Bank, to cover the upside promise and pay further commissions;

(f) had the defendant informed the plaintiff of the small cost of the upside promise, it would have been immediately apparent to the plaintiff that the market regarded it as most unlikely that the Solid World Bond 5 would deliver any significant return or any return sufficient to off-set the cost of the loan transaction;

(g) the defendant caused the plaintiff to enter into an entirely unsuitable combination of back to back transactions. The defendant entirely failed to advise the plaintiff in a clear, meaningful or informed fashion as to the true import of the transactions having regard to the fact that the plaintiff was borrowing to invest in the bonds;

(h) the defendant failed to explain to the plaintiff that historical data furnished in relation to the shares ‘tracked’ by the Solid World Bond was not a reliable guide to the suitability of the Solid World Bond as an investment. In particular, as referred to ante, the defendant failed to point out the small cost of the upside promise, which would have immediately alerted the plaintiff that the market regarded it as most unlikely that the historical performance would be replicated. The defendant knew or ought to have known that an instrument that cost the defendant an estimated 17% in the market was hopelessly and grossly misrepresented by demonstration of historical performance;

(i) in light of the fact that the plaintiff and other investors in the Solid World Bond were borrowing money from the defendant to invest in the bond the ‘independent analyst feature’ was not a material or reliable way of indicating the suitability or otherwise of the investments;

(j) the defendant provided illustrations of the performance of the Solid World Bond and linked tracker and loan agreement that presented the various outcomes as being equally liable to occur in circumstances where this was seriously misleading. The defendant knew or ought to have known that the likely outcomes were heavily weighted towards the lower end of the illustrations and that the vast majority of the likely outcomes were a marginal break even or loss;

(k) the defendant sold the Solid World Bond without carrying out any proper analysis of the suitability of the product;

(l) the defendant engaged in pressurised and misleading selling techniques in relation to the bond and

(i) the defendant imposed an artificial ‘for a limited time only’ deadline in relation to the selling of the bonds;
(ii) the defendant falsely claimed that the bond was only available to a limited number of people on a first come first served basis;

(iii) the defendant falsely claimed that the bond was only available to certain ‘select’ persons. This was a ploy. The manner in which the bond/loan agreement transaction was structured meant that the defendant was prepared to sell the bond to a wide range of persons once they were able to serve the interest on the loans;

(iv) the defendant in every respect presented the Solid World Bond as a ‘win-win’ investment for the plaintiff. This was untrue in circumstances where the defendant was selling a product that was dependent upon borrowing the principal from the defendant and where, having regard to the cost of the said borrowing and the tax that the plaintiff would have to pay on any gains, the product would have to far out-perform the market’s view of the likely performance of the basket of shares in order for the plaintiff to make any or any significant gain.

(m) in failing to highlight to the plaintiff the possible downside that would have resulted from the combination of the zero investment return on the equity element of the bond and the requirement to service a substantial loan, albeit interest only, if there was a further possibility of a rise in interest rates, the defendant failed to act with due skill, care, diligence and in the best interest of its customers;
(n) in failing to take care of the client’s information needs and to produce all relevant information, the defendant, failed to act with due skill, care, diligence and in the best interest of its customers;

(o) in failing to highlight in the sales literature the possible loss of interest which would not be covered by a capital gain on the Solid World Bond, the defendant was negligent in the promotion of the bundled arrangement;

(p) the defendant, through the sale of the product by its agent, indicated a lack of expertise and knowledge in the making of the sale because of inadequate training and product knowledge:

(a) the defendant failed to take adequate steps to ascertain the suitability of the combined product at the level recommended for the plaintiff’s circumstances;
(b) the defendant’s sales representatives did not realise, did not know or did not communicate that the combined product was a high risk strategy;

(c) the defendant did not know or chose to ignore the impact of the combined product on the plaintiff.

(q) the use of gearing to fund the bond was an implicit element of the arrangement and was used to identify the situation of geared but related secured investments which the defendant used to recklessly, negligently and deliberately mislead the plaintiff and to the advantage of the product;
(r) in failing to comply with s. 30 of the Investment Intermediaries Act 1995, the defendant failed to issue a receipt where it advised on and received commission in respect of the transaction.

The plaintiff reserves the right to furnish further particulars on receipt of discovery and expert reports.”
27. Loss on the part of the plaintiff is pleaded and the prayer seeks a declaration that the terms of the loan agreement between the plaintiff and the defendant are unenforceable and of no effect by reason of the provisions of Regulation 3 of the European Communities (Unfair Terms and Consumer Contracts) Regulations 1995. There is then sought an order compelling the Bank to repay to the plaintiff all sums paid by him to it. An account of profits is sought together with damages for negligence, breach of duty, breach of fiduciary duty, breach of statutory duty, breach of contract, negligent misstatement and misrepresentations.
Defence
28. A full defence was delivered to this statement of claim after which discovery was made.

29. It is as a result of material which was disclosed on discovery that the current application comes to be made.
The Correspondence
30. Prior to the bringing of the motion, a letter was written dated 9th February, 2012, by the plaintiff’s solicitors indicating an intention to plead fraud against the defendant. Four particular instances of this fraud were identified. They were:-

(i) the manner in which the Bank advised the plaintiffs and other investors in relation to the bond and the associated back-to-back loans;
(ii) the manner in which the Bank marketed the bond and the associated back-to-back loan to the plaintiffs and other investors;

(iii) the manner in which the Bank promoted the bond to the plaintiffs, other investors and to intermediaries as a suitable product to borrow or invest in; and

(iv) the representations made by the Bank to the plaintiffs, other investors and intermediaries as to the performance of the basket of shares, the subject matter of the bond.

31. The letter went on:-
“The plaintiffs will rely upon the following matters as evidence of the fraudulent conduct of the bank:-

1. at all material times the bank actually knew that the product was not a suitable product to borrow to invest in. This is evidenced, inter alia, by the following matters:-
(a) IFSRA informed the bank it could not ‘in any way’ advertise/promote the lend to invest arrangement;
(b) the bank received legal advice from its in-house legal function to the effect that it could not promote the product to staff as it could not be seen to encourage staff to borrow to invest in the product;

(c) the bank’s compliance officer, Eoin Russell, stated that the product could not be promoted as a borrow to invest product. He said that the bank could provide finance to persons who approached the bank to borrow to invest in the product provided that the bank was satisfied that those persons had the requisite financial sophistication and experience to understand the risks associated with borrowing to invest in the product. For the avoidance of doubt, it is not conceded that the product was suitable even for this class of investor in the absence of proper advice as to the real risks associated with the product.

2. Notwithstanding the state of knowledge of the bank adverted to ante, the bank actively promoted the product as a borrow to invest product. This is evidenced, inter alia, by the following matters:-
(a) each of the plaintiffs and other investors represented by this firm will give evidence that they were encouraged to borrow to invest in the product;
(b) the overwhelming majority of persons who invested in the bond borrowed to invest in the product;

(c) prior to the commencement of the marketing campaign for the bond, Stephen Murphy of the bank predicted, correctly, that 99% of the bonds would be sold on a borrow to invest basis. Dominic Martin of the defendant, in response to that prediction, postured that this would not occur, presumably in an effort to pretend that the bank was not in breach of the advices referred to ante;

(d) the bank has discovered extensive material demonstrating that there was a ‘borrow to invest’ campaign carried out by the bank;

(e) the bank knew that the product was being promoted as a borrow to invest product by intermediaries;

(f) the bank deliberately interposed intermediaries for the purpose of facilitating the borrow to invest arrangements without furnishing any or any proper information to the intermediaries concerning the risks associated with the borrow to invest arrangement;

(g) the bank revised the criteria for lending to invest in the bond in order to remove any meaningful restriction on the persons to whom finance would be available. The bank knew that the attitude of the branch managers was, as set out in the submission made to the bank’s credit function:

‘at present we cannot approach these clients as we cannot guarantee loan approval, and you cannot sell a bond to a guy without assuring him that you will give him the money.’
3. The bank knew that the bond and associated loan were likely to result in a loss for investors and were a high risk product. The statement made by Rabo Bank internal audit report in April 2004 when it said that the ‘ultimate performance of the tracker bonds is estimated to be low’ evidences this. If the bank had that knowledge one month in (sic) the term of the bond, then it, prima facie, sold the bond knowing that its performance was estimated to be low or reckless as to whether the performance of the bond was low or otherwise.
4. In light of the bank’s state of knowledge as to the likely performance of the bond and associated loan the bank made the representations concerning its suitability knowing them to be false or reckless as to their truth or falsity.

5. When IFSRA raised the issue of advisory sales with the bank, the then chief executive of the bank wrote to IFSRA asserting that the Solid World 5 product was a low risk product. He did not disclose that the bank or its intermediaries had promoted and sold the product on a borrow to invest basis. This behaviour is evidence of a course of action by the bank whereby it deliberately misled the regulator as to the manner in which it was conducting its business.

We propose amending the statement of claim in the four test cases to include the claims made ante. If you have any meaningful answer to these matters we will consider same. We are fully cognisant of the serious nature of the conduct disclosed in the discovery made by the bank to date.
We would respectfully request that you do not write to us asserting, without reference to the discovery or what actually occurred, that the product was not promoted or advertised on a borrow to invest basis or that the bank only provided finance to sophisticated investors who approached it on an independent basis. We are well aware that that it the bank’s stated position.”

32. Within days, the Bank’s solicitors responded. Their letter contained a categoric denial of any wrongdoing in respect of the development, marketing or sale of the bond and in particular denied strongly that any fraud whatsoever was perpetrated in the manner alleged or at all. It acknowledged that the allegations which were now being made were extremely serious but indicated that they did not intend to litigate them in correspondence. The letter contained a number of specific comments. It said:-
“1. While you are already aware of the Bank’s position in relation to the issuing of borrowing for investment, we reiterate that while the Bank did not market the Solid World Bond 5 product as a borrow to invest product, it was willing to lend money to customers to invest in the product, provide that they met eligibility criteria. It is also important to reiterate, for the avoidance of any doubt, that the Bank is satisfied that it has acted correctly and that it complied with all regulations regarding the marketing and sale of the product.
2. Our client rejects any allegation that it knew at the time of the sale of the product that the performance of the product would be low, or was in any way reckless as to whether the performance would be low. As you are well aware, the product was for a period of five years eleven months, was capital guaranteed and was linked to a basket of twelve stocks. There is no way that the Bank, or any person, in April 2004, could have known or predicted what way the markets would turn out to be at the end of 2009. Indeed events have shown this to be the case.

3. The Bank never misled the Financial Regulator as alleged, or at all, in relation to this or any other product, or the way in which it conducted its business. The letter to which you refer clearly does not evidence the conduct you allege. The Financial Regulator was aware at all times that the Bank was providing back-to-back lending in relation to the sale of the Solid World Bond 5 product and there was no regulatory prohibition on same.

4. The matters upon which your clients propose to rely on as showing that a fraud was perpetrated do not in our view actually relate to the issue of fraud but rather relate to issues of alleged negligence and alleged breaches of regulation, which issues have already been pleaded by our clients in their pleadings and denied by the Bank in its defence.

5. You have adopted your own interpretation of various comments set out in documents and emails included in the Bank’s discovery as evidence of fraudulent conduct on the part of the Bank in the marketing and sale of the Solid World Bond 5 product. The Bank rejects your interpretation which will be dealt with at the appropriate time. The Bank does not accept that the documents which you have referred to evidence the allegations being made, which allegations are denied. In many instances, it is clear that the comments have been taken completely out of context and that you have chosen to ignore other documents which clarify the true meaning of such comments.”

33. The letter goes on to say that if the plaintiff wished to amend his statement of claim, a motion would have to be issued. Following review of it, the amendments proposed and any other material relied upon, the Bank would determine whether and to what extent it was appropriate to contest the application. It was pointed out that if liberty to amend was granted then a full defence to the new allegations would be delivered.
34. Further correspondence was exchanged but there is little point in reciting it here since it does not advance the issue that I have to decide.
The Evidence
35. Two affidavits were sworn in support of the motion and one in response.

36. The principal grounding affidavit is that of David Coleman, the plaintiff’s solicitor. In the course of the affidavit, he points out the Bank continues to maintain that it did not sell the bond as a borrow to invest product. He also points out that the Bank, through its solicitors, maintains that that issue is a regulatory one and does not go to the issue of whether the representations made by the Bank to the plaintiff and other investors were made knowing them to be false.

37. Mr. Coleman extracted an amount of documentation from the Bank’s discovery. He exhibits it. He says that the exercise carried out in compiling these documents was not an exhaustive one but that a cursory review of the material demonstrates that there is:-

“An unarguable factual basis for the contention now being made by the plaintiff, i.e. that the defendant created the demand to borrow to invest in the investment product through a targeted sales campaign and the position adopted by it in these proceedings and in the A&L Goodbody letter of 16th February, 2012 is a fiction.”
38. Mr. Coleman then takes one example concerning the behaviour of a Mr. Leonard Mills who was a senior executive in the Bank’s wealth management division. That gentleman appears to have been responsible for coordinating the activities of the wealth management division and the financial planning consultants. The Bank’s policy for selling the combined product required that the customer meet with a financial planning consultant or a member of the staff of the wealth management division in each case. He points out that Mr. Mills, together with a compliance officer of the Bank, was responsible for the formulation of the risk warnings letter for lending to invest in the bond. When it came to selling the bond and the associated loan, Mr. Mills made no attempt to disguise the fact that the defendant was selling a combined product, it is alleged. The following is extracted from a communication of Mr. Mills:-
“I enclose a brief approach to drive the lending to invest product and to introduce the wealth management service to existing clients.
Are you available next week to discuss this lending to invest opportunity.”

39. It is said that Mr. Mills made these comments in the emails introducing the product to various managers in the Bank. He is alleged to have been equally forthright in his communications with third parties:-
“I enclose details on a lending to invest arrangement which you may be interested in and some information on self administered schemes.”
40. Mr. Coleman says this is consistent with the instructions that his firm received in relation to the bond, namely, the bond was promoted and sold as a combined borrow to invest product.
41. A replying affidavit was sworn by Tara Glynn, who is the secretary of the Bank. She categorically rejects the contention that the Bank has behaved in any fraudulent fashion. She points out that the Bank opposes the amendment which is sought to be made principally on the basis that even taking the plaintiff’s claim at its height, the matters now asserted do not support any claim in fraud. She takes exception to the manner of presentation of the application which exhibited four folders of documents many of which she alleges have no direct relationship to this application. Ms. Glynn also points out that the application is grounded solely on an affidavit sworn by the plaintiff’s solicitor. No affidavit had by then been sworn by the plaintiff or indeed any of the other plaintiffs whose statements of claim are intended to be amended. She points out that the Bank indicated that it would expect that if an allegation of fraud was going to be made an affidavit alleging that would be sworn by the plaintiff. This is not to be seen as a technical objection on the part of the Bank. She points out that these proceedings involve the personal investment of the plaintiff and was a suitable one for him where his net assets at the time of the investment were valued at €1,670,000. The pleas made in the draft amended statement of claim are generic and make no effort, she says, to tie what is alleged to the personal circumstances of any particular plaintiff.

She then points out that nowhere does Mr. Coleman refer to or exhibit the risk warnings document which was signed by the plaintiff at the time he borrowed monies from the Bank to invest in the bond.

She then takes issue with a number of amendments over and above those alleging fraud which are sought to be made.

Ms. Glynn points out that the Bank has always accepted that the vast majority of customers who invested in the bond borrowed from the Bank in order to do so. Both the Financial Regulator and the Bank’s compliance function were aware of this. There was, she says, no borrowing within the bond structure and the bond and the loan account were two separate products. Borrowing was not a condition of investment in the bond and not all customers opted to borrow to invest. She also points out that there was no prohibition either legislative or through any code of conduct or guidelines from the Regulator on borrowing to invest in tracker bonds or in advertising or marketing borrowing to invest in such bonds. She says that the high watermark of the plaintiff’s claim appears to be that there are instances in which internal bank policy in relation to the promotion or marketing or the ability to borrow to invest was not followed.

Ms. Glynn also points out that the plaintiff appears to have completely disregarded the risk warnings document made available to him. This document expressly stated that a minimum growth level was required over the term of the bond to repay interest on the loan and to pay the relevant tax due on profits on a lending to invest arrangement and that this breakeven point would vary depending on interest rates and exit tax. The document even gave two sample breakeven points. She points out particular statements in the risk warnings document demonstrating that there could be no guaranteed returns on the bond and that a minimum growth level was required over the term of it to repay the interest on the loan and to pay the relevant tax due on profits on a lending to invest arrangement. She points to various other documents which she says are supportive of the Bank’s stance and alleges that the plaintiff has made no attempt to explain how, having regard to these documents, his investment in the bond was procured by a fraudulent misrepresentation. Further material is exhibited from a draft internal report which says that it was only in 2008 that the bond dis-improved with the effect that only capital would be returned to the plaintiff and other investors.

42. The final affidavit is that of Mr. Cuttle. This affidavit was much criticised for counsel for the Bank. Relevant parts of this affidavit are as follows:-

“5. However, insofar as is it material I can confirm that the product was sold to me on a borrow to invest basis and with a recommendation that it was suitable for me having regard to my appetite for risk. Pat Allen, who was my relationship manager in ACC, contacted me. He told me that the minimum investment was €100,000. I told him that I did not have that kind of money and he told me not to worry about it and that the Bank would lend it to me. I understand from my solicitor that the purported minimum investment was €2,500. This was never mentioned to me during the course of the telephone conversation. Insofar as the defendant has claimed and is claiming that persons who borrowed to invest in the product decided to do so of their own volition, this is completely untrue insofar as my case is concerned.
6. I subsequently met with Mr. Allen and Tina Franklin from the defendant’s wealth management division. She completed the form exhibited to Ms. Glynn’s affidavit at TG1. I am absolutely clear that I told them that my attitude to risk was low and this is reflected in the form. Insofar as it says elsewhere in the form that my attitude to risk was medium, that is incorrect. In any event, my solicitor advises me that the experts retained on my behalf are unanimous in their opinion that the product was a high risk product.

7. I am advised that the Bank knew that the product, by which I mean the bond and associated loan, was a high risk product. Had I been advised that the product was a high risk product or that there was any material chance of the return on the product not exceeding the monies paid by me, I would not have invested in the product. While I signed the risk warnings documents Mr. Allen advised me that the lowest expected level of return on the product was in or around €20,000 after the deduction of interest and tax. Based upon what I was told by Mr. Allen I expected to recover €30,000 – €35,000. However, I am not relying upon these representations for the purposes of this application. I was not interested in investing in a high risk product. I believe that the representation made to me that the product was a suitable product for me was false. I am also advised that the defendant has disclosed a substantial amount of material which shows that the defendant knew that the representation was false.”

43. During the course of the hearing, I was taken through other selected items from the discovery of the Bank to demonstrate that there was a statable case to be made in support of the amendments proposed.
The Proposed Amendments
44. There are some amendments which are relatively uncontroversial e.g. the allegation at para. 4 of the statement of claim to the effect that the representatives of the Bank classified the plaintiff’s appetite for risk as “low” in lieu of “medium” as original pleaded. The real objection is taken to what is sought to be pleaded at para. 17. It reads as follows:-

“17. Further, the defendant made the representations referred to above (in particular the key representation that the combined product was a suitable product for the plaintiff) fraudulently and knowing them to be false or recklessly as to their truth or falsity and the defendant sold the combined product to the plaintiff in circumstances that make the retention by the defendant of the monies paid by the plaintiff to the defendant unconscionable.
Particulars

(a) at all material times the defendant knew that it could not sell the investment product to the plaintiff without a recommendation that the investment product was a suitable product for the plaintiff to invest in based upon a full fact find and a proper assessment of suitability;
(b) at all material times the defendant knew that borrowing to invest in the investment product increased the risk profile of the transaction for the plaintiff and other investors;

(c) in November 2003 the Irish Financial Services Regulatory Authority (IFSRA) issued a warning about ‘geared tracker bonds’ stating that they were ‘risky’ products and identifying, inter alia, the risk that the costs involved in such an investment would exceed the return and warning that the consumer should be able to assess whether the costs, risks and benefits involved in the transaction are suitable for their particular circumstances;

(d) having regard, inter alia, to the matters identified at paragraphs (a), (b) and (c) ante the defendant was at all material times aware that it should not in any way promote or market the investment product as a borrow to invest product;

(e) in order to circumvent this prohibition the defendant adopted the fiction that a demand had independently arisen amongst is customers for finance to invest in the product and that it would market and sell the investment product as a stand alone product but would provide finance to customers who decided on an independent basis that they wished to borrow money from the defendant to invest in the investment product;

(f) had the defendant not adopted the fiction referred to at (e) ante, the product would never have been launched, marketed or sold by it. The compliance function of the defendant could not have ‘signed off’ on the product had the defendant’s true intentions in relation to the product been recognised and acknowledged during the course of the product development and sign off process;

(g) in fact, the defendant actively (and almost exclusively) promoted the investment product and the loan product as a combined borrow to invest product and conducted a ‘borrow to invest’ sales campaign both directly and through intermediaries who are appointed by the defendant for this purpose. The demand from the plaintiff and other investors to borrow to invest in the product was created by the actions of the defendant;

(h) while the compliance and legal functions of the defendant may not have known that the defendant was deliberately breaching its own policy, senior executives in the defendant were so aware and had the compliance or legal functions of the defendant made any inquiries of the defendant’s sales function they would have been so aware;

(i) the defendant promoted and sold the combined product to the plaintiff and other investors apparently without any analysis at all as to the likelihood of the return from the combined product exceeding the costs associated with the investment. The first documented occasion upon which any such analysis was carried out was in April 2004 and at that point the internal audit function of the defendant’s parent opined that the estimated return from the investment product was ‘likely to be low’;

(j) given that the defendant was promoting and selling the product to the plaintiff and other investors as a borrow to invest product, the defendant was aware that the statements made in its marketing literature concerning the product referred to ante and in particular the representations that the product was a low risk product and was suitable for the plaintiff were false and made by the defendant knowing them to be false.”

45. It is also sought to amend the prayer in the statement of claim so as to claim damages for fraudulent misrepresentation and deceit together with a declaration that having regard to the unconscionable conduct of the Bank in promoting and selling as a borrow to invest product it is liable to make restitution to the plaintiff of all monies paid to it by him. The plaintiff also seeks damages for unjust enrichment.
Opposition

46. The application to amend is opposed on a number of grounds. First, there is an assertion that there is no factual basis put forward to warrant the amendment. Second, it is said that the amendments amount to nothing more than an artificial construct which has been created by the plaintiff’s lawyers. Third, it is said that Mr. Cuttle himself attempts to make no case in support of the affidavit sworn by him.

47. The Bank relies heavily on the decision of the Supreme Court in Croke v. Waterford Crystal Ltd. and Irish Pensions Trust Ltd. [2005] 2 IR 383.

48. Mr. Croke was one of approximately 350 plaintiffs who brought separate actions against the defendants. The High Court refused leave to amend pleadings against both defendants. The Supreme Court allowed the amendments to be made against the first defendant but not against the second. Particular reliance is placed upon the a passage from the judgment of Geoghegan J. at p. 401, dealing with the application to amend as against the second defendant. That judge said:

“Insofar as the plaintiff wants to amend the statement of claim as against the second defendant, I take a different view. In the earlier part of this judgment, I have demonstrated by reference to the pleadings in the existing statement of claim and by reference to the replies to the two notices for particulars sent by that defendant, that the plaintiff has not put forward any factual basis whatsoever to support a fraud or any kind of deliberate misconduct claim against the second defendant. In the replies to particulars, there is a vague allegation that deliberate misrepresentations made by the first defendant were made by that defendant as agent for the second defendant. But there are no particulars even remotely supporting that proposition. There are no allegations against any single named employee of the second named defendant and, of course, having regard to the second defendant company, fraud or conspiracy allegations against it would be particularly serious.”

Decision
49. The starting point for my decision has to be the basic purpose of O. 28, rule 1. It is, as Geoghegan J. said, intended to be a liberal rule. It has as its object that real matters in dispute between litigants should be determined by the court.
50. There is no plea of fraud contained in the statement of claim as delivered. Some of the allegations of wrongdoing do, however, go very far. For example, allegations of recklessness, negligence and deliberate misleading of the plaintiff. The plea of fraud is sought to be introduced after inspection of discovered material. My attention was drawn to specific documents in that material which, on one view, could be regarded as supportive of a plea of fraud. There may, of course, be another side to that story and indeed a view of the documents as a whole rather than on a selective basis may neutralise the construction which is sought to be put upon them. Without going into detail, I would have to say that if fraud had been pleaded in the statement of claim as originally delivered then, in the light of the documents disclosed in the Bank’s discovery, it would not be possible to strike out the fraud claim as one doomed to failure. That is not, by any means, a warranty as to the likelihood of success in such a claim. It is merely an acknowledgement that the very low threshold of proof that has to be achieved to survive an application to strike out in limine has been met by the plaintiff. Such a determination might be considered sufficient to dispose of this motion having regard to the agreed test which I was asked to apply. There is, however, another aspect of the matter which is more troublesome. That relates to the evidence which has been utilised in support of this application. Initially, there was simply the affidavit from the plaintiff’s solicitor. The Bank, correctly in my view, pointed out in the course of Ms. Glynn’s affidavit that it could not see how the plaintiff could justify the amendment so sought without evidence from the plaintiff himself. It is his case and not his solicitors. The response was to file the short affidavit sworn by Mr. Cuttle. I have already repeated the relevant paragraphs from it. At para. 7 he says he has now been advised that the Bank knew that the product, namely the bond and associated loan, was a high risk product. If he had been advised of that at the time, he would not have invested in it. He goes on to say that while he signed the risk warning documents, he got specific advice from Mr. Allen that the lowest expected level of return on the product was in or around €20,000 after the deduction of interest and tax. He expected to recover between €30,000 and €35,000. He then goes on to expressly disavow any reliance upon those representations for the purpose of this application. The sole case which he seems to wish to make then arises from the representation made to him that the product was a suitable one, he having indicated that he was not interested in investing in a high risk product. He states his belief that the representation made to him that the product was suitable for him was false. He then adverts to the discovered material which he says shows that the defendant knew that representation was false.

51. Whilst I think it would have been desirable to have filed a somewhat more detailed affidavit, I am of the view that this affidavit is sufficient to demonstrate that one of the issues now between the parties is this allegation of fraud. I think that, unlike Mr. Croke, there is a factual basis laid to support an allegation of fraudulent misconduct. Specific information has been given and named persons identified. This application requires a low threshold of proof to be achieved. It has been achieved. Permission to amend the statement of claim is not in any way a warranty of success on it’s contents.

52. Indeed, I think it might said that if the plaintiff is correct, the claim already made, if supported by evidence and accepted by the trial judge, would be sufficient for him to obtain redress for the wrong allegedly done to him without entering into the arena of fraud at all. If, however, he wishes to include a claim in fraud then, having regard to the jurisprudence on the topic of amendment, in my view he should be entitled to make that case.

53. In coming to this conclusion, I bear in mind the strenuous denials of the Bank and the other submissions which I have outlined.

54. In permitting the amendment, I believe I ought to do so on terms. That is permitted to me under the rule. If the plaintiff wishes to avail himself of the leave which I am now giving to amend his statement of claim so as to include the plea of fraud, it will be on the following terms. In the event of him not succeeding at trial on the fraud claim then he will be responsible for the costs of that element of the case regardless of the overall outcome of the action.

55. The inclusion of this plea will add a new dimension to the case. It is likely to lead to a longer trial with perhaps a greater number of witnesses. If, therefore, the plaintiff opts to make this case in fraud he will have to pay for it if unsuccessful.

56. The plaintiff must now, therefore, opt to avail himself of the leave to amend or not. If he opts not to amend he must pay the costs of this motion. If he amends but fails at trial on the fraud claim he will be liable for the costs of this motion and any additional costs arising on foot of the amendment.

Approved: Kelly J.

Donatex Ltd v Dublin Docklands Development Authority

[2012] IEHC 168
JUDGMENT of Mr. Justice Clarke delivered the 29th March, 2012
1. Introduction
1.1 By the standards of the commercial court these proceedings have a protracted procedural history. While it is unnecessary to set out that history in detail in this judgment I might note that I delivered judgment (“the earlier judgment”) on the 15th April, 2011, in an application brought by Donatex and Mr. McNamara seeking a modular trial. Defined terms are used in this judgment in the same way as in the earlier judgment.

1.2 What now comes before the court is an application on behalf of Donatex and Mr. McNamara to amend the statement of claim. I turn first to the background to that application.

1.3 Before doing so, l should briefly note at this stage that the plaintiffs’ application sought to make two amendments to their statement of claim. The first amendment, described as the “vires amendment”, is the issue with which this judgment is concerned and is that to which any reference to the application to amend should be understand as referring. The second amendment involves an application to limit the scope of the plaintiffs’ claim for damages and was not opposed. That application was, therefore, not a matter of dispute between the parties requiring any further consideration by the court.
2. Background
2.1 At para. 3.1 of the earlier judgment, I set out a brief synopsis of the issues which then appeared to arise in the proceedings for the purposes of analysing the merits of the suggested modular trial then under consideration. Under subheading (B) of that paragraph, I noted that Donatex and Mr. McNamara sought to question the legal power of the DDDA to enter into the contract which is at the heart of these proceedings, being one designed to facilitate the purchase and development of the Irish Gas Bottle site on the Pool beg Peninsula. As noted in the earlier judgment, Donatex and Mr. McNamara sought to put forward that argument under two separate bases. The first basis concerned an allegation that the agreement was impermissible for reasons similar to those identified by Finlay Geoghegan J. in North Wall Quay Property Holding Company Ltd & Anor v. Dublin Docklands Development Authority [2008] IEHC 305. The second basis was stated by me, in the same paragraph, to be one whereby it was argued that “it is outside the statutory entitlement of the DDDA to enter into a complex form of commercial arrangement as a result of which it is to gain profits as a developer”. I further noted that the DDDA suggested that the second basis, just referred to, had not been pleaded.

2.2 While dealing with the earlier judgment it is also necessary to note that I identified, at section (C) of para. 3.1, a range of issues which were likely to arise as to what relief, if any, Donatex and Mr. McNamara might be entitled to even if it could be established that, on one or other of the bases asserted, the DDDA did not have authority to enter into the contract in question. For the reasons set out in the earlier judgment, I did not find it necessary to come to a conclusion as to whether the second claim in respect of lack of statutory authority was properly pleaded.

2.3 I gave a ruling on the 5th July, 2011, in relation to a question of the possible amendment of the plaintiffs’ statement of claim and certain other discovery issues. I came to the view that, on the then pleadings, even in the then proposed amended form, the statement of claim did not specify with any sufficient precision the claim sought to be made in relation to the DDDA ‘s remit under the Dublin Docklands Development Authority Act 1997 (“the 1997 Act”). In particular, I ruled that the pleadings did not set out any basis on which Donatex and Mr. McNamara could ground a claim that the powers of the DDDA were limited under the 1997 Act generally, and under s. 18 in particular, or in what way it could be said that the DDDA had not acted within those powers. In the circumstances I refused the application to amend the statement of claim in the terms then proposed.

2.4 Against that background Donatex and Mr. McNamara now bring a further application to amend the pleadings for the purposes of setting out in a more detailed form the claim which they wish to make under that second vires heading. In order to understand the issues which arise in this application it is next necessary to turn to the arguments put forward on behalf of the DDDA against allowing the amendment.
3. The DDDA’s Position
3.1 Counsel for the DDDA made four points in opposition to the application to amend. The points were as follows:-

A. It was asserted that the claim under this heading amounted to a public law claim which, although capable of being maintained in plenary proceedings, was, therefore, subject to the same time limit requirements as would apply in the event that leave to seek judicial review was sought. On the basis that the proceedings (and in particular the raising of these issues) is well outside the ordinary period for the grant of leave to seek judicial review, it is said that an amendment allowing such issues to now be raised should not be granted unless Donatex and Mr. McNamara were to establish circumstances which would ordinarily persuade the court to extend time to seek judicial review;
B. It is said that the argument sought to be raised by the amendment as to the lack of vires on the part of the DDDA to enter into a contract, of the type with which I am concerned in these proceedings, is unstateable having regard to the terms of the 1997 Act;

C. It is said that there are no arguable practical consequences, favourable to Donatex or Mr. McNamara, could flow from a finding of ultra vires having regard to the jurisprudence as to the circumstances in which a claim in damages can be maintained arising out of an ultra vires contract; and

D. It is said that having regard to the protracted history of this case it would not be fair to allow an amendment at this late stage.

3.2 In making his application counsel, on behalf of the DDDA, accepted that the principles applicable to the grant of an amendment were as to be found in Woori Bank & Anor. v KDB Ireland Ltd [2006] IEHC 156. There was no dispute between the parties on that question. It follows that, in the absence of prejudice, an amendment will ordinarily be allowed unless the issue sought to be raised by the proposed amendment would be bound to fail in the sense in which that term was used in Barry v. Buckley [1981] I.R. 306 and the jurisprudence which followed on from that decision.
3.3 Issues B and C above are those issues which are concerned with the “bound to fail” question. If the proceedings are bound to fail then there would be no point in allowing an amendment in any event and questions concerning delay and/or the application of judicial review time limits would not arise. Issue D is, of course, concerned with prejudice while issue A is concerned with delay.

3.4 In the circumstances it seems to me that the appropriate course of action is to consider: first, the question of prejudice; second, the question of delay on the assumption that the proceedings, or at least some of them, are not bound to fail; and third, to address issues B and C on the basis of whether the claims sought to be raised are bound to fail. I turn, therefore, to the question of prejudice.
4. Prejudice
4.1 There can be little doubt but that these proceedings have become protracted and that, at least in many respects, delay has been caused by both Donatex and Mr. McNamara. A series of time limits imposed by the court for the filing of documentation were missed, in some cases by a significant margin. Time for the carrying out of procedural steps has also had to be extended. A previous hearing had to be abandoned in circumstances where, apparently due to inadvertence, all of the directors of Donatex had resigned such that there was no one in control of the company who could give instructions to its legal team to pursue the case. It is unnecessary for the purposes of this application to deal with each and every cause of delay save to note the significant culpability of Donatex and Mr. McNamara to which I have referred.

4.2 The whole purpose of cases being admitted into the commercial list is to ensure that they come on for hearing in the earliest possible time, consistent with affording all parties a reasonable opportunity to be ready for trial, having availed of any appropriate pre-trial steps. That these proceedings have not progressed at the pace that might reasonably be expected of a case admitted into the commercial list can hardly be doubted. I am satisfied that Donatex and Mr. McNamara must at least bear a material part of the blame for that situation.

4.3 However, on the other hand, the case is not now even close to trial. Allowing the amendments would, doubtless, expand the trial somewhat and might lead to some additional pre-trial steps being required to ensure that the case comes properly on for hearing. However, on the basis of my current understanding of the status of the proceedings generally and of the additional issues which are sought to be raised by amendment, I am not satisfied that, provided appropriate procedural measures were put in place and provided that same were strictly enforced as against Donatex and Mr. McNamara, any significant further delay in this case coming to trial would be effected by reason of the amendments, if allowed. Subject to putting in place such procedural measures and making it clear that no further material slippage on the part ofDonatex and Mr. McNamara can be tolerated, I have come to the view that any prejudice that might be suffered would not be sufficient to warrant refusing the application for the amendments sought should those amendments not be inadmissible on other grounds.

4.4 To the extent that any marginal prejudice might be suffered by the DDDA by reason of the amendments, it seems to me that that prejudice would best be met, in the event that the amendments are otherwise appropriate, in a proportionate manner, by putting in place and rigorously imposing a procedural regime designed to ensure that all aspects of these proceedings can be brought to trial in an appropriate and timely fashion without any further uncertainty over the affairs of the DDDA. On the basis of that finding, and in the light of the sequence referred to earlier, it seems to me to be appropriate to now turn to the issues which arise out of the public law/delay point made by counsel on behalf of the DDDA.
5. Public Law and Delay
5.1 It is clear from O’Donnell v. Dun Laoghaire [1991] ILRM 301 that it is permissible in plenary proceedings to seek relief which ought ordinarily be pursued in a judicial review application but that, where so doing, a plaintiff cannot bypass the procedural obligations or limitations which arise in judicial review cases, such as the obligation to move expeditiously and, ordinarily, and in the absence of an extension of time, within the time limits provided for the time being, either by statute or by rules of court.

5.2 It seems to me that three questions arise under this heading. They are as follows:-

A. Whether the aspect of the case which Donatex and Mr. McNamara wish to make, as a result of the proposed amendment, amounts to the type of claim which ought ordinarily be brought in judicial review proceedings;
B. If so, whether any relevant time limit for seeking leave to obtain judicial review has passed; and

C. If so, whether it would, in all the circumstances of the case, be appropriate to extend time.

5.3 I am also mindful of the fact that counsel for the DDDA did not, in making the public law point, confine himself to the suggestion that it was necessary to move on time but also referred to the other restrictions which apply to cases brought by judicial review such as the need to pass the, admittedly low, threshold for leave before the proceedings can be progressed. However, it seems to me that this latter point, in the particular circumstances of this case, is of little practical application. It will be necessary for me to consider whether the case sought to be made by this amendment on behalf of Donatex and Mr. McNamara is bound to fail. While that test may not be identical to the threshold for leave to seek judicial review, nevertheless, because Donatex and Mr. McNamara did not include the relevant claim in their pleadings from the beginning, they are required to satisfy me that the claim which they seek to make by amendment is not bound to fail (at least where, as here, that question has been put in issue by the defendant). It follows that there will be at least an analogous review, by reference to a low threshold, of the merits of the case sought to be made by amendment in this application in much the same way as there would, by reference to a low threshold, be an analysis of the merits in an application for leave to seek judicial review.
5.4 However the delay point is one of much greater substance. If the DDDA is correct in stating that the claim made on behalf of Donatex and Mr. McNamara is, in substance, a public law claim which ought ordinarily be brought by judicial review, then it follows, on the authority of O’Donnell, that that claim could only proceed if it met the relevant judicial review time limits or if there were circumstances which would justify extending time.

5.5 There was debate at the hearing of the motion on both questions of substance being whether the remedy is, in truth, a public law remedy sufficient to require compliance with judicial review time limits and whether, as the DDDA argued, no real explanation for the delay in raising this point has been put forward on behalf of Donatex and Mr. McNamara such that an extension of time would not be allowed in the event that those time limits applied.

5.6 I have come to the view that it would not be appropriate to reach a definitive conclusion on either of those points on this motion. As pointed out earlier the question of whether the public law/delay point is of any relevance is, of course, dependent on whether there is any point in allowing the amendment at all, having regard to the “bound to fail” point. However assuming, for the purpose of the argument at this stage, that I were to conclude that the proceedings are not bound to fail, then the public law/delay point becomes one of significant importance for, if the DDDA is correct such that judicial review time limits apply, were not complied with, and that there is no adequate basis for extending time, then, even though the points may be arguable from the perspective of Donatex and Mr. McNamara, those parties have lost the opportunity to raise the points concerned by their delay. Viewed in that light the public law/delay point is one of potentially significant moment.

5.7 I propose, therefore, to turn to the “bound to fail” issue. However, before so doing I should note that it seems to me that, in the event that the proceedings are not held to be bound to fail and that the amendment sought would, therefore, prima facie be justified, it would be my view that the public law/delay point should be determined first as a stand alone issue. If the DDDA is correct on this point then the DDDA should not be exposed to having to defend the claim under this heading for it would, in those circumstances, be a claim which Donatex and Mr. McNamara have lost the right to pursue by virtue of delay. When I have dealt with the “hound to fail” question I will return to the delay point.
6. Bound to Fail
6.1 While borrowed from the jurisprudence which evolved in the context of applications for leave to seek judicial review on notice in immigration cases, there is, in my view, merit in the view that a court, which has come to the view at an earlier procedural hearing that proceedings should continue, should be sparse in the detail into which it goes as to the merit of the case which will now fall to be decided at a full hearing. For those reasons many judges dealing with leave applications in the immigration field (which, it will be recalled, are required to be dealt with on notice and require substantial grounds to be established) have given detailed reasoned judgments in cases where leave has been refused (on the basis that a party whose proceedings are coming to an end is entitled to know why) but have not given detailed reasons when the case is to go ahead and leave is to be granted.

