Frivilous Vexatious & Abuse
Cases
D.K. v A.K. and Ors
[1993] ILRM 710
Costello J
The plaintiff and his wife have one child, a boy born on 19 June 1978. They separated in December 1981 and have since been living apart. Custody of their son was given to the plaintiff’s wife but access on a regular basis was granted by court order to the plaintiff. In May 1987 the plaintiff’s wife made an allegation against him of having committed one of the most heinous crimes imaginable, namely, that he had sexually abused his own son, then nine years old. These proceedings arise out of that allegation. In the interests of the young boy and to preserve as far as is possible his anonymity I will not refer to him or his parents by name and I will refer to the plaintiff only by initials in the title of this judgment.
The facts relevant to the present applications are as follows. The plaintiff’s son was admitted to Temple Street Children’s Hospital on 9 April 1987 by the plaintiff’s wife with a complaint that he had been sexually abused by her husband. The case was referred for assessment to the sexual assault unit of the Rotunda Hospital and the boy was there attended by Dr King. He was discharged from Temple Street Hospital on 8 May. Thereafter the plaintiff’s wife refused the plaintiff access. The plaintiff had been informed that the principal social worker of the Eastern Health Board would co-ordinate and instigate therapy or treatment as prescribed by Dr King and on 11 May the plaintiff was asked to sign a written agreement prepared by the board. The agreement provided that the plaintiff and his wife would co-operate in relation to certain stated arrangements and that if agreement was not forthcoming that the board would be obliged to take legal advice as to seeking a place-of-safety order. The plaintiff refused to sign. On 12 May he issued a motion seeking a court order re-instating his access rights. There was a hearing of the motion on 15 May when an interim order was made. The matter was adjourned to 24 June and then to 17 July. At the hearing on 17 July Professor Barry O’Donnell gave evidence on the plaintiff’s behalf. The plaintiff later also obtained an opinion on the case from an English specialist and lecturer in child and adult psychiatry.
In 1990 the plaintiff instituted these proceedings. They are not against his wife, but against Dr King as the first defendant, the Governors of the Rotunda Hospital as the second defendant, the Eastern Health Board as the third defendant, and the Governors of Temple Street Hospital as the fourth defendant. A statement of claim was filed in October 1991 and by separate motions three of the defendants Dr King, the Governors of the Rotunda Hospital and the Governors of Temple Street Hospital have applied to strike out the statement of claim under O. 19 or pursuant to the court’s inherent jurisdiction. This judgment gives my conclusions on these applications.
The law
Before referring to the facts relevant to these applications, I should briefly refer to the relevant legal principles.
The defendants referred in their notices of motion to O. 19 rr. 27 and 28 and also in their submissions to the court’s inherent jurisdiction.
O. 19 r. 27 allows the court to strike out any matter in any pleadings which may be ‘unnecessary’, ‘scandalous’ or which may tend to ‘prejudice, embarrass, or delay’ the fair trial of the action. R. 28 provides that 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 … being shown by the pleadings to be frivolous or vexatious, the court may order the action to be stayed or dismissed.
In the course of the argument counsel did not rely on r. 27. R. 28 only applies where it can be shown that the text of the plaintiff’s summons or statement of claim discloses no reasonable cause of action or that the action is frivolous or vexatious. I do not think that the plaintiff’s pleadings here can be so regarded (and it was not seriously contested that they should be) and so it follows that if I am to strike out the plaintiff’s claims it must be in the exercise of the court’s inherent jurisdiction.
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.)
I do not think that the plaintiff’s claims are ‘frivolous’. Although they may cause very considerable worry and concern to each of the defendants, I do not think that they can be properly termed ‘vexatious’ as that word is used in the context I am considering. 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.
The plaintiff’s claims against Dr King
The plaintiff claims damages against Dr King for a libel contained in a medical report dated 13 May 1987, damages for a libel contained in a medical report dated 24 June 1987, damages for a libel contained in a medical report dated 14 July 1987. Damages are also claimed for negligence on the basis that Dr King negligently diagnosed the plaintiff’s son thereby causing the plaintiff damage. There are also claims for damages for breach of constitutional rights and for breach of contract. I will deal firstly with the libel claims.
(a) Dealing firstly with the report of 13 May 1987 the pláintiff will inter alia have to establish that (a) the words used in it were defamatory, (b) that the defamatory words referred to him and (c) that they were published. It has not been submitted that the plaintiff’s case on each of these issues is so weak that the claim should be dismissed as an abuse of the court’s process. The point made on this motion is a different one. It is claimed that the report is protected by absolute privilege and that this being so the claim is so manifestly unsustainable that the proceedings should be struck out. In support of this submission I was referred to Bottomley v Brougham [1908] 1 KB 584 and to Law v Llewellyn [1906] 1 KB 487 but I do not think that either of these cases are directly in point as the first related to the report of an official receiver appointed by the court and absolute privilege was accorded to his report on the ground that it was the judgment of a judicial officer upon a matter entrusted to him for inquiry whilst the second related to a statement made by a magistrate sitting in the course of his judicial duties. More in point is Watson v McEwan [1905] AC 480 which decided that absolute privilege attaches to statements made by a witness to a solicitor taking his proof of evidence for the purpose of a trial.
But there are a number of reasons why the point raised by the defendants in this case cannot be regarded as being so clear cut and unassailable that I should now dismiss the plaintiff’s claim. Firstly, there is a question of fact which will have to be resolved at the trial, and not on this motion. Dr King’s evidence is that she made the report of 13 May 1987 in response to a request by the plaintiff’s wife’s solicitor. But his letter making this request is dated the following day ( ie 14 May) and so the plaintiff is entitled to investigate how this report came to be made so as to ascertain whether in fact it was prepared for the purpose alleged.
Secondly, the correspondence which has been exhibited shows that on making a request for a further medical report on 2 June the plaintiff’s wife’s solicitors pointed out that the report would be made available to the plaintiff’s solicitors so that they should be fully acquainted with the situation. It can be argued that a report made under such circumstances and for such a purpose is not privileged as the requirements of the proper administration of justice would not demand that it be so protected. I am not called upon to give any conclusion on such an argument because a motion of this sort is not one on which the court should adjudicate on controversial legal issues. It will suffice if I conclude, as I do, that the point is not a frivolous or an obviously unsubstantial one. But if the second report was to be made available to both parties a question of fact again arises in relation to the first report, namely, whether it too was intended to be given to both parties. If it was then its right to absolute privilege could be open to question.
Thirdly, the plaintiff has raised a constitutional issue in the pleadings. As I understand the case it is claimed that the plaintiff is entitled to damages for infringement of his constitutionally guaranteed right to a good name. It seems to me that this plea may give rise to an issue to be decided at the trial relating to the priority to be given between the court’s duty (a) to vindicate constitutionally protected rights and its duty (b) to ensure the proper administration of justice by the enforcement of rules relating to the confidentiality of com munications with lawyers in the preparation of such proceedings. The existence of such an issue would preclude the court from dismissing the plaintiff’s claim on this motion.
(b) As to the claims based on the libels alleged to be contained in the reports of 24 June 1987 and 14 July 1987 it is clear that these were made as a result of written requests made by the plaintiff’s wife’s solicitor and so no question of fact arises on these claims. But the other two considerations to which I have just referred raise controversial issues on the claim to absolute privilege and for the reasons I have just given preclude me from striking out the plaintiff’s claim.
(c) The plaintiff also claims that Dr King negligently carried out the assessment and diagnosis of the plaintiff’s son. He claims that she negligently and wrongly diagnosed that he had been sexually assaulted and that she negligently and wrongly diagnosed that he had sexually assaulted him. To establish this claim he will have to show that Dr King owed him a duty of care and it has been submitted on her behalf that because none existed this claim should be dismissed. But it would be wrong for me to adjudicate on that issue on this motion. It cannot be said that the trial judge would certainly hold in the defendant’s favour and it would be wrong for me to strike out the plaintiff’s claim before this controversial issue had been determined with the benefit of oral evidence and full legal argument.
(d) There is a generalised claim for damages for breach of constitutionally protected rights, a claim which no doubt in the course of these proceedings the plaintiff will be required to particularise. As against Dr King I assume that it is a claim for damages for infringing the plaintiff’s constitutionally protected right to a good name. Such a claim raises an issue as to whether a defamatory utterance which involves both the common law tort of libel and the constitutional tort of infringement of a constitutionally protected right gives rise to two separate causes of action. This issue has not yet been authoritively decided and I certainly cannot dismiss this part of the plaintiff’s claim as being an abuse of the court’s process. Furthermore, apart from the claim for damages the claim of infringement is relevant on two other issues that may arise at the trial; firstly, (as already pointed out) as to whether the law of privilege in libel actions is modified in any way if the libel involves an infringement of the constitutionally protected right to a good name; and, secondly, as to whether the law relating to the limitation of damages recoverable in a negligence action is modified in any way when the negligent act amounts to an infringement of the constitutionally protected right to a good name.
For these reasons I will not strike out this part of the plaintiff’s claim.
(e) Finally, the plaintiff has claimed damages for breach of contract. It is urged on Dr King’s behalf that no contract was entered into between her and the plaintiff and so this part of the proceedings should be struck out. It may, of course, be shown at the trial that this claim is otiose — but I express no opinion on the point now. In a reply to a notice for particulars it is claimed that the contract which the plaintiff’s wife entered into in respect of the care, treatment and diagnosis of her son was entered into on behalf of both herself and her husband. Without expressing any concluded view on this submission I can say that it is a case which the plaintiff should be permitted to make — it is not one so devoid of merit as to justify the conclusion that by bringing it the court’s processes have been abused.
I will therefore refuse the relief sought in Dr King’s motion.
The plaintiff’s claims against the Governors of the Rotunda Hospital
These claims are for (a) damages for libel, (b) damages for negligence, (c) damages for breach of constitutional rights and (d) damages for breach of contract. The basis for the claims is that the governors are vicariously liable for Dr King’s wrongful acts. I agree that this case could have been pleaded with greater particularity but if it is necessary to do so the statement of claim can be amended. Once I have decided that the claims against Dr King should not be struck out I think it follows that the claims against the hospital governors must proceed to trial and I must therefore refuse the relief they now claim.
The plaintiff’s claims against the Governors of Temple Street Hospital
It is not clear whether the plaintiff is alleging that the Governors of Temple Street Hospital are vicariously liable for the wrongful acts of Dr King or whether the claim of vicarious liability is based on the alleged wrongful acts of the medical staff of their hospital. This point will have to be clarified. If it is not claimed that Dr King was the servant or agent of Temple Street then no claim for damages for libel and no claim for damages for infringement of constitutionally protected rights would lie against these defendants. But a claim that members of their staff were negligent has been made and such a claim cannot be dismissed as amounting to an abuse of the court’s processes. Nor, for the reasons already given can the claim for damages for breach of contract be presently struck out. When the precise allegations are clarified the motion can if necessary be re-entered by these defendants.
Phonographic Performance (Ireland) Ltd v. Chariot Inns Ltd, Supreme Court, February 16, 1998
HAMILTON CJ:
I have read the judgment of Murphy J and I agree with it.
MURPHY J:
This is an appeal by William Austin Cody and Princess Investments Limited (the defendants) from the judgment of Keane J delivered herein on the 14th April, 1994, and the order made thereon on the 20th June, 1994.
In the opening sentence of his judgment Keane J commented upon these proceedings in the following terms:-
“The application by the plaintiff in this case for certain interlocutory orders is part of a long running legal battle between it and a number of persons and firms who operate discotheques, night clubs and other places of entertainment throughout the country.”
Obviously the duration of the battle has extended and, worse, intensified since Keane J offered that comment.
The members of the plaintiff company are all record companies who issue records to the public in this country in the form of vinyl records, cassette tapes and compact discs. The plaintiff claims it was established in order to collect revenues, inter alia, from the public performance and broadcasting of their members’ sound recordings in this country and to restrain, and to recover damages for, any infringement of the copyright in such recordings. It is its claim that it is the only body established for that purpose in the State. The second defendant is the owner of the Brandon Hotel in Tralee in which there is a discotheque known as “Spirals”. The plaintiff says that the defendants have caused and are causing sound recordings, the property of their members, to be heard in public at those premises. Prior to the 31st December, 1987, the defendants paid certain charges or remuneration to the plaintiff in respect of that facility. Thereafter the defendants made no payment to the plaintiff although they have continued to cause the sound recording to be heard in public at the discotheque. In those circumstances the plaintiff claimed in these proceedings a series of injunctions to restrain the defendants from causing the numerous sound recordings specified in the proceedings to be played in public without payment of equitable remuneration to the plaintiff; damages for the infringement of copyright and an account of the damages suffered by the plaintiff or an account of the profits accruing to the defendants.
The defendants pleaded that the plaintiff had refused to enter into any negotiations concerning the amount of any “equitable remuneration” payable by the defendant to the plaintiff in respect of such sound recordings. The history of the matter and the attitude of the defendants would seem to suggest that the proprietors of discotheques were aggrieved by what they perceived as the peremptory demands of the plaintiff for non-negotiable remuneration in respect of sound recordings in respect of which it claimed to be owner or licensee of the copyright. The plaintiff has argued with equal indignation that rights of property to which it and its members were entitled had been flouted or abused by the defendants. The plaintiff interprets the actions of the defendants in defending the proceedings at all as a device to postpone the payment of royalties or equitable remuneration and in particular, believes that in putting the plaintiff on proof of its title to the copyrights in question are abusing the process of the courts. Counsel for each party readily recognises the existence of procedures by which the matters in dispute could be resolved without excessive delay or expense but contend that the failure to adopt such procedure is due to the intransigence and unreasonableness of the other of them. In fairness it must be recognised that alterations in the stance of the parties since these proceedings were instituted eight years ago may be due in part to judicial decisions given in that period which could have caused them to re-evaluate their approach to the issues herein.
The immediate background to the motion heard by Keane J was the failure of the defendants to make an affidavit of discovery within the time limited by the order of the Master of the High Court made herein on the 20th July, 1993. An affidavit was sworn by them some four months outside the prescribed time limit.
On the 17th December, 1993, the plaintiff’s solicitors wrote to the defendants’ solicitors asking for their clients consent to the evidence of certain witnesses being given on affidavit in the form of draft affidavits enclosed with that letter. On the 2nd March, 1994, the plaintiff served on the defendants notices requiring the defendants to admit the facts and documents therein specified without further proof. Against that background the plaintiff filed a notice of motion on the 24th January, 1994, claiming:-
(1) an order dismissing the defendants’ defence because of their failure to comply with the order for discovery;
(2) in the alternative to (1), an order striking out so much of the defence as puts in issue the plaintiff’s ownership of the copyright;
(3) in the alternative to (1) and (2), an order permitting the plaintiff to establish the matters of fact contained in the draft affidavits specified in the schedule to the notice by affidavit in lieu of oral testimony.
Keane J rejected the plaintiff’s contention that the affidavit of the defendants was inadequate. He accepted that it was appropriate to postpone the discovery in so far as it related to the issue of damages. In any event he made it clear that he was not disposed to grant the drastic remedy of striking out the defendants’ defence for failure to comply with the order for discovery. However, the plaintiff claimed that relief on another ground. It was submitted that the defendants should not be allowed to maintain that the plaintiff was not the owner or exclusive licensee of the copyright in any of the sound recordings played in the defendants’ premises whilst at the same time contending that the amount of remuneration sought by the plaintiff was not equitable remuneration within the meaning of the Copyright Act, 1963. Keane J preferred the contention of counsel on behalf of the defendants to the effect that her clients were entitled, like any defendants, to rely on alternative defences and in particular were entitled to require the plaintiff to prove its ownership of the copyright in the recordings allegedly played by her clients whilst at the same time disputing that the remuneration sought was equitable or that the appropriate machinery for determining such remuneration was under s. 32 of the Act of 1963. The decision of the learned trial judge in that respect has not been appealed by the plaintiff and counsel on behalf of the defendants relies strongly upon the fact that their claim to make alternative or even inconsistent claims has been upheld. This is of significance in considering the subject matter of the appeal to this Court.
In its notice of motion the plaintiff sought an order permitting it to establish by way of affidavit rather than on viva voce evidence the matters of fact contained in certain specified draft affidavits. That relief was granted by the learned trial judge and it is from his decision in that respect that the defendants have appealed to this Court.
In his judgment having set out the history to the matter Keane J analysed the distinction between the nature of the copyright subsisting in “sound recordings” and those which may exist in literary, dramatic, musical or artistic works. As he pointed out the manufacturer of a recording is obliged under the Act of 1963 to permit the playing of the record in public provided the owner is paid “equitable remuneration” as defined in that Act and assessed, if necessary, in pursuance of the provisions therein contained. In the case of other forms of copyright the owners are absolutely entitled to prohibit the performance of their work in public irrespective of the amount which may be offered by way of royalty. One might say of a copyright subsisting in a sound recording that it is not so much a case of inquiring whether the use thereof will be permitted but how much must be paid for that privilege. Whilst to that extent it may be said that issues in relation to the use or abuse of the copyright in a sound recording may be reduced in many cases to the computation of the equitable remuneration payable in respect thereof, the learned trial judge upheld the right of the defendants to put in issue the title of the plaintiff to the very many sound recordings involved in these proceedings.
The learned trial judge rightly emphasised that the examination of witnesses viva voce and in open court is of central importance in our system of justice and that it is a rule not to be departed from lightly. That rule and the exceptions to it are reflected in O. 39, R 1 of the Rules of the Superior Courts, which provides as follows:-
“In the absence of any agreement in writing between the solicitors of all parties, and subject to these Rules the witnesses at the trial of any action, or at any assessment of damages, shall be examined viva voce and in open court, but the Court may, at any time for sufficient reason, order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness may be read at the hearing or trial, on such conditions as the Court may think reasonable, or that any witness whose attendance in Court ought for some sufficient reason to be dispensed with be examined by interrogatories or otherwise before a commissioner or examiner; provided that, where it appears to the Court that the other party, bona fide, desires the production of a witness for cross-examination, and that such witness can be produced, an order shall not be made authorising the evidence of such witness to be given by affidavit.”
Keane J described the rule as conferring a discretion on the court to permit particular facts to be proved by affidavit where “sufficient reason is shown for the making of the order and where justice requires that it should be made”. This is clearly the general effect of the order but I would refine that analysis to the extent that where the proviso to the rule is applicable, that is to say, where the production of a witness is bona fide desired by the other party for cross-examination, the matter ceases to be one of discretion and the order must be refused. Again it would seem to me that in seeking to persuade the judge to exercise the discretion conferred on him by the rule that the onus lies on the party making the application and in the case of the application being resisted on foot of the proviso that the onus lies on the other party to establish a bona fide desire for the production of the witness.
There are few authorities on the interpretation of the rule. Happily, one decision, Cronin v Paul (1881) 15 ILT.R. 121, under the corresponding rule under the Supreme Court of Judicature Act (Ireland) 1877, is that of Palles C.B. He held that an order should not be made under the rule permitting the proof of facts by affidavit which were directly in issue in the action and going to the gist thereof. That decision was followed and applied by Maguire P. in Northridge v O’Grady and Thompson [1940] Ir. Jur. Rep 19.
Proving the existence of a copyright in each and every of the sound recordings referred to in the proceedings herein and the devolution of the title or a licence to the plaintiff would be an awesome task. It would be extremely difficult and costly. Perhaps impossible. If it can be achieved it will involve an enormous expenditure on the part of the plaintiff and, in the event of it succeeding in the action, a corresponding burden on the defendants. I would have no hesitation in concluding that the problems of assembling so many foreign witnesses in this jurisdiction to deal with this issue constitutes “sufficient reason” for seeking an alternative course if that can be achieved without contravening the principle established in Cronin v Paul (1881) 15 ILT.R. 121.
The report of the judgment in Cronin v Paul (1881) 15 ILT.R. 121, is short and for that reason a reference to the facts may be helpful. The action was brought against the committee of merchants in the city of Cork to test the legality of the management of the Cork butter exchange. The defendants were anxious that the evidence of one Nicholas Dunscombe, who was living in Bristol and was in delicate health, should be given on affidavit. The evidence to be given by Mr Dunscombe was that he was appointed one of the two weigh masters of the city of Cork by the common council in 1829; that he acted as such under divers acts of parliament; and that after the passing of certain subsequent acts he was threatened with actions for penalties by the coopers of Cork if he branded any butter casks that did not comply with the old statuable provisions; that the public ceased to frequent the said market in September or October, 1829; that he (Nicholas Dunscombe) ceased to act as and never resumed the business of weigh master; that his colleague in his said office ceased to act before he did and that he subsequently and by formal notice resigned his said office. The affidavit sworn on behalf of the defendants grounding the motion is quoted in the report as going on to say at p. 122:-
“… this was the fifth action which had been brought by various plaintiffs to try the same question, in none of which had they proved successful, and that at the former trials Mr Dunscombe’s evidence had not been impugned.”
Before turning to the judgment of the Chief Baron it would be helpful to quote from the observations of the authors of a treatise on the Supreme Court and Judicature Act (Ireland), 1877, (published 1878) on O. 36, r. 1, as it then was, as follows:-
“In England it seems not competent to order all the facts to be proved by affidavit, or that the affidavit of all witnesses in the cause be read at the trial.”
It was against that background that Palles C.B. expressed his judgment in the following terms at p. 122:-
“I would have made an order for evidence by affidavit on the first two questions in the notice of motion as by consent but Mr Sugrue does not see his way to this. Without consent I cannot grant any part of this motion. It is the ordinary practice that everything going to the gist of the action should be proved by oral evidence in cases of trial by jury. If proof of mere formal matter were required I would grant this application; but here the evidence required goes to the issues in the action; and the plaintiff’s evidence as to these matters would also, I think, by the rule be confined to evidence by affidavit. This is a limitation I do not wish to impose on him. I must, therefore, refuse the principal part of this application – that asking for evidence by affidavit.”
Clearly the learned Chief Baron was distinguishing between evidence to be adduced in proof of mere formal matters and evidence going to the issues in the action. The former might be proved by affidavit; the latter not.
In the present case the ownership of the copyright in the sound recordings or the exclusive licence thereto is in law and in logic an issue, and perhaps the primary issue, in the proceedings. The learned trial judge expressly, and in my view rightly, upheld the entitlement of the defendants to dispute the plaintiff’s claim in that regard and to put it on proof of it. If one looks back through the history of the proceedings one may well infer or suspect that the defendants were not optimistic about defending successfully the proceedings on that ground. It may well be that their real concern is, and at one stage it certainly was, simply to reach agreement as to what constituted equitable remuneration. On the other hand the defendants are not bound to pay remuneration, equitable or otherwise, to the plaintiff unless and until the plaintiff has established its title.
I would respectfully disagree with the learned trial judge in his conclusion that:-
“The gist of this action is obviously the reasonableness of the remuneration being sought by the plaintiff and the appropriate machinery by which any dispute as to the level of such remuneration is to be resolved.”
I accept that remuneration is part of the gist of the action but the gist is twofold: it includes the right or title of the plaintiff to receive such remuneration.
At the end of the day remuneration may be the more hotly contested issue but as the defendants deny the title of the plaintiff that issue must be resolved in favour of the plaintiff before any other issue can arise. In my view it is not possible to dismiss the dispute as to ownership as “formal”, as the Chief Baron said or “collateral” as Maguire P. indicated simply because there are grounds for suspecting that the defendants have no witnesses or evidence on which to challenge the plaintiff’s title. The defendants are entitled, as the learned trial judge has found, to put the plaintiff on proof of its title and as long as that issue remains it is a significant one. The strength or weakness of the case to be made by either party does not reflect upon the importance or primacy of any issue. The case of Cronin v Paul (1881) 15 ILT.R. 121, itself illustrates the proposition that the weakness of an argument, in that case its failure on five previous occasions, did not render an issue any the less “the gist of the action” so as to permit proof by affidavit. As I am satisfied that the ownership of the copyrights or the exclusive licence therein is or forms part of the “gist” of the present action I must conclude that the learned trial judge misapplied the principles established in Cronin v Paul and consequently erred in the exercise of his discretion.
Having regard to that conclusion the question whether the defendants bona fide require the production of the deponent for cross-examination does not arise. In fact the rule under consideration in Cronin v Paul (1881) 15 ILT.R. 121, did not include the proviso containing that qualification. Formerly it was contained in a separate rule. I accept that onus would fall on the defendants to establish the bona fide desire for the production of a witness but I do not accept that it necessarily follows that the defendants would have to show the existence of evidence casting doubt upon that to be offered by the deponent. It might be sufficient in a case such as the present to point to the complexities of the matters in respect of which it is sought to tender proof by affidavit and assert the right to explore with the witnesses their competence and credibility in giving evidence in relation to them. However, as I say, it is not necessary for me to express any final view on the proper interpretation of the proviso or the rights of any party invoking the same having regard to the view which I take as to the rights of the parties under the remainder of the rule.
The rejection of the plaintiff’s application to adduce evidence otherwise than viva voce leaves unresolved the difficulty of the plaintiff in procuring the attendance in Ireland of the many witnesses required to prove its entitlement to the repertoire of sound recordings referred to in the pleadings herein. No doubt the problem could be resolved by agreement between the parties. In any adversarial proceedings it may be imprudent to assume that such agreement would be forthcoming. Having regard to the obvious hostility between the parties in the present case it appears that there is no prospect here of any useful agreement being reached or implemented. Any solution will have to be imposed by the courts. The then President, having consolidated several of the actions between the plaintiff and various discotheque owners by his order dated the 20th March, 1997, it would seem to me desirable to have the issue as to ownership of copyright tried in stages as against all the defendants in those proceedings. If agreement could have been obtained as to what constituted a random or meaningful sample of those recordings the problem could have been satisfactorily resolved but in the absence of any such agreement it may be necessary to deal with the question of ownership in stages until it is established there is no need to debate the issue further.
However, the procedure to be adopted is a matter for the President of the High Court or the judge assigned by him to deal with the proceedings. It would be impertinent for this Court to attempt to dictate any solution but it is material for the purposes of this judgment to recognise that some alternative is available.
In particular I would accept that there could come a time when the trial judge having satisfied himself of the plaintiff’s title to a sufficient number of recordings, say forty or fifty such recordings, by oral evidence in the usual way might decide to treat that evidence as prima facie evidence of the plaintiff’s claim to the entire repertoire of sound recordings or alternatively, to permit affidavit evidence of title to be adduced at that stage. The trial judge must be afforded an adequate discretion to deal with the plaintiff’s claim to title in an evolving situation. Finally I would take the liberty of recommending to the learned President of the High Court that the multiplicity of actions herein might be assigned to one judge who would have the responsibility of applying to them the most effective principles of case management with a view to bringing all of these proceedings to a speedy conclusion.
In the circumstances I would allow the appeal.
LYNCH J:
I agree.
Moran v. Oakley Park Developments Ltd
High Court, March 31, 2000 O’Donovan J.
JUDGMENT of Mr. Justice Diarmuid B. O’Donovan delivered on the 31st day of
March, 2000
1. In this case, I am asked to consider a Motion on behalf of the Plaintiff dated the 1st day of October, 1999 seeking Judgment in default of Defence and a Motion on behalf of the Defendants dated the 1st day of November, 1999 seeking; on the one hand, an Order vacating a Lis Pendens registered by the Plaintiff and, on the other, an Order dismissing the Plaintiff’s claim, either pursuant to Order 19, Rule 28 of the Rules of the Superior Courts, or pursuant to the inherent jurisdiction of the Court; the Defendants maintaining, in either case that the Plaintiff’s claim does not disclose a reasonable cause of action, or that the same is frivolous or vexatious.
Although the Plaintiff’s Notice of Motion was first in point of time, it was
agreed by the parties that I should first of all adjudicate upon the Defendants’ Notice of Motion dated the 1st of November, 1999 and, in that regard, it was conceded by Mr. George
Brady, Senior Counsel on behalf of the Defendants that the Plaintiff’s Statement of Claim disclosed a cause of action and, accordingly, for the purpose of adjudicating upon the reliefs sought by the Defendants, I must assume that the facts pleaded in the Statement of Claim and the facts asserted in the grounding Affidavit sworn herein by the Plaintiff, Eoin Moran, on the
10th day of December, 1999 are true.
2. Before considering the facts of the case, I think it as well to set out the circumstances under which the Court has power to dismiss the Plaintiff’s proceedings. In this regard, Rule 28 of Order 19 of the Rules of the Superior Courts provides:
“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 been 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”.
3. In addition to that specific rule, there is an inherent jurisdiction in the Court to ensure that there is no abuse of the process of the Court. In that regard, in an unreported Judgment delivered on the 28th day of July, 1999 in the case of Jodifern Limited v. Patrick G. Fitzgerald and Margaret Fitzgerald , McCracken J. reviewed what appears to me to be the relevant authorities and, in particular, he referred, with apparent approval, to a Judgment of Costello J. delivered in the case of Barry v. Buckley (1981 I.R. at page 306) and a Judgment of McCarthy J. in the Supreme Court delivered in a case of Sun Fat Chan v. Osseous Limited (1992 1. I.R. at page 425); the import of which Judgments is that, while the jurisdiction should be exercised sparingly and only in clear cases so that, generally speaking, that Courts should be slow to entertain such applications, if, having considered all relevant documentation, the Court is satisfied that a plaintiffs claim must fail, then it is a proper exercise of its discretion to strike out proceedings on the grounds that their continued existence cannot be justified and manifestly causes irrevocable damage to a defendant. In addition, McCracken J. referred to an unreported Judgment delivered on the 15th day of March, 1999 by Macken J. in the case of Supermacs (Ireland) & Anor v. Katesan (Naas) Limited & Anor in which, when considering this inherent jurisdiction of the Court, the learned Judge said:
“Turning now to the question as to whether of not the defendants
are entitled to have their relief relying on the inherent jurisdiction
of the Court, when one is considering a claim of this nature based
on the inherent jurisdiction of the Court, it is permissible for
Affidavit evidence to be filed. A number of Affidavits have been
filed and, although there are several conflicting elements in the
Affidavits there are certain principles which Mr. Buttenshaw has
correctly acknowledged and conceded, including the fact that I
must assume;
(a) that every fact pleaded by the plaintiffs in their Statement of
Claim is correct and can be proved at trial, and
(b) that every fact asserted by the plaintiffs in their Affidavits is
likewise correct and can be proved at the trial” .
This particular approach which is adopted as being the correct
approach in all of the cases in which Affidavit evidence has been
adduced does mean that, insofar as there may be conflict between
matters averred by the plaintiffs and the defendants in their respective Affidavits, such conflicts must be, at least for the purpose of this
application, resolved in favour of the plaintiff .”
4. McCracken J. expressed his entire agreement with that statement of the law and, for the purpose of the Judgment which he was delivering, he adopted it. Likewise for the purpose of this case, so do I.
5. In the Plenary Summons delivered herein, the Plaintiff’s claim is stated to be:
“Specific performance of a contract made between the Plaintiff of the
one part and the Defendants of the other part whereby the Defendants
agreed to sell and the Plaintiff agreed to purchase ALL THAT AND THOSE
the lands known as 15 Ryemont Abbey, Leixlip in the County Kildare,
together with the premises to be build thereon by the Defendants, being
the property described in Folio 8876 of the Register County Kildare.”
6. In the Statement of Claim at paragraph 2 it is pleaded (inter alia) that:-
“The Defendants at all material times carried on business as developers
of land and builders of houses, in particular, at a housing estate known
as Ryemont Abbey, Leixlip in the County Kildare”
At paragraph 3 it is pleaded that:-
“By an oral agreement made in or about the month of May 1996, the Defendants agreed to build and convey to the Plaintiff a dwellinghouse
on site number 15 of the said housing estate for the sum of
£101,000.”
7. At paragraph 4 it is pleaded that:-
“It was agreed between the Plaintiff and the Defendants that the said house should be mainly one of the standard types and design being constructed on the said estate but subject to certain modifications requested by the Plaintiff and accepted by the Defendants between the month of May, 1996 and November, 1996 inclusive. The said modifications were duly incorporated in the construction of the said house.”
8. Particulars of the aforesaid modifications are included in the Statement of Claim and, in paragraph 5 thereof, it is pleaded that:-
“Pursuant to the aforesaid agreement the Defendants on or about the
16th day of May, 1996 prepared and tended for execution by the
Plaintiff a written form of contract incorporating the terms theretofore
agreed between the parties and expressly providing that, on or before
the closing date as therein defined, the Defendants should procure the
grant of a Deed of Transfer to the Plaintiff in the form of a draft Deed
of Transfer produced therewith. The said written form of contract further provided for payment of £7,600 (being the balance of the deposit of £10,100 of the contract price of £101,000) on the signing of the said contract and the balance of the contract price on the closing day”.
9. At paragraph 6 of the said Statement of Claim it is pleaded that:-
“In or about the month of July, 1996, the Plaintiff and the Defendants
agreed that clause 26 of the said written form of contract should be
amended to read as follows “the figures 26. The vendor is erecting
at the request of the purchaser an extension to the rear of the premises
not in accordance with planning permission. However, the vendor
confirms the premises. Save the extension, comply with planning
permission and the full property erected complies with building
regulations”. “.
10. At paragraph 7 of the Statement of Claim it is pleaded that:-
“The Plaintiff signed the said written form of contract with the
amendment set out at paragraph 6 hereof and returned the same
to the Defendant’s Solicitor’s on the 11th day of September, 1996
together with the said sum of £7,600 in part payment of the
contract price.”
11. And at paragraph 8 of the Statement of Claim it is pleaded that:-
“The contract between the parties has been partly performed”:
the details of the alleged part performance being included in the said paragraph but I do not
consider it necessary for the purpose of this Judgment to review them in detail.
12. A number of Affidavits have been filed on behalf of the parties from which it is clear that a conflict of evidence arises in a number of respects. However, in the circumstance that, as I have already indicated, for the purpose of this application, I must assume that every fact asserted by or on behalf of the Plaintiff in Affidavits filed on his behalf are correct and can be proved at the trial of this action, I cannot and do not adjudicate upon those conflicts. Nevertheless, Counsel for the Defendant’s referred to a letter dated the 3rd day of May, 1996 addressed to the Defendant’s Solicitor, Mr. Enda P. Moran, by Messrs. McEvoy & Associates, Auctioneers & Estate Agents, in which Messrs. McEvoy & Associates advised Mr. Moran that they had negotiated the sale of number 15 Ryemont Abbey aforesaid to the Plaintiff for a sum of £101,000 and had received a booking deposit of £2,500 from the Plaintiff but pointing out: “This sale is subject to contract, good title, loan approval and satisfactory surveyors/architects report” and noting, “that this firm has no authorisation to bind our client to any contract for sale and it is understood that no contract shall come into existence until such time as formal contracts are exchanged and a deposit paid”.
13. Counsel for the Defendants also referred to a letter dated the 15th day of May, 1996 addressed by the Plaintiff’s then Solicitors Messrs. Augustus Cullen & Son, to the Defendants said Solicitor, Mr. Moran in which reference is made to the said alleged agreement for sale of 15 Ryemont Abbey but in which the Plaintiff’s said Solicitors specifically indicate that the said sale is “subject to contract/contract denied” and that, “we have no instructions to bind our client in any negotiations at this stage and no contract shall be deemed to exist until such time as both parts of the contract have been signed by both parties and the full deposit paid”. In the light of that correspondence and, indeed, further correspondence which passed between the Solicitors for the parties and in which specific reference is made to the said agreement for sale being “subject to contract/contract denied”, Counsel for the Defendants submitted that, in fact and in law there was no concluded agreement for sale between the parties because it was a precondition to the conclusion of such an agreement that there would be an exchange of contracts which, in fact, never occurred and that, in any event, the use of the phrase “subject to contract” in the correspondence is inconsistent with the recognition of the existence of a concluded agreement. In support of those propositions, Counsel for the Defendants referred to the decision of the Keane J. in Mulhall v. Haren (1981 1 I.R. at page 364) which was approved of in a Judgment of the Supreme Court delivered in a case of Eoin Boyle and Susan Boyle v. Maura Lee and Eve Goins (1992 1 I.R. at page 555) and to a decision of the Supreme Court delivered in a case of Joseph Kelly v. Irish Nursary & Landscape Company Limited (1983 I.R. at page 221), which decisions appeared to be in point. Counsel for the Defendants also submitted that there were no acts of part performance on the part of the Plaintiff and that, in any event, in order to succeed in an action for specific performance under the doctrine of part performance it must be shown that there was a concluded contract between the parties. In support of that proposition, Counsel for the Defendants referred to a decision of the Supreme Court in a case of Leslie Mackey v. David Wilde and Helmet Longin (1998 1 ILRM at page 449) and to a Statement at page 135 of Irish Law of specific performance by John Farrell were in it appears,
“for a Plaintiff to get as far as relying on part performance there must
be a concluded contract. If there is no valid contract the question of
part performance does not arise”.
essentially, therefore, Counsel for the Defendants submitted that, irrespective of any conflict of evidence with regard to the facts of this case, in the light of the correspondence which was exchanged by the parties and, in particular, in the light of the assertion by the Plaintiff’s Solicitors in their said letter of the 15th day of May, 1996 to the Defendant’s Solicitors that the said agreement was “subject to contract” and that “we have no instructions to bind our client in any negotiations at this stage and no contract shall be deemed to exist until such time as both parts of the contract have been signed by both parties”, it would be inequitable were the Plaintiff not bound by the condition imposed by his own Solicitors: namely, that the agreement was subject to contract and that, in that event, it is certain law that an agreement subject to contract is not a concluded agreement.
14. On behalf of the Plaintiff, Mr. Geraghty submitted that, to succeed in having the Plaintiff’s claim dismissed at this stage of the proceedings, the onus was on the Defendants to establish that there was no possibility that the Plaintiff could succeed in his claim herein: in other words, that the Plaintiff’s claim was doomed to inevitable failure. However, Mr. Geragthy argued that, not withstanding the correspondence which was exchanged by the parties, it was open to the Court to conclude that the parties had entered into an oral contract which was backed by acts of part performance and that the strictures of the correspondence in the month of May, 1996 was waived by subsequent conversations and by the actions of the parties. In particular, he submitted that the house in question had been built and tailored by the Defendants to the Plaintiff’s requirements. In this regard, Mr. Geragthy referred to a decision of Costello J. in a case of D.K v. King (1994 1 I.R. at page 166) in which it was held that, when deciding whether to strike out proceedings the Court should not adjudicate on questions of fact or controversial legal issues raised by the proceedings but must confine itself to considering whether or not the issues raised are frivolous or obviously unsubstantial. In the light of that decision, Mr. Geraghty submitted that it would be a travesty of justice were this Plaintiff denied the opportunity of contesting his claim herein.
15. While, in the light of the authorities to which I have been referred, I have to admit to having certain reservations about the matter, I think that, on balance, the Plaintiff has an arguable case which is neither frivolous or vexatious. Accordingly, I am not disposed to dismissing his claim herein. Neither, however, do I think it appropriate to give judgment in default in defence. So far as I am concerned, the case will go to a plenary hearing.
Ewing v. Kelly
, High Court, May 16, 2000 O’Sullivan J
JUDGMENT of O’Sullivan J. delivered the 16th day of May, 2000.
1. In this Judgment I am dealing with Motions brought by each of six of the nine Defendants in this action in which they seek Orders dismissing the Plaintiff’s claims against them. The majority of these Defendants invoke Order 19 Rule 27, Order 19 Rule 28 and the inherent jurisdiction of the Court, that is, the majority seek an Order striking out the pleadings on the basis that they are unnecessary or scandalous or that they tend to prejudice, embarrass or delay a fair trial of the action (Rule 27), or they say the pleadings disclose no reasonable cause of action (Rule 28) or they say that upon a general review of the case, including pleadings and evidence, I should conclude that there is no possibility that the Plaintiff can win his case and therefore in the exercise of my inherent jurisdiction I should strike out the Plaintiff’s claims.
2. I would point out at the outset that the words “unnecessary”, “scandalous” and “embarrass” in this rule have a particular meaning which derives from their context in the Rule book and that this meaning is not the usual meaning of these words; accordingly, legal submissions employing these terms may tend to sound hurtful, aggressive or insensitive in the mouths of lawyers in applications such as the present one in a way which is not necessarily intended.
3. I would also say at the outset that an application such as the present one is dealt with at a technical level; that is by reference to established principles of pleading and by reference to concepts of legal causation and recoverable loss, rather than on the merits of any matters in contention which may be raised or alluded to in the application or in the papers.
4. Thus, for example, in considering these motions I am not concerned with deciding and do not determine the suggestion for example, that the Plaintiff is irrational, violent, obsessional or unintelligent, or the suggestions from the other side alleging institutionalised racism or the more serious allegation linking the activities of some of the Defendants with the unfortunate death of the Plaintiff’s father. My only concern is, rather, to reach conclusions on the relatively technical questions of pleading and the processing of the claim as indicated above.
5. I have had the benefit of comprehensive submissions from Counsel representing each of the six Defendants concerned and also a lengthy submission partly in written form and partly delivered orally in Court by the Defendant and I am grateful for the assistance these have given me.
6. The law in dealing with these applications is well established and clear and need not be repeated here extensively by me.
7. The main principles of law may be summarised, not exhaustively, as follows:-
8. Insofar as the applications are based on the allegation that the pleadings disclose no reasonable cause of action I must assume that all of the relevant matters pleaded by the Plaintiff will be established by him; I must also take account of any amendment of the actual pleadings which could “save” the case being made by the Plaintiff. If, as in this case, the Defendants have made it clear that they intend to plead the Statute of Limitations and such a defence is one which in the circumstances must inevitably succeed, then I consider that I should also take that into account in this application.
9. Again, if issues raised between the same parties have already been finally dealt with on the merits by a Court of competent jurisdiction, then again the law of estoppel makes it clear in my view that such issues should not be tried again and the relevant pleadings accordingly struck out.
10. Insofar as these applications are grounded on the inherent jurisdiction of the Court, if I came to the conclusion that it is inconceivable, for whatever reason, that the claim must fail, then I should strike it out at this stage, but, bearing in mind that the Court should be very slow to exercise such a jurisdiction.
11. Finally, where the applications are grounded on the allegation that the pleadings are unnecessary or scandalous or tend to embarrass, prejudice or delay a fair trial I must have regard to the relevance or not of the material on the issues raised.
12. The foregoing is the briefest of summaries of the applicable principles of law which I have said is well established.
Introduction
13. Broadly speaking the Plaintiff’s case originates from a land transaction whereby the first Defendant in 1986 acquired land from the Plaintiff’s father surrounding the home of the Plaintiff. The Plaintiff seeks in these proceedings to have that transaction set aside and makes comprehensive allegations of various kinds of wrongdoing against several of the Defendants who at one time or another acted for him or his father as their Solicitor, against the Law Society, and against the first Defendant as current owner and occupier of these lands and against the last three Defendants as representing the State.
14. I now turn to deal with the cases made by each of the Defendants in the same sequence as they were dealt with at the hearing of these motions.
The Fourth Defendant
15. This Defendant is The Law Society and the claim in broad terms is that it failed in its obligation to provide the Plaintiffs with a comprehensive list of Solicitors who would be prepared to act in their case.
16. In making this application to have the Plaintiff’s claims struck out this Defendant relies on two broad grounds namely
(a) Section 36(1) of the Solicitors’ (Amendment) Act, 1994 which requires that a Plaintiff must establish that this Defendant has not acted in good faith.
17. In my view this Plaintiff has no conceivable basis for a case that this Defendant did not act in good faith.
(b) Further this Defendant says that the bulk of the material before me shows that the Society’s involvement is merely to make available in accordance with its usual practice to the Plaintiff the names of three Solicitors from a list of same who would be prepared to act for the Plaintiff’s in the proceedings referred to.
18. In my view there is no conceivable basis for a claim made out by the Plaintiffs on the pleadings and accordingly, the claim must be struck out as against this Defendant.
The Fifth Defendant
19. The Plaintiff’s claim against this Defendant is for
(a) Damages arising from the death of the late William Ewing
(b) Loss of enjoyment of life of Robert Ewing; and
(c) For an account and return of monies paid by William Ewing
20. In my view having considered the voluminous material placed before me, no cause of action has been made out against this Defendant for these or any reliefs.
21. There are, further, allegations or certainly imputations that the Plaintiff’s father was inadequately served by this Defendant in his professional capacity, but, once again, on a review of any material before me, I am driven to the conclusion that no such case could conceivably succeed. I must, therefore, strike out the claim as against this Defendant.
The First Defendant
22. Many of the complaints now raised in these proceedings have already been raised and finally determined in proceedings entitled Anthony Kelly -v- William Ewing and Robert Ewing (Nos E21/88 and E31/1988). I have been furnished with a full record of these proceedings and it is quite clear that a number of issues now sought to be raised in the present proceedings were raised and dealt with in the earlier cases. I am satisfied that the following issues raised in these present proceedings have already been dealt with in the earlier cases:-
1. Undue influence on the Plaintiff’s father (Statement of Claim at paragraph 12);
2. That an illegal and unequal transfer took place (Statement of Claim paragraph 12),
3. Inequality of bargaining power (Endorsement of Claim paragraph 3)
4. Coercion (Endorsement of Claim paragraph 4)
5. Breach of contract (Endorsement of Claim paragraph 5)
6. Claim of entitlement to lands (Statement of Claim paragraph 11)
7. Agreement void – no time limit (Statement of Claim paragraph 16)
8. Fraud (Statement of Claim paragraph 19)
9. Abuse of trust (Statement of Claim paragraph 22), and
10. Coercion, by legal proceedings (Statement of Claim paragraph 26)
23. As between the Plaintiff and this Defendant I consider that these issues are governed by the principles of issue estoppel and cannot now be raised again. I have considered the evidence and also the case of S C F Finance Company Limited -v- Masri & Anor (No 3) (1987: 1: Q.B.: 1028) in reaching the foregoing conclusion. I deal with the balance of the claims against the Defendant as follows:-
11. Evasion of Land Commission consent.
24. In my opinion no reasonable cause of action is made out in this regard.
12. Libel.
25. In my opinion no reasonable cause of action as made out in this regard given that the occasions pleaded clearly enjoy the benefit of qualified privilege.
13. Wrongful death.
26. No case is made out on the pleadings for this serious and distressing allegation.
14. Conspiracy.
27. No reasonable cause of action is made out having regard to the overall material available before me.
15. Fraud on the Revenue.
28. Again, having regard to all the material available before me no reasonable cause of action is made out in this regard.
29. In addition to the foregoing I am obliged to conclude having regard to the overall volume of material placed before me that the litigation is extremely onerous to this Defendant and in the circumstances I consider that I am further obliged to strike out the proceedings as against this Defendant pursuant to the inherent jurisdiction of the Court.
Sixth Defendant
30. The case made against this Defendant concerns alleged failure and frustration in regard to the conduct of the Plaintiff’s and the Plaintiff’s father’s earlier civil proceedings.
31. This Defendant submits that the intervention of a Court Order breaks the chain of causation between any alleged wrongdoing and the result, with the consequence that there can be no loss in respect of which the present Plaintiffs could recover and therefore the Plaintiff’s father could have no complaints. With regard to the present Plaintiff it is submitted that this Defendant was entitled on the material before me to proceed upon the basis that she was acting for William Ewing, accepted her instructions from him and therefore that these proceedings disclose no cause of action at the suit of this Plaintiff against this Defendant. In my view this submission is correct. It is not open to this Plaintiff to re-litigate his father’s case or to attempt to reopen the instructions given by his father to this Defendant. No reasonable cause of action is disclosed and therefore I must strike out the claim against this Defendant.
Second Defendant
32. Regarding the several complaints made against this Defendant it is submitted that these proceedings are statute barred given that they commenced in May, 1999 and the matters pleaded against this Defendant occurred between 1975 and 1988. In addition Counsel for this Defendant adopts the submissions already referred to in this judgment in relation to the exercise by me of my inherent jurisdiction. It is also submitted that this Plaintiff has no locus standi to make claims on behalf of his father.
33. In my opinion these submissions are well-founded. It is inconceivable that the Plaintiff’s case can succeed against this Defendant and therefore I must strike it out.
Third Defendant
34. Similar points were made on behalf of the third Defendant who acted for this Plaintiff’s father between May and October, 1988.
35. It seems to me, similarly, that there can be no answer to a plea that the case is statute barred against this Defendant. Accordingly, I strike it out.
The Seventh, Eighth and Ninth Defendants
36. These Defendants are in a different situation. They are facing a motion for judgment in default of defence. Their submission was to have the time enlarged to enable them to file a late defence.
37. As I explained to the Plaintiff in the course of the hearing it is the virtually invariable practice of the Court to grant such liberty once it appears that a defence might be available to a Defendant, albeit, perhaps, that the enlargement of time would be granted on terms.
38. Accordingly, I propose to give these Defendants two weeks from today’s date to file their defences.
39. In conclusion, I wish to repeat what I said at the beginning, namely, that in dealing with the applications I am confined to a consideration of technical issues which are concerned with pleading, the legal concepts of a cause of action, legal causation and recoverable loss, rather than with any evaluation of the matters which are clearly of concern to the Plaintiff and are the subject of his complaint, but which are, in my opinion, incapable of being made the subject of justiciable controversy in legal proceedings in these Courts. I wish to say to the Plaintiff – although it is, of course, gratuitous of me to do so – that the justice which he seeks, and in which he has expressed confidence is not available at the behest of any Court on this earth so far as I am concerned but it may indeed, be available in some more exalted, perhaps infinite, dispensation. It is clear that the Plaintiff has put enormous time and energy into these proceedings and equally that my decisions will be difficult for him to cope with.
40. But apart from the Plaintiff I must also bear in mind the interests of the other parties to this litigation – the six Defendants who have brought these applications. Litigation is onerous and takes a heavy toll of all involved in it. It is my duty if I am convinced, as in this case I am, that a Plaintiff’s case has no conceivable hope of success, to strike it out when asked to by the Defendant rather than let it proceed to the cost and pain of all parties involved and with no conceivable legitimate gain. I would add that in reaching my judgment on these applications I have taken into account the vast bulk of documentation and its contents prepared by the Plaintiff and the fact that much of it is irrelevant to any conceivable justiciable issue which could be raised between the parties.
41. It follows from my decision that the Plaintiff’s motions for judgment against these Defendants in this case which are before me must inevitably fall with the case itself and these therefore I must also dismiss.
Jestdale Ltd v. Millennium Theatre Co. Ltd
., High Court, July 31, 2001
JUDGMENT of Mr. Justice Lavan delivered the 31st day of July, 2001
These proceedings arise out of an application by the defendant, Millennium Theatre Company Limited, to have the Court, pursuant inter alia to its inherent jurisdiction, strike out the within proceedings as an abuse of process on the basis that the plaintiffs claim must fail.
By agreement in writing dated the 10th December, 1999, made between the defendant and the plaintiff, Jestdale Limited, the defendant agreed to grant and the plaintiff to take a lease of the premises formerly known as the Rotunda Picture House and now known as the Ambassador Cinema. At all material times, the defendant held a leasehold interest in the property. It was an express term of the agreement at issue that the defendant would demise the property to the plaintiff upon completion of certain works carried out in accordance with planning permission obtained by the defendant prior to the signing of the agreement. The agreement also made express provision for a recission of the agreement (without a right to compensation for work done) in the event that the works were not completed by a certain date. Alternatively, the defendant was given the discretion to extend the due date for completion of the works or to take such steps as it deemed appropriate to enforce its rights.
The works were not completed on time, and the defendant refused to extend the completion date. The plaintiff claimed that it could not fulfill its obligations by virtue of the acts or omissions of the defendant, in particular due to the allegedly defective planning permission obtained. It was contended that the defects in the planning permission rendered it wholly inoperable for the plaintiffs intended purpose. The plaintiff also contends that the listing of the property as a Grade 1 Listed Building, the possibility of which was not alluded to at the time it entered into the agreement with the defendant further inhibited its ability to carry out its obligations under the agreement, and in particular delayed the submission of any new or alternative Planning Application.
The plaintiff addressed the problems relating to the planning permission to the defendant at a meeting on or about the 18th July, 2000, at which it indicated that it was necessary to submit new planning permission in order to progress the project. The defendant refused to accept the contention that the project could not proceed under the original planning permission and also refused to extend the completion date of 24th November, 2000, as fixed by the agreement The plaintiff did not pay mesne rates due for the month of July. The defendant served Notice of Recission of the Agreement on 29th August, 2000, and purported
to rescind the agreement on 8th September, 2000. The plaintiff has contested the validity of the purported recission and issued and served the Plenary Summons in these proceedings on 27th October, 2000.
In its Statement of Claim, the plaintiff alludes, inter alia, to the following implied terms of the Agreement:
“c) the defendant would if necessary, extend the completion date under the agreement in circumstances where the plaintiff could not fulfill its obligations by virtue of the acts or omissions of the defendant
d) the defendant would not unreasonably withhold its consent to extend the completion date under the agreement in circumstances where the plaintiff could not fulfill its obligations by virtue of the acts or omissions of the defendant”
The plaintiff seeks a declaration that the purported Recission Notice was invalid. It also seeks specific performance of the agreement with a declaration recognising its entitlement to relief from forfeiture under the equitable jurisdiction of the Court.
In its Defence, the defendant denies that it has breached any terms or representations as alleged in the Statement of Claim. The defendant draws particular attention to the clause in the agreement whereby the plaintiff admitted that it had inspected same and that it had entered into the agreement solely on the basis of that inspection and the terms thereof. The defendant asserts that the plaintiff is not entitled to rely upon any implied term in the aforesaid agreement nor upon any representation of the nature alleged (the existence of both of which the defendant in any event denies). Furthermore, the defendant denies that there were any defects in the planning permission as alleged, and also denies that same was rendered inoperable for the plaintiffs intended purpose. Even if defects in the planning permission were found to exist, the defendant denies that either it or the listing of the building delayed the submission of any alternative planning application.
The defendant denies that the plaintiff had incurred expense in connection with the aforesaid property or that it had been entitled to withhold any payment of mesne rates until any problems pertaining to the property had been addressed. The defendant asserts that the Notice of Recission served on the plaintiff had been valid and entitled it to terminate the agreement between the parties. While denying that any alleged loss or damage on the part of the plaintiff (if such is found to have been suffered by it) had been caused by any act or omission of the defendants, the defendant reserves the right to furnish further particulars of contributory negligence as same come to hand. The defendant claims that the plaintiff is estopped by agreement and/or by its representation on March 15th, 2000, that the works provided for in the said agreement were in progress and would be completed on the due date, from claiming the relief sought herein.
The defendant, in applying to have the present proceedings struck out as an abuse of process on the basis that the plaintiffs claim must fail, has drawn the Court’s attention to the following passage in the judgment of Hardiman J. in Supermacs v. Katesan (Naas) Limited [2001] 1 ELRM 401,405:
“The judge acceding to an application to dismiss must be confident that no matter what may arise on discovery or at the trial of the action the course of the action will be resolved in a manner fatal to the plaintiffs contention”.
It is submitted by the defendant in the instant proceedings that a construction of the agreement governing the relations between the parties admits only of the conclusion that the plaintiff cannot sustain the cause of action it has sought to maintain herein.
It is submitted by the defendant that, in failing to fulfill its obligations under the agreement, the plaintiff had lost its entitlement to the lease. The power of recission had been expressly granted in the agreement, and the failure of the plaintiff to fulfill its commitments entitled the defendant to validly rescind the agreement. On the question of whether an implied term or terms existed so as to disentitle the defendant from rescinding in the circumstances of the instant case, the Court’s attention was drawn to a passage from the Supreme Court judgment of Murphy J in Sweeney v. Duggan [1997] 21.R. 531,539-540: “Whether a term is implied pursuant to the presumed intention of the parties or as a legal incident of a definable character of contract, it must be not merely reasonable but also necessary. Clearly it cannot be implied if it is inconsistent with the express wording of the contract and furthermore it may be difficult to infer a term where it cannot be formulated with reasonable precision.”
It is submitted by the defendant that the implied terms alleged in the instant case fail this test on both counts.
It is submitted by the defendant that there is no conflict of fact in the instant situation which discloses a legal basis for dispute between the parties. There is no version of the facts as presented by the plaintiff, it is submitted, which would entitle it to the relief which it claims. The defendant draws attention to the ruling of McCarthy J. in Sun Fat Chan v. Osseous Limited [1992] 11.R. 425
“His claim to be given time … was based on an argument of an implied term of the contract. As I understand the law, to imply a term in a written contract, in its simple form, it requires the conclusion that if the parties had thought of it, they would have expressed such a term./ ….In my view, such a proposition is unacceptable.”
The defendant alludes in paragraph 12 of its legal submissions to what it terms the “undisputed facts of this case”. It lists them as follows:
“(a) The parties entered into, and agreed to be bound by the agreement of December 12,1999;
(b) The plaintiff knew that under the agreement it was compelled to completethe works by 24th November, 2000;
(c) By the time the plaintiff met the defendant’s representative on March 15, 2000, he had neither commenced the works nor – it would seem – even become aware of the deficiencies of which he now complains in the planning permissions;
(d) There was no communication of any of these alleged difficulties until a meeting held on July 18, by which time the plaintiff again had not yet
commenced any of the works;
(e) The plaintiff did not pay mesne rates due in the month of July.”
In its submissions, the plaintiff draws the Court’s attention to the ruling of Costello J. in Barry v. Buckley [1981] I.R. 306, 308 in which he examined the inherent jurisdiction of the Court to strike out a claim as being frivolous and vexatious:
“This jurisdiction should be exercised sparingly and only in clear cases whose outcome depends on the interpretation of a contract or agreed correspondence. If, having considered the documents, the Court is satisfied that the plaintiffs claim 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.”
The plaintiff also drew the Court’s attention to the judgment of McCarthy J. in the previously cited case of Sun Fat Chan v. Osseous Limited, where the judge stated at p. 428:
“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 not one to be disowned for its novelty though there may be a certain sense of disquiet at its rigour. The procedure is peculiarly appropriate to actions for the enforcement of contracts, since it is likely that the subject-matter of the contract would, but for the existence of the action, be the focus of another contract.”
It is submitted on behalf of the plaintiff that the appropriate approach for the Court to adopt when assessing whether to strike out its claim is for the Court to assume that every fact pleaded by the plaintiff in the Statement of Claim is correct and can be proved at trial and that every fact asserted by the plaintiff on affidavit is also correct and can be proved at trial. Such an approach was conceded as being appropriate by counsel for the defendant in Ennis v. Butterly [1997] 1 ILRM 28, 31-33. This approach was considered by McCracken J. in Ruby Property Company Limited v. Kilty (Unreported, High Court, !st December, 1999):
“If there is a dispute on the facts on affidavit, which is not resolved by admitted document, then it will be virtually impossible for a defendant to have proceedings struck out as being unsustainable. The remedy sought by the defendant is a remedy which has the effect of shutting out a citizen’s right of access to the courts, which is a right which is very closely guarded and protected by the courts themselves, and by the Constitution. Therefore, if the defendants are to succeed in this motion, they must show that on facts which either are in dispute, or are disputed on grounds which can only be considered as frivolous or vexatious, the Court should allow the action to succeed.”
The Court’s attention was also drawn to the following observations of Barron J. in Jodifern Ltd. v. Fitzgerald (Unreported, Supreme Court, 21st December, 1999): (at pp.4-5).
“If the plaintiff’s claim is based upon allegations of fact which will have to be established at an oral hearing, it is hard to see how such a claim can be treated as being an abuse of process of the Court. It can only be contested by oral evidence to show that the facts cannot possibly be true. This however would involve trial of that particular factual issue Where the plaintiffs claim is based upon a document as in the present case then clearly that document should be before the Court upon an application of this nature. If that document clearly does not establish the case being made by the plaintiff then a defendant may well succeed. On he other hand, if it does, it is hard to see how a defendant can dispute this prima facie construction of the document without calling evidence and having a trial of that question. /….
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. /…. I am satisfied that the trial judge applied the correct test: whether the plaintiff could succeed rather than whether he would.”
It is submitted on behalf on the plaintiff that its inability to comply with its obligations under the agreement had been as a direct result of the defendant’s acts and/or omissions, in particular in its failure to obtain appropriate planning permission, preventing the plaintiff from effectively commencing the works. In urging the Court to deny the defendant’s application to have the current proceedings stricken out, the plaintiff submits that the disputes of fact can only be resolved at a full trial of the action and with the benefit of cross-examination.
Conclusions
The plaintiff in these proceedings provided no evidence that at any time from the date on which the parties entered into the agreement to the date on which the Notice of Recission was served, it retained the services of building expertise for the purpose of completing the works on or before the 24th November, 2000. The express terms of the contract with regard to recission and the relatively short time scale specified for completion of the works can have left the plaintiff in little doubt as to its obligations to act expeditiously in seeking to complete the works on time if it hoped to reap the benefits of the agreement from its perspective. The evidence before the Court clearly demonstrates that the plaintiff failed to honour its commitments under the agreement, and now seeks to frustrate the defendant’s attempts to extricate itself from the ensuing imbroglio. I accept that the Court ought not imply a provision into a contract which would have the consequence of contradicting the express terms of the contract agreed between the parties. I also find it difficult to infer the implied terms relied upon by the plaintiff on the grounds that they cannot be formulated with reasonable precision. I accept the “undisputed facts” as outlined by the defendant at paragraph 12 in its submissions.
Conscious of the principle that the inherent jurisdiction of the Court to strike out proceedings should be exercised sparingly, I have come to the conclusion that the defendant has reached the required threshold in these proceedings. I am satisfied that the plaintiffs claim must fail. The continued existence of these proceedings cannot be justified and is manifestly causing irrevocable damage to the defendant. I order accordingly that the plaintiffs claim be struck out.
Lawlor v. Seamus Ross Menolly Homes Ltd
, Supreme Court
[Judgments delivered by Keane C.J. and Fennelly J.]
JUDGMENT delivered the 22nd day of November, 2001 by Keane C.J.
1. The facts in this case are comprehensively stated in the judgment which will be delivered by Fennelly J and need not be set out by me.
2. The applicable legal principles are not in doubt. This is not a case, as Mr. Frank Clarke SC conceded on behalf of the appellants, in which it could be successfully contended that the statement of claim itself disclosed no reasonable cause of action or one that was frivolous or vexatious. The appellants say, however, that the proceedings should have been struck out in the exercise of the inherent jurisdiction of the High Court to take that course where it is clear that the plaintiff’s claim must fail.
3. That such a jurisdiction exists is beyond doubt. However, as was made clear by Costello J, as he then was, in Barry -v- Buckley [1981] IR 306 and by this court in Sun Fat Chan -v- Osseous Limited [1992] 1 IR 425, it is a jurisdiction which should be sparingly exercised by the High Court. As McCarthy J observed in the latter case :
“Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated at earlier stages of the proceedings ; often times it may appear that the facts are clear and established but the trial itself will disclose a different picture.”
4. Since the defendant who brings such a motion must satisfy the court that, even assuming that all the facts pleaded and relied upon by the plaintiff in his statement of claim are established in evidence, his or her action will nonetheless inevitably fail, the burden resting on the defendant in bringing such a motion is undoubtedly a heavy one.
5. It remains to consider the application of those principles to the facts of the present case. As I understand the statement of claim and particulars, the plaintiff claims that he entered into what he describes as “a joint venture partnership agreement” with the defendants and a Mr. Peter Dwyer under which a company was to be formed for the purpose of acquiring and developing certain lands known as “ The Guinness lands” in West County Dublin. If the lands in question could be acquired for £8 million, the project was to go ahead and the shareholding in the company and the distribution of profits which, it was hoped, would result from the venture were to be divided in the proportions of 40% to the defendants, 40% to Mr. Dwyer and the remaining 20% to the plaintiff. If it transpired that the purchase price of the lands was in excess of £8 million, the parties would not be bound to proceed with the acquisition and development of the lands. If, however, the parties were willing to proceed with the acquisition of the lands, even though the purchase price was in excess of £8 million, the company would then be formed with the shares held in the agreed proportions. The plaintiff’s case is that the lands were subsequently acquired for a sum admittedly significantly in excess of £8 million, i.e., £19 million, but that, in breach of the agreement he had arrived at with the defendants and Mr. Dwyer, he was given no opportunity of participating in their further development through the medium of the proposed new company.
6. It is undoubtedly the case that, as pleaded in the statement of claim, certain aspects of the alleged agreement remain remarkably vague. There was no agreement as to the details of the development to be carried out on the lands and the entire question of how the project was to be financed seems to have been left in the air. It may be that at the trial of the action, if it is allowed to proceed, the plaintiff will be able to establish that there was an agreement between himself, the defendants and Mr. Dwyer that the company in question was to be formed, that the lands when acquired were to be vested in the company and that the profits of any development were to be divided in the agreed proportions. It is conceded on behalf of the plaintiff, however, that there was no agreement as to how the project was to be financed and that the details of the proposed development were also, in effect, left for further agreement. Accordingly, even making every assumption in favour of the plaintiff as to the stage which negotiations had reached, they remained negotiations. None of the parties would be in a position to hold the other parties to whatever arrangements in principle were envisaged, if it was not possible to reach agreement on matters such as finance and the nature of the proposed development. In these circumstances, it seems to me that this constitutes one of those cases in which, making every assumption in favour of the plaintiff, the contract relied on could not possibly constitute a concluded contract between the parties which would give rise to any action at law.
7. I would allow the appeal and substitute for the order of the High Court an order dismissing the plaintiff’s claim.
THE SUPREME COURT
Record No. 316/00
Keane C.J.
Geoghegan J.
Fennelly J.
BETWEEN
LIAM LAWLOR
PLAINTIFF/RESPONDENT
AND
SEAMUS ROSS MENOLLY HOMES LIMITED AND
MENOLLY PROPERTIES LIMITED
DEFENDANT/APPELLANTS
JUDGMENT delivered the 22nd day of November, 2001 by FENNELLY J.
8. The defendants/appellants (hereinafter “the appellants”) have appealed against the refusal of Mr Justice McKechnie in the High Court to accede to their motion to dismiss the plaintiff’s claim for being frivolous or vexatious, an abuse of the process of the court and not being maintainable in law. They rely on the inherent jurisdiction of the court to strike out proceedings which are doomed to fail. This jurisdiction was first fully explained by Costello J in Barry v Buckley [1981] IR 306.
9. It is agreed that the court may exercise this jurisdiction only if it is demonstrated beyond argument that the plaintiff’s claim must fail. As a corollary, it must be assumed that the facts will be established as the plaintiff alleges them. With those strictures in mind, I will endeavour to describe the plaintiff’s claim.
10. The plaintiff is an engineer and businessman, residing near Lucan, Co Dublin. The proceedings concern an alleged joint venture project for the development of substantial areas of land in West County Dublin.
11. The plaintiff pleads, in the statement of claim, that prior to March 1997, he and one Peter Dwyer were “in the process of developing certain lands at or near but not limited to those lands situate at the Phibblestown/Castaheany and Allendale areas of County Dublin for residential purposes and, in addition, were engaged in the process of evaluating the overall future development potential of the entirety of the lands ….”
12. It is here necessary to quote in full certain paragraphs of the statement of claim:
“5. Furthermore and with a view to the overall development of the lands as aforesaid, and in particular certain other additional lands hereinafter referred to as “the Guinness lands”, which same were situate at or near those outlined in the previous paragraph hereof, (all such lands being more particularly delineated in the map annexed hereto), it was decided between the Plaintiff and the said Mr Peter Dwyer, to act in co-operation with the First and/or Third Named Defendants herein for the purposes of the future development of all such lands, which said Defendants were in the process of developing certain additional lands in the Castaheany/Phibblestown area of County Dublin, which they had purchased previously.
6. Prior to embarking upon their intended/proposed development of the lands as aforesaid, the Plaintiff, together with the said Mr Peter Dwyer and the First and/or Third Named Defendants, decided and so agreed that the most appropriate manner by which they should proceed with the development of the Guinness Lands referred to previously, was by way of a joint venture partnership business. It was at all times material hereto envisaged by the said parties that the said joint venture partnership would be established through the vehicle of a limited liability company.
7. Accordingly, by way of a joint venture partnership Agreement made on or about the 5th day of March 1997 between the Plaintiff of the one part, the First and/or Third Named Defendants of the second part and the said Peter Dwyer of the third part, the said parties agreed to acquire and develop the aforesaid lands, which said development was to include, inter alia, the construction of residential properties on the lands situate at Phibblestown/Castaheany and Allendale, County Dublin, together with the installation and provision of all road connections and underground services connections both to the said lands as well as to all other lands adjacent thereto which could then, or would in future, avail of such services.
8. At all times material hereto, it was an express and/implied term or condition of the aforesaid Agreement, which said term or condition was evidenced by way of a note and/or memorandum in writing, that all profits and financial benefits on the aforesaid lands at Phibblestown/Castaheany and Allendale, County Dublin, as well as such similar profits and financial benefits arising from the provision of both road connections and all underground services connections to the said lands, together with all other lands in the vicinity thereof, which same either availed of the provision of the said underground services connections or would do so in the future, (with all such profits and benefits accruing and being calculable subsequent to the discharge of all reasonable expenses and outgoings incurred in the development of the said lands); would be divided between the aforesaid parties on the basis of their agreed shareholding in the aforesaid body corporate identified at paragraph 6 hereof, which same was to be in the following manner, namely:-
In a reply to a request for particulars, it is alleged that the shareholding in the body corporate to be formed was to be in the ratios: 40% each to the first named appellant and Mr Peter Dwyer, and 20% to the plaintiff. The shareholdings were to be applicable to:
“(i) to the totality of the Guinness lands
(ii) to any Agreement entered into by the First and/or Second and/or Third Named Defendants, or one or other of them or any combination thereof with a Company known as Manor Park Homes Limited and/or its nominee whereby the said Manor Park Homes Limited and/or its nominee availed of the aforesaid underground services connections and road connections.
(iii) to any Agreement entered into by the First and/or Second and/or Third Named Defendants, or one or other of them or any combination thereof with the owners and/or developers of those lands knows as the Greene Bros. lands whereby the said owners and/or developers of the said lands availed of the aforesaid underground services connections and road connections.”
13. The essence of the plaintiff’s claim is that the appellants did not perform the agreement so pleaded. Instead, the first named appellant caused the second/named appellant to be formed as a subsidiary of the third/named appellant and to purchase the so-called “Guinness lands” and to have them developed for the benefit and profit of the appellants and without making any provision for the 20% share claimed by the plaintiff. The plaintiff claims a number of declarations regarding the existence of the agreement pleaded as well as specific performance and other relief.
14. The terms of the alleged agreement and the circumstances surrounding its negotiation were further particularised in a reply to a request for particulars made by the appellants. Two aspects of these particulars merit attention, namely the nature and extent of the intended development and the means by which it was to be financed.
The Development
15. The lands were to be all lands mentioned which would benefit from the installation of an underground infrastructure which could provide all necessary services and connections, including road connections. The development was to involve the construction of residential properties on the Guinness lands as well as the installation of the underground infrastructure necessary to drain those lands as well as all other lands in the near vicinity. The plaintiff states that he and Mr Peter Dwyer had already retained the services of experts to design the underground infrastructure. The particulars state that there were to be two large surface water mains together with foul sewer drains, manholes and the requisite pipe work to drain all the lands in the natural catchment in the Castaheany/Phibblestown area. They also state that all this was explained to and discussed in detail with the first named appellant at a meeting in February 1997, whereupon the latter asked to be allowed to co-operate with the plaintiff and Mr Dwyer in order bring into effect their advices, apparently in relation to these services.
Finance
16. The particulars state that the plaintiff and Mr Peter Dwyer had in late 1996 taken professional advice with a view to assembling a package to finance the acquisition and development and installation of services they then envisaged. They also state that, prior to the meeting of 5th March 1997, the first named appellant had expressed serious concern about his existing indebtedness and his unwillingness to provide finance for the underground services envisaged by the plaintiff. In reply to a question about financing of the acquisition, the particulars further state that the matter was raised by the plaintiff at the meeting on 5th March 1997 at the behest of the appellants and was to be discussed at a later stage as stipulated in a document of 5th March 1997, to which I will next refer, and which is central to the present issue.
17. It is agreed that a handwritten document was prepared by the plaintiff at the meeting of 5th March and subsequently signed by the first named appellant and Mr Peter Dwyer, but not by the plaintiff. In so far as is necessary, the plaintiff relies on this document to satisfy the requirements of the Statute of Frauds.
18. The parties differ fundamentally regarding the contractual value of this document. The plaintiff pleads that it represents evidence of a concluded agreement; he swears in one of his affidavits that the purpose of his “writing the terms which had been agreed between the parties was to formalise those terms.” The first named appellant says that the entire discussion was tentative and that many matters were uncertain, queried or to be discussed or agreed. These are issues that cannot be determined on a motion of this kind. The plaintiff’s version must be preferred for present purposes.
19. The handwritten document contains, firstly, some very general calculations of acreages and prices, producing a sum of £7.9, meaning £7,900,000, rounded up to “£8m.” The words, Newco Ltd, next appear, followed by an informal note of 50% each to “SR” (Seamus Ross) and “PD” (Peter Dwyer), – (minus) 10%, followed by a question mark, being written under each. Finally, there appears “Finance to be Discussed.” As already mentioned, the plaintiff, in the particulars supplied, acknowledges that the financing of the acquisition was raised by the first named appellant, but that it was “to be discussed at a later stage as stipulated in the document …”
20. The general tenor of the contract pleaded in the statement of claim and the particulars is that it involved the acquisition by the joint venture, through the vehicle of a company to be formed, in which the plaintiff, the first named appellant and Mr Peter Dwyer would be the shareholders in agreed shares, of the Guinness lands upon which the company would construct a housing development. In addition the joint venture would construct an underground infrastructure and foul and surface water services, which would serve both the Guinness lands and extensive other lands in the area, including some lands already in the ownership of the first or third named appellants and lands owned by third parties. The revenue earned by any of the parties from the provision of such services to other developers would accrue to the joint venture company.
21. In his affidavit grounding the motion to dismiss the claim, the first named appellant maintains that there was no concluded contract between the plaintiff and any of the defendants. He agrees that he signed the handwritten document of 5th March and does not contest any of its contents. He implicitly accepts that one or other of the defendants subsequently acquired the Guinness lands, but says that the price was £19,000,000 and not £8,000,000, as mentioned in the document. The plaintiff says that the latter sum was discussed as the minimum price at the meeting of 5th March. The first named appellant says that Mr Peter Dwyer did not do anything subsequent to 5th March “to advance negotiations or tender requisite capital.”
22. By way of reply, the plaintiff repeats that it was the first named appellant who requested that the issue of finance be dealt with at a later time. He merely adds that the latter “was aware that [the plaintiff] and Mr Peter Dwyer were at an advanced stage of finalising the financial arrangements,” that these arrangements were then discontinued but that the first named appellant said that the raising of finance would not be a problem for “Newco.”
23. The legal principles to be applied on an application of this kind are not in dispute. As explained by reference to the judgment of Costello J in Barry v Buckley, at page 308, it must be clear that the plaintiff’s claim must fail. The learned judge continued:
“The jurisdiction should be exercised sparingly and only in clear cases; but it is one which enables the court to avoid injustice, particularly in cases whose outcome depends on the interpretation of a contract or agreed correspondence. If, having considered the documents, 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 irreparable wrong to the defendant.”
This Court, in Sun Fat Chan v. Osseous Ltd. [1992] IR 425 abstained from ruling on the existence of this kind of jurisdiction, as its existence was not disputed. McCarthy J commented that the “High Court should be slow to entertain an application of this kind.” In reality, the Court exercised the jurisdiction.
24. Hardiman J, giving judgment in Supermacs Ireland Limited and another v Katesan (Naas) Limited and another [2000] IR 273, dismissing an application of the kind at present before the Court, approved a dictum of Keane J, as he then was, in Lac Minerals v Chevron Corporation (High Court, unreported, 6th August 1993):
“The judge acceding to an application to dismiss must be confident that no matter what may arise on discovery or at the trial of the action the course of the action will be resolved in a manner fatal to the plaintiff’s contention.”
Hardiman J commented that this was a very difficult hurdle to clear. This and the similar remarks of Costello and McCarthy JJ underline the strictness of the applicable test, namely that the plaintiff’s claim is bound to fail. In Barry v Buckley, Costello J found that the test had been satisfied: the offer to contract and all relevant solicitors’ correspondence were expressed to be “subject to contract.” In Sun Fat Chan v. Osseous Ltd , this Court approved the decision of the High Court to dismiss a claim for specific performance of an agreement for the sale of land, which was expressly subject to a condition as to the obtaining of planning permission. The High Court had rejected the plaintiff’s argument that the condition in question was for the benefit of the purchaser only. This Court agreed. Supermacs Ireland Limited also concerned a contract for the sale of land. This Court, in declining to exercise the jurisdiction, rejected a number of submissions regarding the enforceability of contracts where certain terms had not been agreed. These included the claimed need to have an agreement on the amount of a deposit, on the completion date and on the obtaining of vacant possession. Clearly, all of these points were debatable, to say the least. The exercise of the jurisdiction to strike out could not have been justified. Where the claim is, as postulated by the test, clearly bound to fail, the court will normally exercise its jurisdiction to strike out.
25. It is also clear, and I accept, that the Court should be willing to assume in favour of the plaintiff that an appropriate amendment of the pleadings might save his case. Furthermore, it may be difficult to succeed on such a motion based only on the absence of a note or memorandum which satisfies the requirements of the Statute of Frauds. Something may be found on discovery. It is different where, as in Barry v Buckley, there is a note but it is headed “subject to contract.”
26. The question is whether the plaintiff’s claim in the current case is so deeply flawed that it cannot succeed. I assume, in the plaintiff’s favour, that there was an agreement, as pleaded: a joint venture agreement, where a company was to be formed between identified persons in agreed shares, for the purchase of an identifiable holding of land at an agreed minimum price; that housing development was to be carried out on those lands and that the opportunity of that development was to be used to carry out agreed and identifiable drainage and similar works and to plough the proceeds into the joint venture. I merely say that I assume that, because none of that is the decisive consideration in my mind. I would, in fact, have serious doubts about the uncertainty of the description of the agreed development – what density; what type of housing? – and of the sewerage and drainage works: over whose lands and according to what specification? How could the agreement be binding if the land could not, as envisaged, be bought for the assumed price of £8,000,000?
27. The fatal defect in the plaintiff’s claim is, in my view, the clear evidence, not disputed by the plaintiff, that an integral part of the agreement of 5th March 1997 was that how the entire joint venture was to be financed was left over for discussion at a later date. The plaintiff has described this term, in the particulars furnished as a stipulation and from his affidavit, it is clear that he wrote down the terms in order to formalise them. To his credit, therefore, he does not seek to escape the implications of the signed handwritten document, from which it is abundantly clear that the issue of finance was left over for future discussion. That the matter of finance was of importance to both parties is agreed to be the case. The plaintiff and Mr Peter Dwyer had been investigating it for some considerable time. All parties knew that considerable capital investment would be required to finance the intended project. This was not a case of a straightforward sale of property from vendor to purchaser, where the law would not import or imply, in the absence of express reference, any need for financial provision. The purchaser would be assumed to have the means. The agreement in this case was for the formation of a company. The parties did not address the question of the capital of that company at all. Most crucially, they agreed in the terms which the plaintiff was so careful to formalise that this issue would be discussed at a later date.
28. This provision was, indisputably, an important part of any arrangements between the parties for the purchase and development of lands. In effect, the development could not take place without finance. The parties may well have reached an agreement in principle to enter into a joint venture and on their respective shares. However, they remained in negotiation so long as they had not agreed on finance. Hence, there was no concluded contract. I would allow the appeal and dismiss the plaintiff’s claim.
29. There are a number of alternative pleas in the statement of claim. In my view, these are all subsidiary to the central question of whether there was a concluded agreement. In particular, the claim based on negligent misstatement is, in reality, a restatement of the contract claim. It is not a genuine claim in negligence for misstatement of fact. It relates to the future.
30. For these reasons, I would allow the appeal. I would dismiss the plaintiff’s claim in its entirety.
Hanly v Newsgroup Newspapers Ltd
[2004] 1 I.R. 471
JUDGMENT of Mr. Justice T.C. Smyth delivered 10th March 2004.
The defendant by notice of motion dated 10th July 2003 seeks an order pursuant to Order 19, r.27 of the Superior Courts 1986, as amended, striking out paragraphs 6, 7 and 8 of the Statement of Claim in this action delivered on 20th February 2003, as being unnecessary or scandalous, or tending to prejudice, embarrass or delay the fair trial of the action.
The provisions of the Order and rule invoked provides as follows:-
“The Court may at any stage of the proceedings order to be struck out or amended any matter in any indorsement of 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.”
The challenged material paragraphs in the Statement of Claim are as follows:-
“6”.
Further and without prejudice to the a foregoing the Irish Sunday People on the 12th day of May 2002 published a photograph of the Plaintiff with a series of articles with headlines which contained the following words:-
‘G.A.A. Stars naked romp’, ‘G.A.A. Stars wrecked the ladies toilet, urinated all over a bed and paraded stark naked round hotel’, ‘One Roscommon player even seemed to chalk his own cue then carried on and potted the pink’ ‘Players to face discipline’ and ‘Roscommon stars in dock’.
“7”
As a consequence [of] this publication the plaintiff was injured in his character and reputation and exposed to ridicule and contempt. The plaintiff sought and obtained a fulsome apology from the Irish Sunday People which was published in that Newspaper on 12th May 2002 (a date corrected in open correspondence to read 19th May 2002) and in the following terms:-
In this paper last week we published a report concerning the behaviour of certain members of the Roscommon G.A.A. football team at a hotel in Derry. On page two of this report we published a photograph taken in the course of a match between Donegal and Roscommon. Mr. John Hanly was one of the players depicted in this photograph. We acknowledge that the use of this photograph in conjunction with the article could be understood by readers as suggesting that Mr. John Hanly, as a Roscommon player depicted in the photograph, was involved in the incidents described in the report. We fully accept Mr. Hanly was not involved in any way in the incidents described and that Mr. Hanly was not even at the hotel at the time of the incident. We accept that the article was defamatory of Mr. Hanly and caused him a significant distress and embarrassment. The Sunday People wishes to apologise sincerely to Mr. Hanly and his family for the grave hurt and upset caused as a result of this publication. We acknowledge that Mr. Hanly is a person of the highest character and reputation. The Sunday People has agreed to pay damages to Mr. Hanly and discharge his legal costs.
“8” The plaintiff hoped and believed that the aforementioned apology would vindicate and restore his good name, character and reputation but the publication by The Irish Sun of the defamatory material referred to herein a short time after the publication of the afore mentioned apology has neutralised the effect of this apology and further has aggravated the damage to the plaintiff’s character and reputation and exposed him to further ridicule and contempt which has caused the plaintiff and his family severe distress, embarrassment and upset.”
I will attempt to summarise the background facts relevant to the issues raised in this motion. In May 2002 a football match took place under the auspicious of the G.A.A. between counties Donegal and Roscommon. A number of players on the Roscommon team required or were given accommodation after the football match in a hotel in Co. Derry. Now, it would appear, that some members of the Roscommon team behaved in a disreputable, disgraceful and degusting manner. A report of this conduct appeared in the public press. The plaintiff who was a member of the Roscommon football team for the purposes of playing apparently returned to Dublin on the evening of the match – and was never in the hotel in Derry at the time of the matters reported in the press. Unfortunately by the juxtaposition of the team photograph and photographs and text depicting and describing the disreputable conduct the newspaper – The Irish Sunday People in their edition of 12th May 2002 considered they left themselves open to a libel action and published an apology in their edition of 19th May 2002 and paid agreed damages and costs to Mr. Hanly. Some two months after the apology of The Sunday People for the libel they admitted on the 19th May 2002 – The Irish Sun published on July 19th 2002 the libel complained of in these proceedings. The libel alleged is similar to that in respect of which the plaintiff has received an apology and damages from The Sunday People.
In these proceedings the plaintiff (inter alia) claims that the defendants article negatived and neutralised the effect of the apology of The Sunday People and as a consequence the plaintiff is entitled to aggravated damages.
The defendants position is that the first article and apology is inadmissible in the context of the instant proceedings and that the plaintiff is not entitled to aggravated damages, either by statute or at common law, by reason of the first article and apology; and that the inclusion of the details of The Sunday People article and apology at paragraphs 6, 7 and 8 of the Statement of Claim is inadmissible and unnecessary and only serves to prejudice and embarrass the defendant.
To date no defence has been delivered to the Statement of Claim.
If the plaintiff has a cause of action against the defendant in these proceedings it is based on a separate and distinct publication to that which existed as against The Sunday People and it is not the less separated and distinct because the alleged/incident(s) on which it is purportedly based are similar in many respects and details. Each publication even by the same newspaper can give rise to a separate cause of action.
The function of pleadings is to ascertain with precision the matters upon which the parties differ and the points on which they agree, and thus to arrive at certain clear issues on which both parties require a judicial decision. (see Odgers on Pleadings). Only the material facts and not the evidence on which they are to be proved should be pleaded. Notices for particulars and replies thereto are not pleadings in the strict sense of the word but merely information exchanged between the parties for their own information.
In my judgment the matters referred to in paragraphs 6, 7 and 8 are in the nature of evidence, are referable to unrelated proceedings with a different party and are scandalous in that they seek to introduce immaterial matters which would lead to the introduction of irrelevant evidence at the trial of the action. In my judgment the entitlement of the plaintiff to claim aggravated damages must be related to or connected to the original subject of the cause or matter of the publication of 19th July 2002. The instant case is referable to a publication of The Irish Sun not The Sunday People. In Quinn v Hessian [1878] 4 L.R.Ir. 35 in which the plaintiff moved the court to set aside a counter claim on the grounds that elements of it were an embarrassment and that the other elements of it did not appear to be connected to the action between the plaintiff and the defendant, Palles, C.B. at p.40 pronounced as follows:-
“The 3rd and 4th paragraphs of this counter claim must be struck out. They are obviously introduced by the pleader to make some connection between the causes of action in the Statement of Claim and counterclaim, but they bring in matters such as the disputes of the wives of the plaintiff and the defendant wholly immaterial. There immateriality is admitted, and they could not but prove embarrassing upon the trial, because they would lead to the production of irrelevant evidence.”
There is no concession of immateriality in the instant case.
The plaintiff is entitled to advance a case for aggravated damages in evidence subject to any ruling by the trial judge as to relevance, materiality and admissibility. What the plaintiff may not do in pleadings is set out in extensio by way of evidence matters referable to another unconnected action. I do not consider this to be an application of “intelocutory jockeying for forensic advantage” (Dwek v McMillan Publishers [2000} E. L. 284 at 294 per Sedley, L.J.).
This is not a case of striking out of the plaintiffs case or any part of it against the defendant, for I accept that such a draconian step “should only be done in clear and obvious cases” Aspro Travel Limited v Owners Abroad Group (C.A. [1996] 1. W.L.R. 132 at 140 per Schiemann L.J.): nor is it a case of a claim being struck out where the essential facts and matters going to liability would be the same as those already raised in earlier proceedings which were brought by the same claimant against another defendant and in respect of a similar publication in which either failed or abandoned by the claimant.” (Oates v Mirror Group Newspapers, unreported, May, 2000. C.A. – referred to in Gatley on Libel and Slander). his is not an abuse of process case.
Outside s. 26 of the Deformation Act, 1961 the defendant in this case cannot seek to show that the plaintiffs reputation has/had been damaged by publication in The Sunday People of 12th May, 2002, if to the same effect (see Associated Newspapers v Dingle [1964] A.C. 371) which considered the equivalent legislative provision in England to wit s. 12 of the Defamation Act, 1952).
In these proceedings the plaintiff claims:-
a. Aggravated damages –
The Plaintiff may rely on the conduct of the defendant, his/her conduct of the case and his state of mind as aggravating the damages. In Dawson ( t/a. A.E. Dawson & Sons) v Irish Brokers Association (Supreme Court 6th November 1998) O’Flaherty J. stated at p. 8 and 9 of his judgment –
“. . . while aggravated damages are distinct, they are still meant to compensate the plaintiff and so they should be regarded as a sub-head of compensatory damages awarded to the plaintiff.”
b. Exemplary damages:
These are intended to punish the defendant for the deliberate or wilful commission of a tort. It is unnecessary for present purposes to analysis the differences in the jurisprudence in this jurisdiction and in the courts of England following on from Rookes v Barnard [1964] A.C. 119.
Continuing the passage from the judgement of O’Flaherty J. immediately before cited – he states:-
“. . . exemplary (or punitive) damages are a separate category. They are not compensatory at all. In this jurisdiction it is not necessary to plea in regard to exemplary damages in the Statement of Claim . . . though it is a requirement in England under that country’s Rules of court.”
In the light of the fact that the plaintiff, the respondent in the motion relied on this judgement of O’Flaherty J. it is difficult to understand the opposition to the striking out of paragraphs 6, 7 and 8 of the Statement of Claim.
In my judgment it is not permissible for a plaintiff in a Statement of Claim in an action such as this to seek to set forth in the pleadings in an narrative form intended factual evidence in anticipation of or pre-emptive of possible evidence in mitigation of damages that may be tendered at trial arising from matters in a defence yet to be formulated. The material in the paragraphs of the Statement of Claim is scandalous, prejudicial and embarrassing in the legal sense of those terms. Accordingly relief will be granted in the terms of the Notice of Motion.
In making this determination I express no view one way or the other on the entitlement or otherwise of the plaintiff to aggravated and/or exemplary or any damages or any aspect of liability.
The plaintiff will be entitled to deliver an amended Statement of Claim with the omissions of paragraphs of 6, 7 and 8 and whatever other amendments (as he may be advised) within 14 days of this date.
Grant v Roche Products (Ireland) Ltd [2005] I.E.H.C. 161
Judgment of Finnegan P. delivered on the 27th day of May 2005
The Plaintiff brings this action pursuant to the Civil Liability Act 1961 Part IV. He is the father of Liam Grant Junior. The Seventh Named Defendant is a Consultant Dermatologist who prescribed a drug Roaccutane to Liam Grant Junior. The First to Fifth Named Defendants are involved in the manufacture and distribution of the drug. The Sixth Named Defendant is the statutory body entrusted with the regulation of the manufacture and distribution of drugs within this jurisdiction. The Statement of Claim pleads that a side effect of the drug is depression, that Liam Grant Junior became depressed and suicidal as a result of taking the drug and on the 15th June 1997 took his own life. It is pleaded that the death was caused by the negligence, breach of duty and breach of statutory duty of the Defendants. Defences were delivered denying liability. By letter dated 13th October 2004 the solicitors for the First, Second, Third, Fourth and Fifth Named Defendants offered to the Plaintiff a sum of money sufficient they say to satisfy the claim. I am not satisfied that the sum offered is indeed sufficient so that it could be said with certainty that the Plaintiff would not recover a greater sum. However as the parties had come to court prepared to argue the issue raised on the Notice of Motion and court time had been set aside for that purpose and as in the particular circumstances of a claim under the Civil Liability Act 1961 Part IV it would be possible for the said Defendants to offer a sum more than which the Plaintiff could not be awarded it was agreed that I should proceed and determine the issue raised on this application. Further I propose treating the said Defendants offer as a tender although not made in the form prescribed by the Rules of the Superior Courts (No. 5) (Offer of Payment in Lieu of Lodgement) 2000 S.I. No. 328 of 2000 for the purposes of dealing with the issue before me. S.I. 328 of 2000 provides a qualified party with the alternative to lodging money in court of making an offer of tender. In practical terms and for present purposes therefore I propose having regard to the situation as if a lodgement had been made.
The relief sought by the First to Fifth Named Defendants on this Notice of Motion is as follows –
(a) An order pursuant to the inherent jurisdiction of the Court staying the proceedings herein, or alternatively, restraining the continued prosecution of the proceedings on the grounds that, in light of the open offer made to the Plaintiff by Solicitors for the First, Second, Third, Fourth and Fifth Named Defendants by letter dated 13 October 2004, the relief sought by the Plaintiff in the proceedings has been offered to him by these Defendants and in those circumstances the continued prosecution of these proceedings would be an abuse of the process of the Court.”
If the action proceeds the costs of the same will be substantial indeed. The Plaintiff has obtained an Order for Discovery against the First to Fifth Named Defendants from the Master which is under appeal. On foot of that Order the first to fifth named Defendants will be required to discover between 4 and 5 million documents. As to the nature of the documents many will be highly technical and lengthy. The Plaintiff has appealed the Master’s Order and if he succeeds on that appeal the number of documents will be increased to some 9 million. It is estimated that the hearing will take in excess 3 months.
In an Affidavit filed on behalf of the Plaintiff on this application it is deposed as follows –
“4. In the first instance the offer letters are repeatedly stated to be made without prejudice to the issue of the Roche Defendants’ liability. My client wishes the issue of liability to be determined. My client believes that the wrongful actions of the Roche Defendants caused or contributed to the tragic death by suicide of his son, Liam. In the circumstances, I believe that my client is entitled to an adjudication of the liability issue and that he cannot be precluded from asserting his right of access to the court by reason only of the offer of a small monetary sum without any acknowledgement that the Roche Defendants were guilty of negligence in the manner claimed in these proceedings.”
A second issue raised in that Affidavit is that of special damages. The Plaintiff as special damages claims the expense incurred in investigating and gathering scientific information about Roaccutane. The amount claimed is €696,193. A considerable portion of this sum has already been paid – $219,000, $33,243, $10,500, €21,066.03, €13,865.54 and €139,595.83. There is an issue as to whether some or all these items are properly items of damages or items of costs. However this could be determined either as a preliminary issue or on taxation. It may be that some or all of the items are not recoverable under either heading of damages or costs.
The Issue
The issue which arises is this. If, without admission of liability, a defendant tenders or lodges in court a sum of money in satisfaction of the Plaintiff’s claim that claim being a claim which can be calculated with mathematical certainty is it an abuse of process for the Plaintiff to continue to prosecute the action.
The Nature of Payment into Court pursuant to Order 22 Rule 1 of the Superior Courts Rules
A payment into court is simply an offer to dispose of the claim on terms: A Martin French (a firm) v Kingswood Hill Limited 1962 All ER 251. Where the Defence denies liability the payment in should be without admission of liability and the acceptance of the sum so paid implies no admission about the merits of the cause of action as there has been no adjudication and no estoppel is created. In effect acceptance of money so paid in is nothing more than a compromise.
Rules of the Superior Courts
Order 22 Rule 1 of the Rules of the Superior Courts provides for the payment into court by a defendant of a sum of money in satisfaction of a claim or where several causes of action are joined in one action in satisfaction of one or more of the causes of action. The pleadings in this case are broadly framed in negligence, breach of duty and breach of contract. There is in effect only one cause of action – the statutory cause of action created by the Civil Liability Act 1961 section 48. That section creates a statutory tort of causing death by wrongful act. Rule 1(6) requires the Notice of Payment into Court to be in one of form number four or number five in Appendix C of the Rules of the Superior Courts that is either admitting or denying liability. Rule 6 deals with the effect of a payment into court on costs. The Rule provides that if the amount paid into court exceeds the amount awarded to the Plaintiff the Plaintiff is entitled to the costs of the action up to the time when such payment into court was made and of the issues or issue, if any, upon which he shall have succeeded. In Willcox v Kettell 1937 1 All ER 222 the Rules of the Superior Courts England and Wales Order 22 were considered. The Rules provided that the Notice of Payment into Court should state whether liability is admitted or denied. Rule 6 of that Order further provided as follows –
“The Judge shall, in exercising his discretion as to costs, take into account both the fact that money has been paid into court and the amount of such payment”.
In that case the Defendant paid £100 into court with a denial of liability the Plaintiff’s claim being in trespass. The Plaintiff recovered £31.10 shillings. It was held that the Plaintiff should have his costs of the action up to the time of payment in and the subsequent costs of the issue of trespass and the Defendant to have his costs since payment in on the issue as to damages. In the course of his judgment Clauson J. cited with approval a passage from the Annual Practice 1937 at p. 405:
“If the Defendant in an action for unliquidated damages denies liability but pays money into court, and the Plaintiff proceeds with the action, there are two distinct issues raised, namely
(a) Whether the defendant is under any liability to the plaintiff and
(b) Whether the sum paid in is sufficient to cover the liability, if any.
If the Plaintiff succeeds in recovering from the Defendant an amount which carries costs, even though it is less than the sum paid into court, he succeeds in the first of those issues, and is entitled to the whole costs of the action down to the payment in, and the subsequent costs of the issue on which he has succeeded. The above statement of the Practice was read and adopted in the judgments given in Powell v Vickers, Sons & Maxim Limited 1907 1 KB 71”
The present position in England and Wales however is that set out in Hultquist v Universal Pattern and Precision Engineering Company Limited 1962 All ER 266. Where there is a payment in with denial of liability costs follow the event and it is very rare indeed that a plaintiff is awarded the costs of the issue of liability. Sellers L.J. at page 272 said –
“The action of tort consists of wrongdoing and damage resulting therefrom and the Plaintiff must prove both to obtain a judgment. On the face of it there can be no complaint and no ground for an order for costs on the issue of liability because the plaintiff is being called on to prove a case to establish his right to damages and has failed to get more than the amount in court. A payment into court is an offer to dispose of the action and if accepted prevents all further costs. A plaintiff who continues an action after a payment in takes a risk and cannot normally complain if he has to pay all the costs which his acceptance of an award would have avoided.”