6.2 While the considerations may not be identical on a motion such as this, there does seem to me to be at least some basis for analogy. If a party is to have their proceedings dismissed as being bound to fail or, as here, to be declined permission to pursue a particular claim by amendment because the issues sought to be raised by amendment are bound to fail, then that party is entitled to know why. However, if the case is to be allowed to go ahead then the court should address the merits only to the minimum extent necessary to explain why the court has taken the view that the proceedings are not bound to fail. It would then be for the trial judge to consider the merits without any possible prejudgment on the part of the judge dealing with the procedural motion.

6.3 Against that background it is necessary to address the two points raised by the DDDA under this heading. First, it is said that the 1997 Act itself expressly permits commercial activity and joint ventures so that, it is said, the points sought to be raised by Donatex and Mr. McNamara cannot succeed. There is no doubt but that Donatex and Mr. McNamara will need to carefully address the arguments made by the DDDA under this heading. The 1997 Act clearly does not, of itself, rule out commercial activity on the part of the DDDA or joint ventures. However, I have come to the view that it could not safely be said, after the limited form of hearing possible on a motion such as this, that there are no circumstances in which a case of the type sought to be raised by the proposed amendment could succeed. For the reasons already addressed I do not think it would be prudent for me to analyse the matter further.

6.4 So far as the second point made under this heading is concerned, the DDDA quite properly draws attention to the case law (see, in particular, Crédit Suisse v. Allerdale B.C. [1997] 1 QB 306) which suggests that a party entering into an ultra vires contract with a statutory body cannot claim damages for to do so would be to permit the statutory body to incur obligations in circumstances where the statute itself does not permit the obligation concerned. It is argued by the DDDA that, by a parity of reasoning, proceedings for damages could not be maintained for a breach of warranty of authority contained in a contract by a public authority. In partial answer, Donatex and Mr. McNamara seek to rely on other possible causes of action. In respect of many of the points raised as an alternative means of seeking damages, counsel for the DDDA argues that the pleadings, even if the amendment be allowed, do not permit such claims to be brought.

6.5 While again acknowledging the significant barrier which the established jurisprudence places in the way of Donatex and Mr. McNamara, r have come to the conclusion that it could not safely be concluded, after the limited hearing possible on a motion such as this, that Donatex and Mr. McNamara have no chance of success in the sense of being able to overcome the problems, which the jurisprudence relied on by the DDDA places in their way. I cannot, therefore, in my view, safely conclude that the proceedings are bound to fail on those grounds either.

6.6 However, I would add one important rider. The procedural history of this case demands, for the reasons which I have already sought to analyse, that the case now proceeds to trial in an expeditious and timely fashion. Even if the proposed amendments are allowed, the case will have to be confined within the parameters of the pleadings as they then will be. It must be made clear that, in the absence of wholly exceptional circumstances, Donatex and Mr. McNamara will not be allowed to amend the proceedings further. In addition, it should be made clear that it will not be possible, whether in a reply, or by the filing of additional particulars, to extend the claim beyond the reasonable parameters of those which are included in the proposed amendments. Detailed particulars of a claim already clearly made are, of course, permissible. Extending the claim beyond the parameters of that already made under the guise of furnishing additional particulars is not. I make these comments for the purposes of emphasising my view that Donatex and Mr. McNamara must now live within the parameters of the pleadings which they propose. If that causes them any difficulties further along the line, then so be it. Donatex and Mr. McNamara have had more than an adequate opportunity to mend their hand. They have run out of road on this issue and will not be allowed any further latitude. To the extent, therefore, that there may be merit in the argument made by counsel on behalf of the DDDA that certain of the arguments sought to be relied on are not pleaded, then that is an issue which can be revisited before the trial judge who I trust will not, for the reasons which I have already ruled on, afford Donatex and Mr. McNamara any latitude beyond that which may be given as a result of this motion.

6.7 It follows that I have concluded that the proceedings are not bound to fail and that the amendments should not be refused on that ground. It follows that it is necessary to return to the delay/public law issue.
7. Public Law and Delay Revisited
7.1 Having determined that the amendments sought would not give rise to a claim which is bound to fail, it seems to me that the amendments should be allowed. However, before the case which is sought to be made by virtue of the amendments comes to trial, it seems to me that the question raised by the public law/delay point needs to be definitively determined. I, therefore, propose to allow the amendment sought but to direct that the question, of whether the case set out in the amendments to the pleadings thus allowed should be permitted to proceed to a full hearing, be tried as a stand alone issue to the intent that if Donatex and Mr. McNamara fail on that issue, that aspect of the case will not proceed to trial and the case will continue as if the relevant amendments had not been allowed.

7.2 For clarity, it seems to me that the issues which require to now be tried are as per para 5.2 above.
8. Conclusions
8.1 I, therefore, propose to make the following orders:-

A. An order amending the pleadings in the manner sought on behalf of Donatex and Mr. McNamara;
B. A direction that the issue as to whether those aspects of the claim which have been included by that amendment, and which concern the powers of the DDDA to enter into commercial agreements, should be permitted to go to trial to be dealt with as a separate issue with the following specific questions being tried:-

i. Whether the claim made in respect of that issue amounts to the type of claim which ought ordinarily be brought in judicial review proceedings;
ii. If so, whether any relevant time limit for seeking leave to obtain judicial review has passed; and

iii. If so, whether it would, in all the circumstances of the case, be appropriate to extend time.

8.2 So far as bringing that matter to early hearing is concerned, it seems to me that the issues raised have already been the subject of debate between the parties. To the extent that Donatex and Mr. McNamara may wish to put in any further evidence I will direct that such evidence be filed within three weeks of today’s date (making all allowance for Easter). If the DDDA wishes to put in any further evidence, same can be filed within two further weeks. The DDDA should file written submissions at the same time as filing any additional evidence and Donatex and Mr. McNamara can file any replying submissions within two weeks of that date.
8.3 On the basis of that timescale, the issue should be ready for hearing within seven weeks of today’s date being Thursday, 17th May. On that basis I will put the case generally, together with the issue which I have directed to be tried, in for mention in the ordinary Monday commercial list on Monday the 14th May, for the purposes of ensuring that the timescale referred to is met and for the purposes of fixing a date for the hearing of the issue directed to be tried.

Citywide Leisure Ltd (in receivership) v IBRC Ltd

[2012] IEHC 220

JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 24th day of May, 2012
1. Two motions are brought before the court in this case. The plaintiff has brought a motion for leave to amend its statement of claim and the defendant has brought a motion for security for costs pursuant to s. 390 of the Companies Acts 1963 (“the 1963 Act”).
Motion to amend Statement of Claim
2. The plaintiffs are a group of companies which owned and managed the following properties: the Holiday Inn Hotel in Pearse Street, Dublin; a restaurant in Temple Bar, Dublin; Tante Zoe’s restaurant, Dublin; and the Blarney Inn Hotel, Kildare Street, Dublin along with an associated nightclub called Club Nassau in Dublin.

3. One of the plaintiff companies had a debt with the defendant but the debt was cross-secured on assets of the plaintiff companies as a whole. The loans were refinanced in 2008, but the defendant (formerly Anglo Irish Bank Corporation, otherwise “Anglo”) called in the loans pursuant to the terms of the loan agreement, and when the plaintiffs were unable to pay the sums due, the defendant appointed a receiver to the companies.

4. In these proceedings, the plaintiffs challenge the appointment of the receiver and seek a declaration that the appointment of the receiver over the assets and undertakings of the plaintiffs or any of them is in breach of contract, void and otherwise invalid. The plaintiffs also claim damages for breach of contract and seek an order directing the taking of accounts and an inquiry as the Court may deem appropriate.

5. The statement of claim was delivered on 21st November, 2011, in accordance with case management directions given by Kelly J. The defendant delivered a full defence to the claim.

6. The plaintiffs seek to make three amendments to their statement of claim. One concerns an allegation that security documents were altered. The second amendment involves an allegation that there was a breach of s. 60 of the 1963 Act, in that assistance was given to the plaintiff companies by loans from the defendant for the purposes of the purchase of its own shares and that the defendant had constructive knowledge of this. The third amendment concerns what was described by counsel as “the NAMA point”. The defendant does not contest the entitlement of the plaintiffs to be granted an order making the first and second amendments. Accordingly, I give liberty to the defendant to make those amendments. They are set out in the amended statement of claim as follows:

“41. The Plaintiffs further claim that the transactions set out at paragraph 6 hereof were executed in breach of section 60 of the Companies Act 1963 as amended an are thus voidable at the instance of the plaintiffs. The breaches of the Companies Acts were known to the Defendant. The appointment of receivers was made on foot of the said transactions and was therefore unlawful.
42. Further the Defendant, its servants or agents, materially altered documents so as to give effect to certain securities. The said alteration was unlawful. As the appointment of receivers was made on foot of the said securities the appointment was unlawful.”

7. The amendment sought to be made in relation to the “NAMA point” is as follows:
“43. The Plaintiffs claim and assert that they have been subjected to a profound inequality of treatment and/or invidious discrimination by agencies of the State which constitute and continue to constitute a breach of their property rights guaranteed by the Constitution of Ireland.
Particulars of breach of Property Rights

(a) The defendant is a financial institution licensed in the State and fully owned and controlled by the State and/or its agents.
(b) The State in recognising the need to address the serious threat to the economy and the instability of credit institutions in the State generally and the need for the maintenance and stabilisation of the financial system in the State and recognising the need to facilitate the availability of credit in the economy of the State, to resolve the problems created by the financial crisis in an expeditious and efficient manner and achieve a recovery in the economy and to contribute to the social and economic development of the State, enacted the National Asset Management Agency Act, 2009.

(c) Under the terms of the said legislation the defendant has been designated as a participating institution. In that regard certain of the defendant’s loans have been transferred to the National Asset Management Agency NAMA) and borrowers of those loans now deal with the Agency.

(d) The plaintiffs’ loans, by reason of the fact that they do not exceed £20,000,000, were not transferred to the NAMA and remain on the balance sheet of the defendant.

(e) NAMA, in acquiring loans form the defendant, purchased same at a substantial discount to their face value.

(f) Having acquired the loans, NAMA requires each borrower to submit a business plan whose primary purpose is to present a complete account of its financial affairs and to provide a detailed plan of how and when all liabilities to NAMA will be repaid. It is to be noted that the liability to NAMA is represented by the discounted price paid by NAMA for the original loan.

(g) The borrower’s business plan is reviewed by an independent business reviewer who assesses the reasonableness of assumptions used by the borrower, conducts a detailed analysis of cash flow projections and presents an independent critique of the plan. The plan and the associated independent business review are then considered by the NAMA board, credit committee, chief executive or senior management, based on a cascading system of delegated authorities approved by the board. Other factors to take into account at this stage include the degree of the borrower’s co-operation with NAMA and the quality of its corporate governance arrangements.

(h) The business plan process leads ultimately either to approval of the borrower’s business plan, possibly subject to changes and the imposition of certain conditions, or to enforcement. The latter applies in the case of borrowers who are unable to prove that they have the capacity to meet their debt obligations, even if re-structured, or where they have failed to co-operate with the process. NAMA has stated that enforcement is not its preferred option but that its stated objective is to try and achieve a consensual workout with as many borrowers as possible.

(i) Further, credit activity continues whilst this process of engagement with borrowers is under way. NAMA has provided significant credit to borrowers.

(j) The plaintiffs claim and assert that they are being treated in a manner which is both unequal to the way in which borrowers in NAMA are treated and further claim that were their loans to have been transferred to NAMA that NAMA would have accepted a business plan and would not have proceeded to enforcement.

(k) In those circumstances the plaintiffs claim that they have been discriminated against in such a way as to be unjustified and/or invidious. The plaintiffs further plead that there can be and is no legitimate reason for the inequality of treatment between borrowers such as the plaintiffs whose loans remain on the balance sheet of the defendant and the borrowers whose loans have been transferred to NAMA.

(l) Further, the plaintiff specifically plead that borrowers such as the plaintiffs whose loans have remained on the balance sheet of the defendant have been specifically targeted for enforcement by reason of the requirements placed upon the defendant to wind its operations down and/or to create cash flow or profit from which to discharge debts.

(m) In the circumstances the conduct of the defendant is such as to constitute a breach of the plaintiffs’ property rights as a consequence whereof the plaintiffs have suffered and continue to suffer loss and damage.

(n) In particular the plaintiffs plead that the defendant has breached the plaintiffs’ rights in the following manner but without prejudice to the plaintiffs’ right to rely on further particulars:

1. Appointing receivers to the assets of the plaintiffs;
2. Appointing receivers when it knew or ought to have known that the receivers appointed would not act in the best interests of the plaintiffs;

3. Refusing or denying directors and managers of the plaintiffs from engaging in the management of the plaintiffs’ assets and/or business;

4. Failing to negotiate in good faith or at all in respect of the plaintiff’s indebtedness;

5. Determining to appoint receivers in circumstances where no proper opportunity was afforded to the plaintiffs to repay, renegotiate or refinance the debts;

6. Failing to give any or any adequate consideration to business plans submitted by or on behalf of the plaintiffs;

7. Permitting the loss of the ‘Holiday Inn’ brand;

8. Refusing to take such steps as were necessary to retain the ‘Holiday Inn’ brand;

9. Closing or causing to be closed the assets and/or business of the plaintiffs and dismissing the employees;

10. Failing to afford the plaintiffs proper or fair procedures in determining to move to enforcement;

11. Acting in a manner which in all the circumstances was unreasonable, unfair, irrational, capricious and unjustified;

12. Failing to take any or any adequate steps to protect the property of the plaintiffs.”

8. The plaintiffs assert that this amendment is necessary to enable the court to deal with the real issues between the parties. The plaintiffs state that they are borrowers of Anglo and that the only difference between them and borrowers whose loans were transferred to NAMA is the size of the plaintiffs’ loans. The plaintiffs’ loans were just short of the threshold required for transfer to NAMA. The plaintiffs claim that if their loans had been transferred to NAMA, they would have obtained continuing support, the loans would not have been called in, and the receiver would not have been appointed. The plaintiffs also claim that Anglo obtained its own independent expert report and if they followed its recommendations, the companies would have been supported and a receiver would not have been appointed.
9. While NAMA is a statutory entity and the defendant is not, the defendant is fully owned by the State and its solvency depends entirely on promissory notes provided by the Minister for Finance under the Credit Institutions (Financial Support) Act 2008, and its management is appointed by the Minister. Counsel for the plaintiffs argues that in those circumstances, while it is not technically a public entity, it enjoys all the hallmarks of a public entity fully owned by the State, fully controlled by the State, and its solvency is entirely dependent on the State. The plaintiffs claim that in dealing with the defendant, they are entitled to equality of treatment with borrowers whose loans were transferred to NAMA.

10. The plaintiffs claim that they are being treated in one way by a body which is wholly owned by the State and other persons or bodies whose loans have gone into NAMA are being treated in a fundamentally different way. The plaintiffs claim that they are entitled to equality of treatment with borrowers whose loans were transferred to NAMA.

11. The plaintiffs accept that the courts have a discretion as to whether to allow an amendment and that the discretion must be exercised judicially. Where an amendment can be made without prejudice to the other party, and thus enable the real issue to be tried, such an amendment should be allowed (see Director of Public Prosecutions v. Corbett [1992] ILRM 674).

12. Where there is delay, a party may not be entitled to amend pleadings. In this case, the plaintiffs argue that the proceedings commenced in 2011, and were entered into the Commercial List on 7th November, 2011. The plenary summons was issued on 29th July, 2011, and the statement of claim was delivered on 21st November, 2011. The defence was delivered on 8th December, 2011. On 16th January, 2012, the plaintiffs’ solicitors wrote to the defendant’s solicitors asking the defendant to consent to the delivery of the amended statement of claim. The letter did not enclose a copy of the proposed amendment or give any information as to its nature. By letter dated 23rd January, 2012, the defendant’s solicitors responded, informing the plaintiffs’ solicitors that no copy of the proposed amended statement of claim had been enclosed and requested that it be sent immediately with the proposed amendments. By letter dated 27th January, 2012, the draft amended statement of claim was delivered to the defendant’s solicitors. The defendant’s solicitors pointed out to the plaintiffs’ solicitors that since an amended statement of claim was not delivered before 22nd December, 2011, the amendment could not be made without leave of the court pursuant to the provisions of O. 28, r. 2 of the Rules of the Superior Courts 1986 (“RSC”), and that an application would have to be made. That is the relevant timeline concerning the issue of delay.

13. It seems to me that there was no unreasonable delay in bringing that application to court, and I also got the impression from the manner in which the matter was argued by the defendant that it was not making a great deal about the issue of delay but was primarily relying on two other grounds on which the court should refuse this discretion, namely, (i) that on the issues raised in the amendment (“the NAMA point”), the plaintiffs’ claim was bound to fail, and (ii) that the amendments were not necessary to determine the real issues between the parties.

14. The defendant argues that the amendments sought in para. 43 of the amended statement of claim should not be allowed because it does not deal with a real question in controversy between the parties and is a claim that on the face of the pleadings is bound to fail. If the amendment is of a type which is bound to fail, then it can be struck out under O. 19, r. 28 RSC (see Woori Bank & Anor. v. KDB Ireland Ltd [2006] IEHC 156; Porteridge Trading Ltd v. First Active Plc [2007] IEHC 313; Cuttle v. ACC Bank PLC T/A ACC Bank [2012] IEHC 105; and Cornhill v. Minister for Agriculture (Unreported, High Court, O’Sullivan J., 13 March, 1998)).

15. Both parties agree that the court should not assess the strength of the plaintiffs’ claim, but rather, ask, “Is it a claim that is bound to fail?” If it is, then it should not be allowed.

16. I accept the following summary of the principles established by the authorities which have been set out by the defendant:-

“1. A party who applies for an order allowing it to amend its pleadings must furnish reasons as to why the court should exercise its discretion in its favour.
2. The court is entitled to look at those reasons and the evidence adduced therefrom to inform the exercise of its discretion.

3. Fundamentally, the exercise of that discretion involves an analysis as to whether the new claim involved the real issues in controversy between the parties.

4. The court is entitled to look at other factors.

5. The court can enquire if the new claim or new plea is bound to fail.

6. The inquiry by the court as to whether the new claim is or is not bound to fail can involve analysis by reference to either or both of the tests set out in Order 19, rule 28 or the court’s inherent jurisdiction.

7. If the new claim fails to meet both these tests, then it is not one of the real issues in controversy between the parties.

8. If the new claim was bound the fail, the amendment will not be allowed.”

17. The proposed amendment is based on the assertion that there is inequality of treatment or invidious discrimination between borrowers whose loans have been transferred to NAMA and other borrowers such as the plaintiffs, whose loans have not. The defendant claims that no evidence is adduced to support this allegation, nor is evidence adduced in support of the proposition that the plaintiffs’ loans are capable of acquisition by NAMA pursuant to the National Asset Management Agency Act 2009 (“the 2009 Act”). It also argues that no evidence is adduced to support the proposition that a borrower whose loan has been acquired by NAMA has its liability reduced to the discounted price by NAMA, notwithstanding the provisions of s. 99 and s. 102 of the 2009 Act, and no evidence is adduced to indicate any basis for the proposition that NAMA would have entered into a restructuring or compromise with the plaintiffs had the plaintiffs’ loan and security with the defendant been acquired. Nor do the plaintiffs state how such evidence could be produced. On this basis, the defendant argues that the claim must fail. In the amendment proposed, the plaintiffs claim that NAMA legislation should have provided for loans of the plaintiffs’ type and quantity to be included in it. If that is so, the defendant argues that the claim could only be made against Ireland and the Attorney General since the claim is based on an assertion that the NAMA legislation is itself a breach of constitutional obligations to ensure equality. This would be so because it either breaches Arts. 40 or 43 of the Constitution.
18. If such a claim is made, the defendant argues that it could only be made against the State on the basis that it had introduced a scheme that was discriminatory and which did not adequately protect the property rights of the plaintiffs. This is a challenge to the legislation. But such a challenge is not made in this case.

19. The plaintiffs contend that if their loans had gone into NAMA, their property rights would have been improved. But, the defendant argues, this is not something that can be laid at the door of the defendant. It is, in effect, a constitutional challenge to the 2009 Act, and the defendant says this would have to be an action against Ireland and the Attorney General and not against the defendant.

20. I agree with this submission. The plaintiffs’ scheme under the proposed amendment is based on an assumption that borrowers whose loans are transferred to NAMA will have a liability represented by the discounted price paid by NAMA for the original loan. This is, in fact, incorrect. Sections 99 and 102 of the 2009 Act provide that the borrower’s obligations to the bank remain the same as they were when the loan was transferred to NAMA. While NAMA may have paid a discounted price to the bank for the transfer of the loan, the full amount of the loan remains due and owing to NAMA by the borrower.

21. The claim made in the proposed amendment is bound to fail because there is no right to have an asset acquired by NAMA. The 2009 Act does not impose any benefit on a borrower nor is there any duty owed to borrowers, so the plaintiffs can have no claim in respect of any non-acquisition of their loan by NAMA. If there was such a claim, it is a challenge to the legislation and would require to be made against the State by naming Ireland and the Attorney General as defendants. Just because there is legislation (i.e. the 2009 Act) providing for a different entity and imposing different statutory obligations and duties on that entity, does not mean that another organisation such as the defendant in this case has to deal with plaintiffs in the same way as they might have been dealt with had their loans been transferred to NAMA.

22. A point was raised concerning the issue of whether the constitutional rights being claimed by the plaintiffs could be claimed by a corporation rather than a human person. The entitlement of corporate bodies to invoke the constitutional guarantee of private property rights was addressed by Keane J. in the High Court in Iarnród Eireann v. Ireland [1996] 3 I.R. 321. In that case, he held that it does not necessarily follow that the property rights of individual citizens which are protected against unjust attack by Art. 40.3 of the Constitution are confined to rights enjoyed by human persons. In any event, nothing turns on this point, because even if the plaintiffs did have property rights under the Constitution, the claim sought to be made in the amendment is, for the reasons I have already expressed, bound to fail.

23. That leaves a question of whether the amendment is necessary in order to enable the court to deal with the real issues between the parties. Counsel for the plaintiffs stated that the real issue in dispute between the parties is the defendant’s appointment of receivers to the assets of the plaintiffs and the calling in of the loans. He claimed that no proper or adequate time was given after the demand and he says that the decision to appoint a receiver had been made and a receiver had in fact been appointed prior to the demand being made. He also asserts that there was a misrepresentation at the heart of the agreement between the parties when the plaintiffs borrowed money from the defendant in 2008, not knowing the true financial state of the defendant. He said that this was the essential issue in the case and the real controversy in the case had to do with the appointment of the receivers and that alleged misrepresentation. Counsel for the plaintiffs asserts that as part of their claim, the plaintiffs seek to prove that they have been subject to invidious discrimination. But if that is so, it is an attack on the legislation and is bound to fail for the reasons I have already set out earlier in this judgment.

24. The commercial relationship between the plaintiffs and Anglo gave rise to rights and obligations on both sides. No factual allegations have been made that would sustain a claim against the defendant for breach of the plaintiffs’ constitutional rights. Insofar as complaint is made that there was no transfer of the plaintiffs’ assets to NAMA, this is not a complaint which can be made against the defendant as it is not something for which the defendant could be held responsible. Therefore, matters set out in the proposed amendment and relating to this issue are not part of the real issues to be tried between the parties.

25. Since I am satisfied that the proposed amendment raises issues which are bound to fail and which are not necessary to determine the real issues between the parties, I refuse the application to amend the statement of claim in respect of para. 43. I now turn to the issue of security for costs.
Security for Costs
26. Section 390 of the Companies Act 1963 provides:

“Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter, may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until the security is given.”
27. Counsel for the plaintiffs accepts that in the circumstances of this case, s. 390 applies, and that security for costs should be ordered unless special circumstances arise which will entitle the court to exercise its discretion not to order security. The defendant contends that it has a prima facie defence and this is not contested by the plaintiffs. Accordingly, the burden of proof is on the plaintiffs who must satisfy the court that “special circumstances” exist which would enable the court to exercise its discretion not to order security for costs.
28. The plaintiffs claim that there are a number of special circumstances and that they are as follows:

(i) The defendant has caused the financial difficulties of the plaintiffs.
(ii) The proceedings raise issues of public and/or legal importance.

(iii) The existence of the proceedings bearing record number 3213S/2011 between IBRC v. John Moran, are a mirror image of these proceedings and that the consolidation of both actions and/or the hearing of both actions at the same time would mean that no extra costs in bringing these proceedings would be borne by either party.

29. In Connaughton Road Construction Ltd v. Laing 0’Rourke Ireland Ltd. [2009] IEHC 7, Clarke J. stated at para. 3.4 that in order for a plaintiff to succeed in proving that his inability to pay stems from the wrongdoing asserted, four propositions must necessarily be true:-
“(1) That there was actionable wrongdoing on the part of the defendant (for example, a breach of contract or tort);
(2) that there is a causal connection between that actionable wrongdoing and a practical consequence or consequences for the plaintiff;

(3) that the consequence(s) referred to in (2) have given rise to some specific level of loss in the hands of the plaintiff which loss is recoverable as a matter of law (for example, by not being too remote); and

(4) that the loss concerned is sufficient to make the difference between the plaintiff being in a position to meet the costs of the defendant in the event that the defendant should succeed, and the plaintiff not being in such a position. ”

30. In this case, the defendant points to compelling evidence to show that the plaintiff companies were unable to pay their debts as they fell due and that they were in financial difficulties in 2009 and 2010, long before the appointment of a receiver. There is clear evidence that the plaintiffs financial difficulties were due to the economic downturn and this was particularly so with regard to the first named plaintiff. Counsel for the plaintiffs says that the court should look at the plaintiffs’ case in the round and that while they were suffering financial difficulties, these could be easily overcome, as evidenced in the accountant’s report commissioned by the defendant. The burden of proof on this issue rests with the plaintiffs, and in my view, they have failed to show that there is any credible evidence to link their inability to pay costs with the conduct of the defendant.
31. The next ground urged by the plaintiffs for the court to exercise its discretion against making an order for security for costs relates to the claim by the plaintiffs that these proceedings raise an issue or issues of exceptional public or legal importance. Essentially, this relates to “the NAMA point”. For the matter to be one of exceptional public importance it has to transcend the interests and considerations of the parties actually before the court (see Lansford Ltd v. An Bord Pléanala [1998] 2 IR 511).

32. Since I have refused to allow the amendment to the statement of claims so as to admit “the NAMA point”, I must look at the proceedings without regard to that issue. The pleadings raise issues of an unexceptional nature arising out of the relationship between a bank and its customer including allegations of breach of statutory duty, breach of regulations, dishonesty, impropriety and fraud. But however serious such claims may be, they do not transcend the interests and considerations of the parties actually before the court, or raise interests of the common good requiring the law to be clarified for the public benefit. I see nothing in the matters before the court which would indicate that there is a point of law or issue of exceptional public importance that arises in this case.

33. The plaintiffs claim that these proceedings mirror other proceedings entitled Irish Bank Resolution Corporation v. Johnny Moran [2011 3213 S]. In those proceedings, the defendant, who is a director and shareholder of the plaintiff companies, seeks to avoid a claim of liability on foot of a guarantee given to IBRC and the plaintiffs in this action claim that he seeks to avoid liability on precisely the same grounds that the plaintiffs in these proceedings rely.

34. Mr. Moran is not a party to these proceedings. In the proceedings against him on foot of the guarantee, the claim is for a liquidated sum claimed to be due and owing to the plaintiffs by Mr. Moran. The guarantee proceedings have nothing to do with the appointment of receivers. I do not accept that the proceedings against Mr. Moran can be properly characterised as being a “mirror image” of these proceedings, or that they would constitute a special circumstance which could be taken into account by the court in deciding whether or not to make an order for security for costs.

35. The plaintiffs have failed to show any special circumstances as to why security for costs should not be directed in this case, and accordingly, I make an order directing that the plaintiffs furnish security for costs.

 

Ryanair v Somner

[2014] IEHC 634

Judgment of Mr Justice Michael Peart delivered on the 12th day of December 2014:
1. There are two motions before the Court for decision. I will deal firstly with the plaintiff’s motion for further and better for particulars, and then deal with the defendant’s motion for discovery against the plaintiff.
The plaintiff’s motion for further and better particulars:
2. In these proceedings the plaintiff, Ryanair, sues the defendant for, inter alia, damages for defamation.

3. The defendant was a pilot working for Ryanair from October 2004 until his resignation on medical grounds on the 16th September 2011.

4. In late December 2012 the defendant took part in a two-part television programme entitled ‘Mayday Mayday’, which was broadcast also on the internet, and it is alleged by the plaintiff that during the course of his contributions to that programme he stated particular words as set forth in the Statement of Claim which are defamatory of the plaintiff company. It is not necessary to set out all the allegedly defamatory words referred to in the Statement of Claim, but the plaintiff pleads that the words in question meant and were understood to mean, both in their natural and ordinary meaning and/or by way of innuendo, that:

(i) the corporate culture, management structure and the way Ryanair deals with its staff jeopardises the safety of passengers by placing pilots under abnormal stress and pressure.
(ii) the chances of being involved in a serious incident or accident on Ryanair are greater than on other airlines.

(iii) a serious incident or accident on Ryanair is inevitable.

(iv) Ryanair compromises the safety and lives of its passengers and is an airline that should be avoided.

5. In his Defence delivered on 23rd December 2013, he admits that he published the words complained of during the programme and on the website, and also, inter alia, pleads that the natural and ordinary interpretation or meaning of the words complained of is as the plaintiffs have pleaded in their Statement of Claim, except that it is not accepted that the words complained of meant that “a serious incident or accident on Ryanair is inevitable”.
6. As part of his Defence, the Defendant pleads honest opinion, truth, fair and honest publication on a matter of public interest, and qualified privilege.

7. In relation to honest opinion, it is pleaded (a) that the words complained of constituted the opinion of the defendant; (b) the opinion pertained to a matter of public interest, namely the adverse effect of the plaintiff’s corporate culture on passenger safety; (c) at the time of publication, the defendant believed in the truth of the said opinion, and continues to do so; (d) the said opinion was based on allegations and facts specified in the publication, and further/in the alternative, in the context of a broadcast concerning “the incident of 26th of July 2012” the audience knew or might reasonably be expected to have known what allegations of fact were being referred to, and further/in the alternative, the said opinion was based on allegations of fact to which privilege attaches.

8. The plaintiff raised particulars in relation to honest opinion and asked for full and detailed particulars of the allegations of fact specified in the publication upon which the defendant relies in support of the defence of honest opinion. Particulars were also sought in respect of any facts not specified in the publication but which it is alleged the audience knew or might reasonably be expected to have known, and also in relation to any allegations of fact to which the defendant asserts that privilege attaches, and also asked the defendant to identify the nature of the privilege which they alleged existed.

9. In its reply to this request for particulars, the defendant stated that the allegations of fact relied upon in support of the defence of honest opinion are that (i) pilots in Ryanair who raise serious concerns are quickly punished or disciplined; (ii) pilots in Ryanair are not valued or respected; (iii) that Ryanair engages in bullying, intimidation, threats and harassment; (iv) that there exists a layer of pilot fear and stress within Ryanair that does not exist within other airlines. (v) that the plaintiff’s corporate culture and management structure and the way that the plaintiff deals with its staff adds an extra layer of fear and stress; (vi) the fact that certain of the plaintiff’s pilots are being paid only when they fly; (vii) the fact that certain of the plaintiff’s pilots are based in foreign countries and are stressed because they are based in locations other than those where they want to be.

10. In answer to the request for particulars as to what the audience knew or might reasonably be expected to have known, the defendant stated that it was the plaintiff’s belligerent corporate culture and aggressive manner in which had dealt with both passengers and staff.

11. In answer to the request for full and detailed particulars of the allegations of fact to which the defendant asserts that privilege attaches, the defendant replied that the defendant’s stated opinions were based on the facts set out in replies 1 and 2 to which I have already referred, and went on to state that those facts were stated by the defendant on an occasion of qualified privilege which arises pursuant to common law, and pursuant to Section 18 of the Defamation Act, 2009.

12. In answer to the other requests for particulars set out above, the defendant stated that the nature of the privilege alleged is qualified privilege, and that this is privilege which arises from a line of authority commencing with Reynolds v. Times Newspapers Ltd [2001] 2 AC 127, and arising from Section 18 of the Defamation Act, 2009.

13. In relation to the defence pleaded that the publication constituted a fair and reasonable publication on a matter of public interest, the plaintiff sought particulars of the facts which it is alleged that the defendant’s publication was based upon (and which it is alleged the defendant knew or believed to be true) and also full and detailed particulars of all attempts made by the defendant to contact the plaintiff to obtain and publish a response from the plaintiff in advance of the publication, and also in relation to all attempts made and the means used by the defendant to verify the assertions and allegations concerning the plaintiff in advance of the publication.

14. In response to these requests, the defendant stated that the facts upon which the defendant’s statements were based, and which he as a former pilot of the plaintiff knew or believed to be true, are those facts set out in replies 1 and 2 in the replies to notice for particulars already been set out above. In relation to the other matters sought under this heading, the defendant stated that his statements were based on facts which he, a former pilot of the plaintiff, knew or believed to be true. He went on to state that the broadcaster of the programme on which the defendant’s remarks were published contacted the plaintiff in advance of the broadcasts in order to obtain and publish a response from the plaintiff, which response was both obtained and published during the course of the broadcasts. He went on to say that it was not necessary for the defendant to separately verify the assertions and allegations being made by him since they were based upon facts which he, as a former pilot of the plaintiff, knew or believed to be true.

15. Finally, the request for particulars sought further particulars of the basis upon which it was alleged that the defendant was entitled to rely upon the defence of privilege at common law, and the material facts upon which the defendant intends to rely in support of his defence of privilege at common law. To this, the defendant replied that this was a matter of law, but referred to the earlier reply which stated that the nature of the privilege was qualified privilege arising from the line of authority commencing with Reynolds v. Times Newspapers Limited.

16. The plaintiff was not satisfied with the replies which had been delivered on 4th March 2014 and served a Notice for Further and Better Particulars on 23rd April 2014. The plaintiff asked firstly whether it is claimed by the defendant that he raised concerns (regarding safety or otherwise) and was punished or disciplined by the plaintiff, and if so to provide full and detailed particulars of the material facts upon which the defendant intended to rely on support of that allegation. In answer to that, the defendant stated that it was a matter of evidence, but went on to say that the plaintiff presumably retains all of the defendant’s employment records, and knows the answer to the question that it is asking. Without prejudice to that assertion, the defendant went on to state that he had utilised the plaintiff’s confidential safety reporting system twice while flying for the plaintiff.

17. Secondly, the plaintiff asked whether the defendant claims that he was not valued or respected by Ryanair, and if so to provide details of any material facts which intended to rely on in support of that allegation. Again, the defendant stated that this would be a matter for evidence, but went on, without prejudice, to state that the defendant does indeed claim that Ryanair did not value or respect its pilots (including the defendant) during the course of his employment with the airline. He went on to state that during the broadcast the defendant confirmed that pilots within Ryanair suffer an extra layer of stress and that he would be giving evidence that one such fact was the plaintiff’s operation of an aggressive fuel usage policy, and that while working for the plaintiff he personally received correspondence relating to the fact that his “fuel burn” was at the bottom of the table operated by the plaintiff, and stated also that the plaintiff presumably still possesses such correspondence relevant to the defendant in this regard.

18. Thirdly, the defendant was asked to confirm whether he alleges he was the victim of bullying, intimidation, threats or harassment, and if so to provide full and detailed particulars of any material facts upon which he intended to rely in support of that allegation. To this, the plaintiff replied that the defendant was among pilots employed by the plaintiff who feared to speak out or otherwise criticise the plaintiff during the course of their employment. He went on to state that the plaintiff is notorious for its aggressive corporate culture and management structure, and that this would be a matter of evidence. Nevertheless, without prejudice to that, he went on to say that the facts relevant to such issues have been well particularised in the defendant’s defence and replies to particulars, and stated also that the defendant did not make any complaint to the plaintiff during the course of his employment relating to alleged bullying, intimidation, threats or harassment.

19. Fourthly, the defendant was asked to provide full and detailed particulars of the material facts upon which the defendant intended to rely on support of his allegation that there exists a layer of pilot fear and stress within Ryanair that does not exist within other airlines, to which the defendant again replied that this was a matter of evidence but, without prejudice, the plaintiff should refer to the particulars of Truth pleaded by the defendant in his defence, and should refer also to replies to the notice for further particulars itself.

20. Certain other details were sought and were given by the plaintiff and those matters do not form part of the issues to be decided on the motions for further and better particulars which the plaintiff has brought by way of Notice of Motion dated 11th June 2014 with which I am presently dealing.

21. The request for Further and Better Particulars requested full and detailed particulars also of the identities of any individuals (apart from himself) whom it is claimed were not respected or valued, were the victims of bullying, intimidation, threats or harassment, or were the subject of fear and stress within Ryanair and so forth. To this, the defendant has replied simply that this is a matter for evidence.

22. The plaintiff also asked the defendant to confirm that he did not contact the plaintiff in advance of the publication/broadcast in order to verify his assertions, to which the defendant has responded that the plaintiff knows full well that the defendant did not contact it in advance of the broadcast.

23. The defendant was also asked to distinguish between those facts which in its replies to particulars he had said that he knew to be true and those which he believed to be true. To this, the defendant set out under different fact headings, those facts which he believed to be true and those facts which he knows to be true.

24. The plaintiff had asked, in relation to any facts which the plaintiff said he believed to be true (as opposed to those which he knew to be true) to set out full and detailed particulars of the material facts alleged to support his belief. To this, the defendant stated that this was a matter for evidence.

25. The plaintiff is not satisfied that the defendant has fully complied with his obligations in relation to the provision of particulars, and has brought a motion to compel the defendant to comply and provide further and better particulars in relation to certain matters. The grounding affidavit in support of that motion which is sworn by Oisin O’Neill, who is the legal and regulatory affairs adviser employed by the plaintiff company, has described the defamatory allegations as relating to issues concerning the alleged corporate culture within Ryanair and the manner in which it treats its staff. He states his view that having raised the defence of honest opinion, the defendant is obliged to provide particulars of the facts upon which he alleges that this opinion is based. He has helpfully set forth in paragraph 13 of his grounding affidavit in great format the particular requests upon which further information and particulars was sought, the reply to that request and then the plaintiff’s comment in relation to that reply.

26. The plaintiff had asked the defendant to provide details of the identity or identities of individuals other than himself who were claiming to have been involved in the matters complained of by him in relation to the alleged corporate culture, the manner in which he became aware of same, the dates on which the defendant discussed same with any such individuals, and full and detailed particulars of the material facts alleged by the defendant to support such claims. To these requests the defendant had replied that this was a matter for evidence. In this regard the plaintiff comments that the defendant has made positive pleas concerning the treatment of pilots in Ryanair in support of his plea of honest opinion and has provided replies to particulars in respect of his own experience only. Mr O’Neill goes on to say that the plaintiff is seeking particulars concerning other pilots who the defendant is alleging were subjected to similar treatment, and goes on to state that if, as appears to be the case, the defendant intends to rely upon facts concerning the experiences of other pilots or staff of Ryanair, then he ought to provide particulars of same, and cannot simply be permitted to ambush the plaintiff at the trial with any witnesses he is calling. It is submitted that in circumstances where the defendant is obliged to prove the truth of the facts on which his honest opinion is based, it follows that the plaintiff must be provided with particulars of facts now since it is entitled to know the case that it has to meet. Similar comments and submissions are made in relation to other particular sought under that particular heading.