Thus even if two issues arise in an action, that is liability and quantum, and the Defendant lodges money in court without an admission of liability, if the Plaintiff succeeds on liability but fails to achieve an award in excess of the sum lodged in court in the ordinary case the Plaintiff will not be awarded the costs of the liability issue after the date of lodgement. That is the position within this jurisdiction.
The Issues on an Action pursuant to the Civil Liability Act 1961 Part IV
Section 48 of the Act provides as follows –
“(1) Where the death of a person is caused by the wrongful act of another such as would have entitled the party injured but for his death to maintain an action and recover damages in respect thereof the person who would have been so liable shall be liable to an action for damages for the benefit of the dependants of the deceased.”
“Wrongful act” is defined in section 47 of the Act –
“Wrongful act” includes a crime.
“Wrong” is defined in section 2 of the Act –
“Wrong” means a tort, breach of contract or breach of trust whether the act is committed by the person to whom the wrong is attributed or by one for whose acts he is responsible, and whether or not the act is also a crime and whether or not the wrong is intentional.
The definition of “wrongful act” and “wrong” read together give the comprehensive meaning of wrongful act. In an action under Part IV two issues arise:-
1. Did the Defendant commit a wrongful act.
2. Assessment of damages.
An unusual feature of an action under Part IV, having regard to the maximum sum which can be awarded for general damages fixed by statute, is that the maximum sum which can be recovered for damages can be ascertained from the pleadings with mathematical certainty. The pleadings will identify the special damages. Section 49(3) of the Civil Liability Act 1961 provides that it is sufficient for a defendant in paying money into court to pay in one sum as damages for all the dependants of the deceased without apportioning the sum between them: accordingly Order 22 Rule 1(5) does not apply.
Remedies at Law
The principle of the ubi jus ibi remedium is accepted by the courts of this jurisdiction. The appropriate remedy will vary with the cause of action and the circumstances of the same. The most common remedy is damages. Damages are the pecuniary compensation obtainable by success in an action for a wrong. The object of an award of damages is to give the Plaintiff compensation for damage, loss or injury which he has suffered. The heads of damages are divisible into two main groups; pecuniary and non pecuniary loss. However an award of damages is not the only object of a claim. Thus in Willcox v Kettell above two issues arose – vindication of the Plaintiff’s claim that the Defendant had trespassed on his property and the award of damages. Where there has been injuria but no damage the courts have traditionally awarded nominal damages. In the Mediana 1900 A.C. 113 at 116 Lord Halsbury L.C. said –
“Nominal damages is a technical phrase which means that you have negatived anything like real damage but that you were affirming by your nominal damages that there is an infraction of a legal right which though it gives you no right to any real damages at all yet gives you a right to the verdict or judgment because your legal right has been infringed.”
Nominal damages can be awarded in cases of breach of contract: Marzetti v Williams (1830) 1B & AD. They can be awarded in torts actionable per se: Constantine v Imperial London Hotels (1944) KB 693 which concerned refusal by a hotel to receive a guest. Thus the Courts can vindicate a right by an award of nominal damages the main object of the Court’s judgment being the vindication of the right and the award of nominal damages being no more than “a mere peg on which to hang costs”: Maule J in Beaumont v Greathead (1846) 2 CB 494 at 499.
Abuse of Process
The Court has an inherent power to strike out or stay proceedings which are an abuse of process. It is a power which the Court should be slow to exercise: Sun Fat Chan v Osseous Limited 1992 1 I.R. 425. The reported cases in this jurisdiction tend to turn on whether the Plaintiff could succeed: that is not the issue of abuse of process raised here. An abuse of the process can also arise where the process of the Court is used, not in good faith or for proper purposes, but as a means of vexation or oppression or for ulterior purposes. In Dorene Limited & Anor v Suedes (Ireland) Limited 1982 ILRM 126 Costello J. recognised the existence of an action for damages at common law for the institution or maintenance of a civil action –
1. Without reasonable or probable cause.
2. For some improper or wrongful motive including the use of the legal process for some other than its legally appointed and appropriate purpose and
3. The Defendant thereby sustains damage or damage is presumed.
To cause a man to be put to expense is damage of which the law will take notice: Saville v Roberts 1 Ld Ray 374. At page 130 Costello J. dealt with reasonable or probable cause: the test is an objective one and it is for the Court on that basis to determine whether there is reasonable cause for maintaining the action. The Court found that the motive in maintaining the action notwithstanding legal advice that it could not succeed was to exert pressure on the Defendant by maintaining in place a lis pendens and to use this to assist the Plaintiffs in their bargaining position in dealing with the Defendant.
See also Parton v Hill (1864) 10 LT 414, Sean Quinn Group Ltd., v An Bord Pleanala & Ors 2001 2 ILRM 94. In Goldsmith v Sperrings Limited (1977) 2 All ER 566 Scarmen L.J. dealing with an action for this
tort said –
“In the instant proceedings the Defendants have to show that the Plaintiff has an ulterior motive, seeks a collateral advantage for himself beyond what the law offers, is reaching out “to effect an object not within the scope of the process”.
The American Second Statement of the Law of Tort (1977) para 682 states the following principle under the heading “Abuse of Process” –
“One who uses a legal process, whether criminal or civil, against another primarily to accomplish a purpose for which it is not designed, is subject to liability to the other for harm caused by the abuse of process”.
Thus abuse of process in this sense gives rise to a cause of action in the Defendant: however I am satisfied that it should equally give rise to an entitlement to have the proceedings maintained in abuse of process struck out or stayed.
Conclusion
There are two objects of the present action –
1. To establish that the Defendant committed a wrongful act and
2. To recover damages.
The Plaintiff maintains that his concern is to establish that the death of his son was caused by the wrongful acts of the Defendants. In these circumstances he is not seeking “to effect an object not within the scope of the process”. If the Plaintiff’s motive was to excite adverse publicity damaging to the Defendants or to punish the Defendants for their wrongful act by causing them to incur extravagant costs (as will certainly be the case here) a case for abuse of process could be made out. As the determination of liability is one of the objects of the proceedings and as there is no admission of liability the Plaintiff is not acting in abuse of process. The right to litigate to achieve the appropriate remedy is an unenumerated right under Article 40.3.1 of the Constitution: Tuohy v Courtney & Ors 1994 3 I.R. 1. It may well be the case that the Defendants on making a tender or lodgement such that there is no possibility of the Plaintiff beating the same that in that event the Plaintiff will be unable to satisfy any award of costs against him. This is not a factor to be taken into account. Mere poverty is never a bar to bringing an action: Tormey & Ors v ESRI 1986 I.R 615. While the consequences for the Defendants of the Plaintiff determining to proceed will be significant in terms of costs the Constitutional right of the Plaintiff takes precedence. See Crindle Investments Limited & Ors v Wymes & Ors 1998 4 IR 567 at 595. There is no question, I am satisfied, of the Court carrying out a cost benefit analysis. While in the particular circumstances of the case in AB & Ors v Wyeth Unreported 1996 EWCA Civ 1202, part of group litigation, the Court had regard to the very modest measure of damages, the fact that the Plaintiff was impecunious and the enormous costs which would be incurred by the Defendant in striking out a claim no such general principle was established. At page 10 of the judgment Stuart Smyth L.J. said –
“Mr. Buchan sought to rely on an analogy with the case of a multi millionaire who wished to sue Wyeth. His damages might be only £20,000 but he might be prepared to pay the several millions required to bring the case to trial and face the risk of paying the Defendant’s costs if he was unsuccessful. Even for a very rich man this would be economic madness, but I agree that the Court would probably not strike out his action.”
Our system of procedure penalises in costs a plaintiff who fails to accept a sufficient sum paid into court or tendered and this is the only penalty which our procedures provide.
Having regard to the foregoing should the Defendants tender or pay into court a sum equal to or greater than the maximum award which the Plaintiff could achieve but without admission of liability the Court would have no jurisdiction to stay or strike out the Plaintiff’s claim. I refuse the First to Fifth Named Defendants the relief which they seek.
Porterridge Trading Ltd v First Active plc [2006] I.E.H.C. 285; High Court, Clarke J., October 4, 2006
JUDGMENT of Mr. Justice Clarke delivered 4th October, 2006.
1. Introduction
1.1 These proceedings are one of a series of cases involving disputes between companies controlled, or formally controlled, by Mr. Brian Cunningham (“Mr. Cunningham”) on the one hand and the defendant (“First Active”) together with Mr. Ray Jackson (who has been appointed by First Active as receiver to many of the companies concerned) on the other hand. For a general overview of the totality of the proceedings reference should be made to an earlier judgment delivered by me which related to each of the relevant proceedings (High Court, Unreported, Clarke J., 20th October, 2005). These proceedings are referred to in that judgment as the “second related proceedings” and are outlined at paragraph 1.4 of that judgment. In this application First Active contends that these proceedings should be stayed as bound to fail.
1.2 These proceedings relate to three leases and/or agreements which would appear to have been executed by Salthill Properties Limited (“Salthill”) on 22nd December, 1999 in favour of the plaintiff (“Porterridge”). It would appear that on 20th August, 2004 First Active went into possession of the premises the subject matter of these leases. It is the lawfulness of that action and the subsequent attempts by First Active to sell the property concerned that is the subject of these proceedings. The substance of the defence put forward by First Active is that, prior to the execution of the relevant leases, Salthill had entered into a mortgage debenture which, amongst other things, created a first charge in favour of First Active in respect of the premises the subject of the leases. In addition it is contended that the debenture created a first floating charge on all of the assets of Salthill, which included the relevant premises. It would appear that the relevant debenture agreement provided that Salthill should not, amongst other things, lease the property without the written consent of First Active. On that basis First Active contends that the leases were, at least insofar as the interests of First Active are concerned, ineffective. On that basis First Active contends that it was lawfully entitled to enter into possession of the premises.
1.3 In its reply delivered on the 21st June, 2005 Porterridge denies or puts in issue most of the matters raised by way of defence but goes further in paragraph 7 in alleging that First Active:-
“Was at all material times aware of the execution and/or existence of the leases dated 22nd December, 1999 and is thereby estopped from now relying on any clause which it is alleged required the giving of prior written consent to the making of such leases.”
In similar vein paragraph 8 contends that the receiver/manager:-
“Accepted that the leases dated 22nd December, 1999 were valid and accordingly the defendant is estopped from alleging that the said leases are invalid”.
1.4 While these proceedings were pending the receiver brought an application pursuant to s. 316 of the Companies Act 1963 for directions relating to his entitlements in respect of the property (“the directions application”). That application was the subject of a judgment in this court in Re Salthill Properties Limited (High Court, Unreported, Laffoy J., 30th July, 2004) and in the Supreme Court (Supreme Court, Unreported, McCracken J. 29th May, 2006).
1.5 On the basis of the determination of the directions application, First Active now contends that this court should stay or dismiss these proceedings either under Order 19 Rule 28 of the Rules of the Superior Courts or alternatively under the inherent jurisdiction of this court. In substance it is contended that as a result of the decision of this court and of the Supreme Court in the directions application these proceedings are bound to fail.
1.6 In that context it is necessary to look at the issues which were before this court and the Supreme Court in the directions application and the manner in which that application was determined. I now turn to that issue.
2. The Directions Application
2.1 As appears from the judgment of Laffoy J. the specific issues on which directions were sought were the following:-
“1. Whether the leases, which in the notice of motion are referred to as “purported” leases, are valid?
2. Whether the leases contravene the negative pledge clause contained in certain mortgages between the company and First Active plc (the Bank)?
3. Whether the leases were determined by reason of forfeiture notices served by the company on the lessees dated 20th December, 2001?
4. Whether the leases were surrendered by the lessee in January 2002?
5. Whether the lessee currently has any valid or enforceable leasehold or other interest in the lands thereby demised?”
The judgment also notes that at the hearing the receiver did not pursue the question of the validity of the leases as referred to at 1. It should also be noted that Porterridge was a party to the application.
2.2 As is clear from p. 10 of the judgment of Laffoy J., amongst the matters raised by Porterridge in its submissions was the suggestion that the issues raised by the receiver should more properly be dealt with in these proceedings and that an application under s. 316 of the Companies Act 1963 was inappropriate for the resolution of contested facts.
In relation to that argument Laffoy J. concluded, at p. 13, as follows:-
“While it is probable that, when the issues are joined in the plenary proceedings, there will be a certain similitude between those issues and the issues which arise in this application, in my view, that is not a basis for the court refusing to exercise its jurisdiction under s. 316(1).
Prima facie, the receiver was entitled to bring this application. Whether it would be just for the court to declare rights as between the company (in receivership) and the lessee on this application on the basis of the current state of the evidence remains to be considered having regard to the admissible evidence considered in the context of the issues which arise”.
2.3 Having reviewed the evidence Laffoy J., at p. 15, indicated that the issues which remained for determination were the following:-
“1. Whether, as between the company and the lessee, the leases have terminated by –
(a). forfeiture; or
(b). surrender
2. What impact the existence of the mortgage debentures had on the leases”.
2.4 Laffoy J. was not satisfied that there was evidence to justify a conclusion that the leases had been terminated either by forfeiture or surrender.
Having reviewed the evidence in relation to bank consent Laffoy J. concluded, at p. 21, as follows:-
“On the basis of evidence adduced by the lessee, I am satisfied that the creation of the leases contravened clause 6 in that they were granted without the written consent of the bank”.
As if further clear from a passage at pp. 21 and 22 of the judgment, Laffoy J. went on to consider whether the bank might have given retrospective consent. Laffoy J. reached the conclusion that the bank had indicated that it would give such consent on condition which condition was not fulfilled. On that basis the court concluded that there was no retrospective consent.
Laffoy J., for reasons set out in the following paragraphs of her judgment, further concluded that the lessee had failed to establish that it did not have actual notice of the existence of clause 6.
On that basis, insofar as material to the issue which I have to decide, Laffoy J. concluded that the leases contravened clause 6.
2.5 As noted above, the judgment of the Supreme Court was delivered by McCracken J.. In dealing with the question of the appropriateness of the procedure adopted, McCracken J. stated the following, at p. 6:-
“I am quite satisfied that the directions sought by the receiver in this case clearly come within the provision of s. 316. The primary issue is the priority of charges on the assets of the company. If a receiver is to perform his functions properly, and in particular if he were to wish to sell the relevant assets, it is, of course, essential for him to know and identify such priorities. Furthermore the section specifically empowers the court to make orders declaring the rights of the persons before the court, in this case the rights of Porterridge as a lessee.”
On that basis McCracken J. (speaking for the court) was satisfied that the procedure was appropriate.
The balance of the judgment was concerned with the appeal brought in respect of the decision of Laffoy J. concerning actual notice. For the reasons set out the decision of Laffoy J. was upheld.
2.6 Porterridge was, of course, a party to the directions application. It is, therefore, bound by the determination in those proceedings. It is not, therefore, of course, open to Porterridge to seek to go behind any of the determinations of the courts in the directions application for the purposes of establishing its case in these proceedings.
2.7 The net question which therefore arises on this application is as to whether there is any basis upon which Porterridge could succeed in these proceedings having regard to the findings in the directions application. If there is not, then these proceedings are bound to fail and should be stayed under the court’s inherent jurisdiction as identified by Costello J. in Barry v. Buckley [1981] I.R. 306.
2.8 In that context it is necessary to refer to the extent to which the issues in these proceedings are determined by the findings in the directions application.
3. The Issues (directions application)
3.1 As was pointed out by McCracken J., in the passage from his judgment which I have quoted above, the primary issue in the directions application was the priority of charges on the assets of the company. The reason why those priorities were, as was noted, important, was that it was essential for the receiver to know and identify such priorities if he was to perform his functions properly and required, in so doing, to sell the relevant assets.
3.2 It is clear, therefore, that the overall issue between the receiver and Porterridge was the priority between the debenture (through which the receiver had his entitlements) and the leases (through which Porterridge had its entitlements).
It is also clear that the specific issues of detail which the court had to consider in reaching conclusions as to those priorities were, in the main, issues raised on behalf of Porterridge. Thus, for example, Laffoy J. determined against Porterridge a contention made on its behalf that there had been a retrospective consent. Furthermore it was determined that Porterridge had, contrary to its argument, actual notice of the existence of the relevant clause in the debenture.
3.3 It is, therefore, clear that it was open to Porterridge to raise any additional questions which could have had an effect on the issue as to the priorities as and between Porterridge and the receiver and that such issues would have been determined by the court on the s. 316 application if the court felt that it was appropriate so to do. As is clear from the judgment of McCracken J., this could have been so even if it was necessary to direct a plenary hearing in respect of any issues of fact which could only be determined by the resolution of contradictory evidence.
3.4 It is in that context that First Active places reliance on the jurisprudence which has been referred to as the principle in Henderson v. Henderson (1843) 3 Hare 100.
This principle was most recently applied by the Supreme Court in A.A. v. The Medical Council [2003] 4 IR 302 where Hardiman J. (speaking for the court) quoted the famous passage from Henderson delivered by Wigram V.C. at p. 115 to the following effect:-
“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 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 matters 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.”
3.5 Having reviewed further authority Hardiman J. noted. at p. 317 that:-
“Rules or principles so described cannot, in their nature, be applied in an automatic or unconsidered fashion. Indeed, it appears to me that sympathetic consideration must be given to the position of a plaintiff or applicant who on the face of it is exercising his right of access to the courts for the determination of his civil rights or liabilities. This point has a particular resonance in terms of article 6 of the European Convention on Human Rights and Fundamental Freedoms 1950. In Ashingdane v. United Kingdom (1985) 7 EHRR 528 at p. 546, the European Court of Human Rights said:-
“the right of access to the courts is not absolute but may be subject to limitations; these are permitted by implication since the right of access, by its very nature calls for regulation by the State, regulation which may vary in time and place according to the ends and resources of the community and of individuals.”
Considering the nature of permitted limitations, the same court in Tinneally & Sons Ltd. v. United Kingdom (1999) 27 EHRR 249 at p. 271 quoting from Ashingdane v. United Kingdom (1985) 7 EHRR 528:-
“a limitation will not be compatible with Article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aims sought to be achieved.”
3.6 It is, therefore, clear that a party will not, ordinarily, be permitted to raise an issue which could have been raised in previous proceedings, but which was not. The court does, however, retain a discretion to permit such a matter to be raised where so to do would not, in all the circumstances of the case, amount to an abuse of process.
3.7 In the light of that jurisprudence it is necessary to consider the matters that might be said to arise in these proceedings but which were not determined by the judgments in the directions application. Obviously matters expressly determined against Porterridge cannot be raised again. Equally matters caught by the principle in Henderson v. Henderson cannot now be litigated.
3.8 In general terms two matters are put forward on behalf of Porterridge which, it is said, are not excluded by either of the above principles and which, it is also said, are capable of establishing Porterridge’s claim in the proceedings. They are:-
1. The estoppel issues raised on the pleadings (and in particular paragraph 7 and 8 of the reply to which I have referred in detail earlier); and
2. Issues concerning the possession of First Active which derive from contentions that First Active did not enter into possession of the property in accordance with the provisions of the relevant debenture.
I propose dealing with each in turn.
4. The Estoppel Issues
4.1 Under these issues it is contended that First Active is estopped from relying on clause 6 by virtue of the fact that it was aware of the execution and/or existence of the leases or, alternatively, as a result of an acceptance by the receiver as to the validity of the leases.
4.2 While it is clear that a specific issue of estoppel was not raised in the directions application it seems to me that it would have been open for Porterridge to have raised such an issue. As was pointed out by McCracken J. the overall issue was as to the priorities between the position of Porterridge as lessee and the receiver who derived his entitlements from the debenture. If First Active were estopped from relying on the debenture, then the receiver, who was appointed by First Active on foot of that debenture, would equally have been estopped. The legal entitlement of First Active (through the receiver) to priority over the interests of Porterridge as a lessee would have been displaced by any estoppel which could have been established. It seems to me, therefore, that any issue of estoppel which would have precluded the receiver and First Active from asserting the priority of entitlements deriving from the debenture over the interest of the lessee ought to have been raised in the directions application and, not having been raised, is now caught by the principle in Henderson v. Henderson. I can see no basis for exercising the discretion spoken of by Hardiman J. in A.A. to permit the issue to be raised in these proceedings when it was not raised in the directions application.
4.3 Indeed, before leaving this issue, it is worthy of note that Porterridge raised (and had determined against it) a not dissimilar issue which amounted to a contention that a retrospective consent had being given by First Active. The factual basis for the contention that there was a retrospective consent would, at least in significant part, have overlapped with the factual basis for the estoppel case now sought to be made.
4.4 I am therefore satisfied that it is not open to Porterridge to seek to rely on the estoppel issues identified in paragraphs 7 and 8 of its reply by virtue of the fact that those issues must be taken to have been determined against its interests in the direction application under the principle in Henderson v. Henderson.
5. The Possession Issue
5.1 Under this heading it is contended, on behalf of Porterridge, that there is what is described as a “striking incongruity” between Mr. Jackson continuing to have possession of the units as receiver and agent of Salthill (i.e. in his capacity as receiver appointed to Salthill by First Active) and at the same time purportedly being agent for First Active as mortgagee seeking to sell as a mortgagee in possession. On that basis the legality of the possession of First Active is challenged.
5.2 Having considered this aspect of the case I am not satisfied that this is an issue which was either expressly dealt with by this court or the Supreme Court in the course of the directions application or must necessarily be taken to be excluded under the principle in Henderson v. Henderson. In coming to that conclusion I express no view as to the merits of the argument put forward on behalf of Porterridge under this heading. Indeed given that it is an issue which I may have to decide, it would be most inappropriate for me to express any view until after the matter has been argued. However it seems to me that it is at least possible that Porterridge may be able to formulate an argument in favour of the relief claimed in these proceedings based upon its contentions relating to the manner in which possession was obtained, which would, in theory, allow it to succeed on a basis that was not inconsistent with the determination of the courts in the directions application. In those circumstances it would not, it seems to me, be appropriate for the court to exercise its inherent jurisdiction to stay the claim in its entirety. It is well settled that the court should be slow to exercise that jurisdiction. Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425; LAC Minerals v. Chevron Corporation [1995] ILRM 161. However it seems to me that each of the other matters contended for on behalf of Porterridge as providing a basis for its claim (with the exception of the possession issues) are either inconsistent with the findings of the court in the directions applications or seek to raise issues which should have been raised on the directions application.
6. Conclusions
6.1 For the reasons which I have set out above I have, therefore, come to the conclusion that the only basis upon which it is open to Porterridge to now argue that it can succeed in these proceedings on a basis which would not amount to an abuse of the process of the court as being an attempt to re-litigate issues which either were or should have been determined in the directions application, is the contention that, irrespective of the priorities as and between the debenture and interest derived from it (such as the receiver’s entitlements) on the one hand, and the interest of the lessee on the other hand, the nature of the possession exercised by First Active is wrongful.
6.2 I will therefore direct that Porterridge file an amended statement of claim which confines itself to that issue and will give such further consequentional directions as appear appropriate when counsel have had an opportunity to consider the matter in the light of this judgment.
Arklow Holidays Ltd v An Bord Pleanála [2007] I.E.H.C. 327; High Court, Clarke J., October 5, 2007
JUDGMENT of Mr. Justice Clarke delivered the 5th October, 2007
1. Introduction
1.1 These proceedings form part of a very long running dispute concerning a proposal on the part of Arklow Urban District Council (“Arklow”) to build a waste water management treatment plant for the purposes of servicing increasing needs of the Arklow area. These, and other connected, proceedings have a long history. The applicant (“Arklow Holidays”) challenged, in this Court, an initial planning permission granted by the first named notice party (“Wicklow Council”). That challenge failed. Thereafter an appeal as to the merits of the planning permission was pursued to the first named respondent (“the Board”) which upheld the grant of permission subject to conditions. These proceedings were commenced with a view to challenging that decision of the Board on appeal. I will set out the relevant procedural history of the respective proceedings in due course.
1.2 In accordance with the requirements of s. 50 of the Planning and Development Act, 2000 (“the 2000 Act”), leave to seek judicial review was sought on notice to the respondents and the various notice parties. Some, but not all, of the notice parties participated. For the reasons which I set out in an earlier judgment in these proceedings on the 18th January, 2006 [2006 (IEHC) 15], I was persuaded to give leave to apply for judicial review pursuant to s. 50 of the 2000 Act relating to some but not all of the grounds advanced.
1.3 At para. 4.1 of that judgment, I identified six groups of grounds in respect of which leave had been sought. As set out later in that judgment, I was persuaded that leave should be granted only in respect of the groups of grounds identified at 2, 3 and 5 in that paragraph, which were in the following terms:-
“2. That the Waste Management Act 1996 applies to the plant and that, therefore, it was wrong of the Board to have regard, as it is said it did, to environmental questions, those matters being properly ones for the Environmental Protection Agency (“EPA”).
3. That the Board failed to carry out a proper environmental impact assessment (“EIA”) in relation to the whole of the project.
…
5. That the Urban District Council did not have a sufficient interest in the property which was the subject of the planning application to entitle them to make the application.”
1.4 The matter then proceeded to a full hearing at which those grounds were argued in detail.
2. Issues
2.1 The issues which I have to decide include, therefore, questions as to whether any of the grounds which I have identified are made out. At the substantive hearing only the Board and Arklow Council, of those opposing the application, were represented notwithstanding the fact that both Wicklow County Council and the State respondents had been represented at the leave hearing. Wicklow County Council indicated that it did not feel that it had anything to add to the proceedings and was prepared to abide by the result. By reason of the refusal of leave in relation to some of the grounds which had been advanced at the leave application, the State respondents were no longer necessary or proper parties to the full hearing.
2.2 The hearing, therefore, proceeded on the basis of the application for judicial review being opposed by the Board and Arklow Council. In addition to the three groups of grounds in relation to which leave had been granted, a further issue or point of defence was argued at the hearing before me as a preliminary objection. It should be noted that this issue had been raised by those opposing the judicial review at the leave stage, but I was not, at that time, and for the reasons which I set out in my judgment, satisfied that it could be determined that the resolution of the issue concerned was sufficiently clear so as to necessarily provide an answer to these proceedings, at that leave stage. In other words while considering the point to be of substance, it did not, it seemed to me, prevent Arklow Holidays from having established substantial grounds. The issue concerns a contention, on the part of those opposing the judicial review, that Arklow Holidays are now estopped from raising any of the points which are now asserted, on the basis that those points would have been equally applicable, if they be good points, to the original grant of planning permission. It is said that none of those points were raised in the challenge to the planning permission. It is, therefore, argued that having regard to the so called rule in Henderson v. Henderson (to which I will return), Arklow Holidays are now precluded from raising those issues at this stage.
2.3 There are, therefore, four matters which arise in this substantive application.
The first is as to whether those opposing the application are correct in their contention that Arklow Holidays are now precluded from raising any of the issues concerned.
2.4 If, and to the extent that, Arklow Holidays are not so precluded in relation to any or all of the grounds in respect of which leave was given, then such of the three matters in respect of which leave has been granted as are not thus excluded, also fall for determination.
2.3 In the circumstances, it seems to me to be appropriate to turn, firstly, to the question of whether Arklow Holidays are, in fact, precluded from raising any of the issues.
3. The preliminary objection- the facts
3.1 The original judicial review proceedings in respect of the grant of planning permission in this case were commenced on the 10th September, 1999 by Arklow Holidays naming Arklow and Wicklow County Council as respondents. Those proceedings bore Record No. 1999 No. 358 J.R. It is fair to say that in those proceedings Arklow Holidays raised a significant number of legal issues which, it was alleged, rendered the grant of the planning permission concerned invalid. As part of the process Arklow Holidays were given leave to amend their grounding statement to enable the relief claimed to be more fully set out. This was done on the 13th November, 2000.
3.2 On the 15th October, 2003 Murphy J. refused Arklow Holidays all of the relief sought. Further on the 3rd February, 2004 Murphy J. refused an application for the necessary certificate to enable an appeal to be brought to the Supreme Court.
3.3 It would seem that none of the grounds which are now before this court were, in fact, raised by Arklow Holidays in the challenge to the original planning permission which was ultimately dismissed by Murphy J. In that context it is necessary to examine the grounds now raised for the purposes of determining whether they could (or indeed should) have been raised at that time. It is appropriate to address each of the groups of grounds in turn.
3.4 As noted at par. 1.3 above the first group of grounds concern the question of the applicably of the Waste Management Act, 1996 (“the 1996 Act”) to the plant. The issues concerned raise mixed question of law and fact but centre on the question of whether the proposal which was under consideration by the Board for the waste management treatment plant concerned was one which required a licence under the 1996 Act. If it does, then, it is argued that it was wrong of the Board to consider environmental pollution questions in determining whether or not to grant a planning permission or the conditions to be imposed on such a grant, for those matters, it is in turn argued, are properly within the jurisdiction of the EPA.
3.5 If there is any merit to that point it is manifestly clear that it applied with equal strength to the considerations of Wicklow County Council in granting the original planning permission. Wicklow County Council engaged in a similar exercise to that conducted by the Board and included in its consideration an assessment of environmental pollution issues. The planning permission with which both Wicklow County Council and the Board were concerned was, of course, the same planning permission. If, as is now argued, it was impermissible for the Board to have regard to the relevant environmental pollution issues, then it follows that it was equally impermissible for Wicklow County Council to have similar regard. Both the Board and Wicklow County Council imposed conditions which appear to be designed to meeting such environmental concerns. If the Board was wrong in so doing then it equally follows that Wicklow County Council was wrong.
3.6 It, therefore, seems to me to follow that, if there is any legitimate case to be made to the effect that the Board was wrong, on the facts of this case, in considering environmental pollution factors, then Wicklow County Council was equally wrong. It, it turn, follows that if there is any validity to the argument that the planning permission granted by the Board is invalid on these grounds, then the original decision of Wicklow County Council to grant planning permission (or more accurately to give notice of intention to grant planning permission) was also invalid on virtually identical grounds.
3.7 It, therefore, follows that the grounds now relied on under this heading are grounds which could have been agitated, if they have any merit, in the original application which sought to challenge the planning decision of Wicklow County Council.
3.8 Similar considerations appear to me to apply to the second set of grounds raised. Under this heading it is suggested that the Board failed to carry out a proper environmental impact assessment (“EIA”) in relation to the whole of the project. The underlying argument under this heading stems from the fact that the environmental impact statement (“EIS”) submitted on behalf of Arklow, as part of the planning process, addressed itself only to the waste water treatment plant itself and some, but not all, of the ancillary works that would be necessary to bring the plant into operation. The EIA carried out by the Board does not, it is argued, go, to any significant or adequate extent, so far as its scope is concerned, beyond the EIS. It is, therefore, argued that the Board failed to carry out an appropriate EIA in relation to some of the project and that the permission granted is, therefore, flawed.
3.9 However, an identical process was engaged in by Wicklow County Council at the stage of the original planning application. The EIS submitted by Arklow is the same EIS which was before both Wicklow County Council and the Board. There is no suggestion that Wicklow County Council carried out a wider assessment than that carried out by the Board. In those circumstances it also follows that, if there is any validity to the point raised, so as to render invalid the planning permission granted by the Board, it follows that the same argument could have led to the original decision by Wicklow County Council being quashed on an identical ground.
3.10. The third group of issues concerns the interest of Arklow in some of the property which was the subject of the planning application. The underlying point in respect of this aspect of the case concerns the fact that Arklow required to connect the waste water treatment plant to the town. While it had exercised compulsory purchase powers in respect of the lands on which the plant itself was to be constructed, no such exercise had been conducted in relation to obtaining the necessary interests in the land between the town and the plant to enable that aspect of the project to be completed. It should be noted in passing that even the compulsory purchase powers in respect of the land for the plant itself had been exercised only to the point of obtaining a confirmation of the entitlement to compulsorily acquire which had not, at any material time, been formally exercised by the service of a notice to treat. On the other hand it has to be said that Arklow had within its complete discretion the acquisition of at least those latter lands by the simple expedient of the service of such a notice to treat.
3.11 Whatever may be the merits or otherwise of any such argument it is clear that exactly the same situation pertained at the time when the original notice of intention to grant planning permission was given by Wicklow County Council as pertained at the time when the Board gave its decision. It again follows that if any of the points under this heading be good points, they were equally available to challenge the grant of the original planning permission.
3.12 That review of the factual basis for the challenges which are now before the court leads only to one conclusion. Each of the grounds now pursued raises issues which were equally capable of having been raised in respect of the original planning permission process conducted by Wicklow County Council. If any or all of the points have any merit sufficient to justify the quashing of the grant of permission by the Board then it equally follows that the same ground would have, had it been raised and properly argued, led to the quashing of the original decision by Wicklow County Council to notify an intention to grant permission.
3.13 Before going on to deal with the legal issues which flow from that factual situation, it is of some importance to point out that the factual situation which I have identified as arising in this case will by no means necessarily arise in every case. There is, of course, an established jurisprudence which is concerned with questions as to whether, in any individual case, an appeal to the Board is a more appropriate remedy in respect of a complaint relating to the planning process and planning decisions of a local authority, rather than a judicial review of the decision of the planning authority concerned. There are certainly cases where this Court has held that an appeal is a more appropriate remedy and that, therefore, judicial review in relation to the original planning decision of the local authority is not appropriate. However, it is equally clear that there will be some cases where judicial review will be considered to be a more appropriate means of challenging that original decision.
3.14 Obviously some cases where judicial review might, in principle, be the more appropriate remedy will, nonetheless, fail on the merits. In some such circumstances there may, in any event, be an appeal to the Board so that the possibility of a second challenge (being one to the decision of the Board) arises. In such an eventuality it will by no means always be the case that the sort of grounds that might be advanced as a basis for a challenge to the decision of the Board would have been available to the party concerned in an earlier challenge to the original decision of the relevant local authority. The matters complained of may relate to actions taken by the Board which had no equivalent in either the process conducted by, or decision of, the local authority. The Board may impose terms or conditions in respect of the grant of the planning permission which are different from those which the local authority considered appropriate. The challenge may relate to the appropriateness of such matters. In addition, the challenge might concern the process before the Board itself which would, of course, have no application to the original planning decision. Many other examples could be given. It does not, it therefore needs to be noted, follow that, just because there was a challenge to an original planning decision, all of the grounds which might be raised in a challenge to a subsequent decision by the Board could have been raised at the earlier stage of a challenge to that original permission.
3.15 It just happens that on the facts of this case all of the grounds which Arklow Holidays are now permitted to rely on (after the leave application) are grounds which could have been raised as a challenge to the original planning decision. Against that factual background it is necessary to turn to the legal principles applicable.
4. The Rule in Henderson v. Henderson
4.1 The jurisprudence in this area stems from Henderson v. Henderson (1843) 3 Hare 100. The so-called rule in that case was considered by the Supreme Court in A.A. v. The Medical Council [2003] 4 IR 302 where Hardiman J. (speaking for the Supreme Court) noted the principle to the effect that a party to previous litigation is bound not only by matters actually raised but by matters which ought properly have been raised but were not. It is clear, however, that Hardiman J. also determined that a rule or principle so described could not, in its nature, be applied in an automatic or unconsidered fashion and that the public interest in the efficient conduct of litigation did not render the raising of an issue in later proceedings necessarily abusive where, in all the circumstances, the party concerned was not misusing or abusing the process of the court.
4.2 It is clear, therefore, that a plaintiff or applicant is at risk of being prohibited from raising, in a second set of proceedings, an issue which, it can properly be said, could and should have been raised in an earlier set of proceedings relating generally to the same subject matter.
4.3 There is, however, an overriding discretion in the court to consider whether the raising of the issue in the second set of proceedings truly amounts to an abuse of process and, if it does not, then the party may be permitted to proceed.
4.4 As I noted earlier, this issue was raised by those opposing the leave in this case. In that regard I noted in my judgment at the leave stage that:
“The precise application of such principles in the field of public law challenges to the validity of decisions (and in particular decisions made in what is often a two-part process) remains, in my view, open to argument …
In those circumstances it seems to me that it would be necessary for Arklow to establish that a distinction can and should be made between the types of cases in which the principles to which I have referred were established and public law challenges of the type which the court is concerned with in this case.”
The reference to Arklow is a reference to Arklow Holidays.
4.5 It is clear, therefore, that the rule in Henderson v. Henderson has potential application to the facts of this case. There is no doubt but that each of the issues which Arklow Holidays is now entitled to pursue, is an issue which could have been raised in the original challenge to the grant of planning permission. The question which I must address is as to whether there are any reasons why the rule in Henderson v. Henderson should not apply in a case such as this. Two possible bases for the non-application of the rule need to be considered.
4.6 The first concerns the extent of the applicability of the rule to a process such as that with which I am concerned, that is to say a two-stage statutory process which has been described in a number of decisions of both this Court and the Supreme Court as forming part of a single process.
4.7 Secondly, it is necessary to consider whether there are any factors present which would make it appropriate for the court to exercise the discretion identified by Hardiman J. in A.A. against imposing the full rigours of the rule.
4.8 I propose to consider both of these matters in turn.
5. Does the rule apply
5.1 There seems to me to be both a domestic and a European aspect to this question. It is clear that the rule applies, in principle, to public law challenges. A.A. itself involved a challenge to a process before the Medical Council. The fact that the same point could have been raised in an earlier challenge to the same process debarred the applicant from being entitled to raise it at a second challenge.
5.2 Indeed Hardiman J., at p. 318, noted the following:
“The respondent is discharging a public function in the hearing and determination of allegations of professional misconduct as well as observing the profession’s interest in promoting high professional standards and public confidence.
The allegations in question here relate to a time some six and a half years ago and it is manifestly in the interest of the applicant, the respondent, the profession, the complainants and the public generally that these be resolved as soon as possible and without unnecessary or unreasonable delay.”
At p. 320 Hardiman J. went on to state that:
“The applicant has numerous legal and constitutional rights in relation to the Inquiry into the allegations against him which he has quite properly and exhaustively been at pains to assert. But so also have the other participants in the procedures envisaged by Part V of the Medical Practitioners Act, 1978 and the public in whose interest that measure was enacted. If these rights, as well as those of the applicant, are to be respected, the Court cannot tolerate a further challenge to the Inquiry and its proceedings made, without explanation, two years after the first, and which could and should have been incorporated with it.”
5.3 Similar principles were applied by Hanna J. in Mitchell v. Ireland [2005] IEHC 102 and by Kearns J. in Akram v. Minister for Justice [2004] 1 IR 452. Both of those proceedings involved public law considerations in a judicial review process.
5.4 As a matter of domestic law there does not, therefore, it seems to me, appear to be any reason why the rule in Henderson v. Henderson should not apply with at least equal force in relation to judicial review proceedings. Such proceedings involve the exercise by public or quasi-public bodies of a public law role. There will almost invariably be similar considerations to those identified by Hardiman J., in respect of the Medical Council, which mandate that that public role be carried out in an expeditious way in the interests of the public generally and those persons whose rights and obligations may fall to be governed by the public body concerned. It seems to me that the principles apply with equal force, if not greater, in relation to the planning process. It has been commented on in numerous recent decisions of the superior courts that much of the recent legislative adjustments to the provisions governing challenge to planning decisions are designed to ensure that finality will be brought to such matters, one way or the other, at the earliest possible time. Those who seek planning permissions and in respect of whose application objections are made, are entitled to have those objections determined, one way or the other, in a timely fashion. The 2000 Act imposes significant time limits on the conduct by local authorities and the Board of the planning process. The legislation also imposes significant time limits and other measures in relation to the bringing of challenges to such decisions before the courts. It is clear that there is a significant public interest involved in the bringing of early finality to any challenge to a planning decision.
5.5 If it were to be ordinarily permissible for a party to raise some points at the stage of a challenge to an original favourable planning decision by a local authority and then raise other points (which could have been raised on the original occasion) at a subsequent challenge to a decision on appeal to grant permission by the Board, then the very mischief identified by Hardiman J. in the passages from A.A. which I have cited would occur. The rights of all concerned, including the applicant for planning permission, the planning authorities and the Board, and the public generally, in the timely determination of planning applications, would not be respected.
5.6 I am satisfied, therefore, that the logic identified in A.A. applies with at least equal force in respect of planning challenges. I can see no reason, therefore, deriving from domestic law, to suggest that either principle or authority should lead to any different view being taken of the application of the rule in planning cases to other cases.
5.7 Counsel for Arklow Holidays did touch upon a European Union dimension to the matter. It is correct, as he argued, that all organs of a Member State are required to seek to endeavour to ensure compliance with the obligations of the Member State concerned under applicable measures of the competent authorities of the EU. In appropriate circumstances that obligation applies equally to the courts. In those circumstances it was argued that this court should lean against excluding, on procedural grounds, a challenge based on EU legal entitlements and obligations, on the basis that in so doing the court might, in substance, be countenancing a departure from EU mandated requirements.
5.8 I am not satisfied that there is any substance to that argument. It is manifestly clear that the obligations of the courts in reviewing, on the basis of compliance with EU law, the validity of development permissions or the like (or indeed the status of many other types of decisions whose validity may be challenged on EU grounds) is, prima facie, to be determined in a manner designated by the procedural law of the Member State concerned.
5.9 That position should only be departed from where it can be established that the relevant procedural law of the Member State concerned breaches the principles of effectiveness or equivalence. Under those principles it is necessary that the procedural law of the Member State concerned should provide an effective remedy and that any limitations contained in that law, in respect of the enforcement of entitlements which may derive from EU law, should be equivalent to any similar limitations as might be applied in the domestic context.
5.10 There seems to me to be no basis for suggesting that the application of the rule in Henderson v. Henderson to a case such as this would breach either of those requirements. Such an application is manifestly equivalent. It is a rule which applies, for the reasons which I have set out, in any public law challenge and there is no basis for any suggestion that its application applies differently, and less favourably to a challenger, where EU environmental measures are being relied upon.
5.11 Equally there is no basis for the suggestion that its application renders any remedy ineffective. There is no practical reason why the points raised in these proceedings could not have been raised at the time of the original challenge to the decision of Wicklow County Council. If they be good points then Arklow Holidays had an effective remedy in relation to them. The way in which that remedy was to be exercised, in accordance with Irish procedural law, was to raise the points at the time of the challenge to the original Wicklow County Council decision. It does not diminish the effectiveness of the remedy to rule that, having omitted to include those points in the original challenge, they can not now be raised in this challenge to the decision of the Board.
5.12 In those circumstances I can see no basis in EU law for determining that the rule in Henderson v. Henderson should not apply to challenges in the environmental field which are based on an assertion of lack of compliance with EU law. Persons raising such challenges have an effective remedy which is equivalent to the remedy available in relation to similar domestic legal issues, and is only restricted to the same extent that an equivalent purely domestic challenge would be restricted.
5.13 For all those reasons I am satisfied that the rule in Henderson v. Henderson applies equally to successive challenges in the same planning or environmental context. The fact that the second challenge is, technically, different from the first challenge in that it amounts to a challenge to the decision of the Board rather than the decision of a local authority does not, it seems to me, affect the matter.
5.14 I would leave for consideration to a case where the point directly arises the question as to the extent to which the rule or, perhaps more accurately similar considerations, may have any application in a case where no challenge is, in fact, brought to the original planning decision by the local authority but where the grounds sought to be relied on to challenge a decision of the Board could have been raised had such a challenge been brought. It is possible that different considerations might apply in such a case. For the purposes of these proceedings I confine myself to determining that where an applicant chooses to challenge by judicial review a local authority decision in the planning process and subsequently brings a second challenge in relation to a decision by the Board in the same process, the applicant will, ordinarily, be precluded by the rule in Henderson v. Henderson, from raising, in any such second challenge, any points which could and should have been raised in the original challenge. I should emphasise that I say “ordinarily” because it is clear from the decision of Hardiman J. in A.A. that the court retains a discretion to consider whether, on the facts of the case under consideration, the full rigours of the rule should be applied.
5.15 It follows, therefore, that subject to the exercise of any such discretion as has been identified by Hardiman J. in A.A. in favour of Arklow Holidays, all of the points now raised are caught by the rule in Henderson v. Henderson and cannot be litigated in these proceedings. I now turn to the question of discretion.
6. Discretion
6.1 I can see no basis for the exercise of the court’s discretion in favour of Arklow Holidays in this case. No real explanation has been given as to why the points now raised were not litigated in the first judicial review proceedings. If they had been, then this entire matter would now, almost certainly, be at an end. Either the points would have been successful, in which case the original planning permission decision by Wicklow County Council would long since have been quashed and whatever fresh planning applications followed on would, doubtless, by now, have been determined. If the points had been litigated and found to be unmeritorious then it would not, of course, have been open to Arklow Holidays, in any event, to raise them again in these proceedings. At best, from Arklow Holidays’ point of view, these proceedings would, then, have ended at the leave stage. I can see no basis upon which it could be considered just and equitable to permit Arklow Holidays to now rely on points which should and could have been raised eight years ago in the proceedings before Murphy J. To echo, with appropriate adaption, the words of Hardiman J. in A.A., if all the rights concerned (including the rights of the public, the local authority as developer, and the planning authorities), are to be respected, this Court cannot now tolerate a further challenge to the underlying basis of the planning process which is made, without explanation, six years after the first and which could and should have been incorporated with it.
6.2 I am mindful of the fact that the six-year period, to which I have referred, should not be blamed upon Arklow Holidays. After the failure of its original challenge, Arklow Holidays was required to deal with the appeal before the Board and thereafter brought its challenge to the decision of the Board in a timely fashion. However, that does not get away from the fact that the points now sought to be relied upon could and should have been incorporated in the original challenge and, had they been, the overall process of seeking planning permission in respect of the waste water treatment plant for Arklow would, almost certainly, have now come to a definitive conclusion or, at a minimum, be very much more advanced that it, in fact, is.
6.3 In the circumstances I can see no basis for exercising any discretion which might arise in favour of Arklow Holidays. It follows that I have concluded that Arklow Holidays are now estopped from raising all of the issues in respect of which leave has been granted. It, therefore, follows that the application for judicial review must be refused.
7. Some additional matters
7.1 There are two further matters upon which it seems appropriate to comment. Firstly, this is yet another case where the issue upon which the final determination of this Court has turned, could (and in my view should) have been capable of being determined at one substantive hearing. Unfortunately, under the statutory regime which the court is obliged to apply, leave must be granted unless it can be said that no substantial grounds have been established. A similar principle applies to any point of defence raised by respondents or notice parties. Unless the point raised, at the leave stage, is so strong that it deprives the applicant of having substantial grounds for its challenge (unless, that is, it delivers a knock out blow), then leave must be granted with the issue having to go to a second substantive hearing before final determination. That is what happened here. There is not, however, any real reason why it would not have been more beneficial to have this issue fully and finally determined at an initial single hearing.
7.2 In view of the conclusions which I have reached it is clear that had the statutory regime permitted me to do just that and had I had the benefit of full argument on both sides leading to a final decision, these proceedings would have been over after that initial hearing however it might have been characterised. It is unfortunate that these proceedings have been prolonged because of the cumbersome procedure imposed on the court by statute.
7.3 Secondly, I gave careful consideration as to whether it would be appropriate to express views and reach conclusions on the substantive issues raised, notwithstanding my determinations that Arklow Holidays were estopped from raising them. On balance, I have come to the view that it would not be appropriate so to do in this case. The issues raised are, in many cases, of considerable importance and of potentially wide-ranging application. For example, the question of the entitlement of a party which has the benefit of compulsory purchase powers, which have not yet been exercised, to make a planning application in respect of lands to which the compulsory purchase powers might be applied, is one of considerable importance. It does not seem to me to be appropriate that obiter views be expressed on such an issue in circumstances where I have determined that the applicant seeking to raise the issue is estopped from making the point in this case. Similar considerations apply to the arguments under the Waste Management Act and those relating to the question of whether a proper assessment was made of the entire project.
7.4 I have come to that view with some little regret having regard to the very great assistance which I received from counsel on all sides in exploring what are, undoubtedly, important if extremely complex issues. However, it is their very importance and complexity which lead me to the view that those issues should be decided, authoritatively, in proceedings where they are potentially determinative of the result rather than be left as obiter comments in proceedings where their resolution has no capability of effecting the final decision of the court.
8. Conclusion
8.1 For the reasons which I have set out, it, therefore, seems to me that I should confine my self to determining that Arklow Holidays are precluded, by virtue of the rule in Henderson v. Henderson, from arguing any of the issues in respect of which leave was granted. It follows that Arklow Holidays are not entitled to any of the reliefs in respect of which leave was given and that its application must, therefore, be dismissed.
Kenny v Trinity College Dublin [2008] I.E.S.C. 18
Judgment delivered the 10th day of April 2008 by Fennelly J.
1. This is an appeal by the above named defendants and appellants against the order of the High Court (Finnegan P) dated 2nd April 2003, refusing an application to dismiss the plaintiff’s proceedings for failure to disclose a reasonable cause of action or, alternatively, under the inherent jurisdiction of the court. For ease of reference, I will refer to defendants and appellants as “Trinity” and the plaintiff and respondent as Mr Kenny.
2. The appeal forms part, though a central one, in a saga of litigation in which Mr Kenny, through a multiplicity of proceedings, contests the validity of a planning permission granted to Trinity in 1999 to redevelop Trinity Hall, the University’s hall of residence in Dartry.
3. In the present action Mr Kenny seeks to overturn a High Court order (McKechnie J) refusing him leave to apply for judicial review of the principal planning decision. He pleads that McKechnie J was misled by fraud on the part of Trinity. It is necessary to trace the planning history and the earlier litigation insofar as it bears on this contention.
Planning history
4. In April 1999, Trinity applied for planning permission for a development consisting of the construction of new student halls of residence at Trinity Hall. The project comprised approximately 25,000 square meters including three new student residences and ancillary facilities.
5. Mr Kenny and others, including the Dartry and District Preservation Association, opposed the development.
6. On 11th November 1999, Dublin Corporation (now Dublin City Council) made a decision to grant planning permission subject to 14 conditions.
Mr Kenny and the Association appealed the decision to An Bórd Pleanála (“the Board”). The Board held an oral hearing between 24th and 26th May 2000 at which Mr Kenny was represented. On 4th August 2000 the Board made a decision to grant permission subject to 19 conditions.
7. On 3rd October 2000, Mr Kenny and the Association commenced an application for leave to apply for judicial review by way of certiorari of the Board’s decision dated 4th August 2000 (High Court reference number 2000 No. 532JR.) I will refer to those proceedings as the “first judicial review.”
8. Following a four-day hearing, and consideration of seven affidavits and many exhibits, McKechnie J, gave judgment on 15th December 2000, reported at [2001] 1 IR 565, refusing leave to apply for judicial review. In the present proceedings, Mr Kenny seeks to have that decision set aside. He asks that the first judicial review be reheard. I will need to refer to the reasons of McKechnie J later.
9. On 2nd March 2001, McKechnie J made an order refusing the application of Mr Kenny for a certificate, pursuant to s. 82(3B)(b) of the Local Government (Planning and Development) Act, 1963 as amended by insertion by s. 19(3) of the Local Government (Planning and Development) Act, 1992, granting leave to appeal his decision to this Court. McKechnie J also awarded costs against Mr Kenny.
10. I mention one only of the other proceedings instituted by Mr Kenny, as it has an indirect relevance to the present proceedings. On 4th January 2002, Dublin City Council issued a Compliance Order to the Appellants bearing the reference P.0022 confirming satisfactory compliance by Trinity with certain conditions of the planning permission granted by the Board. Mr Kenny on 3rd July, 2002 was granted leave to apply for judicial review to quash that Compliance Order. Mr Kenny, in those proceedings, claims, inter alia, a declaration that the installation of the boilers and boiler rooms in the roof spaces and the omission of the plant rooms from the buildings as indicated on revised plans submitted to the planning authority on 7th October 1999 is an unlawful material alteration to the development permitted by the planning permission. By order of the High Court of 19th October 2004 (Murphy J) that application for judicial review was dismissed. Mr Kenny has appealed the decision of the High Court to this Court. The appeal is pending.
The first judicial review
11. In order to understand the issues in the present proceedings, it is necessary to identify a core area of dispute concerning the planning application. It concerns the location of boilers throughout the development. The importance which Mr Kenny attaches to this issue was disclosed by a letter written, after the decision of McKechnie J, by his then solicitor on 1st March 2002:
“It is clear from my client’s instructions that your client misled the court with regard to its true intentions and plans for the location of boilers as of the dates on which the affidavits were filed and the case heard.”
12. The essential facts are not in dispute.
13. Neither the original application nor any revision of drawings or plans during the planning process identified the location of boilers. A number of drawings, however, indicated the location of “plant rooms.” In addition, the original Environment Impact Statement provided by Trinity and a revised version indicated that the development would be serviced by a centralised boiler plant.
14. The adequacy of the treatment of this issue by Trinity and by the Board in its decision was at the heart of the first judicial review. Mr Kenny complained that, although Trinity had indicated during the planning process that it sought to develop boiler house facilities, it had provided no plans or drawings to the Board. In his Statement to Ground the application for judicial review, Mr Kenny mentioned that Trinity had said that it might place the boiler house facility in basements under the buildings of the proposed development and that it might construct a central boiler house facility on the site of the proposed development. The Board, he claimed, should have required Trinity to supply sufficient information. Thus, it was claimed, the Board had insufficient information and could not lawfully exercise its jurisdiction to determine the planning application resulting in the Board’s decision being invalid.
15. There were other grounds for the first judicial review, not now relevant. It is the boiler issue which connects the present proceedings with the first judicial review and it is only that issue, as addressed by McKechnie J, which now needs to be considered.
16. Mr Kenny’s key complaint, as described by McKechnie J in his judgment was that there was insufficient information before the Board to enable it to exercise its jurisdiction. Mr Kenny quibbles with that statement only to the extent that he says that there was no information at all on the issue.
17. That was the basic submission relating to the boiler-house issue, made by Mr Kenny to McKechnie J in the first judicial review. He also pointed out that a centralised boiler system had been mentioned in the Environmental Impact Statement, whereas, at the oral hearing, a decentralised system had been mentioned as the preferred option. (see page 570 of the judgment). Furthermore, he pointed out that:
“…during the oral hearing, an attempt was made by the applicant for planning permission, [Trinity], to have the boiler house facilities sited in the basement, which suggestion had not previously made or considered, much less evaluated or analysed.”
18. McKechnie J acknowledged that “some confusion ha[d] arisen with regard to the boiler house facilities.” (page 577). He then observed:
At the oral hearing two suggested modifications to this were advanced. Firstly, it was urged upon the Inspector that these facilities could properly be placed in the basement, this being the first time that such a location was mentioned with no real consideration having been given to the quantity of excavation involved or the effect on the tree roots or on the water table. Rightly so in my view,…… the Inspector emphatically ruled out any further debate on this possibility. ……
The learned judge explained the second modification as follows:
“In the Service Engineers Reports, originally given and as revised, plant rooms are listed for all three buildings. In the revised plans and in particular Drgs. 213A, 214 and 215, all dated September 1999, plant rooms are again shown, though it should be said that one could not readily identify all such rooms, without an explanation that the floor plan was but a typical or representative one.”
19. He noted:
“At the oral hearing there was very considerable debate on this question. Every interested person made a contribution. Some such persons were for and some against the development including those witnesses specifically called on behalf of the Applicant.”
20. McKechnie J expressed his own concluded view on this issue in the following terms:
“Notwithstanding this confusion and despite the entry in the EIS and the floating of the basement solution, what is abundantly clear however, is that at the Oral Hearing, as per the Design Architect ……a decentralised system was in fact being sought on behalf of the developer.”
21. The learned judge analysed the nature of the dispute. He found, (see page 578) that, at the oral hearing, everyone present knew of this proposal and indeed made comment on it. His final conclusion was that:
“Examples of matters in dispute were, – the precise location of the plant rooms – (this being essential it was claimed to determine the emanating noise); the fact that one such room was shown next to a living area, whether the dimensions of such areas were sufficient, what should be the height of the flue, its location etc. Whilst I am satisfied that all of these matters were adequately dealt with at the oral hearing and that many are also suitable to be dealt with by agreement with the local authority, in addition could I say that I would set my face totally against such a microscopic examination by this Court of such matters of details.”
22. Mr Kenny is unhappy with the approach of the learned judge. He insists that there was no or insufficient detail of the boiler positions; he says that the matter could not simply be dealt with by agreement. At the hearing of the appeal, he argued that no planning permission had been granted for the installation of boilers and, at one point, that the effect of the judgment of McKechnie J was to grant such a permission. However, he did not dispute that, in the absence of a certificate giving him leave to appeal the decision of the High Court, he could not contest the correctness of the judgment of McKechnie J.
23. I should observe, at this point, that McKechnie J was expressly aware that Trinity had proposed the location of boilers in basements. The point was made in Mr Kenny’s Statement to Ground Judicial Review. The learned judge noted the criticism of that proposal made at the oral hearing. He was not aware that, prior to the oral planning hearing, Trinity had applied for a fire safety certificate based on plans and drawings showing boiler houses in the basement of one building. The latter fact is the nub of Mr Kenny’s fraud allegation.
The present proceedings
24. Mr Kenny says that, following the decision of McKechnie J, and as a result of persistent research and use of the Freedom of Information Acts, he discovered that Trinity had applied on 19th May 2000 (i.e. prior to the oral planning hearing) to the Building Control Authority (in fact, Dublin County Council) for a fire safety certificate in relation to one of the three buildings. The application included a proposal to place boilers in a basement of that building. Mr Kenny thus issued the present proceedings in which he claims that the decision of McKechnie J was procured by fraud.
25. Mr Kenny issued a Plenary Summons on 7th November 2002 claiming the following:
“1. An injunction restraining the Developer from completing the Development and in particular locating the boilers in the roof spaces of the development buildings.
2. An Order directing the rehearing of the Plaintiff’s judicial review application and in particular the evidence in relating to the location of the said boilerhouses.
3. An Order setting aside the award of costs to the Developers in respect of the original application for judicial review.
4. Costs.”
26. A statement of claim was delivered on 20th January 2003. In the events that have happened, it has now, if belatedly been amended and its original contents can be ignored. On any view, however, it was clear that the essential relief sought was that the judgment and order of McKechnie J be set aside that that the first judicial review be reheard.
27. On 7th March 2003, Trinity issued a notice of motion seeking:
1. An Order pursuant to Order 19 rule 28 of the Rules of the Superior Courts striking out the above entitled proceedings as being frivolous, vexatious and as disclosing no reasonable cause of action.
2. Further or in the alternative and without prejudice to the foregoing, an Order pursuant to the inherent jurisdiction of the Court striking out the within proceedings as an abuse of process and/or in excess of jurisdiction.
28. That motion was heard by Finnegan P. By his order dated 2nd April 2003, he refused the relief sought. He held that, if he were to take the Statement of Claim on its own, he would have struck it out. He thought that the statement of claim (in its then unamended form) failed to disclose a cause of action. He had regard, however, to matter contained on affidavit, which “manage[d] to scramble across the threshold” and to the fact that Mr Kenny was not represented. The learned President did not specify the material which enabled Mr Kenny to cross “the threshold.” He fixed times for the delivery of pleadings. The order gave Mr Kenny leave to amend his statement of claim. Mr Kenny did not avail of that opportunity, though he has now belatedly applied for such leave.
29. Trinity appealed against the order of the learned President. This Court, by its order of 20th June 2003, allowed the appeal and ordered that Mr Kenny’s claim be struck out as disclosing no reasonable cause of action. By an order of 15th October 2007, this Court set aside its order of 20th June 2003, for reasons irrelevant to the present hearing, with the effect that the appeal of Trinity against the order of the learned President dated 2nd April 2003 was reinstated. This judgment follows upon the rehearing of this appeal.
30. By an order dated 1st February 2008, Clarke J granted liberty to Mr Kenny to amend his statement of claim in the terms of a draft he provided to the court. Trinity has agreed that, for the purposes of this appeal, its motion is based on the statement of claim as thus amended. It places no reliance on the terms of the original statement of claim or the delay of Mr Kenny in seeking its amendment.
31. Paragraph 3 of the amended statement of claim reads as follows:
The Plaintiff claims that the Defendant through its servants and agents knowingly and for the purpose of inducing a judge of the High Court so to act, misled the Court during the hearing of a judicial review application entitled In the Matter of James Kenny Applicant, An Bord Pleanála (”the Board”)Respondent, Dartry and District Preservation Association and others, Notice Parties, said hearing being before Mr. Justice McKechnie in November 2000, in manner(s) following, all of which were capable of causing and/or caused Judge McKechnie to refuse the Applicant (the Plaintiff herein) leave, which he would not otherwise have refused;
(i) submitting to the Honourable Court certain architectural plans and drawings relating to a development proposed by Defendant at Trinity Hall, Dartry Road, Dublin 6 and purporting to show therein that boilers would be installed in certain rooms of buildings identified on the plans and drawings as “plant rooms” which submission was made to the Planning Section of the then Dublin Corporation and was false and not in compliance with the requirements of the directly effective EU Directive 97/11, or of EU Directive 85/337 (as amended by 97/11) which governed part of the planning process and under which the Defendant had a statutory duty to disclose detailed information and data on the environmental effects of the proposed development to the Board, also to interested members of the public, and to the Honourable Court, which information and data it failed to disclose.
(ii) Concealing from the Honourable Court the material facts of an application whichDefendant had previously made and was then pursuing for the location of some of the aforesaid boilers in the basement of one of the aforesaid buildings to another section of Dublin Corporation namely the Fire Prevention Section, while at the same time it was preparing a further application to locate additional boilers in another of the aforesaid buildings, which applications should have been disclosed to Judge McKechnie.
(iii) Intentionally inducing a judge of the High Court
(a) to accept that on the basis of evidence which the Defendant knew to be untrue, the boilerhouses in question would be installed in what it described as randomly located plant rooms in two of the three buildings in the proposed development, the type and relevant locations of which were of central relevance to the body of information and detailed particulars which the Defendant was required to, but failed to, furnish to the planning authority with its revised planning application, which information should also have, but did not, correspond to the locations proposed in each of its fire safety certificate applications, and
(b) in so failing to comply with the statutory duty imposed on it, the Defendant also did not inform the Honourable Court, as it should have done, that it had omitted to identify any locations for boilerhouses in the Environmental Impact Statement which accompanied its revised planning application, other than by stating thereon that the development would be serviced by a centralised boiler which did not appear on any of its plans or drawings.
(iv) Inducing a judge of the High Court……to believe incorrectly that in the case of the third building in the development, a boilerhouse would be located in a small plant room on the ground floor of that building, which location was challenged in the affidavit evidence from Anthony Gallagher, architect, who averred that such location was much too small for its claimed purpose, which evidence the Defendant, contrary to the intention which it had stated to Judge McKechnie, did not place the boilerhouses in the location it had shown, but did so without seeking or obtaining the planning permission which it knew was required.
Submissions on appeal
32. The essence of Mr Kenny’s case is that the judgment and order of McKechnie J should be set aside and that the first judicial review should be reheard.
33. Trinity, in its appeal, relies, firstly, on the jurisdiction conferred on the Court by Order 19 rule 28 of the Rules of the Superior Courts, which provides:
“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 the 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.”
34. Secondly, Trinity invokes the inherent jurisdiction of the court.
35. In the exercise of the first jurisdiction, the Court is restricted to considering the pleadings: it asks whether a cause of action is disclosed. On the other hand, when exercising its inherent jurisdiction to dismiss a claim alleged to be frivolous or vexatious, the Court may consider affidavit evidence. This latter jurisdiction is to be used sparingly and with great caution. However, where the Court is satisfied that the Plaintiff’s case must fail, the Court should exercise its power to strike out the Plaintiff’s claim to avoid injustice to a Defendant. (see Barry .v. Buckley, [1981] IR 306.)
36. In the absence of fraud, 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 Court1. Fraud is the only basis on which such an Order could be set aside. Counsel cited Tassan Din .v. Banco Ambrosiano S.P.A., [1991] 1 IR 569.
37. Trinity, in its written submissions, drew particular attention to the dictum of McCracken J in Fay v Tegral Pipes Ltd, [2005] 2 IR 261, 266:
“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 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.”
38. Trinity maintains that a final judgment may be set aside on the ground of fraud only where: a) the judgment was obtained by fraud; b) the fraud alleged amounts to “conscious and deliberate dishonesty” (reference was made to The Ampthill Peerage Case, [1977] AC 547); c) as was stated by Barrington J in Waite .v. House of Spring Gardens Limited (High Court unreported 26th June 1985), “the proper method of impeaching a concluded Judgment on the ground of fraud was by action in which the particulars of the alleged fraud are exactly set out.” Reliance was also placed on the judgment of Murphy J in Tassan Din .v. Banco Ambrosiano S.P.A., cited above, and on that of Denham J in Superwood Holdings Plc. v Sun Alliance and London Insurance Plc. [1995] 3 IR 303 with particular regard to the need to plead fraud with the necessary particularity.
39. Mr Kenny does not contest these propositions of law. He submitted, however, that the judgment of McKechnie J was not, for the purpose of those principles, a final judgment. Nothing was determined by McKechnie J except that Mr Kenny was refused leave to apply for judicial review. Mr Eamonn Galligan, Senior Counsel for Trinity responded by referring to s. 82(3B)(b) of the Local Government (Planning and Development) Act, 1963 as amended by insertion by s. 19(3) of the Local Government (Planning and Development) Act, 1992. That provision, which was in force at the time of the decision of McKechnie J, is that:
“The determination of the High Court of an application for leave to apply for judicial review as aforesaid or of an application for such judicial review shall be final and no appeal shall lie from the decision of the High Court to the Supreme Court in either case save with the leave of the High Court which leave shall only be granted where the High Court certifies that its decision involves a point of law of exceptional public importance and that it is desirable in the public interest that an appeal should be taken to the Supreme Court.”
40. Mr Kenny also submitted that natural justice required that he be allowed to have a hearing of his complaint and that the judgment of McKechnie J had the effect of depriving him of that right.
41. Mr Galligan analysed the amended statement of claim by reference to the judgment of McKechnie J. He submitted that the learned judge had been concerned with the adequacy of the documentation which had been before the Board for the purposes of its decision, not with the intentions of Trinity. The fire safety certificate sought by Trinity from the Building Control Authority (in fact, the same body as the planning authority) cannot concern the Board at all. When one reads the judgment of McKechnie J, one sees that the fact that Trinity had applied for a fire safety certificate involving the placing of boilers in a basement, if he had been aware of it, could not have affected his judgment. The planning permission did not permit the construction of basements. Thus, Trinity could not, in any event, have proceeded with any such proposal without a further planning permission. The application for a fire safety certificate was immaterial to the matter before McKechnie J and would not have influenced his judgment.
42. Mr Kenny, in reply, examined the history of Trinity’s proposals in relation to the placement of boilers in detail. He recalled that, at the oral hearing, there was conflict on this issue which was never resolved. He argued that the planning permission gave no permission for boilers at all, but acknowledged that McKechnie J had decided otherwise. He described an intense debate before McKechnie J, in which large and detailed plans and drawings were presented to the judge. The Trinity proposal could not have been brought about. The engineer for the applicants generally had disputed the view of Trinity’s experts, maintaining that no flues or other technical details of boilers had been shown. According to Mr Kenny, the essential element of the fraud was to persuade McKechnie J that it was feasible to place boilers at “random locations” in plant rooms throughout the development, whereas Trinity had never had any intention of doing so. Their concealment of the application for a fire safety certificate was, in these circumstances, fraudulent.
43. Mr Kenny acknowledged that the boilers had not, in fact, been placed in any basements, that no planning permission had been obtained for the excavation of basements and that, at the time of the hearing before McKechnie J, the proposal for the insertion of boilers in roof-spaces (which is what has, in fact, happened) had not been formulated. Nonetheless, he maintains that the proposal for which Trinity argued before McKechnie J was never a genuine one and had come into existence only for that hearing and was never heard of again.
The law
44. I am satisfied that the decision of McKechnie J was a final one for the purposes of the principles relating to the setting aside judgment. s. 82(3B)(b) of the Local Government (Planning and Development) Act, 1963, as inserted in 1992, expressly so provides. Such a decision is made after a hearing inter partes. The Oireachtas has designated the decision as final.
45. What then is the law regarding the setting aside of a final judgment? Mr Galligan cites three Irish cases, all High Court decisions: Kelly v Ireland [1986] I.L.R.M. 318, (O’Hanlon J); Waite .v. House of Spring Gardens Limited, cited above (Barrington J); Tassan Din .v. Banco Ambrosiano S.P.A. (Murphy J). In truth, only the last of these is directly in point. Murphy J there cited extensively from speeches of the House of Lords in the Ampthill Peerage Case, also cited above.
46. It is necessary to draw a clear distinction between the power of an appeal court, such as this Court, to set aside a judgment of a court of first instance on the ground of discovery of new evidence and the jurisdiction to set aside on the ground of fraud. Murphy J examined this matter in Tassan Din. The plaintiff, in that case, argued “that the availability of new evidence which was not and could not have been available to one party at the hearing of the case was a ground for setting aside or rescinding a judgment otherwise than in pursuance of an appellate jurisdiction.” See page 578 of the report). It had been thought in former times in England that there could be a jurisdiction to set aside a judgment of a court of concurrent jurisdiction, based on the discovery of new material evidence. Such a possibility was contemplated in a decision in the House of Lords in 1894: Boswell v Coaks (1894) 6 R. 167. However, in more modern times, it was considered that the earlier decisions were explicable by the absence of a Court of Appeal: see In re Barrells Enterprises and Others [1973] 1 WLR 19. Murphy J concluded, at page 580, with a statement which undoubtedly correctly states the law:
“It seems to me, therefore, that all that can be said is that at one time a court might have set aside a judgment of a court of co-ordinate jurisdiction not merely for the grounds of fraud but also on the basis of the discovery of new evidence. The law, as I understand it, in this country is that (in the absence of fraud) “new evidence” can be availed of as part of the appeal process or not at all. No authority has been opened to show that the decision of a final court of appeal can be challenged in subsequent proceedings on the basis of new evidence. In the very nature of a court of final appeal such an action would involve a contradiction in terms.”
47. This passage would dispose of any argument of Mr Kenny in reliance on the principles of natural justice that he should be entitled to have the judgment set aside on the ground of the discovery of new evidence. It is true that Mr Kenny did not enjoy an unfettered right of appeal. He required a certificate from the High Court, but that does not change the principle.
48. There is, however, a right to maintain an action to set aside a judgment, which has been obtained by fraud. Barrington J stated in Waite .v. House of Spring Gardens Limited, cited above, that: “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 the proceedings.” He cited the decision of the House of Lords in Jonesco v Beard [1930] 1 AC 298 for the proposition, pronounced by Lord Buckmaster, at page 300 of the report, that:
“It has long been the settled practice of the Court that the proper method of impeaching a completed judgment on the ground of fraud is by action in which, as in any other action based on fraud, the particulars of the fraud must be exactly given and the allegation established by the strict proof such a charge requires.”
49. The jurisdiction to set aside judgments on the ground of fraud must be seen against the background of the important principle of res judicata and of the public policy which discourages endless litigation expressed in the maxim: interest rei publicae ut sit finis litum. Keane J, as he then was, commented thus in Dublin Corporation v Building & Allied Trade Union and others [1996] 2 I.L.R.M. 547, at 556:
“…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.”
50. From a reading of the authorities it appears necessary to consider three aspects of this important, though exceptional power: firstly, the quality or degree of fraud or dishonesty that must be alleged; secondly, the extent to which it must be shown that the alleged fraud affected the impugned judgment; thirdly, the particularity with which the fraud must be pleaded.
51. What degree of fraud or dishonesty must be alleged? Murphy J, in Tassan Din, cited two passages from the Ampthill Peerage Case. That celebrated and unique case was concerned with an attempt to impugn a declaration of legitimacy affecting inheritance of a peerage. The law lords applied the principles relevant to all cases of attempts to set aside judgments. Lord Simon was of opinion that:
“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 of 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.”
52. To similar effect, Lord Wilberforce, at page 571:
“What is fraud for this purpose? Learned counsel for John Russell without venturing upon 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 analogous, 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 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.”
53. It is worth also quoting the words of Lord Russell of Killowen, at page 598, if only for the purpose of eliminating any suspicion that the learned law lords were influenced by the very extraordinary nature of the proceeding, to set aside a declaration of legitimacy made many years before and to affect the status of a peer of the realm:
“I consider that fraud in this context is the same as that which is required to be established in an action to set aside an ordinary judgment inter partes on the ground that it has been obtained by fraud: less than that will not suffice. In such an action particulars of that which is alleged to have been the fraudulent conduct must be given, and strong proof of the fraudulent conduct is required. This is not a mere matter of court practice: it is something which justice requires, having regard to the gravity of an accusation of dishonest dealing designed to pervert the course of justice and achieving that aim.”
54. I am satisfied that, in order to ground an action to set aside a judgment, the plaintiff must allege fraud in the true sense, that is deliberate and purposeful dishonesty, knowing and intentional deceit of the court. That approach is consistent with the statement of principle made by Keane J, in Dublin Corporation v Building & Allied Trade Union and others, with the interests of parties to litigation who have secured a final decision of a court and with the overriding public interest in finality of litigation.
55. In addition, the fraud alleged must be such as to affect the impugned decision in a fundamental way. It will not suffice to allege that the new situation revealed by the uncovering of the fraud might have affected the judgment. It will not be enough to show, for example, that a witness lied unless it is shown that the true version of his evidence would probably have affected the outcome. Mr Galligan, on behalf of Trinity, submitted that the court should adopt the test adopted by O’Hanlon J in Kelly v Ireland, cited above. The test would be whether new evidence “changes the whole aspect of the case.” That was, of course, a very different type of case. The plaintiff claimed damages for alleged assault by gardaí. He had been convicted in a criminal trial, where the court had rejected as untrue the allegations now made in a civil action. Thus, there was a question of issue estoppel. However, in the course of the proceedings, the plaintiff claimed in addition to have found new evidence which had not been before the criminal court. O’Hanlon J adopted the test I have mentioned, following a dictum of Goff LJ in McIlkenny v Chief Constable of the West Midlands [1980] QB 283. Would the alleged new evidence “change the whole aspect of the case? I believe that, in an action to set aside a judgment based on an allegation that the court was deliberately deceived into making the impugned decision no less stringent test should be required. There must be something fundamental, something that goes to the root of the case.
56. An additional point arises. In general, a court approaches an application to dismiss pursuant to Order 19, rule 28 on the basis of the pleadings. Do the pleadings, as they are read by the court, disclose a cause of action? Would the alleged facts, if true, confer a cause of action? That test clearly applies in a modified form to such an application when made in a case such as the present. Where the substance of the claim is the validity of a final decision of a court of competent jurisdiction, the court hearing an application to dismiss must be permitted to examine the impugned decision, including the reasoning of the judgment. It cannot be constrained by the version of that decision disclosed in the pleadings seeking to set it aside.
57. The third matter is the necessity for particularity in pleading. It is the unanimous view of the various judges cited in argument that the allegation of fraud said to have deceived the former court must be pleaded with particularity and exactness. I have cited the statement of Barrington J in Waite. Lord Buckmaster in Jonesco v Beard, Cited above, insisted that “the particulars of the fraud must be exactly given…” Similarly, according to Lord Wilberforce, “anyone wishing to attack a judgment on grounds of fraud must make his allegation with full particularity……” In essence, the nature of the fraud, deceit or dishonesty must be clearly and unambiguously alleged. It is not enough to allege mere non-disclosure, unless the plaintiff can identify an obligation to disclose arising either under law or from the circumstances.
Examination of the pleadings
58. The amended statement of claim undoubtedly alleges fraud consisting of intentional deceit of McKechnie J. The original version expressly ascribed this fraudulent behaviour to counsel. The amended version omits this and attributes it generally to Trinity without designating any alleged fraudulent actor. For present purposes, nonetheless, I consider that it contains allegations to a sufficient degree of fraud or dishonesty to satisfy the standard required by the cases cited.
59. I ask next whether the alleged fraud has been pleaded with sufficient particularity. The amended statement of claim specifies that Trinity persuaded McKechnie J that it intended to place boiler houses at various or “random” locations at various locations throughout the development and that it dishonestly persuaded the learned judge to that effect, having no genuine intention so to place the boilers. This amounts to saying that Trinity made statements to the learned judge which they knew to be false. On the other hand, several averments in the amended ststement of claim relate to matters which were clearly before McKechnie J, for example the architectural plans and drawings mentioned in paragraph (i) and the Environmental Impact Statement mentioned at paragraph (iii)(b). In addition, Mr Kenny accepted at the hearing that the proposal to place boilerhouses in the roof space did not exist at the date of the hearing before McKechnie J and thus, could not have been fraudulently concealed from him. The key allegation is that, at the time of that hearing, Trinity had “previously made and was then pursuing” an application “for the location of some of the aforesaid boilers in the basement of one of the …buildings…”
60. Thus, Mr Kenny has satisfied two of the three requirements which I have identified as essential components of an action to set aside a final judgment on the ground of fraud. It does not follow, of course, that the allegations are plausible or credible, merely that the allegations have been clearly made.
61. I must, in these circumstances, consider the remaining essential requirement, namely the degree to which the fraud affected the impugned judgment. For this purpose, as I have explained, the court should look at that judgment.
62. For the purpose of the present proceedings, the subject-matter is strictly limited to the issue of boiler houses. So far as that issue was concerned in the first judicial review, Mr Kenny alleged that no plans or drawings relative to a boiler house facility were submitted to the [Board] for its consideration. He variously described the information provided as “inadequate” and “insufficient” with the consequence that he claimed the deficiency “thereby vitiate[d] the decision…”
63. McKechnie J, therefore, accurately summarised Mr Kenny’s argument as being that there was “insufficient information before [the Board] which would have enabled it to exercise its jurisdiction…” Mr Kenny says there was no information, but that would also be insufficient.
64. Insofar as Mr Kenny had relied on the insufficiency of information as constituting a breach of the applicable regulations, McKechnie J (at page 577) said that Mr Kenny’s counsel had been unable to specify any breach. In fact, Mr Kenny’s point, as explained to this Court, is the more general one that the boiler houses being part of the development specific planning permission had to be obtained for them. I do not regard this point as significant.
65. McKechnie J took into account, in the course of his judgment, that two suggested modifications to the treatment of the boiler houses had been advanced at the oral hearing. In particular, he noted that the inspector, at the oral hearing, had emphatically ruled out the possibility of locating boilers in the basement. The crucial and decisive conclusion of McKechnie J was expressed in the following terms:
“Examples of matters in dispute were, – the precise location of the plant rooms – (this being essential it was claimed to determine the emanating noise); the fact that one such room was shown next to a living area, whether the dimensions of such areas were sufficient, what should be the height of the flue, its location etc. Whilst I am satisfied that all of these matters were adequately dealt with at the oral hearing and that many are also suitable to be dealt with by agreement with the local authority, in addition could I say that I would set my face totally against such a microscopic examination by this Court of such matters of details.”
66. McKechnie J thus showed that he was fully conscious of the disputes regarding the location of boiler houses both at the oral hearing and at the hearing which took place before him in the High Court. Of particular relevance is the fact that he was fully aware that Trinity had proposed their placement in basements and that this had been ruled out. It is absolutely clear that McKechnie J did not consider this to be a matter which he had to resolve. Mr Kenny lays great emphasis on the dispute at the High Court hearing between the experts for Trinity, on the one hand, and the applicants for judicial review, on the other. His fraud allegation relates centrally to this issue: that Trinity deceived the learned judge into believing that the boilers could be placed in the various “plant rooms.” But, significantly, the judge firmly ruled that he did not have to resolve this issue. He thought that it was a matter to be resolved within the planning process. Mr Kenny strongly disagrees with this view. But that is a disagreement which this Court cannot resolve on this appeal.
67. I am satisfied that it was completely irrelevant to the decision of McKechnie J that Trinity had applied, as they had, to the Building Control Authority for a fire safety certificate based on plans which showed, inter alia, boilerhouses being placed in a basement. The issue before McKechnie J was the validity of the decision of the Board to grant planning permission, which could not be affected to any degree by an application by Trinity, pursuant to another statutory scheme. Even if it must be accepted, for the purposes of the present application that the application for a fire safety certificate evinced an intention to place boilerhouses in basements, any such intention patently could not have been carried into effect without a further grant of planning permission. Crucially, its existence could not have affected the validity of the planning permission granted by the Board, which was the only matter before McKechnie J.
68. Accordingly, I have reached the conclusion that the amended statement of claim in the present action discloses no reasonable cause of action and that the action is frivolous and vexatious. Therefore, I would allow the appeal and make an order dismissing the action.
69. In the alternative to all of the foregoing, I reach the same conclusion, based on an appraisal of the facts and circumstances surrounding the grant of planning permission by An Bórd Pleanála, the hearing before McKechnie J and the judgment of the learned judge. That is that, under the inherent jurisdiction of the Court, this Court should dismiss the proceedings because they are certain to fail. The modern line of authority relating to the exercise of this jurisdiction commences with the judgment of Costello J in Barry v Buckley, cited above, and approved in later cases, where, at page 308, the learned judge explained it as follows:
“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 L.J. in Goodson v. Grierson 5 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, particularly in cases whose outcome depends on the interpretation of a contract or agreed correspondence. If, having considered the documents, 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.”
70. It is undoubtedly the case, as has been repeated in several of the cases, that the jurisdiction must be exercised sparingly. Courts must exercise the drastic power to exclude a litigant from pursuing a claim only in very clear cases. It should be assumed that disputed issues of fact will be resolved in favour of the plaintiff. I have made the required assumptions in dealing with the matter under the rules of court.
71. However, as I have also pointed out, the essential facts and circumstances concerning the planning application and procedures leading to the decision of An Bórd Pleanála, are not in dispute. It is of particular importance to keep in mind the nature of the claim: Mr Kenny seeks, on the ground of fraud, to set aside a final judgment of the High Court (McKechnie J). He has had the opportunity of placing his challenge to the validity of the planning permission before the High Court. As already explained, I am quite satisfied that the facts allegedly concealed from the learned judge with fraudulent intent, would, if he had been aware of them, not have materially affected the decision. On that ground, the action is doomed to failure. On this ground also, I would allow the appeal and dismiss Mr Kenny’s action
Behan v McGinley [2008] I.E.H.C. 18
_____________________Judgment of Ms. Justice Irvine delivered the 24th day of January, 2008
The plaintiff in this action at the time of the events which give rise to these proceedings, had been a customer of the Bank of Ireland for many years at its Carlow branch where he dealt regularly with Mr. Vincent Power, the branch Manager. The plaintiff owned a valuable farm of approximately 240 acres at Athy, Co. Kildare and found himself, like many other farmers in 1980 in significant difficulties, principally due to rising interest rates and falling land values.
The business dealings between the plaintiff and his bank have resulted in the institution by the plaintiff of a number of sets of legal proceedings to which I will refer later in this judgment.
The first action in the title hereto was commenced by plenary summons dated 19th July, 2002 (“the 2002 proceedings”). The defendant to the action is the party nominated to defend the interests of the late Noel Clancy, S.C. who represented the plaintiff in the course of his first action against the Bank of Ireland, which was heard in the High Court in the summer of 1997 and dealt with an appeal on the Supreme Court the following year.
There are a number of motions which are the subject matter of this judgment the first of which is dated the 27th April, 2006. In that motion the defendant asks the court to strike out the plaintiff’s pleadings pursuant to O. 19, r. 28 of the Rules of the Superior Courts on the basis that the same that the same are vexatious, frivolous and/or disclose no reasonable cause of action as against the defendant.
The plaintiff has instituted further proceedings in the High Court under Record No. 2005/2424P (“the 2005 Proceedings”) being the second action in the title hereto. The defendants in that action are the Governor and Company of the Bank of Ireland, Edward McGinley of Royal and Sun Alliance, Michael O’Kennedy and Charles Corcoran.
In the 2005 proceedings there are two motions before the Court. The first motion is that of the first named defendant, the Governor and Company of the Bank of Ireland, dated the 15th of January 2007 wherein the Court is asked to strike out the plaintiff’s pleadings pursuant to O. 19, r. 28 of the Rules of the Superior Courts on the basis that the pleadings disclose no reasonable cause of action. Alternatively, the Court is asked to direct that the proceedings be stayed or dismissed pursuant to O. 19, r. 28 on the grounds that the action is frivolous or vexatious. The court is further asked to exercise its inherent jurisdiction to stay or dismiss the action on the basis that the proceedings amount to an abuse of process. Finally, the court is requested to make an order prohibiting the plaintiff from issuing any further proceedings against the first named defendant without leave of the court.
The second notice of motion in the 2002 proceedings is one dated the 26th of January, 2007 and is brought on behalf of the second, third and fourth named defendants. In that notice of motion the court is asked to invoke its inherent jurisdiction and/or the provisions of O. 19, r. 28 of the Rules of the Superior Courts to strike out the plaintiff’s proceedings as being an abuse of process and/or on the basis that the proceedings are frivolous or vexatious. Alternatively, the court is asked to strike out the proceedings on the grounds that the allegations of fraud and/or collusion and/or conspiracy and/or deception are made without any or any sufficient evidence. Finally, the court is asked to dismiss the plaintiff’s claim for negligence on the basis that such a claim is statute barred.
The facts which underlie the within application, are set out in the pleadings and affidavits delivered in the actions to which the three motions relate. In essence, both actions relate to the dealings between the plaintiff and his bank over the period 1981 to 1985 and also his dealings with the lawyers who represented him in his litigation against his bank in the proceedings which are referred to below.
Background to earlier litigation
In proceedings bearing Record No. 1990/9665P (“The 1990 Proceedings”) the plaintiff sued the Governor and Company of the Bank of Ireland with a view to establishing a breach by his bank of a concluded enforceable agreement allegedly made at a meeting with his bank Manager, Mr. Vincent Power on the 18th May, 1981. The plaintiff contended that, notwithstanding his increasingly substantial liabilities, his bank agreed that it would continue to fund his farming activities so as to permit him to trade out of his financial indebtedness.
In the 1990 proceedings the plaintiff further asserted that he was given negligent advice by Mr. Power. He alleged that Mr. Power convinced him not to sell certain lands which he wished to sell to reduce his indebtness. The plaintiff claimed that but for the bank’s negligence in this respect he would have sold such lands, reduced his indebtness and ultimately avoided the losses occasioned to him when the bank called in all his outstanding liabilities in 1984. The plaintiff alleged that this negligence in addition to causing him financial loss caused him to sustain serious ill health. This claim for negligence and consequential personal injuries was held to be statute barred at a preliminary hearing in June 1997 at which time the court concluded that the plaintiff’s claim for breach of contract was not statute barred.
Finally, incorporated within the 1990 proceedings was a claim which was made by the plaintiff late in the day as a result of the emergence of evidence in the course of the trial before Morris J. The court permitted the plaintiff to amend his pleadings to maintain a claim against his bank arising from the manner in which he was treated in relation to a scheme introduced by the Government in 1982 to assist farmers who were in difficulties having regard to increased interest rates at that time. For the purposes of this judgment it is sufficient to state that the “Reduced Interest Scheme for farmers in severe financial distress” (“the Scheme”) was introduced by the Minister for Agriculture on the 1st April, 1982. The objective of the scheme was to provide relief from high interest rates for certain classes of farmers. The Scheme operated for three years from the 1st April, 1982 and provided for substantially reduced interest rates to those who qualified for admission into the Scheme. In turn the bank who provided the reduced interest rates received a corporation tax credit in respect of the reduced interest received by them from the farmers whom they admitted to the Scheme.
In the course of the evidence in the 1990 proceedings the court became appraised of the fact that after the bank had called in payment from the plaintiff of all sums outstanding and had reached a compromise with him regarding his indebtness, in the sum of £165,000 that it had thereafter credited his account with three sums totalling £18,455.18 so that it could offset such sums against its own corporation tax liabilities, something it was only entitled to do, if it had admitted the plaintiff to the Scheme. In this respect the judgment of Morris J. in the 1990 proceedings sets out all of the material facts referable to the banks management of the plaintiff’s application for entry into the scheme.
To qualify for entry into the Scheme the farmer was required to produce a report on the viability of their farm. In the instant case, the plaintiff produced a supportive report from ACOT on 28th July, 1983. On 17th January, 1984 the plaintiff’s bank in Carlow was given authority to admit the plaintiff to the Scheme, he having completed the necessary forms for admission thereto on the 28th May, 1982. Notwithstanding the authorisation to admit the plaintiff to the Scheme, the benefit of the Scheme had not been passed on to him at the time the Scheme was being wound up by the Government. Further, the reduced interest rates had not been passed on to the plaintiff at the time when the bank ultimately called in all sums due by the plaintiff, which then amounted to £213,891.43.
The judgment of Morris J. dated 15th August, 1997 in the 1990 proceedings recites that he determined the plaintiff’s claim, including his claim arising from any wrongdoing on the part of the bank in relation to the Scheme in the course of the hearing of the proceedings in July and August 1997. The plaintiff made the case at the trial that he had suffered consequential loss arising from the unreasonable and improper delay on the part of the bank in permitting him to benefit from the scheme.
The trial judge in his judgment expressed himself satisfied that the bank, whilst attempting to achieve benefits for itself deriving from the Scheme, had deprived the plaintiff of the benefit of the Scheme from January 1984 until the winding up of the Scheme and that the plaintiff had to be recompensed for such failure by reimbursement of the monies which would have been credited to his account had he been admitted to the Scheme.
In relation to the main issue in the proceedings, i.e. the breach of contract claim, Morris J. in his judgment dated the 19th of August 1997 held that:-
“Even accepting Mr. Behan’s evidence in its entirety I do not believe that anything that was said by Mr. Power on that occasion could constitute an enforceable contract by reason of the imprecise nature of the arrangement alleged. It is not suggested for how long the commitment was to have lasted, the rate of interest payable on any monies advanced on foot of the contract nor is it suggested that Mr. Behan ever indicated an acceptance of the alleged contract.”
I do not believe it is necessary to set out all of the findings of the trial judge in relation to the 1990 proceedings. For the purposes of this judgment it is sufficient to state that the learned trial judge held that there was no enforceable contract to extend borrowings to Mr. Behan on an indefinite basis and that all claims arising from this alleged contract had to fail. Consequentially, Morris J. held that the bank was entitled to call in Mr. Behan’s indebtness and dishonour cheques drawn by him on his account. In the course of his judgment, Morris J. noted that the plaintiff’s liabilities to the bank as of 22nd July, 1985 were £213,891.43 and that the bank had agreed to accept in lieu thereof a sum of £165,000 in staged payments. The bank had thus agreed to write off a sum of £48,891.43.
Morris J. rejected assertions made in the course of those 1990 proceedings that the bank had deliberately dishonoured cheques to ruin the plaintiff’s reputation and further concluded that the bank was entitled, in the absence of any concluded contract between the plaintiff and his bank, to refuse to honour cheques as there were simply no funds to meet them.
What is of significance to the present proceedings is the finding of the trial judge that no other losses accrued to the plaintiff by reason of the banks dealings with him referable to the Scheme, he having heard evidence regarding the extent of the plaintiff’s liabilities at the relevant period and considered the benefits which he would have received in terms of a reduction of interest had he been admitted to the Scheme.
The judgment of Morris J. in the 1990 proceedings makes it clear that it was his intention to ensure, at the conclusion of the proceedings, that the plaintiff would be reinstated financially into the position which he would have been in had he been admitted to the Scheme at the relevant time. Hence, the plaintiff was compensated by the court to the extent of the amount of interest levied on his account at a time when he should have been admitted to the scheme and this the trial judge held compensated him in respect of all financial loss arising to him deriving him from the failure of the bank to formally admit him to the Scheme. At p. 13 of his judgment the trial judge stated that he was satisfied that the failure on the part of the bank to admit the plaintiff to the Scheme had no overall effect on his ultimate financial outcome having regard to the extent of his liabilities at the time.
Because of the nature of the motions presently before the court it is relevant to set out the conclusions of the trial judge in the 1990 proceedings and also briefly refer to the evidence which was available to him in relation to each conclusion. Hence, form the documentation submitted on these motions, which documentation includes the pleadings, various transcripts, orders of the court, written submissions and the judgment of the trial judge it appears that the court in the 1990 proceedings concluded that:-
1. The claim by the plaintiff contending for a breach by his bank of a binding contract of indefinite duration entitling him to continued funding was not sustained. For the purposes of determining this issue the court heard extensive evidence from the plaintiff and his experts regarding the dealings between the plaintiff and his bank, the nature and profitability of his farming enterprise and the consequential losses to him of the banks’ failure to perform its obligations under the alleged contract. In particular the court heard evidence as to the cause of the plaintiff’s financial difficulties in the 1980s and heard substantial expert testimony from Dr. Beilinberg, supporting the plaintiff’s substantial claim for consequential loss.
2. Having regard to the absence of any binding agreement requiring the bank to continue to fund the plaintiff’s farming activities that the bank was entitled to dishonour cheques drawn by him and that in so doing it did not conspire with any of his competitors to procure his downfall. The transcript reveals that the bank’s entitlement to dishonour those cheques was challenged by the plaintiff’s counsel. Further, counsel pursued the consequences to the plaintiff of the dishonour of those cheques by the bank.
3. The bank acted arbitrarily in failing to admit the plaintiff to the Scheme. Insofar as the bank had obtained the benefit of a reduction in its corporation tax liabilities by virtue of credits made to the plaintiff’s account after its settlement with him, that the plaintiff was entitled to reimbursement of such monies together with interest as monies had and received to the plaintiff’s benefit.
The learned trial judge did say in the course of his judgment that no evidence had been offered to support a claim for consequential loss arising from the failure of the bank to admit the plaintiff to the Scheme. However, he then went on to conclude, that the amount of the plaintiff’s indebtedness at the relevant time was such that “the relief he would have obtained from immediate admission to the Scheme was of no overall consequence”.
Because of the issues arising in the within motions it is important to note that in the course of the 1990 proceedings the court heard evidence from some fourteen witnesses whose names are set out in the schedule to the order of the court dated 15th August, 1997. One such witness was Mr. Duffy of ACOT, who had prepared a report as to the viability of the plaintiff’s farming activities over the relevant period. The transcript exhibited in these motions demonstrates that counsel for the plaintiff used this report for the purposes of aggressively challenging the defendant’s agricultural expert, Mr. Lawrence Power whose evidence was to the effect that the plaintiff’s financial problems all stemmed from over expenditure. Further Mr. Power was cross-examined as to the financial consequences arising from the banks failure to admit the plaintiff to the Scheme.
Appeal from the High Court decision in the 1990 proceedings
It is common case from the affidavits filed on behalf of the defendants in these motions that the plaintiff was advised by his counsel not to appeal the decision of the High Court. Notwithstanding, this fact and in the face of an offer from the bank to settle the proceedings, the plaintiff pursued an appeal which was heard by the Supreme Court in 1998.
The Supreme Court in its judgment unanimously upheld the trial judge’s findings regarding his conclusion that there had been no concluded contract between the plaintiff and his bank which would have obliged the bank to allow him trade out of his financial difficulties. Further, Barron J. and O’Flaherty J. upheld the trial judge’s finding that the plaintiff was entitled to be reimbursed the £18,455.18 together with interest which the bank had claimed as a corporation tax credit based on the plaintiff’s entitlement to be admitted to the Scheme. The court also held that the plaintiff was entitled to know at the time he settled his liabilities with the bank, that the bank was intent on obtaining the fiscal advantage of these monies from the Revenue as a tax credit and that the bank in so doing was effectively acknowledging the right of the plaintiff to these monies and was consequently estopped from denying his entitlement to the benefit of the same.
The minority judgment of Keane J. on this issue concluded that there was nothing inappropriate with what he described as a “paper transaction” carried out by the bank after its settlement with the plaintiff. He held that, given the extent of the plaintiff’s indebtedness and the banks acceptance of a significantly lesser sum than it had been entitled to by way of settlement, the plaintiff was estopped from claiming any entitlement deriving from the banks actions.
By order dated 20th July, 1998 the Supreme Court affirmed the decision of the High Court on the main issue. The costs order was varied with the plaintiff obtaining an order for three days High Court costs and the defendant being granted an order for ten days costs. The court further directed that the plaintiff’s liability for costs be reduced by the sum he was entitled to receive from the defendant’s referable to their failure to admit him to the Scheme. The court made no order as to the costs of the Supreme Court hearing.
The next critical event in the historical chronology of the plaintiff’s litigation, is that by letter dated the 27th July, 1998 the plaintiff dismissed all counsel who acted for him in the 1990 proceedings namely Mr. Noel Clancy S.C., Mr. Michael O’Kennedy S.C. and Mr. Charles Corcoran B.L. Subsequently, the same counsel were asked once again to come back to act on the plaintiffs behalf in fresh proceedings by request made dated the 8th December, 2000. All counsel refused stating that their advice had been rejected in the course of the earlier proceedings and further referring to the fact that they had never received any payment for their earlier work. This work included representing the plaintiff in the course of the eighteen day High Court hearing, attending numerous consultations, the preparation of extensive pleadings and written submissions and the plaintiff’s further representation at the time of his appeal to the Supreme Court.