27. It will be recalled also that the plaintiff had asked in relation to alleged facts that the defendant believed to be true (as opposed to facts which he knew to be true) to provide full and detailed particulars of material facts which supported such a belief, and that the defendant had stated that this was a matter of evidence. In that regard the plaintiff says that such particulars are not simply a matter of evidence, and that the defendant is obliged to particularise the facts upon which is his opinion is based, and which he believes to be true, and that in circumstances where the defendant is obliged to prove the truth of those facts it follows that the plaintiff must be provided with particulars so that it can know the case that it has to meet.

28. It will be recalled also that the plaintiff in his first replies to particulars had stated that the broadcaster of the programme on which the defendant’s remarks were published had contacted the plaintiff in advance of the broadcasts in order to obtain and publish a response from the plaintiff, which response was both obtained and published during the course of the broadcasts. In its request for further particulars the plaintiff asked for full and detailed particulars of how the defendant came to participate in the programme in question, and how the defendant verified that the plaintiff’s full responses were obtained and published during the broadcasts. To those requests for further information, the defendant had stated that this was a matter of evidence. However the plaintiff submits that this is not so, and that in circumstances where the defendant concedes that he did not contact the plaintiff in advance of the broadcast it is essential that the plaintiff knows how the defendant came to participate in the program. The plaintiff further submits that since the defendant is relying upon the defence of fair and reasonable publication, the onus is upon him to prove that he published the statement in good faith, and that the particulars sought go to the question of the good faith or otherwise of the defendant, and to the question of whether it was fair and reasonable to publish the statement, given that the defendant himself had not contacted the plaintiff in advance of the publication.

29. In answer to this motion, the defendant has submitted that it has provided sufficient particulars for the plaintiff to know the case which it has to meet. It emphasises also that many of the particulars requested have been provided, and that the plaintiff makes no complaint in relation to the majority of the replies given. There are in effect only a small number of matters which are the subject of the present motion. Counsel has referred to the judgment of Ms. Justice Dunne in Quinn Insurance Limited and others v. Tribune Newspapers Plc and others, unreported, High Court, 13th May 2009.That was a case where the plaintiffs had sought further and better particulars of certain matters which the defendants had stated were a matter for evidence, and this led to the plaintiffs bringing a motion for further and better particulars under Order 19, r. 7 RSC. The learned judge concluded that the matters in question had been adequately particularised in replies already given, and refused to make the order sought. In so doing she considered the provisions of Order 19, r.3 RSC which provides for what pleadings should contain, and she considered a number of judgments on that topic, and stated:

“There is no doubt whatsoever that a party is entitled to know the nature of the case being made against them. However, the role of particulars is not to require a party to furnish detailed particulars of specific aspects of the case. It is sufficient that the issues between the parties should be adequately defined and that the parties should know in broad outline what is going to be said at the trial of the action.”
30. She considered other authorities to which she was referred, and then considered how the principles should be applied to that case. She stated in that respect:
“I think it is clear from the outline of the arguments I have set out, that the issue I have to consider is whether the defendants have, in fact, provided a broad outline of the case being made in justification against the plaintiffs, or are the plaintiffs attempting, by means of the notices for particulars, to force the defendants to disclose the names of the witnesses who will be giving evidence on their behalf at the trial of the action.”
31. Having set out an extensive consideration of quite a number of authorities on the question of particulars, she concluded:
“Having referred at length to the authorities opened to me in the course of argument, it seems that certain principles can be derived from those authorities. It goes without saying that a party is entitled to know the case being made against them. If necessary, particulars may be ordered to clarify the issues or to prevent the party from being taken by surprise at the trial of the action. However, a party is only entitled to know the broad outline of the case that he/she will have to meet. A party is not entitled to know the evidence that will be given against them in advance of the hearing. Further, it is not usual to order the names and addresses of witnesses to be furnished in advance of the action.”
32. Counsel for the plaintiff has submitted that the Quinn Insurance case was one where the defence of justification was in play, and that the judgment should be read in that light. However, I do not think that the general principles which emerged from that case are less applicable to the present case. The question in the present case is whether the defendant should be required to provide the further particulars being sought, which he has refused to provide on the basis that they are a matter for evidence. I am satisfied that he ought not to be required to provide any further particulars in relation to the small number of outstanding matters raised. I am satisfied that from the pleadings and such replies to particulars as have been furnished, the plaintiff knows not just broadly, but with some particularity, the issues being raised by the defendant by way of defence to these defamation proceedings. The plaintiff is not entitled, by way of replies to particulars, to the level of detailed information now being sought in the present motion. Ultimately the question is whether the plaintiff is at a litigious disadvantage by the defendant not having adequately particularised his defence so that the plaintiff in an unfair way is not aware of the issues being raised. That is not so in the present case. Of course, I accept that the plaintiff may wish to have as much information as possible in advance of the hearing of exactly what evidence is going to be given and who is going to give it. But that is not the same as saying that the defendant has not, for the purpose of the rules, adequately particularised the claims which he is making by way of defence to the plaintiff’s proceedings.
33. I therefore refuse the plaintiff’s application for an order under Order 19, r.7 RSC.
The plaintiff’s motion for discovery:
34. Two categories of documents are sought by the defendant. The need for these categories of documents is said to arise from some matters raised by the defendant in his Defence to the plaintiff’s proceedings. As part of that Defence, as already seen, the defendant relies upon the defence of Truth. Under the heading “Particulars of Truth” the defendant gave particulars of two matters that would be relied on in relation to passenger safety, namely the plaintiff’s fuel policy and also the plaintiff’s pilot hire policy.

35. In relation to the plaintiff’s fuel policy, particulars were given in relation to 26th July 2012 when it is alleged that three of the plaintiff’s passenger planes which were en route to Madrid airport had to divert to Valencia airport because of bad weather over Madrid. It was stated also within these particulars that these three planes were forced to declare a “fuel Mayday” over Valencia airport because of an apprehension on the part of the respective pilots that they could not land without going below the legally required level of final reserve fuel. Reference was made also to a Chilean plane which was similarly diverted but on account of engine failure. It was stated that all of these Mayday calls were made within a 15 minute period on that date and all four planes landed within a 16 minute period in circumstances where Valencia airport has only one landing runway, and it is suggested that these events represented a potential disaster scenario. The particulars went on to state that this potential disaster scenario was a direct result of a culture within the plaintiff’s business of prioritising fuel efficiency even at the expense of passenger safety, that the plaintiff encourages its pilots not to carry extra fuel on flights because the additional weight will lead to increased fuel consumption, and that the plaintiff operates a fuel burn league that lists the individual fuel consumption of each of its captains, and ranks at the bottom those captains who are considered to use too much fuel. It was stated also within these particulars that the plaintiff company admonishes pilots who appear at the bottom of that fuel burn league, while complimenting pilots who appear at the top, and further that the plaintiff severely limits the discretion of pilots to carry additional fuel over and above the amount prescribed in the Original Flight Plan. It was stated also that these factors have caused or contributed to a situation in which Ryanair aircraft have experienced an unusually high number of fuel emergencies.

36. In relation to the plaintiff’s pilot hire policy, these particulars of Truth stated that the plaintiff company employs a very large proportion of young and relatively inexperienced pilots, that it bases many of its pilots far away from their place of residence, which causes stress to pilots and means that they must use their rest days in order to travel, thereby leaving them socially exposed and frustrated. The particulars went on to say that the rosters designed by the plaintiff make it difficult for pilots employed by the plaintiff to get holidays at times that suit them and their families, and mean that they fly for a long time without leave. It was stated also that the threat to passenger safety represented by these factors is compounded by a fear on the part of the plaintiff’s pilots to speak out or otherwise criticise the plaintiff, and that this fear arises in large part due to the employment structure employed by the plaintiff. It was further particularised that the plaintiff is at liberty to effectively terminate its relationship with contract pilots, even those with contracts for a definite period, by simply refusing to allocate any flights to those pilots, and further that the plaintiff reacts in a very aggressive and angry manner to any perception of criticism, so that pilots are reluctant to complain. Finally it was stated that the plaintiff pursues a policy of intimidation and ridicule to discourage trade union membership.

37. The two categories of documents sought by way of discovery are set out in the notice of motion as follows:

Category 1:
(a) All documents relating to in-flight fuel-related incidents which took place: –

– During the five years prior to 26th July 2012
– On 26th July 2012

– from 26th July 2012 date

to include both internal corporate communications and communications with third parties such as:

-Communications with domestic and foreign regulatory authorities/aviation investigation bodies
– Communications with Chief Pilot/communications with Base Captains.

– Communications with the plaintiff’s public relations advisers, both the plaintiff’s Communications/Internal PR Department and external/PR advisers (to include the manner of presentation of explanations of any/all such fuel related incidents).

In relation to the 26th July 2012 fuel incidents, all correspondence between the plaintiff and: –

– The Irish and Spanish Aviation Regulatory Authorities/Investigation Agencies

– The Irish and Spanish Ministries of Transport

– And all documentation deriving from, and correspondence between, the plaintiff and the above-mentioned entities.

(b) all documents recording details of the plaintiff’s flight fuel policy since 1st January 2008 to include operation of fuel burn league tables, instructions given and/or agreed with Chief Pilot from time to time regarding fuel usage/planning policy, and all communications between the plaintiff companies/its Chief Pilot/its Base Captains/its management with its pilots generally concerning aircraft fuel usage and, in particular, all policies/changes to policies regarding the carriage of fuel in excess of flight plan fuel.
Category 2:
All documents in the possession, power or procurement of the plaintiff generated during the period 28 December 2007 and 28 December 2012 relating to the plaintiff’s pilot hire policy and in particular records of all discussions and decisions relating to the plaintiff’s policies concerning the contract hire of Ryanair pilots as well as records detailing the number of such pilots hired during the period in question and their operational locations throughout Europe.

38. The defendant submits that these documents are necessary because they will tend to support the defendant’s claim of Truth, and are directly relevant to the matters pleaded at paragraphs (h) to (n) in the Particulars of Truth contained in his Defence.
39. The plaintiff on the other hand has stated in its replying affidavit that the alleged fuel policy and any associated stress for pilots was not the subject of any part of the broadcasts. To this, the defendant responds that he is raising this as part of the justification for content of the programmes about which the plaintiff is complaining. The defendant states also that the fuel policy of the plaintiff company is relevant to the issues around the 3 emergency ‘maydays’ at Madrid airport on the 26th July 2012 which were part of the broadcasts in question.

40. I am satisfied that the documents sought in Categories 1 and 2 of the Notice of Motion are relevant to the issues between the parties in this case, and are necessary for the full and proper determination of the issues which arise from the pleadings in this case. They may either assist or damage either party’s case, but they are clearly relevant and necessary for a proper determination. This application cannot be described as a fishing exercise. The plaintiff has made its case clearly in its Statement of Claim. The defendant has availed of a number of Defences and has clearly nailed his colours to the mast by pleading honest opinion, truth and fair and reasonable comment on matters of public interest. In so far as he is able at this stage to do so, he has given particulars of the basis for these defences. He has not made mere bald assertions. He has provided certain particulars. He has satisfied this Court that the documents sought by way of discovery are relevant and are likely to assist him in mounting his defence to the plaintiff’s claim.

41. In relation to Category 1, I will order discovery of all documents relating to in-flight fuel-related incidents which took place from 26th July 2009 to 26th July 2012 (including those that took place on the 26th July 2012), to include all the documentation set forth in the Notice of Motion, save that in relation to the final paragraph setting out documents recording details of the plaintiff’s fuel policy, those should be produced in respect of a two year period from 28th December 2010 to 28th December 2012, rather than from 1st January 2008 as sought. I am not ordering discovery of the documents sought from the 26th July 2012 to date.

42. In relation to Category 2, I will order that those documents shall be discovered in respect of a period of two years from 28th December 2010 to 28th December 2012.

James Elliott Construction Ltd v Lagan

[2014] IEHC 547,

JUDGMENT of Mr. Justice Barrett delivered on the 1st day of April, 2014
Facts
1. OTE International Solutions S.A., trading as OTE Globe S.A., is a limited liability company incorporated in Greece. It has commenced proceedings against a large number of parties, alleging that there were fraudulent dispositions of property within a group of companies, that there has been reckless trading to which certain directors were knowingly party, that there has been misfeasance and/or breach of duty, including breach of fiduciary duty by certain named directors, and a failure to maintain proper books of account. OTE has sought a variety of reliefs under the Companies Acts, including but not limited to orders under section 297A of the Companies Act 1963 and section 204 of the Companies Act 1990, that various directors are personally liable for the debts of a company of which they were director. The allegations made by OTE are clearly very serious allegations for any party to make. Moreover, the orders sought have potentially ruinous financial and other consequences for the directors against whom OTE has made its allegations.
Pleadings
2. OTE’s notice of motion issued in February 2013 and its points of claim were delivered on 2nd August, 2013. An appearance for the first to third, ninth to thirteenth, and fifteenth to nineteenth respondents was entered on 7th June, 2013. A notice for particulars was delivered by the same respondents to OTE on 28th August, 2013. OTE issued its replies to the notice for particulars on 23rd September, 2013. The points of defence of the eighth respondent were delivered on 18th October, 2013. The first to third, ninth to thirteenth, and fifteenth to nineteenth respondents issued a rejoinder to OTE’s replies to particulars on 31st October, 2013. OTE delivered further replies to particulars on 31st October, 2013. An appearance for the fourth, fifth and seventh respondents was entered on 11th November, 2013. On 21st November, 2013, the first to third, ninth to thirteenth, and fifteenth to nineteenth respondents issued a notice of motion seeking, inter alia, an order of the court pursuant to O. 19, r. 7 of the Rules of the Superior Courts directing OTE to provide the further and better particulars of pleadings sought in certain paragraphs of the said respondents’ notice for particulars of 28th August, 2013. On 2nd December, 2013, the eighth respondent issued a notice of motion seeking, inter alia, an order of the court pursuant to O. 19, r. 7 of the Rules of the Superior Courts compelling OTE to furnish the particulars of its claim sought at specified paragraphs of the eighth respondent’s request for particulars dated 11th September, 2013. It is these two motions that fall to this Court to adjudicate upon.
Relevant principles
3. The classic statement as to the purpose of pleadings remains that of Fitzgerald J. in Mahon v. Celbridge Spinning Co. Ltd [1967] I.R. 1 at 3 where he stated that:

“The whole purpose of a pleading, be it a statement of claim, defence or reply, is to define the issues between the parties, to confine the evidence at the trial to the matters relevant to those issues, and to ensure that the trial may proceed to judgment without either party being taken at a disadvantage by the introduction of matters not fairly to be ascertained from the pleadings. In other words a party should know in advance, in broad outline, the case he will have to meet at trial.”
4. Order 19, rule 3 of the Rules of the Superior Courts establishes the golden rule of pleading, viz. that:
“Every pleading shall contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which they are to be proved …”
As will be seen hereafter, the dispute arising between the parties to these proceedings largely focuses on whether certain details sought by way of particulars are in fact evidence by which OTE’s pleadings are to be proved.
5. Hamilton J., in Cooney v. Browne (1985] I.R. 185 at 188, stated that the purpose of particulars is “to define the issues between parties to any action or proceeding and thereby to prevent either party being taken by surprise and incidentally to limit as much as possible the length and expense of trials.” Thus particulars serve the general purpose of pleadings by further refining the issues arising between the parties.

6. Order 19, rule 5(2) of the Rules of the Superior Courts requires that:

“In all cases alleging misrepresentation, fraud, breach of trust, wilful default or undue influence and in all other cases in which particulars may be necessary, particulars (with dates and items if necessary) shall be set out in the pleadings.”
Obviously care has to be taken in the application of this rule: applied too strenuously it would, for example, in the context of fraud, require particulars of such exactitude as to frustrate the bringing of effective proceedings; applied too loosely it would allow fishing expeditions to be conducted under the guise of discovery.
7. In McGee v. O’Reilly [1996] 2 I.R. 229, a Supreme Court case concerning whether particulars should be ordered, Keane J. had regard to the judgment of Fitzgerald J. in Mahon before continuing, at 234:

“[S]o far as this part of the case is concerned, the issues are defined between the parties, which will be confined at the trial to the matters relevant to those issues. There is no ground on which it could be suggested that the trial of this action could conclude with the plaintiff having been taken at a disadvantage by the introduction of matters which could not be fairly ascertained from the defence.
At the very least, the plaintiff knows in broad outline what is going to be said ….In our system of civil litigation, the case is ultimately decided having regard to the oral evidence adduced at the trial. The machinery of pleadings and particulars, while of critical importance in ensuring that the parties know the case that is being advanced against them and that matters extraneous to the issues as thus defined will not be introduced at the trial, is not a substitute for the oral evidence of witnesses and their cross-examination before the trial judge.”

8. Though not a case in which an allegation of fraud was made, McGee is nonetheless of interest as regards the question of whether and when further particulars should be ordered by the court. In his judgment, Keane J. suggests that a key consideration in this regard is that there should not be any ground upon which it could be claimed that the plaintiff was disadvantaged by the introduction of matters which could not be fairly ascertained from the defence. Notably, however, Keane J. also emphasises in effect that in our system of justice the trial of an action takes place in a court of trial, not via pre-trial pleadings and particulars, a point that will be returned to hereafter.
9. In In the Goods of John Rutledge, Deceased [1981] I.L.R.M. 198, the plaintiff made an application for an order directing that the defendant deliver particulars of a plea of undue influence made in the defence. Giving judgment for the plaintiffs, Barrington J., at 202, stated:

“The defendant in the present case has not raised any special difficulty which prevents him delivering particulars. He has taken his stand on the submission that the law does not require him to deliver such particulars. Undue influence is a plea similar to fraud and it appears to me that it would be quite unfair to require a party against whom a plea of undue influence is made to go into court without any inkling of the allegations of fact on which the plea of undue influence rests. Because of the seriousness of the plea counsel will not lightly put his name to a pleading containing a plea of undue influence so that his solicitor will usually have in his possession some allegations of fact which justify the raising of the plea or at least excuse the plea from being irresponsible.”
10. In his judgment, Barrington J. appears to set the bar relatively low in terms of what will suffice by way of to what extent a party should be apprised of the case against him, indicating that it is undesirable that one go into court “without any inkling of the allegations of fact” and that counsel putting his name to pleadings containing a plea of undue influence “will usually have in his possession some allegations of fact”. So it would seem, certainly on Barrington J.’s reckoning, that even some inkling of the allegations of fact suffices for matters to reach the courtroom. This perhaps should be seen as the baseline threshold that is required to be met as regards apprising a party of the case against him.
11. Perhaps the most comprehensive recent consideration of the purpose and place of pleadings and particulars is in National Educational Welfare Board v. Ryan and Others [2008] 2 IR 816, a case which raised issues that are strikingly similar to those arising in the present case. In that case the plaintiff had pleaded with some particularity that a former employee had received bribes or secret commission from the second defendant, allegations that the second defendant strenuously denied. Among other issues raised in the proceedings, the second defendant contended that the plaintiff had failed to set out its allegations of fraud with sufficient particularity and had also failed to answer what it contended were reasonable particulars. Following a consideration of relevant Irish and English authorities, Clarke J., at 824, observed as follows:

“[I]f a plaintiff is not able to have the benefit of discovery before defining the precise parameters of his claim, it is likely in cases of fraud or other clandestine activity, to place very great limits on the benefit of discovery …. The other side of the coin requires that care be taken not to allow a party, by the mere invocation of an allegation of fraud, to become entitled to engage in a widespread trawl of the alleged fraudster ‘s confidential documentation in the hope of being able to make his case ….A balance between these two competing considerations needs to be struck. The balance must be struck on a case by case basis but having regard to the following principles. Firstly, no latitude should be given to a plaintiff who makes a bare allegation of fraud without going into some detail as to how it is alleged that the fraud took place and what the consequences of the alleged fraud are said to be. Where, however, a party in its pleadings, specifies, in sufficient, albeit general, terms the nature of the fraud contended together with specifying the alleged consequences thereof, and establishes a prima facie case to that effect, then such a party should not be required, prior to defence and thus, prior to being able to rely on discovery and interrogatories, to narrow his claim in an unreasonable way by reference to his then state of knowledge. Once he passes the threshold of having alleged fraud in a sufficient manner to give the defendant a reasonable picture as to the fraud contended/or, and establishes a prima facie case to that effect, the defendant should be required to put in his defence, submit to whatever discovery and interrogatories may be appropriate on the facts of the case, and then pursue more detailed particulars prior to trial ….This latter point must, of course, be subject to the caveat that the defendant must always be entitled to sufficient detail to enable him to plead in his defence ….The reason why I have taken the view which I have identified in the next preceding paragraphs is that to do otherwise would, in my view, be to strike an inappropriate balance against the legitimate requirements of persons who can make out a stateable case in fraud. It is in the very nature of fraud (or other unconscionable wrongdoing) that the party who is on the receiving end will not have the means of knowing the precise extent of what has been done to them until they have obtained discovery. To require them to narrow their case prior to defence (and, thus, discovery) would be to create a classic Catch-22. The case will be narrowed. Discovery will be directed only towards the case as narrowed. Undiscovered aspects of the fraud or the consequences of the fraud will, as a natural result, never be revealed. This would, in my view, be apt to lead to an unjust situation.”
12. There is perhaps a degree of overlap in the various criteria identified by Clarke J. in the above extract. However, it appears to the court that his observations can be reduced to a number of key questions that can usefully be applied in a case such as that now before the court where a plaintiff alleges fraud or other wrongdoing:
(1) is this a case where more than a bare allegation of fraud has been made?
(2) has the plaintiff gone into some detail as to how the alleged fraud took place?

(3) has the plaintiff specified in sufficient, albeit general, terms the nature of the alleged fraud?

(4) has the plaintiff identified the alleged consequences of the fraud?

(5) is there adequate evidence to support a prima facie or stateable case of fraud?

13. If the answer to each of these questions is ‘yes’, then the judgment in National Educational Welfare Board suggests that a defending party should be required to put in a defence, submit to whatever discovery and interrogatories may be appropriate on the facts of the case and then pursue more detailed particulars prior to trial, subject to the caveat that in all instances a defending party must always receive sufficient, but only sufficient, detail to be able to plead its defence.
14. The particular attraction of Clarke J.’s judgment is that it is consistent with all of the case-law considered above. However, it might perhaps be contended that Clarke J. sets the bar too high as regards the substance of pleadings, certainly when viewed in the context of decisions such as McGee and Rutledge. At the least it seems to the court that the litmus test applied by Clarke J. in National Educational Welfare Board needs always to be viewed in the context of the over-arching point made by Keane J. in McGee as to the primacy of the courtroom as the forum of trial in our system of justice.

15. In addition to the above-mentioned case-law, the court is cognisant of the concern sounded by Charleton J. in IBB Internet Services Limited (trading as Imagine Networks) v. Motorola Limited [2013] IEHC 541, echoing an earlier warning sounded by Hogan J. in Armstrong v. Moffatt [2013] IEHC 148, that the timely progression of complex cases through the courts has in recent times been impeded by an over-concentration on what are ultimately peripheral orders relating to discovery and particulars. Thus, per Charleton J., at para. 3:

“The parties to any proceeding are expected by the court to cooperate to bring the case to trial. Central to that fundamental obligation is defining what the cause is about. Increasingly, in complex cases issues are being lost sight through concentration on peripheral orders as an end in themselves. The spectre of Jarndyce v Jarndyce is one that no court should forget. Discovery motions seem to be increasingly self-justifying rather than an aid to litigation; this despite the repeated warnings of the Supreme Court against oppressive discovery. Yet, nothing has changed. Statements of claim now increasingly plead evidence and defences can be read with mystification as to what the answer to a claim is beyond denial. Hogan J has rightly, in Armstrong v. Moffatt [2013] IEHC 148, expressed frustration at the futility and waste of costs occasioned by endless notices for particulars in personal injury cases. In the commercial list, issues central to the disposal of the cause are to be identified by clear and precise pleadings and the proper use of pre-trial procedures in aid of appropriate notice as to facts.”

Conclusion
16. In the present case all of the applicant’s allegations concern fraudulent or otherwise wrongful behaviour. Having regard to the criteria propounded in National Educational Welfare Board and, in particular, the five questions mentioned above, the answer to each of the questions posed appears in the present context to be ‘yes’. Thus this is a case in which more than a bare allegation of fraud or other wrongdoing has already been made. The plaintiff has already gone into some detail as to how the alleged fraud or other wrongdoing took place, specified the elements of the alleged fraud or other wrongdoing in some detail, identified the alleged consequences of the fraud or other wrongdoing, and made out a stateable case of alleged fraud or other wrongdoing. To borrow from the phraseology of Keane J. in McGee, it does not appear to the court, having regard to the applicant’s points of claim, that there is scope in these proceedings for a respondent to be taken at a disadvantage by the introduction of matters which could not be fairly ascertained from the points of claim. The court is of course aware that the consequences of the claims brought by OTE may be potentially ruinous for the respondents, certainly the individual respondents. Because of this the court has had careful regard to whether, notwithstanding the foregoing conclusions, the principles of natural justice and fairness require that the applications now before the court should in any event succeed. There are three reasons why the court considers that this is not appropriate: first, to require particulars of the exactitude sought by the respondents in these proceedings would, in the court’s opinion, have the potential of frustrating altogether the instant proceedings notwithstanding that, inter alia, a stateable case of alleged fraud has been made out by the applicant; second, to borrow again from the reasoning of Keane J. in McGee, to require such detailed particulars is not appropriate in a system of justice that has at its heart the trial-court and the giving and testing of evidence therein; third, and this is perhaps more of an ancillary point, this Court in deciding the instant proceedings is conscious of the quite proper concern raised in the IBB and Moffat cases at the potential for unnecessary delay to occur in the adjudication of the key issues arising in proceedings such as those now before the court were the respondents’ applications to be successful.#

17. For the reasons stated above, the court declines to give the direction and order sought in these proceedings.

Murray v Budds

[2015] IECA 269

JUDGMENT OF MR JUSTICE MICHAEL PEART DELIVERED ON THE 19th DAY OF NOVEMBER 2015:

1. Before this Court are two appeals from interlocutory orders made in the High Court, the details of which I shall shortly set forth. The proceedings themselves comprise a claim for damages for professional negligence and/or breach of contract by the defendant firm arising from its retainer to defend the plaintiff at Naas Circuit Criminal Court against a charge of possession, with intent to supply, of a significant quantity of heroine. He was convicted of that offence on the 11th February 1999 and received a seven year sentence of imprisonment from which he was released in September 2004. I should add that the plaintiff was unsuccessful in two separate appeals against his conviction to the Court of Criminal Appeal. The first appeal in 2000 was based on a number of alleged errors on the part of the trial judge. His second appeal was heard in June 2005 after his release from prison, and was based on the alleged failure of his solicitor to adequately and properly prepare for his trial, and the failure of both solicitor and counsel to pay heed to his instructions during the course of his trial. As I have said, neither appeal succeeded.

2. He commenced these proceedings by way of Plenary Summons on the 2nd February 2005, being just within a period of six years from the date of his trial, being the relevant period under the Statute of Limitations, 1957 as amended, provided that the claim is not one in respect of personal injuries. That reservation assumes some significance in one of the appeals before the Court, as we shall see.

3. Because there are two appeals – one by each party to these proceedings – I will refer to the parties as plaintiff and the defendant, rather than cause confusion by referring to them as appellant and respondent.

4. The plaintiff’s appeal is against an order of Charleton J. dated 20th April 2009 whereby he ordered:

(a) that the proceedings be struck out as an abuse of process because, being an action alleging professional negligence, it was launched without first ascertaining that there were reasonable grounds for so doing by obtaining appropriate expert evidence to support it; and
(b) further ordered that the plaintiff pay the defendant’s costs of the motion when taxed and ascertained.

5. The defendant’s appeal is against an order of Clark J. dated 23rd of November 2010 whereby she:
(a) permitted the plaintiff to amend his pleadings in order to introduce a new claim for “loss and damage in the week of the 3rd to 10th February 1999” the particulars of which loss were that “the plaintiff was exposed to the worry and stress from the uncertain position where he found himself in the criminal justice system facing an imminent trial without knowing who his counsel would be”;
(b) declined the defendant’s’ application to strike out the proceedings in their entirety on the basis of section 3 (1) of the Statute of Limitations (Amendment) Act, 1991; and

(c) directed that the issue of the application of the statute of limitations be determined by the trial judge.

6. Before addressing the appeals themselves, some background narrative would assist an understanding of the basis for permitted claim in negligence, and the loss and damage said to have been sustained. The plenary summons was served on the defendants in January 2006. The Statement of Claim was delivered in June 2006. It contained many allegations in relation to the defendants’ handling of his case and their preparation of his defence at trial. There is no need to set out those allegations extensively, but merely to refer to one of the complaints which is now the only complaint which remains relevant to the plaintiff’s claim following the amendment permitted by the said order of Clark J., namely that they failed to retain and instruct Counsel in a timely fashion, indeed until the night before the trial was scheduled to commence. Clark J. permitted the plaintiff to amend his claim in the manner which I have described in paragraph 5 above, but struck out the remainder of his claims relating to the conduct of the trial itself and his conviction, on the basis that they represented a collateral attack upon the previous decision of the Court of Criminal Appeal.
7. The allegation that Counsel was retained by the defendants only on the evening before the plaintiff’s trial is pleaded in the Statement of Claim as follows:

“(v) although the defendant’s solicitors had nearly two years to prepare the trial, the defendant found himself the weekend before the trial without counsel. Such was his panic that he endeavoured to contact counsel on his own but unsuccessfully. Indeed, when he met his instructing solicitor at Naas the day before his trial, there was still no counsel appointed. It was only on the evening of the same day that he was introduced to his new legal team, and a consultation lasting around 30 minutes was held.”
8. It appears that after the defendant firm was first instructed by the plaintiff, a particular experienced Senior Counsel was retained and a consultation took place with him in April 2007. In due course a trial date was fixed for February 1998 but the trial was postponed to a later date, presumably to February 1999 when the trial in fact took place. The plaintiff has stated in Replies to Particulars that he was not made aware of the reason for the postponement of his trial but he goes on to state that “[he] believes that the trial was postponed due to the fact that the defendants were completely unprepared for a trial at that time”. It appears to be common case that the particular Counsel retained was heavily engaged in another lengthy trial by February 1999 and was therefore unavailable to represent the plaintiff. His complaint essentially is that despite knowing for some time that Counsel would be unavailable, no new Counsel was engaged to defend the plaintiff until the day before the trial was due to take place. The Defence delivered by the defendants contains a denial that counsel was retained only on the night before the trial.
9. I believe that I have provided sufficient by way of background in order to understand the rather limited basis on which Clark J. allowed the plaintiff’s claim to be amended, namely to a claim for “loss and damage in the week of the 3rd to 10th February 1999” arising from the fact that “the plaintiff was exposed to the worry and stress from the uncertain position where he found himself in the criminal justice system facing an imminent trial without knowing who his counsel would be”. That is now the nature and extent of the plaintiff’s claim, and there is no cross-appeal by the plaintiff against the order striking out the remainder of the plaintiff’s claims as being an abuse of process. The defendants say that the only claim that has been permitted to be litigated is a personal injuries claim to which only a two year limitation period applies, and is therefore statute-barred, and should be struck out, firstly because it is clearly statute-barred and cannot succeed, and secondly because the type of injury in respect of which compensation is sought, namely “worry and stress” is not one for which damages can be awarded, absent some recognised psychiatric injury.
The defendants’ appeal:
10. As I have said, the defendants’ appeal is from an order of Clark J. made on the 23rd November 2010 whereby she permitted the plaintiff to amend his claim in the manner described, struck out the remainder of his claims as an abuse of process, and directed that any issue on the statute of limitations on the amended claim should be addressed by the trial judge. That motion first came before Clark J. in December 2008. Having heard the parties’ submissions she expressed certain views as appear below in paragraph 12 and put the matter back. Between that date and it coming back before her, the defendants had brought a further motion to have the proceedings struck out on the basis of the doubt expressed by Clark J. that a professional negligence action may not be commenced in the absence of an expert opinion having been obtained showing a basis for such a claim. That matter was determined by Charleton J. in the defendants’ favour on the 20th April 2009, and is the subject of the plaintiff’s appeal which I shall address in due course. There is further procedural history but none that is particularly relevant to the present appeals.

11. The defendants’ motion to strike out the plaintiff’s claims had come before Clark J. on foot of a notice of motion dated 5th March 2007 in which the defendants sought to have the plaintiffs’ claims (as then pleaded) dismissed as being statute-barred, and/or on the basis of inordinate and inexcusable delay, and/or as an abuse of process on the basis of being a collateral attack upon the decision of the Court of Criminal Appeal, and/or finally on the basis that the plaintiff’s statement of claim (as then pleaded) disclosed no reasonable cause of action.

12. As already explained, Clark J. acceded to the application based on abuse of process, but permitted the plaintiff to amend his claim. In her judgment, she stated at paragraph 10 thereof:

“Having heard submissions from both parties, I indicated that the proceedings as constituted did indeed represent an impermissible collateral challenge to a decision of the Court of Criminal Appeal and that the application would succeed on that ground. However, I recommended that if the plaintiff confined his claim to the alleged upset claimed for the short period before the trial when he became aware that his original counsel with whom he was familiar would not be available to represent at the trial, and that no substitute senior counsel had been located or briefed, then he might possibly have a claim, but that the claim as constituted would fail. I also expressed doubt as to the propriety of commencing a negligence action against a professional without first obtaining an independent opinion from an expert in the area stating that the actions of the solicitor in question fell below the expected professional standard in such circumstances. The Court expressed its understanding that a practice direction to this effect existed.”
13. The doubt expressed by Clark J. in the final sentence quoted above is what led to the motion which was heard by Charleton J. and which I have referred to in paragraph 10 above. In addition, following the judge’s suggestion, the plaintiff issued a motion seeking to amend his claim. That motion came before Clark J. on the 21st April 2010, and led to the judgment and order now under appeal.
14. Her judgment indicates that when the amendment application came before her, counsel for the plaintiff accepted her ruling that the claims as originally pleaded represented a collateral attack on the decision of the Court of Criminal Appeal, and stated that the limited claim now being advanced was “not a new claim but rather a modification of the original claim outlined in the plenary summons which was issued … within six years of the events complained of”. Her judgment goes on to note counsel as stating that the plaintiff does not claim any out of pocket expenses “but seeks damages for the mental distress suffered by the alleged professional negligence/breach of contract of the defendant”.

15. I should add at this point that the amendment first sought to be made by the plaintiff claimed that the worry and stress which he suffered during the week from the 3rd to the 10th February 1999 in advance of his trial “constituted an invasion of his constitutional right to fairness and justice”. The defendants submitted that this amounted to dressing up a claim for personal injuries (i.e. mental distress) as a constitutional tort in order to escape the clutches of s. 3 of the Statute of Limitations (Amendment) Act 1991, as amended.

16. In reaching her conclusions, Clark J. stated as follows:

“17. The Court has a wide discretion pursuant to Order 28 of the Rules of the Superior Courts 1986, to amend or alter pleadings to do justice between the parties and to determine the real questions in controversy between the parties. It seems to this Court that it is now clear that the only issue in controversy between the parties is the issue of mental distress and upset alleged to have been suffered by the plaintiff in the period between when he was made aware that his expected counsel would not be available to represent him or to have a further consultation with him and his trial which was listed for a week later [sic]. He alleges that during that week he was’ messed about’. This is not a collateral attack on the decision of the Court of Criminal Appeal to the effect that the trial was fair and that the plaintiff was adequately represented but rather recites the ingredients – subject to proof – of a claim for negligence and breach of contract. It is no function of this Court to determine the merits of that claim. That function falls to another judge. The claim the plaintiff makes is that due to the lack of communication with his legal representative he suffered distress during the period that he was in limbo when he had no idea who would represent a matters forthcoming trial. The issue will be whether this constitutes professional negligence and breach of contract.”
18. It is now established that in certain circumstances where a contract has been established, the negligence of a solicitor in the performance of that contract to provide professional services can ground a claim for distress provided that the claim passes the test of foreseeability. See Hamilton-Jones v. David & Snape (a firm) [2004] 1 WLR 924; Farley v. Skinner [2002] 2 AC 732; Heywood v. Wellers [1976] QB 446 or that damages for distress can arise from breach of contract since Jarvis v. Swan Tours [1973] 1 Q.B. 233. See also, Hussey v. Dillon & others [1995] 1 I.R. 111.

19. It is not, however, open to the plaintiff to plead an ill-defined constitutional tort in the manner sought or indeed at all at this stage of the proceedings. The issue of whether a plaintiff on the facts of this case or indeed at all, can plead a constitutional tort against an individual rather than an organ of the State is not one which falls to be determined in this case. The Court adopts the dictum of Barrington J in McDonnell v. Ireland [1998] 1 I.R. 134 where at p. 148 when he stated:

‘constitutional rights should not be regarded as wild cards which can be played at any time to defeat all existing rules. If the general law provides an adequate cause of action to vindicate a constitutional right it appears to me that the injured party cannot ask the court to devise a new and different cause of action.’

20. In all the circumstances, I do not believe that it is appropriate for the plaintiff to be permitted to ground his claim for worry and distress in the guise of a constitutional tort. If he has a cause of action is lies in the perfectly well recognised tort of professional negligence. I am prepared to allow a limited amendment to determine the real questions in controversy between the parties which is confined to a claim for ‘loss and damage in the week of the 3rd to the 10th February 1999 as a result of the defendants‘ negligence and breach of duty’. Particulars of loss and damage: – ‘the plaintiff was exposed to the worry and stress from the uncertain position where he found himself in the criminal justice system facing an imminent trial without knowing who is counsel would be.
21. While the defendants seek to resist any amendment to the proceedings on the basis of the provisions of the Statute of Limitation (Amendment) Act, 1991, in particular, section 3 (1), as amended, and further seek to have the proceedings struck out on that basis, the Court will not accede to that motion as to do so would deprive the plaintiff of any opportunity to pursue his asserted and now limited grievance. Courts must be slow to use their inherent power to strike out proceedings in their entirety unless it is clearly evident that the claim is unsustainable and bound to fail. Mindful of that restraint on the power to strike out proceedings, the limited amendment will be allowed with costs but the costs of the application will be in favour of the defendants. The issue of the application of the statute of limitations will be one to be determined by the trial judge.” [emphasis added]

17. The defendants submit on this appeal that while Clark J. struck out the claims as originally constituted as an abuse of process, she erred by allowing the plaintiff to amend his proceedings in the manner described, and by not simply striking out the entire proceedings.
18. Firstly it is submitted that a claim for damages for worry and stress simpliciter is not recognised within the law of tort, and that the trial judge erred by permitting such a claim to be litigated.

19. Secondly, it is submitted that even if such a claim is possible (which is denied) it could only be one for personal injuries, and is therefore in any event statute-barred given the time limit applicable to such claims under s. 3 (1) of the Statute of Limitations (Amendment) Act, 1991 as amended. I leave aside any issue concerning whether the claim would first have to be brought to the Personal Injuries Assessment Board. It is to be noted that a personal injury action where the cause of action accrues before 5th March 2005 must be commenced not later than three years from the accrual of that cause of action, and where the accrual date is after the 5th March 2005, not later than two years from such accrual, as provided by s. 3 of the Act of 1991 as amended by s. 7 of the Civil Liability and Courts Act, 2004. In the present case it is submitted that it is beyond any doubt that the plaintiff’s new cause of action accrued not later than the 10th February 1999, and cannot possibly be any later date given the express terms in which the amendment was permitted.

20. Thirdly in so far as it is being argued by the plaintiff that the stress and worry results from the breach of contract of retainer of the defendants for his trial, it is submitted (a) that the plaintiff has identified no duty arising under that contract that has been breached, (b) that there cannot be implied into that contract a term that obliges the defendants to ensure that the plaintiff is not caused any stress and worry in the week prior to his trial, and (c) even if there is such a claim for worry and distress in this case arising from the contract of retainer, the accrual date for the alleged breach is still the 3rd February 1999 or latest 10th February 1999, and the six year limitation period for a claim in contract had passed by the date on which Clark J. allowed the proceedings to be amended. In that regard, it is submitted that the amendment amounted to an entirely new claim, and not simply an amendment to any existing claim which might be saved by the issue of the original proceedings on the 2nd February 2005.