The 2001 proceedings
Further proceedings were instituted by the plaintiff in 2001 against the Governor and Company of the Bank of Ireland bearing Record No. 2001 No. 4815 P. In those proceedings the plaintiff contended that he had been defrauded of the interest subsidy which he was entitled to under the Scheme referred to earlier in this judgment. The plaintiff alleged that he was defrauded of this subsidy due to the negligence of his bank and claimed that he had sustained significant losses as a result of the conversion by his bank of his monies to its own use.
The particulars of special damages claimed in the 2001 proceedings are set out at p. 11 of the statement of claim. The heads of loss are the same as those referred to in the plaintiff’s 1990 proceedings.
The defendant to the 2001 proceedings brought a motion to the High Court to dismiss the proceedings on the basis that the issues were res judicata and further on the basis that the proceedings did not disclose any reasonable cause of action. The bank was unsuccessful in its application and the decision made in the High Court by Kinlen J. was appealed by the bank to the Supreme Court.
Denham J. at p. 4 of her judgment of 19th March, 2004, referred to the statement of claim which had been amended in the course of the 1990 proceedings to include the plaintiff’s assertion of wrongdoing on the part of the bank referable to its failure to benefit him under the Scheme. The learned Supreme Court judge, at p. 5 of her judgment also referred to the portion of the judgment of Morris J. of 15th August, 1997 where he dealt with all of the issues arising from the banks wrongdoing and also to the decision of the Supreme Court upholding the trial judge’s findings thereon.
At para. 13 of her judgment, Denham J. referred to the losses claimed in both sets of proceedings and concluded that the issues and losses the subject matter of the 2001 proceedings had already been litigated in the 1990 proceedings. The court concluded that the fact that the plaintiff wished to present further evidence which might not have been presented in the course of the first action did not mean that the matter could be re-opened and further determined in any event, that the consequences which flowed from any wrongdoing on the part of the bank in relation to those matters pleaded in the 2001 proceedings, had already been determined by Morris J. She concluded that the consequential loss to the plaintiff of not having been afforded the benefit of the Scheme was the same irrespective of whether or not such losses were categorised as having flowed from negligence or alternatively fraud on the part of the bank.
The 2002 proceedings
The first action set out in the title to this judgement was commenced on the 19th July, 2002. In this action the plaintiff alleges negligence against his senior counsel, the late Noel Clancy S.C., in relation to the management by him of his 1990 proceedings which were the subject matter of the judgment of Morris J. of 15th August, 1997. The major criticisms made by the plaintiff against his counsel are not at all clearly stated in either his statement of claim or in his replies to the defendant notice for particulars. Further, the affidavits filed on the plaintiff’s behalf in the present motions fail to set out the nature of the evidence which the plaintiff proposes to call in support of his latest claims. In addition, the affidavits filed in many instances inaccurately record the facts and the evidence referable to the earlier proceedings. These facts are more accurately captured by revisiting the earlier pleadings, judgments and transcripts.
Broadly speaking the plaintiff’s complaint in this his third set of proceedings is that his counsel failed to secure for him adequate pecuniary compensation in his 1990 proceedings as a result of his negligent management of his High Court action and his appeal to the Supreme Court. He contends that he ought to have recovered compensation for the loss of his lands and livelihood. These losses are set out in the particulars of special damage in the statement of claim. Once again these losses mirror the same heads of claim advanced by the plaintiff in his earlier two actions. Written submissions had been delivered by the plaintiff in his 1990 proceedings and an examination of Chapter 4 of those submissions demonstrates that the losses which the plaintiff now seeks to recover in these 2002 proceedings are the same losses as were already dealt with by the court in his earlier proceedings.
By notice of motion dated 17th April, 2007, the defendant, who is the party nominated to represent the interests of the late Noel Clancy, S.C. seeks to dismiss the plaintiff’s claim on the basis set out in the introduction to this judgement.
In the grounding affidavit to the aforementioned motion Ms. Melanie Holmes, Solicitor on behalf of the defendant, at para. 8 of her affidavit asserts that:-
“It is manifest that on the basis of the claim made by the plaintiff he has no cause of action against the defendant and in fact the plaintiff’s claim against the defendant is no more than a further attempt to re-visit his proceedings against the Bank of Ireland.”
The plaintiff’s replies to particulars when read in conjunction with the statement of claim shows that the plaintiff still harbours the belief that he can maintain an action for damages as a result of the failure on the part of his bank to notify him of his acceptance into the Scheme and/or for the banks failure to give him the benefit of the interest reduction which he would have been entitled to under that Scheme. Further, notwithstanding the outcome of his first two actions the plaintiff in this his third action also seeks to maintain an entitlement to claim that the bank was obliged to honour his cheques during the currency of the Scheme and to claim damages consequent upon the banks dishonour of those cheques.
I now propose to deal with the several areas of complaint made by the plaintiff against the late Mr. Clancy S.C. in these proceedings which he contends amounts to negligence and which he asserts permits him to maintain once again a claim for damages for the loss of his entire farming enterprise in 1984. Because of the case law to which I will refer later it is necessary in the course of this part of the judgment to refer briefly to some of the facts and evidence relevant to the allegations of negligence made by the plaintiff.
1. The plaintiff asserts that counsel did not present what he describes as “relevant and appropriate documents” to the court which he contends would have had the effect of altering the courts judgment.
From the affidavits in these motions the documents which the plaintiff asserts were not produced on his behalf were firstly the ACOT Report and secondly a bundle of cheques which the plaintiff alleges he physically handed to his counsel. The plaintiff contends that his counsel’s default in failing to produce these documents resulted in counsel failing to make appropriate submissions as to the damages which he was entitled to recover in those 1990 proceedings.
In this respect, insofar as the ACOT Report is concerned, that Report was clearly introduced into evidence as the author of such Report, Mr. Duffy, was called to give evidence on the plaintiff’s behalf in relation to its contents. The order of the court dated the 15th August 1997 recites that the court heard evidence from some fourteen witnesses, the names of whom are set out in the schedule to the said order. Included amongst them is Mr. Duffy. It is common case that this Report, asserting that the plaintiff’s farm would return to profitability in early course, was a condition precedent to the plaintiff’s application for admission into the Scheme. The Report was relied upon strongly by Mr. O’Kennedy S.C. when cross examining Mr. Laurence Power, the bank’s agricultural expert, regarding the profitability of the plaintiff’s business, its future viability and the reasons behind the plaintiff’s financial difficulties.
In relation to the cheques it is clear, contrary to what is contended for by the plaintiff, that counsel pursued the dishonour of the plaintiff’s cheques with the bank’s witnesses. However, even if he had not done so, it is difficult to see how these cheques could have formed the basis of any claim for damages unless the plaintiff was in a position to convince the court that there was an enforceable agreement that the bank would allow the plaintiff trade out of his difficulties and therefore would not have been entitled to dishonour the cheques. The transcript and submissions filed demonstrate that the making of such an agreement between the plaintiff and Mr. Power in May 1981 was aggressively pursued by counsel for Mr. Behan, but was rejected by the court and hence the dishonour of the cheques was the right of the bank, absent any such contract. Regarding such an agreement, Morris. J. stated that he could not possibly come to the conclusion that the bank had agreed to allow Mr. Behan trade through his financial difficulties. Hence, the entitlement of the bank to call in all outstanding liabilities and the ultimate loss by the plaintiff of his farm.
From the judgment of Morris J. it is apparent that not only did counsel produce the cheques handed to him by the plaintiff but the court went on to consider the banks actions in relation to the dishonour of the cheques against the backdrop of the failure on the part of the plaintiff to establish the concluded contract contended for. The court also considered the issue of the dishonour by the bank of the plaintiff’s cheques during the period when the plaintiff, in its opinion, should have had the benefit of the Reduced Interest Scheme. Implicit in the Court’s judgment was its conclusion that even had the plaintiff been afforded the benefit of the reduced interest rates under the Scheme prior to the bank seeking repayment of his liabilities that the benefit of the Scheme would have been so marginal in the overall context of the plaintiff’s liabilities that the bank would in any event have been entitled to dishonour those cheques.
In addition to the aforegoing the transcript shows that Mr. O’Kennedy S.C. pursued the issue of the dishonour of the cheques and the consequences to the plaintiff’s business and reputation flowing therefrom. This fact is borne out by the judgment of the court where it deals with the cheques in the context of the plaintiff’s assertion that the bank sought to ruin the plaintiff’s reputation and also sought to conspire with a fellow competitor so as to damage the plaintiff’s business.
At other portions of the transcript and in particular through the questions posed by Mr. O’Kennedy, S.C. commencing with question 340, Mr. Power was challenged on the consequences of the bank bouncing cheques of the plaintiff in December, 1983 and January, 1984.
The learned Trial Judge at page 10 of his judgment stated as follows:-
“Mr. Behan further complains that the bank improperly and indeed maliciously dishonoured cheques drawn by him. He suggested that the bank did so in order to ruin his reputation as a farmer and a businessman in the community and to denigrate him in the eyes of his workmen and business associates. No case has been made out to my satisfaction that any of these cheques were improperly dishonoured. At the time these cheques were drawn by Mr. Behan he neither had the authority of the bank to do so nor did he have funds or an accomplice to cover these cheques.”
The finding of the learned Trial Judge referred to above has a significant impact on this motion insofar as the net effect of the judgment was that the bank was entitled at the relevant time to dishonour certain cheques presented for payment by the Plaintiff and about which dishonour the Plaintiff can have no legitimate complaint. It is clear that the trial judge had the benefit of sustained and in-depth cross-examination on the issue of bounced cheques, the credit-worthiness of the plaintiff, the potential viability of his business and the effect, if any, that the plaintiff’s inclusion in the Scheme would have had upon him.
Prima facie therefore the plaintiff’s claim against his counsel in respect of both the ACOT Report and the relevant cheques appears to be without foundation. Further, all issues arising in respect of the dishonour by the bank of the plaintiff’s cheques during the relevant period are res judicata. In any event, in respect of the ACOT Report, the same was only of relevance to the plaintiff’s admission into the scheme and he was compensated for the failure on the part of the bank to treat him as a member of that Scheme in the 1990 proceedings.
2. The second major complaint made against Mr. Clancy S.C. is that when it came to the courts attention in the course of the hearing that the bank had sought to reduce its corporation tax liabilities as if they had admitted the plaintiff to the Scheme that counsel refused to plead fraud contrary to the plaintiff’s instructions. In addition, it is alleged that Mr. Clancy failed to argue for satisfactory damages arising from the bank’s failure to admit him to the Scheme when invited to do so in the Supreme Court.
In relation to this issue it appears to this court that whatever the instructions given to counsel might have been the plaintiff in this motion has not produced any evidence to the court to show how fraud would have been established had such a plea been made in the 1990 proceedings. Neither does the plaintiff demonstrate in the affidavits filed on his behalf how any such claim, if established, would have entitled him to damages over and above those which he obtained as monies had and received by the bank to his benefit.
The High Court heard the evidence as to what occurred in relation to the plaintiff’s treatment at the hands of the bank under the Scheme. The High Court categorised the bank’s actions as wrongful and decided that such wrongdoing entitled the plaintiff to the benefit of the monies which the bank should have credited him with, had he been admitted to the Scheme. The Supreme Court categorised the plaintiff’s rights to the same monies as arising by virtue by some type of estoppel. The minority judgment of the Supreme Court in relation to the 1990 proceedings determined that the bank did nothing wrong whatsoever in relation to how the plaintiff was treated under the Scheme. Finally, Denham J. in the second action instituted by the plaintiff stated that the damages would have been the same whether or not the claim was successful irrespective of whether it was categorised as fraud or negligence. Hence, even if the plaintiff could establish negligence against his counsel for not pleading fraud he has no claim for damages given that he has already been compensated for precisely the same loss in the course of his 1990 proceedings.
The plaintiff has produced no evidence to this court as to how the claim of fraud against the bank could have been supported by evidence had it been made in accordance with his alleged instructions in 1990. This being so, the court views the assertion made by Mr. Browne, a solicitor, who ought to be well familiar with the rules of evidence, as to Mr. Clancy’s negligence in this respect as being one which is irresponsible and gravely offensive and is an assertion of professional impropriety against a fellow professional which he must know to be without any legitimate foundation. If the plaintiff’s assertion is correct that Mr. Clancy, S.C. failed to plead fraud and he did so in the absence of any evidence to support such a plea, it is to his credit that he did not lend his name to such a plea and further was acting in accordance with his professional obligations.
From the affidavits filed, it seems that the plaintiff in these proceedings is trying to revisit his entitlement to be admitted to the Reduced Interest Scheme and the issue of losses arising therefrom through the guise of a negligence action against his counsel, when the court has already pronounced in his earlier proceedings that the issue of losses arising from not having been formally admitted to the Scheme are res judicata. Even if the plaintiff was correct that his counsel ought to have pleaded fraud and evidence was available to establish such a claim, it is difficult to see how the court could award damages to the plaintiff over and above those which were awarded to him in his first action. The effect of the bank’s failure to admit the plaintiff to the Scheme on his business was considered and adjudicated upon in the 1990 proceedings at which time the court clearly accepted Mr. Powers evidence that in the context of the year by year losses and the marginal reduction it would have made to Mr. Behans’s total liabilities that the overall outcome would have been much the same in any event. The fact that the court considered these issues in the earlier proceedings is demonstrated in Mr. Browne’s affidavit of 12th June, 2006 where at para. 10 he refers to the evidence given by the bank’s expert, Mr. Power which allegedly belittled the assertion of the plaintiff that the bank’s failure to afford him reduced interest rates caused him substantial loss.
3. The third major complaint made by the plaintiff in the affidavits filed on his behalf is that Senior Counsel was negligent in failing to aggressively challenge the evidence given by the bank’s agricultural expert Mr. Power. In particular it is asserted that counsel was negligent in failing to produce a report to rebut the evidence given by Mr. Power.
The court views the aforementioned assertion which is made by Mr. Browne, a solicitor, as one which lacks credibility. Any solicitor must know that, save in wholly exceptional circumstances, none of which are relevant to this case, the case ends after the conclusion of the defendant’s evidence and that it is simply not possible for a plaintiff to produce reports to rebut the evidence of a defendant’s expert witness after the conclusion of the defendant’s evidence. Neither does the plaintiff demonstrate to the court that such evidence was available nor how it could have altered the outcome. Once again it seems in this action that the plaintiff seeks another opportunity to challenge the evidence given by Mr. Lawrence Power. The transcript shows that the plaintiff set out through his own experts, namely Dr. Beilinberg and Mr. Duffy, to establish how his losses arose and the extent of those losses. These were all put to Mr. Power whose evidence was fully challenged, but ultimately accepted by the court.
4. The plaintiff asserts that Senior Counsel was negligent in failing to contend that the award of damages made by the High Court in respect of the failure on the part of the bank to admit him to the Scheme was inadequate.
Once again the plaintiff in his affidavit does not establish how Senior Counsel could have contended for any additional losses having regard to the findings of the High Court on the core issue i.e. that there was no concluded contract precluding them from calling in the plaintiff’s outstanding liabilities. The plaintiff does not put forward on affidavit the basis upon which he asserts that Mr. Clancy could have contended for damages over and above what were awarded without reversing the High Court’s decision on the existence of an enforceable contract to permit him to trade out of his financial difficulties. Senior Counsel simply had no evidence to support an argument for damages to be made beyond that which was awarded in the High Court.
5. The plaintiff alleges that Mr. Clancy S.C. failed to adequately challenge the testimony of Mr. Laurence Power, the defendant’s agricultural expert.
Not only does this assertion appear to be without foundation from the transcript of the evidence but the plaintiff has failed in his affidavits to point to the existence of any facts, which, if put to Mr. Power would have been likely to bring about an alternative outcome to that which occurred.
From the transcripts of the evidence produced on this motion it is clear that Mr. Laurence Power, in his direct evidence, advised the court that it was the management by the plaintiff of his farm, rather than interest rates, which was his major problem in the six years up to and including 1984. Mr. Power gave evidence that Mr. Behan’s fixed and overhead costs were underestimated as were his living expenses. This witness gave evidence that in each year following 1979 that the plaintiff’s liabilities were increasing. He gave evidence that any further monies that might have been advanced by the bank would simply have led to further losses.
A review of the transcript of the hearing identifies that a lengthy cross-examination of Mr. Power was carried out by Mr. O’Kennedy, S.C. and that cross-examination runs to some 30 pages of text. In the course of his cross examination Mr. O’Kennedy sought to challenge Mr. Power on many issues including the report from ACOT which set out a positive projection for Mr. Behan’s farming business over the relevant period. Mr. Power constantly recalled to the court that Mr. Behan’s track record was inconsistent with the projections being made for his farm in the ACOT plan and ultimately this evidence seems to have been accepted by the court. Further, when challenged about the bank’s failure to give the plaintiff the benefit of the farm rescue scheme in circumstances where he had been approved for entry into that Scheme, Mr. Power pointed out:-
“Now the farm rescue plan was actually a very limited plan, in that the most it could mean to a farmer in difficulty in any year was £8,750. That would be an awful lot of money to a very small farmer with a very small operation. To a very large farmer with very large indebtedness £8,750 was the maximum within the scheme. In Mr. Behan’s case, his maximum was about £6,000, £6,200.”
The details set out in relation to the five categories of complaint above are is not an effort on the part of this court to prejudge the outcome of these proceedings if they were to be permitted to run to trial. However, because of the law which is pertinent to an application to have an action dismissed as being vexatious and an abuse of process, is necessary for the court to seek to evaluate the viability of the claims made in the within proceedings when viewed in the context of the plaintiff earlier litigation.
The 2005 proceedings
The second of the actions referred to in the title to this judgment were instituted by the plaintiff in 2005 under Record No. 2005/2424P. In this action the Bank of Ireland is the first named defendant, the second named defendant is the representative of the late Mr. Noel Clancy, S.C., the third and fourth named defendant respectively are Senior and Junior Counsel who acted on his behalf in the 1990 action.
In this his fourth action the plaintiff claims that counsel deliberately mislead the court in the 1990 proceedings in order to deny him his legal entitlements. In addition the plaintiff asserts that his counsel deliberately mislead him and further alleges that his counsel colluded with the bank to deny him his legal rights.
I have carefully considered all of the affidavits filed by the parties in these motions and in particular the affidavits of Mr. Lavelle, solicitor for the Bank of Ireland, the affidavits of Mr. Corcoran Junior Counsel, Mr. O’Kennedy Senior Counsel, and Mr. McGinley on behalf of the late Mr. Noel Clancy, S.C. The court has also carefully considered the affidavit of Mr. Behan sworn on his own behalf on 26th January, 2007.
Once again the plaintiff in this action wishes to impugn the evidence given to the court by Mr. Lawrence Power, the agricultural expert called on behalf of the bank in the 1990 proceedings. In the earlier proceedings the plaintiff had complained that the court had accepted Mr. Power’s evidence due to incompetence on the part of his own counsel to adequately cross examine Mr. Power or adduce appropriate rebuttal evidence. In this action it is alleged that the bank conspired with its own expert witness to mislead the court and in addition that his own counsel conspired and colluded so as to allow the bank’s evidence go unchallenged.
Notwithstanding these most serious allegations there is simply no evidence produced by the plaintiff in support of these assertions of collusion and conspiracy. The court is asked to assume corruption and collusion. The assertions made are abusive, not supported by the evidence and indeed appear to be in the teeth of the challenges made to the evidence on the plaintiff’s behalf by his counsel and other expert witnesses. Once again the court has serious concerns that these allegations of the gravest type of deliberate professional misconduct have been made by Mr. Behan at a time when he is being advised by Mr. Browne, a practising solicitor, who has not only sworn affidavits himself in relation to the defendants motions but has written correspondence and overseen all of Mr. Behan’s submissions in the course of the three day hearing before this court. The fact that these serious allegations of professional misconduct are deposed to on oath without a scintilla of evidence against three members of the Bar is, to say the least, regrettable.
Once again, whilst new allegations of collusion and conspiracy are at the core of this action, the proceedings appear to be yet another effort on the part of the plaintiff to re-open the consequences to him of the bank’s failure to admit him to the Scheme for which he was fully compensated in the 1990 proceedings.
The Law
Order 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 judgement to be entered accordingly, as may be just.”
Order 19, r. 5(2):-
“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.”
Whilst the court has the specific power referred to at O. 19, r. 28 above to order and action to be stayed or dismissed where the pleadings are defective within the manner specified in that Order, the court also has an inherent jurisdiction to strike out a claim so as to ensure that there is no abuse of the right of access to the courts.
The circumstances in which the courts inherent jurisdiction may be invoked was briefly stated by Costello J. in D.K. v. A.K. (High Court, 1990 No. 5306P, 2nd October, 1992) were he stated:-
“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 courts 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] I.R. 306: Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425).”
The courts have further determined in Sun Fat Chan v. Osseous Limited that if a claim is capable of being rectified by amended pleadings then the court should not strike out proceedings exercising its inherent jurisdiction. Further, the decision of Costello J. in Barry v. Buckley makes it clear that for the purposes of an application where the court is asked to exercise its inherent jurisdiction to stay proceedings that 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. In this regard the court has had regard to the extensive affidavits, exhibits, and transcripts produced to the court by the parties for the purposes of determining the outcome of the within motions.
For the purposes of the courts adjudication as to whether or not proceedings are vexatious within the meaning of O. 19, r. 28 or indeed for the purposes of the courts consideration as to whether it will exercise its inherent jurisdiction to stay or dismiss proceedings the court must consider whether the proceedings have been brought without any reasonable grounds. Ó Caoimh J. in Riordan v. Ireland [2001] I.R. Vol. 4, p 463, has referred to a helpful decision of the Ontario High Court in Re. Lang Michener v Fabian [1987] 37 D.L.R. (4th) 685 at p. 691, where the following matters were held to be indicators of proceedings which were potentially vexatious namely:-
“(a) the bringing of 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) when 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.”
It is clear that the court must be very cautious when deciding to exercise its jurisdiciton under O. 19, r. 28 or its inherent jurisdiction to stay or dismiss proceedings having regard to the fact that the Constitution expressly recognises the right of every citizen to have access to the courts to determine the existance or breach of a legal obligation owed to him by any potential defendants. However, as Murphy J. stated in E. O’K. v. D. K. (Witness: immunity) at p. 573:-
“On the other hand, the Constitution expressly recognises the need for finality in the judicial process. Moreover, it is recognised that justice is more likely to be achieved where persons participating in litigation whether as parties, witnesses, judges, jurors or lawyers can discharge their funciton without the fear of being held to account, at the suit of, perhaps, a disgruntled litigant for the manner in which he performs his role.”
For the purposes of dealing with the defendants motions in the present proceedings bearing Record No. 2002/10061P which is the negligence action against Edward McGinley as the nominated representative of the late Noel Clancy S.C. it is relevant briefly to look at whether or not in this jurisdiction a barrister, such as Mr. Clancy S.C., enjoys any immunity from suit which issue is clearly relevant as to whether or not the proceedings are vexatious or an abuse of process. The same issue is also relevant to the courts decision as to whether or not the proceedings instituted are bound to fail.
In relation to this particular issue the court is guided by the decision of the House of Lords in Arthur J.S. Hall and Company v. Simons [2000] Vol. 3 All E.R. p. 673. That decision relates to three separate cases wherein clients brought claims for negligence against their former solicitors. Having initially successfully relied upon the immunity of advocates from suits for negligence the Court of Appeal ultimately held that the claims fell outside the scope of the immunity. The House of Lords determined that it was no longer appropriate that barristers or solicitors should enjoy immunity from proceedings for negligence against them in respect of the manner in which they conducted proceedings in court. Lawyers will not be immune from suit if it is established that they acted negligently on behalf of their client, either in the preparation or in the conduct of legal proceedings. The court did nonetheless refer to the evidential difficulties which arise in trying to establish in the course of the negligence action what conclusion would have come about in the earlier proceedings if those proceedings had been conducted differently. Nonetheless, the court determined that the existence of such evidential difficulties for a plaintiff who has to prove that the lawyers negligence caused him loss is not a reason for continuing the immunity but might well become a reason for the court striking out such negligence proceedings on the basis that the potential action for negligence had become so weak due to the passage of time. Hoffman L.J. at p. 699 considered the difficulties for a court in such circumstances in the following manner:-
“(b) Invidious Judgments
Then it is said that while it is difficult enough to decide what would have happened at a trial which did not in fact take place, it may become positively invidious to decide how a judge who actually heard the case would have reacted if the advocate had advanced a different argument or called different evidence. Some judges are more receptive to certain kinds of points than others. I think this is an imaginary problem. Whatever may have been the foibles of the judge who heard the case, it cannot be assumed that he would have behaved irrationally. If he did, it would have been corrected on appeal. Obviously one has to take into account the findings that the judge made on the case as it was actually presented. For example, if he did not believe anything which the plaintiff said, it may be difficult to show that the different line of argument would have persuaded him to find in his favour. But I do not see how it is relevant for the purposes of the hypothetical exercise to have regard to the judge’s idiosyncrasies. It must be assumed that he would have behaved judicially.”
The court also in Arthur J.S. Hall v. Simons considered the problems of relitigating an action in the following manner:-
“The law discourages relitigation of the same issues except by means of an appeal. The Latin maxims often quoted are nemo debet bis vexari pro una et eadem causa and interest rei publicae ut finis sit litium. They are usually mentioned in tandem but it is important to notice that the policies they state are not quite the same. The first is concerned with the interests of the defendant: a person should not be troubled twice for the same reason. This policy has generated the rules which prevent relitigation when the parties are the same: autrefois acquit, res judicata and issue estoppel. The second policy is wider: it is concerned with the interests of the State. There is a general public interest in the same issue not being litigated over again. The second policy can be used to justify the extension of the rules of issue estoppel to cases in which the parties are not the same but the circumstances are such as to bring the case within the spirit of the rules.”
For the purposes of the within applications, notwithstanding the fact that there is no definitive approval of the decision of the House of Lord in Arthur J.S. Hall and Company v. Simons in this jurisdiction, the court for the purposes of this application will assume that barristers such as those implicated in the within proceedings do not enjoy a blanket immunity from suit and can be sued for negligence in relation to their management of litigation on behalf of their clients either in respect of their preparatory work or indeed in respect of their management of the trial itself.
There is one final matter which causes the court some concern in the context of the action for negligence against Edward McGinley as representative of the late Noel Clancy S.C. Many of the assertions made in these negligence proceedings pertain to the manner in which Mr. Lawrence Power, the bank’s expert agricultural witness was dealt with in the course of the trial. In particular there is a complaint that he was not examined sufficiently fulsomely by counsel on behalf of the plaintiff and it is alleged that this cross examination constituted negligence.
It is clear from the transcript that this cross examination was conducted by Mr. Michael O’Kennedy S.C. and this court doubts whether under any circumstances a fellow Senior Counsel could, on the basis of some type of collective responsibility, be held to be negligent in respect of any default on the part of his colleague in the conduct of a cross examination which it is alleged was not sufficiently aggressive. However, having regard to the conclusions that the court has reached in any event on the other issues this issue is not one which is troublesome in the context of the within application.
Conclusions
Having regard to the aforementioned legal position and the circumstances surrounding each of the Plaintiff’s actions which have been dealt with earlier in this judgment, the court concludes that the 2002 proceedings against Edward McGinley should be struck out as being vexatious and as proceedings which disclose no reasonable cause of action against the defendant.
Principally, the 2002 action is a claim for negligence and this court concludes that the action is one which is destined to fail. The facts relied upon by the plaintiff in support of his assertions of negligence are not borne out by the transcripts, pleadings and judgments of the court in the earlier proceedings. The assertion that the cross examination of Mr. Power was not aggressive in the sense required to establish negligence is highly unlikely to be sustained having regard to the transcript of the same which is available to this court. The issue regarding the dishonour of the plaintiff’s cheques was fully canvassed in the course of the 1990 proceedings and adjudicated upon by the court both in terms of the bank’s entitlement to dishonour the cheques and whether or not the same would have been dishonoured had the plaintiff been admitted to the Scheme. Insofar as the ACOT Report is concerned the same was clearly introduced into evidence by Mr. Behan’s legal team through the evidence of Mr. Duffy and the same became the plinth upon which Mr. O’Kennedy S.C. cross examined the defendant’s agricultural expert. The assertion that no rebuttal evidence was produced by the plaintiff’s Senior Counsel to counter the evidence of Mr. Lawrence Power is to misunderstand the procedural rights of the parties in relation to the production of evidence.
Even if the court is in error in terms of the plaintiff’s ability to prove the facts before mentioned, the plaintiff has indicated to the court that he will have no professional evidence to place before the court, should the matter be permitted to go to trial, to suggest that his counsel departed from an acceptable standard of practice in terms of his conduct of the action. The only evidence available, according to Mr. Behan will be his own evidence and that of Mr. Browne who was the solicitor who handled his 1990 action. Mr. Browne’s evidence is hardly likely to withstand significant cross examination regarding the negligence of counsel having regard to the fact that whilst he initially dismissed the plaintiff’s counsel following the decision of the Supreme Court given in 1998, he then sought to re-engage the very same counsel in December 2000 for the purposes of representing Mr. Behan in yet further proceedings.
In addition to the foregoing matters I believe that even if the plaintiff had a stateable case in negligence against his Senior Counsel in respect of the management of the 1990 proceedings he has failed to show that his losses arising from such wrongdoing are any different from the losses which were awarded to him by the High Court in the 1990 proceedings. The plaintiff has failed to demonstrate in his pleadings or affidavits how the management of the 1990 case could ever have led the court to conclude that he had a binding contract with the bank such as would have entitled him to recover the very significant claim for special damages which he contended for in that action. Any alleged negligence on the part of counsel has not been shown to have had any bearing whatsoever on the outcome of the only issue which would have entitled him to damages beyond those already awarded to him in that action. Applying the same reasoning as that of Denham J. in her judgment in relation to the 2001 proceedings, I conclude the issues which are the subject matter of the negligence action are in effect res judicata.
The court also is of the opinion that these proceedings are an abuse of process. In the 1990 proceedings, Mr. Behan claimed that he lost his business and the vast preponderance of his wealth because the bank were in breach of a contract made with him in May 1981 whereby he alleged the bank agreed to provide him with funding to trade out of his financial difficulties. The plaintiff failed to establish the existence of such a contract and all of the losses he claimed in those proceedings were therefore irrecoverable. In the course of those proceedings, both in the High Court and the Supreme Court, the courts considered whether or not the failure on the part of the Bank of Ireland to admit him to the Scheme in any way altered the plaintiff’s financial outcome. On both occasions the court held that the failure to admit the plaintiff to that Scheme merely meant that he had not been afforded credits amounting to a total sum of approximately £18,455.18 over the relevant period and that had such credits been afforded to him that the same would not have in any way materially altered the viability of his business. Notwithstanding the Court’s adjudication on those issues the plaintiff sought to revisit all of the losses which initially had been based on the breach of contract claim in his 2001 proceedings where he sought to attribute the same losses to fraud on the part of the bank in failing to admit him to the Scheme. The Supreme Court determined that those losses had already been the subject matter of his 1990 proceedings and determined that all of the issues therein raised were res judicata.
The within negligence action is a further effort to revisit the extensive losses claimed by the plaintiff in the 1990 proceedings as damages for breach of contract. All of the facts which form the foundation for the allegations of negligence in this claim have already been litigated in the 1990 proceedings and the proceedings are merely a further effort on the Plainitff’s part to use an alternative cause of action to revisit his initial claim. Further, the plaintiff’s affidavits fail to demonstrate how the alleged mismanagement by his counsel of his 1990 case resulted in his failure to establish a concluded contract with the bank whereby they were committed to permitting him to trade out of his financial difficulties. Only proof of such a contract would have entitled him to claim the significant special damages which were at the heart of his 1990 proceedings and indeed all subsequent actions. The within proceedings bear all of the hallmarks which Ó Caoimh J. in O’Riordan .v. Ireland warned were likely to be present in an action which was potentially vexatious and an abuse of process.
It seems to the Court that the Plaintiff continues to reject, either deliberately or otherwise, the findings of the High Court and Supreme Court in his 1990 proceedings to the effect that he lost the monies claimed in that action firstly, as a result of his own non profitable farming activities and secondly by reason of his failure to convince the court that the bank was not entitled to call in his indebtedness which action by the bank ultimately led to the end of his farming business. Ever since the plaintiff has sought to ascribe these losses to the fraud, negligence, collusion or conspiracy of those parties referred to earlier in this judgment.
The court has considered carefully the replying affidavits delivered by the plaintiff’s then counsel and by Mr. McGinley on behalf of Mr. Noel Clancy deceased. It could not be clearer to this court that the plaintiff was provided with what appears to have been competent and dedicated advice, none of which was ever paid for by the plaintiff.
For the reasons set out above the court concludes that the plaintiff’s continued right of access to the courts is being abused and this abuse is perhaps most clearly seen in the proceedings instituted by him in 2005 where he has sought to implicate the defendants in a conspiracy to cause him harm.
In relation to the motions brought by each of the defendants in the 2005 proceedings to dismiss the plaintiff’s claim the court firstly concludes that the plaintiff has not complied with the O. 19, r. 5(2) of the Rules of the Superior Courts insofar as he has failed to adequately particularise his claims in respect of conspiracy and/or collusion as is required when contending for fraud on the part of a defendant.
Secondly, the court has considered all of the affidavits that have been sworn on plaintiff’s behalf and concludes that the plaintiff has failed to demonstrate to the court that he has any evidence to offer to establish that there was any collusion between his counsel and the Bank of Ireland so as to cause him any loss or damage. The best that the plaintiff can do is ask the court to infer the existence of such collusion.
In the absence of any particulars of collusion or any evidence in the supporting affidavits filed on behalf of the plaintiff this court believes that the assertions by the plaintiff in these proceedings must be destined to fail. The court concludes that the pleadings offend O. 19, r. 28 and also O. 19, r. 5(2). Further given that the proceedings are destined to fail the court also concludes that it is entitled to exercise its inherent jurisdiction even if the pleadings themselves were not defective as found.
The final relief sought by the second, third and fourth named defendant in the 2005 proceedings is an order that the plaintiff’s proceedings for negligence against them is stature barred by reason of the provisions of the Statute of Limitations 1957, as amended. Section 11 which refers to actions of contract and tort and certain other actions provides a six year period of limitation for the institution of any such proceedings. In the instant case the plaintiff dismissed his counsel following the Supreme Court hearing in the 1990 proceedings by letter dated 27th July, 1998. This being so I conclude that at best the plaintiff had six years from 27th July, 1998 to issue a writ claiming negligence on the part of his counsel. Given that the 2005 proceedings were commenced by plenary summons dated 12th July, 2006 the court concludes that the negligence aspect of such proceedings are statute barred.
Finally the relief sought by the Governor and the Company of the Bank of Ireland in its notice of motion must for all of the reasons set out above also be granted.
For the aforementioned reasons the court will in the case of James Behan v. Edward McGinley bearing Record No. 2002/10061P make an order pursuant to O. 19, r. 28 of the Rules of the Superior Courts striking out the plaintiff’s proceedings on the basis that the same are vexatious, frivolous and disclose no reasonable cause of action.
In relation to the bank’s notice of motion in proceedings bearing Record No. 2424P/2005 which is a notice of motion dated 15th January, 2007 the court will grant to the first named defendant, the Governor and Company of the Bank of Ireland the reliefs set forth at paras 1 to 4 of their notice of motion. Further, in relation to the motion brought on behalf of the second, third and fourth named defendants in the action bearing Record No. 2424P/2005 being the notice of motion dated 26th January, 2007 the court will grant the reliefs set forth at paras. 1 to 4 of the said notice of motion.
As a consequence of the aforementioned reliefs the court does not have to consider the plaintiff’s motion for judgment in default of defence in the proceedings bearing Record No. 2424P/2005 and accordingly that motion will be struck out as the proceedings are now at an end.
Bula Ltd v Crowley [2009] IESC 35
Judgment delivered the 3rd day of April, 2009 by Denham J.
1. This is an appeal by Bula Ltd. (in receivership), “Bula”; Bula Holdings, “Holdings”; Richard Wood, “Mr. Wood”; and Michael Wymes, “Mr. Wymes”; the plaintiffs/appellants, who are referred to collectively as “the appellants”.
2. It is an appeal from the judgment of the High Court (Murphy J.) delivered on the 10th day of June, 2005.
3. The High Court had before it notices of motion: the notice of motion of the fifth, sixth and seventh named defendants, referred to as “the banks”; the notice of motion of Laurence Crowley the first named defendant “the receiver”; the notice of motion of Tara Mines Limited, the third named defendant, and Outokumpu Oy, the fourth named defendant. The High Court noted the attendance of the solicitor for the receiver of Navan Mining Public Company Limited (in receivership), who indicated to the Court that due to lack of funds in the receivership the receiver was not taking any part in these proceedings save to indicate his support to the notices of motion.
4. The notice of motion, brought by the banks, sought:
(a) An order dismissing the proceedings as constituting an abuse of the process of the court.
(b) Further, or alternatively, an order pursuant to Order 19, rule 28 of the Rules of the Superior Courts dismissing the proceedings on the grounds that they are frivolous and vexatious and/or disclose no reasonable cause of action against the banks.
(c) An order restraining the appellants and each of them from instituting any further proceedings against the banks without the leave of the court.
5. The notice of motion brought by the receiver was in similar terms to that of the banks.
6. The notice of motion of the third and fourth named defendants sought an order dismissing the plaintiffs’ action against the defendants pursuant to Order 27, rule 1 of the Rules of the Superior Courts, further or in the alternative, an order pursuant to the inherent jurisdiction of the Court dismissing the appellants’ action on the grounds:
(a) that the appellants’ action constitutes a manifest abuse of the process of the Court,
(b) that the action discloses no reasonable cause of action against the second and third defendants or either of them,
(c) that the action is frivolous and vexatious, and that
(d) the appellants’ claims against the defendant are res judicata.
7. Proceedings
These notices of motion were brought in response to proceedings instituted by the appellants, the plenary summons issued in August, 2003, referred to as “these proceedings”. In these proceedings, in the general indorsement of claim on the plenary summons, the appellants claimed:
As against all the defendants:-
1. Damages for negligence
2. Damages for unlawful interference with the economic interests of the appellants and each of them.
As against the receiver:
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 has purported to sell the property known as the Bula Mine at Nevinstown, Navan, County Meath in breach of duty.
7. A declaration that the receiver was and is prohibited from acting as receiver and manager.
8. An injunction restraining the receiver from dealing with the proceeds of the purported sale, pending the determination of these proceedings.
As against the second defendant:-
9. Damages for breach of contract.
10. Damages for misrepresentation and/or negligent misstatements.
As against the receiver and the third defendant:-
11. An Order setting aside the contract dated the 9th of May 2001 made between the receiver and Tara Mines Ltd.
12. An Order setting aside any conveyance between the receiver and Tara Mines Ltd pursuant to any purported completion of the contract dated 9th May 2001 between the receiver and Tara Mines Ltd.
13. An Order setting aside any conveyance to any purported completion of the contract.
As against Tara Mines Ltd:-
14. A declaration that Tara Mines Ltd has no good title to the property.
15. An injunction restraining Tara Mines Ltd. 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 Ltd. refrain from entering onto, into or under, or extracting minerals from the property.
As against the fourth, fifth and sixth defendants:-
17. Damages for breach of duty and negligence.
As against the first, second, third, fourth, fifth, sixth, seventh and eighth defendants:-
18. Damages against the first, second, third, fourth, fifth, sixth, seventh and eighth defendants for unlawful interference with and obstruction of the course of justice.
As against the eighth defendant:-
19. A declaration that the eighth defendant had an interest in the security, pursuant to which the receiver purported to sell the property to the Tara Mines Ltd.
20. A declaration that the eighth defendant was an intended beneficiary pursuant to the contract between the receiver and Tara Mines Ltd. dated 9th May 2001.
21. An order directing that all necessary accounts and enquiries be taken.
22. Such further or other relief as to this Honourable Court shall seem fit.
23. Costs.
7. High Court Order
The High Court ordered that the proceedings be dismissed as constituting an abuse of the process of the Court. This order was made pursuant to the inherent jurisdiction of the Court. Also, it was ordered that the appellants and each of them be restrained from instituting any further proceedings against the receiver, Tara Mines Ltd., Outokumpu Oy, and the banks, without the prior leave of the High Court.
8. Appeal
The appellants have appealed against the order and judgment of the High Court, filing seventy grounds of appeal.
9. Submissions on behalf of the appellants
On the case opening in this Court, counsel for the appellants, Mr. Frank Callahan, S.C., limited the grounds of appeal. He submitted that he did not advance arguments to set aside the sale of the lands, or to set aside the judgment of this Court on the s.316 application. Counsel submitted that the essence of the appellants’ case was that there was in the judgment of this Court in the s.316 application no determination on the merits of any of the matters that are the gravamen of these proceedings. Further, that the merits could not have been determined under the s.316 application. He submitted that the only proceedings which could ground a finding that the case was an abuse of process was the s.316 application and judgment of this Court. Therefore, he submitted that, the primary legal issue on the appeal was whether the judgment on the s.316 application is capable of giving rise to a res judicata in these proceedings given the issues in that case and the nature of a s.316 hearing. Counsel referred to the events leading up to the s.316 order. He referred to relevant dates in January 2001, to the receiver receiving an offer from Tara Mines Ltd., to the receiver’s application to court under s.316, the receiver instituting the proceedings by Motion on the 20th March, 2002, the affidavit of Mr. Wymes of the 17th April, 2002, the Court hearing on the 27th April, 2002, the Court approval on the 20th June, 2002, the refusal of the stay on the 12th July, 2002, by the High Court, and the subsequent completion of the sale by the receiver. On the 11th April, 2003, the Supreme Court affirmed the order of the High Court: Bula Ltd. v. Crowley (No.4) [2003] 2 IR 430. Counsel submitted that the s.316 application, from the date of the application to the date of the judgment in the High Court, occurred in a telescoped period of time, and he submitted that this is a relevant factor in considering the difference between that application regarding the sale and these proceedings. Counsel opened Bula Ltd. v. Crowley (No.4). He stated that the appellants relied on In re Edenfell Holdings Ltd [1999] 1 IR 443. Counsel submitted that when the applicants disputed the contract price under the s.316 application they were told that “it was a very narrow goal mouth”, that what was relevant was the process. Now on this application the receiver and other defendants assert that the goal posts on the s.316 application were broad and that the rule in Henderson v. Henderson [1843] 3 Hare 100 applies. He made submissions as to the narrow nature of the s.316 application, and stressed that it was a summary procedure, grounded on affidavit, with the receiver as applicant and as dominus litus. He submitted that an application under s.316 has a narrow purpose and a narrow effect, and that s.316 is limited in its ambit. He submitted that it would be extraordinary if, because the receiver brings an application under s.316, that, if a full scale challenge to the conduct of a receiver alleging wrong doing of a receiver, is not mounted in the s.316 application, persons like the appellants are precluded from doing so. He submitted that that could not be right. Counsel referred to the alleged wrong doing of the receiver. He submitted that the sale was at a gross undervaluation. He submitted that if in these proceedings he could show wrongful conduct of the receiver, then the order of this Court approving the sale is not determinative of the value. He emphasised that he was not trying to intervene in the sale. Counsel submitted that the s.316 application had been a narrow determination, that he had been precluded form canvassing other issues. He submitted that it was a classic s.316 application on process and price in the High Court, which had been reviewed in the Supreme Court. Counsel pointed out the nature of the parties to the s.316 application; that it did not include Outokumpu Oy, that Tara Mines Ltd. was a notice party, that KPMG has not brought a motion to strike out, and that Navan Mining Public Ltd. Co. was also a notice party. He stated that it was astonishing to submit that the s.316 application avails persons who were not even a party to that application, where there are allegations of wrongful actions; that this would extend res judicata to people not in the motions, that benefit would flow not just to the people who seek the proceedings struck out. As well as In re Edenfell Holdings [1999] 1 IR 443, counsel referred to Henderson v. Henderson [1843] 3 Hare 100, and to A.A. v. Medical Council [2003] 4 IR 302.
As to the issue of the Isaac Wunder order, counsel submitted that it would be wholly inappropriate. He submitted that the previous proceedings had been brought mostly with the advice of solicitors and counsel, and that the situation did not warrant an Isaac Wunder order, in all the circumstances. Having reviewed the litigation, counsel submitted that Mr. Wymes and Mr. Woods had had to address genuine and complex issues, that they had acted on legal advice, that they had had a substantial interest in Bula, which gave rise to very serious concerns, which has left them with immense liabilities. He submitted that the appellants had a legitimate interest. The fact that they had lost to Tara, and to the banks, and on the s.316 application, could not on any fair view, he submitted, render them vexatious litigants so as to merit an Isaac Wunder order.
Written submissions were filed also, which I have considered carefully. These concluded with the submission that, as a result of the sale of the assets of Bula for £27.5 million, the appellants have sustained enormous losses as set out in the statement of claim of these proceedings; that the appellants have an entitlement to have the Court adjudicate upon their contention that some or all of the defendants were at least partly responsible for those losses; and that the appellants are entitled to have their contentions tested by cross-examinations, and, to test the appellants by examination of their evidence, and to support their case with such material as may be obtained by discovery of documents.
11. Submissions of behalf of receiver
Mr.. Ian Finlay S.C. addressed oral submissions to the Court, written submissions having been received, on behalf of the receiver. Counsel referred the Court, inter alia, to three matters: (a) the nature of s.316 proceedings and the status of the parties to the proceedings; (b) the nature of res judicata where an issue has been finally determined between the parties; and (c) the principles in Henderson v. Henderson [1843] 3 Hare 100, submitting that where an issue could have been raised but was not, a party is precluded from raising it later.
As to the issue of an Isaac Wunder order, counsel asked the Court to affirm the order of the High Court. He referred to the history of the litigation and submitted that it was clear that that was the basis for the order in the High Court. He submitted that the order should be made in the public interest.
12. Submissions on behalf of the third and fourth named defendants
Written submissions on behalf of the third and fourth named defendants were filed and considered. In oral submissions counsel on behalf of the third and fourth named defendant, Mr. Brian Kennedy, B.L. adopted the submissions made on behalf of the receiver. Inter alia, he relied on In the Matter of Salthill Properties Ltd. (In Receivership) (Unreported, Supreme Court, McCracken J., 29th May, 2006). Counsel also stressed that the s.316 application was an application for the directions of the Court as to the sale. Thus all issues that related as to whether the sale was appropriate could have been raised. He submitted that the rule in Henderson v. Henderson [1843] 3 Hare 100 applied to all issues touching on the sale.
13. Submissions on behalf of the banks
Written submissions were received from the banks and I have considered them carefully. Counsel for the banks, Mr. Seamus Noonan S.C., adopted also the submissions of the other defendants. In oral submissions he submitted that this is the third attempt to raise these matters. He submitted that the issues had been dealt with in previous Bula proceedings. He referred especially to the action brought by the appellants against Tara Mines and others. It was before the High Court for 277 days, after which Lynch J. gave judgment against the appellants: Bula Limited (In Receivership) and Ors. v. Tara Mines Ltd. and Ors (Unreported, High Court, 6th February, 1997). This was upheld by the Supreme Court. Counsel submitted that the second attempt was in the s.316 application, which was also appealed and upheld by the Supreme Court: Bula Ltd. v. Crowley (No.4) [2003] 2 IR 430. This is the third attempt, he submitted, which has been dismissed in the High Court.
As to the Isaac Wunder order, counsel submitted that it was imperative that there be such an order. He pointed out that it was merely a filtering process, but that it would protect against harassing litigation raising issues which have been litigated many years ago.
14. New Statement of Claim
At the commencement of the hearing of the appeal before this Court counsel for the appellants submitted a new draft statement of claim in these proceedings from which were deleted a number of the original claims. Counsel conceded a number of grounds of appeal. Deleted from the original statement of claim, and so no longer an issue relating to the claim or on this appeal of the motions, were:-
(a) a claim to set aside the previous s.316 proceedings, judgments and orders of the High Court and this Court;
(b) a claim to set aside the contract of sale dated the 9th day of May, 2001, between the receiver and Tara Mines Ltd., and any conveyance in completion of that contract;
(c) a claim that Tara Mines Ltd. had no good title to the property, and associated orders;
(d) a claim to set aside orders and judgments of the High Court and Supreme Court in Bula II, the banks case.
15. Issue
The kernel of this case is whether the High Court was correct in dismissing the proceedings of the appellants as constituting an abuse of the process of the Court. There is also an issue as to whether the High Court erred in making an Isaac Wunder order.