21. The plaintiff has not delivered an amended Statement of Claim. But the factual basis subtending his amended claim (and with those facts being assumed to be proven for the purpose of the strike out application and this appeal) is clear from the affidavits filed on the defendants’ motion, and indeed from the plaintiff’s written submissions on this appeal. For convenience I will set forth that factual basis as it appears in the plaintiff’s written submissions as follows:

“The proposition of the Respondents in this Appeal is that on the facts of this case (which are disputed) he was subjected to unnecessary stress and aggravation in the week before the trial. Notwithstanding that he had been arrested and charged with a serious criminal offence in October 1996, no steps had been taken by the appellants to prepare for his trial. It is accepted that all persons facing criminal trial must endure fear and upset, but in this matter, the respondent believing himself innocent and conscious of the risks of a substantial custodial sentence became increasingly concerned in the week before the trial that no steps were being taken to meet his concerns. His fears were well grounded. Despite the period of time since his arrest, no directions or advice on proofs had been prepared; no detailed witness statement had been taken and finally there had been no detailed consultation with leading or junior counsel. The respondent in the week before the trial repeatedly sought an assurance from the appellants that matters were under control but received none. He did not meet his counsel until late in the evening of the day before the trial. These facts, if proven before a trial judge, could be held to constitute a disturbance of his peace of mind sufficient to justify an award of damages.”
23. The plaintiff submits that his claim is not simply one arising from some general anxiety before his trial, which might be expected of anybody facing such a trial, but is grounded on an alleged specific lack of preparation which was fundamental to the obligations upon the defendant firm by virtue of its retainer to defend him, namely the failure to have engaged counsel in a timely fashion, thereby unnecessarily causing him a level of stress and anxiety above and beyond that which to be expected of any person facing trial on serious charges. By making that distinction he seeks to escape the several authorities to which the defendants have referred this court, where a claim in tort for general worry and stress has been found not to exist, whether in contract or tort. I will come to some of those.
24. I should add at this point that counsel for the plaintiff has conceded that if the plaintiff’s claim is now to be considered to be a personal injuries action, then it is statute-barred. But he seeks to satisfy the court that it is a claim for damage resulting from breach of contract. In so far as the defendants have submitted that no such claim can be made under contract by reason of the general rule in Addis v. Gramophone Co Ltd [1909] AC 488, the plaintiff prays in aid certain passages from the judgment of Neuberger J. (as he then was) in Hamilton Jones v. David & Snape (a firm) [2004] 1 All ER 657 which, it is submitted, lend support to his submission firstly that Addis may no longer be considered to be as sound an authority as in the past, and secondly, that where one purpose of the retainer was to minimise that stress normally to be expected of a client facing a criminal trial, a breach of that contractual duty which causes additional stress and anxiety to the plaintiff can sound in damages.

25. The facts of the present case are of course very different to those in Hamilton Jones. That case involved an allegation of negligence against a firm of solicitors who acted for the plaintiff in relation to proceedings commenced by her husband relating to the couple’s children. An order was obtained prohibiting the husband from removing the children from the United Kingdom. However, due to a failure on the part of her solicitors, the Passport Office did not maintain the names of the children on their records beyond twelve months, and the husband was thereby enabled to obtain a new passport with the children’s names included on it, which in turn enabled him to remove the children from the United Kingdom while on an arranged unsupervised contact visit, thereby defeating the very purpose which she had sought to guard against when she retained her solicitors. It was on such facts that Neuberger J. carried out a lengthy examination of the legal principles in relation to the availability of a claim for worry and distress arising from a breach of retainer by a solicitor. On the facts of that case he concluded:

“It appears to me that both the claimant and the defendants would have had in mind that a significant reason for the claimant instructing the defendants was with a view to ensuring, so far as possible, that the claimant retained custody of her children for her own pleasure and peace of mind. It would, I think, be a relatively unusual parent who, in the position of the claimant in the present case, would not have had, and would not be perceived by her solicitors to have had, her own peace of mind and pleasure in the company of her children as an important factor. In these circumstances, subject to any further argument which the defendants might raise, I consider that the principles as developed in Watt’s case and in Farley’s case indicate that the claimant should be entitled to recover damages for mental distress.”
26. As far as the present case is concerned, however, one must bear in mind firstly the very different facts and circumstances which distinguish it significantly from Hamilton Jones. It can hardly be argued that when an accused person retains a firm of solicitors to defend him against a serious charge, the solicitor undertakes, inter alia, a duty to preserve the client from worry and stress. I do not read Hamilton Jones as going that far.
27. But in the present case one must have regard to the nature of the amendment which was permitted by Clark J. and the fact that she struck out all the other claims. The facts relied upon in the Statement of Claim were professed in that document to constitute a beach of contract or in the alternative negligence. They were struck out in their entirety as being a collateral challenge to the decision of the Court of Criminal Appeal. Clark J. stated in paragraph 20 her judgment:

“if [the plaintiff] has a cause of action it lies in the perfectly well recognised tort of professional negligence. I am prepared to allow a limited amendment to determine the real questions in controversy between the parties which is confined to a claim for loss and damage in the week of the 3rd to the 10th February 1999 as a result of the defendants’ negligence and breach of duty”.
28. This passage makes clear the nature and scope of the amendment permitted, and there has been no cross-appeal by the plaintiff against this part of the judgment. The permitted claim is a claim in tort only, and can only therefore be a personal injury claim. The fact that contract was pleaded as part of the claims originally made is no longer relevant since all of those claims have been struck out.
29. There is no doubt in my view that the claim permitted is statute-barred. I appreciate that no amended Statement of Claim has been delivered by the plaintiff, presumably because the order of Clark J. is under appeal, but it can be noted and had regard to that in its Defence to the Statement of Claim originally delivered, the defendants pleaded the statute. There have been cases where a defendant has attempted to have a plaintiff’s claim struck out ahead of the delivery of its defence, and that application has been considered to be premature, since a plea on the statute is a plea by way of defence. But here the position is clear. The plaintiff’s claim has been permitted by way of amendment where the cause of action accrued at latest on the 10th February 1999. That is not in dispute. It is now a new personal injury claim in tort. A two year, or at best from the plaintiff’s point of view a three year, limitation period applies. In my view, Clark J. ought not to have permitted an amendment of the claim in order to introduce a personal injury claim that was clearly statute-barred. She was already in possession of all the facts and circumstances said to give rise to that claim, as is clear from the very precise nature of the amendment permitted by her. On that ground alone I would allow this appeal and vacate that part of the order of Clark J. which permitted an amendment to the plaintiff’s claim.

30. There is, however, another important aspect to the appeal which should be addressed by reference to the judgment of Hogan J. in Walter and another v. Crossan and others [2014] IEHC 377. It is the entirely separate question whether, even if this claim was not statute-barred, damages for the alleged worry and stress during the week of 3rd February 1999 is recoverable at all, given the absence of any pleaded recognizable psychiatric injury. In Walter, Hogan J. examined the relevant case-law in this area both from this and the neighbouring jurisdiction with typical care and exhaustion, and concluded on the facts of that case that even though there was a duty of care owed to the plaintiff purchasers by the firm of solicitors acting for the builder of the house, the only damages claimed were for “mental distress, upset and inconvenience falling short of nervous shock or psychiatric injury” and as such were not recoverable. I appreciate that in Walter there was no contractual relationship between the plaintiffs and the solicitor firm and that the only remedy, if any, was in negligence predicated on a duty of care being owed. But in the present case, the claims based upon a breach of contract have been expressly struck out by Clark J., and cannot subtend the claim that was permitted by way of amendment. It is now solely a claim in negligence, and it seems to me in such circumstances that the damage being claimed are, as in Walter, in respect of a category of claim for which damages are not recoverable, namely mental distress, stress generally and worry, but short of any recognised psychiatric illness.

31. That being my conclusion, I am satisfied that having struck out all the plaintiff’s existing claims in the proceedings, Clark J. erred in permitting the plaintiff to amend his Statement of Claim by inserting the new claim for damages in negligence and breach of duty which are provided for in her order under appeal by the defendants.

32. I would therefore allow the appeal by the defendants against that part of the said order.

33. In view of these conclusions it is unnecessary to address the plaintiff’s appeal against the order of Charleton J. dated 20th April 2009 wherein he acceded to a motion by the defendants to strike out the plaintiff’s proceedings as an abuse of process on the ground that being an action alleging professional negligence it was launched without first ascertaining that there were reasonable grounds for so doing by obtaining appropriate expert evidence to support it. In my view it is unnecessary now to dispose of that appeal, save to say that if I was required to reach a determination I would have allowed that appeal because, while there is certainly authority to the effect that in cases alleging medical negligence against a doctor or other professional person, it would be an abuse of process or irresponsible to launch such proceedings in the absence of the plaintiff’s solicitor satisfying himself or herself that there were reasonable grounds for the allegations of negligence being made, I would not exclude the possibility that where the action is being contemplated against a solicitor for professional negligence, the plaintiff’s solicitor may not in every case require to obtain an independent expert opinion from another solicitor or counsel in order to form the relevant opinion that the facts of the case disclose a prima facie case, and that it is not irresponsible to commence the proceedings.

34. Every case will depend on its own facts, and a plaintiff’s solicitor ought to exercise caution in every such case. In any case where he or she has a doubt, prudence suggests that an opinion from another expert be sought in advance of commencement. I believe that such a view is consistent with what was stated by Denham J. (as she then was) when, having considered the views expressed by Barr J. in Reidy v. National Maternity Hospital [1997] IEHC 143, and those of Kelly J. in Connolly v. Casey & Fitzgibbon [2000] 1 IR 345, she expressed agreement as follows:

“While bearing in mind the important right of access to the Courts I am satisfied that these statements of law are correct. To issue proceedings alleging professional negligence puts an individual in a situation where for professional or practice reasons to have the case proceed in open Court may be perceived and feared by that professional as being unprofessional conduct”.
34. In so far as Charleton J. concluded (as the agreed note of his decision indicates) that “the advices of the plaintiff’s junior counsel did not fulfil the exacting requirements of obtaining an expert’s report on the merits or otherwise of the plaintiff’s claim against his former solicitors”, I would very respectfully disagree that this of itself was necessarily a basis for a finding of an abuse of process. However, it is unnecessary to reach a concluded view in this case, given that the appeal against the order of Clark J. must be allowed in any event.

 

Quinn v IBRC

[2015] IEHC 313

JUDGMENT of Mr. Justice Haughton delivered the 20th day of May, 2015
Background
1. This judgment relates to an application by the plaintiffs to amend the Statement of Claim. I have already given a decision on 13th May, 2015 dismissing the application and in this judgment I give my reasons for so doing. The main trial of this matter is listed for hearing on 3rd June, 2015.

2. The background to the application is that these proceedings were commenced by plenary summons dated 16th May, 2011 and were admitted to the Commercial List on 30th May, 2011. The claims asserted by the plaintiffs are set out in their Statement of Claim delivered on 8th July, 2011 and the case is fully defended. The proceedings arise from lending by Anglo Irish Bank, now Irish Bank Resolution Corporation Ltd (in Special Liquidation) (“the Bank”) to the Quinn Group of companies over a period of time, but particularly between 2007 and 2008. The plaintiffs claim that at the relevant times they were the ultimate beneficial owners of the Quinn Group.

3. The plaintiffs inter alia challenge the validity of six share charges that they gave the Bank as security for lending to the Quinn Group. In addition, they seek to challenge the validity of specific personal guarantees that they gave to the Bank as security for significant lending into six Cypriot companies. Their claims to these reliefs as currently pleaded are that the securities should be declared void and unenforceable because they were obtained through undue influence, were improvident or were otherwise liable to be set aside on the basis of an unconscionable bargain. In addition, the plaintiffs pleaded that the securities and guarantees should be declared void and unenforceable on the grounds that they were given in respect of lending which they alleged breached s.60 of the Companies Act, 1963 and/or the provisions of the Market Abuse Regulations (“MAR”). They also pleaded that the securities were tainted by that alleged illegality.
Preliminary Issue and Decision of the Supreme Court
4. The pleadings were closed some three and a half years ago, but have at all times been the subject of case management in the Commercial Court. By Order dated 16th December, 2011 Kelly J directed a trial of a preliminary issue. The question that was set down for the preliminary trial was as follows:-

“Do the Plaintiffs or any of them have the standing or entitlement to rely upon alleged or any breach:
1. (a) of the Market Abuse Regulations; or

2. (b) Section 60 of the Companies Act, 1963.

in aid of any of their claims for declarations of invalidity, unenforceability or no legal effect in respect of any Charge [on] Shares or any Personal Guarantees.”

5. In directing the trial of this preliminary issue, Kelly J stated:-
“Now, I come to the conclusion that certainly insofar as the first part of the Issue Paper is concerned that there would be a great deal to be said in favour of a modular trial asking the Court to determine the questions concerning the Plaintiffs’ standing in advance of the trial. I believe that there would be, as a result of such a hearing, a material saving in both time and costs, both by reference to discovery issues but more particularly by reference to both evidential issues and time which would have to be spent at the trial. Because these two questions of abuse of section 60 [and] failure to comply with the market abuse regulations permeate throughout insofar as the various reliefs are concerned and those reliefs are sought by reference to complaints being made on the part of the Plaintiffs concerning the failure to adhere to both the regulations and the Act. As I say it is not the only part of the Plaintiffs’ case but in my view it is a material part of it and I am of opinion that the first issue as to the Plaintiffs’ standing is something that is capable of being dealt with in a short period of time. It is a legal question. The facts which are alleged in the Statement of Claim are for the purpose of it accepted so there will be no need for any evidence in relation to it. It will be a legal argument as to whether those facts provide the Plaintiffs with a locus standi to make the case which they seek to make by reference to those two statutory provisions. And I believe that if that question is answered in the way in which the bank hope that it will remove from the case a substantial part of what the judge at trial will have to deal with. If on the other hand it is answered in a manner adverse to the bank then it means that the judge does not have to consider or concern himself with any question of standing. That will already have been decided and the matter can then proceed to the next phase.
…
I am convinced that there would be a saving both in time and in costs, time of the litigants, time of the court and the costs of the litigants by identifying this legal issue and having it decided in advance of the trial, the advantages I have already outlined. If it’s a decision in favour of what the Defendants hope for it means that that element of the case has simply disappeared, thereby reducing the trial time. If, on the other hand, it is decided in favour of the Plaintiffs and they are afforded the status which they say they have by a determination of the court then they can proceed without further having to have that question raised at trial and they move on to the second part of the claim.
So I am satisfied that it is appropriate that as part of the ordinary case management of litigation of this sort that there should be a modular trial dealing with the Plaintiffs’ standing and I propose, therefore, to direct a trial of the questions which are framed at paragraph No. 1 of the “Preliminary Issues” which are identified in the schedule to the Notice of Motion.”

6. In the High Court, Charleton J found that the plaintiffs were entitled to rely on s.60/MAR. That decision was appealed by the Bank to the Supreme Court and Clarke J delivered the unanimous judgment of the Court on 27th March, 2015. He stated his conclusions as follows:-
“12.16 However, I have concluded that the underlying lending contracts are enforceable, notwithstanding their illegality. I have further concluded that the Quinns never made a case which suggested that the security arrangements might be unenforceable, even if the underlying lending transactions were enforceable. On that basis, I am forced to conclude that, on the case as it has been pleaded and run to date, it can only be held that the relevant security arrangements are enforceable. This is so because the underlying loans themselves are enforceable and no alternative case has been made. In those circumstances, the question of whether it might be possible to undo executed security just does not arise.
13. Conclusions
13.1 On that basis it seems to me that, in the light of the case made by the Quinns to date, they are not “entitled to rely” (in the words of the preliminary issue directed to be tried) on any of the alleged breaches of either section 60 or the MAR in aid of the claims which they make concerning the invalidity of guarantees given by them and security put in place in respect of underlying lending transactions said to be in breach of those provisions.”

7. In the course of his judgment Clarke J at para. 12 summarises the Quinns’ claim as pleaded in the Statement of Claim and at para. 12.1 states – “the statement of claim refers specifically to the alleged illegality of the loan transactions and what is said to be the consequent unenforceability of the security and guarantees” and in that context he refers to paras. 103 and 106-110 of the Statement of Claim and then states at para. 12.4:-
“Those seem to me to be the relevant parts of the statement of claim for present purposes. It is against the background of a claim formulated in that fashion that the trial of the preliminary issue was directed and determined. It is, therefore, in the context of a claim as thus formulated that this appeal arises. It is by reference to such a formulation of the claim that it is next necessary to look at aspects of the written submissions made by the parties to this Court.”
8. Then, having referred to the parties written submissions, Clarke J stated:-
“12.6 …There does not seem to be a plea contained in the statement of claim which suggests that the security and guarantees are allegedly void or unenforceable on a separate and stand-alone basis, as opposed to being invalid by being closely connected to the lending transactions which are said to be void or unenforceable due to illegality.”
He followed this up by stating:-
“12.9 I have analysed the statement of claim and the position adopted by the parties on this appeal in some detail for the purposes of determining with some precision the precise questions which were properly before the High Court on the hearing of the preliminary issue and, therefore, before this Court on appeal. In that context, it is important to make a distinction between two potentially different allegations. The first type of allegation, which was undoubtedly before the High Court and is before this Court, relies on the suggestion that the various underlying lending transactions were void for illegality on the basis already explored. As a consequence, it is said that security put in place to support that lending is so closely connected with the lending concerned that it too is tainted by illegality, and it too is unenforceable, because the underlying loans themselves are unenforceable.
12.10 A second type of allegation might have been to suggest that, even if the underlying loans were themselves enforceable (on the grounds that policy did not require unenforceability), then, nonetheless, security put in place to support illegal activity by persons who are unaware of the illegality concerned might not be capable of being enforced.

12.11 The reason why this distinction is important stems from the analysis already conducted in the course of this judgment which suggests that policy may require that underlying contracts entered into by parties who had knowledge of a relevant illegality might nonetheless remain enforceable, but that it was possible, in similar circumstances, that collateral contracts entered into by innocent parties in connection with such illegal activity might be unenforceable, at least against those parties where the innocent parties concerned might not also have been expected to benefit by the very series of transactions which are argued to be unenforceable.

12.12 However, it does not seem to me that an argument was ever truly advanced on behalf of the Quinns which suggested that a distinction might be made between the effect of any illegality on the underlying lending contracts, on the one hand, and on the security or guarantee arrangements in respect of those lending contracts, on the other. Rather, the case made by the Quinns was that the underlying lending contracts were unenforceable on the basis of being void for illegality and that security put in place in close connection with those unenforceable contracts could not, itself, be enforced.

12.13 While there might, therefore, be a theoretical basis on which it might have been possible to consider whether the guarantee or security arrangements from which the Quinns seek to escape in these proceedings are unenforceable, notwithstanding the fact that the underlying loans are, for the reasons already analysed, enforceable, that case was never truly made, and it would, in my view, be inappropriate to address it any further at this stage.”

Amendment Sought
9. It is against this background that the plaintiffs now seek to amend their Statement of Claim to plead, in effect, that notwithstanding that the underlying lending is enforceable, it was illegal by reason of breach of s.60/MAR, and the share pledges and guarantees are void and unenforceable against them as a matter of public policy because they were innocent of the illegality. This is what may be conveniently termed as a plea of “stand alone” unenforceability of the share pledges and guarantees. Thus, they seek amendments to the Statement of Claim commencing from para. 103 in the terms as set out in the schedule to this judgment (the proposed amendments being underlined).
10. The plaintiffs seek their liberty to amend under Order 28 rule 1 which provides:-

“The Court may, at any stage of the proceedings, allow either party to alter or amend his indorsement or pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.”

The Plaintiffs’ Arguments
11. Mr. Hayden S.C. on behalf of the Plaintiffs argued that the question of stand alone unenforceability is a real question in controversy between the parties and that it is necessary for it to be determined. He relied on the judgment of Geoghegan J in Croke v. Waterford Crystal [2005] I.R. 383 to the effect that this is a liberal rule, and argued that the mere novelty of the proposed amendments should not present a barrier to them being permitted, and that it is immaterial that they seek to make a case that may be significantly different from that made originally. It was argued that there would be no real prejudice to the defendants’ position and that any residual prejudice could be met by appropriate amendment of the defence. It was submitted that no additional discovery would be needed and that the trial timetable would not be unduly affected although Mr. Hayden accepted that there might be some minimal delay if particulars were raised and rejoinders were necessary. He drew support for his application from the words “to date” as employed by Clarke J in paras. 12.16 and 13.1 of his judgment in reference to the matters as pleaded in their Statement of Claim, and from the fact that the decision of the Supreme Court did not contain any direction suggesting that the plaintiffs should not be given liberty to amend. In this regard Mr. Hayden S.C. relied by analogy on Clarke v. O’Gorman [2014] IESC 72 where O’Donnell J stated:-
“43…while it was understandable on the state of the authorities, the trial judge here was wrong to dismiss the plaintiff’s claim. The lack of authorisation under the [PIAB] Act had not been raised by the defendant at any time during the process of pleading. It was only mentioned in correspondence shortly before the trial and the application made at the commencement of the trial. No application was brought to amend the pleadings. Since it was not a jurisdictional matter it could only be raised if it was pleaded and therefore relevant to the issues between the parties. There was therefore no basis to hear the application and no basis for the dismissal of the proceedings. Consequently, I would allow the appeal and set aside the Order of the High Court. I should perhaps add that while it would be a matter for any court before which any application was made, the fact that the matter had proceeded so far before any issue was raised, and that in the light of this judgment the correct Order which ought to have been made in the High Court was an Order to reject the defendant’s application (in which circumstances the case would have proceeded to trial and long since have been determined), should weigh heavily against any application to amend the proceedings at this stage to include any plea in relation to the 2003 Act.”
12. With regard to delay, it was argued on behalf of the plaintiffs that they had moved swiftly following the delivery of the judgment of the Supreme Court on 27th March, 2015. They asserted that there was no prejudice and that the delay was explicable and reasonable in the circumstances.
13. The plaintiffs argued two other matters in support of their application. Firstly, they pointed out that lack of awareness on the part of the plaintiffs is pleaded in the Statement of Claim:

• In para. 69(e) : “None of the plaintiffs were aware of the purchase of these shares [between 14th-21st July, 2008] in their own name and they were not consulted in relation to same”;
• In para. 69(h): “In October 2008, the July Facilities were refinanced, and each of the Plaintiffs shareholdings in Anglo was transferred to a Cypriot company wholly owned by each of them and, again, none of the Plaintiffs were aware of this refinancing”;

• In para. 71: “None of the Plaintiffs had any knowledge, involvement or input into any of the discussions preceding the transactions or in respect of the funding arrangements which were put in place in respect thereto”.

• They also plead at para. 91 that they “took no active role in any matter relating to Anglo lending, and were effectively dictated to in relation to such lending pursuant to which the personal guarantees and share pledges were required by Anglo” and provide some detail of this allegation.

It should be noted that in seeking Particulars the Bank asked:-
“59. In respect of each plaintiff, please state when and by what means he or she became aware of the matters described in paragraphs 67 to 71 of the statement of claim.”
The reply stated:_
“The Plaintiffs became generally aware of the matters on or about 14 or 15 July, 2008. They became aware of the detail of the transactions in or about September 2010”.
14. Secondly, it was argued that the proposed amendments do no more than set out a plea of innocence and the legal consequences flowing from factual matters already pleaded, the claimed consequence being that the share pledges and guarantees are in and of themselves unenforceable.
15. The Plaintiffs also seek to introduce a proposed amendment at 110A to read as follows:-

“Further or in the alternative and without prejudice to the foregoing, the lending transactions, share pledges and guarantees impugned in these proceedings are unlawful and unenforceable in an[d] of themselves as they were entered into for an illegal purpose and, as such, offend the common law rules on illegality.”
16. In relation to this plea the plaintiffs referred the court to ‘Outline Legal Submissions on Behalf of the Plaintiffs’ prepared for the trial of the action in which they wished to rely on the case of Scott v. Browne Doering McNab & Co [1892] 2 QB 724 for the proposition that the lending agreements entered into by the Bank had the object of buying shares to induce the marketplace to wrongly believe that there was a true market (or higher than warranted share price) for the company’s shares, and that this was a common law offence such that both the underlying loans and the collateral share pledges and guarantees were unenforceable at common law. It was argued that this common law offence survived the MAR which came into effect in 2005 (S.I. No.342 of 2005).
17. In a written ‘Rejoinder Submission’ by way of alternative argument, and in the event that the common law offence of cheating the public no longer existed, the plaintiffs relied on the principle that a person cannot rely on their own tortious act, citing para. 15.08 of Paul McDermott’s “Contract Law” at pp. 766-767 which states that:-

“The principle that a person should not benefit from their own wrong arises most frequently in the context of insurance policies. In Beresford v Royan Insurance Co it was held that the estate of a person who commits suicide was not entitled to the proceeds of a life policy that was silent on the issue….At the time of the case suicide was a criminal offence. It has ceased to be so in this jurisdiction…However, just because suicide is no longer a criminal office that does not automatically mean that a court would permit a person (through their estate) to benefit in a civil action from their own act of self-destruction.”
18. Mr. Hayden also relied on a passage of Peel’s “The Law of Contract” (12th ed., 2007) at para. 11-016 on p. 476 where it is stated that “Deliberate commission of a civil wrong. A contract is illegal where its object is the deliberate commission of a civil wrong.” They also relied upon commentary at p. 483 of Peel headed “Conduct made lawful: future contracts” where it is stated:-
“Secondly, it is possible that, even after the conduct in question has ceased to be a legal wrong, a contract involving such conduct would still be contrary to public policy.”
Opposition to amendment
19. The Bank in opposing the application to amend argued that –

• the issues that the plaintiffs now seek to raise are res judicata following the determination of the preliminary issue by the Supreme Court;
• alternatively, the application to amend is an abuse of the process because it seeks to circumvent the decision on the preliminary issue raising arguments that should have been raised earlier;

• this is case managed litigation and it is now nearly four years since the pleadings closed, and there has been extensive and costly discovery (including non-party discovery), exchanges of interrogatories, the trial of the preliminary issue and appeal, the preparation and exchange of witness statements and reports and the preparation of legal submissions;

• they would suffer logistical prejudice if the amendments were permitted; and

• with regard to the proposed para. 110A, the plaintiff seeks to introduce an amendment on a basis that discloses no claim in law.

20. The second named defendant also opposed amendment, but simply adopted the arguments presented by Mr. Gallagher S.C. on behalf of the Bank.
Res Judicata
21. The preliminary issue related to the plaintiffs’ “standing” to raise s.60/MAR in impugning the share pledges and guarantees. The use of this wording, and the general tenor of Kelly J’s ruling makes it clear that he intended that the preliminary issue would deal with the s.60/MAR issues in their entirety.

22. The Supreme Court decided that the underlying lending was still enforceable notwithstanding that it might be illegal, or tainted by illegality by being in breach of s.60/MAR and concluded that the plaintiffs had no “standing” to impugn the validity of the share pledges/guarantees “in the light of the case made by the Quinns to date”. It is quite clear from paragraphs of the decision quoted above (and in particular paras. 12.6 and 12.16), that the court did not regard “stand alone” unenforceability of the share pledges/guarantees as having been pleaded, and so it did not decide whether as a matter of law they might be unenforceable on that ground. Indeed, Clarke J expressly stated that this did not arise on the case as pleaded and he reserved a decision on it to “a suitable future case”.

23. It follows that the Supreme Court decision determined the preliminary issue only insofar as the issues of s.60/MAR illegality were raised in the pleadings. It therefore cannot be said that the precise case that the plaintiffs now wish to make by way of amendment of their pleadings was determined by the Supreme Court. Although the question of “standing” has been determined, this only reaches as far as the matter was pleaded and it does not go beyond the ambit of the pleadings. I therefore reject the submission that the issue that the plaintiffs now seek to raise is res judicata in the strict sense of that term.
Delay/Abuse of the Process
24. It is convenient to deal with these two aspects of the defendant’s answer to this application to amend together because they are inextricably linked, and it is under these headings that the court has decided, in its discretion, to refuse the application.

25. While it is undoubtedly the case that the plaintiffs now say that the “stand alone” enforceability issue is a real matter of controversy, it is relevant for the court to consider when this issue became a real matter of controversy, and this will be considered below.

26. The principle that it is an abuse of the process for a litigant to attempt to introduce into existing proceedings or fresh proceedings matters that have already been litigated was established in Henderson v. Henderson [1843] 3 Hare 100. At p. 319 Sir Wigram, Vice Chancellor, in delivering the judgment of the Privy Council, stated:-

“In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest but which was not brought forward, only because they have from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”
27. This principle has been applied by Irish courts on many occasions, and the defendants referred me to, inter alia, the decision in Morrissey v. IBRC & Ors (unreported High Court, Costello J, 11th March, 2015). In this case the court refused to allow the plaintiff to reopen matters that had been determined in an earlier case in which he was a defendant on the grounds that those matters were res judicata. However, in relation to arguments that were not made in the earlier proceedings but which arose from the same transactions, Costello J held that this was a form of Henderson v. Henderson abuse of the process. She stated at para. 5 that:-
“It is a fundamental principle of law that a party should not be entitled to re-litigate matters or raise issues which have already been determined by a final judgment of a court of competent jurisdiction between the same parties and their privies. This is known as the principle of res judicata. But beyond the strict limitations of res judicata the courts have long recognised that there may be an abuse of the process outside of the relatively confined limitations of the rule and the courts have always been prepared to balance the rights of the parties to have their cases heard and determined by the courts with the rights of the opposing parties to fair procedures in the conduct of litigation and, where necessary, to strike out proceedings if they amount to an abuse of the process. In addition to the private rights of litigants there is a public policy interest in ensuring the finality of litigation and preventing vexatious litigants from subjecting the same parties to multiple lawsuits on the same issue.”
28. At para. 24 of her decision, Costello J stated:
“24…However, other litigants enjoy rights in relation to litigation. They are entitled to rely upon the fact that, subject to a right of appeal, a determination by the High Court of an issue which has been raised (or which ought to have been raised), is final and may not (save in special circumstances which do not arise here) be re-agitated.” (emphasis added)
29. In Re Vantive Holdings [2010] 2 I.R. 118 at p. 142, Denham J (as she then was) approved the following statement of principle by Bingham MR in Barrow v. Bankside Ltd [1996] 1 W.L.R. 257 at p. 260:-
“The rule in Henderson v. Henderson (1843) 3 Hare 100 is very well known. It requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.”

Decision
30. The court has taken into account a number of matters that have led it to the conclusion that the issues that the plaintiffs now seek to raise by way of amendment are in reality arguments that ought to have been raised at the outset or at any rate at an earlier date, and that in exercising its duty to balance the rights of the plaintiffs and the defendants in this litigation the amendment should be refused.
31. Firstly, it is far from clear that the case that the plaintiffs now wish to make was a matter of real controversy at any time prior to the decision of the Supreme Court on 27th March, 2015. The defendants emphasised to the court not only that this issue never formed part of their pleadings but also that in various affidavits sworn by the plaintiffs they consistently relied on an allegation that the underlying loans were illegal and unenforceable and did not suggest that the share pledges/guarantees were in themselves unenforceable. This was the case in an affidavit sworn on 25th May, 2011 by Aoife Quinn grounding the plaintiffs’ application to enter the Commercial List (para. 8(f)); in an affidavit sworn by Colette Quinn on 14th February, 2013 grounding the plaintiffs’ application to lift the stay on proceedings imposed by the Irish Bank Resolution Corporation Act, 2013 (para. 28); and in an affidavit sworn by Aoife Quinn on 27th May, 2013 grounding the plaintiffs’ unsuccessful application to join the Central Bank of Ireland and Minister for Finance as co-defendants (para. 5).

32. The same approach was taken by the plaintiffs in submissions to the court dated 19th September, 2013 in support of an application for injunctive relief where they submitted:-

“In essence, the Quinns seek to set aside security (the “impugned security”) provided to Anglo Irish Bank Corporation Limited (“Anglo”) in respect of lending provide by Anglo to Quinn related entities. The Quinns contend that such lending was illegal and/or invalid and/or unenforceable for a number of reasons including breach of section 60 of the Companies Act 1963 and the Market Abuse (Directive 2003/6/EC) Regulations 2005. It is the Quinns’ case that the lending in question was provided by Anglo for the purpose of meeting margin calls on Contracts for Difference (“CFDs”) in respect of Anglo shares held by Quinn related entities in support of the share price of Anglo shares.”
33. Furthermore, as appears from the affidavit of Karyn Harty sworn on 29th April, 2015 in opposition to this motion to amend, it is averred that in instituting other related proceedings the plaintiffs have consistently alleged that unenforceability of the security is consequent on alleged statutory illegality of the lending and not the security itself. Ms. Harty cites an affidavit sworn by the plaintiffs’ former solicitor on 20th June, 2011 in proceedings taken by the plaintiffs in Cyprus as an example.
34. Secondly, the defendants also drew to the court’s attention the eminence of counsel who prepared and signed the Statement of Claim delivered herein. The court takes note of the experience and expertise of these counsel, and of the firm of solicitors instructing them who have particular experience in commercial matters.

35. Mr. Hayden S.C. suggested that the plaintiffs could not reasonably have been aware, until the Supreme Court had delivered its judgment, of a distinct claim that the share charges/pledges might be void or unenforceable notwithstanding that the underlying lending, if illegal, is nonetheless enforceable. I cannot agree with this submission. In the court’s view, the plaintiffs and their lawyers were in a position to assess the level of awareness and innocence of the plaintiffs and to foresee the possibility of making the case, if it could be made, that the security might of itself be unenforceable even if the lending was enforceable. They were equally in a position to anticipate that one outcome of the preliminary issue was that the underlying lending would be enforceable even if it was illegal. Accordingly, the delay in seeking an amendment commenced at a much earlier point in time and, as indicated below, this was probably in May 2012 when the Bank delivered a written submission noting the restricted nature of the pleas in the Statement of Claim.

36. Thirdly, the plaintiffs in their grounding affidavit for this motion and in their submissions failed to give any explanation or reason why the pleas they now wish to make were not pleaded at the outset, or why no application to amend was brought at an earlier point in time. It is true that in Croke Geoghegan J (at p. 394) stated that in a number of High Court decisions cited to him there had been “an overemphasis on an obligation to give good reason for having to amend the pleadings.” However, in a case such as this where the application is made late in the day, after the trial and final determination of a preliminary issue – which in truth was more in the nature of a ‘module’ of the trial – and shortly before the date fixed for hearing of the remainder of the action, it is of some relevance.

37. One reason for the absence of any explanation may be that there have been changes in the plaintiffs’ legal representation and therefore it may be more difficult to ascertain or present any explanation. However, the court cannot discount the possibility that the lawyers who prepared and delivered the Statement of Claim in its present form did not consider that there was a factual basis for making the claim that the plaintiffs now wish to make. For instance, it might have been considered unlikely that the plaintiffs could prove that they were entirely innocent guarantors, or it might have been considered that they would face difficulties if it were demonstrated that they stood, potentially, to gain a benefit from the underlying illegal lending – two possibilities tentatively canvassed by Clarke J at paras. 8.50-8.51 of his judgment. While the court is careful not to prejudge any aspect of the plaintiffs’ case (notwithstanding an invitation to do so in the Bank’s submissions), the absence of any explanation as to why these pleas were not made earlier does put the court at a disadvantage and is a factor that the court takes into account.

38. Fourthly, as the plaintiffs themselves accept in their submissions, the transactions and factual basis for the claims pleaded in their Statement of Claim are virtually identical to the transactions and facts upon which they seek to rely in pursuing the case based on the amended pleading. The primary differences are firstly a plea of innocence and secondly a plea that the share pledges/guarantees are in and of themselves unenforceable at common law as a consequence of the illegality (as opposed to unenforceability) of the underlying lending. As to the first of these, there seems to be little difference between this and the existing pleas of lack of awareness which are set out earlier in this decision. As to the second, this effectively raises a new argument as to legal consequences based on the same facts.

39. This brings the amended pleas within the rubric of those “which ought to have been raised” (to use the words of Costello J) at the outset. It is apparent from the wording of the proposed amendments, and in particular deployment of the word “innocent”, that the Plaintiffs now seek to plead a question/argument identified by Clarke J at para. 8.48 of his judgment, and which he later describes at para. 12.13 as “a theoretical basis” for considering stand alone enforceability. What the plaintiffs seek to do by way of amendment is a recasting of its arguments which essentially still rely on the alleged illegality of the underlying lending under s.60/MAR. The application in its timing and in the wording of the proposed amendments both indicate an intention to overreach or circumvent the actual decision of the Supreme Court on the preliminary issue. As a matter of public policy, this should not be permitted. On this basis alone the court is of the view that none of the amendments should be allowed.

40. Fifthly, Clarke J noted, at para. 12.19, that had he decided that the share charges/guarantees were unenforceable, he would then have had to consider whether such unenforceability would permit the plaintiffs to undo the executed security and to prevent Anglo from exploiting the security in a way which did not require Anglo to invoke the jurisdiction of the court (as a receiver was appointed, and changes made to the directorships of various Quinn companies).

41. Had the plaintiffs included stand alone enforceability pleadings in their Statement of Claim and had these been part of the preliminary issue, and had the plaintiffs succeeded before the High Court/Supreme Court on the stand alone issue, then this further question would have been considered and determined by the court at that stage. As the stand alone issue was not considered, this further question was never considered by the Supreme Court.

42. Sixthly, and more fundamentally, it must now be questioned whether Kelly J would have fixed a preliminary issue at all if the case that the plaintiffs now wish to make had been included in the Statement of Claim. Kelly J clearly felt that there was a discreet legal issue, but it is difficult to characterise the broader issue as now raised by the amended pleadings as being a discreet legal issue. This is because such a preliminary issue would involve assumptions of “innocence” or “lack of awareness” on the part of the plaintiffs of the illegality of the underlying lending, and these are matters that could only really be determined at a full hearing on oral evidence.

43. At para. 12.14 of the Supreme Court’s decision Clarke J stated:-

“…it bears noting that the very issue which I have sought to address raises questions about whether, with the benefit of hindsight, a preliminary issue was really the best way of dealing with the issues addressed in this judgment. Dealing with questions concerning the enforceability of collateral security arrangements without detailed evidence is far from ideal. It is one thing to conduct the trial of a preliminary issue on the basis of the facts as pleaded. But where a nuanced view of those facts may be relevant to the very question of whether a particular legal principle might have application, then the trial of a preliminary issue may prove an inappropriate vehicle for the resolution of such questions. Furthermore, where, as here, the precise legal principles which are applicable may themselves be the subject of some debate and, potentially, refinement, and where the application of the principles ultimately found by the Court to apply may depend, at least on one view, on a very precise consideration of the facts, the trial of a preliminary issue may again prove less than ideal. Be that as it may, however, a trial of the preliminary issue was directed and conducted. This Court must, therefore, deal with the results of that exercise and the issues which thereby arise on this appeal.”
44. I am of the view that a “nuanced view” and “very precise consideration of the facts” would be required to consider and determine the legal issues that the plaintiffs seek to raise in their amendments. I believe that the High Court would have been very hesitant to settle a preliminary issue if those pleas had been in the Statement of Claim at the outset. It may therefore be said that were the plaintiffs permitted to amend at this late stage, the time and effort expended by the parties and the court in fixing and dealing with the preliminary issue would to a large extent be wasted.
45. Seventhly, the plaintiffs should have been alerted to the omission from their Statement of Claim of “stand alone” unenforceability pleas when they received the written submissions of the defendants dated 1st May, 2012 in support of their appeal to the Supreme Court. They stated:-

“15. There is no plea that the Share Charges are illegal. It clearly was not illegal for the Respondents and IBRC to enter into the Share Charges and on their face they are entirely lawful documents. The purpose of securing loans even if those loans are alleged to be illegal is not in itself an illegal purpose. Neither is it alleged that the Guarantees were themselves illegal.”
46. This put the plaintiffs on notice, if they were not already aware, of the absence of such a plea. They did address this to a limited extent in their reply submissions to the Supreme Court where they stated:-
“36. It is submitted that the authorities admit of two separate means by which agreements may be found to be illegal upon which the Quinns rely in these proceedings: first, the Quinns submit that the share charges and guarantees are so closely connected with unlawful loan transactions, the purpose and effect of which was to artificially maintain Anglo’s share price in breach of s.60 and MAR, that they themselves are tainted with illegality; second, the Quinns plead that the share charges and the guarantees are unlawful and unenforceable in and of themselves, as they were entered into for an illegal purpose, and as such, offend the common law rules on illegality.”
However, the plaintiffs did not develop the second of these arguments any further in their written submissions.
47. Perhaps more importantly, no application was made after 1st May, 2012 to the High Court, or to the Supreme Court, to amend the Statement of Claim, or to defer the appeal until an application was made to the High Court to amend the pleadings, or to broaden the ambit of the Preliminary Issue. While the outcome of any such application, at any rate to the Supreme Court, might have been problematic, the court does regard the plaintiffs as having failed to canvass at an earlier date the plea and legal arguments that they now wish to raise. In this respect, their delay is significant and is unexplained. It is culpable delay in all the circumstances. While of itself it might not justify refusing an amendment, it is a factor that I consider relevant to determining whether there has been an abuse of the process because it undermines the rights of the other parties to the litigation, the efficient use of court time and the finality of litigation. It is of particular significance in the unusual circumstances of this case where Kelly J fixed the preliminary issue as a form of “modular trial dealing with the Plaintiffs’ standing”, with the intention that this broad issue should be determined before the balance of the trial proceeded on oral evidence.

48. Additionally, the defendants pleaded that if the plaintiffs were given leave to amend, they would be prejudiced in two respects. Firstly, they asserted a general prejudice by reason of the time, effort and expense incurred in addressing the preliminary issue through two courts over a period of some three and a half years. I have already adverted to this earlier in this judgment and I consider that this is a factor that the court is entitled to and should take into account in the exercise of its discretion to refuse the amendments sought.

49. They also argued logistical prejudice in that if the amendments were allowed they would need to seek particulars, and possibly further particulars depending upon the replies, followed by the filing of amended defences, and they argued that further discovery or interrogatories would then have to be considered. They point out that as the trial date is currently fixed for 3rd June, it was likely that this would have to be deferred and they argued that this would be very unsatisfactory in the context of commercial litigation that has now been ongoing for nearly four years.

50. I do not consider that the logistical prejudice so described is a significant factor. If the court had been disposed to grant the amendments sought, while a short adjournment of the trial date might have been required, it is probable that, with appropriate case management, the deferral would not have exceeded four weeks. In the context of the overall delay in bringing this case to full trial of the remaining issues this would not have caused any significant or irreparable prejudice.
Proposed Plea of Common Law Illegality
51. While the above considerations apply equally to all of the amendments sought by the plaintiffs, some further considerations apply to the new plea that the plaintiffs seek to introduce as 110A:-

“Further or in the alternative and without prejudice to the foregoing, the lending transactions, share pledges and guarantees impugned in these proceedings are unlawful and unenforceable in an[d] of themselves as they were entered into for an illegal purpose and, as such, offend the common law rules on illegality.”
52. As recited earlier in this judgment, the plaintiffs in argument relied on submissions contained in their “Outline Legal Submission on Behalf of the Plaintiffs” prepared for the purposes of the trial of the action and in particular paras. 31-38. In essence, they wished to rely on an argument that the underlying lending by Anglo constituted the common law offence of “cheating the public” as referred to in the case of Scott v. Browne Doering McNab & Co.
53. In a detailed submission at paras. 96-122 of the “First Defendants’ Outline Legal Submissions” the defendants argued that this plea was bound to fail principally because the Criminal Justice (Theft and Fraud) Offences Act, 2001 repealed the majority of the so-called “‘acquisitive’ offences at common law and in statute in Ireland. The abolished common law offences include cheating. Section 3(2) provides that:-

“Any offence at common law of larceny, burglary, robbery, cheating (except in relation to the public revenue) extortion under colour of office and forgery is abolished.”
54. The court accepts this submission as correct. Indeed, Mr. Hayden S.C. did not appear to contest that the common law offence had been abolished, but as indicated earlier in this judgment he sought to rely on extracts from McDermott’s “Contract Law” to suggest that a person is not entitled to benefit from their own wrong notwithstanding that a criminal act may have been decriminalised; and he relied on Peel’s “The Law of Contract” to suggest that the wrong may be a civil wrong, i.e. tortious activity.
55. This was the first time that an entirely new argument based on tortious wrongdoing was raised in these proceedings, by way of argument in rejoinder on the second day of the hearing of the motion. In the view of the court this was a belated and impermissible attempt to recast the illegality argument and for that further reason the amendment sought at 110A is refused.

 

Schedule- Amended Pleadings, Paragraphs 103- 110A
ILLEGALITY IN THE LOAN AND SECURITY TRANSACTIONS

103. Further and/or in the alternative and without prejudice to the foregoing, the loan transactions engaged in by Anglo, for and on behalf of the positions being maintained by Bazzely, and/or the Cypriot Companies, and/or the subject matter of the said loan transactions were tainted by illegality and/or were for an illegal purpose, of which Anglo was or ought to have been aware.

103A At all material times, the Plaintiffs were innocent parties and to the extent they furnished securities by way of collateral contracts i.e. the share pledges and guarantees impugned in these proceedings, the Plaintiffs did so innocent of and independent from the underlying central contractual arrangements which are of themselves illegal by reason of a breach of Section 60 of the Companies Act 1963 and the Market Abuse Regulations.

103B In so providing the security in such circumstances, the shares pledges and guarantees impugned in these proceedings are unenforceable as against the named, innocent, Plaintiffs, in and of themselves, and independently of the illegality attaching to the underlying loan transactions. In this regard, the Plaintiffs are entitled to rely on the matters pleaded herein in support of the Plaintiffs’ contention that the cultural contractual arrangements are tainted with illegality.

(a) The Market Abuse Regulations
104. The underlying purpose of the advances from Anglo and of the share pledges and the guarantees impugned in these proceedings, as pleaded above, constituted or evidence market manipulation within the meaning of the Market Abuse (Directive 2003/6/EC) Regulations, implemented in Ireland on 1 July, 2005 (the “Regulations”) in that the advances, share pledges and guarantees, inter alia, involved or were advanced in connection with:-
a) transactions which gave, or were likely to give, false or misleading signals as to the supply of, demand of, financial instruments (viz. Anglo shares);
b) transactions which secured the price of Anglo shares at an abnormal or artificial level; and

c) the dissemination of information which gave, or was likely to give, false or misleading signals as to Anglo shares, in circumstances where Anglo knew, or ought to have known, that the information was false or misleading.

105. As appears from the chronology already pleaded above, from an early stage Anglo was supporting Bazzely in amassing and, as the share price fell, retaining a large stake in Anglo through CFD positions. These CFD purchases that were supported by Anglo loans and ultimately secured by the share pledges and guarantees impugned in these proceedings gave, or were likely to have given, false or misleading signals as to the supply of, demand for, or price of, financial instruments, in a manner prohibited by the Regulations.
106. In the premises, the lending and, in particular, the provision of the share pledges and guarantees impugned in these proceedings were in support of an illegal objective of market manipulation as prohibited by Regulation 6(1) of the Market Abuse Regulations and, accordingly, were tainted with illegality, or were intended to support an illegal purpose, such that the said loans and said share pledges and guarantees are not enforceable as against the Plaintiffs, as wholly innocent parties.

(b) Section 60 of the Companies Act, 1963
107. Further and/or in the alternative, the loans were advanced by Anglo and, in particular the share pledges and securities impugned in these proceedings were sought by Anglo in breach of Section 60 of the Companies Act, 1963 in that they involved the giving of financial assistance, within the meaning of that section, by Anglo for the purchase or support of its own shares. As a consequence thereof, as innocent parties, the said share pledges and guarantees are void and unenforceable as against the Plaintiffs.
108. Such lending and seeking/obtaining of share pledges and guarantees, prima facie, constituted the commission of a criminal offence on the part of certain officers of Anglo pursuant to the provisions of section 60(15) of the Companies Act 1963.

109. In the premises, the lending was further tainted by illegality such that the security taken from the Plaintiffs by Anglo ought not to be enforceable insofar as it relates to the Plaintiffs.

110. By reason of the matters pleaded above, Anglo is estopped from seeking to rely upon the security taken from the Plaintiffs in the form of the personal guarantees and/or the share pledges and the purported appointment of the Share Receiver on foot of the said share pledges is invalid and ought to be set aside.

(c) Common Law Illegality
110A Further or in the alternative and without prejudice to the foregoing, the lending transactions, share pledges and guarantees impugned in these proceedings are unlawful and unenforceable in an[d] of themselves as they were entered into for an illegal purpose and, as such, offend the common law rules of illegality.

Allied Irish Banks Plc v Pierce

[2015] IECA 87

JUDGMENT of Mr. Justice Gerard Hogan delivered on 22nd day of April 2015
1. Where a plaintiff elects to sue for a liquidated sum by means of a summary summons, how extensive must the particulars of debt be in order to satisfy the requirements of Ord. 4, r. 4 of the Rules of the Superior Courts, 1986? This is essentially the issue posed in this appeal and it arises in the following way.

2. The plaintiff bank, Allied Irish Banks plc (“AIB”) advanced various sums by way of loan to the defendant, Ms. Pierce, from 2007. Further facilities were granted in April 2008 and were again re-structured in June 2009. The facility fell into arrears and by letter dated 23rd April 2013 the plaintiff’s solicitors demanded repayment of the principal sum. These proceedings were commenced by way of summary summons shortly thereafter.

3. The affidavits filed on behalf of the Bank give further details of the account and accrued interest. One of the documents therein exhibited was an open letter from the defendant’s financial adviser to AIB. It is, perhaps, striking that this letter did not seriously dispute the debt and gave details of settlement proposals which had been advanced on her behalf.

4. The matter came before the Master on a number of occasions, but on 16th October 2014 he struck out the summons pursuant to Ord. 63, r. 5 on the ground that the summons was defective for want of failure to disclose adequate particulars regarding interest. AIB appealed that decision to the High Court. In his decision 14th November 2014 Binchy J. upheld the decision of the Master to strike out the summons on the ground that the claim for interest had not been sufficiently particularised. AIB now appeals to this Court against that decision.

5. The indorsement of claim contained in the summary summons was in the following terms:

“The plaintiff’s claim is for €785,928.24 against the defendant together with continuing interest at current bank rates being monies due by the defendant to the plaintiffs for monies leant by the plaintiffs to the defendant forborne at interest by the plaintiffs from the defendant and paid by the plaintiffs as bankers for the defendant at her request within the last six years.”
Particulars:

Loan Account Number [details supplied]
23rd April 2013: – amount formally demanded: (total): €785,928.24”

6. It is agreed that the particulars supplied in the indorsement of claim followed the standard practice which has been used by the plaintiff bank without objection for more than fifty years. The point taken by the defendant’s counsel, Mr. Sheahan S.C., is that while this may be so, this summons nonetheless fails ex facie to comply with the requirements of Ord. 4, r. 4 of the Rules of the Superior Courts, 1986 and that he is entitled on that ground alone to object to the proceedings in their present form.
7. I should pause here to observe that it is agreed that in the event that this appeal were to succeed, the matter must then be remitted to the High Court, as the defendant elected to raise the pleading point as a preliminary objection and she has yet to file an affidavit showing a defence on the merits.
The requirements of Ord. 4 and particulars on the indorsement of claim
8. Ord.4, r. 4 of the Rules of the Superior Courts provide:

“The indorsement of claim on a summary summons and on a special summons shall be entitled ‘special endorsement of claim’ and shall state specifically and with all necessary particulars the relief claimed on the grounds thereof. The indorsement of claim on a summary summons or a special summons shall be in such one of the forms in Appendix B, Part III shall be applicable to the case, or, if none be found applicable, then such other similarly concise form as the nature of the case may require.”
9. Looking at the matter first in terms of general principles, the whole object of pleadings and, specifically, the requirements contained in the Rules of the Superior Courts regarding to particulars was articulated by Henchy J. in Cooney v. Browne [1984] I.R. 185, 191 in the following terms:
“…where the pleading in question is so general or so imprecise that the other side cannot know what case he will have to meet at the trial, he should be entitled to such particulars as will inform him of the range of evidence (as distinct from any particular items of evidence) which he will have to deal with at the trial.”
10. The Rules of the Superior Courts admittedly contain a variety of distinct provisions dealing with the obligation to provide particulars. While the obligation to supply particulars may vary depending on the context, these provisions all, however, share one common objective, namely, to ensure that litigants properly know the case that they have to meet. The obligation to supply particulars is, accordingly, not an end in itself.
11. This general principle is also reflected in the case-law regarding particulars in summary summons proceedings. It is true that the procedure provided for by Ord. 4, r.4 is attenuated. This, however, reflects the limited purpose of the summary summons procedure, namely, to provide for a speedy mechanism whereby a plaintiff creditor can recover a liquidated sum from a defaulting debtor. But as to the guiding principle to be applied, there can, I think, be very little doubt.

12. The defendant is accordingly entitled to sufficient particulars as will enable him to determine himself whether he is obliged to pay the sum claimed. The principle was stated by Cockburn C.J. in Walker v. Hicks (1877) 3 Q.B.D. 8, 9:-

“I think a party, who is placed in the predicament of being liable to have a judgment signed against him summarily, is entitled to have sufficient particulars to enable him to satisfy his mind whether he ought to pay or resist… It seems to me that a party is entitled, before summary proceedings for judgment are taken against him, to know specifically what is the claim against him.”
13. Mellor J. spoke to the same effect [(1877) 3 Q.B.D. 8,9-10]:
“It seems to me very important to prevent any loose dealing with regard to the form of special endorsements. A very summary remedy is given to the plaintiff where there has been such an endorsement. But before the plaintiff can ask for final judgment the defendant ought to have afforded him, by the endorsement of reasonably specific particulars of claim on the writ, an opportunity to see whether the claim is one to which he has any defence or not.”
14. This issue was further considered in Allied Irish Banks Ltd. v. The George Ltd., High Court, 21st July 1975. At issue in The George was whether the standard form endorsement of claim used in summary summons proceedings actually satisfied the requirements of Ord. 4. This was a case in which the bank sued for money owed by a customer. Butler J. held that the special endorsement of claim “complies, though not perhaps ideally, with these requirements.” He continued:-
“I think it would have been preferable if the agreement to pay interest at the normal rate had been more particularly pleaded and that it had been indicated whether the loan was by way of overdraft or special advance or term loan or whatever might be the case. All this, however, is something which is clearly within the knowledge of the defendant so as to determine his attitude towards the claim. But with the reservations as stated, I am prepared to accept the special endorsement of claim as sufficient.”
15. In the present case the particulars supplied by AIB in the indorsement of claim refer to the sum outstanding, the date of demand and the relevant account. To my mind, this is sufficient, at least so far as the present case is concerned. It is clear from the correspondence from her financial adviser which has been exhibited in the grounding affidavits filed on behalf of AIB that she is fully acquainted with the nature of the bank’s claim against her. Adopting the words of Ryan J. in Bank of Ireland v. Keehan [2013] IEHC 631, it cannot be said that this defendant “has asserted…any confusion or uncertainty as to his liability.”
16. Counsel for Ms. Pierce, Mr. Sheahan S.C., suggested that the Bank could and should have provided by way of particulars contained in the indorsement of claim a running account of the loan obligations, with additional details as to interest, nature of the loan, repayments and so forth. Doubtless all of this information could have been supplied, save that in that situation the indorsement of claim would have taken on the character of a bank statement rather than a pleading. It is clear, however, from the language of Ord. 4, r. 4 that this is what the drafters of the Rules sought to avoid: they aimed instead for a pithy and concise statement of the claim.

17. I do not doubt but that there might be special cases involving proceedings brought by way of summary summons where more elaborate particulars might be required. Yet such cases are likely to be unusual – perhaps even exceptional – and no objection to the form of pleading should properly be entertained unless the defendant has first made out a convincing case by way of replying affidavit to the effect that, absent such additional particulars, the fair defence of the proceedings would be compromised.

18. Nothing of the sort arises in the present case. Indeed, Mr. Sheahan S.C. freely conceded that the objection here was based on a pure pleading point to the proceedings as cast in their present form. In my view, however, the indorsement of claim in the present case complies with the requirements of Ord 4, r. 4. It follows, therefore, that the present appeal should be allowed and the matter remitted to the High Court for a determination on the merits.
The role of the Master and Ord. 37, rr. 4 and 6
19. One other matter calls for comment. In the present case the Master struck out the summons on the ground that it was defective in failing separately to specify the interest component of the sum demanded and owing. The procedure governing the actual hearing of proceedings commenced by summary summons is set out in Ord. 37 of the Rules of the Superior Courts 1986. Order 37, r. 1 provides that every summary summons endorsed with a claim for a liquidated sum “shall be set down before the Master by the plaintiff on motion for liberty to enter final judgment for the amount claimed”. Order 37, r. 2 provides that, generally speaking, any motion for liberty to enter final judgment shall be heard on affidavit. Order 37, r. 3 provides that the defendant “may show cause against such motion by affidavit.”

20. Order 37 then distinguishes between the powers of the Master in uncontested cases on the one hand and those which obtain in contested cases on the other. Order 37, r. 4 deals with the power of the Master in uncontested cases:

“Upon the hearing of any such motion, the Master, in all uncontested cases, may deal with the matter summarily, and may give liberty to enter judgement for the relief to which the plaintiff may appear to be entitled and, for that purpose, in the case of an action for the recovery of land for non-payment of rent, may ascertain the amount of rent due, or he may dismiss the action and generally may make such order for the determination of the action as may seem just.”
21. It is accordingly clear that in uncontested cases the Master may deal with the matter summarily and give liberty to enter final judgment. Order 37, r. 6 deals, however, with contested cases. It provides:
“In contested cases, the Master shall transfer the case, when in order for hearing by the Court, to the Court list for hearing on the first opportunity; and, for this purpose, the Master may extend the time for filing affidavits and give such directions and adjourn the case before himself as he shall think fit. The Master may also, on consent, adjourn the case for plenary hearing as if the proceedings had been originated by plenary summons, with such directions as to pleadings, discovery, settlement of issues or otherwise as may be appropriate.”
22. The power to dismiss a contested case is clearly reserved to the High Court itself, as Ord. 37, r. 7 provides:
“Upon the hearing of any such motion by the Court, the Court may give judgment for the relief to which the plaintiff may appear to be entitled or may dismiss the action or may adjourn the case for plenary hearing…”
23. It will accordingly be seen that the Master has no jurisdiction to make final orders in contested cases. As I put it in my judgment as a judge of the High Court in ACC Bank plc v. Heffernan [2013] IEHC 557:
“His task in such cases is rather to the transfer the matter to the High Court for hearing when the case is “in order” for hearing by the Court. The reference to “in order for hearing” means nothing more than that the case is administratively ready for hearing so that, for example, all appropriate affidavits have been sworn and filed. This phrase does not gave the Master a jurisdiction to strike out contested cases on the ground that the pleadings are in some way irregular or that the proceedings ought to have been commenced by plenary action rather than by way of summary summons: see here by analogy the comments of Laffoy J. to like effect in ACC Bank plc v. Tobin [2012] IEHC 348. In that case she held that the Master had no jurisdiction to strike out a special summons on the grounds that the papers were not in order for the purposes of Ord. 38, r. 5.”
24. This conclusion is also borne out by other authority. In Grace v. Molloy [1927] I.R. 405 the plaintiff issued a summary summons claiming a fixed sum by way of arrears of rent. The defendant filed a replying affidavit claiming that he had an arrangement with the plaintiff to the effect that the plaintiff was to continue to pay rent to the head landlord under the lease and to remain as tenant under that lease and that it was only on the plaintiff making such payments that the defendant was obliged to recoup him in respect of the same amount. The defendant stated that the plaintiff had not paid the rent due to the head landlord and claimed that until such payments were made in the first instance he was not liable. The Master made an order for final judgment on the ground that the defendant’s affidavit did not disclose the fact entitling him to defend.
25. The defendant’s appeal against that decision of the Master succeeded before the High Court. As O’Byrne J. observed ([1927] I.R. 405, 405) Order XIII, r. 5 of the Rules of the High Court and Supreme Court 1926 gave the Master power to make certain orders, including an order for final judgment in uncontested cases. It was, however, otherwise in the case of a contested case. On this point O’Byrne J. stated:

“The present is admittedly a contested case, and therefore the Master had no power under that Rule to make the order for judgment, nor has he such jurisdiction under any order of the Rules of the High Court and Supreme Court.”
26. It is clear, therefore, that the Master has no jurisdiction to determine contested cases. What, then, is a “contested case” in this context? In my judgment in Heffernan, I stated:
“For my part I would interpret the reference to “an uncontested case” in its ordinary sense as meaning one where the defendant offers no opposition to the application over and above the entry of an appearance. The mere entry of an appearance is not in itself sufficient to bring a case into the category of a contested case, since this is simply the administrative mechanism which (subject to some exceptions not here relevant) acknowledges due service of the proceedings and fulfils the function of either permitting a solicitor to come on record or, where the litigant is acting in person, allowing for address for service to be thereby given.
But where – as here – the defendants oppose the application for liberty to enter final judgment under O. 37, r. 1 by the filing of affidavits disputing the plaintiff’s claim, then the case falls into the category of a contested case. In those circumstances, as the comments of O’Byrne J. in Grace make clear, the Master’s task is simply either to transfer the case into the High Court for adjudication once satisfied that the papers are in order and the matter is ready for determination or, should the parties so consent, adjourn the case for plenary hearing. Specifically, the Master has no function to resolve a conflict of fact or to make an assessment of the likely strength of the case made by either the plaintiff or the defendant or to determine that the case ought to have been commenced by plenary summons.

27. A similar view was taken by Kearns P. in Bank of Ireland v. Dunne [2013] IEHC 484 where he stated that:
“The Master has no jurisdiction in a contested case….Further, where a case is contested and there is some ambiguity as to form, the Rules do not confer on the Master a jurisdiction to dismiss the proceedings out of hand – his jurisdiction, clearly spelt out in the Rules (Ord. 37, r.6), permits him only to go so far as to decline to transfer the case to the court list until those deficiencies are rectified and the matter thereby becomes ‘in order.’”
28. By any standards, it is clear that the present case was a contested case. After all, AIB were seeking judgment for the sum of €785,928 and the defendant was contesting this by contending, among other things, that the summons was defective. This, by definition, brought the case within the category of a contested case. It is clear that in such cases the Master has no jurisdiction and his task is simply to transfer the case to the High Court once it is administratively ready for hearing. Specifically, the Master had no jurisdiction at all to strike out the summons on the ground that it was defective. That was a matter in respect of which only the High Court alone had a jurisdiction to determine.
Conclusions
29. In summary, therefore, I would allow the appeal on the basis that the plaintiff bank had supplied adequate particulars for the purposes of Ord. 4, r. 4. Specifically, as there was no suggestion at all that this defendant did not know the nature of the case which she had to meet, it cannot be said that these particulars were inadequate in any way. There may, perhaps, be special cases where more particulars might be required, but such cases are likely to be unusual, even exceptional. Certainly, the question of further particulars could not arise unless the defendant first demonstrates by cogent affidavit evidence that the matter cannot be fairly determined in the absence of such particulars.

30. I would also add that as this was by definition a contested case within the meaning of Ord. 37, r.6, the Master had no jurisdiction to strike out the summary summons on the basis that the summons was defective.

31. In these circumstances, I would allow the appeal and remit the matter afresh to the High Court to enable that Court to proceed to hear the merits of the present application which have yet to be determined.

 

Judgment of Mr. Justice Kelly delivered on the 22nd day of April 2015.

Introduction
1. I entirely agree with the judgment which has been delivered by Hogan J., but I wish to add some observations of my own. I do so because of the presence of some remarkable features in the way this litigation has proceeded to date.

The pleading point
2. The objection which was taken concerning the special endorsement of claim on the summary summons appears to have its genesis in what took place at a hearing before the Master of the High Court on the 13th March, 2014.

3. On that occasion it was apparently the Master himself who expressed his disquiet with the special endorsement of claim. He required submissions to be prepared on the point taken by him. That was so notwithstanding the absence of any evidence on the part of the defendant suggesting any prejudice being caused to her as a result of the alleged infirmity in the endorsement of claim.

4. In an affidavit sworn on the 25th April, 2014, by Mr. David Galvin on behalf of the plaintiff bank, he exhibited open correspondence from the defendant’s financial advisers dated the 10th September, 2013 and written in the context of this litigation. That correspondence contained an open offer to settle the litigation and the defendant acknowledged her indebtedness to the bank in the sum of €781,000. Notwithstanding that evidence, the Master proceeded to conduct a hearing on the pleading point on the 10th July, 2014, and reserved his decision until the 16th October, 2014. It was on that day that he erroneously struck out the summons.

5. The notice of motion seeking leave to enter final judgment was first made returnable before the Master on the 11th July, 2013. Despite the absence of any affidavit being sworn by the defendant it took until the 16th October, 2014, before the matter was ultimately and wrongly concluded by the Master.

6. Not merely was the order which was made on that occasion incorrect, but it was made in excess of jurisdiction. If that were the first time that such occurred, it might be unremarkable. But it is not, as is clear from what follows.

Jurisdiction
7. Hogan J. has analysed the provisions of O. 37 and the role of the Master of the High Court under that order.

8. In my view, the position is crystal clear. The wording of O. 37 makes it plain that the Master has no jurisdiction in contested cases other than to transfer them for judicial determination before a judge.

9. The words of the rule are so clear that it is difficult to imagine how there could be any doubt about what they mean. But if there was any such doubt it was entirely addressed in the series of decisions which are referred to in the judgment of Hogan J. Those decisions go back as far as 1927, but two of them are of very recent vintage. There is the decision of Kearns P. in Bank of Ireland v. Cawley [2013] IEHC 484. In that case the President held that the Master has no jurisdiction to dismiss proceedings in a contested case. That decision was given on the 8th November, 2013.

10. The second case is the decision of Hogan J. in ACC Bank plc v. Heffernan [2013] IEHC 557. That judgment was delivered just four days before that of the President in Bank of Ireland v. Cawley. There Hogan J. made it clear that the Master has no jurisdiction to make final orders in contested cases and he further analysed the meaning of the expression “in order for hearing” where it appears in O. 37, r. 6. I agree with him that it means nothing more than a case being administratively ready for hearing. It certainly does not give the Master a jurisdiction to strike out a contested case. It matters not whether a contest is on fact or law or by reference to some alleged irregularity in the pleadings or proceedings, the Master has no jurisdiction to adjudicate on it

11. Despite the clarity of the two judgments which I have cited, the Master, within months of their delivery, proceeded to do in the instant case precisely what it had been held he had no power to do by both Kearns P. and Hogan J.

12. The assumption by the Master of this non existent jurisdiction delayed the progress of this litigation for well in excess of a year. It deprived the plaintiff of the ability to make progress in circumstances where, in the correspondence to which I have already referred, the defendant accepted through her financial advisers that she has a liability to the plaintiff for €781,000. During all that period of delay, interest has continued to accrue and costs have multiplied. None of that ought to have happened. It would not have happened if the clear judgments of the President of the High Court and Hogan J. had been followed.
Result
13. I concur in the view that this appeal must be allowed.

Keaney v Sullivan [2015] IESC 75

Judgment of Ms. Justice Dunne delivered on the 23rd day of July 2015

This is an appeal from the plaintiff appellant (the Appellant) in respect of the judgment of the High Court (Finlay Geoghegan J.) delivered on the 16th January, 2007 and the order perfected on the 26th day of January, 2007 striking out parts of the statement of claim delivered by the Appellant in these proceedings. The order of the 26th January, 2007 was made pursuant to four separate notices of motion issued on behalf of the defendants/respondents (the Respondents) as follows:

1. The third, fourth, ninth, seventeenth and eighteenth respondents.
2. The eighth defendant (AIB).

3. The first respondent (Mr. Sullivan).

4. The tenth to sixteenth respondents (Ormsby Rhodes).

The background to this matter is described by the learned trial judge in her judgment and I gratefully adopt and set out her description of the background as follows:
“The plaintiff won a significant sum of money in the Lotto in the 1990’s. In 1996, he acquired a premises known as Scotts Building in Cobh, Co. Cork and decided to establish and run a theme bar to be known as the Titanic Bar. In 2000, he retained the services of the first defendant a chartered accountant as financial advisor and to seek an investment partner. The fourth defendant Michael Nolan was identified as such a person, in relation to a joint venture for the premises acquired and the pub to be run therein. In 2000, the plaintiff and the fourth defendant entered into a Heads of Agreement’’ and subsequent transactions pursuant thereto. These included a deed of assignment of the 20th October, 2000, by the plaintiff to himself and the fourth named defendant as tenants in common in equal shares of the premises known as Scotts Building; the incorporation of Titanic Queenstown Trading Company Limited (“TQT Company’’) on the 11th August, 2000 and the granting to it of a lease of the said premises. It was agreed that the proposed pub, the Titanic Bar was to be operated and run by TQT Company which was owned as to 49% by the plaintiff and 51% by the fourth defendant. The publican’s licence originally obtained in July, 2000, in the name of the plaintiff was transferred to TQT Company in September, 2001.
TQT Company traded as Titanic Bar until December 2002. In July, 2003, the plaintiff and the fourth defendant entered into “heads of agreement legally binding” on 2nd July, 2003 and pursuant thereto entered into a further series of agreements, deeds and share transfers. These included a contract for sale of the plaintiff’s interest in the Titanic Bar premises dated the 24th July, 2003; a deed of assignment between the plaintiff and the fourth and eighteenth defendants of the plaintiff’s interests in the premises; a transfer of the plaintiff’s 49% shareholding in TQT Company to the fourth defendant and a deed of release and other documents referred to in paragraph 62 of the statement of claim. The intended effect of these transactions appears to have been to separate the business and property interests of the plaintiff and fourth defendant.

The plaintiff in these proceedings by plenary summons issued in 2006, has brought multiple claims and made many allegations against the 18 defendants arising out of the transactions entered into in 2000, the running of the pub between 2000 and 2003 and the transactions in 2003. He seeks inter alia to set aside all the transactions, deeds and property transfers entered into and effected both in 2000 and 2003.

Following commencement of the proceedings the fourth defendant, Michael Nolan, the seventeenth named defendant, Tregan Properties Limited and the eighteenth defendant Julia Nolan, his wife made application for admission to the Commercial List. On the 3rd April, 2006, Kelly J. entered the proceedings into the Commercial List and treated the motion as the initial directions hearing. He further ordered that the plaintiff deliver a statement of claim on or before the 13th April, 2006.

On the 24th April, 2006, at a further hearing of the directions motion on complaint from a number of the defendants in relation to the form of the statement of claim delivered Kelly J. ordered that: ‘the plaintiff be at liberty to deliver an amended statement of claim herein by close of business on Monday 8th May, 2006, the said statement of claim to be properly drafted, in the proper form and properly particularised.’

An amended statement of claim was delivered on the 8th May, 2006.

The defendants were further given liberty on the 24th April, 2006, to bring notices of motion for orders dismissing or striking out the proceedings within a period of two weeks from receipt of the amended statement of claim.”

As can be seen from the recital of facts set out, the original statement of claim delivered herein was directed to be amended at a directions motion in the Commercial List presided over by Kelly J. by reason of the lack of particularity as to the allegations made against the various Respondents. The statement of claim as amended was the subject of the notices of motion which came on for hearing before Finlay Geoghegan J. However, on the day before the hearing of the motions to strike out, the Appellant delivered another statement of claim without leave of the Court. It was accepted that it was appropriate to determine the motions in respect of that statement of claim. Thus, the statement of claim at the heart of that decision and this appeal was the third attempt by the Appellant to plead his case in accordance with the Rules of the Superior Courts (RSC) having been expressly ordered to furnish particulars of the allegations in the statement of claim as required by the RSC.
Judgment of the High Court
The notices of motion issued on behalf of the respective Respondents sought to strike out all or part of the Appellant’s statement of claim pursuant to the provisions of Order 19, rule 27, 28 and/or the inherent jurisdiction of the Court. The learned trial judge in the course of her judgment described in detail the various applications made and the grounds relied on. Thus in the case of the application of the third, fourth, ninth, seventeenth and eighteenth Respondents the judgment focused, inter alia, on the allegations of fraud, deceit, misrepresentation and/or undue influence made against those parties by the Appellant. The Appellant relied on those allegations with a view to seeking to set aside agreements and deeds entered into in 2000 and 2003 with the fourth named respondent.

At the heart of these Respondents’ complaints about the statement of Claim was Order 19, rule 5(2) of the RSC which provides:

“In all cases alleging misrepresentation, fraud, breach of trust, wilful default or undue influence and in all other cases in which particulars may be necessary, particulars (with dates and items if necessary) shall be set out in the pleadings.”
In the course of her judgment, the learned trial judge quoted with approval passages from Delany and McGrath, Civil Procedure in the Superior Courts (2nd Ed.) paragraph 5.38 as follows:
“(b) Allegations of Fraud
5.38 The long established practice of the courts has been to require allegations of fraud to be pleaded with particularity. Rule 5(2) now provides that, in all cases alleging misrepresentation, fraud, breach of trust, wilful or undue influence and in all other cases in which particulars may be necessary, particulars (with dates and items if necessary) must be set out in the pleadings. The rationale of this requirement was explained by Barrington J. in Hanly v. Finnerty in relation to a plea of undue influence as follows:

Undue influence is a plea similar to fraud and it appears to me that it would be quite unfair to require a party against whom a plea of undue influence is made to go into court without any inkling of the allegations of fact on which the plea of undue influence rests. Because of the seriousness of the plea counsel will not lightly put his name to a pleading containing a plea of undue influence so that his solicitor will usually have in his possession some allegations of fact which justify the raising of the plea or at least excuse the plea from being irresponsible.
5.39 Thus, a party is not only required to expressly plead fraud or misrepresentation etc., but he must also give full particulars of its nature and how it is alleged to have occurred. However, it should be noted that, given the difficulty of proving fraudulent intention, malice or any other condition of the mind (which is often a matter of inference to be drawn from the proven facts), it suffices to allege this as a fact without setting out the circumstances from which the same is to be inferred.”
She also referred with approval to a passage from Bullen and Leake (12th Ed.) 1975 at pages 452 to 453 where the position in relation to the equivalent English rule is set out:
“The Statement of Claim must contain precise and full allegations of facts and circumstances leading to the reasonable inference that the fraud was the cause of the loss complained of (see Lawrance v. Lord Norreys (1890) 15 App. Cas. 210 at 221). It is not allowable to leave fraud to be inferred from the facts pleaded and accordingly, fraudulent conduct must be distinctly alleged and as distinctly proved (Davy v. Garrett (1878) 7 Ch.D. 473 at 489). ‘General allegations, however strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any court ought to take notice’
. . .

Particulars. Full particulars of any misrepresentation relied on must be given in the pleading (R.S.C., Ord. 18, r. 12 (1) (a)). The Statement of Claim must show the nature and extent of each alleged misrepresentation (Newport Dry Dock & Engineering Co. v. Paynter (1886) 34 Ch.D. 88) and it must contain particulars showing by whom and to whom it was made, and whether orally or in writing, and if in writing, identifying the relevant document (Seligmann v. Young [1884] W.N. 93). Where the plaintiff alleged that the entries made by the defendant in certain books were false, he was ordered in the first place to give particulars of entries which he alleged to be false, and subsequently to give further particulars showing in what respects each of these entries was false (Newport Dry Dock & Engineering Co. v. Paynter, ante); ‘all the accounts rendered to the plaintiff are untrue’ did not comply with an order for further particulars of fraud (Harbord v. Monk (1878) 38 L.T. 411).

Moreover, the necessary particulars of the fraudulent intention relied on must also be contained in the pleading (R.S.C., Ord. 18, r. 12 (1) (b)), and accordingly, the pleadings must set out the facts, matters and circumstances relied on to show that the party charged had or was activated by a fraudulent intention.”

The learned trial judge accepted that these principles were a correct statement of the pleading requirements in this jurisdiction. I agree with her view as to the appropriate principles applicable to the requirement to particularise allegations of fraud, deceit, misrepresentation, etc. Thus in the case of fraud, it is not sufficient that a statement of claim or other pleading makes a bare assertion of fraud against another party. The facts, matters and circumstances said to give rise to the alleged fraud must be expressly pleaded.
Having set out the relevant principles, the learned trial judge proceeded to analyse the claims alleging fraud, deceit, misrepresentation and undue influence alleged against the fourth named respondent in the statement of claim and in particular paragraphs 25, 26 and 28, paragraph 51 and paragraphs 62 to 71 of the statement of claim. By way of example it would be useful to set out paragraphs 25, 26 and 28 of the statement of claim which are in the following terms:

“25 In the foregoing the First Named Defendant in negotiating the Agreement between the Plaintiff and the Fourth Named Defendant hereinafter pleaded acted deceitfully, in conflict of interest and in breach of duty including fiduciary duty, and was at all times acting as the undisclosed agent of the Fourth Named Defendant.
26. In the year 2000 as a result of aggressive and improper conduct and deceit on the part of the First and Fourth Named Defendants and as a result of duress and undue influence including the threat by the First Named Defendant that if the Plaintiff did not enter into an Agreement with the Fourth Named Defendant then, the Manager of the AIB in Midleton would persuade AIB to foreclose on securities including the Plaintiff’s Family Home. The Plaintiff was thus induced to enter into purported Heads of Agreement bearing dated the 27th March, 2000 with the Fourth Named Defendant, which Heads of Agreement in any event the Fourth Named Defendant entirely breached.

28. The said purported Agreement of 2000 was void as it was obtained by deceit and/or impropriety/duress/undue influence, or alternatively on the grounds that it was an unconscionable and improvident bargain in that it was disproportionately disadvantageous to the Plaintiff and utterly failed to protect his existing and legitimate interests and was not complied with in any event by the Fourth Named Defendant, nor was it intended to be.”

Having carefully analysed the paragraphs of the statement of claim in respect of the claims made against the fourth named respondent the learned trial judge concluded:
“I have considered carefully each of the above sets of pleas and concluded that none satisfy the requirements of O. 19, r. 5(2).”
The learned trial judge then considered the allegations of fraud and deceit against the third named respondent set out in paragraphs 41, 44, 45 and 48 of the statement of claim and concluded that those paragraphs did not comply with the requirements of Order 19, rule 5(2) of the RSC.
The learned trial judge then proceeded to consider the application of the third, fourth, ninth, seventeenth and eighteenth respondents to strike out the claims of those Respondents pursuant to Order 19, rules 27 or 28 or pursuant to the inherent jurisdiction of the Court. She identified the relevant principles applicable as follows:

“Counsel for these defendants submit that all the remaining claims against these defendants should now be struck out either pursuant to O. 19, rr. 27 or 28 or pursuant to the inherent jurisdiction of the court on one or more of the following grounds:

(i) They disclose no reasonable cause of action against these defendants; and/or
(ii) They are frivolous or vexatious; and/or

(iii) They must fail or are unsustainable as that term has been used by the Supreme Court in Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425 and O’Neill v. Ryan [1993] ILRM 557.