16. Decision
There have been decades of litigation brought by the appellants in relation to various issues relating to the mine. The core issue in this case is whether the s.316 application and the decisions by the High Court and the Supreme Court on that application, act as a bar to these proceedings.
17. In context
These proceedings require to be considered in context. This is relevant both to the motions and to the issue of an Isaac Wunder order. The history of the appellants’ litigation may be seen in some of the recorded judgments. The litigation is convoluted as some cases commence before others are concluded and there are overlapping cases and appeals.
18. The Navan zinc and lead ore body lies beneath the lands of Nevinstown and adjacent townlands to the north of the river Blackwater in County Meath, and extends under the river and under the lands of Whistlemount and adjoining townlands to the south of the river. The late Mr. Patrick Wright owned about 120 acres of the lands of Nevinstown and the minerals beneath the lands.
Tara Exploration and Development Co. Ltd. carried out, on its own behalf and on behalf of Tara Mines Ltd., extensive drilling for minerals in the Nevinstown area during the late 1960s and 1970s. Rich deposits of lead and zinc were discovered on Mr. Patrick Wright’s land. Tara sought to purchase the mineral rights from Mr. Wright. In March, 1971 Mr. Thomas C. Roche and Mr. Thomas J. Roche offered a price to Mr. Wright which was accepted. Mr. Wright, at the request of the Messrs Roche conveyed the lands to Bula. Mr. Wood joined later. The Minister sought to acquire compulsorily the minerals under the lands. Mr. Thomas C. Roche and Bula challenged the compulsory acquisition, successfully: Roche v. Minister for Industry and
Commerce [1978] 1 I.R. 149.
19. Subsequently there were negotiations and Bula Holdings and the Minister entered into a memorandum of agreement in principle on the 26th July, 1974. The Minister agreed in principle to acquire 49% of the share equity of Bula but to give power of attorney over the voting rights of 21% of the share equity to Mr. Roche Sr., or his nominees. The agreement in principle was signed by the Minister, Mr. Thomas C. Roche, Mr. Wright and Mr. Wood. The agreement envisaged by that memorandum was entered into on the 12th December, 1975.
20. The receiver was appointed receiver over the ore body located in Nevinstown, originally owned by Bula, on the 8th December, 1985, pursuant to powers contained in debentures created between the banks and Bula. Since then the receiver has been engaged in litigation brought by the appellants. This meant that the receiver was unable to sell the ore body until approval was given by the High Court on the s.316 application: In the matter of Bula Ltd. (In Receivership) [2002] 2 ILRM 513, judgment given by Murphy J. on the 20th June, 2002.
21. The proceedings brought by the appellants included the “Tara proceedings”. After 277 days at hearing, in a reserved judgment, Lynch J. gave judgment in Bula Limited (In Receivership)
and others v. Tara Mines Limited and others (Unreported, High Court, 6 February, 1997), “the Tara proceedings”. The plaintiffs, and ultimately the appellants, in that case were the appellants in this case, together with Mr. Thomas C. Roche and Mr. Thomas J. Roche. Tara Mines Ltd. and Outokumpu Oy, who are defendants in this case, were the first and second defendants in that case. The third to fourteenth defendants were at various times directors of Tara Mines Limited and/or Outokumpu Oy. The Minister for Energy was the fifteenth defendant.
The sixteenth defendant was a civil servant in the Department of Energy who was nominated by the Minister to be a director of Bula Limited. Lynch J. commenced his judgment, delivered on the 6th day of February, 1997, as follows:-
“This case arises out of circumstances which commenced more than a quarter of a century ago. It has its origin in business dealings undertaken in the hopes of arriving at a very large crock of gold, which in the end of the day turned into a bottomless pit of debt and misery for those who most avidly sought the crock of gold. It is from that bottomless pit that the remaining Plaintiffs in this action hope by this litigation to escape.
The statement of claim contains such a multiplicity of allegations and claims many of which have been abandoned and withdrawn at various stages in the course of the trial, that I think it is desirable that I should state at the outset in broad terms what is the essence of the Plaintiffs’ claim.
The Plaintiffs allege against the first fourteen Defendants that in spite of a provision in the first Defendants lease from the Minister that they should co-operate with the Plaintiffs as owners of the neighbouring mine those Defendants nevertheless wrongfully conspired together and sought to inflict and did in fact inflict economic loss and damage to the Plaintiffs to such an extent as to ruin the Plaintiffs in order to enable the first Defendant to acquire the Plaintiffs 1/6 share approximately of the Navan Zinc and Lead Ore Body at an undervalue with a view to working the same for their own benefit along with their own 5/6 share approximately of that ore body. The Plaintiffs allege against the fifteenth and sixteenth Defendants that by virtue of agreements made with the Plaintiffs and other agreements made with the first Defendant the fifteenth and sixteenth Defendants had power and were under an obligation to the Plaintiffs to prevent the first fourteen Defendants from acting in the manner aforesaid but that the fifteenth and sixteenth Defendants not only failed to prevent the first fourteen Defendants from so acting but on the contrary encouraged and assisted them in so acting.
All of these claims so made by the Plaintiffs against the Defendants are vehemently denied by all the Defendants who allege on the contrary that the failure of the Plaintiffs’ enterprise was due to the Plaintiffs own incompetence and unreasonable conduct leading to commercial errors of an irrational and disastrous nature.”
The High Court dismissed the plaintiff’s claims. An appeal from the judgment of Lynch J. was heard by the Supreme Court (Hamilton C.J., Barrington J., Keane J.). Keane J. delivered judgment on the 15th January, 1999. While there had been many grounds of appeal filed, on the hearing of the appeal only on two grounds were advanced. The Supreme Court held that neither ground was established and dismissed the appeal. Keane J. concluded:-
“It is tragic that this venture, in which the plaintiffs invested so much time, energy and resources has ended with litigation on so catastrophic a scale.”
22. Bula Ltd. v. Tara Mines Ltd. (No.6) [2000] 4 I.R. 412 was an application by the appellants against that judgment of the Supreme Court, seeking to set it aside on the grounds of objective bias. The application was unsuccessful and was dismissed.
23. Another set of proceedings, In Bula Ltd. (In Receivership) and ors. v. Laurence Crowley and Ors. (Unreported, High Court, Barr J., 29th April, 1997), an action between Bula Ltd.
(In Receivership), Bula Holdings, Thomas C. Roche, Thomas J. Roche, Richard Wood and Michael Wymes v. Laurence C. Crowley, Northern Bank Finance Corporation Ltd., Allied Irish Investment Bank Ltd. and MacKay A. Schnellmen Ltd., has been referred to as “the banks proceedings”. In this action the plaintiffs originally sought damages and other relief on the basis of alleged acts of negligence, breach of contract, deceit and breach of trust of the defendants.
24. In the banks proceedings Bula was given leave to introduce new claims against the banks and the receiver based on the Statute of Limitations. Barr J. directed that a preliminary issue should be tried.
25. On the 18th June, 1997, Barr J. gave a ruling on conditions, on an application by the appellants, to adjourn the proceedings pending the determination of the Supreme Court in the Tara proceedings. One of the conditions was that:-
“The [appellants] and each of them undertake that they will not mount further proceedings against the defendants (or any of them, their servants or agents) in respect of any alleged wrong doing of which they are presently aware or in the opinion of the court ought now to be aware.”
26. In Bula Ltd. (In Receivership) and Ors v. Laurence Crowley and Ors.
(Unreported, High Court, 29th April 1997) Barr J. commenced his ruling by stating:-
“These proceedings comprise the second of two primary actions in a vast panoply of litigation which is unique in Irish legal history as to duration, complexity, range and multiplicity of issues. In essence it revolves around an intended lead and zinc mine near Navan, Co Meath. The prime mover at the heart of this litigation is Mr. Michael Wymes, who at all material times was managing director of Bula Limited, owner of the proposed mine, (Bula), and also through a holding company a major shareholder therein. He orchestrated the affairs of Bula from its incorporation in 1971 and in that regard was instrumental in launching on its behalf and other interested parties the primary actions to which I have referred. The Bula mining lands adjoin property which comprises a lead and zinc mine operated by Tara Mines Limited (Tara). The first action (Bula I) was in essence against Tara and the State. The trial before Lynch J continued for 277 court days. The principal witness for the plaintiffs was Mr. Wymes and he gave evidence for about 120 days. An enormous quantity of documents comprising upwards of a hundred box files were introduced in evidence. The learned trial judge delivered judgment (the judgment) on 6 February, 1997 in which he rejected the case made on behalf of the plaintiffs against both sets of defendants and he dismissed the action against all of them.”
Barr J. referred to the decision by Lynch J. as Bula I, and the application before him as Bula II, which was brought by the same plaintiffs as in Bula I and was against Mr. Crowley (the receiver) and the banks which provided funds for Bula’s activities. Barr J. held that the findings of Lynch J. in his judgment relevant to any issue in the banks proceedings were not reviewable. He stated:-
“As to findings made by Lynch J. in the judgment; I have ruled that findings made by him which are relevant to any issue in the present action are not reviewable herein and the parties are not entitled to re-open such matters. I reached that conclusion on the ground that, although the parties are not the same in both actions, the facts relating to each are intimately intertwined; that some factual matters and findings may be common to issues in both actions; that many such matters entailed an assessment by Lynch J. of a huge volume of evidence adduced in course of a trial of monumental length and if re-opened would add greatly to the duration and expense of the present trial; and that, at least until the outcome of the appeal to the Supreme Court in Bula I is known, there was no acceptable reason in justice to revisit such findings and to permit the plaintiffs to challenge them. I am satisfied that for the foregoing reasons it is not in the interest of justice to re-open relevant findings made by Lynch J. in Bula I and that it would be an abuse of the process of the court to do so.”
He held:-
“I am satisfied that there are three questions which should be addressed by the court in determining an issue regarding the status of facts and/or law found by a court of competent jurisdiction in earlier proceedings. In terms of the instant case; first, are the plaintiffs seeking to re-open in Bula II an issue of fact or law which was decided against them in Bula I? Secondly, was the finding in question necessary to the determination by Lynch J. of the issue in Bula I to which it relates? Thirdly, is the finding in question relevant to an issue raised by the plaintiffs in Bula II? These questions comprise the yardstick against which the status of each finding of fact or law made by Lynch J. in Bula I must be assessed in determining whether or not it has binding effect in Bula II.”
On the particular issue in that case, he ruled that the finding of Lynch J., regarding the payment of interest by the State to the Northern Bank Finance Corporation amounted to a finding that it was not an unlawful payment or one which was secret or unauthorised by Bula and that it was binding on the plaintiffs in that action. Barr J. ordered that the banks proceedings go to hearing.
Dealing with the concept of the abuse of process Barr J. held:-
“The concept of abuse of the process of the court applies irrespective of privity. When an issue has been finally determined by a court of competent jurisdiction it is an abuse of the process of the court to seek to have it re-litigated in new proceedings.”
27. When the banks proceedings resumed on the 10th June, 1997 it was conceded on behalf of the plaintiffs that the claims made in the banks proceedings (other than the Statute of Limitations claims) could not succeed unless Bula was successful in its appeal in the Supreme Court on Bula I. Counsel for the plaintiffs made an application for an adjournment pending the outcome of the
Supreme Court appeal on Bula I. The banks and receiver opposed the application. On 18th June, 1997, Barr J. held that the application ought to have been made at the commencement of the trial. He stated that he had no doubt that a conscious decision was made to proceed with the preliminary issue on the Statute of Limitations in the hope that the plaintiffs might be successful and to postpone the application for an adjournment to await the outcome of the preliminary issues. Barr J. stated that a manipulation of litigation in that way was itself an abuse of the process of the Court. Having considered the matter Barr J. granted an adjournment to await the outcome of the plaintiffs’ appeal to the Supreme Court on Bula I, on specific terms relating to expedition of the proceedings. He further stated that if the Bula I appeal were dismissed without overturning material facts found by Lynch J. that the plaintiffs’ primary claims in the banks proceedings should stand dismissed. Further, each of the plaintiffs were to undertake that they will not mount further proceedings against the defendants or any of their servants or agents in respect of any alleged wrong doing of which they are presently aware or in the opinion of the Court ought now to be aware.
28. As stated previously, the appellants were not successful in the Supreme Court. The Bula I appeal was dismissed on the 15th January, 1999. The appellants then applied to have that order of the Supreme Court set aside, which application was refused: as referred to previously.
29. After the judgment of Lynch J. on the 6th February, 1997 in Bula I, and at about the time when the banks proceedings were commencing, Bula Ltd. (in receivership) issued proceedings against the receiver, Laurence Crowley, on the 13th March, 1997, claiming an order directing the receiver to deliver up possession of the Bula lands, and damages for trespass, detention, conversion, breach of contract, negligence, and/or breach of duty, intimidation, conspiracy, acting in excess of authority, abuse of process, interest and costs. A notice of intention to proceed in the action was served, dated the 14th May, 1999, and a statement of claim delivered on the 21st June, 1999. The plaintiff claimed that the banks did not issue proceedings within the time limit pursuant to the Statute of Limitations to claim a sale but relied on the receiver to sell the property and pay them the net proceeds of the sale. The banks issued proceedings against Bula on the 4th April, 1997. Proceedings seeking well charging orders were issued on the 22nd April, 1997 and served on the 30th March 1998. The plaintiff claimed that as a consequence the receiver’s title to the land and any right to execute for repayment of principal and interest was extinguished: from the 19th February, 1992, for the Northern Bank Finance Corporation, from the 31st October, 1996, for Ulster Investment Bank; and from the 19th October, 1995, for Allied Irish Investment Bank. The plaintiff claimed it was entitled to have the receiver discharged, the mortgages and debentures cancelled, assets returned, and documents of title returned. On the 5th July, 1999 the receiver brought a notice of motion seeking to strike out the proceedings on the basis that there was no disclosure of a reasonable cause of action, and/or that it was frivolous or vexatious, and that it was an abuse of process, and that the issues raised could have been, but were not, raised in the banks proceedings.
30. Carroll J. held that the motion by the receiver was in effect an application to enforce the undertaking and that it would be a denial of justice to the receiver to release Bula from the undertakings given. A permanent stay was put on the action. As the receiver succeeded on this ground the Court did not rule on other grounds.
31. The banks proceedings came on for hearing again on the 16th January, 2001. In Bula Ltd. (In Receivership) and Ors. v. Crowley and Ors (Unreported, High Court, Barr J., 1st February, 2002), the High Court dismissed the remaining claims of the plaintiffs. In that judgment Barr J. referred to the fact that the receiver had sought to advance the sale but that he:-
“… has been frustrated in his efforts by persistent, unsuccessful litigation orchestrated by the sixth defendant who has demonstrated that he is implacably opposed to the sale of the potential Bula mine in any circumstances and is determined to place every possible obstacle in the way of the banks obtaining the benefit of their securities through such sale.”
The sixth defendant was Mr. Wymes.
32. After the Supreme Court decision in the Tara proceedings the receiver sought to sell the ore body. On the 9th May, 2001 he entered into a contract for sale to Tara Mines Ltd.
33. The receiver applied to the High Court for directions pursuant to s.316 of the Companies Act, 1963, “the s.316 application”. After a seven day hearing, on the 20th June, 2002, the High Court approved the sale pursuant to the contract: In the Matter of Bula Ltd. [2002] 2 ILRM 513. The appellants applied to the High Court for a stay on the 12th July, 2002 on the s.316 application, which was refused. The sale was then completed.
34. On the 23rd July, 2002 further proceedings were commenced by the appellants against the receiver and Tara seeking to overturn the sale and obtain interlocutory reliefs. These were refused by the High Court on the 1st August, 2002. On the 5th November, 2002 the appellants brought a motion seeking to amend the order of the High Court opposing the sale on the 20th June, 2002.
35. The appellants appealed the judgment in the s.316 application and the judgments of the 12th July, 2002, the 1st August, 2002, and the 5th November, 2002.
36. These four appeals were considered in the judgment Bula Ltd. v. Crowley (No.4) [2003] 2 IR 430, they were part of a series of seven appeals to the Supreme Court at that time. Part of the litany of litigation. The fourth appeal was the appeal against the High Court order on the s.316 application. All appeals were dismissed. I shall return to this appeal at a later stage in this judgment.
37. In Bula Ltd. v. Crowley (No.3) [2003] 1 IR 396 the issue raised related to the Statute of Limitations 1957. The plaintiffs claimed that the title of the banks to the secured lands and to the principal and interest secured by the mortgages and debentures had been extinguished as the banks had not brought an action to recover the land or an action claiming sale of the land within the twelve year period prescribed by the Act of 1957. The Supreme Court dismissed the appeal of Bula, holding that there was no adverse possession within the Statute of Limitations Act, 1957 so that Act would not apply; that on appointment the receiver went into possession of the assets of Bula for the benefit of the banks and so there was no possession contrary to the banks.
38. These Proceedings
These proceedings, the plenary summons and statement of claim which have been referred to earlier in the judgment, were brought by the appellants. Although many reliefs were sought , the key reliefs sought against the receiver are:
(a) a declaration that the receiver has purported to sell the property known as the Bula mine in breach of duty;
(b) a declaration that the receiver was and is prohibited from acting as a receiver and manager; and
(c) an injunction restraining the receiver from dealing with the proceeds of the purported sale pending the determination of the proceedings.
39. The receiver, the third and fourth defendants, and the banks, have brought the motions described previously, to dismiss or strike out these proceedings. On the 10th June, 2005 the High Court (Murphy J.) held:-
“The court is, however, satisfied that even though not appropriately particularised all of the plaintiffs claims have already been dealt with by the courts and are res judicata.
What remains are indeed vague, unparticularised allegations without foundation. It is an abuse of process to say that the appropriate foundation and particulars should await discovery.”
Murphy J. dismissed these proceedings as constituting an abuse of process of the Court and made an order restraining the appellants and each of them from instituting any further proceedings against the defendants without prior leave of the Court.
40. This then is the context of the appeal. The primary issue is the nature of the s.316 proceedings and their relationship, if any, to these proceedings.
41. The appellants have withdrawn their claims to set aside the judgments of the Courts on the s.316 application. However, it is relevant that they made the claim even though that claim is no longer maintained. This was a correct decision by the appellants in my opinion in light of Article 34.4.6˚ of the Constitution of Ireland which states:-
“The decision of the Supreme Court shall in all cases be final and conclusive.”
The relevant jurisprudence supports the decision of the appellants not to proceed with these claims. However, the existence originally of these claims in the pleadings and before the High Court implies that to succeed in the proceedings the s.316 application judgment has to be set aside. This infers similarity between the two proceedings.
42. Section 316 application
In the s.316 application the receiver sought the directions of the Court in relation to the sale of the Bula mine. By the 20th March 2002 the receiver made an application to the High Court pursuant to s.316 of the Companies Act, 1963. The receiver sought the following relief:-
“(1) an order pursuant to s.316 of the Companies Act, 1963 for directions in connection with the contract entered into for the sale of the property known as the Bula Mine, Navan, Co. Meath … by Bula Ltd. (In Receivership) to Tara Mines Ltd. on 9th May 2001;
(2) further or in the alternative, an order approving the sale of the said property to Tara Mines Ltd. on the terms set forth in the said contract and/or order granting and/or liberty to Bula Ltd. (in receivership) to complete the said contract.”
43. The appellants were parties, as was the receiver and Tara Mines Ltd. Mr. Wymes filed an affidavit on behalf of the appellants objecting to the sale, and other documentation filed also objected to the sale.
44. The s.316 application was heard over seven days in the High Court and a reserved judgment was given. There was a hearing over several days in the Supreme Court and a judgment upheld the High Court decision. The Court approved the sale, the contract has been completed, the property conveyed and title has passed to Tara Mines Ltd.
45. Section 316 of the Companies Act, 1963, as amended, provides that when a receiver of the property of a company is appointed under the powers contained in any instrument, named persons may apply “to the court for directions in relation to any matter in connection with the performance or otherwise by the receiver of his functions. …” These words describe a wide jurisdiction – for directions relating to any matter in connection with the performance of the receiver. In the s.316 proceedings brought, to which the Court was referred, the receiver sought directions. Thus both the statute and the motion in the proceedings relate to a broad jurisdiction. Thus the duty of care of a receiver may be addressed. It was for the Court to consider whether the receiver had taken all reasonable care to obtain the best price reasonably obtainable for the mine at the time of the sale. Of course each case depends on its own circumstances.
The process was considered carefully in the s.316 application in the High Court and in the Supreme Court. The very analysis of the process went to the root of considering whether the receiver had exercised his duty of care. While the s.316 application was necessarily addressing the statutory requirements on that application the Courts were fundamentally analysing the exercise of the duty of care by the receiver. Thus while the conclusion of the judgment in that case specifically addressed the statute and the circumstances it was an analysis of the duty of care of the receiver in the circumstances.
46. I am satisfied that issues relevant to the approval of the Court for the sale should be raised in the s.316 application. This is emphasised in this case where the s.316 application sought, firstly, directions in connection with the contract for sale, and secondly, an order approving the sale. This indicated the essence of the application as being a general request for directions regarding the sale. Consequently, no issue relevant to the sale by the receiver may be raised at a later stage.
47. The appellants, in the s.316 proceedings, made allegations in Mr. Wymes’ main affidavit. Subsequently these were withdrawn. On appeal to this Court there was an indication of a wish to introduce the allegations on the appeal, but this was not proceeded with. The appellants are now seeking to bring these and other issues back before the courts in these new proceedings. I am satisfied that a party cannot make claims in one set of proceedings, not proceed with them, and then after a final order is made in court, seek to bring further proceedings with such claims.
48. The position of the banks
The position of the banks in these proceedings was carefully scrutinised by the High Court. The learned trial judge referred to the s.316 application and pointed out that the purpose of the s.316 application was to allow the parties to raise objections. He considered that it was appropriate that the objections re Navan etc. should have been proceeded with. It had been claimed that the effect of the arrangements depressed the price so that the price obtained was not the best price. The learned High Court judge held that this was clearly relevant to the s.316 application, and he found that it was pleaded in the s.316 application. He held:-
“… the issue was not proceeded with because there was no evidence to support it. The issue cannot be re-litigated in these proceedings for three reasons.
Firstly, it is an abuse to re-litigate not only matters which were determined but also issues which were and could have been determined. … Secondly, there is, …, no adequate no proper factual basis for this issue to proceed.
Thirdly, the Supreme Court was not informed that the matter pleaded and not proceeded with, would be re-litigated. It would appear that there was no reservation in the Supreme Court.”
I agree with and affirm the findings of the learned High Court judge.
49. Having considered the pleadings in these proceedings I am satisfied that in essence the issue in these proceedings is the sale of the mine. These proceedings are an attempt to re-litigate previous litigation. This is, in my opinion, an abuse of process.
50. The essence of the appellant’s claim in these proceedings is that the receiver accepted the price of £27.5m, and the appellants claim that the value of the assets was several times this sum, and the appellants claim that because that value was not sought or obtained by the receiver, the appellants sustained losses. They have brought these proceedings. The appellants claim that the receiver satisfied the requirements of s.316 but failed in his duty to them. Further, that the receiver had a conflict of interest because of the involvement of relatives of his in Navan Mining Plc. and the involvement of KPMG with Navan Mining Plc. Further that the interests of Navan Mining Plc. are grounds for serious disquiet and the appellants seek to be compensated.
51. However, in the s.316 application the appellants submitted that the sale should not take place, which is essentially what the appellants’ claim in these proceedings. The issues raised in these proceedings have been aired before, or could have been. For example, in the s.316 application Mr. Wymes made objections relating to the involvement of Navan Mining Plc. with Bula’s banks and in the security granted. However, it was conceded that Mr. Wymes could not maintain the ground, and the matter was withdrawn as an objection. From the pleadings and affidavit of Mr.
Wymes in these proceedings it appears that a basis of the claim against the banks is the Navan involvement, which issue has been raised by Mr. Wymes in earlier proceedings. The banks have always maintained, and it has been deposed on their behalf, that no arrangements of the kind alleged by Mr. Wymes exist.
52. It is well established under the Constitution and the law that there must be finality in litigation. It is not open to a party to litigate and re-litigate issues.
53. There has been a large volume of litigation relating to the conduct of the receiver. I have set out some of the proceedings previously in establishing the context of this appeal. Yet it is now once again sought to revisit the sale and related matters.
54. The claims in these proceedings are couched in vague terms. I have a keen sense of being on a fishing expedition.
55. In general it is not appropriate to draft pleadings in vague terms. However, if fraud is alleged that must be done with particularity. The issue of fraud is raised but there are no detailed allegations. The learned High Court judge held that:
“The allegations were framed in terms which were not particularised and which were vague and hint at the previous orders of the Supreme Courts being obtained by fraud.”
Further, the High Court found that the evidence referred to in Mr. Wymes’ affidavit relating to a conflict of interest the Navan involvement, was not sufficient to ground a claim for fraud. The High Court pointed out that conflict of interest was relevant to the s.316 application and that the courts had heard such evidence as there was. I would endorse the analysis and determination of the High Court on this aspect of the case also.
56. Res judicata
I am satisfied that the principle of res judicata applies. This applies to claims made by the appellant in the s.316 proceedings and to claims which could have been made and determined in the earlier proceedings. As it was said in Henderson v. Henderson [1843] 3 Hare 100 at pp. 114 and 115:-
“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 matters which might have been brought forward only 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 to pronounce a judgment, but to every point which properly belonged to the subject of the litigation, and which the parties, exercising reasonable diligence might have brought forward at the time.”
This principle is part of Irish law and is applicable in this case. Of particular relevance is the aspect of the principle which exists to protect respondents from successive applications. This Court has on several previous occasions approved, as I do now, the following from Woodhouse v. Consignia Plc. [2002] 1 W.L.R. 2258 at p.2575:-
“But at least as important is the general need, in the interests of justice, to protect the respondents to successive applications in such circumstances from oppression. The rationale for the rule in Henderson v. Henderson (1843) 3 Hare 100 that, in the absence of special circumstances, parties should bring their whole case before the court so that all aspects of it may be decided (subject to appeal) once and for all 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 for ever, and that a defendant should not be oppressed by successive suits where one would do.”
57. These proceedings seek in essence to re-litigate the s.316 application. The order sought under s.316 was for directions as to the sale. That is the appropriate time to raise all issues relevant to the sale. All such issues “properly belonged to” (Henderson v. Henderson) the s.316 application. Consequently, the appellants may not re-litigate the issues in these proceedings. The appellants were parties to the s.316 application, they took an active part in the litigation, it was open to them to raise issues relevant to the sale. The fact that the form of the s.316 application and these proceedings is different is not relevant. The tyranny of the form has been overcome in the common law legal system for over a century. The issue is the nature of the case. In these proceedings there is an attempt to raise issues which were raised, or should have been raised, on the s.316 application. In these proceedings the appellants are once again attacking the receiver and his right to sell. This has been the subject of litigation for over a decade, and the issue has been finalised. Issues relevant to the sale should be raised on that application.
58. Counsel on behalf of the appellants submitted that the s.316 proceedings were conducted speedily in the High Court, that it gave a party little time to prepare and present a claim. This is not a persuasive argument. If ever there was a party well versed in the facts of his case and in litigation it is Mr. Wymes. Obviously the issue of directions in relation to a contract is not something which should be rushed. However, it is a matter which should be dealt with attentively as the very nature of a sale requires that it not languish in the courts for years. A court should facilitate parties in matters relating to a contract and sale. It is for that attention and supervision that the court’s direction is sought. I am satisfied that the appellants had a fair opportunity to bring their objections before the Court in the s.316 application.
59. Access to Court
There is a constitutional right to access the courts. However, it is not an absolute right. With that right comes responsibility. Circumstances may arise where a person loses the right to initiate proceedings. For example, if there has been an excessive amount of litigation initiated by a person, or on his behalf, the courts have an inherent discretion, and indeed a duty, to review the use of court time. Court time is limited and there is a duty to use it justly. The history of the appellants’ litigation has been set out in part in this judgment. The entire history is not described but it gives a broad brush description of the situation. As recited earlier, the litigation of the appellants has been described as “a vast panoply of litigation which is unique in Irish legal history as to duration, complexity, range and multiplicity of issues”: Barr J. in Bula Limited (In Receivership) & Ors v. Laurence Crowley and Ors. (Unreported, High Court, 29th April, 1997). That observation was made more than 10 years ago, since when the litigation of the appellants has continued apace.
60. Isaac Wunder Order
In light of the history of the litigation by the appellants, some of which has been set out herein, I would affirm the order of the High Court, that the appellants and each of them be restrained from instituting any further proceedings against the receiver, Tara Mines Ltd, Outokumpu Oy, or the banks, without the prior leave of the High Court. This is not a bar to bringing litigation. It does not exclude the appellants from access to the courts. It establishes a filtering process, if they wish to bring proceedings against the named persons they must apply to the High Court for leave to issue the proceedings.
61. Conclusion
I would confirm the order of the High Court and dismiss the appeal. These proceedings are an abuse of process. They seek to re-litigate matters which were before the courts in the s.316 application, or which could have been raised in that application but were not. The appellants are bound by the determination in the s.316 application. The issues have been determined finally. I would dismiss the appeal for the reasons given. The dream of a future for the mine has turned to dust. Many have been covered with that dust. The dream is over. There is no escape from that fact. No amount of litigation can change the situation.
I would also make an order that the appellants be restrained from issuing further proceedings against the first, third, fourth, fifth, sixth and seventh named defendants without the prior leave of the High Court.
Talbot v McCann Fitzgerald Solicitors [2009] IESC 25
Judgment delivered the 26th day of March, 2009 by Denham J.
1. Application
Thomas Talbot, the plaintiff/appellant, hereinafter referred to as “the appellant”, has brought an ex parte motion and notice of vacation seeking to set aside a final judgment and order of this Court delivered on the 29th June, 2007, dismissing his appeal from a judgment and order of the High Court given and made on the 6th February, 2006, which refused his application for leave to apply for judicial review.
2. Exceptional Jurisdiction
The appellant seeks to set aside a final judgment and order of this Court. He requests this Court to exercise a jurisdiction which arises only in extremely rare and exceptional cases.
3. Constitutional Principle
The fundamental constitutional principle is that the decision of the Supreme Court is final and conclusive on matters which have been raised before it and on which a final order has been made. This principle is grounded in the Constitution of Ireland, 1937, Article 34.4.6˚ which provides:-
“The decision of the Supreme Court shall in all cases be final and conclusive.”
4. Exceptions
Under the common law a final order is conclusive also, however, a few exceptions exist. These exceptions relate to technical matters and do not establish a right to review a final order. In Belville Holdings Ltd. v. Revenue Commissioners [1994] 1 I.L.R.M. 29 at pp.36 and 37 Finlay C.J. stated:-
“There is, however, I am satisfied, a wider and more fundamental jurisdiction in a court to amend an order which it has previously made, even though that order is in the form of a final order and has been perfected.
We have not been referred to, nor have I been able to discover, any decision of this Court or of the Irish courts dealing with this question.”
Finlay C.J. reviewed some decisions from the Courts of England and Wales and stated that:-
“The position and principles appear, however, to be accurately stated in the judgment of Romer J. in Ainsworth v. Wilding [1896] 1 Ch. 673. where at p.677, he stated as follows:
‘So far as I am aware, the only cases in which the court can interfere after the passing and entering of the judgment are these:
(1) Where there has been an accidental slip in the judgment as drawn up, in which case the court has power to rectify it under O.28.r.11:
(2) When the court itself finds that the judgment as drawn up does not correctly state what the court actually decided and intended.'”
Having referred to some further cases Finlay C.J. concluded that:-
“I am satisfied that these expressions of opinion validly represent what the true common law principle is concerning this question. I would emphasise, however, that it is only in special or unusual circumstances that an amendment of an order passed and perfected, where the order is of a final nature, should be made by the court. The finality of proceedings both at the level of trial and, possibly more particularly, at the level of ultimate appeal is of fundamental importance to the certainty of the administration of law and should not lightly be breached.”
As I pointed out in G.McG. v. D.W. (No.2) (Joinder of Attorney General) [2004] 4 IR 1 at p.14 the inherent jurisdiction of the Courts as expressed in Belville does not encroach on the principle of the finality of litigation but rather is utilised to ensure that the intent of the Court in making an order is met.
5. Finality
The reason for this fundamental principle, that a final judgment is conclusive of the litigation, is because the finality of litigation is an important concept in the administration of justice. In The Ampthill Peerage [1977] A.C. 547 at p.576 Lord Simon of Glaisdale described the concept as follows:-
“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.'”
In essence, the principle of finality in litigation is to underpin certainty in the administration of justice. It is a fundamental principle for the common good. It ensures that litigation comes to an end and that there is certainty in the situation.
6. Fraud
The inherent jurisdiction referred to above enables a court to vary a final order so that the true intent of the court is carried out. However, an action may be brought to set aside an order obtained by fraud. This would be by way of new and separate proceedings from the original action.
7. An exception under the Constitution
The concept of an inherent jurisdiction under the Constitution of Ireland 1937 to vary an order of the Supreme Court has been considered. In Attorney General v. Open Door Counselling Ltd (No.2) [1994] 2 I.R. 333 the jurisdiction of this Court to vary a final order arose. In that case Finlay C.J. (with whom Hederman, Egan and Blayney JJ agreed) stated that the first issue for determination was whether the Supreme Court had any such jurisdiction to vary or discharge a final order. Finlay C.J. referred to his judgment in Belville and he stated that exceptions to that principle may arise where it is established that a judgment has been obtained by fraud. Finlay C.J. held that the jurisdiction did not arise in the Attorney General v. Open Door Counselling Ltd. case. He stated at p.342:-
“I am quite satisfied that it is wholly inconsistent with the constitutional obligations and the jurisprudence of this Court, for it to consider a question of the interpretation of the Constitution by way of motion to vary an order previously made in an appeal finally determined by it which, by inevitable necessity, has never arisen in the High Court or been decided by the High Court and, furthermore, is in the instant case a provision of the Constitution which was not in force or enacted at the time when the appeal was determined.”
In Open Door Counselling I wrote a dissenting judgment being of the opinion that the extant order of the Court manifestly breached a constitutional right. I considered that the Court has an inherent jurisdiction to ensure that the Constitution is not, and that rights thereunder are not, circumvented. I held that the Court has a duty to ensure that the Constitution and justice are upheld and that in that case the exceptional jurisdiction arose, and in the circumstances I would make an order varying the previous order of the Supreme Court.
8. Circumstances of a Case
In determining whether the jurisdiction arises the Court should consider all the circumstances of the case. In In Re Greendale Developments Ltd. (No. 3) [2000] 2 I.R. 514 an application to set aside the order of the Supreme Court was brought on the grounds that the core issue addressed (ultra vires) was decided by the Court without affording the applicants any proper opportunity to argue the point. Hamilton C.J. concluded:-
“The common law and public policy recognised the desire for finality in proceedings inter partes and Article 34.4.6 of the Constitution incorporated into the Constitution this desire and expressed it in clear and unambiguous terms. It provided that the decision of the Supreme Court shall in all cases be final and conclusive. The said provision is expressed to apply in all cases and there is nothing in the circumstances of this appeal which would justify disregarding the said provision.”
In that case I stated at pp 539 and 540, of such an application in relation to a final order that:-
“The court has to balance the application against the jurisprudence, of the common law and the Constitution, of the finality of an order. Whilst the Supreme Court is guardian of constitutional rights, it must also protect the administration of justice which includes the concept of finality in litigation.”
9. The circumstances must be such as to justify disregarding the primary principle that the order is final. In Bula Ltd v. Tara Mines Ltd (No.6) [2000] 4 I.R. 412 the applicants initially appealed against the judgment and order the High Court (Lynch J.) of the 6th February, 1997. The appeal was heard, determined and dismissed by the Supreme Court (Hamilton C.J., Barrington and Keane JJ.). Subsequently the applicants applied seeking to have the judgment of the Supreme Court set aside on grounds of objective bias. The applicants alleged that Barrington J. and Keane J., when practising at the Bar, had had links with the respondents which were of such a character as to give rise to a perception of bias. Barrington J. had acted for the fifteenth respondent in two sets of proceedings, relating to the Tara respondents in one case and the applicants in another; had advised on legislative reform in the area of mineral mining; had acted against Tara in a case; and had prepared two sets of advices for the first named respondent. Keane C.J. had advised the first named respondent as to an exempted development under the planning legislation and had undertaken to appear for the first named respondent in an anticipated hearing before An Bord Pleanála, which in the end he did not so do as he was appointed to the High Court. The applicants contended that objective bias arose from these connections between these judges and the respondents.
The Supreme Court held that it had an inherent jurisdiction to protect constitutional rights and justice. This jurisdiction may arise on an application relating to a final judgment of the Supreme Court, but only in rare and exceptional cases would it be invoked to protect a constitutional right or justice.
This Court exercised that jurisdiction in Bula Ltd v. Tara Mines Ltd No.6 and considered the application alleging perceived bias. It held that the test was whether an ordinary reasonable member of the public would have a reasonable apprehension that an appellant would not have a fair hearing from an impartial judge. It was pointed out that barristers were independent and did not become espoused to a litigant’s ambitions in providing the litigant with legal services. The reasonable person would be aware of that. A prior relationship of legal advisor and client did not generally disqualify the former advisor on becoming a member of court sitting in proceedings to which the former client is a party. There must be additional factors establishing a cogent and rational link between the previous association and its capacity to influence the decision to be made in the particular case. A reasonable apprehension would arise where the judge as counsel had previously given legal services to a party on issues alive in the case to be heard by the court. In that case I referred to the fact that there were seventeen alleged links between the respondents and the two judges, and that it was alleged that there was a reasonable apprehension of bias because of the links alleged. I found that none of the seventeen alleged links raised an issue so as to ground such an application. The Court dismissed the application.
10. In Kenny v. Trinity College & anor [2007] IESC 42 by notice of motion Mr Kenny applied for an order vacating the order made by the Supreme Court on 20th June, 2003, on the ground of objective bias. Mr Kenny submitted that the facts were sufficient to establish objective bias. The gravamen of his claim was that one of the judges who heard his application was a brother of an architect in the firm of architects which were witnesses in the case and were responsible for the design and execution of the development. The respondent in that case relied on two factors, (i) that the architect mentioned had no involvement whatever with the development in question; and that (ii) the architect was not a party, but that a member of the firm in a different city had charge of the project and was a witness in the proceedings.
There was no analysis in Kenny of the nature of the jurisdiction of the Court to set aside an order which is final and conclusive. There was no express decision as to what gave rise to the jurisdiction in that case and as to why the jurisdiction should be exercised in that case. Consequently the case does not assist the jurisprudence on this topic. Kenny did analyse the nature of objective bias. The test for objective bias was referred to, as were cases relevant to that test, and an order was made setting aside the order of the 20th June, 2003.
11. Applicable Law
The applicable law may be found in the Constitution of Ireland, 1937 and case law.
(i) The Constitution provides that the decision of the Supreme Court shall in all cases be final and conclusive.
(ii) In Attorney General v. Open Door Counselling Ltd. No.2 [1994] 2 I.R. 333 the Supreme Court held that it was inconsistent with the constitutional obligations and jurisprudence of the Court to vary the order previously made in an appeal finally determined by the Court.
(iii) The common law and public policy recognises the desire for finality in proceedings inter partes. Article 34.4.6 of the Constitution incorporated into the Constitution this desire and expressed it in clear and unambiguous terms. This is the fundamental principle to be applied by the Court. As Hamilton C.J. said in In Re Greendale Developments Ltd. (No.3) at p.536:
“… there is nothing in the circumstances of this appeal which would justify disregarding the said provision.”
(iv) Bula Ltd. v. Tara Mines Ltd. (No.6), held that the Supreme Court could set aside its own decisions in rare and exceptional cases as an exercise of its inherent jurisdiction to protect constitutional rights and justice. McGuinness J. held at p.478:-
“In summary, whilst very great weight must be given to the principle of finality and to the provisions of Article 34.4.6, this court has a jurisdiction to review and if necessary to set aside what appears to have been a final order in circumstances where the court’s duty to protect constitutional rights or natural justice arises. Such circumstances can only be to a high degree exceptional, and a very heavy onus lies on the applicants to establish that such exceptional circumstances exist. It is in this context that this court must consider the facts of the present case and the arguments put forward by the applicants.”
(v) Therefore, in this case the appellant must establish:-
(a) That the circumstances of this case are such as to give rise to this rare and exceptional jurisdiction.
(b) If this jurisdiction arises, that there was good reason to exercise it, such as establishing that there was objective bias.
12. Judicial Review
The appellant has sought to bring this motion to set aside the judgment of the Supreme Court made on the 29th June, 2007. That judgment related to an application for leave to apply for judicial review in the High Court.
13. The application for leave to apply for judicial review in the High Court was sought in relation to several decisions of the Circuit Court including:-
(i) The Hon Mr Justice Spain on the 1st May, 1990,
(ii) Judge White on the 21st November, 2001,
(iii) Judge Linnane in April, 2004 relating to an Isaac Wunder order.
Also, the appellant referred extensively to proceedings before those courts and raised issues and complained of the first named defendant/respondent and its letters.
14. The appellant argued and stressed that the inherent strength of his case proved that there was bias by the court when determining the application against him. While I am not satisfied that there is any such applicable principle, I have considered the strength of the appellant’s case in both the High Court and the Supreme Court.
15. In essence the appellant brought an application seeking leave to apply to judicially review a decision and/or decisions of the High Court which were hearings of appeals from the Circuit Court.
16. This application was refused on the 6th February, 2006 by Peart J.
17. Peart J. held:-
“The applicant made an ex parte application for leave to seek relief by way of judicial review of certain orders made in the Circuit Court in family law proceedings to which he was the respondent party.
It is very difficult to understand the background to the present application by reference only to the documentation prepared and produced to the Court by the applicant. He is unrepresented. But there is a very clear and useful summary of the chronology of events which is contained in a judgment of Mr Justice Abbott dated 26th June 2002 when making his decision on the Appeal by the applicant from the order of the Circuit Court (His Honour Judge White) dated 21st November 2001. That arose out of an application for, inter alia, an order of divorce. There had in 1990 been an order for judicial separation, and other ancillary orders, by His Honour the late Judge Spain. The applicant appealed against the making of those orders, which in due course was affirmed by McKenzie J. in the High Court.
In his judgment, Mr Justice Abbott referred to the fact that the litigation between the applicant and his former wife has been protracted. That is certainly so. In order to assist the applicant in his present application I sought the Circuit Court and High Court files so that I could perhaps better understand what relief the applicant was seeking and the reasons for same, since that was not at all obvious from the documentation produced by the application when he moved his application. When these files arrived to me it was evident that they amounted to a bundle of documents measuring about one foot in height. The applicant has sought already to obtain leave to seek relief by way of judicial review in respect of the order of Mr Justice Abbott already referred to. That application was refused by Mr Justice Quirke on the 7th February 2003.
Having considered the applicant’s ex parte application I informed him on the 6th February 2006 that I was not satisfied that he had shown any arguable grounds for seeking a judicial review of the order of His Honour Judge White and that indeed he was many years outside the time for so doing in any event. I drew attention to the fact that he had already availed of his right to appeal to the High Court against that order, and that there could be no question of another judge of the High Court judicially reviewing an order of a High Court judge.
I will not attempt to try and set forth the grounds upon which the applicant seeks to rely in the papers prepared by him since the contents are so incomprehensible that such a task is impossible. But it is without any doubt in my view that it is an attempt to impugn orders of the Circuit Court made several years ago, and in respect of which appeals have been heard and adjudicated upon. In my view the applicant is out of time by a long way, even if he could show, which he has not, that there are arguable grounds for contending that he is entitled to seek relief. I exercised my discretion in the matter not to grant leave, having made all reasonable allowance in considering the papers for the fact and that the applicant is representing himself.”
18. The appellant appealed the decision of the High Court (Peart J.) to the Supreme Court.
19. On the 29th June, 2007, the Supreme Court heard and gave judgment, in an ex tempore judgment delivered by Fennelly J., (with which Macken J. and Finnegan J. agreed). Fennelly J. held:-
“Mr Talbot appears before this court seeking leave to apply for judicial review of certain Circuit Court decisions. He made this application initially before Mr Justice Peart in the High Court on foot of a document entitled introductory motion, and which is dated with two dates, the 23/03/05 and the 25/11/05.
The judicial review procedure under Order 84 of the Rules of the Superior Court requires that there be a statement of grounds. It also requires that that statement of grounds be verified on affidavit. The document which at the top is headed “Introductory Motion” says that it is an application for judicial review ex parte. That obviously has to be interpreted as an application for leave to apply for judicial review, because of course judicial review itself cannot be obtained ex parte. The purpose of the ex parte application is to obtain leave from the court to apply for judicial review.
Mr Justice Peart heard that application in the High Court and by his order of the 6th February, 2006 he refused it. The applicant, Mr Talbot, applies to this court, not by way of appeal, but by way of application ex parte in this court for leave to apply for judicial review.
He still relies, as he has to, on the document entitled “Introductory Motion” and application for judicial review ex parte. He has however, produced no verifying affidavit. But he has made it clear that the Circuit Court orders in respect of which he seeks judicial review are made respectively by Judges White, Linnane and Spain. There were two substantive hearings in the Circuit Court. The first of those was before Judge Spain who made his decision in the Circuit Court order of the 1st May, 1990. The second of those was made by Judge White in the Circuit Court and it was heard and determined by an order of the 21st November, 2001. I will leave aside the matter of the order of Judge Linnane for the moment, but two things stand out in respect of the two orders respectively of the 1st May, 1990 and the 21st November, 2001. The first is that each of them is so long ago that an application for judicial review is extraordinarily late and is out of time and the second is that each of those was appealed to the High Court, there was a rehearing in the High Court and there was a High Court order. The consequences of those two matters are as follows; firstly in relation to time, the rules in Order 84 provide that any application for judicial review must be made at the earliest possible time but in any event within respective periods of three or six months depending on the nature of the order made. In the case of certiorari it should be six months. So the application here would be for an order of certiorari clearly of the two Circuit Court orders.
It is quite obvious that these orders were in each case made many years ago and much longer ago than six months. Now the law provides and the rules provide for extensions of time in cases where grounds for an extension are established. That has to be done by the applicant who has to explain the reasons for the delay. No attempt has been made in this case to explain the delay, there is no affidavit setting out grounds of any sort and there is no attempt to explain why the applications are being made so late. That in itself would be sufficient ground for refusing leave in each case.
The second is just as fundamental, in one sense perhaps more fundamental, and that is that each of those orders was appealed to the High Court. There was a full High Court hearing and in each case an order was made at the end of that hearing by the High Court. In the case of the order made by Judge Spain in the Circuit Court, it was made after hearing in the High Court by Mr Justice McKenzie and that order was dated the 28th February, 1991. In the other case there was an order made by Mr Justice Abbott in the High Court on appeal from the decision of Judge White and that order was made on the 26th June, 2002.
So those matters were fully heard and determined in the High Court. Two further points then arise. The first is that no appeal lies to the Supreme Court from an order made by the High Court on appeal from the Circuit Court. That is well established. This court has no jurisdiction. That aspect of the constitutional right of appeal from the High Court is regulated by law and it has been well established that no appeal lies. The second is, although no application is made of course for judicial review of either of those orders, the fact is that it could not be because no remedy by way of judicial review lies against a High Court order.
The attempt to question the validity of the two orders respectively of Judge Spain and Judge White is entirely baseless and without any possible foundation and therefore this court will refuse judicial review.
The remaining matter then is an order made in April, 2004 by Her Honour Judge Linnane in the Circuit Court. That order related to an application which was made by the applicant originally in the Circuit Court proceedings for an order known, under the colloquial appellation of an Isaac Wunder order, a sort of order which restrains vexatious litigants from pursuing repeated applications before a court. That application was made but no order was made and that is the vitally important matter. Judge Linnane made no order whatever on foot of the application for the Isaac Wunder order, except to adjourn it.
Apart from that altogether there are two other vital, obvious and fundamental matters which render this application in respect of Judge Linnane’s order baseless and without foundation like the others and that is there is no grounding affidavit at all. Indeed, Mr Talbot says before this court, that he believes, interpreting Rule 19, not Rule 84, Order 19 of the Rules of the Superior Courts that he does not have to produce any affidavit. That is his reason for not producing it, but the fact of the matter is that he has not produced any affidavit grounding leave to apply for judicial review. On that ground alone the application would have to be refused as being completely unjustified by evidence. But the second is that, in any event, that order, although perhaps not so long ago as the other two orders, was made more than three years ago now, and there is no attempt in that case either to justify the delay in applying for judicial review. It has to be said, in the end, that no substantive order was in any event made by Judge Linnane. Her only order was that the matter be adjourned with liberty to re-enter.