The first two grounds need no elaboration. The nature of the third ground is clearly set out by Blayney J. in O’Neill v. Ryan where in relation to a similar ground advanced in that case he states at p. 561:

‘The second ground invokes an aspect of the inherent jurisdiction of the court which was defined as follows recently by Costello J. in D.K. v. A.K., High Court, 1990 No. 5306P, 2 October 1992:
‘The principles on which the court will exercise its inherent jurisdiction to strike out a plaintiff’s action can be shortly stated. Basically the jurisdiction exists to ensure that an abuse of the court’s process does not take place. If it is established by satisfactory evidence that the proceedings are frivolous or vexatious or if it is clear that the plaintiff’s claim must fail then the court may stay the action. But it will only exercise this jurisdiction sparingly and in clear cases (Barry v. Buckley [1981] IR 306: Sun Fat Chan v. Osseous Ltd [1992] 1 IR 425.’
Having expressed the view that the plaintiff’s claims there were neither frivolous nor vexatious Costello J went on to say:
What I am required to consider therefore is whether any of the claims against all or any of the defendants is so clearly unsustainable that I should strike it out.
I am satisfied that this is a correct statement of the law.’

The requirement that the High Court only exercise this jurisdiction sparingly derives from the caution expressed by McCarthy J. in Sun Fat Chan v. Osseous Ltd. [1992] 1 I.R. 425 where at pages 428 to 429 he stated:

‘By way of qualification of the jurisdiction to dismiss an action at the statement of claim stage, I incline to the view that if the statement of claim admits of an amendment which might, so to speak, save it and the action founded on it, then the action should not be dismissed.
Generally, the High Court should be slow to entertain an application of this kind and grant the relief sought.

Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated at earlier stages in the proceedings; often times it may appear that the facts are clear and established but the trial itself will disclose a different picture. With that qualification, however, I recognise the enforcement of a jurisdiction of this kind as a healthy development in our jurisprudence and one not to be disowned for its novelty though there may be a certain sense of disquiet at its rigour.’”

The learned trial judge has, in my view, correctly identified the principles to be applied in such an application. She then considered the relevant claims set out in paragraphs 73 and 74 of the statement of claim which she summarised as follows:
“Those claims relate to two distinct matters:

1. The deed of assignment now dated 30th September, 2004, (but alleged to have been executed on 24th July, 2003) between the plaintiff and the fourth and eighteenth defendants in relation to the premises known as Scotts Building; and
2. The transfer of the plaintiff’s 49% shareholding in TQT Company to the fourth defendant.”

The learned trial judge concluded that paragraphs 73(i) to (vi) together with the first sentence of paragraph 74 as amended in the form permitted by the learned trial judge should be allowed to be pursued against the fourth and eighteenth named respondents but she struck out any claim against the third named respondent appearing in paragraph 73 on the basis that contrary to the allegations contained therein, the deed referred to in paragraph 73 was one to which the third named respondent was not a party and was not executed by him as attorney for the fourth named respondent. She then struck out claims in relation to share transfers referred to in paragraphs 73(vii) and 74 of the statement of claim. She also struck out all those parts of the statement of claim which sought to challenge subsequent dealings in shares formerly held by the Appellant and for rectification of the share register.
The learned trial judge proceeded to consider a number of related claims against the fourth named respondent in relation to Titanic Queenstown Trading Company Limited (TQT Company). In this context, the Appellant sought to take derivative actions on behalf of TQT Company. He claimed that the company was never permitted to trade and was “an intentional sham” for the “exclusive profit” of the fourth named respondent (see paragraph 51(ix) of the statement of claim). The argument that the company was a sham was considered by reference to the decision in Snook v. London and West Riding Investments Limited [1967] 1 All E.R. 518 at 528 and Yukong Line Limited v. Rendsburg Investments [1998] 2 B.C.L.C 485. Finlay Geoghegan J. concluded that the Appellant’s claim as pleaded was not capable of supporting the claim that the company was a sham in the sense in which that term is explained in the authorities referred to and therefore she struck out assertions that the company was a sham on the basis that any such claim must fail.

Insofar as the Appellant sought to recover damages for the alleged misappropriation of funds of the company or wrongdoing to the company she concluded that there was no basis to “lift the corporate veil”. She noted that what the Appellant was seeking to do was to pursue claims against the fourth named respondent and others for alleged misapplication of funds of the company or wrongdoing to the company. She observed that it was well established that the plaintiff as a shareholder had no entitlement to any assets of the company such as would entitle him to pursue such a claim. She then went on to consider the arguments made on behalf of the Appellant in respect of the non-application of the rule in Foss v Harbottle. She relied on the Supreme Court decision in O’Neill v. Ryan [1993] I.L.R.M. 557 where the rule was explained and considered. She noted that the Appellant was no longer a shareholder in the company and concluded that there were no facts disclosed which would bring the Appellant within what has been described as the “fifth exception” to the rule in Foss v. Harbottle, namely “in the interests of justice”. Therefore, any claim which was in substance a claim for damages on behalf of TQT Company, and thus reliant on the non-application of the rule in Foss v. Harbottle, was struck out insofar as such claim was made against the fourth named respondent and a similar conclusion was reached insofar as any claim was made against the third named respondent on that basis.

The Appellant also made a claim based on oppression of the Appellant as a minority shareholder within the meaning of s. 205 of the Companies Act 1963 and that claim was also struck out on the basis that the Appellant was no longer a shareholder of the company.

The next section of the statement of claim to be considered was paragraphs 91 to 94. Insofar as those paragraphs contained allegations against the fourth named respondent the claims were permitted to be pursued but not in respect of the seventeenth named respondent. Accordingly those claims were struck out in respect of the seventeenth named respondent.

The final claims struck out related to the third named respondent and were in essence claims for damages as a result of an alleged breach of duty to the Appellant as a shareholder by the third named respondent in his capacity as a director of TQT Company. Those claims were set out in paragraphs 41 to 43 and parts of paragraph 44 to 45 of the statement of claim. Having identified the principles as to the duty owed by directors to shareholders set out in Crindle Investments v. Wymes [1998] 4 IR 567 at 591 the learned trial judge concluded that there were no facts pleaded in the statement of claim to sustain such a claim. Accordingly those claims were stuck out.

Finally, the claim against the ninth respondent was struck out as the claim against the ninth named respondent was essentially a claim for relief based on the claims against other respondents. As the relevant claims against the other Respondents had been struck out, the underlying basis for seeking those reliefs no longer existed and therefore those claims for relief were also struck out.
The application of the first named respondent
The claims against the first named respondent consisted of a claim for damages for negligence and breach of contract; claims in respect of breach of fiduciary duty which were summarised by the trial judge as “appear to relate to his position as a director and the plaintiff’s position as a shareholder of the company”; claims for breach of duty alleged to be owed to the company with consequent loss and damage to the company and claims that the first named respondent acted deceitfully. Save for the claim for damages for negligence and breach of contract, the claims against the first named respondent were struck out by the learned trial judge for the same reasons as those given in respect of the application on behalf of the previous group of respondents, namely a lack of material facts necessary to ground claims for breach of fiduciary duty, the inability of the Appellant to sue on behalf of the company (see Foss v. Harbottle) and the failure to particularise allegations as required by Order 19(5)(2) of the RSC.
The application of AIB
The claim against the eighth named respondent was also struck out by reference to the rule in Foss v. Harbottle. A further claim against the eighth named respondent in relation to a deed of release was struck out on the grounds that no separate cause of action was pleaded against the eighth named respondent in relation to the deed of release. The final claim against the eighth named respondent concerned discovery and it was concluded by the learned trial judge that it was not necessary to keep the eighth named respondent as a party to the proceedings for the purpose of seeking discovery. She pointed out that if discovery from the bank was necessary, the procedure under the rules for non-party discovery could be utilised. Accordingly, all of the claims against the eighth named respondent were struck out.
The application of Ormsby Rhodes
The final application was made on behalf of the tenth to sixteenth named respondents who are the partners in Ormsby Rhodes, a firm of accountants. That firm acted as auditors for TQT Company. The claims against Ormsby Rhodes are for damages for loss and damage suffered by (a) TQT Company and (b) the Appellant by reason of the alleged negligence and breach of duty of Ormsby Rhodes in carrying out their duties as auditors to TQT Company. The claims were struck out on the basis that the first of those claims could only be brought by the company. So far as the Appellant’s claim under the second heading was concerned the learned trial judge, relying on the principles set out in Prudential Assurance Co. Ltd v Newman Industries Ltd (No. 2) [1982] Ch 204 as applied by the Supreme Court in O’Neill v. Ryan referred to above, concluded that there was nothing in the pleadings to show any basis to support the contention that such alleged loss was other than a diminution in the value of his shareholding. Thus insofar as there was a personal claim made by the Appellant against Ormsby Rhodes such claim was struck out on the basis that no cause of action vested in him as a shareholder for any diminution in the value of his interest in the company by reason of the alleged negligence and/or breach of duty of Ormsby Rhodes as auditors to the company.

The other claim made against Ormsby Rhodes was a claim said to arise by vicarious liability for the alleged wrongdoing of the first named respondent. It is contended by the Appellant that the first named respondent and Ormsby Rhodes had a relationship and/or association with one another. The learned trial judge pointed out that the statement of claim did not, contrary to the requirements of Order 19, rule 3 of the RSC state the material facts upon which the Appellant relied to establish that Ormsby Rhodes was vicariously liable for any alleged wrongdoing of the first named respondent. She referred in detail to evidence on affidavit in respect of this issue. She concluded that:

“. . . the bald assertions that the first defendant acted as agent for or was in partnership with Ormsby Rhodes are ones which having regard to the affidavit evidence (which it was common case I am entitled to take into account in considering the matter pursuant to the inherent jurisdiction of the court) are ones which the plaintiff could not sustain at the hearing of the action.”
She found that there were no material facts pleaded to establish an association between the first named respondent and Ormsby Rhodes. She concluded that even if the Court were to permit the Appellant to amend the statement of claim to set out material facts, that it appeared from the affidavits sworn by the Appellant and those sworn on behalf of Ormsby Rhodes simply demonstrated that the first named respondent and Ormsby Rhodes practised in Cork from the same premises in 2000. As she pointed out, the mere fact that two persons sharing a common profession practised from the same premises could not be a basis for a reasonable cause of action for one person to be made vicariously liable for alleged wrongs by the other. She therefore struck out all the claims against Ormsby Rhodes.
Thus, as can be seen, a significant number of the claims brought by the Appellant against the Respondents were struck out by the learned trial judge relying on the provisions of Order 19, rule 5(2), Order 19, rules 27 and 28 and pursuant to the inherent jurisdiction of the Court. Not all of the claims of the Appellant were struck out by the learned trial judge. The remaining claims were the subject of a hearing before the High Court (Feeney J.) and resulted in a judgment delivered on the 19th December, 2008. The Appellant failed in all his remaining claims. As that judgment is the subject of an appeal I do not propose to make any further comment on that decision.
Submissions
This appeal concerns a statement of claim which contains some ninety nine paragraphs, many divided into lengthy sub-paragraphs. The written submissions furnished on behalf of the Appellant ran to ninety two pages. The Supreme Court Practice Direction (SC 13) provides that written submissions should in general not exceed twenty five pages. A further set of submissions described as a synopsis of the written legal submissions was also provided. The delivery of overlong written submissions is not helpful. As the Practice Direction makes clear, the purpose of written submissions is to summarise succinctly the arguments of the parties. They should set out clearly and succinctly the issue or issues of law to be argued on an appeal. The Appellant’s submissions fall far short of this requirement.

The length of the written submissions furnished on behalf of the Appellant is in itself a matter of concern but a matter of greater concern to the Court and indeed, to the Respondents is the content of those written submissions. Written submissions are not for the purpose of making further unsubstantiated allegations against the opposing parties to an appeal. Equally, it is inappropriate to use the submissions to set out a narrative of the Appellant’s complaints against the various defendants in an attempt to provide more information by way of factual background to the matters alleged in the statement of claim. In this case, further allegations are made against some of the parties in the written submissions which were not even made in the statement of claim. For example, in the synopsis of the written submissions and in the longer written submissions at page 85 it is stated as follows:

“As stated Michael Nolan the fourth defendant would not have succeeded in defrauding the plaintiff without the collusion of the AIB Bank and the firm of chartered accountants the tenth to sixteenth defendants trading as Ormsby Rhodes otherwise BKR Ormsby Rhodes.”
As counsel on behalf of Ormsby Rhodes pointed out, there is nothing at all in the statement of claim to support the suggestion that Ormsby Rhodes colluded in any way to assist the fourth named respondent to defraud the Appellant.
Further in the synopsis of the written legal submissions the following appears:

“Furthermore, Vincent Keaney was not aware of a series of fraudulent acts that led to the execution of all the agreements in this matter and which were committed by the respondents either jointly and/or severally which include: misrepresentation, professional negligence, fraud, deception, breach of fiduciary duty, forgery of documents, unconscionable bargain and breach of contract. All these acts flow at the backdrop of a sophisticated conspiracy to defraud, and indeed defrauded the plaintiff commencing from the initial meeting of Vincent Keaney and the [sic] James Sullivan.”
The use of written submissions by the Appellant to make such unsubstantiated allegations against other parties to the proceedings is in my view nothing short of an abuse of process and is something to be strongly deprecated. The application before the High Court was to dismiss or strike out those parts of the statement of claim which it was contended did not comply with Order 19, rules 27 and 28 and/or pursuant to the inherent jurisdiction of the courts. The submissions should have been focused on the grounds relied on for the appeal before this court, namely, whether or not the learned trial judge identified the appropriate principles of law in the applications before her and applied those principles correctly to the facts and circumstances of the case before her. The submissions of the appellant went far beyond the bounds of what is permissible.
For completeness, I should add that I had helpful written submissions from the several Respondents.
Discussion on the issues
It was confirmed in the course of the hearing before the Court that there was no issue between the parties as to the relevant principles of law applicable to the applications made on foot of the respective notices of motion issued by the respective Respondents. Rather the argument before the Court was that the learned trial judge erred in law and in fact in her application of the relevant principles to the facts of the case. At its most succinct, the argument was made on behalf of the Appellant that the learned trial judge fell into error in not reading the statement of claim as a whole but rather decided matters “in a selective and disjointed way”. It was also suggested that the Appellant should be permitted to amend the statement of claim following discovery.

Two central issues in the course of the appeal were first, the role of Order 19, rule 5(2) of the RSC and second, the application of the rule in Foss v. Harbottle. I propose to look at those two issues briefly. In the course of her judgment as set out above, the learned trial judge referred to the judgment of Barrington J. in Hanly v. Finnerty [1981] I.L.R.M. 198, it seems to me to be of such relevance that it is worth reiterating that passage again. Barrington J. at page 202 stated:

“Undue influence is a plea similar to fraud and it appears to me that it would be quite unfair to require a party against whom a plea of undue influence is made to go into court without any inkling of the allegations of fact on which the plea of undue influence rests. Because of the seriousness of the plea counsel will not lightly put his name to a pleading containing a plea of undue influence so that his solicitor will usually have in his possession some allegations of fact which justify the raising of the plea or at least excuse the plea from being irresponsible.”
There are two observations I would make briefly in relation to that passage. First of all, when pleading fraud etc., it is necessary to set out the allegations of fact in a statement of claim or pleading on which the plea concerned rests. That is required by the rules and as is made clear in that passage from the judgment of Barrington J., it is a fundamental requirement. The reason is, as Barrington J. said, that it would be quite unfair to require a party against whom such an allegation is made to go into court without any idea whatsoever as to the nature of the allegations of fact on which that plea rests. The second point highlighted by Barrington J. in that passage is the seriousness of such a plea. One does not lightly make an allegation of fraud against another party. It has to be borne in mind that absolute privilege attaches to pleadings in court proceedings (see s. 17(2)(g) of the Defamation Act 2009). The fact that absolute privilege attaches to pleadings in legal proceedings is not a licence to make unsubstantiated allegations of a serious nature such as fraud against another party. Care must be taken before making such an allegation. There must be available facts to support such a plea and those facts must be particularised in the pleading concerned. The seriousness of such a plea is underlined by the express requirement contained in Order 19, rule 5 of the RSC to properly particularise such allegations. Bullen and Leake in the passage set out earlier sets out how this should be done.
It is not suggested on behalf of the Appellant that it is not necessary to particularise the pleas complained of in these proceedings but as I have explained the position of the Appellant is that on a full reading of the statement of claim there are sufficient particulars of the allegations underlying the pleas of fraud, deceit, etc.
The rule in Foss v. Harbottle (1843) 2 Hare 461
The learned trial judge in the course of the judgment referred at length to the rule in Foss v. Harbottle and to the explanation of that decision by the Supreme Court in the case of O’Neill v. Ryan [1993] ILRM 557.

The central issue in Foss v. Harbottle is whether a shareholder is entitled to prosecute an action on behalf of a company for a wrong alleged to have been done to the company. Such an action is a form of a derivative action. The Appellant in this case relies on the so-called fifth exception to the rule in Foss v. Harbottle, to argue that it is “in the interests of justice that the plaintiff would be allowed to pursue an action on behalf of TQT Company for alleged damage to that company”. In considering the question of the so-called fifth exception to the rule in Foss v. Harbottle, Blayney J. at page 568 of his judgment said:

“Counsel cited a later passage in the judgment of Sir G. Jessel M.R. to support his submission that exceptions to the rule in Foss v. Harbottle would be allowed when necessary in the interests of justice. The passage in question, which occurs at page 481, begins with the following sentence:

‘It remains to consider what are those exceptional cases in which, for the due attainment of justice, such a suit should be allowed.

This sentence, however, is preceded by the following sentence which makes it clear that the types of case he was dealing with were cases concerned with providing a remedy for an injury to a corporation and not for an injury to the shareholding of a particular corporator. The preceding sentence is as follows:

‘If a case should arise of injury to a corporation by some of its members, for which no adequate remedy remained except that of a suit by individual corporators in their private characters, and asking in such character the protection of those rights to which in their corporate character they were entitled, I cannot but think that the principles so forcibly laid down by Lord Cottenham in Wallworth v. Holt and other cases would apply and the claims of justice would be found superior to any difficulties arising out of technical rules respecting the mode in which corporations are required to sue.’

It is clear from this and particularly from the last phrase “respecting the mode in which corporations are required to sue” that the exceptional cases which Sir G. Jessel M.R. had in mind were cases of injury to a corporation for which it would be entitled to sue so that the remedy being given was a remedy for such injury and not for an injury to the alleged rights of an individual corporator which is what is in issue here.”
Blayney J. went on in the course of that judgment to refer to a passage from a judgment of the Court of Appeal in Prudential Assurance v. Newman Industries Limited (No. 2) [1982] Ch. 204. That was both a derivative action and a personal action against Newman Industries and two of its directors alleging in regard to the latter claim that as a result of the fraud of the two directors the quoted price of Newman Industries must have been affected and accordingly they had suffered some damage to their shareholding. Blayney J. at page 569 quoted from the judgment in that case as follows:
“The Court of Appeal dealt with this in its judgment at page 222:

‘In our judgment the personal claim is misconceived. It is of course correct, as the judge found and Mr. Bartlett did not dispute, that he and Mr. Laughton, in advising the shareholders to support the resolution approving the agreement, owed the shareholders a duty to give such advice in good faith and not fraudulently. It is also correct that if directors convene a meeting on the basis of a fraudulent circular, a shareholder will have a right of action to recover any loss which he has been personally caused in consequence of the fraudulent circular; this might include the expense of attending the meeting. But what he cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a ‘loss’ is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. ‘Loss’ is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3% shareholding. The plaintiff’s shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company’.

And at page 224 the Court said:

‘A personal action would subvert the rule in Foss v. Harbottle and that rule is not merely a tiresome procedural obstacle placed in the path of a shareholder by a legalistic judiciary. The rule is the consequence of the fact that a corporation is a separate legal entity. Other consequences are limited liability and limited rights. The company is liable for its contracts and torts; the shareholder has no such liability. The company acquires causes of action for breaches of contract and for torts which damage the company. No cause of action vests in the shareholder. When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting. The law confers on him the right to ensure that the company observes the limitations of its memorandum of association and the right to ensure that other shareholders observe the rule, imposed upon them by the articles of association.’

In my opinion that is a correct statement of the law in regard to the status of a shareholder in a limited liability company. What is also a relevant consideration in addition to the matters referred to in the two passages cited are the consequences which would flow from giving shareholders in a company a personal action against a party causing damage to the company. It would enable a multiplicity of actions to be brought and deprive the company itself of the ability to control them. So it would be both harmful to companies and very much against the public interest in opening the door to irresponsible litigation. For these reasons also I am satisfied that a personal claim by a shareholder should not be permitted.
I am satisfied, accordingly, that even if the plaintiff were still a shareholder in Ryanair he would have no cause of action against the last four defendants. A fortiori he has none since he is no longer even a shareholder.”

The judgment of Blayney J. in O’Neill v. Ryan is a reminder of the importance of the rule in Foss v. Harbottle. While there are exceptions to that rule, it is clear from the judgment of Blayney J. that no such exception can avail a party who wishes to sue in respect of the reduction in value of a shareholding as a result of damage to the company is a matter for the company to deal with. I cannot see any basis upon which the so called fifth exception to the rule in Foss v Harbottle can avail the Appellant.
Decision
I am conscious of the remarks made in the case of National Educational Welfare Board v. Ryan [2008] 2 IR 816 at page 825 by Clarke J. where he stated:

“It is in the very nature of fraud (or other unconscionable wrongdoing) that the party who is on the receiving end will not have the means of knowing the precise extent of what has been done to them until they have obtained discovery. To require them to narrow their case prior to defence (and, thus, discovery) would be to create a classic Catch-22. The case will be narrowed. Discovery will be directed only towards the case as narrowed. Undiscovered aspects of the fraud or the consequences of the fraud will, as a natural result, never be revealed. This would, in my view, be apt to lead to an unjust solution.”
He went on to observe at pages 824 to 825 as follows:
“A balance between these two competing considerations needs to be struck. The balance must be struck on a case by case basis but having regard to the following principles. Firstly, no latitude should be given to a plaintiff who makes a bare allegation of fraud without going into some detail as to how it is alleged that the fraud took place and what the consequences of the alleged fraud are said to be. Where, however, a party, in its pleadings, specifies, in sufficient, albeit general, terms the nature of the fraud contended together with specifying the alleged consequences thereof, and establishes a prima facie case to that effect, then such a party should not be required, prior to defence and, thus, prior to being able to rely on discovery and interrogatories, to narrow his claim in an unreasonable way by reference to his then state of knowledge. Once he passes the threshold of having alleged fraud in a sufficient manner to give the defendant a reasonable picture as to the fraud contended for, and establishes a prima facie case to that effect, the defendant should be required to put in his defence, submit to whatever discovery and interrogatories may be appropriate on the facts of the case, and then pursue more detailed particulars prior to trial.”
I would readily endorse those observations. However one has to bear in mind, as Clarke J. said, that a plaintiff alleging fraud has to pass the threshold “in a sufficient manner to give the defendant a reasonable picture as to the fraud contended for”. The Appellant has in my view fallen short of passing the threshold. In addition, many of the claims made in these proceedings are claims that could only be properly brought by TQT Company. These are not claims that can be pursued by the Appellant.
By way of conclusion, I want to make it clear that I have carefully read the statement of claim herein. I have considered the judgment of Finlay Geoghegan J. in respect of the motions brought by the respective Respondents. I have considered the written and oral submissions of the parties on this appeal. I am satisfied that each of the grounds relied on by the respective Respondents in support of their applications to strike out parts of the statement of claim was carefully considered by the learned trial judge. The relevant principles of law were set out in the course of her judgment. There is no suggestion that she erred in any way in identifying those principles. I can see no basis for suggesting that Finlay Geoghegan J. erred in any way in her application of the relevant principles to the facts and circumstances of this case. On the contrary, it is clear from her judgment in this matter that she carefully and properly considered all the issues before her.

Finally, I do not think that this is a case in which the Court should give any consideration to the possibility of an amendment of the statement of claim. The statement of claim at issue in these proceedings was the third statement of claim to be delivered. It is worth recalling that Kelly J. had directed that the second statement of claim should be delivered in circumstances where the complaint made at that time was the failure to particularise the claims being made against the various respondents. The comments of McCarthy J. in Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425 at page 428 must always be borne in mind where he stated:

“By way of qualification of the jurisdiction to dismiss an action at the statement of claim stage, I incline to the view that if the statement of claim admits of an amendment which might, so to speak, save it and the action founded on it, then the action should not be dismissed.
Nevertheless in circumstances such as this where the Appellant has had three opportunities to deliver a statement of claim setting out appropriately the claims against the respective respondents it is difficult to see what purpose would be served by giving a further attempt to plead the case appropriately.
In all the circumstances of the case I would dismiss the appeal.

Quinn v IBRC

[2016] IECA 21

JUDGMENT of Ms. Justice Irvine delivered on the 29th day of January 2016
1. This judgment concerns two related appeals brought in respect of the same set of proceedings. The first appeal is against the Order of the High Court (Haughton J.) dated 21st May, 2015, whereby he refused an application brought by the plaintiffs to amend their statement of claim.

2. The second appeal is brought by the defendants in respect of the order of the High Court (Haughton J.) dated 21st May, 2015, whereby he refused their application to strike out certain paragraphs of the plaintiffs’ statement of claim.

3. Before considering each appeal it is first necessary to briefly summarise the background circumstances germane to both.
Background

Procedural chronology
4. The proceedings were commenced by means of plenary summons dated 16th May, 2011, and were admitted to the commercial list on 30th May, 2011. In their statement of claim delivered on the 8th June, 2011, the plaintiffs, who claim that they are the ultimate beneficial owners of the Quinn Group, challenge the validity of six share charges (“Share Pledges”) which they gave to Anglo Irish Bank (“the bank”), as security for monies loaned by the bank to the Quinn Group. They also seek to challenge the validity of six personal guarantees (“the Guarantees”) which they gave to the bank by way of security in respect of significant loans made by the bank to six Cypriot companies. In addition they seek remedies against the bank for alleged breach of duty/breach of fiduciary duty and the negligent infliction of economic harm.

5. The following is a brief outline of the facts relied upon by the plaintiffs to support these claims.

6. As a result of the negative drop in the share price of Anglo in 2007, the bank advanced funds to companies within the Quinn Group so that the latter could meet the margin calls on its Contracts for Difference (“CFD”) position. The plaintiffs signed many security documents during this period and allege that they did so without obtaining any legal or financial advice.

7. Following further price drops in Anglo’s share price in 2008, the Quinn Group came under pressure from banks and bondholders. As a result, a further loan facility was provided to the Quinn Group in return for the provision of the Share Pledges executed by the plaintiffs in favour of the bank.

8. Following a demand by the bank in 2008 that the Quinn Group reduce its CFD position, the majority of the CFDs were unwound into shares, the first portion of which (102,000,000) were purchased by a group of investors known as the “maple ten” while the second portion (108,625,000) were purchased by the Quinn Group. These shares were then transferred to the six Cypriot companies, each of which was wholly owned by an individual member of the Quinn family, i.e. the plaintiffs. As part of the unwinding arrangement, the plaintiffs provided the Guarantees in respect of the relevant Cypriot companies, and those companies ultimately received a total of €498 million from the bank.

9. On 14th April, 2011, Anglo appointed the second defendant as share receiver in respect of the Share Pledges.

10. In the original statement of claim, which runs to some 31 pages, the plaintiffs maintain that the Share Pledges and Guarantees are unenforceable at the suit of the bank. That claim is based on two separate assertions. The first is that these securities were procured by reason of undue influence or in the alternative that they ought to be considered to be improvident or unconscionable bargains, such that they should be set aside. The second is that the securities should be set aside on the grounds that the charges were given in respect of lending that was in breach of Section 60 of the Companies Act 1963 and/or in breach of the provisions of the Market Abuse Regulations (“ MAR’).

11. The defences of both defendants were delivered in July, 2011 and the plaintiffs reply thereto in August, 2011. Thereafter, the High Court (Kelly J.) on 16th December, 2011, directed the trial of a preliminary issue. That issue concerned the locus standi of the plaintiffs to rely on certain breaches of s.60 of the Companies Act 1963 and the MAR in support of their claims that the securities are unenforceable. The order of Kelly J. set the following question for determination:

“Do the Plaintiffs or any of them have the standing or entitlement to rely upon the alleged or any breach:-

(a) of the Market Abuse Regulations; or
(b) Section 60 of the Companies Act, 1963,

in aid of any of their claims for declarations of invalidity, unenforceability or no legal effect in respect of any Charge [on] Shares or any Personal Guarantees herein?”
12. By judgment of the High Court (Charleton J.) dated 23rd February, 2012, it was held that the plaintiffs had locus standi to rely on those breaches in support of their claims. However, on appeal, it was held by a unanimous decision of the Supreme Court (Clarke J.) dated 27th March, 2015, that the plaintiffs were not entitled to rely on the alleged breaches of the MAR and /or s.60 of the Companies Act 1963 in support of their claims, as they had pleaded them.
13. In the course of his judgment Clarke J. summarised the Quinns’ claim as pleaded in the statement of claim at para. 12.1 of his judgment where he stated:-

“The statement of claim refers specifically to the alleged illegality of the loan transactions and what is said to be the consequent unenforceability of the security and guarantees.”
14. In the face of this particular claim he concluded that the underlying lending contracts were enforceable notwithstanding their illegality.
15. Of particular significance to the plaintiffs’ application to amend their statement of claim was the observation of Clarke J. at para. 12.6 of his judgment where he stated:-

“There does not seem to be a plea contained in the statement of claim which suggests that the security and guarantees are allegedly void or unenforceable on a separate and standalone basis, as opposed to being invalid by being closely connected to the lending transactions which are said to be void or unenforceable due to illegality.”
16. Having identified the limited nature of the claims pleaded by the plaintiffs in their statement of claim, Clarke J. later concluded as follows at para. 12.16 of his judgment:-
“I have further concluded that the Quinns never made a case which suggested that the security arrangements might be unenforceable, even if the underlying lending transactions were enforceable. On that basis, I am forced to conclude that, on the case as it has been pleaded and run to date, it can only be held that the relevant security arrangements are enforceable. This is so because the underlying loans themselves are enforceable and no alternative case has been made. In those circumstances, the question of whether it might be possible to undo executed security just does not arise.”
17. In the course of his judgment Clarke J. noted that had the plaintiffs’ claims been pleaded differently they might have sought to argue that the securities were unenforceable on a separate and stand alone basis as opposed to being invalid due to the illegality of the underlying lending, but they had never made that case.
18. At this juncture, it is appropriate to consider the first appeal.
The first appeal
19. Following the Supreme Court judgment the plaintiffs, by notice of motion dated 17th April, 2015, sought to amend their statement of claim pursuant to O.28, r.1 of the Rules of the Superior Courts, 1986. The pertinent amendment sought the insertion of what the learned High Court judge conveniently termed as a plea of “stand alone” unenforceability of the Share Pledges and Guarantees. This was a plea that Clarke J. at para. 12.10 of his judgment suggested might have been open to the plaintiffs, had they chosen to pursue it. This is what he said:-

“A second type of allegation might have been to suggest that, even if the underlying loans were themselves enforceable (on the grounds that policy did not require unenforceability), then, nonetheless, security put in place to support illegal activity by persons who are unaware of the illegality concerned might not be capable of being enforced.”
20. Accordingly, it would prima facie appear that the application brought by the plaintiffs to amend their statement of claim was made in direct response to a number of observations made by Clarke J. at paras. 12.9 to 12.13 of his judgment.
21. The application was refused in the High Court (Haughton J.) on a number of grounds but principally on the basis of the rule in Henderson v. Henderson (1843) 3 Hare 100, which concerns applications which may be considered to be an abuse of process and also on the grounds of delay on the part of the plaintiffs in the making of the application. The High Court judge dealt in some detail with both of these issues but also made a number of other findings which were material to his conclusions.

22. Starting at para. 30 of his judgment he noted the following as relevant factors:-

(1) That the issue which the plaintiffs now wished to advance was never a matter of real controversy at any time prior to the decision of the Supreme Court on 27th March, 2015, such that the application did not comfortably fall within the provisions of Order 28.
(2) That there was little difference between the amendment sought and the existing pleas such that they fell under the rubric of those “which ought to have been raised” from the outset and he went on to describe the proposed stand alone plea of unenforceability as a new argument concerning the legal consequence of facts that had already been pleaded.

(3) That the plaintiffs ought to have anticipated that the outcome of the preliminary issue might be that the securities would be deemed to be enforceable even if the underlying lending was found to be in breach of MAR or Section 60 of the Companies Act 1963. Thus, in anticipation of such a finding, they should have raised the stand alone enforceability plea at a much earlier time. Further, the restricted nature of the plaintiffs’ claim as pleaded in the original statement of claim had been drawn to their attention by the bank in its written submissions of May, 2012 filed in respect of the appeal to the Supreme Court.

(4) That no reasonable explanation had been furnished as to why the plea of stand alone enforceability had not been pleaded at the outset and that the obligation to provide such an explanation was all the more important in the context of a modular trial.

(5) That what the plaintiffs were now seeking to do by way of amendment was to recast their arguments, which still essentially relied upon the illegality of the underlying lending, to allow them pursue their claim of stand alone unenforceability. Accordingly, the application to amend the pleadings both in respect of its timing and proposed wording demonstrated an intention on their part to overreach or circumvent the decision of the Supreme Court on the preliminary issue. This was an abuse of process and should not be permitted for reasons of public policy.

(6) That it was questionable as to whether a preliminary issue would have been directed by Kelly J. if the proposed amendment had been in the original statement of claim because the issues to be determined would have involved a consideration of “innocence”, or “lack of awareness” on the part of the plaintiffs of the alleged illegality of the underlying lending, matters which were only determinable following a full consideration of the facts at a hearing on oral evidence.

(7) That to permit the amendment would precipitate general prejudice in that the efforts that had been expended by the parties but particularly by the defendant and the court itself in dealing with the preliminary issue would, to a large extent, have been wasted.

(8) That the culpable delay of the plaintiffs, while not of itself a bar to the success of the proposed application, was relevant to the question of whether the amendment sought would constitute an abuse of process. The same had undermined the rights of the defendants, the efficient use of court time and the principles which seek to ensure finality in the litigation process.

23. The High Court judge in refusing the application then expressed himself satisfied that the plaintiffs had failed to provide an adequate explanation as to why the amendment sought had not been pleaded at the outset or been brought at a much earlier point in time.
Submissions on behalf of the plaintiffs
24. Mr. Dunleavy S.C., on behalf of the plaintiffs, submitted that the trial judge had erred in fact and in law in refusing the application to amend the statement of claim. He made two principal submissions. The first was based on the provisions of O.28, r.1 which he submitted had always been considered to be a liberal rule and which if properly applied to the facts of this case warranted the granting of the amendment sought. The second was that, on the facts of the present case, the rule in Henderson v. Henderson was not relevant to the exercise of the court’s discretion.

25. Counsel submitted that the High Court judge had erred in refusing the application given that the plaintiffs required the amendment to properly plead a matter in controversy between themselves and the bank. He submitted that the plaintiffs had laboured under the mistaken belief that they had advanced their claim on a basis that included a stand alone plea as to the illegality and unenforceability of the securities, until the Supreme Court had found otherwise. He drew the Court’s attention to a paragraph in the plaintiffs’ written submissions to the Supreme Court to support this submission and emphasised that this was not a case in which the plaintiffs had been holding back on this aspect of their claim.

26. Counsel also argued that the reason the application to amend the statement of claim was delayed was because of the legal distinction that had been drawn by Clarke J. between the different claims that might be made by those who granted security in respect of underlying loans which were subsequently found to be illegal. His clarification of the law was not foreseeable at the outset of the proceedings. Consequently, counsel submitted that there had been no culpable delay in seeking the amendment.

27. In addition, counsel maintained that if the plaintiffs were permitted to make the amendment sought, that the same would not cause any significant logistical prejudice or delay. In respect of the former he relied on the findings of the High Court judge. In respect of the latter he relied on the fact that, by reason of the intervention of the Director of Public Prosecutions, the trial of the action was now unlikely to be heard until 2017.

28. In respect of the abuse of process point, counsel submitted that the High Court judge erred in applying the rule in Henderson v. Henderson to the facts of this case. In particular, he argued that it was difficult to conceive of the rule having any relevance or application to an application to amend pleadings in the course of a single set of proceedings, despite the modular trial, except in circumstances in which a plaintiff was attempting to change the grounds or facts upon which his claims were made. In this context, he relied upon the fact that the High Court judge had correctly concluded that the proposed new plea as to innocence was little different to the lack of awareness plea already made such that the proposed claim based on the stand alone unenforceability of the securities amounted to no more than a new argument as to the legal consequences of the same facts.

29. Finally, counsel argued that the issues which he now sought to introduce in the amended pleadings were not res judicata by virtue of the Supreme Court judgment. The plaintiffs were not seeking to go behind that decision in bringing the application to amend the pleadings. Further, the fact that there had been a hearing in respect of a preliminary issue did not afford the defendants any legitimate basis upon which to argue that the application to amend constituted an abuse of process. That hearing had not resulted in any savings in costs or time. The action still had not come on for hearing regardless of the outcome of the preliminary issue and the duration of the ultimate trial was unlikely to be any different to what it would have been had there not been a preliminary issue, albeit that the Supreme Court decision would of course play an important role. Consequently, counsel submitted that the High Court judge was wrong to find the proposed amendment constituted an abuse of process.
Submissions on behalf of the first defendant
30. Mr. Gallagher S.C., counsel for the first defendant, made two principal submissions in support of the High Court judge’s findings.

31. Counsel’s first submission was that the High Court judge was correct in finding that if the application was to succeed, the defendants would suffer prejudice. He highlighted that the prejudice identified by the High Court judge was not logistical but rather general prejudice relating to the time and expense that had been incurred in the trial of the preliminary issue. More specifically, counsel emphasised that the amendment sought, albeit based on the same facts, would give rise to new factual enquiries concerning the innocence of the plaintiffs in respect of the illegality of the underlying lending transactions. He pointed to the fact that the Supreme Court did not have to deal with this issue as it had adjudicated upon the preliminary issue on the basis of assumed facts. Thus, counsel submitted that the proposed amendment would lead to further factual enquiries and potentially further discovery.

32. In these circumstances, counsel submitted that the plaintiffs were obliged to furnish a full explanation for their delay in seeking to amend the statement of claim. That which had been provided was, he urged, both wrong and contradictory. The claim now sought to be made had, contrary to the averments of Ms. Quinn in her affidavit, never previously been advanced. Neither had it been brought to the attention of the Supreme Court. Counsel also submitted that the plaintiffs’ explanation that the claim was always considered to have been part of the original case was contradictory to the plaintiffs’ written submissions which advised that it was by reason of the uncertainty of the law at the time of the inception of the proceedings that the plea had not been included at the outset of proceedings. Accordingly, counsel submitted that the High Court judge was correct to refuse the application.

33. Secondly, counsel submitted that it was wrong to suggest that the rule in Henderson v. Henderson was not applicable because the plaintiffs were not seeking to go behind the determination of the preliminary issue. Counsel observed that the purpose of the rule in Henderson v. Henderson was to deal with situations in which a party does not attempt to go behind a specific determination, because it is bound by that determination as a matter of issue estoppel, but rather seeks to advance another ground in relation to its case on which it maintains it is entitled to succeed. In this respect, counsel submitted that it was irrelevant that the facts of the case as already pleaded might be sufficient to support the new cause of action which should have been included from the outset.

34. Counsel further submitted that the amendment sought concerned a distinct but related illegality ground which undermined the determination of the preliminary issue. The principles in Henderson v. Henderson were very apt, he submitted, in the context of a modular trial in proceedings which were being managed in the Commercial Court. The trial of the preliminary issue had been set up to dispose of all of the plaintiffs’ arguments concerning illegality in aid of their claim for declarations of invalidity concerning the Share Pledges and Guarantees. Consequently, counsel submitted that the High Court judge had been correct to apply the rule in Henderson v. Henderson so as to prevent the plaintiffs from introducing new illegality based pleas in response to the conclusion of the Supreme Court that the said securities were enforceable notwithstanding the illegality of the underlying lending contracts.