So in these circumstances the court, having given Mr Talbot every opportunity to present the grounds for his applications for leave to apply for judicial review is satisfied, but they are without foundation and must be refused.”
20. It is clear that the Supreme Court addressed the case and pointed out that there was no jurisdiction to bring the application which the appellant sought. It was without legal foundation. This is a correct statement of the law. There was no strength in the appellant’s case and it could not be a basis (if indeed such a ground existed) upon which to establish bias.
21. The appellant has brought the motion before the Court seeking to vacate a decision of the Supreme Court. He wishes to have the judgment and order of the Supreme Court made on the 29th of June, 2007 set aside.
22. The basis for his submissions, on his Notice of Motion, is:-
“That all bias and prevarication be set aside by this Honourable Court in agreeing my application for judicial review first mooted October 2002.”
The appellant also asks the Court to further take notice that he will rely on the following grounds:-
“(a) Clear perception of bias favouring legal fraternity and subjective too;
(b) In camera “inquisitorial” unjudicial proceedings;
(c) “Adversarial” strength in my extensive “books” was ignored;
(d) No finality in Irish divorce law; and
(e) That named lawyers misused court influence with judges involved having no track record in family jurisprudence, Supreme and High and Circuit and District (if you go back to 1989) Courts.”
23. The appellant filed extensive papers in relation to his claim and was heard in oral submissions.
24. Lay Litigant
The appellant brought this application in person. The Court gave the appellant great latitude in the presentation of his case, both for his oral submissions and in his written submissions, as he is a lay litigant. The appellant was permitted to submit many documents. Also, the Court heard two hours of oral submissions presented by the appellant on his behalf. The Court has taken great care to ensure that the appellant had a reasonable opportunity to present his submissions. In the circumstances the Court has had a full opportunity to hear the appellant’s case.
25. Roots
The roots of this application lie in family law proceedings in the Circuit Court. Family law litigation may be very stressful to parties. Clearly the appellant is unhappy with decisions made by a number of Circuit Courts on matters relating to his family, such as orders for protection, a barring order and the family property. He did, however, as he is entitled to do, appeal these orders to the High Court, where a full rehearing was held and decisions made on the appeals.
26. I have read carefully the papers filed by the appellant and considered carefully his oral submissions.
27. The appellant made oral submissions which ranged over many issues. He alleges bias of judges in all jurisdictions. He made reference to matters in the family law cases in the Circuit and High Courts. He referred to events “in the maelstrom of family law”. He spoke of losing his house in litigation. He stated that he got nothing and paid everything. He made allegations that solicitors had had arranged a scorched earth policy. He referred to the voluminous correspondence. He objected to barring and protection orders being made without him being present. He stated that he had been an excellent husband, he made statements about his wife, he said he did not know where his wife and children live. He argued that the written judgments did not reflect what the judges said. For example, he alleged that Peart J. said there were arguable grounds but then wrote that there not arguable grounds. He revisited events in submissions which had clearly been upsetting, such as being arrested and charged. At times he spoke well of the judges, saying, for example, that Judge Abbott gave him everything, and that Judge McKenzie gave him a good hearing.
28. I have also considered carefully the documents and the additional documents filed by the appellant, including those filed after the Court hearing, as was permitted by the Court. It is clear from the papers that the appellant is alleging objective bias of judges, and alleging illegal acts of solicitors in family law proceedings in the Circuit, High and Supreme Court. He alleges that judicial bias and activities of legal representatives contrary to law existed from 1989 in the maelstrom of family law proceedings. He stressed the strength of his case.
29. The appellant referred to and relied on a letter from Mr Justice Finnegan, when he was President of the High Court, who wrote to the appellant in reply to a letter of 12th February, 2003.
The appellant states that Mr Justice Finnegan “kindly pointed out no appeal from High Court to Supreme Court when appeal from Circuit Court to High Court has taken place.” In that letter Mr Justice Finnegan referred to the issue of judicial review:-
“Further where a Judge of the High Court makes a decision I have no power to interfere with the same or to review the same and the only remedy available is in the case of Judicial Review when the decision of the High Court can be appealed to the Supreme Court. In those circumstances I regret that I am unable to assist you in the circumstances which you outline.”
This letter has been misinterpreted by the appellant. It does not advise the appellant that judicial review is open to him. It pointed out that if the case were one of judicial review that then an appeal could lie to the Supreme Court, but that an appeal did not lie to the Supreme Court from a High Court decision on an appeal from the Circuit Court.
30. The appellant made submissions about the proceedings before Mr Justice Spain. He also made submissions about the proceedings before Judge White, and the solicitors and counsel. He made allegations against staff of the Courts Service. He made allegations about property transfers arising out of the family law proceedings. He expressed concern about his pension.
He made allegations that court orders were falsified. He alleged lack of fair decisions in the courts and that this is the background of general and specific bias. He wrote lengthy submissions for this Court. For example:-
“I submitted “Grounding application for judicial review” to Ms McGuigan 3 Sept 2004. I already had a deep sense of misgiving about all Courts treatment of what was basically an indictment of themselves. Judges, Court Services, Legal Profession and began to explore the possibilities of both sec 40 of Civil Liability and Court Act 2004 and Commission of Investigation Act 2004 in effect the cost cutting time saving son of Tribunal for sins I perceive as committed by the father figure. This Hon Courts Judges have to read the 18 typed pages of pleadings submitted to J.M. White Counsel and Solicitor present during 4 days hearing to 21 Nov 2001 to understand and sympathise with my position at that point and to wonder how it worsened with bias overcoming strength of case from beginning to end.”
The appellant referred to many appearances and issues before the Courts over the years. He constantly returned to assertions of bias and to the many occasions on which his suspicions were aroused.
31. Decision
31.1 This case was heard in open court, it was not heard in camera.
31.2 This was an ex parte application by the appellant. There was no one in court holding a watching brief for the respondents.
31.3 Papers were received from the appellant both before and after the Court hearing, with permission of the Court.
31.4 The appellant was granted two hours to make oral submissions on this motion. This was in excess of the time which would be allocated to a case where counsel acted for a party, the extra time was awarded to the appellant because he is a lay litigant. In fact, he exceeded this time, but the Court permitted him the extra time.
31.5 The first issue for the Court is whether it has jurisdiction in the circumstances, where the appellant seeks to vacate a final order and judgment of the Supreme Court.
31.6 The decisions of the Supreme Court are final and conclusive. This fundamental constitutional principle is to provide finality and certainty in the administration of justice. The finality of litigation is important in all courts, but especially so in the court of final appeal. The fundamental principle is that the order of the Supreme Court is final. However, in rare and exceptional cases a jurisdiction may arise. The appellant has a heavy burden to establish that such rare and exceptional circumstances exist as to give rise to this jurisdiction.
31.7 The Constitution expressly states that the decision of the Supreme Court shall in all cases be final and conclusive. In rare circumstances the Court has jurisdiction to vary a final order. This may arise (a) where there has been an accidental slip in the judgment; (b) where the judgment as drawn up does not correctly state what the Court intended and decided; (c) in separate proceedings for fraud; (d) in rare and exceptional cases to protect constitutional rights and/or justice.
31.8 The appellant has come before the Court submitting that such exceptional circumstances exist in his case that there should be an intervention in the final order of the Supreme Court made on the 29th June, 2007.
31.9 I have considered very carefully all the documentation furnished by the appellant, and his oral submissions. I understand that he is very unhappy with the way the litigation relating to his family proceeded in a variety of Circuit Courts and High Courts. He feels he has not had the strength of his case recognised by the Courts. While I understand his distress at his family break up, those decisions of the Circuit Court and the High Court are not in issue before this Court. This Court has no jurisdiction to review those decisions. The only judgment and order before this Court is the judgment of the 29th June, 2007, of the Supreme Court. That judgment has been set out earlier.
31.10 The appellant has made assertions about the Supreme Court judgment of 29th June, 2007. But mere assertions do not give rise to the jurisdiction he seeks to invoke. The appellant has not discharged any onus, let alone the heavy burden of establishing that such exceptional circumstances exist that this Court should exercise a jurisdiction to review a previous judgment of this Court. Therefore, in the circumstances of this case I am satisfied that no such jurisdiction arises. Consequently I would dismiss the application on the basis that no jurisdiction arises to review the judgment and order of the Supreme Court of the 29th June, 2007.
32. Even if the appellant had discharged the burden of proof, which he has not, and even if the Court had a jurisdiction to review the judgment of the 29th June, 2007, which it does not in the circumstances, there is no basis on which to vary the judgment of the Supreme Court of the 29th June, 2007.
33. The legal system gives a right to a hearing and a right to an appeal. In this case the initial hearings were in several Circuit Courts and appeals were heard by several High Courts. These High Court appeals were a full rehearing of each case. There is a right of access to the courts, and a right of appeal. The appellant has exercised both rights. But there has to be finality to litigation. That finality is achieved on the conclusion of an appeal, in this case in the High Court.
34. The right to judicial review is a right to apply to the High Court to review decisions of lower courts or tribunals or administrative decisions. The right to apply for judicial review does not apply to review an appeal heard by the High Court of a decision of the Circuit Court. This was clearly stated by the High Court, by Peart J., on the 6th February, 2006 and it was affirmed by the Supreme Court on the 29th June, 2007.
35. Even if the jurisdiction arose, which I am satisfied it does not, the appellant has not shown any bias by the Court in its judgment of the 29th June, 2007. Consequently, I would dismiss the application on this basis also.
36. The issue of objective bias was argued in submissions before the Court and considered. The test is whether an ordinary reasonable member of the public would have a reasonable apprehension that the appellant would not have a fair hearing by an impartial judge. While the appellant has made lengthy submissions on his application for judicial review, and many assertions, he has failed to establish any objective bias.
37. At the root of the application is the appellant’s misunderstanding of court proceedings and his disappointment with decisions in family law matters in Circuit and High Courts. His assertions of objective bias are only that, assertions. His belief in the strength of his case does not establish any bias by the Court. He has no right under the Constitution or the law to have the previous final decision of the Supreme Court reviewed. The litigation must conclude.
38. Procedure
The jurisdiction to review a previous decision of the Supreme Court arises from its inherent jurisdiction to do justice.
38.1 There are occasions when it is manifestly clear that the Supreme Court does not have jurisdiction to exercise this exceptional jurisdiction. For example, the Supreme Court does not have jurisdiction to hear an appeal from the High Court where the High Court decision was on an appeal from the Circuit Court. As Murray C.J. pointed out in P. Clohessy v. P. Clohessy Supreme Court 31st July, 2008:-
“… this Court can only deal with it if it has jurisdiction and it cannot under any circumstances, no more than any other Court, deal with a matter for which it does not have jurisdiction.
… [this Court] does not have jurisdiction to entertain appeals from the High Court where the decision of the High Court is on an appeal from the Circuit Court. That has been the clear and stated law for a very long time.”
Where it is clear that the claim is manifestly ill-founded and the Supreme Court has no jurisdiction to hear an application, the matter can be dealt with administratively in the office of the Supreme Court.
38.2 If on the papers an applicant fails to disclose any objective foundation for the exercise of the exceptional jurisdiction of the Supreme Court to review its decision, and the claim appears to be manifestly ill-founded, then the Supreme Court may make a ruling that the application is manifestly ill-founded without the necessity of holding an oral hearing.
39. In this case the appellant was granted an oral hearing. He failed to disclose any objective basis for the exercise of the exceptional jurisdiction on the papers filed and the claim appeared to be manifestly ill-founded. However, he was granted an oral hearing, and written and oral submissions were presented and considered. Having considered the documents filed and the written and oral submissions I am satisfied that the appellant’s claim is manifestly ill-founded and I would dismiss the application.
Conclusion
For the reasons given I would dismiss the appellant’s motions.
Keane v Considine [2010] IEHC 267
Judgment of Mr Justice John Edwards delivered on the 11th day of June, 2010
1.0 Introduction
1.1 This Court is concerned with a motion brought by the defendants to strike out, alternatively to dismiss, or to stay, the plaintiffs’ proceedings as against the first and second named defendants. The relevant Notice of Motion dated the 2nd of October 2009 specifically claims:
“1. An Order pursuant to Order 19, Rule 28 of the Rules of the Superior Courts striking out the within proceedings as against the first and second named defendants, or in the alternative dismissing the plaintiffs’ said action or staying all further proceedings therein on the grounds that the pleadings disclose no reasonable cause of action as against the first and second named defendants and/or the action shown by the pleadings as against the first and second named defendants is frivolous and/or vexatious.
2. An Order pursuant to the inherent jurisdiction of this Honourable Court striking out the proceedings by the plaintiffs as against the first and second named defendants, or in the alternative dismissing the said action or staying all further proceedings therein on one or more of the following grounds:
(i) the plaintiffs’ action as against the first and second named defendants is frivolous and/or vexatious;
(ii) the plaintiffs’ action as against the first and second named defendants is bound to fail;
(iii) the plaintiffs’ action as against the first and second named defendants is an abuse of the process of the Court.”
2.0 The proceedings herein:
2.1 On or about 5 March 2009, the plaintiffs issued a Plenary Summons seeking a number of reliefs as against the defendants. The plaintiffs sought a number of declaratory reliefs, rectification of contracts for the sale of land dated 16 August 2003 and 1 June 2003 and grants of wayleave dated 9 September 2003 and 2 June 2005, specific performance of the rectified agreements and damages.
2.2 The first and second-named defendants entered an appearance on or about 20 March 2009 and a Statement of Claim was delivered on or about 2 April 2009.
2.3 The Statement of Claim was in the following terms:
“1. The First named plaintiff is a retired Medical Consultant, and the Second named plaintiff is the wife of the First named plaintiff, and they reside together at Oranhill, Oranmore, Galway.
2. (a) By contract for Sale, dated 16th August, 2003 (hereinafter sometimes referred to as “the First contract for Sale”) made between the plaintiffs, as Vendors, of the one part, and the first and second named defendants, as Purchasers, of the other part, the plaintiffs agreed to sell and the defendants agreed to purchase from the plaintiffs ALL THAT AND THOSE part of the lands comprised in Folio 20658F County Galway measuring 0.327 hectares, or thereabouts statute measure and that part of the lands comprised in Folio 29383 County Galway measuring 2.923 hectares, or thereabouts, statute measure, as delineated on the map thereto annexed, but Reserving unto the plaintiffs, their servants, agents, licensees and successors in title FIRSTLY the right at all times with or without vehicles to pass and re-pass over and along the roadways and footpaths to be constructed on the lands sold and SECONDLY without charge, to connect and make connections to all services to be constructed on the lands thereby sold and including the free passage to and from the plaintiffs’ retained lands of water, soil, gas, electricity, telephone signals, oil, heating fuel and all other services through all pipes, drains, sewers, mains, ducts, pipes, electrical and telephone apparatus, cables, wires and all other services.
(b) The purchase price specified in the First contract for Sale was €4,140,582.
(c) The First contract for Sale contained certain Options in favour of the first and second named defendants.
(d) By Special Condition 8 of the First contract for Sale it was provided that the lands in sale would be subject to the plaintiffs reserving rights to services and access for their retained lands comprising the remainder of Folio 29383 County Galway insofar as these lands may be developed and all water and soil pipes accessed by gravity flow and excluding any areas which will require pumping.
The plaintiffs will refer to the said First contract for Sale at the hearing of the action herein for greater particularity.
3. By Transfer dated 10th September, 2003 made between the plaintiffs of the one part and the first and second named defendants of the other part, for the consideration specified therein, the lands comprised in the First contract were duly transferred to the first and second named defendants.
4. By Deed of Grant of Wayleaves, dated 9th September, 2003 (hereinafter sometimes referred to as “the 2003 Grant of Way leaves”) made between the defendants, Thomas Considine, Patrick Sweeney and Ronald Greene, as Grantors, of the first part, the plaintiffs, as the First Grantees, of the second part, and Biondel Limited, as the Second Grantee, of the third part, for the consideration therein the defendants granted to the plaintiffs, their heirs, executors, administrators, servants, agents, licensees, successors, nominees and assigns, for the benefit of the entire lands comprised in Folios 29383 and 20658F both of the Register, County Galway the rights specified in the First Schedule hereto.
5. By contract for Sale dated the 1st day of June 2005 (hereinafter referred to as “the Second contract for Sale”) made between the plaintiffs, as Vendors, of the one part and the first and second named defendants, as Purchasers, of the other part, the plaintiffs agreed to sell to the first and second named defendants agreed to purchase from the plaintiffs ALL THAT part of the lands comprised in Folio 29383 County Galway measuring 0.2206 hectares or thereabouts as delineated on the map annexed thereto and thereon marked “B 1” and “S”. The plaintiffs will, at the hearing of the Action, refer to the Second contract for greater particularity.
6. By Transfer, dated 2nd June, 2005 made between the plaintiffs, as Transferors, of the one part and the first and second named defendants, as Transferees, of the other part, the lands comprised in the Second contract were transferred to the first and second named defendants.
7. By Deed of Grant of Way leaves dated 2nd June, 2005 made between the defendants, as Grantors, of the one part and the plaintiffs, as Grantees, of the other part, for the consideration specified therein the rights and easements specified in the Second Schedule hereto, being rights similar to those specified in the First Schedule hereto, were granted to the plaintiffs for the benefit of the entire remaining lands comprised in Folio 29383 retained by the plaintiffs.
8. The defendants applied for and obtained the Planning Permissions specified in the Third Schedule hereto for the development of both the plaintiffs’ lands and the defendants’ lands. The Planning Permission benefiting the plaintiffs’ lands is Planning Register No. 04/1973, dated 31st January, 2005.
9. In making the said Planning Applications and the grants of the said Planning Permissions show the roadways on the defendants’ lands connecting up with the roadways on the plaintiffs’ lands.
10. It was an implied term of the First contract for Sale and the Second contract for Sale, and the said 2003 Grant of Way leaves and the 2005 Grant of Way leaves that:
(i) The defendants would complete the construction of the roadways and footpaths and services authorised by such Planning Permissions obtained by them up to the boundary between the plaintiffs’ lands and the defendants’ lands (hereinafter referred to as “the Common Boundary”):
(ii) In the event of the defendants failing or neglecting to complete the construction of the said roadways, footpaths and services up to the Common Boundary, the plaintiffs should be entitled, at their own cost and expense, to enter in and upon the defendants’ lands, with all necessary building equipment, men and machinery, for the purposes of connecting up the said roadways and footpaths on the defendants’ lands with the roadways and footpaths on the plaintiffs’ lands and the services on the defendants’ lands with the services on the plaintiffs lands, causing as little damage and inconvenience as would be reasonably practicable by the exercise of such right, but making good any damage occasioned to the defendants’ Land by the exercise of such right, but not being liable for any temporary inconvenience caused by the exercise of such right.
11. Insofar as the First contract for Sale and the Second contract for Sale, and the 2003 Deed of Grant of Wayleaves and the 2005 Grant of Wayleaves do not contain such provisions they do not accurately reflect the common intention of the plaintiffs and the first and second named defendants which continued up to the date of execution of the First contract for Sale and the Second contract for Sale.
12. Pursuant to the Planning Permissions specified in the Third Schedule hereto, or some of them, the defendants, or the first and second named defendants, constructed the roadways and footpaths on the defendants’ lands in a manner which left a short gap between the said roadways and footpaths and the Common Boundary. The defendants have wrongfully contended that the plaintiffs, their servants or agents, are not entitled to enter in and upon the defendants’ lands for the purposes, at their own cost and expense, of completing the construction of the said roadways and footpaths on the defendants’ lands up to the Common Boundary and into the plaintiffs’ lands.
13. The defendants wrongfully dispute the right or title of the plaintiffs, their servants or agents, to enter in and upon the defendants’ lands for the purposes of opening up the same and connecting to the services on the defendants’ lands, contending that such right is futile, having regard to the contention made by the defendants that there is no right for the plaintiffs to complete the said roadways and footpaths as constructed by the defendants on the defendants’ lands up to and unto the plaintiffs’ lands.
14. The Planning Permission authorising the development of the plaintiffs’ lands will expire on 30th January, 2010. The Planning Permissions relating to the development of the defendants’ lands have withered. The approved roadways and services on the defendant’s lands have not been completed in accordance with the approved Planning Applications and the Planning Permissions granted in respect of the defendants’ lands.
15. If the Planning Permission dated 31st January, 2005, Register Reference 04/1973 is not implemented before its expiry or substantial development carried out thereon, it is likely that any new Planning Application or Applications for the plaintiffs’ lands if granted will encounter serious planning difficulties due to environmental issues. If a new Planning Permission is in fact granted, it is anticipated, and the plaintiffs are advised, and so believe, that such Planning Permission would be more restrictive, and less beneficial to the plaintiffs and the plaintiffs’ lands: as a result thereof the plaintiffs will suffer severe loss and damage by reason of the breach of contract and breach of duty of the defendants.
PARTICULARS OF LOSS AND DAMAGE
To ongoing and continuing reduction in the value of the plaintiffs’ lands arising by reason of such restrictive Planning Permission
AND THE PLAINTIFFS CLAIM:
(1) A Declaration that the first and second named defendants are obliged to extend and complete the roadways and footpaths constructed by them on their lands situate at Oranhill, Oranmore, Co. Galway, and being the lands comprised in Folios 20658F and 81564F County Galway (hereinafter referred to as “the defendants’ lands”) up to the boundary of the defendants’ lands with the plaintiffs’ adjoining lands situate at Oranmore aforesaid, and comprised in Folio 29383 County Galway (hereinafter called “the plaintiffs’ lands”).
(2) A Declaration that the plaintiffs, their servants or agents, are entitled, at their own cost and expense, to enter in and upon the defendants’ lands for the purposes of completing the roadways and footpaths thereon up to the roadway and footpaths authorised by Planning Permission dated 31st January, 2005, Register Reference No. 04/1973, to be constructed on the plaintiffs’ lands.
(3) A Declaration that the plaintiffs, their servants or agents, are entitled at their own cost and expense, to enter in and upon the defendants’ lands the purposes of opening up the same and connecting the services authorized by said Planning Permission dated 31st January, 2005, Register Reference No. 04/1973 to be constructed on the plaintiffs’ lands with the services on the defendants’ lands.
(4) Rectification of a contract for Sale date 16th August, 2003 made between the plaintiffs, as Vendors, of the one part the first and second named defendants, as Purchasers, of the other part, for the sale by the plaintiffs of part of the defendants’ lands to the first and second named defendants so as to provide in the special conditions thereto, that: –
(a) The first and second named defendants would complete the construction of the roadways and footpaths and services authorised by Planning Permission or Permissions obtained by them up to the boundary between the plaintiffs’ lands and the defendants’ lands (hereinafter called “the Common Boundary”)
(b) In the event of the defendants, or the first or second named defendants, failing or neglecting to complete the construction of the said roadways, footpaths and services up to the Common Boundary, the plaintiffs should be entitled, at their own cost and expense, to enter in and upon he defendants’ lands, with all necessary building equipment, men and machinery, for the purposes of connecting up the said roadways, footpaths and services authorized by Planning Permission to be on the plaintiffs’ lands with the said roadways, footpaths and services on the defendant” lands, causing as little damage as was reasonably practicable by the exercise of such right, and making good, at their own cost and expense, any damage occasioned to the defendants’ lands by the exercise of such right, but not being liable for any temporary inconvenience caused by the exercise of that right.
(5) Rectification of a Deed of Grant of Wayleaves, dated 9th September, 2003, made between the defendants, as Grantors, of t one part, and the plaintiffs, as First Grantees, of the Second Part, and Biondel Limited, as Second Grantee, of the third part in like manner as at paragraph 4(a)
(6) Rectification of a contract for Sale, dated 1st June, 2005, made between the plaintiffs, as Vendors, of the one part and the defendants, as Purchasers, of the other part, in like manner as at paragraph 4 above.
(7) Rectification of a Deed of Grant of Wayleaves, dated 2nd June, 2005, made between the defendants of the one part and the plaintiffs of the other part, in like manner as at paragraph (4) (a) and (4) (b) above.
(8) Specific performance of the contracts specified at paragraphs 4 and 6 above, as Rectified, insofar as the same remain uncompleted, and damages under Lord Cairns Act.
(9) Damages for breach of contract.
(10) An Order that the defendants do execute such Deeds of Rectification and Wayleaves and assurances as may be necessary to rectify the Deeds of Grant dated 9th September, 2003 specified at paragraph 5 above, when rectified, and the Deed of Grant of Wayleaves, dated 2nd June, 2005, specified at paragraph 7 above, when rectified.
(11) Further and other relief.
(12) Costs.
FIRST SCHEDULE
Full right and liberty for the entire of the plaintiff’s lands
(1) At all times by day and by night a right of way with or without horses, carts, motor vehicles and motor lorries and all other mode of vehicles whatsoever propelled or drawn, laden or unladen, to go over and pass and re-pass over and long the roadways and footpaths now laid or at any time within twenty-one years from the date hereof to be laid within the Grantors’ lands.
(2) A free passage to and from the first and second Grantees’ lands respectively of water, soil, gas, electricity, telephone signals, oil, heating fuels and other services through all pipes, drains, sewers, mains, ducts, poles, electrical and telephone equipment, cables and wires now or within twenty-one years from the date hereof to be constructed under or over the Grantors’ lands.
(3) The right to erect, connect up with and to cleanse and repair the said pipes, sewers, mains, ducts, poles, electrical and telephone equipment, cables and wires and for that purpose to enter the Grantors’ lands hereto or any part thereof with workmen and others and all necessary equipment for making good any damage thereby occasioned and over and under the roads and footpaths contained within the Grantors’ lands.
SECOND SCHEDULE
For the benefit of the plaintiffs’ lands, and the entire remaining lands comprised in Folio 29383 retained by the plaintiffs insofar as these lands may be developed, the full right and liberty:
(1) At all times by day and by night a right of way with or without horses, carts, motor vehicles and motor lorries and all other mode of vehicle whatsoever propelled or drawn, laden or unladen, to go over and pass and re-pass over and along the roadways and footpaths now laid over or at any time within twenty-one years from the date hereof to be laid within the lands described in the First, Second and Third Schedules to the 2005 Deed of Grant, and including the defendants’ lands.
THIRD SCHEDULE
(1) Planning Permission dated 26th July, 2002, Planning Register Reference No. 00/1957.
(2) Planning Permission dated 28th June, 2004, Planning Register Reference No. 04/1423.
(3) Planning Permission dated 31st January, 2005, Planning Register Reference No. 04/1973.
(4) Planning Permission dated 26th July, 2004, Planning Register Reference No. 04/2614.
(5) Planning Permission dated the 20th day of February 2006, Register Reference No. 05/4339.”
2.4 On or about 27 April 2009, the proceedings were entered into the Commercial List of this Honourable Court pursuant to an application grounded on the Solicitor’s Certificate required pursuant to Order 63A Rule 4 of the Rules of the Superior Courts, viz the Certificate of Messrs R.D.J. Glynn Solicitors, and an affidavit of the first named plaintiff Padraic Keane, sworn on the 8th day of April, 2009.
2.5 At paragraph 2 of their said Certificate, Messrs R.D.J. Glynn, Solicitors, stated that:
“The defendants have constructed the said roadways on the defendants’ lands leaving a short gap between the common boundary of the plaintiffs’ lands and the defendants’ lands. The defendants contend that they are not bound to complete the construction of the roadways and footpaths up to the common boundary and contend that the plaintiffs have no right to enter in or upon the defendants’ lands for the purposes of completing the construction of the said roadways and footpaths up to the common boundary and onto and into the plaintiffs’ lands”.
2.6 The first named plaintiff has deposed, at paragraph 4 of his Affidavit grounding the application for admission to the Commercial list, that:
“Notwithstanding the reservation[,] in the contract for Sale dated 16th August 2003 made between the plaintiffs as vendors of the one part and the first and second named defendants as purchasers of the other part, and the two Deeds of Grant of Wayleaves[,] of rights of way over the said roadways[,] the defendants did not complete the construction of the said roadway[s] on the defendants’ lands up to the common boundary between the plaintiffs’ lands and the defendants’ lands but left a small or narrow strip between the same”.
(The punctuation and other material in square brackets is not contained in the original and has been inserted by the Court to better convey what the Court believes was the intended sense of this lengthy sentence.)
2.7 The first and second-named defendants delivered their defence on or about 8th June 2009. The defendants denied in their defence that the agreements between the parties imposed on them the obligations contended for by the plaintiffs. They have also filed a substantial counterclaim to the plaintiffs’ proceedings with which the Court is not presently concerned.
2.8 Subsequent to the delivery of the defence, it was discovered that the gap which the plaintiffs had claimed existed between the common boundary of the plaintiffs’ lands and the defendants’ lands, does not in fact exist. Moreover, roads which both parties had contended had not been constructed had in fact been constructed. Further, it is now accepted by both sides that physical access to the plaintiffs’ lands is now, and has at all material times been, available for the purpose of carrying out development on those lands. Accordingly, the extent to which the parties are in continuing dispute concerns, principally, whether or not the roads in question have been finished to the standard required under the contract, and indeed as to what was the standard required under the contract.
2.9 This extraordinary state of affairs came about because both sides through their respective solicitors saw fit to engage in a course of robust correspondence prior to, and for some months after, the commencement of proceedings without anybody fully checking out the facts of the case. The aforementioned correspondence and proceedings were based, at least in part, upon asserted, assumed or presumed facts which were not correct. As a result both sides operated under a misapprehension or mistake as to what was the actual situation on the ground. This misapprehension or mistake, which the Court emphasises was a mutual one, could easily have been dispelled if the two sides had organised a timely joint inspection of the lands. However, there was no such inspection prior to the commencement of proceedings, prior to the delivery of a Statement of Claim and prior to the delivery of a Defence. It was only after the Defence was filed that an inspection, to be attended by both parties’ respective engineers, was arranged. The error was then discovered when that inspection was finally carried out.
2.10 It does appear from Replies to Particulars dated the 25th of May 2009, and furnished by the plaintiffs to the defendants, that John Mooney & Co, Consulting Engineers, who were retained by the plaintiffs alone, reported to the plaintiffs in September 2008 “following inspection of maps, planning permissions and drawings, and the lands themselves” (the court’s emphasis) “that the approved roadway and services have not been fully completed in accordance with the planning approval.” Although the court has not had sight of the actual report, it is the court’s understanding that this representation was interpreted, incorrectly, by the plaintiffs, their servants or agents, as confirming their understanding that there was a physical gap between the roads as constructed and the boundary with the plaintiffs’ lands, which understanding was induced by express representations from the first and second named defendants, their servants or agents, to the effect that “the roads are not complete, nor will they be completed”. The actual position, however, was not that the roads had not been constructed up to the boundary but rather they had (arguably or allegedly) “not been fully completed in accordance with the planning approval” (the court’s emphasis), i.e. although roads had been constructed right up to the boundary they had been only been constructed to what is referred to as “haul route” or “construction” standard and not to “development” standard.
3.0 The defendants’ submissions
3.1 The first and second named defendants as the moving parties have submitted to the Court that it has grounds to strike out or otherwise to dismiss or to stay the proceedings both in the exercise of the Court’s inherent jurisdiction and also under Order 19, Rule 28 of the Rules of the Superior Courts.
Inherent Jurisdiction
3.2 The first and second named defendants submitted that it is “beyond doubt” that a Court has inherent jurisdiction to strike out any proceeding (or pleading) on the grounds that it is frivolous or vexatious, is bound to fail or is an abuse of process (see Keane CJ in Lawlor v Ross [2001] IESC 110).
3.3 Further, in Barry v Buckley [1981] 1 I.R. 425, the Court described it as a jurisdiction which should be “exercised sparingly and only in clear cases.” However, where there is no, or no real dispute as to the facts upon which a plaintiff’s claim is advanced, and the plaintiff cannot succeed on those undisputed facts, then the Court may exercise its jurisdiction (see O’Higgins J in McCabe v Harding [1984] ILRM 105 at 108).
Order 19, Rule 28
3.4 It was submitted that the Courts also have jurisdiction to strike out a Statement of Claim pursuant to Order 19, Rule 28 of the Rules of the Superior Courts, which states:
“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 judgement to be entered accordingly, as may be just.”
3.5 In Farley v Ireland, (Unreported, Supreme Court, 1st of May 1997), the plaintiff sought declarations that certain provisions of the Guardianship of Infants Act 1964 and the Family Home Protection Act 1976 were unconstitutional. The defendants brought an application pursuant to Order 19, Rule 28. The Court dealt with the Order made by the High Court as follows:
“There is of course no doubt that proceedings claiming such relief would in terms disclose a cause of action. What the learned trial Judge concluded was that on any examination of the facts there was no possibility of such an action succeeding. To maintain an action which has no prospect of success, however honourable and well motivated the plaintiff may be, would be vexatious and accordingly would be properly struck out pursuant to Order 19 Rule 28 of the Rules of the Superior Courts.”
3.6 In the course of his judgment in the Farley case, Barron J described what is meant by the test ‘frivolous and vexatious’:
“So far as the legality of the matter is concerned frivolous and vexatious are legal terms, they are not pejorative in any sense or possibly in the sense that Mr. Farley may think they are. It is merely a question of saying that so far as the plaintiff is concerned if he has no reasonable chance of succeeding then the law says that it is frivolous to bring the case. Similarly, it is a hardship on the defendant to have to take steps to defend something which cannot succeed and the law calls that vexatious.”
Exercise of Jurisdiction
3.7 In Lowes v Coillte Teoranta, (Unreported, High Court, Herbert J., 5th of March, 2003) the Court expressed the view that in addressing the question of whether proceedings are frivolous or vexatious –
“it is undesirable to attempt any comprehensive legal definition of these terms: one must consider the pleadings and, where the inherent jurisdiction of the Court is invoked, any satisfactory evidence advanced, in each particular case and determine whether it could properly be described as clearly frivolous or clearly vexatious having regard to any relevant case law.”
3.8 The High Court again considered how best to exercise its jurisdiction in the case of Salthill Properties Ltd v Royal Bank of Scotland [2009] IEHC 207. In that case, Clarke J. considered the type of cases in which an application to dismiss might arise, and stated:
“It has often been noted that an application to dismiss as being bound to fail may be of particular relevance to cases involving the existence or construction of documents. For example, in claims based on written agreements it may be possible for a party to persuade the court that no reasonable construction of the document concerned could give rise to a claim on the part of the plaintiff, even if all of the facts alleged by the plaintiff were established. Likewise, a defendant in a specific performance action may be able to persuade the court that the only document put forward as being a note or memorandum to satisfy the Statute of Frauds, could not possibly meet the established criteria for such a document. More difficult issues are likely to arise in an application to dismiss when there is at least some potential for material factual dispute between the parties capable of resolution only on oral evidence. At this end of the spectrum, it is difficult to envisage circumstances where an application to dismiss as bound to fail could succeed. In between are a range of cases which may be supported to a greater or lesser extent by documentation.”
3.9 On the question of the extent to which the Court should consider the factual background to a plaintiff’s claim, Clarke J. noted:
“3.12 It is true that, in an application to dismiss proceedings as disclosing no cause of action under the provisions of order 19, the court must accept the facts as asserted in the plaintiff’s claim, for if the facts so asserted are such that they would, if true, give rise to a cause of action then the proceedings do disclose a potentially valid claim. However, I would not go so far as to agree with counsel for Salthill and Mr. Cunningham, to the effect that the court cannot engage in some analysis of the facts in an application to dismiss on foot of the inherent jurisdiction of the court. A simple example will suffice. A plaintiff may assert that it entered into a contract with the defendant which contained certain express terms. On examining the document the terms may not be found, or may not be found in the form pleaded. On an application to dismiss as being bound to fail, there is nothing to prevent the defendant producing the contractual documents governing the relations between the parties and attempting to persuade the court that the plaintiff has no chance of establishing that the document concerned could have the meaning contended for because of the absence of the relevant clauses. 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.”
Application of principles to the present case
3.10 It was submitted that the present case is of a type contemplated in the “simple example” cited by Clarke J. The first and second named defendants submitted that the Court can and should have regard to the following: the central issue of fact upon which the plaintiffs’ entire claim is based is accepted by the plaintiffs to be wrong.
3.11 In particular, at paragraph 12 of the Statement of Claim it is pleaded that the first and second-named defendants “constructed the roadways and footpaths in the defendants’ lands in a manner which left a short gap between the said roadways and footpaths and the Common Boundary.” The reference to the common boundary is to the common boundary between the plaintiffs’ and the first and second-named defendants’ lands.
3.12 It was submitted that the entire basis of the plaintiffs’ claim arises from this factual assertion, and that no other facts giving rise to a cause of action of any value are disclosed by the pleadings.
3.13 The first and second named defendants point out that it is admitted by the plaintiffs in affidavits sworn in these proceedings, and in particular in the affidavit of Daniel Melia, sworn on the 8th of October 2008 and in the affidavit of Imelda Tierney sworn on the same day, that insofar as it is alleged that the roadways have not been constructed as far as the common boundary, that allegation is incorrect.
3.14 It was submitted that the proceedings instituted by the plaintiffs, and the reliefs sought are therefore founded on an entirely mistaken pretext. In circumstances, where there is no dispute between the parties that the circumstances which purportedly gave rise to the plaintiffs’ cause of action do not exist, the plaintiffs’ cause of action is bound to fail.
3.15 It is apparent from the plaintiffs’ Statement of Claim that the only substantive relief sought by the plaintiffs (other than various declarations sought) is damages for breach of contract. The said damage is alleged to arise from the plaintiffs’ inability to access its lands by exercising rights of way over the defendants’ lands. As is clear from the affidavits sworn herein, there is no dispute between the parties that there is in fact no barrier to the plaintiffs’ accessing their lands. Nor is it disputed that there has been no material change in circumstance since the commencement of proceedings which would allow for access now where none had existed at the time of institution.
3.16 It is submitted that there is no cause of action or entitlement to a remedy disclosed by the pleadings, or in the alternative, that the plaintiffs’ action against the first and second-named defendants is bound to fail and/or is frivolous and vexatious.
4.0 The plaintiffs’ submissions
4.1 In response to the defendants’ submissions the plaintiffs deny that their proceedings are frivolous or vexatious, or that they are bound to fail, and they submit that on the contrary, and they contend that by virtue of the penultimate and ultimate clauses of Order 19, Rule 28, which read “or judgment to be entered accordingly, as may be just”, the Court would be entitled to, and should, make an Order in favour of the plaintiffs for part, at least, of the reliefs sought. The plaintiffs contend that at a minimum the Court can, and should, make an Order in the terms of paragraphs (1) and (2) of the prayer to the Plenary Summons and Statement of Claim (both are in identical terms). They further submit that an Order for Costs would follow the event.
4.2 The plaintiffs submit that the starting point for the Court is a consideration of the pleadings, and what caused the plaintiffs to institute and issue those Proceedings. Were there good grounds for so doing?
4.3 The Plenary Summons was issued on 5th March, 2009, and in it the plaintiffs claim a number of various reliefs. The plaintiffs say that for the purposes of this application, the first two of those reliefs are of prime importance:
(1) A Declaration that the First and Second named defendants are obliged to extend and complete (our emphasis) the roadways and footpaths constructed by them on their lands situate at Oranhill, Oranmore, Co. Galway, and being the lands comprised in Folios 20658F and 81564F County Galway (hereinafter referred to as “the defendants’ lands”) up to the boundary of the defendants’ lands with the plaintiffs’ adjoining lands situate at Oranmore aforesaid, and comprised in Folio 29383 County Galway (hereinafter called “the plaintiffs’ lands”).
(2) A Declaration that the plaintiffs, their servants or agents are entitled, at their own cost and expense, to enter in and upon the defendants’ lands for the purposes of completing the roadways and footpaths thereon up to the roadway and footpaths authorised by Planning Permission dated 31st January, 2005, Register Reference No. 04/1973, to be constructed on the plaintiffs’ lands”.
4.4 The plaintiffs make the case that the defendants had developed the defendants’ lands pursuant to a Planning Permission which showed the three estate roadways serving or servicing the defendants’ lands running up to the boundary with the plaintiffs’ lands, and extending into same. Under their contracts with the defendants, the plaintiffs and their retained lands were entitled to rights of way over the roadways to be constructed on the defendants’ lands. The defendants appeared not to have constructed any one of the three roads up to the boundary with the plaintiffs’ lands, and their Solicitors, Messrs. MacGowan wrote to the plaintiffs’ Solicitors a letter dated 12th June, 2008, in the course of which they stated:
“As a result of this error our clients have not been able to complete six properties and have lost substantial monies. Given that they could not complete these properties they were not in a position to complete roadways that would serve these properties, and as a result of this the roads are not complete, nor will they be completed, to the boundary of your clients’ land. As you are aware, your clients’ Right of Way allows your client use of the roadways now laid or at any time within twenty-one years from the date of the Right of Way, to be laid, over certain of our client’s lands.
As our client has not completed roadways to your clients’ boundary and does not intend to do so, it appears to us that your client does not currently have a Right of Way serving his property. We would be obliged if you would review your files and revert to us in relation to this matter.”
They wrote again on 7th July, in the course of which they stated:
“Please also revert with regard to the mapping error and your clients’ resulting lack of access to their retained lands. It is in both parties’ interest to resolve this matter as soon as ever possible. As you are on notice you will not be in a position to sell the property without notifying prospective buyers of the difficulty.”
They wrote again on 18th August, 2008, in the course of which they stated:
“Please also note that your client is not entitled to lay any roadways over the property in question and therefore the laying of pipe sewers, etc. is unlikely to be of use.”
They wrote again on 1st September, 2008:
“1. Please point out where exactly your clients’ alleged right to lay a roadway is set out in the Rights of Way and Wayleaves furnished.”
They wrote again on 3rd September, 2008:
“Please note, in the interim, that the Planning Permission for the roadway in question has lapsed.”
The plaintiffs make the point that, of course, if the roadways had been constructed, the Planning Permission would not have lapsed.
4.5 Thus, say the plaintiffs, before issuing the Plenary Summons, they were in receipt of a number of letters from the defendants, their servants or agents, (i) denying that the roads had been completed to the plaintiffs’ boundary, (ii) further denying that they had any intention of completing them, (iii) denying the plaintiffs’ entitlement to enter their lands for the purposes of completing the roads and footpaths, at their own cost and expense, up to the boundary with the plaintiffs’ lands, and (iv) contending that the Planning Permission in respect of the uncompleted portion of the roadway had withered, and could not be lawfully used, therefore, for that purpose. The plaintiffs say that in those circumstances they were entirely justified in issuing the Plenary Summons herein and, in particular, to seek the reliefs claimed at paragraphs 1, 2, 4B and 10 of the Plenary Summons and in the prayer to the Statement of Claim subsequently filed.
4.6 The plaintiffs have submitted that they would have been acting most unwisely, and possibly unlawfully, if, in the face of this correspondence they had entered or attempted to enter the defendants’ lands and to have carried out any works on the roadway for the purpose of extending and completing it up to the boundary with the plaintiffs’ lands. In the circumstances the defendants created the necessity for the issuing of the Plenary Summons and the Statement of Claim herein. The plaintiffs claim that they are, moreover, estopped by their own conduct from contending that what the plaintiffs did in bringing the proceedings was unreasonable, or not warranted. They owed a duty to the plaintiffs. (The plaintiffs have cited O’Dwyer v Chief Constable of the R.U.C. [1997] N.I. 403 in support of the latter contention. However, the Court should immediately state that it considers that the facts of the O’Dwyer case were so radically different to those of the present case as to render it of little assistance on the question of whether the asserted duty was in fact owed.)
4.7 With regard to the claim under Order 19, Rule 28 the plaintiffs say that it cannot be contested that the Statement of Claim, which was delivered on the 2nd of April 2009, exhibits on its face a good cause of action (in the sense that it pleads a stateable case of a sort known to the law) by the plaintiffs against the first and second named defendants. They say it clearly shows that there was a good cause of action at that date. In this context the plaintiffs have also drawn the Courts attention to the case of Salthill Properties Limited & Another v. Royal Bank of Scotland plc & Another [2009] IEHC 207, and in addition to paragraph 3.12 relied upon by the defendants and previously quoted, the plaintiffs rely upon the two further paragraphs immediately following it, i.e. paras 3.13 and 3.14, wherein Clarke J stated:
“3.13 However, it seems to me that counsel for Salthill and Mr. Cunningham is correct when he says that the court need not and should not require a plaintiff to be in a position to show a prima facie case at the stage of an application to dismiss, in order that that application should fail. There have been many cases where the crucial evidence which allowed a plaintiff to succeed only emerged in the course of the proceedings. At the level of principle, this is likely to be particularly so in cases alleging fraud or other similar wrongdoing which is likely to be clandestine, if present, and where a plaintiff may only be able to come across admissible evidence sufficient to prove his case by virtue of the use of procedural devices such as discovery and interrogatories. That is not to say that it is legitimate for a party to instigate such proceedings when the party concerned has no basis for so doing. However there is, in my view, a significant difference between circumstances where a plaintiff has a legitimate basis for considering that it may have a claim at the time of commencing proceedings, on the one hand, and a situation where that party has, at that time, available to it, admissible evidence which it can put before the court to establish a prima facie claim, on the other hand.
3.14 It is clear from all of the authorities that the onus lies on the defendant concerned to establish that the plaintiff’s claim is bound to fail. It seems to me to follow that the defendant must demonstrate that any factual assertion on the part of the plaintiff could not be established. That is a different thing from a defendant saying that the plaintiff has not put forward, at that time, a prima facie case to the contrary effect.”
4.8 The plaintiffs contend that the validity of their claim continues.
4.9 The plaintiffs further rely upon the fact that the first and second named defendants’ position continued to be maintained up to their Defence and Counterclaim (and even thereafter). They draw attention to the following circumstances: The matter was admitted to the Commercial Court by Order of 27th April, 2009. A Notice for Particulars was served by the first and second named defendants dated 11th May, 2009. It is clear from this Request for Particulars – and in particular nos. 3 – to – 9 inclusive – that the defendants were maintaining their stance. The plaintiffs’ Replies are dated 25th May, 2009, and the Court’s attention is drawn to replies at 7 to 9, 10 and 11 in particular, wherein notice is given that various representations made by or on behalf of the first and second named defendants, both in meetings and in correspondence, were being relied upon by the plaintiffs. Further, the point is made reply “7 to 9” that:
“It is not pleaded that the defendants have wrongfully refused the plaintiffs entry on to the defendants’ lands. Rather, it is pleaded that the first and second named defendants contend that the plaintiffs are not entitled to enter in and upon the first and second named defendants’ lands and at their own cost and expense of completing the construction of roadways and footpaths onto the first and second defendants’ lands up to the common boundary and into the plaintiff’s lands and that the first and second named defendants wrongfully dispute the right or title of the plaintiffs’, their servants or agents, to enter upon the first and second named defendants’ lands for the purposes of opening up same and connecting to the services on the first and second named defendants’ lands.”
The first and second named defendants then caused a Defence (and Counterclaim) to be delivered on 8th June, 2009. The plaintiffs refer, in particular, to paragraphs 5, 6 and 7 thereof. The plaintiffs say that paragraph 6 is very explicit:
“6. It is denied that the first and second named defendants have wrongfully contended that the plaintiffs are not entitled to enter in and upon the defendants’ lands for the purpose of completing the construction of the roadways and footpaths on the defendants’ lands at their own expense as alleged in paragraph 12 of the Statement of Claim or at all. For the avoidance of doubt, it is specifically pleaded that the plaintiffs have no entitlement to enter upon the first and second named defendants’ lands for such a purpose or any related purpose” (the plaintiffs’ emphasis).
Moreover, in paragraph 7 they plead:
“7. It is admitted that the Planning Permission serving the first and second named defendants’ lands has withered. The said Planning Permission expired on or about 11th November, 2007. As a consequence of the expiration of the said Permissions, the implied agreement relied on by the plaintiffs (which implied agreement is denied) has been frustrated (the plaintiffs’ emphasis).”
4.10 The plaintiffs point out that they furnished a further Notice for Particulars dated the 22nd June, 2009, particularly in relation to the gap understood by them to exist between the road as constructed on the defendants’ lands, and the plaintiffs’ lands. After this, a meeting took place on site between the Engineers and the Solicitors for both parties on the 9th of July, 2009. Following this meeting, and on the same date, the solicitors for the first and second named defendants wrote to the solicitors for the plaintiffs stating:
“we note that all parties are now agreed that two roads are laid that provide access to lands retained by your client. Both roles are constructed to and beyond the boundary of their lands transferred to our clients. One road is constructed substantially to development standard and one road is constructed to a standard suitable for use as a haul or construction route.