35. Finally, counsel submitted that the amendments sought were the subject of an issue estoppel or otherwise res judicata.
Discussion
36. Of particular relevance to the decision of the High Court judge are the provisions of Order 28, rule 1 of the Rules of the Superior Courts, 1986 and the decisions in Henderson v. Henderson, Croke v. Waterford Crystal [2005] 2 IR 383, Ashcoin Limited (In Creditors’s Voluntary Liquidation) v. Moriarty Holdings Ltd. (No. 2) [2013] IEHC 8, LSREF III Stone Investments Limited v. Morrissey [2015] IEHC 199 and Morrissey v. IBRC [2015] IEHC 200.

37. Order 28, rule 1 provides as follows:-

“The Court may, at any stage of the proceedings, allow either party to alter or amend his endorsement or pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.”
38. As was held by Geoghegan J. in Croke, the rule was intended to be a liberal one based on the proposition that the interests of justice are best served by allowing pleadings to be amended to ensure that the real issues in controversy between the parties are determined, even at a late date, unless the court is satisfied that the amendment would cause significant prejudice to the opposing party.
39. Apart from that consideration, I am satisfied that on the facts of this particular case, there are other factors to which the Court must have regard when exercising its discretion. These include delay and also the fact that the Court directed the trial of a preliminary issue which had been determined in the Supreme Court prior to the plaintiffs’ application to amend their statement of claim. I will return later to consider the significance which the High Court judge attached to these factors later.

40. Having regard to the submissions of the parties, it seems to me that the principles which emerge from the decision of Hogan J. in Ashcoin Limited are material to the discretion which was exercised by the High Court judge in refusing the plaintiffs’ application. That decision would appear to be good authority for the following propositions, namely:-

(i) That the rule in Henderson v. Henderson may be applied in any case where the court is satisfied that a party has held back in reserve an alternative argument with the intention of using it should the court reach a determination adverse to its interests on other arguments.
(ii) That the rule should not be applied with remorseless severity.

(iii) That the rule is one which is designed to protect a defendant from harassment or other abusive conduct.

(iv) Relevant to the exercise of the court’s discretion in applying the rule is whether it can be demonstrated that the party that seeks the relief does so in order to overreach, act oppressively or circumvent unfairly an adverse judicial ruling.

41. The following are a number of helpful and relevant extracts from the judgment of Hogan J.:-
Paragraph 7
“There is no doubt but that the rule in Henderson v. Henderson – which, broadly speaking, requires a plaintiff to advance the entirety of his or her case and forbids him or her to hold back an alternative argument in reserve – is capable of applying to the present case since it would have been open to Ashcoin to advance the present basis for the proceedings at a much earlier stage. The rule would certainly have applied to bar the reconstitution of the proceedings if there was evidence that Ashcoin had deliberately originally elected for strategic reasons not to pursue the alternative argument.”

Paragraph 9

“… [I]t is clear from the authorities that the rule in Henderson v. Henderson should not be applied with remorseless severity, as if indeed it were otherwise, the rule could then often apply so as to preclude even the routine amendment of pleadings since it might be plausibly contended that the rule precluded the plaintiff from now advancing the amended case.”

Paragraph 13

“This case-law therefore mandates an approach towards the Henderson v. Henderson which is discretionary in nature and which, above all, seeks to protect a defendant from harassment or abusive conduct.”

Paragraph 15

“ [t]here was no intention to overreach or act oppressively or to circumvent unfairly an adverse judicial ruling.”

42. Consistent with the aforementioned principles is the decision of Costello J. in LSREF III Stone v. Morrissey [2015] IEHC 199. In that case she concluded that where a modular trial had been directed, the parties ought not to be permitted to revisit or reopen at a later time issues disposed of in the course of an earlier hearing. In considering an application to have an amended defence in debt proceedings restricted or struck out for, inter alia, abuse of process, she advised as follows at para. 50:-
“Fourthly, with the agreement of both parties, the proceedings were dealt with by way of modular trials. It follows that determinations of issues in prior modular hearings governed the issues that remained to be determined in the subsequent modules. Where [one party] seeks to revisit, reopen and re-agitate matters which have been ruled out or rejected in previous hearings, to admit them at this stage would be utterly to defeat all of the proceedings and steps taken in these proceedings to date.”
43. In the related case of Morrissey v. IBRC [2015] IEHC 200, Costello J. struck out new proceedings instituted by the defendant in the aforementioned debt proceedings on the grounds of res judicata and the rule in Henderson v. Henderson. Of particular relevance is the following observation at para. 5:-
“But beyond the strict limitations of res judicata the courts have long recognised that there may be abuse of process outside of the relatively confined limitations of the rule and the courts have always been prepared to balance the rights of parties to have their cases heard and determined by the courts with the rights of the opposing parties to fair procedures in the conduct of litigation and, where necessary, to strike out proceedings if they amount to an abuse of process. In addition to the private rights of litigants, there is a public policy interest in ensuring finality of litigation and preventing vexatious litigants from subjecting the same parties to multiple law suits on the same issue. ”
44. In light of these principles, it seems clear that in proceedings involving modular trials, a subsequent attempt to introduce a matter which has the effect of utterly defeating the previous steps taken in those proceedings can in certain circumstances amount to abusive conduct, having regard to, inter alia, the intention and conduct of the parties.
Decision
45. For the purposes of seeking to determine whether the High Court judge fell into error in refusing the plaintiffs’ application to amend the statement of claim I will refer briefly to the findings which appear to have influenced his refusal of the relief sought.

46. The first matter which the High Court judge was obliged to consider was whether or not the proposed amendment was required for the purpose of determining the real questions in controversy between the parties. He answered that question in the negative and having considered the helpful submissions of the parties on this appeal I cannot find fault with that conclusion.

47. I am satisfied that the amendment sought concerned an entirely new claim which was never pleaded or in issue between the parties prior to the delivery of the Supreme Court judgment on 27th March, 2015.

48. While Ms. Aoife Quinn, in her grounding affidavit of the 16th April, 2015, maintained that the issue as to the stand alone enforceability of the share pledges and guarantees was always in controversy between the parties or always intended to be so, that assertion does not sit comfortably with the pleadings as drafted or with the fact that there was no evidence presented to this court that such a claim was flagged when the preliminary issue was heard before Charleton J. in the High Court.

49. Further, the fact that the issue was referred to in passing at para. 36 of the plaintiffs written submissions to the Supreme Court does not mean that it can be stated that it was thus in controversy between the parties. To the contrary, in response to that document, the written submissions filed on behalf of the defendants made reference to the fact that the claim concerning the stand alone enforceability of the relevant securities had not been pleaded in the statement of claim as it then stood. Having had this fact drawn to their attention, no application was then made to amend the statement of claim. The only reasonable inference to be drawn from the fact that, notwithstanding the prompt from the defendants’ legal advisors, the issue never resurfaced until after the decision of the Supreme Court, is that the plaintiffs after due consideration with their extremely experienced legal advisors decided not to seek to put this matter in issue in the proceedings.

50. Finally, when counsel for the plaintiffs was asked in the course of this appeal as to whether the content of para. 36 of their written submissions had been brought to the attention of the Supreme Court; he was unable to definitively confirm that this was so. If it had been, it is difficult to believe that Clarke J. would have stated what he did in his judgment regarding the fact that no such case had at that time been advanced in reliance on an argument as to the stand alone unenforceability of the securities.

51. Accordingly, I can find no fault with the conclusion of the High Court judge that the amendment sought was not necessary to allow the true issues between the parties be determined.

52. Relevant also to the exercise of the Court’s discretion on an application to amend proceedings is the conduct of the applicant and that includes a consideration of any delay in the bringing of the application. In this regard I am satisfied that the High Court judge was correct in his conclusion that the plaintiffs’ delay in seeking to amend their statement of claim was not adequately explained and must be viewed as culpable in all of the circumstances. Further, I tend to agree with the submissions made by Mr. Gallagher S.C. that the reasons for the delay as advanced by the plaintiffs can at best be described as contradictory.

53. In their efforts to explain their delay the plaintiffs maintain that at the time the proceedings were commenced there was significant legal uncertainty as to whether the claim they now wished to advance was sustainable. They submit that it was only when the Supreme Court gave its decision on the 27th March, 2015, that it became clear that such a claim might reasonably be advanced as a matter of law. In their written submission to this court, they describe the judgement of Clarke J. as a watershed decision insofar as it referred to the possibility that collateral contracts entered into by innocent parties in connection with illegal but enforceable underlying lending transactions from which they were not to derive benefit, as opposed to cases in which the parties despite being innocent were intended to benefit, might not be enforceable per se.

54. For my part I find this particular submission a highly unconvincing explanation for the delay in seeking the amendment of the statement of claim. It is difficult to understand why, regardless of any alleged lack of legal certainty, the plaintiffs would not have made the relevant plea for the purposes of having the court adjudicate on the issue if they had, as is to be inferred from their submission, given consideration to the possibility of advancing a claim based on the stand alone enforceability plea.

55. More importantly however is the fact that the submission that legal uncertainty was responsible for the delay in applying to amend the statement of claim, is in complete conflict with Mr. Dunleavy’s argument that the original pleadings did in fact include such a plea. That of course is a submission that is simply unsustainable having regard to the decision of Clarke J. who, having conducted a detailed analysis of the pleadings, found that no such plea had been advanced. Secondly the submission is incompatible with Ms. Quinn’s affidavit in which she states, not that the plaintiffs were too unsure of the legal position to plead the case of stand alone unenforceability but rather that they had formed the mistaken view that their pleadings had actually encompassed that argument. In this regard she relies on para. 36 of the plaintiffs’ written submissions to the Supreme Court, where the following reference is made to a stand alone unenforceability plea:-

“…[T]he Quinns’ plead that the share charges and the guarantees are unlawful and unenforceable in and of themselves, as they were entered into for an illegal purpose, and as such, offend the common law rules on illegality.”
56. This averment raises the further question as to why, when the plaintiffs received the defendants’ submissions which highlighted the fact that the statement of claim did not include such a plea, they did not then immediately write to the defendants’ solicitors to advise them that they intended to pursue such a claim and why they didn’t follow up such correspondence with an application to amend the statement of claim, if that was what they had always intended.
57. While counsel for the plaintiffs submitted that it would have been unrealistic to seek to amend the statement of claim at that stage, in my view they would have had significantly more merits than they had at a time when it could be said that they had ignored the defendants prompt as to the absence of such a plea in the statement of claim and then either deliberately abandoned or alternatively culpably left the issue in abeyance to await the outcome of the preliminary issue in the hope that it would be resolved in their favour.

58. For these reasons I am of the view that the High Court judge was correct in finding culpable delay on the part of the plaintiffs in the bringing of their application to amend the statement of claim.
Abuse of process
59. Having considered the submissions of the parties and in particular the case law referred to earlier in the course of this judgment, I am quite satisfied that the High Court judge was correct in concluding that the principles that emerge from the decision in Henderson v. Henderson, were relevant and material to the exercise of his discretion on the plaintiffs’ application. Those principles do not cease to be relevant merely because there has not been earlier litigation between the same parties. The fact that the court, prior to the plaintiffs application to amend their pleadings, had these proceedings under active case management, had directed the trial of a preliminary issue destined to ensure that the proceedings were conducted efficiently and the fact that that issue had been determined on appeal in the Supreme Court, were sufficient reasons to permit the court to consider these principles, which more usually apply in the context of sequential proceedings between the same parties.

60. In seeking to apply the Henderson principles to the facts of the present case, the High Court judge correctly engaged with a consideration as to whether the amendment sought could be considered to amount to culpable or abusive conduct in the circumstances. He did so by considering first whether the application if granted would undermine what the court had hoped to achieve when it directed the trial of the preliminary issue and secondly whether it would have the effect of undermining the decision that had been made on that issue.

61. To consider whether the trial judge was correct in his assessment that the application amounted to culpable and abusive conduct it is necessary to review, not only the precise terms of the Order made by Kelly J. for the determination of the preliminary issue, but also what he said concerning the objectives underlying the making of that order.

62. The precise terms of the issue which was fixed for determination as a preliminary issue have already been set out at para. 11 of this judgment and will not be repeated here. However, the issue which he directed be tried has to be viewed in the context of the reasons which he gave for the making of that order. This is what he said:-

“I believe that there would be, as a result of such a hearing, a material saving in both time and costs, both by reference to discovery issues but more particularly by reference to both evidential issues and time which would have to be spent at the trial. Because these two questions of abuse of section 60 [and] failure to comply with the market abuse regulations permeate throughout insofar as the various reliefs are concerned and those reliefs are sought by reference to complaints being made on the part of the plaintiffs concerning the failure to adhere to both the regulations and the Act. As I say it is not the only part of the Plaintiffs’ case but in my view it is a material part of it … And I believe that if that question is answered in the way in which bank hope that it will remove from the case a substantial part of what the judge at trial will have to deal with. If on the other hand it is answered in a manner adverse to the bank then it means that the judge does not have to consider or concern himself with any question of standing.”
63. Kelly J. also made the following remark in relation to the outcome of the trial of the preliminary issue: “If it’s a decision in favour of what the Defendants hope for it means that that element of the case has simply disappeared, thereby reducing the trial time.”
64. In the Supreme Court, Clarke J. determined the issue on the basis of what he determined to be the plaintiffs’ case, as pleaded. At para. 13.1, he concluded:

“…[I]n the light of the case made by the Quinns to date, they are not “entitled to rely” (in the words of the preliminary issue directed to be tried) on any of the alleged breaches of either section 60 or the MAR in aid of the claims which they make concerning the invalidity of guarantees given by them and security put in place in respect of underlying lending transactions said to be in breach of those provisions.”
65. It is patently self-evident that to allow the plaintiffs to introduce a new plea of stand alone unenforceability at this stage of proceedings would undermine the perceived benefits and raison d’être underlying the decision of Kelly J. to direct the preliminary trial. The Supreme Court, having decided that the share pledges and guarantees might be enforced notwithstanding any illegality stemming from s. 60 or MAR insofar as the underlying loans were concerned, the amendment if permitted would allow the enforceability of that security be put back into issue again in the proceedings but this time based upon an entirely new argument that would engage not only a different legal issue but which would require new factual enquiries to be made and further extensive discovery.
66. Further, in my view, the only inference which can reasonably be drawn from the evidence before the High Court is that the plaintiffs must have given serious consideration as to whether they wanted or intended to pursue a plea as to the stand alone unenforceability of the securities either at the outset of the proceeding or alternatively at the very latest in the period leading up to the lodgement of their submissions in the Supreme Court, in November, 2013, which mention such an issue. Regardless of which of these alternatives is correct, I believe it can be inferred with some certainty from the facts that the plaintiffs, with the benefit of the best of legal advice, made an informed choice to hold back an issue of very significant magnitude that they could and ought to have advanced from the outset or at a much earlier point in time and that only in the face of the loss of the preliminary issue and the observations of Clarke J. did they decide to seek to breathe life into that claim.

67. While it cannot be said that to allow the amendment sought would set at nought the determination of the preliminary issue ,I am nonetheless satisfied that if it were to be permitted, the defendants would suffer general prejudice given that they spent significant time and money litigating the preliminary issue, secure in their belief, having regard to the fact that there was no response to their prompt concerning the absence of a stand alone unenforceability plea in their submissions of May, 2012, that they would not thereafter be met by any new basis upon which the plaintiffs might allege the securities were unenforceable. Indeed, in my view it is not only questionable but highly likely in such circumstances that had the issue as to the stand alone unenforceability of the securities been pleaded in the original statement of claim, Kelly J. would not have considered that the proper management of time and resources warranted the trial of the preliminary issue in the terms so ordered.

68. The High Court judge found that no logistical prejudice would be occasioned by the proposed amendment, a conclusion with which the defendants take issue. They contend that the amendment if permitted would necessitate significant new factual enquiries as to whether the Guarantees and Share Pledges were entered into innocently, i.e. without knowledge of the purpose of the underlying lending transactions or the CFD position, and that was not the basis on which the claim was made. In other words the defendants maintain that the new legal issue would precipitate a new factual dispute between the parties.

69. As to the significance of introducing such a potential dispute, the defendants rely on para.12.15 of Clarke J.’s judgment where he said as follows:

“… it should be recalled that, on the Quinns’ case, they were unaware of their beneficial ownership of the relevant Cypriot companies until well after the underlying lending transactions were put in place. Indeed, it is difficult to see how the  Quinns could otherwise claim to have been unaware of the illegality which they allege, for anyone who was familiar with those Cypriot companies at the relevant time would have to have known that the purpose of those companies was to acquire a significant shareholding in Anglo with money provided through loans from Anglo, in circumstances where the overall purpose was to unwind what might have been perceived to be an excessive and difficult position taken in relation to CFDs in Anglo by the Quinn Group.”
70. In addition, the defendants point to a statement released by the Quinn Group on 15th July, 2008, which was handed into court and states:
“The Quinn Family announced today … that they are in the process of unwinding their interests held in Anglo Irish Bank through Contracts for Differences (CFDs) and as part of this process individual family members are purchasing long holdings in the bank’s ordinary shares …. [T]he chairman of Quinn Group, Mr. Sean Quinn, said: ‘The family regards these shareholdings in Anglo Irish Bank as long term holdings’.”
71. It has been the plaintiffs’ case from the outset that they were unaware of the particular illegalities which they have pleaded concerning the loans underlying the banks security. However, if the amendment were to be permitted it would place as a central issue within the proceedings the question as to whether they were not just unaware of those illegalities but rather whether they were completely innocent of knowledge of the nature of those transactions and the arrangements to which they were connected.
72. Thus, I accept the defendants’ submission that if the amendment were to be permitted further factual enquiries would have to be carried out in relation to all the parties involved as to their precise state of knowledge at the relevant time and whether it was ever intended that the plaintiffs would ultimately benefit from the transactions and arrangements which were then put in place.

73. In conclusion, I am satisfied that the High Court judge was correct in his decision to dismiss the plaintiffs’ application to amend the statement of claim in reliance both on the provisions of Order 28 itself and also on the basis of the Henderson v. Henderson principles. The amendment sought was not necessary to permit a matter that was in issue between the parties to be tried and in any event the plaintiffs’ conduct and delay in making the application was such that the court was entitled in its discretion to refuse the relief sought. Further, based on the Henderson principles, the plaintiffs’ conduct in relation to the proposed amendment may comfortably, for the reasons earlier stated, be classified as culpable and abusive both insofar as their obligations to the court and the defendants are concerned. It behoves the court and the parties to litigation of the magnitude and complexity concerned in this type of action to ensure that the proceedings are conducted in as fair and efficient a manner as is possible. While the court must of course ensure that the need for efficiency does not trump doing justice between the parties, what was being asked of it on this appeal was to allow a plaintiff, who either had or ought to have considered the possibility of advancing a particular type of claim at the outset of the proceedings parachute that claim into the proceedings as an opportunistic response to the loss of its legal argument on a related claim and to do so in circumstances where the defendants had been led to believe by the plaintiffs’ conduct that such an issue would not be pursued. The conduct of the plaintiffs in seeking to recast their claim is in my view conduct which is not only abusive of the defendants but is also such that if permitted would have the effect of circumventing or at least substantially undermining the outcome of the preliminary issue.
The second appeal
74. Following the judgment of the Supreme Court (Clarke J.) of 27th March, 2015, the defendants by notice of motion dated 15th April, 2015, brought an application to strike out paras. 103 to 110 of the statement of claim.

75. Haughton J. did not grant the entirety of the relief sought and it is his refusal to do so that forms the basis of this, the defendants’ appeal. The High Court judge ordered that para. 110 as well as certain sections of paras. 106 and 109 be excised from the statement of claim and he further refused to dismiss the plea of negligent infliction of economic harm which is referred to in para. 25 of the prayer in the statement of claim on the grounds that it had been appropriately pleaded by means of the particulars.

76. In his ex tempore decision, the High Court judge expressed the view that the judgment of the Supreme Court did not necessarily close off any attack on the illegality of the underlying lending, but rather only as to the effect of the illegality on its enforceability. Thus, in his view, the judgment did not shut out the possibility that pleas of illegality in respect of the underlying lending could still be relied upon in the context of other pleas. He identified particular paragraphs in the statement of claim which referred, for example, to the assertion that the sole purpose behind the underlying lending by Anglo had been to prop up its own share price.

77. In addition, the High Court judge noted that the plaintiffs made a number of pleas to which the illegality referred to at paras. 103 to 110 formed an important backdrop. This included the plea that there had been no independent legal or financial advice given to the plaintiffs and thus the implied plea that the plaintiffs would not have signed the documentation if they had been aware of the full background in relation to it. The High Court judge also found that the illegality pleas could have a bearing on the plaintiffs’ claim that the share charges and personal guarantees were not procured as a result of the plaintiffs’ free and informed consent but rather as a result of undue influence.

78. Furthermore, the High Court judge found that the illegality issue was also central to the plea that the Share Pledges and Guarantees were improvident and unconscionable. He noted that the prime ingredient of such a plea was morally culpable behaviour and that, in this regard, the state of mind, motive or intention of Anglo officials at the time when the Guarantees and Share Pledges were executed would be of relevance. Similarly, he concluded that the issue of illegality would be of significance to the plea at para. 111 of the statement of claim, namely that Anglo breached a duty of care and fiduciary duty which it owed to the plaintiffs, on the basis of inter alia the wording of the relevant paragraph which begins with the phrase “In all the premises”.

79. Accordingly, the High Court judge refused to excise the relevant paragraphs of the statement of claim.
Submissions on behalf of the first defendant
80. Mr. Murray S.C., counsel for the first defendant, submitted that the High Court judge made two significant errors in his decision: first, he erred in that on an objective reading of the statement of claim paras. 103 to 110 were clearly not directed to either the undue influence, improvident bargain or other such pleas; and, secondly, insofar as he interpreted the Supreme Court judgment as permitting the invocation of illegality under the guise of other pleas such as undue influence.

81. In this respect, counsel submitted that the statement of claim was logically divided and worded so that it was clear that the individual sections concerned distinct freestanding claims. Further, he maintained that the paragraphs preceding paras. 103 to 110 did not posit any specific illegal act or breaches of MAR/s.60 of the Companies Act 1963; rather, they merely referred to the purpose of Anglo entering into the transactions. In that connection, counsel elaborated on an important distinction underlying its submissions, namely that while the defendants did not object to the giving of evidence relating to the purpose of Anglo entering into the transactions for the purpose of the other pleas, there was no requirement for the court to adjudicate on any illegality, i.e. any breach of MAR/s.60 of the Companies Act 1963.

82. More specifically, counsel submitted that it was a step too far to imply into a plea of improvident bargain the necessity to determine illegality. Similarly, in respect of the plea of negligent infliction of economic harm, counsel submitted that such an exotic plea should have been pleaded more clearly and that, as it was only detailed in the replies to particulars, it was simply not part of the case. Counsel submitted that the focus of the remaining claims concerned the purpose for which Anglo entered into the transactions and that it did not make sense for the court to retain pleas which required the defendants to defend the illegality plea – particularly in circumstances where the purpose of the preliminary issue, when decided in the defendants’ favour, was to avoid the calling of evidence and advancement of arguments in relation to that issue.
Submissions on behalf of the plaintiff
83. In response, Mr. Dunleavy S.C., counsel for the plaintiffs, submitted that it was first incorrect to contend that the finding of the Supreme Court effectively barred the plaintiffs from relying on any allegation of illegality. In particular, counsel submitted that this was not the finding of the Supreme Court and that the findings of the Supreme Court were not in terms of the question that had been posed by Kelly J. as the preliminary issue. Rather, counsel submitted that the entirety of the Supreme Court decision dealt with the enforceability of the transactions which were secured by the Share Pledges and Guarantees rather than the illegality of the conduct of the bank.

84. Secondly, counsel relied upon use of the phrase “in all the premises” at para. 111 of the statement of claim, in respect of the plea of breach of fiduciary duty/duty of care, in support of his argument that the plaintiffs intended relying on everything within the four corners of their pleadings, including the illegality pleas to support those claims. Similarly, counsel relied on the written submissions to the High Court for the trial of the action to evidence the plaintiffs’ intention to rely on illegality for the purpose of advancing claims of unconscionability, improvidence and breach of duty. Further, he submitted that the illegality of the underlying transactions was material as providing the context in which the court would determine the other pleas

85. Thus, counsel submitted, the pleas which the defendants sought to have. excluded were interwoven and were part and parcel of the case which the plaintiffs wished to make to the court, rather than pleas that might be classified as distinct and free standing.

86. Finally, counsel submitted that the plea of negligent infliction of economic harm was properly detailed in the particulars provided by the plaintiffs, which had not been criticised by the defendants as being inadequate or incapable of being understood, and accordingly could be considered part of the pleadings.
Decision concerning the second appeal
87. This appeal consists of two issues. The first issue to be determined is whether the High Court judge erred in respect of his refusal to strike out paras. 103 to 110 of the statement of claim in their entirety, and the second as to whether the High Court judge erred in refusing to dismiss the plea of negligent infliction of economic harm.
Whether the relevant paragraphs should have been excised.
88. It is first necessary to briefly examine the paragraphs which the defendants seek to excise, before moving on to consider the factors influencing my decision. The relevant section is entitled “Illegality in the Loan Transactions” and begins at para. 103:-

“Further and/or in the alternative and without prejudice to the foregoing, the loan transactions engaged in by Anglo, for and on behalf of the positions being maintained by Bazzely, and/or the Cypriot Companies, and/or the subject matter of the said loan transactions were tainted by illegality and/or were for an illegal purpose, of which Anglo was or ought to have been aware.”
89. Thereafter, at paras. 104 to 106 under the heading “(a) The Market Abuse Regulation” the document details the alleged breaches of that instrument and concludes at para. 106:-
“In the premises, the lending was in support of an illegal objective of market manipulation as prohibited by Regulation 6(1) of the Market Abuse Regulations and, accordingly, was tainted with illegality, or was intended to support an illegal purpose, such that the said loans are not enforceable.”
90. Under the title “(b) Section 60 of the Companies Act, 1963”, the document details the relevant breaches of that piece of legislation. The relevant paragraphs are 109 and 110, where it concludes:-
“In the premises, the lending was further tainted by illegality such that the security taken from the plaintiffs by Anglo ought not to be enforceable insofar as it relates to the Plaintiffs.
By reason of the matters pleaded above, Anglo is estopped from seeking to rely upon the security taken from the plaintiffs in the form of the personal guarantees and/or the share pledges and the purported appointment of the Share Receiver on foot of the said share pledges is invalid and ought to be set aside.”

91. In coming to the conclusion which I have reached, I take account of the following factors:
92. First, on any objective reading of the statement of claim and in particular having regard to the manner in which it is structured, it is clear that the plea which commences at para. 103 and which asserts that the loan transactions were tainted with illegality as in breach of the MAR and s.60 of the Companies Act 1963 relates exclusively to the plea at para. 110 which maintains that by reason of the illegality previously pleaded “…Anglo is estopped from seeking to rely upon the security taken from the Plaintiffs in the form of the personal guarantees and/ or the share pledges and that the purpurported appointment of the Share Receiver.” The illegality is not pleaded to support any alternative cause of action.

93. Secondly, I have taken account of the purpose for which the trial of the preliminary issue was directed, which -as quoted above – was to determine whether the plaintiffs could rely on the alleged illegality of the underlying lending transactions “in aid of any of their claims for declarations of invalidity, unenforceability, or no legal effect in respect of any Charge [on] Shares or any Personal Guarantees.”

94. Thirdly, I place reliance upon Kelly J.’s observation that “…these two questions of abuse … [and] failure to comply [with the relevant statutory provisions] … permeate throughout insofar as the various reliefs are concerned…” and that “[i]f it’s a decision in favour of what the defendants hope for it means that that element of the case has simply disappeared, thereby reducing the trial time.” Accordingly, it is abundantly clear that the preliminary issue was concerned with removing the issue of illegality from the case, and the evidentiary burden associated therewith. It is in this light that the following extract from the judgment of Clarke J. must be viewed.

95. At para. 1.6, Clarke J. noted that:-

“However, the underlying contention of Anglo, which led to the decision of the High Court to direct the trial of a preliminary issue, was to the effect that, even if the factual contentions put forward in their claim by the Quinns concerning breaches of either or both the MAR and section 60 were to be sustained, then the Quinns still could not succeed. That contention was based on a legal argument which, in substance, comes down to a contention that the application of relevant legal principles does not render lending transactions, guarantees or security void or unenforceable even if the relevant transactions are in breach of the MAR, or are in contravention of section 60, or are connected with transactions which breach those provisions. That net question is the issue which arose on the preliminary issue.”
96. However, despite focusing on this net issue Clarke J. ultimately concluded his judgment at paras. 13.1 to 13.2 with the following passage:-
“On that basis it seems to me that, in the light of the case made by the Quinns to date, they are not “ entitled to rely ” (in the words of the preliminary issue directed to be tried) on any of the alleged breaches of either section 60 or the MAR in aid of the claims which they make concerning the invalidity of guarantees given by them and security put in place in respect of underlying lending transactions said to be in breach of those provisions.
It follows that, in my view, the appeal should be allowed and the result of the preliminary issue should be determined in the manner described in the preceding paragraph.”

97. It must surely be inferred from this conclusion that the learned Supreme Court judge was of the belief that the issues of statutory illegality pleaded, regardless of the terms in which the preliminary issue was formulated, were only material to the proceedings in the context of the plaintiffs’ claim that the security could not be enforced. There is nothing in his judgment from which it could be inferred that he considered the plaintiffs might seek to rely on the illegality pleaded in support of their other claims.
98. Further, his express conclusion that the plaintiffs are not entitled to rely on illegality in the context of their other pleas concerning the Share Pledges and the Guarantees would also support a conclusion that the trial judge was in error when he concluded that the judgment of Clarke J. had not closed off potential reliance on illegality to support their remaining claims.

99. Perhaps it is worth noting that, given the fact that the plaintiffs are still able to advance evidence concerning the purpose of the underlying transactions and the motive of Anglo, namely the propping up of its share price, it is difficult to see how the exclusion of any plea concerning the specific illegality of such transactions would be unduly prejudicial to the plaintiffs.

100. In conclusion, in light of the specific purpose and rationale outlined by Kelly J. in directing the preliminary trial of the illegality issue, the clear and unambiguous ruling of Clarke J. in the Supreme Court and the fact that the plaintiffs can still adduce evidence as to the purpose and motivation of Anglo in entering the underlying transactions in order to illuminate the background context of their other pleas, I am satisfied that the High Court judge erred in dismissing the application of the defendants.
Whether the plea of negligent infliction of economic harm had been properly pleaded?
101. The relevant principles to be applied on the consideration of this issue are those set out in Croke v. Waterford Crystal Limited and Irish Pension Trust Limited, to which the court has earlier referred. In that case, the causes of action mentioned in the prayer of relief in the plenary summons did not distinguish between the first and second defendants.

102. Thus, in the context of considering an application to amend the statement of claim, Geoghegan J. observed at para. 10:-

“It is trite law that a cause of action merely mentioned by name in the prayer does not and cannot in any sense constitute the pleading of such cause of action. It is, therefore, necessary to look at the main body of the statement of claim. It is important that I should do so separately in relation to each defendant.”
103. Accordingly, Geoghegan J. proceeded to analyse the factual basis set out against each of the defendants in the statement of claim to see if they could support each of the claims in the prayer of relief. Having done so he conclued that no claim for fraud or deliberate concealment had been made out as the necessary factual basis had not been established against the second defendant and also by reason of the fact that only vague allegations as to deliberate concealment had been articulated in the plaintiff’s replies to particulars. The latter is an important point of distinction to the present case. Accordingly, Geoghegan J. refused to allow an amendment of the statement of claim to include a claim for fraud.
104. The plaintiffs relied on the decision in Davy v. Bentinck [1893] 1 Q.B. 185 as support for their contention that the particulars form part of the pleadings. As Lord Esher noted at pp. 187 to 188:-

“Whether the case can be brought within Order XXV., r. 4, depends on whether for that purpose such particulars as have been ordered in this case can be considered as part of the pleadings. I incline to that opinion, and to the view that the rule should be construed in its largest sense, so that where particulars shew that the grounds on which a party is either bringing or defending an action are frivolous or vexatious that is sufficient to warrant an order to dismiss the action or strike out the defence, as the case may be. It is not necessary finally to decide this point, because I have no doubt that the Court at any stage of the proceedings, if it appears that the action is frivolous or vexatious or that the defence is so, has by its inherent jurisdiction power to stop the proceedings or to strike out the defence.”
105. Similarly, Lopes L.J. at p. 188 opined:-
“It is not necessary to decide whether Order XXV., r. 4, applies, and whether within the meaning of that rule particulars are part of the pleadings, though I am inclined to think that that is so… ”
106. The substantial issue is whether the particulars constitute part of the pleadings. Indeed, in Croke it was the absence of a factual basis in the statement of claim to support a claim for fraud and the fact that only vague references to such a claim were articulated in the particulars that formed a key part of the court’s reasoning.
107. Accordingly, the question for this Court is whether there is a sufficient factual basis in the statement of claim to support a claim of negligent infliction of economic harm and whether such a claim is sufficiently articulated in the particulars.

108. Having regard to the factual claims made at paras. 12 to 82 of the statement of claim and the reply to the first defendant’s notice for particulars dated 6th July, 2011, and more specifically the pleas at item 79 (i)-(xi) thereof, I am satisfied that the High Court judge did not err in finding that the claim of negligent infliction of economic harm had been properly pleaded.
Conclusion
109. In conclusion, I would propose that the first appeal be dismissed and I would allow the second appeal to the extent that I have just described.

 

James Elliot Construction Ltd v Lagan

[2016] IEHC 5
JUDGMENT of Ms. Justice Costello delivered on 14th day of January, 2016.
The plaintiff’s motion
1. In these proceedings the plaintiff seeks leave to amend its statement of claim pursuant to O.63A, r.6(1)(b)(v) and/or O.28, r.1 of the Rules of the Superior Courts by including two additional pleas of deceit, one against the fourth named defendant and the other against the remaining defendants. The application has been brought after I have delivered three written judgments in these proceedings, two of which concerned the defendants’ motions to compel the delivery of further and better particulars of the plaintiff’s case. The background facts and the nature of the case have been set out previously and I do not propose to restate them here.

2. The plaintiff says that the proposed pleas in fact do not form part of its case in fraud against the defendants. The application was brought in the light of the judgment delivered this Court on 14th July, 2015. In further replies to particulars, the plaintiff stated that test results given in evidence by or on behalf of the fourth named defendant in earlier proceedings between the plaintiff and the fourth named defendant were falsified. I indicated that:-

“[u]ndoubtedly, these are serious and new allegations of deceit and fraud. The plaintiff is perfectly entitled to bring a claim based on this fraud if it so wishes. However, it must be properly pleaded and it is not appropriate to introduce it in the fourth version of a reply to particulars arising out of the Statement of Claim dated 4th February, 2014.”
3. It was clear from the presentation of the plaintiff’s application in court that the proposed amendments are not designed to elaborate upon or expand the plaintiff’s claim against the defendants. Rather, it is in essence a reply to the defence of the defendants where they plead that there were test results produced from the Bay Lane Quarry throughout the period of its production life which indicated that the stone being produced was capable of producing clause 804 and 3 inch down products. By implication, the defendants are asserting that these test results are genuine and valid and the plaintiff does not accept that this is the case. The plaintiff states that it will wish to contest any evidence the defendants may advance at trial to that effect. Therefore it wishes to amend the Statement of Claim to plead that any such results cannot be genuine.
4. In my opinion this application to amend the Statement of Claim is misconceived. It is not designed to elucidate the matters in controversy between the parties. It is directed towards the evidence which it is anticipated that the defendants will adduce at the hearing of the action, no more. Expressly it does not form part of the case in fraud. That being so, I cannot see that there is any need for the amendment.

5. The plaintiff indicated that it was apprehensive that if the amendment were not permitted that, at the trial of the proceedings, the defendants would object to any evidence on the part of the plaintiff or any cross-examination on the part of the plaintiff contesting the genuineness or validity of the test results. Firstly, I do not accept that this is a correct basis upon which to amend pleadings. Secondly, I do not believe that my refusal of the application to amend the proceedings for the reasons I have set out in any way precludes the plaintiff from dealing with such evidence as the defendants may adduce at trial as they see fit within the normal rules governing a plenary hearing. In particular, my judgment is not to be taken as precluding the plaintiff in anyway from challenging any evidence which the defendants may adduce at the trial of these proceedings.

6. In addition I should point out that the proposed pleadings do not in fact bring clarity to the issues between the parties, as any amendment to proceedings ought.

7. As a plea in fraud, I am not satisfied that this meets the level of particularity required when alleging fraud. It leaves the defendants in the dark as to the precise nature of the wrong alleged to have been committed. If it is not a plea in fraud, as appeared to be the case in the replies to particulars of 14th January, 2015, of the plaintiff, then it is equally unsatisfactory as implying fraud without actually pleading it correctly. Accordingly, I refuse the application for leave to amend the Statement of Claim.
The defendants’ motions
8. The fourth named defendant brought a motion pursuant to O.19, r.16 and/or O.19, r.27 of the Rules of Superior Courts or the Court’s inherent jurisdiction seeking to strike out portions of the plaintiff’s replies to particulars dated 14th January, 2015, in reply 42(d) and 13th February, 2015, in reply 51 as set out in the schedule to the notice of motion. It also sought to strike out certain paragraphs in affidavits sworn by the plaintiff’s solicitor, Mr. Daragh O’Donovan, on 16th March, 2015, 24th March, 2015, and 23rd April, 2015.

9. As I held in my earlier judgment of 14th July, 2015, the replies to particulars numbered 42(d) and 51 raised new allegations of deceit and it was not appropriate that such allegations be introduced into the case in this fashion. In light of the plaintiff’s application to amend the Statement of Claim and the elaboration of its case in relation to these matters, it is clear that the allegation of falsifying or having suspicions as to the veracity or genuineness of test results does not in fact form part of the plaintiff’s claim but rather its rebuttal of the anticipated line of defence on the part of all of the defendants. That being so, I am satisfied that these pleas are not in fact particulars of the Statement of Claim and therefore they should not remain in the replies to the particulars of the Statement of Claim. On the other hand, if they remain in the replies to particulars, then they necessarily form part of the case the fourth named defendant has to meet at trial. This is not appropriate in the circumstances and I therefore strike out the sentence“[t]his finding supports grave suspicions on the part of the Plaintiff regarding IAL’s evidence of testing” in reply 42(d) dated 14th January, 2015.

10. I also strike out the following portion of reply 51 to the further and better replies dated 13th February, 2015:-

“[t]o the extent that any test results purported to indicate otherwise, the Plaintiff alleges that these were not genuine results. Expert evidence was adduced in the Menolly proceedings, tending to cast doubt on the veracity of certain test results purporting to be the results of testing on Bay Lane rock. Regarding the veracity of testing conducted by IAL, the Plaintiff also relies on the doubts expressed by the Courts in the context of the JEC -v- IAL proceedings.”
11. I decline to strike out any portions of the affidavits as sought in the notice of motion. The averments do not form part of the plaintiff’s case which the defendants must meet at trial. There is no prejudice being suffered as a result of the averments.
12. The first, second, third and fifth named defendants also brought a motion seeking to strike out certain replies delivered by the plaintiff on 14th January, 2015, and 13th February, 2015, to requests for particulars raised by these defendants. Request number 23.1 required the plaintiff to specify each and every test result that each of the first, second and third named defendants is alleged to have been aware of. The reply lists 14 matters. Numbers 13 and 14 challenge the veracity or reliability or indeed credibility of the evidence advanced in respect of test results in previous proceedings. In the further reply of 13th February, 2015, it stated that certain test results produced by the fourth named defendant were not genuine. The plaintiff has fairly stated that its position is that if the defendants adduce evidence as to test results which indicate that stone produced from the Bay Lane Quarry was capable of producing clause 804 or 3 inch down, then any such test results are untrue and do not reflect material sourced from the Bay Lane Quarry. That being so, these pleas are more properly considered as being directed towards any evidence which it is anticipated that the defendants will lead at the trial of the action rather than comprising particulars relating to the state of knowledge of the defendants both before the quarry went into production and during the period it was producing product and selling it to the plaintiff for use in its construction projects. These replies are therefore not particulars of the plaintiff’s claim. Accordingly, for the reasons explained in relation to the motion of the fourth named defendant I strike out replies 23.1.13 and 23.1.14 of the replies to particulars dated 14th January, 2015, and the last paragraph of the reply to particular 23.1 of 13th February, 2015.

13. These defendants also seek to strike out the penultimate paragraph under the heading “[p]articular 5.5” of the replies of 13th February, 2015, including a quote from the judgment of Charleton J. in the High Court in James Elliott Construction Limited v. Irish Asphalt Limited [2011] IEHC 263. This paragraph is not in fact, and does not purport to be, a reply to the request for particulars. It reflects a disagreement between the respective firms of solicitors concerning the case advanced and the evidence adduced in those earlier proceedings between the parties. It is neither necessary for the fair conduct of these proceedings nor appropriate that this paragraph be struck out and I refuse this relief.

14. For the reasons advanced above I likewise refuse to strike out the averments in paras. 70-73 of the affidavit of Mr. O’Donovan of 16th March, 2015.
Conclusion
15. I refuse the plaintiff leave to amend its statement of claim in the manner proposed. I strike out those portions of the plaintiff’s replies dated 14th January, 2015, to particular 42(d) and the replies dated 13th February, 2015, to particular 51 of the fourth named defendant as set out in paras. 8-10 above. I strike out replies 23.1.13 and 23.1.14 of the plaintiff’s replies to particulars raised by the first, second, third and fifth named defendants dated 14th January, 2015, and the final paragraph of reply 23.1 of the reply dated 13th February, 2015.

Ryanair v Goss

[2016] IECA 328

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 15th day of November 2016
1. In August 2013 the British television channel, Channel 4, broadcast a programme entitled “Dispatches: Secrets from the Cockpit” in which it claimed that the well-known Irish airline (and plaintiff in these proceedings), Ryanair, had compromised passenger safety in a number of respects. It would appear that this particular broadcast has given rise to a good deal of litigation. The present appeal is, indeed, now the third appeal within the last fifteen months or so in which this Court has had occasion to consider questions arising from this particular programme.

2. The defendant was a pilot formerly employed by Ryanair. He was, however, dismissed on the 14th August 2013, two days after the broadcast of the programme. Mr. Goss was interviewed by the Channel 4 team and excerpts from that interview were broadcast in the Dispatches programme. Ryanair commenced these defamation proceedings on 22nd August 2013.

3. Ryanair delivered a statement of claim on 6th September 2013 and Mr. Goss filed a defence and counterclaim on 16th December 2013. A defence to counterclaim is still awaited. A detailed notice for particulars was served by Ryanair on 28th March 2014 and the defendant replied with an equally detailed response on 2nd May 2014. A notice for further and better particulars was served on 24th November 2014 and the defendant replied on 15th October 2014.

4. The plaintiff was dissatisfied with this response to its requests for particulars and it issued a motion on 19th January 2015 seeking an order compelling a response to its notice for further and better particulars. At the hearing in the High Court before O’Connor J. the outstanding issues were, at his suggestion, reduced to two specific requests for further and better particulars, the details of which I will shortly set out. In an ex tempore judgment delivered on 20th October 2015 O’Connor J. dismissed the application on the basis that the plaintiff had sufficient knowledge from the pleadings and the particulars of the case it might meet at trial: see Ryanair Ltd. v. Goss [2015] IEHC 874. Ryanair has appealed against that decision to this Court.

5. It is, however, necessary to explain in summary the background to the pleadings before examining the disputed particulars. The general thrust of the Dispatches programme was that Ryanair had potentially compromised passenger safety by reason of its fuel conservation policies, the suggestion being that Ryanair pilots were discouraged from carrying excess fuel capacity in order to save costs. The defendant was interviewed for the programme and in the course of the broadcast he alleged that most of the Ryanair pilots had little confidence in aviation safety agencies and that two thirds of them did not feel comfortable “raising safety related issues to Ryanair’s own internal systems”. The defendant further alleged that a number of Ryanair pilots had made complaints to the Irish Aviation Authority (“IAA”) on a confidential basis, but that he was not aware of any pilot who had received a satisfactory response to such a complaint.

6. In its statement of claim Ryanair gave particulars of the alleged defamatory comments, including a claim that the programme had stated or implied that the IAA “is turning a blind eye to safety issues in Ryanair” and that safety issues at Ryanair “are being ignored and overlooked by aviation authorities.” So far as these specific particulars are concerned, the defendant pleaded that these allegations were true in fact and in substance for the purposes of s. 16 of the Defamation Act 2009 (“the 2009 Act”). The defendant specifically gave particulars of the material facts upon which he intends to rely at trial by way of support of this plea. These particulars included a plea that he had submitted confidential reports to the IAA in 2006 and 2007 and that the issues raised by him “in these reports included the operational effects of aggressive management behaviour” and simultaneous refuelling and boarding.

7. So far as the particulars of material fact supplied by the defendant in its defence regarding the allegations of inaction by the IAA are concerned, the defendant contended, inter alia, at paragraph 14 (iv) of his defence that:

“The defendant, and other pilots working for the plaintiff, have made reports to the IAA and received no substantive response from the said Authority.”

First disputed particular: details of alleged aggressive management behaviour
8. Against that background of the pleadings I can turn to the two disputed particulars which were the subject of the High Court decision. The first was particular no. 2 of its notice for particulars (as slightly reformulated). This particular sought details of the “instances of aggressive management behaviour on the part of the plaintiff which the defendant intends to reply upon.” Whatever uncertainty might hitherto have attached to the scope of these particulars of material fact in the defence (and, candidly, I am not sure that there was in fact any such uncertainty), counsel for Mr. Goss, Mr. Whelan, clarified that all the instances of alleged aggressive management behaviour upon which the defendant relies are contained in the reports made by him to the IAA. Ryanair has already been supplied with copies of this material. In these circumstances and in the light of this clarification, Mr. Hogan S.C. now accepts that the claim has been adequately particularised. It is, accordingly, unnecessary to consider this issue further.
The second disputed particular: details of other complaints made by Ryanair pilots who have reported issues to the IAA and have received no substantive responses
9. It is clear that the plaintiff has already adequately particularised the nature of his complaints to the IAA in respect of which he said that he had not received any adequate response and no issue arises in relation to this. The second particular relates to details of other similar complaints allegedly made by other Ryanair pilots to the Authority in respect of which it is alleged they have not received any substantive response.

10. The classic test regarding object of particulars remains that as articulated by Henchy J. in Cooney v. Browne [1984] I.R. 185, 191:

“Where particulars are sought for the purposes of delivering a pleading, they should not be ordered unless they can be said to be necessary or desirable to enable the party seeking them to plead, or for some other special reason: see Ord. 19, r. 6(3). Where the particulars are sought for the purpose of a hearing, they should not be ordered unless they are necessary or desirable for the purpose of a fair hearing….Thus, where the pleading in question is so general or so imprecise that the other side cannot know what case he will have to meet at the trial, he should be entitled to such particulars as will inform him of the range of evidence (as distinct from any particular items of evidence) which he will have to deal with at the trial.”
11. It follows, therefore, that particulars will be ordered in the interests of fair procedures and to ensure that a litigant will not be surprised by the nature of the case which he has to meet. The case-law shows that this is essentially the governing principle in all cases where the issue of whether the particulars should be ordered has been considered.
12. In Mahon v. Celbridge Spinning Co. Ltd. [1967] I.R. 1 Fitzgerald J. stated that the object of pleadings (of which particulars form part) was to ensure that a party “should know in advance, in broad outline, the case he will have to meet at the trial.” This basic principle – namely, that particulars must convey “in broad outline” the nature of the case which the litigant must meet at trial – as distinct from the nature of the evidence which the other party may lead in support of that case – has also been consistently endorsed in the subsequent case-law. It must be admitted, however, that this principle is sometimes easier to state than it is to apply.

13. The decided cases, however, give guidance in respect of the manner in which this test is applied. A good example is supplied by the decision of the Supreme Court in McGee v. O’Reilly [1996] 2 I.R. 229. In that case the plaintiff sued a medical practitioner for professional negligence in respect of the treatment of a young child. In his defence the medical practitioner had contended that he had examined the child following a house call and recommended that the child be brought immediately to hospital. Arising from this the plaintiff sought further and better particulars of the examination which the medical practitioner claimed to have undertaken, including the details of the observations and symptoms and the diagnosis made, and, in particular, the terms in which he had allegedly advised the parents to take the child to hospital.

14. The Supreme Court refused to order the particulars sought. As Keane J. noted, the plaintiff already knew from the defence “in broad outline” what was going to be said at the trial by the defendant regarding the house call. Keane J. further added ([1996] 2 I.R. 229 at 234):

“In our system of civil litigation, the case is ultimately decided having regard to the oral evidence adduced at the trial. The machinery of pleadings and particulars, while of critical importance in ensuring that the parties know the case that is being advanced against them and that matters extraneous to the issues as thus defined will not be introduced at the trial, is not a substitute for the oral evidence of witnesses and their cross-examination before the judge.”
15. Another example is supplied by the Supreme Court’s decision in Doyle v. Independent Newspapers (Ireland) Ltd. [2001] 4 I.R. 594. Here the plaintiff, who was a former coach of the Irish rugby team, sued for defamation in respect of a newspaper article which alleged that he had “become ostracised by the decision-making core among the players.” In response to a plea of justification, the plaintiff raised particulars in respect of the manner in which it was contended that he had been ostracised by senior players of that team and the High Court ultimately directed the defendant to furnish these details.
16. The plaintiff had, however, also sought the actual names of the members of the team who were said to have ostracised him. Although the High Court directed that these names be furnished, an appeal against this specific aspect of the order was allowed by the Supreme Court. Keane C.J. concluded that it could not be said that the plea of justification was so “general or imprecise” that the plaintiff did not know the nature of the case he had to meet at the trial. While the plaintiff did not know the actual names of the players concerned, Keane C.J. further noted ([2001] 4 I.R. 594 at 598) that the cases “in which a court will actually order a defendant to say what witnesses he is going to produce at the trial are extremely rare and unusual.”

17. It could, of course, be said that the pleading of the material facts by the defendant is in some respects imprecise in that it does not disclose either the range of years in which the complaints were made or the number of complainants to the Authority. The plaintiff is, of course, anxious to obtain third party discovery from the IAA in respect of such complaints – as is, doubtless, the defendant – and if it had further details in respect of these complaints it would undoubtedly assist in identifying the complaints in respect of which it seeks discovery.

18. In Playboy Enterprises International Inc v. Entertainment Media Networks Ltd. [2015] IEHC 102 – which was an action for copyright infringement under the Copyright and Related Rights Act 2000 – Baker J. held that in the case of an alleged breach of a statutory tort, the defendant was entitled to particulars of the alleged breach(es) by reference to the provisions of the statute itself. This decision is, however, no more than a general application of the general principle to which I have just referred, as without knowing the details of the alleged statutory infringements, the defendant cannot know in broad terms the case it had to meet.

19. In one sense, however, almost every pleading is imprecise and general. The defence in McGee did not identify the details of the observations and symptoms and the diagnosis made or the terms in which the defendant doctor had allegedly advised the parents to take the child to hospital. The same was true in Doyle where the defendant was not required to identify the names of the Irish rugby squad who were said to constitute the decision-making core who had ostracised the plaintiff. In neither case, however, were particulars ordered because the plaintiff was adjudged in each case to know in broad outline the case they respectively had to meet.

20. The role of discovery in the context of particulars was touched on by Clarke J. in Thema International Fund plc v. HSBC Institutional Trust Services (Ireland) [2010] IESC 19:

“…overly broad discovery carries with it the risk that in virtually every case, the costs of the proceedings will be increased for no gain in terms of the likely justice in the vast majority of cases, so that whatever party has to bear the burden of paying for that discovery (normally the losing party), will bear a larger burden than might otherwise have been the case. The injustice, to at least one party in virtually every case, that would arise in those circumstances is obvious.”
21. Clarke J. went on to acknowledge that the Court is obliged to engage in a balancing act in cases of this kind:
“To enable a party to move to discovery without having adequately pleaded its case is to run the risk of a significant injustice by virtue of that party being allowed to trawl through the other side’s often confidential information without real justification. On the other hand, to require a party to plead at a level of detail (in advance of discovery or the like) which it could not reasonably obtain other than by discovery or other procedural steps can lead to an obvious injustice. A balance again needs to be struck.”
22. Judged by these standards, I am driven to the conclusion that Ryanair knows in broad terms the case it has to meet, namely, that some of its pilots filed confidential reports with the IAA complaining about safety to which the Authority gave no substantive response. While the distinction articulated by Henchy J. in Cooney between being entitled to know the range of evidence on the one hand as distinct from any particular item of evidence on the other is – as this aspect of the present case readily illustrates – sometimes a subtle one, I nonetheless think, on balance, that the allegation regarding the other pilots filing confidential reports falls into the former rather than the latter category. In other words, Ryanair knows the range of evidence, but not the details of any particular item of evidence, such as the date of a particular complaint or the identity the pilot or pilots in question. The authorities are clear, however, that it is not entitled to the latter information by way of particulars.
23. While further details and particulars in respect of these complaints would probably assist Ryanair in its conduct of the litigation – by, for example, narrowing down the range of documents it might seek in discovery from the Authority – I am not persuaded that it does not already know in general terms the case it might meet at the trial. That is ultimately the test which the Supreme Court has mandated in the trilogy of leading cases on this topic: Cooney, McGee and Doyle. The fact that, if additional details were supplied by way of particulars, this would be likely to assist the plaintiff in the subsequent conduct of the litigation is not in itself a reason to order further particulars if, as here, the particulars already supplied to the plaintiff enable it to know in broad outline the case it has to meet. In any event, as Clarke J. pointed out in Thema, it would be generally unfair to require a defendant to plead to such a high level of particularity in advance of discovery.
Conclusions
24. In summary, therefore, for the reasons set out in this judgment I would affirm the decision of the High Court to refuse to make an order directing the defendant to answer the disputed two particulars. I would, accordingly, dismiss the appeal.

Burke v Beatty

[2016] IEHC 353
JUDGMENT of Mr. Justice Noonan delivered on the 22nd day of June, 2016
Introduction
1. In the within motion, the defendant seeks an order pursuant to O. 19, r. 28 of the Rules of Superior Courts and/or the inherent jurisdiction of the court striking out the plaintiffs’ claim on the grounds that it discloses no reasonable cause of action, is bound to fail or is frivolous or vexatious. Alternatively, the defendant seeks an order pursuant to O.19, r. 27 of the Rules striking out such parts of the claim as the court considers to be unnecessary or scandalous, or tending to prejudice or embarrass or delay the fair trial of the action.
Background facts
2. The plaintiffs are businessmen who were in all material times the owners of a property at 45/46 Bellview Avenue Lower, Dublin. The plaintiffs’ property adjoined another property known as units A and A1, Old Fairview Cinema owned by a Mr. Gary Payne. Access to Mr. Payne’s property is via a right of way over the plaintiffs’ property. On the 29th November, 2002, the plaintiffs obtained planning permission from the planning authority for the construction of 36 apartments and two retail units on their property. In the normal way, this planning permission extended for a period of five years and thus was due to expire on the 29th November, 2007. The plaintiffs intended funding the development by means of a loan from KBC Bank which was approved on the 16th March, 2004.

3. On the 29th July, 2005, Mr. Payne instituted proceedings against the plaintiffs arising out of an alleged apprehended interference with his right of way as a result of the development works being or to be carried out by the plaintiffs on foot of the planning permission. A statement of claim was delivered in those proceedings on the 25th November, 2005, in which he sought declaratory relief in relation to the extent of his right of way and injunctions restraining the plaintiffs from interfering with it. Mr. Payne also sought damages.

4. Arising out of the institution of these proceedings, the plaintiffs instructed Mr. Paul Ferris, solicitor, to act on their behalf in relation to the litigation. In or about December 2005, Mr. Ferris in turn instructed the defendant, who is a member of the Bar, to represent the plaintiffs. The defendant drafted a defence and counterclaim to Mr. Payne’s proceedings essentially traversing the claim and contesting the extent of the right of way claimed by Mr. Payne. The counterclaim alleged that Mr. Payne was guilty of wrongful actions which caused the plaintiffs loss and for which they claimed damages. They also claimed a declaration regarding the extent of the way. Although it is unclear whether at that stage any work had been done by the plaintiffs on the site, it would appear that by 2007 at any rate, such work as was done was of a fairly preliminary nature involving site clearance and the like. It is clear however, that Mr. Payne’s proceedings and his claimed right of way were a significant, and perhaps total, impediment on the plaintiffs’ ability to complete the development. It was therefore imperative from the plaintiffs’ perspective to have Mr. Payne’s claim resolved. A settlement meeting took place between the parties on the 11th October, 2006. It would appear that a sum of €500,000 was sought by Mr. Payne to extinguish the right of way and matters did not progress further at that time.

5. Subsequently, in early May 2007, Mr. Ferris suggested to his opposite number that the parties attend a further settlement meeting at the Four Courts. The meeting took place on the 17th May, 2007. The defendant led the negotiations on behalf of the plaintiffs, having received written instructions from Mr. Ferris on the 9th May, 2007. The plaintiffs’ architect, Mr. Fergus Clancy, was also present. The negotiations commenced at around 10am and concluded at around 7pm with a written settlement agreement having been executed by the parties. The agreement, entitled “Terms of Settlement” appears to have been largely drafted by the defendant. The salient terms are as follows:

“It is agreed between the parties that above entitled proceedings will be settled on the following terms:
[1.][Mr. Payne] hereby agrees to surrender and/or extinguish the right of way …

[2.][Mr. Payne] agrees to enter into the necessary agreements for the extinguishment of the right of way referred to at para. 1 herein within seven days of notice in writing being given to him by registered post of the [plaintiffs’] intention to commence development … Unless and until such time as such notice is given, the plaintiff, is servants, agents, lessees, licences [sic] and/or assigns shall continue to enjoy the benefit of the right of way referred to at para. 1 herein.

[3.]On extinguishment of the right of way referred to at para. 1 herein, the [plaintiffs] hereby agree to grant to [Mr. Payne] his successors and assigns and all and every, the owner or owners, lessees or occupiers of [Mr. Payne’s property] a particular and pedestrian right of way at all times and for all purposes by day or by night to pass and re-pass over that portion of the [plaintiffs’] lands which at all times shall have a minimum width of 3.5 meters and a minimum height clearance of 3 meters and run from the entrance to the [plaintiffs’] lands across the [plaintiffs’] lands to the point were [Mr. Payne’s] lands adjoin the [plaintiffs’] lands for the purposes of serving and/or accessing [Mr. Payne’s] lands…

[7.] The parties’ engineers are to meet on site within 30 days to agree the exact line of the right of way to be granted by the [plaintiffs] to [Mr. Payne] referred to at para. 3 herein…

[9.] The [plaintiffs] shall have an option to purchase [Mr. Payne’s] property which said option shall expire on the 30th September, 2007. [A price determination method and other terms ore stipulated]…

[11.]The [plaintiffs] shall pay [Mr. Payne] the sum of €275,000 by way of damages not later than eight weeks of the date of this settlement.

[12.] The [plaintiffs] shall pay [Mr. Payne] the sum of €40,000 (inclusive of VAT) as a contribution towards his costs of the proceedings not later than eight weeks of the date of this settlement …”

6. The plaintiffs allege in the within proceedings that at the time the settlement agreement was entered into, there was not enough time remaining for them to carry out sufficient works by the expiry of the planning permission on 28th November, 2007, to avoid the necessity for a fresh planning application. They allege that the defendant was aware of this fact. Following the conclusion of the settlement agreement, the respective parties’ experts, incorrectly described as “engineers” in the settlement agreement but in fact architects, did not meet on site within the stipulated 30 day period. In fact discussions between the architects only commenced in July 2007, and ultimately, agreement was never reached on the line of the proposed new way. Mr. Payne’s architect in correspondence appears to suggest that this was at least in part related to the fact that no monies were paid to Mr. Payne by the plaintiffs on foot of the agreement. Indeed it is evident from this correspondence and further exchanges between the parties in these and other proceedings that something of a “chicken and egg” debate ensued with Mr. Payne indicating that the new right of way could not be discussed or agreed until the money was paid and the plaintiffs arguing that no money could be due until such time as the old right of way was extinguished and the new one agreed.
7. Arising from this, Mr. Payne instituted new proceedings by way of summary summons on the 8th May, 2008, claiming the sum of €315,000 as money due under the settlement agreement. This was followed by Mr. Payne issuing a motion for summary judgment which was contested by the plaintiffs. In response to that motion, the second plaintiff swore an affidavit contesting Mr. Payne’s right to summary judgment on the basis that the €275,000 claimed was part consideration for the extinguishment of the right of way and as this had never occurred, the money never became due. Furthermore, the second plaintiff averred that as the planning permission had now lapsed, it became impossible for agreement on a new right of way to be reached.

8. Mr. Payne’s motion for summary judgment came on for hearing before this court (McKechnie J.) on the 12th April, 2010, and the court granted judgment in the sum of €40,000, being the agreed contribution to Mr. Payne’s legal costs, and adjourned the balance of the claim, being for €275,000, for plenary hearing. A statement of claim was delivered by Mr. Payne on the 12th July, 2010. In it, Mr. Payne contends that the plaintiffs’ obligation to pay him the sum of €275,000 for “damages” is free standing and independent of any obligation on his part to extinguish the right of way.

9. The plaintiffs delivered their defence and counterclaim on the 2nd November, 2010, which was settled by the defendant. It raises the preliminary objection that the settlement agreement is void for illegality as its purpose is to hinder the collection of tax by the Revenue Commissioners. The defence goes on to plead that the €275,000 was never intended as damages but was in fact part consideration for the extinguishment of the right of way. Further, the plaintiffs counterclaimed for damages premised on a breach by Mr. Payne of the terms of the settlement agreement, such breach being the failure to extinguish the right of way. The plaintiffs went on to plead that Mr. Payne’s breach of contract had the effect of causing them to lose their entire investment in the development amounting to very substantial sums. The counterclaim goes on to allege that the settlement agreement was entered into under a mutual mistake of fact, first that the €275,000 was part payment for extinguishment of the right of the way and secondly that only a temporary right of way during construction could be provided by virtue of health and safety considerations. The prayer for relief by the plaintiffs includes the following:

[1.] Damages for breach of contract
[2.] An order declaring the contract void for illegality.

[3.] In the alternative, specific performance of [Mr. Payne’s] obligations on the compromise agreement as pleaded herein if and when the development proceeds.

[4.] A declaration that the [plaintiffs] are only required to pay to [Mr. Payne] a sum of €275,000 in exchange for the extinguishment of the existing right of way as part consideration for this extinguishment with the other part of the consideration being the provision of an alternative right of way for the completion of the construction of the development pursuant to the terms of the agreement.

[5.] A declaration that the settlement agreement dated the 17th May, 2007, and signed by the parties is to be rectified so as to embody the agreement actually made between them or their true intentions at the time of executing the same in the respects that out of above and had the said compromise agreement treated as being so rectified.

[6.] Alternatively, an order that the said compromise agreement be rescinded.

[7.] A declaration of the compromise agreement is frustrated in part or altogether.

[8.] Costs.

10. It would appear that the matter has not yet proceeded to trial, having been adjourned generally on the 20th July, 2010, by which time the defendant had ceased to represent the plaintiffs.

The Law
11. The court’s approach to applications of this nature is by now so well settled that I do not think it necessary to subject it to detailed analysis. The jurisdiction to strike out a claim under the Rules is quite separate and distinct from the inherent jurisdiction to strike out. This is comprehensively explained in a series of judgments delivered by Clarke J. first in the High Court in Salthill Properties Limited & Anor v. The Royal Bank of Scotland Plc & Ors [2009] IEHC 207 and subsequently in the Supreme Court in Lopes v. Minister for Justice, Equality and Law Reform [2004] IESC 21 and in Keohane v. Hynes & Anor [2014] IESC 66. O. 19 r 28 provides as follows:
“The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just.”
12. An application under O. 19, r. 28 is concerned solely with what appears on the face of the pleadings. If the facts as pleaded by the plaintiff could not conceivably give rise to a cause of action, then the proceedings may be dismissed. The court does not, and cannot, look outside the pleadings or examine the facts or the evidence to determine if the cause of action is sustainable. In such an application, the court has jurisdiction to strike out an entire pleading but not a portion thereof, so that it is all or nothing – see Aer Rianta v. Ryanair [2004] 1 IR 506. The court must further be satisfied that the impugned pleading does not admit of any amendment that could save it – per Keane J. in Moffitt v. Bank of Ireland [Unreported, Supreme Court, 19th February, 1999].
13. The jurisdiction conferred on the court by O. 19, r. 27 is quite different. It provides:

“The Court may at any stage of the proceedings order to be struck out or amended any matter in any indorsement or pleading which may be unnecessary or scandalous, or which may tend to prejudice, embarrass, or delay the fair trial of the action; and may in any such case, if it shall think fit, order the costs of the application to be paid as between solicitor and client.”
14. Rule 27 is concerned with a different subject matter to r. 28. Unlike r. 28, it explicitly permits the court to strike out a part of a pleading. Pleadings exist to define the issues which the court has to determine. Thus, where a pleading contains allegations which are irrelevant or otherwise unnecessary to make out the cause of action pleaded, they may be struck out. Scandalous matter may also be struck out which is not present for legitimate pleading purposes but rather is a form of abuse of process. An example would be the inclusion of gratuitous allegations defamatory of a party, which are irrelevant to the issues and included for the improper purpose of abusing the cloak of privilege conferred in court proceedings. Matters which may tend to prejudice, embarrass or delay the fair trial of an action may for example include excessive prolixity, vagueness and lack of particularity in pleadings. Rule 27 enables the court to address all such issues which are separate and distinct from the subject matter of r. 28. Applications to dismiss under the inherent jurisdiction of the court are quite different. Here, the court is not confined to an examination of the proceedings but may look outside them at uncontroversial facts to determine if the claim is bound to fail. As Clarke J. said in Salthill Properties (at para. 3.12):
“The whole point of the difference between applications under the inherent jurisdiction of the court, on the one hand, and applications to dismiss on the factual basis of a failure to disclose a cause of action on the other hand is that the court can, in the former, look to some extent at the factual basis of the plaintiff’s claim.”
15. The same judge speaking for the Supreme Court emphasised however, the limited nature of such enquiry in Keohane at para. 6.2:
“However, it is important to emphasise that the extent to which it is appropriate for the Court to assess the evidence and the facts on a motion to dismiss as being bound to fail is extremely limited.”
Clarke J. summarised the matter in the following way:
“[6.5.] It is important, for the avoidance of any doubt, that the overall principle be clearly stated. As pointed out in many of the authorities, not least in the judgment of Murray J. in Jodifern, the underlying basis of the jurisdiction to dismiss as being bound to fail stems from the court’s inherent entitlement to prevent an abuse of process. Bringing a case which is bound to fail is an abuse of process. If it is clear to a court that a case is bound to fail, then the court has jurisdiction to prevent that abuse of process by dismissing the proceedings. However, as again noted by Murray J. in Jodifern, whatever might or might not be the merits of some form of summary disposal procedure, an application to dismiss as being bound to fail is not a means for inviting the court to resolve issues on a summary basis.

[6.6.] It is for that reason that all of the jurisprudence emphasises that the jurisdiction is to be sparingly exercised and only adopted when it is clear that the proceedings are bound to fail rather than where the plaintiff’s case is very weak or where it is sought to have an early determination on some point of fact or law. It is against that background that the extent of the court’s entitlement to look at the facts needs to be judged.
[6.7.] I am in full agreement with the views expressed by Birmingham J. in Burke. Where there is evidence placed before the court on affidavit on behalf of a plaintiff which, if accepted at trial, might arguably lead to the plaintiff succeeding, then that is an end of the matter. But it does not necessarily follow that a plaintiff even has to put evidence of that type before the court. In Lopes, I observed at para 2.5:

‘In order to defeat a suggestion that a claim is bound to fail on the facts, all that a plaintiff needs to do is to put forward a credible basis for suggesting that it may, at trial, be possible to establish the facts which are asserted and which are necessary for success in the proceedings. Any assessment of the credibility of such an assertion has to be made in the context of the undoubted fact, as pointed out by McCarthy J. in Sun Fat Chan (at p. 428), that experience has shown that cases which go to trial often take unusual turns on the facts which might not have been anticipated in advance.’

I commented to similar effect in Salthill Properties at para 3.15:
‘…it seems to me that I should assess the factual allegations .., not on the basis of whether those parties have shown that they have evidence which, if accepted, would lead, arguably, to success in the proceedings but rather whether [the applicants] have established that it is impossible that any such evidence will be produced at trial.’
[6.8.] What the Court can analyse is whether a plaintiff’s factual allegation amounts to no more than a mere assertion, for which no evidence or no credible basis for believing that there could be any evidence, is put forward…

[6.10] … the bringing of a claim based on a factual assertion for which there is or may be evidence (even if the defendant can point to many reasons why it might be argued that a successful challenge could be mounted to the credibility of the evidence concerned) is not an abuse of process.”

These Proceedings
16. The plaintiff instituted the within proceedings by plenary summons on the 2nd May, 2013. The claim is for damages and the cause of action is stated in the general indorsement of claim on the summons as being negligence, breach of duty, mis-representation and conspiracy. The statement of claim was delivered on the 19th February, 2014, and sets out in some detail the factual background to which I have already referred. The plaintiffs plead that the defendant was aware of all of these facts at the time he negotiated and drafted the terms of settlement. In essence, the statement of claim pleads two separate causes of action against the defendant, the first in conspiracy and the second in professional negligence.
17. With regard to the first, it is alleged that the defendant conspired with Mr. Ferris and Mr. Payne to procure an unlawful object by advising the plaintiffs to enter into the settlement agreement, namely the unlawful avoidance of capital gains tax by Mr. Payne. The second limb of the claim is that the defendant negligently advised the plaintiffs to enter into the settlement agreement when it was not in their interests to do so. Complaint is made of the fact that the settlement agreement imposed an obligation on the plaintiffs to pay a sum of €315,000 to Mr. Payne independent of any obligation on his part to extinguish the right of way. Accordingly, it is alleged that the settlement agreement as drafted by the defendant failed to impose contemporaneous mutual obligations upon the parties.

18. The plaintiffs plead that the location of the new right of way could not be agreed until the construction works commenced upon the site but no works could commence without drawing down the finance from KBC Bank who indicated to the plaintiffs that it would not advance any sums until a map was agreed between the experts outlining the precise location of the new right of way. The plaintiffs accordingly allege that they were left in a situation where they were obliged to pay €315,000 to Mr. Payne whilst at the same time being unable to agree the new right way and extinguish the old one. The plaintiffs go on to allege that all of these matters had the consequence that the planning permission expired, they were unable to proceed with the development and they lost their entire investment and the very significant profits that would have flowed from the project. All of these are claimed for in the statement of claim and subsequent replies to particulars.
The Defendant’s Application
19. Mr. Hayden S.C. for the defendant submits that with regard to the first limb of the claim, conspiracy, it is bound to fail because no loss is alleged to have been suffered by the plaintiffs as a result of the conspiracy. The conspiracy is alleged to be one to defraud the Revenue and if that is correct, then it is the Revenue that have suffered the loss and not the plaintiffs. Counsel contended further that a claim for damages in conspiracy could not be advanced against a sole defendant where the essence of the tort is that he conspired with others not before the court. Although proceedings have been brought separately against Mr. Ferris which the plaintiffs say they intend to consolidate with the claim against the defendant, those proceedings against Mr. Ferris do not include a claim for conspiracy and such claim against him would now be statute barred. Insofar as it is claimed in the counterclaim against Mr. Payne, that matter appears to be determined.

20. On the second limb of the claim, professional negligence, it is said that this is bound to fail for a number of reasons. Primary amongst these is that the plaintiffs have in fact suffered no loss as a result of any negligence on the part of the defendant, even if there was such. The basis of this argument is that the plaintiffs have never discharged the sum of €315,000 to Mr. Payne and are thus not at the loss of it. The proceedings involving Mr. Payne appear to have ended some years ago and the plaintiffs themselves concede that they have only discharged a sum of €10,000 on foot of the judgment already obtained against them in 2010. It is not open to the plaintiffs to argue that the obligation to pay Mr. Payne is independent of his obligations to extinguish the right of way in circumstances where the second plaintiff has sworn an affidavit to contrary effect in opposing the motion for judgment brought by Mr. Payne.

21. Insofar as the plaintiffs make a claim in relation to the loss of the development, that is also bound to fail because the plaintiffs concede and expressly plead that at the time of the settlement agreement was entered into, it was already too late for them to complete the development without the necessity for a fresh planning application. Accordingly, the defendant submits that any losses suffered by the plaintiffs in that regard are solely attributable to their own actions and cannot be attributed to any putative negligence on the part of the defendant. The defendant further argues that it is not open to the plaintiffs to contend that they have a liability for the €275,000 in circumstances where, quite apart from the fact that they have not paid it, McKechnie J. found that they had a defence to this claim in adjourning the matter for plenary hearing.
Discussion
22. Dealing first with the conspiracy claim, in discussing the constituent ingredients of the wrong, in The Law of Torts (4th Ed) McMahon and Binchy, the authors state at para. 32.98:

“For the plaintiff to succeed, it is necessary to show not merely that a conspiracy was in existence but that it resulted in damage to the plaintiff.”

23. The tort of conspiracy was considered by Barton J. in Van Garde Auto Finance Limited v. Byrne & Ors [2014] IEHC 465 were he said (at para. 85 – 86): “[85.] The essential features of the tort of conspiracy were succinctly described in the judgment of O’Neill J. in Iarnrod Eireann v. Colbrook [2000] IEHC 47 where having reviewed a number of earlier authorities the learned judge stated

‘[1.] The agreement or combination of two or more people the primaryor predominant object of which was to injure another, is actionable even though the act done to the party injured would be lawful if doneby an individual.
[2.] An agreement or combination of two or more persons to carry outa purpose lawful in itself but by using unlawful means is actionable, in circumstances where the act in question might not be actionableagainst the individual members of the combination, as individuals.’

[86.] This tort requires the participation of two or more legal or natural persons to injure the plaintiff. The parties need not all act at the same time nor are they required to be of the one aim but there must be an agreement on acting together. Conspiracy is not actionable per se. It is a necessary proof on the part of the plaintiff to establish both the fact of the conspiracy and that this resulted in damage to the plaintiff.”

24. In the present case, the plaintiffs allege a conspiracy involving the defendant with others to defraud the Revenue. It is clear on any view of the matter therefore that the object of the alleged conspiracy was not to injure the plaintiffs. Although they allege that the defendant was guilty of conspiracy and separately that they suffered loss, even on their own case as pleaded there is clearly no causal connection between the alleged wrongful conduct and the alleged loss. Further, looking outside the pleadings at the first plaintiff’s replying affidavit which contains a lengthy section dealing with the conspiracy claim, the entirety of that is devoted to the assertion that the defendant well knew when he drafted the settlement agreement that the €275,000 was not in fact damages but was part of the consideration for the extinguishment of the right of way. That may or may not be so but it does not in any way address the fundamental issue that the plaintiffs have plainly suffered no loss as a result of the conspiracy complained of.
25. In those circumstances, it seems to me that an analysis of the claim as pleaded together with the supporting evidence of the plaintiffs, even taken at its high water mark, demonstrates clearly that this claim is bound to fail. I should add however, that were it necessary to express a view on the argument of the defendant that a claim in conspiracy could not succeed against an individual party, I am not convinced that this is so. No authority was cited in support of this proposition and it seems to me that it is possible to envisage circumstances where there may be a number of co-conspirators but the plaintiff is only in a position to proceed against one or other because their identities may be unknown, they may not be amenable to the court’s jurisdiction for whatever reason, they may be immune from suit and so forth. For those reasons I do not think that this argument is well founded.

26. Turning now to the professional negligence claim, although lengthy and detailed allegations are made in the pleadings on this issue, I think when one steps back and takes an overview of the matter, it is perhaps not unduly complex.

27. The plaintiffs wanted to proceed with their development. They could not do so as long as Mr. Payne’s claim remained extant. The purpose of attending the settlement meeting was therefore to procure a compromise that would enable the development to proceed. This was clearly going to involve the payment of money to Mr. Payne one way or the other. The plaintiffs’ evidence is that they had no intention of paying damages to Mr. Payne and presumably believed he had suffered none. Their intention was to buy out his right of way and reinstate it in a different location where it would not interfere with their development. They were prepared to pay Mr. Payne for this facility. The defendant was aware of these facts. He was also aware as Mr. Ferris’s letter of 9th May, 2007, to him clearly shows that the plaintiffs were unlikely to have sufficient time to complete the development before the planning permission expired but they still wished to compromise the matter if that were possible. The plaintiffs may well have felt that even in the event of running out of time, they would have a reasonable prospect of getting a fresh planning permission. Alternatively they may have felt that if they managed to extinguish the right of way, this would considerably enhance the value of their site with a view to selling it on to a third party who had the means to develop it. However, the important point is that whatever their motivation, the plaintiffs believed that it was in their interests to extinguish Mr. Payne’s right of way.

28. It seems to me that at minimum, it is at least arguable that the settlement agreement failed to achieve this relatively simple objective. On one view of the matter, which is of course the view advanced by Mr. Payne, after the conclusion of the settlement agreement, the plaintiffs were left with an obligation to pay him €315,000, described as “damages” and costs, while at the same time being left with no final and conclusively binding commitment by him to extinguish the right of way. Mr. Payne’s agreement to extinguish his right of way was left contingent upon a further agreement between the parties’ experts which might never be, and has not to date in fact been, reached. In that respect, Mr. Payne’s commitment in relation to the extinguishment of his right of way might reasonably be characterised as no more than an agreement to agree.

29. As against that, the plaintiffs have arguably been left with an obligation to pay damages of €275,000 to Mr. Payne. I do not accept the defendant’s submission that it is not open for the plaintiffs to make this argument in circumstances were they have sworn in Mr. Payne’s claim that this sum is in fact part consideration for the extinguishment of the right of way, in the absence of which there can be no obligation to pay. That issue has not been finally determined as the proceedings have simply been adjourned generally and could, in theory at least, be resurrected in the future. Furthermore, the suggestion that McKenchie J. found that the plaintiffs had a defence at the summary judgment hearing is not something that in my view can be relied upon by the defendant to show that the plaintiffs’ claim is either frivolous or vexatious or bound to fail.

30. At the summary judgment hearing, all that the court was required to conclude was that the plaintiffs had raised no more than an arguable defence but whether such defence might ultimately succeed is something as yet undetermined.

31. It is also of particular significance that judgment was given against the plaintiffs in those proceedings for €40,000, in respect of which a part payment only has been made. The fact is that the plaintiffs remain liable on foot of that judgment and might reasonably argue that this at least is a clear liability to which they have been exposed for which they have received no benefit and which arises from the manner in which the settlement agreement was drafted by the defendant.

32. The defendant argues that the claim for the losses arising from the failure of the project cannot be visited upon him as the project was in effect already doomed before the settlement was concluded. That may or may not be the case and is no doubt something that will be forcefully argued at the trial of the action. However, at this juncture, I do not think it is possible for me to say that there are no circumstances in which this claim could succeed irrespective of what evidence may be led by the plaintiffs at the trial. The plaintiffs’ case may be weak in that regard, it may be lacking in credibility and perhaps even contradicted to an extent by their own pleadings, but to conclude that the case is thus bound to fail would involve embarking on precisely the kind of analysis and weighing of the evidence that is impermissible in an application of this nature for the reasons explained in the authorities to which I have already referred.

33. I am therefore not satisfied that this aspect of the plaintiffs claim is bound to fail.
Conclusion
34. For the reasons already set out, I propose to strike out those parts of the plaintiffs’ plenary summons and statement of claim that refer to the conspiracy claim. In respect of the balance of the plaintiffs’ claim, I will refuse the defendant’s application herein. I will hear counsel further on the final form of order necessary to give effect to these findings.