We confirm that our clients do not dispute, and have never disputed, your client’s rights to use any laid roads for the purposes of access to and development of their retained lands as set out in the rights of way and way leaves granted to them. We are informed by our clients that the roads examined this morning were constructed to haul route standard at some point in 2005. If required we can revert with specific dates.”
4.11 The plaintiffs then refer with particularity to various affidavits sworn in connection with this motion what is the stage or state of the construction of the three roadways. They point to the following:
4.12 In paragraph 4 of his Affidavit sworn on 2nd October, 2009 Mr. Hanniffy, the defendants’ Engineer, refers to the meeting on site on 9th July, and says:
“(i) Road 1 was constructed to haul route standard to a point up to and beyond the Transfer Boundary.
(ii) Road 2 was constructed to development standard to a point up to and beyond the Transfer Boundary.
(iii) I confirm that Road 3 was constructed at least to haul route standard to a point up to and beyond the Transfer Boundary in 2005.
I was unable to determine the standard of Road 3 at the site meeting of 9th July, 2009 due to the presence of builder’s rubble which had been temporarily dumped on the road and was fenced off. However I have since examined the aerial photograph referred to in Mr. Considine’s Affidavit and confirm that Road 3 was constructed at least to haul route standard to a point up to and beyond the Transfer Boundary in 2005.”
4.13 Further, Mr. Daniel Melia, Engineer, of John Mooney & Company Limited, the plaintiffs’ Engineers, sets out in paragraph 7 of his affidavit sworn on the 8th of October, 2009, his professional understanding of the expressions used by Mr Hannafy. He stated:
“.
• haul/construction standard: temporary road consisting of well compacted imported fill or in-situ material suitable for construction traffic.
• “Development Standard”: Permanent road constructed in accordance with Department of Environment specifications and suitable for all traffic. ”
4.14 Mr Melia then dealt with Road 1, stating:
“The tarmac road at this location stops approximately 14.4 metres short of the land transfer boundary. There is then an area of ground – uncompleted road (length 14.4m) between completion of the tarmac road, and the transfer boundary, which appears to have been stripped/excavated down to reasonably solid ground. The section of ground/uncompleted road referred to as a “haul road” or “construction road” extends up to and beyond the Land Transfer Boundary, and to a point approximately 1M short of the physical boundary, (i.e. the post and wire fence). The haul road / construction road does not extend up to the physical boundary (the post and wire fence). In paragraph 11 he refers to the fact that this said road will require considerable further work in order to construct, complete and maintain this section as a permanent road, in accordance with Department of the Environment specifications.
4.15 With regard to Road 3, Mr Melia avers that when he attended the lands on 9th July, 2009 in the company of Mr. Hanniffy, and with the Solicitors acting for the plaintiffs and defendants, he was unable to assess whether this roadway had even been built to haul road standard as this area was (then) covered with builder’s rubble and Mr. Hanniffy acknowledged this in his Affidavit sworn on 2nd October, 2009.
4.16 In relation to Road 2 Mr Melia avers that this had been constructed to a development standard to a point close to the transfer boundary. The kerbs and footpaths of this road have not yet been completed up to the Land Transfer Boundary. The road surface has not been fully completed to a final (development) standard up to the Land Transfer Boundary.
4.17 The Court has also been referred to the Supplemental Affidavit of Mr. Gerard Hanniffy, sworn on 12th October, 2009, wherein he accepts that with respect to Road 1 the tarmac road stops approximately 14.4 metres short of the land Transfer Boundary. Mr Hannaffy contends that this fact is not in any way an impediment to the plaintiffs’ development of their lands. The road continues on completed to construction road standard to the Transfer Boundary.
4.18 The plaintiffs submit that paragraph 20 of Mr. Hanniffy’s Affidavit of 19th October, 2009 contains some very important averments: He stated:
“I beg to refer to paragraph 19. I say and believe that the defendants are aware that there is an obligation on them in respect of the houses within their own development to have the roads completed to development standard. This will require a final wearing course tarmac layer placed on the roads. However it is not prudent or appropriate to have these completed while the said roads are being used for construction traffic. I say and believe and am instructed that it is the defendants’ intention to attend to the finishing of these roads at an appropriate time when the passage of construction traffic on a heavy scale has ceased.”
4.19 The plaintiffs comment as follows on paragraph 20 of Mr. Hanniffy’s Affidavit of 19th October, 2009:
“(a) It might be observed that while Mr. Thomas Considine also swore a Supplemental Affidavit on 19th October, 2009, no such averment is contained in his Affidavit: he has given no undertaking:
(b) Nor is there any time specified for the carrying out of this work – if it is to be done.
(c) If the plaintiffs’ claim herein is struck out, as sought by the defendants, and the defendants did not complete the construction of the three roads, what would be the plaintiffs’ situation? What would be their remedy? That question shows why the application to strike out or dismiss should not succeed”.
The plaintiffs maintain that there is no reason in all the circumstances of the case why the Court should not grant a Declaration in the terms of paragraph 1 of the Prayer on the Plenary Summons and Statement of Claim.
4.20 The plaintiffs have referred the court to a course of correspondence between the parties respective Solicitors from the 10th of July 2009 until the end of October 2009. They contend that in the post July 10th, 2009 correspondence, the defendants have acknowledged the right of the plaintiffs to use the “roadways”, as laid down, but have tried to avoid acknowledging the right of the plaintiffs, at their own cost and expense, to enter in and upon the defendants’ lands for the purpose of completing the said roadways and footpaths up to the roadways and footpaths on the plaintiffs’ lands. The Court is invited to review the correspondence and to conclude that the statements that the defendants have never denied the plaintiffs’ rights and entitlement “at their own cost and expense, to enter in upon the defendants’ lands for the purpose of completing the roadways and footpaths thereon up to the roadways and footpaths authorised by Planning Permission dated 31st January, 2005, Register Reference No. 04/1973, to be constructed on the plaintiffs’ lands” is at variance with the facts, as established by the correspondence and by the Defence.
4.21 The plaintiffs say the relevant course of correspondence in fact commences with a letter dated 8th July, 2009 from Messrs. MacGowan on behalf of the defendants: there they acknowledge the right of the plaintiffs pursuant to the Right of Way and Wayleaves previously granted to them, to have access to the lands retained by them sufficient for development purposes. Then by letter dated 9th July, 2009 they “confirm” that their clients “do not dispute, and have never disputed, your clients’ right to use any laid roads for the purposes of access to and development of their retained lands as set out in the Rights of Way and Wayleaves granted to them.”
4.22 By letter dated 10th July, 2009 Messrs. R.D.J. Glynn on behalf of the plaintiffs sought confirmation of three points:
“(a) Our clients have an undisputed Right of Way to their lands over the two roadways that are laid;
(b) That our clients may freely use those Rights of Way; and
(c) That your clients will do nothing to hinder the use of those roadways for the purposes of developing or selling the lands retained by our clients.”
4.23 To this Messrs. MacGowan replied by letter dated 10th July, 2009:
“With regard to points numbered (a), (b) and (c) in your letter, we note that we have already stated in our letter of 9th July that we have never disputed your clients’ right, pursuant to the Rights of Way granted to them, to use any laid roads for the purposes of access to and development of their retained lands. Given that all parties agree that two roads are laid to the boundary of land transferred to our clients, it is clear that your clients have the right to use those roads, and your clients have enjoyed this right since the date the roads were laid. Clearly our clients will do nothing to hinder the lawful use by your clients of Rights of Way granted to them.”
4.24 The plaintiffs then draw attention to the Supplemental Affidavit of Imelda Tierney sworn on 22nd October, 2009, and the letters referred to therein. Messrs. MacGowan, Solicitors, in their letter of 2nd October, 2009 conclude:
“You state in your letter that we have at all times disputed the entitlement of your clients to entire (enter) on our lands for the purposes of carrying out the works. This is not correct. We have repeatedly confirmed that it was our understanding of the Rights of Way and Wayleaves that your clients were entitled to come on our lands for the purpose of carrying out works related to all services with the exception of roadways. Our position is unchanged.” (the plaintiffs’ emphasis)
4.25 The plaintiffs’ then refer to the letter dated 14th October, 2009 from Messrs. R.D.J. Glynn – where they sought confirmation of two points:
“Can you now please confirm the following:
(1) That the plaintiffs, their servants or agents are entitled, at their own cost and expense, to enter upon the lands of Messrs. Considine and Sweeney for the purpose of completing the roadways and footpaths thereon up to the roadway and footpaths to be constructed on the plaintiffs’ lands, which roadways and footpaths may be constructed to “development standard” in accordance with the Department of the Environment specifications.
(2) That pending the ultimate construction and completion of the roadways to development standard, that the plaintiffs and/or their servants or agents may enter upon the first and second named defendants’ lands for the purposes of upgrading and maintaining the roadways while same are being used by construction traffic.”
4.26 Messrs. MacGowan replied by a letter dated 21st October, 2009, but did not give any answer or confirmation in respect of either of the two points. Then by letter dated 27th October, 2009 they stated, inter alia, the following:
“1. The confirmation which you are seeking at paragraph 1 is difficult to understand – given that the said roads have been completed to your clients’ lands.
Where the roads have been constructed – whether to construction standard or development standard (on which the Contract is silent) – your clients have an express right under the Contract to enter upon the said roads and to use them to go onto their own lands. We have never denied your clients such an entitlement.
2. There was no reference in the express term of either Agreement (in 2003 or in 2005) (or in either Grant of Wayleave) about the standards to which the roadways and footpaths had to be constructed. The three access roads have been constructed. They have been constructed to construction standard (and indeed the second road has been constructed to development standard). It follows therefore that the plaintiffs, their servants or agents may enter upon the First and Second named Defendant’s lands at any time to use those roads. Moreover, if they so (wish) they may do so for the purpose of upgrading and maintaining the roadways while same are being used by construction traffic. We have never denied your clients’ right to do so.”
4.27 In the circumstances of this correspondence the plaintiffs say that, once again, the following questions arise – what would happen if the plaintiffs’ claim at 1 and/or 2 of the prayer to Plenary Summons or Statement of Claim was dismissed, and the defendants did not complete the construction of the road, or if the roadway fell into bad disrepair? What would be the rights of the plaintiffs in respect of entering in and upon the defendants’ lands for the purpose of repairing and completing the said roadways at their own cost and expense? The plaintiffs accept that in law the owner of the dominant tenement has the right to repair and improve the subject matter of an easement to make it more suitable for the accommodation of the dominant tenement: but point out that this is a case in which the defendants have expressly denied the entitlement of the plaintiffs to so do. In the circumstances they contend that they are justified in seeking the relief claimed in paragraph (2) of the prayer to the Plenary Summons and Statement of Claim, namely a Declaration as to the right or entitlement of the Plaintiffs, which exists. Accordingly they contend that this claim should not be dismissed: rather, it should be granted.
5.0 The Court’s decision
The claim based on Order 19, Rule 28
5.1 In this Court’s view the plaintiffs have misinterpreted Order 19, Rule 28. It is not correct of them to suggest that it is open to this Court, if the Court were minded to dismiss the first and second named defendants’ application under this rule, to then proceed immediately to enter judgment for the plaintiffs. In so far as it relates to a case brought by a plaintiff or plaintiffs, Order 19, Rule 28 provides that a court may order a pleading to be struck out on the grounds that “it discloses no reasonable cause of action” and in any case where the action is shown by the pleadings to be “frivolous or vexatious”, the Court may order the action “to be stayed or dismissed”. However, Order 19, Rule 28 does not just apply to cases brought by a plaintiff or plaintiffs. It can also apply to an answer or defence to a claim filed by a defendant or defendants. In that instance, a court may order a pleading to be struck out on the grounds that “it discloses no reasonable answer” and in any case where the defence is shown by the pleadings to be “frivolous or vexatious”, the Court may order “judgment to be entered accordingly”. However, in this case the plaintiffs have not filed a cross motion requesting the Court to strike out the first and second named defendants’ defence and accordingly, even if it the case that were no outstanding controversies as to matters of fact or law, the Court has no jurisdiction to enter judgment in their favour at this stage.
5.2 It is well established that the jurisdiction under Order 19, Rule 28 is one to be exercised sparingly and cautiously. Nevertheless, as stated by Denham J in Aer Rianta Cpt v Ryanair Ltd [2004] 1 IR 506 at 509 a pleading will be struck out “if a court is convinced that a claim will fail.”
5.3 Costello J stated in Barry v Buckley [1981] I.R. 306 (at p.308 of the report) that “the court can only make an order under this rule when a pleading discloses no reasonable cause of action on its face.” Again in D.K. v. King [1994] 1 I.R. 166 he stated (at p. 170 of the report) that:
“Rule 28 only applies where it can be shown that the text of the plaintiff’s summons or statement of claim discloses no reasonable cause of action or that the action is frivolous or vexatious.”
Moreover, in McCabe v Harding [1984] I.L.R.M 105 O’Higgins C.J. makes it plain at p. 108 of the report that for Order 19, Rule 28 to apply “vexation or frivolity must appear from the pleadings alone”.
5.4 It is well established that the Court cannot go beyond the pleadings and seek to examine the evidence available to support the claim as pleaded. See Barry v Buckley [1981] I.R. 306; Supermacs Ireland Ltd v Katesan (Naas) Ltd (Unreported, High Court, Macken J., 15th March 1999; Ratcliff v Wilson (Unreported, High Court, Macken J., 23rd March 1999) and Leinster Leader Ltd v Williams Group (Tullamore) Ltd (Unreported, High Court, Macken J., 9th July 1999) among other cases. Rather, and in the words of Clarke J in Salthill Properties Limited & Another v Royal Bank of Scotland plc & Another [2009] IEHC 207:
“the court must accept the facts as asserted in the plaintiff’s claim, for if the facts so asserted are such that they would, if true, give rise to a cause of action then the proceedings do disclose a potentially valid claim.”
5.5 While a pleading such as a Plenary Summons or Statement of Claim may indeed be struck out under Order 19, Rule 28 where it fails to disclose a reasonable cause of action, i.e. where the facts and matters pleaded do not constitute a cause of action that is known to the law or likely to be established, this Court has no hesitation in concluding, upon a consideration of the relevant pleadings in the present case, that the plaintiffs have pleaded a case based upon a cause of action that is known to the law, and that upon the facts as pleaded (and ignoring any affidavit evidence filed) that that cause of action is likely to be established.
5.6 Moreover, I also do not think that the plaintiff’s pleadings here can be regarded as frivolous or vexatious.
5.7 In the circumstances the Court must dismiss the first and second named defendants’ applications for relief under Order 19, Rule 28 of the Rules of the Superior Courts. It therefore follows that if I am to strike out the plaintiffs’ claims it must be in the exercise of the Court’s inherent jurisdiction, or not all.
The claim based upon inherent jurisdiction
5.8 McCarthy J in Sun Fat Chan v Osseous Ltd [1992] 1 I.R. 425 cautioned (at 428) that:
“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.”
5.9 In doing so he was echoing the views of Costello J in Barry v Buckley, where that learned judge had stated that the jurisdiction was one “to be exercised sparingly and only in clear cases.”
5.10 The jurisdiction can only be exercised where “on admitted facts” the case “cannot succeed”, per McCarthy J in Sun Fat Chan (at 428) . In the present case the first and second named defendants seek to make exactly that case. They contend that as it is now common case that the roads in question were in fact constructed up to the transfer boundary, and that no physical gap exists, the plaintiffs proceedings are entirely misconceived and their case cannot succeed.
5.11 Unlike the position with respect to the application under Order 19, Rule 28, I am satisfied, as was Clarke J in the Salthill Properties case, that in considering whether or not to strike out the plaintiffs pleadings, dismiss their claim or stay the proceedings in the exercise of the Court’s inherent jurisdiction, the Court is entitled to engage in some analysis of the facts.
5.12 The primary basis for the Court having inherent jurisdiction to strike out the plaintiffs pleadings, dismiss their claim or stay the proceedings is to protect the process of the Court and to ensure that it is not being abused. Although the plaintiffs are not blameless in the matter, the Court is satisfied that in issuing the proceedings herein they have acted at all times in good faith and that at no time have they sought to deliberately abuse the process of the Court, as would be the case for example where proceedings are commenced on a fraudulent basis. To the extent that the plaintiffs may be criticised it is on the basis that they failed to make sufficient or adequate enquiries concerning what was the position on the ground before launching their action. However, the defendants were equally guilty in regard to the quality of their initial investigations, and with respect to their correspondence and their pleadings filed in response to the plaintiffs’ claim. I am satisfied that as a matter of probability the plaintiffs were led into a false sense of security as to what was the position on the ground by the express, and often repeated, representations of the first and second named defendants, their servants or agents both in correspondence, and, seemingly, in the course of several meetings (the latter are detailed in replies 7-9, 10 and 11 of the plaintiffs’ Replies to Particulars dated the 25th of May 2009). It is also clear to the Court that these misrepresentations were not deliberate, and in fairness to the plaintiffs the contrary is not suggested.
5.13 While the Court does not consider that the plaintiffs have established that the defendants owed them a duty not to erroneously or accidentally mislead them, the fact of the matter is that the plaintiffs were unwittingly misled by the defendants and in this Court’s view the defendants should not be allowed to take advantage of that unless it has resulted in a situation where the plaintiffs case is now utterly hopeless and doomed to failure. In such circumstances the Court would be entitled to act in order to protect its own process. Conversely, if it is the situation that at least part of the plaintiffs’ claim remains stateable and tenable in terms of having at least some prospect of success the Court should not strike out the plaintiffs’ pleadings in their entirety, or dismiss their claim, or stay the proceedings, but rather should allow them to salvage what they can from the wreckage of a partially misconceived claim.
5.14 I am satisfied that the plaintiffs’ claim, although partially misconceived for having been launched on the basis of an erroneous understanding of the situation on the ground, is not certain to fail in every respect. It validly remains to be determined whether the contracts between the parties did contain the implied terms contended for in paragraph 10 of the Statement of Claim. Moreover, if there was an implied term, as the plaintiffs allege, that the defendants would “complete” the construction of the roadways and footpaths it remains to be determined (i) to what standard they were required to complete them; (ii) as to what might be the consequences of any established failure on the part of the first and second named defendants in that regard; and (iii) whether in fact there has been a failure of the first and second named defendants in that regard. There is a claim for damages which could conceivably succeed in the Court’s view, although the quantum of any damages recovered is now likely to be less that it would have been had the claim as pleaded been properly conceived in every respect. Moreover in the Court’s view the point made by the plaintiffs that they are entitled, in the light of the position adopted in correspondence by the first and second named defendants, to seek the declarations that they seek at paragraphs 1 and 2 of the prayer to both the Plenary Summons and Statement of Claim for the purpose of having certainty concerning their rights to avail of, maintain and where necessary (due to any default on the part of the first and second named defendants as owners of the servient tenement) to improve their easements, as the owners of the dominant tenement, is well made.
5.15 In all the circumstances of the case the Court is not disposed to strike out the plaintiffs’ pleadings in their entirety, or dismiss their claim, or stay the proceedings. Rather the Court will only strike out so much of the plaintiffs’ claim as does not come within the parameters of those “live” issues that the Court has just identified and in that regard the plaintiffs will be directed to submit an amended Statement of Claim for the Court’s consideration in due course with a view to substituting it for the existing Statement of Claim. Clearly, the first and second named defendants will also have to be afforded an opportunity to reconstitute their pleadings in defence of the plaintiffs reconstituted claim and the Court will give all appropriate directions in that regard in due course.
Talbot v McCann Fitzgerald Solicitors [2010] IEHC 383
JUDGMENT of Mr. Justice Hanna delivered the 8th day of October, 2010
The plaintiff in this case is a lay litigant. While he describes himself as a “self litigant”, he has been described by others as a “serial litigant” (Kearns J., Supreme Court) and a man with grievances.
The background to the plaintiff’s woes has already been extensively described in the following judgments:-
(i) Thomas Talbot v. Hibernian Group plc & Amicus the Union [2007] IEHC 385, (Unreported, High Court, Irvine J., 14th November, 2007);
(ii) Thomas Talbot v. Hibernian Group plc & Amicus the Union [2009] IESC 27 (Unreported, Supreme Court, 26th March, 2009) – Judgment of Kearns J. on appeal from the foregoing decision of Irvine J.
(iii) Thomas Talbot v. McCann Fitzgerald Solicitors, Mrs. Thérése Talbot, Judge Michael White, Judge Jacqueline Linnane, Courts Services, Chief State Solicitor [2009] IESC 25 (Unreported, Supreme Court, 26th March, 2009) – Judgment of Denham J.
I do not propose to set out in detail yet again the factual background to this case although it is important that I map out how we come to be where we are now. It should be noted that in the Supreme Court, on appeal from the decision of Irvine J., it was noted by Kearns J. that, apart from one minor matter, the plaintiff did not raise any significant dispute with the factual background as described by Irvine J. Very briefly, the plaintiff has been engaged on several fronts in legal disputes over the past three decades. Firstly, he has to deal with the undoubted trauma of family law proceedings leading to judicial separation and ultimately divorce from his wife, with the attendant significant ramifications. He then came into dispute with his employer, Hibernian plc. (now Aviva plc), leading, inter alia, to a situation where he was unfairly overworked and considerably underpaid (as he would see it) given his seniority, in contrast with others engaged by his employer. Thirdly, he has been engaged in litigation with his trade union, formerly Amicus the Union and now Unite the Union, complaining, inter alia, about the failure of the union to represent his interests and the conduct of the union and the solicitors at one stage engaged on his behalf. The issue of his pension entitlements spans all the proceedings.
In the above proceedings, the plaintiff now seeks to involve the first named defendants, Messrs. McCann Fitzgerald Solicitors, who previously acted for Mrs. Talbot in the matrimonial proceedings to which I have earlier referred. Although this is the first time the plaintiff has sued them in plenary proceedings, he did previously seek to involve them in judicial review proceedings. Along the way, he became involved in litigation involving his Golf Club. The details of this do not concern us here.
A Brief History of the Litigation to Date
The plaintiff’s family law litigation took up the 1990s and spilt into the new millennium. He was legally represented at one stage, but his solicitor and counsel came off record at some undefined point (he sought to lay blame for this on the first named defendant in the current proceedings). Otherwise, he has represented himself. He has appeared before a number of judges both in the High Court and Circuit Court, a few of whom he regards reasonably highly. To others, however, he attributes base motives for the decisions they have made, such decisions being adverse to him. The final act in the family law litigation was an appeal from a pension adjustment order made in the Circuit Family Court and which was rejected by Abbott J. on the 26th June, 2002.
The plaintiff then sought judicial review of that order and applied to Quirke J. on the 7th September, 2003, at which point his application was already significantly out of time. Quirke J. refused the order. The plaintiff then made a further application ex parte for judicial review citing McCann Fitzgerald Solicitors, the first named defendant herein, and his former wife as respondents. This application was made on the 12th December, 2005, (nearly three years out of time) to Peart J., who reserved judgment and refused leave on the 6th February, 2006. The judicial review application was given Record No. 2005 No. 1423 J.R. A copy of Mr. Justice Peart’s judgment was not made available to me but an extract from it is contained in a judgment of the Supreme Court delivered by Denham J. (see below). The plaintiff seems to have been somewhat confused as to what was going on and, at one stage at least, was of the view that he had been granted leave. At one stage he even suggested that some person had interfered with Peart J.’s judgment. However, it is abundantly clear that Peart J. refused leave.
This refusal was appealed to the Supreme Court which, in an ex tempore judgment delivered by Fennelly J. on the 29th June, 2007, dismissed the appeal. On the 11th January, 2008, the plaintiff brought an ex parte motion seeking on order vacating the order of the Supreme Court of the 29th June, 2007. At this stage, according to the written judgment, a number of other parties appear to have been added to the proceedings. This relief was refused by the Supreme Court. The appeal and the application to vacate bear Record Number 2006 No. 114 and the judgment of the Court was handed down by Denham J. on the 26th March, 2009 (see [2009] IESC 25 (Unreported, Supreme Court, 26th March, 2009)). The application was refused.
While all of the foregoing was taking place, the plaintiff was active on another front. He commenced proceedings in April, 2006 against Hibernian Group plc. (now Aviva plc.) and Amicus the Union (now Unite the Union). These proceedings bear Record Number 2006 No. 1726 P.
I will return later to the nature of proceedings authored by the plaintiff. These proceedings were met by a motion from Amicus the Union seeking to have the proceedings struck out on the grounds that they disclosed no reasonable cause of action and that they were frivolous and vexatious. On the 11th January, 2007, Dunne J. struck out the proceedings on the former but not on the latter ground. A note of the judgment was made by Ms. Aileen Fleming, a solicitor in the above third named defendant’s solicitors firm, Messrs. Donal Spring & Co., to which the plaintiff appeared to take some exception during the hearing of this matter. Having read it, it appears to me to be a complete and professionally prepared note of an ex tempore judgment in which it is clear that the learned judge had considerable compassion for the plaintiff’s plight. Nonetheless, since he has some objection to it, I will not cite it. There can be no doubt, however, as to the terms of the order granted by Dunne J. The plaintiff did not appeal that decision.
It is of some note that Hibernian Group plc. did not bring a motion seeking relief along the lines sought by Amicus the Union.
The plaintiff then proceeded to issue a further set of proceedings against the same defendants later in January, 2007, such proceedings bearing Record Number 2007 No. 433 P. These proceedings came before Irvine J. In her written judgment delivered on the 14th November, 2007, the learned judge ordered that the proceedings against Amicus the Union be struck out as disclosing no reasonable cause of action. She further ordered that the plaintiff’s claim against Amicus the Union be dismissed as frivolous or vexatious. It was that order that was appealed unsuccessfully to the Supreme Court. Again, no motion appears to have been brought by Hibernian Group plc. seeking similar relief.
The order of Irvine J. was appealed to the Supreme Court unsuccessfully by the plaintiff (see judgment of Kearns J. referred to above).
Thus we arrive at the current proceedings.
The Present Proceedings
I earlier stated that I would return to the nature of the “proceedings” brought by the plaintiff and it is useful at this juncture to deal with same. I have taken some time to read through the variety of documents, some typed and many handwritten. I have also heard the plaintiff’s oral submissions, which lasted for a period of approximately two and a half hours. This exceeded the time taken up by counsel for the first and third named defendants combined, the third named defendant’s counsel, Mr. Devlin S.C., having opened the pleadings during the course of his submissions. Like other judges before me, I have found great difficulty in trying to glean from the documents and from the oral submissions precisely what the nature of the plaintiff’s complaints in law against the various parties are. It is, however, abundantly clear, as has been noted by other courts, that the plaintiff is a person with many grievances relating to his matrimonial proceedings and his relationship with his former employer and trade union. It was readily apparent to me during the course of his oral submissions that he was fighting past battles yet again.
The following citations exemplify the problems in dealing with the plaintiff’s proceedings. Denham J. in her judgment in the ex parte judicial review proceedings, Talbot v. McCann Fitzgerald Solicitors & Ors. [2009] IESC 25, (Unreported, Supreme Court, 26th March, 2009), cites Peart J. at p. 11 as saying:-
“I will not attempt to try and set forth the grounds upon which the applicant seeks to rely in the papers prepared by him since the contents are so incomprehensible that such a task is impossible. But it is without any doubt in my view that it is an attempt to impugn orders of the Circuit Court made several years ago and in respect of which appeals have been heard and adjudicated upon.”
In his judgment on the appeal from Irvine J. in the case of Talbot v. Hibernian Group plc. & Amicus the Union [2009] IESC 27 (Unreported, Supreme Court, 26th March, 2009), Kearns J. (as he then was) says at pp. 12-13 of his judgment:-
“The learned trial judge was, in my view, restrained in her characterisation and comments about the documentation furnished by the plaintiff. I am in this context adverting (sic) not only to the seven statements of claim advanced by the plaintiff, but also to his voluminous submissions, including those filed following the conclusion of the appeals herein. The same are in my view prolix, unfocused and irrational to a high degree and almost entirely unrelated to the issue before the Court. There is no attempt made to engage with the reasoning of the learned trial judge or to provide grounds for challenging her conclusions both that the proceedings are frivolous and vexatious and that they fail to disclose a reasonable cause of action.”
In the current case, the plaintiff issued a plenary summons. This was then followed by three documents which he refers to as being statements of claim, but which appear to be more in the format of statements per se. Insofar as one can ascertain precisely what reliefs the plaintiff is seeking, each of the three “statements” is prefaced with the following:-
“Application for Breaches of Constitutional and Legal Rights Concerning Perversion of Justice, Fraud, Theft, Conspiracy, and Defamation before Judge and Jury in High Court, Dublin 7.”
I must invoke the spirit of the remarks of Peart J. and Kearns J. I find myself in no stronger position than they in identifying the case advanced by the plaintiff. As in the previous proceedings, it appears to me, as urged upon me by counsel for the first and third named defendants, that the plaintiff is seeking to revisit and reopen litigation long since concluded.
The Present Application
The three defendants have brought motions seeking to have the plaintiff’s claim dismissed or struck out pursuant to O. 19, r. 29 of the Rules of the Superior Courts, 1986 and/or pursuant to the inherent jurisdiction of this Court on the ground that the proceedings disclose no reasonable or sustainable cause of action. They further make the case that the plaintiff’s claim is frivolous or vexatious. The first named defendant urges that the proceedings constitute an abuse of process. That defendant also seeks a declaration that the issues between the plaintiff and that party are res judicata as a consequence of the ex parte hearings in the Supreme Court in the judicial review application. The defendants also rely on the fact that the proceedings are statute barred. Finally, all defendants seek what is colloquially known as an “Isaac Wunder Order” seeking to restrain the plaintiff from taking any further proceedings against the named defendants without leave of the High Court.
The third named defendant did not rely on want of form on the part of the documents served by the plaintiff. However, the first named defendant did object to the documents on these grounds.
During the course of submissions on behalf of the second named defendant, it was drawn to my attention that that defendant had not previously brought a similar application seeking the reliefs now sought in either of the two previous sets of proceedings brought by the plaintiff against it. It struck me that it was appropriate that the second named defendant’s application should be joined with similar applications in respect of the other proceedings. The second named defendant’s application was then adjourned generally and since the matter may proceed by way of further application I will refrain from further comment.
I propose to deal with the applications of the remaining defendants in reverse order as they were opened to me. I should observe that the plaintiff also brought a motion, the purport of which is unclear to me. It appears to be something in the form of a motion in default of defence. In any event, that motion was left in abeyance pending the outcome of the motions brought by the defendants.
The Third Named Defendant’s Application
Having read the papers and having heard the legal submissions in this case advanced by the plaintiff, I am satisfied that the case he seeks to make against his trade union is substantially the same, if not identical, to the case he sought to advance in two previous sets of proceedings. The plaintiff did not, in my view, make any effort to attempt to identify some new or fresh cause of action. Thus, we are left in a situation where two sets of previous proceedings levelling much the same case against the third named defendant have been struck out by the High Court. The most recent (the 2007 proceedings) were struck out on the grounds that the pleadings failed to disclose the cause of action and the proceedings were frivolous and vexatious and an abuse of process of the courts. The correctness of this decision by Irvine J. has been endorsed by the Supreme Court. As regards the case brought against the third named defendant, I am of the same view. In my view the case is unsustainable and is frivolous and vexatious. It is my opinion that the plaintiff seeks to use the courts of Ireland as a battlefield to wage unrelenting war against, inter alia, the third named defendant. It is my view that such recycling of an unsustainable case is both oppressive of the third named defendant and abuse of the processes of this Court.
This Court has jurisdiction pursuant to O. 19, r. 28 of the Rules of the Superior Courts, 1986, to strike out any pleading on the grounds that it discloses no reasonable cause of action or is frivolous or vexatious or an abuse of the process of the courts (see McCracken J. in Fay v. Tegral Pipes Ltd. [2005] 2 IR 261 and Costello J. in Barry v. Buckley [1981] I.R. 306). Further, where the court is of the view that a party persistently engages in vexatious or frivolous civil proceedings, it can order that the offending party be restrained from so acting. In Riordan v. Ireland (No. 5) [2001] 4 I.R. 463, Ó Caoimh J. states at p. 465:-
“Where the court is satisfied that a person has habitually or persistently instituted vexatious or frivolous civil proceedings it may make an order restraining the institution of further proceedings against parties to those earlier proceedings without prior leave of the court. In 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. The court is entitled in the assessment of whether proceedings are vexatious to consider whether they have been brought without any reasonable ground.”
The courts are not a forum for the ventilating of lost causes (see McCracken J. in Fay v. Tegral Pipes Ltd., cited above).
As regards the third named defendant, I am satisfied that the proceedings against it should be struck out both pursuant to the Rules of the Superior Courts and by way of exercise of the inherent jurisdiction of this Court to do so upon the grounds that the pleadings disclose no sustainable cause of action and that they are bound to fail and that the proceedings are frivolous and vexatious and constitute an abuse of the process of this Court. I am satisfied from the way the plaintiff has conducted the litigation over the years that he is likely to attempt yet again to bring proceedings under some other form or guise. It is, in my view, of importance to note that when his 2006 proceedings were struck out by Dunne J. his almost immediate reaction was not to seek to appeal her decision, but to issue fresh proceedings levelling, in effect, the same allegations, inter alia, at the third named defendant. I am fully conscious of the fact that the court must exercise great caution in considering any act restraining the citizen’s right of access to the courts. Nonetheless, the third named defendant comes before this court with rights certainly no greater than, but at least equal to those of the plaintiff and, most importantly, is entitled to the benefit of finality of litigation and protection from oppressive litigious conduct by another party (see judgment of Keane C.J. in Riordan v. An Taoiseach [2001] IESC 83 (Unreported, Supreme Court, 19th October, 2001)).
Accordingly, I will accede to the third named defendant’s request for an order restraining the plaintiff from taking any further proceedings against it unless so permitted by this Court.
The First Named Defendant’s Application
The legal principles which I have enunciated obviously govern the first named defendant also.
The allegations levelled at the first named defendant are to be found principally in the second of the plaintiff’s “statements”. These “statements”, in turn, rehash many of the allegations made in previous cases to which the first named defendant was not party and, to some extent at least, were made in the two ex parte hearings before the Supreme Court.
The family law proceedings in this matter constitute the parameters of the plaintiff’s grievances against this defendant. These commenced in 1989 and were heard by a number of Circuit Court judges and by the High Court on appeal from the Circuit Court. As noted above, the last act in that sequence was the order of Abbott J. on the 26th June, 2002, refusing the plaintiff’s appeal from the pension adjustment order of the Circuit Family Court. Thus over eight years have elapsed since this matter was concluded. In his oral submissions and in the documents prepared by him in this and in the previous cases, the plaintiff repeated a number of allegations against the first named defendant and, indeed, several members of the judiciary. Of course, one must accept the factual matrix, i.e. that the plaintiff was engaged in no doubt torrid and upsetting litigation over a period of some twelve or thirteen years. His wife was legally represented and so was he at one stage but, as noted above, his solicitors and counsel came off record. A number of court orders went against him and, no doubt, this weighed heavily on him then and still does. But that does not mean that this Court must go on to accept the inferences, some of them quite scandalous, which he invites the courts to draw from the sequence of events, which undoubtedly took place, namely the conduct of family law proceedings. The Court is not obliged to accept the inferences of corruption and impropriety levelled by the plaintiff.
The family law proceedings were conducted before judges of Circuit Family Court and the High Court, as I have said. They are at an end and have been since 2002. No appeal lies to any court from the various decisions of the High Court judges who became engaged with the plaintiff’s litigation. This Court is entitled to assume, and does assume with utter confidence, that proceedings conducted before the various learned judges were done so wholly in accordance with the law and with due regard to the rights of the unfortunately conflicting parties.
In my view, the documents, insofar as they set out allegations against the first named defendant, disclose no reasonable cause of action against it and are unsustainable in law and are frivolous and vexatious. In my view, they constitute a vehicle whereby the plaintiff seeks to vent his spleen and frustration in respect of legal “reverses” which he cannot otherwise reopen. It was apparent in his oral submissions to me that the plaintiff availed of the court time to recite in full his complaints in respect of the family law proceedings, his union representative and his employer (even though their legal representatives were no longer present).
I therefore accede to the first named defendant’s application to strike out the proceedings for the reasons stated.
Two further matters remain. Firstly, the first named defendant seeks a declaration that the issues raised by the plaintiff in these proceedings are res judicata. I fear that such a declaration would be legally unsound. In the first instance, the first named defendant did not engage in the judicial review proceedings at any stage. This is confirmed in the affidavit grounding the first named defendant’s application. Secondly, and more importantly, the issue with which both the High Court and the Supreme Court on appeal were confronted was whether or not to grant leave to bring judicial review proceedings. In the Supreme Court, additionally, the issue of whether or not that Court ought to vacate its order was also litigated on the plaintiff’s application. Although some comments may have been made concerning the plaintiff’s allegations against the first named defendant, it seems to me that any such comments were obiter and that there was no definitive ruling on the plaintiff’s case against the first named defendant. For that reason I decline to make a declaration as sought.
As regards the “Isaac Wunder Order”, having regard to what I have said in relation to the issue of res judicata, I feel I must treat these present proceedings against the first named defendant as the first (and hopefully the last) such proceedings. The mere suspicion (however strong) that the plaintiff might yet again attempt to sue the first named defendant notwithstanding the finding of this Court is not, in my view, sufficient to justify making an Isaac Wunder Order. I feel that something more by way of a track record would be required involving this Defendant to lay the grounds for fettering the plaintiff’s constitutional right of access to the courts. It may well be that the plaintiff will now lay down his pen. I do not know.
I have little doubt, however, that were he to seek again to sue the first named defendant, that defendant may well find itself on significantly stronger ground in seeking the said relief.
Burke v Anglo Irish Bank Corporation plc [2011] IEHC 478
Judgment of Mr. Justice Birmingham delivered the 15th day of December 2011
1. The plaintiffs in this case are husband and wife and are both solicitors by profession. The matter before the Court arises from a notice of motion brought by the defendants dated the 5th January, 2011. Three reliefs were sought in the notice of motion namely:-
1. An order directing the trial of a preliminary issue as to whether the plaintiffs have privity of contract or any sufficient interest with regard to the contracts.
2. An order pursuant to O.19, r. 28 of the Rules of the Superior Courts, 1986 striking out the plaintiffs’ claim on the grounds that it discloses no reasonable cause of action and is frivolous or vexatious.
3. An order striking out the plaintiffs’ action for the reasons as set out in para.2 pursuant to the inherent jurisdiction of the Court. In the event only the relief at para.3 has been pursued.
2. In summary, the plaintiffs’ claim as set out in the statement of claim is that in December, 2002 they entered into a contract with the defendants, pursuant to which the defendants would lend them €546,000. The plaintiffs’ intention in seeking to borrow this sum was so as to purchase six sites situated at Kinvara, County Galway. The plaintiffs contend that of the agreed €546,000, only €54,000 was advanced, which was linked to the payment of a deposit, that the defendants wrongfully, in breach of contract and breach of duty, failed to advance the balance, and that as a result of this the plaintiffs were unable to complete the purchase of the site and so suffered loss and damage. Of note is that the statement of claim refers to proceedings initiated by the defendants in which the bank sought possession of the plaintiffs’ family home and it is said that there will be an attempt to consolidate these proceedings commenced by the bank with the present proceedings. In fact the proceedings were not consolidated, and an order for possession was made by McGovern J., that order is under appeal. It may be noted that the possession proceedings initiated by the bank were commenced on the 18th June, 2008, and the plenary summons in the present proceedings issued on the 17th December, 2008.
3. Two arguments have been advanced by counsel on behalf of the moving party in seeking to have the proceedings dismissed. First of all, it is said that the plaintiffs, Frank and Lorna Burke never had contracts with the bank and secondly it is said, that even if the plaintiffs had a contract, which is strongly denied, a condition precedent for the drawdown of the second tranche of funding was that the bank had to receive net proceeds of approximately €700,000 from the sale of a property, No. 6 Averard, Taylors Hill and this has never been complied with.
4. The background to the contention that the plaintiffs did not have a contract with the bank is that in December, 2002 sites in Kinvara were about to go to auction. The plaintiffs, and more particularly the first named plaintiff was anxious to acquire the sites and approached the defendant bank, dealing with an associate director of the bank, Mr. Stephen Mackey, who was the area manager in the West for the bank. A loan of €54,000 was advanced, and in that regard a bank draft was made out in favour of Keane Mahony Smith, the auctioneers who are acting for the vendors. A promissory note was signed by Frank Burke on the 17th December, 2002, which was stated to be signed for and on behalf of Burdale Limited.
5. While the loan of €54,000 was actually paid on the 17th December, 2002, the formal loan offer letter did not issue until the 7th January, 2003. That letter was addressed to the Directors of Burdale Limited. It stated that Anglo was confirming its willingness to make a loan facility available to Burdale Limited. Of note is that in relation to the repayment date, the facility was stated to be repayable on demand, and without prejudice to the demand nature of the facility, was to be repaid on or before the 30th April, 2003. The section of the letter dealing with acceptance required a duplicate copy of the facility letter to be returned signed within seven days, together with a resolution of the board of directors approving the terms and also the certificate of incorporation.
6. The borrowers’ acceptance which was stated to be an acceptance for and on behalf of Burdale Limited states the signatories have read the facility letter of the 7th January, 2003, to Burdale Limited and the bank’s General Conditions and agreed to be bound by them. This was signed by Mr. Frank Burke.
7. There is sharp disagreement in relation to the role of Burdale Limited. The first named plaintiff has sworn that neither he, nor the second named plaintiff initiated the setting up of that company, acted as directors of it, or had any involvement with it in any capacity in the day to day running of the company. Attention is drawn to a Company Registration Office printout which indicated that the company was incorporated on the 22nd February, 1989, was struck off the register on the 11th January, 1999, and refers to apparently completely unconnected individuals as directors and secretary of the company. More surprisingly, given the terms of the promissory note and the acceptance of the loan offer to which I have referred the first named plaintiff avers that he never engaged or purported to engage or represented to the defendant that he was a director of Burdale Limited.
8. Burdale Limited also features prominently in relation to the documentation generated in relation to the second tranche. On this occasion a facility letter dated the 25th September, 2003, issued addressed to the directors of Burdale Limited. The body of the letter which was issued confirms the bank’s willingness to make an advance to Burdale Limited. The borrowers acceptance section records the signatories, Frank Burke and Lorna Burke, as stating that they have read the facility letter to Burdale Limited, and it is expressly stated to have been signed for and on behalf of Burdale Limited. The acceptance section required a certified copy of a resolution of the Board of Directors of the borrower. Attached to this is a document headed “Resolution” this records that at a meeting of the Board of Directors of Burdale Limited when there was present Frank Burke, in the chair, and Lorna Burke, it was proposed by Frank Burke and seconded by Lorna Burke that the company borrow from Anglo Irish Bank on the terms of the bank’s letter of the 25th September, 2003. This was signed by the first named plaintiff as chairman and the second named plaintiff as secretary. Also signed by both Frank Burke and Lorna Burke on the 25th September, 2003, was a guarantee, which referred to Burdale Limited as the “Principal”. A similar guarantee had been signed by Lorna Burke in January, 2003 at the time of the earlier advance where again Burdale Limited was referred to as the “Principal”.
9. In terms of how the involvement of Burdale Limited arose, Mr. Pat McHugh on behalf of the bank has averred that Mr. Burke informed the bank that Burdale Limited was to be the vehicle used by him to purchase the lands and develop the site. Mr. McHugh does not seem to have been employed by the bank in December, 2002 and certainly was not present for such discussions as took place during that month. However, Mr. Stephen Mackey who was, has sworn an affidavit confirming the contents of the McHugh affidavit and asserts that it was Mr. Burke who proposed Burdale Limited as the borrower and he refutes any allegation that he came up with the name Burdale, which he says is just simply untrue. Mr. Burke, it must be said alleges just that. He says that Mr. Mackey had said that he should use a corporate vehicle to develop, as distinct from purchasing the lands, but that the site should be kept in the plaintiffs’ names, which was advantageous for tax reasons. He says that it was Mr. Mackey who came up with the name after the first named plaintiff had said that he would like a name that was linked with him.
10. The first named plaintiff has pointed to an amount of correspondence between his solicitors and the solicitors for the vendors and also correspondence with third parties, referring to Frank Burke as the purchaser. In truth I do not attach any great significance to this as the issue is not what was being said to third parties but what was being said to Anglo Irish Bank. Of greater interest is that the actual contract refers to the purchaser as Frank Burke (in trust).
11. In November, 2003 Burco Properties Limited entered the picture. Mr. McHugh indicates that what happened was that Mr. Burke stated that the vehicle with regard to the lands was now going to be Burco Properties Limited. Mr. Mackey, in his affidavit, deals with this aspect by saying that it appears that there was a problem with Burdale Limited and that the proposal to use Burco Properties Limited was a proposal put forward by the plaintiffs’ solicitors and discussed between the parties and eventually accepted by the bank. For his part Mr. Burke explains that in October, 2003 he initiated the setting up of a company called Burmack Limited but that the Company’s Registration Office refused to register this entity and that he renamed the entity Burco Properties Limited, receiving a certificate of incorporation dated the 2nd December, 2003.
12. The account operated by the defendant bank reflects the change of identity. The account, which uses the same account number throughout, refers initially to Burdale Limited and then this changes to Burco Limited, as distinct from Burco Properties Limited.
13. There is broad agreement between the parties as to the legal principals applicable to cases such as this. In particular there is agreement that the principles have been concisely and helpfully summarized by Charleton J. in Millstream Recycling Limited v. Gerard Tierney and Newton Lodge Limited (Unreported, High Court, Charleton J., 9th March, 2010). From the summary and by reference to a number of the authorities referred to therein I identify the following principles as particularly relevant in the present case.
(i) The High Court is entitled to dismiss a claim, if it is clear that the plaintiff’s claim must fail.
(ii) The jurisdiction is to be exercised only upon the closest scrutiny and in clear cases.
(iii) A court should generally be slow to entertain applications of this kind.
(iv) Disputed oral evidence of fact cannot be relied upon by a defendant to succeed in such an application.
(v) In so far as there is a conflict of fact in any case, this must be resolved in favour of the party against whom the application to strike out has been brought.
(vi) The fact that a case appears weak and not likely to succeed provides no basis for dismissing the plaintiff’s claim.
14. There is no doubt that the documentation signed by the plaintiffs and in particular by the first named plaintiff with its frequent references to Burdale may present considerable difficulty for the plaintiffs, if this matter is permitted to proceed to trial. However, that of itself is clearly not sufficient for the defendant to succeed. In Ruby Property Company Limited v. Kilty (Unreported, High Court, McCracken J., 1st December 1999) MCracken J. went so far as to say that, if there is a dispute as to the facts on affidavit which is not resolved by admitted documents, then it will be virtually impossible for a defendant to have proceedings struck out as being unsustainable.
15. In this case, there are a number of complicating factors. As of December, 2002 Burdale Limited did not exist and as of September, 2003 neither Burdale Limited nor Burco Properties Limited existed, the latter not coming into existence until significantly later. In these circumstances despite the documentation signed by the plaintiffs which would certainly seem to create formidable obstacles for the plaintiff, I cannot be confident that the plaintiffs will not find a way to overcome them. The question is not whether the plaintiffs will overcome these obstacles, or even whether it is likely that the obstacles will be overcome, but whether I can be confident that cannot happen. I find myself in a situation where, whatever doubts I entertain in relation to the proceedings, that I cannot be entirely confident that cannot be so.
16. In the course of her oral argument Ms. Eileen Barrington S.C. has urged that even if there was no issue in relation to privity of contract, there would remain an insuperable obstacle for the plaintiffs in the form of the fact that the condition precedent to a drawdown of further funding has never been met. While the fact of non-compliance with the pre-condition is referred to in the course of affidavits sworn by the defendants, the issue was not expanded upon there and it was not suggested that this of itself would provide a basis for dismissing the plaintiffs’ claim. Again, the failure to comply with the condition precedent referred to in the facility letter may present difficulties for the plaintiffs if the matter goes to trial. By way of example it would appear to restrict the scope for the plaintiffs to rely on s.37 of the Companies Act 1963. It provides so far as material:-
“37(i) Any contract or other transaction purporting to be entered into by a company prior to its formation or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by it and entitled to the benefit thereof, as if it had been in existence at the date of such contract or other transaction and had been a party thereto.
(ii) Prior to ratification by the company the person or persons who purported to act in the name or on behalf of the company shall in the absence of express agreement to the contrary be personally bound by the contract or other transaction and entitled to the benefit thereof.
It would seem that if the plaintiffs are able to establish an entitlement to the benefit of the contract in accordance with s.37(2), they would still have to face the argument that if entitled to the benefit of the contract, they are also bound by the conditions of the contract including the condition precedent. The plaintiffs’ response to this is to say that they, as of December, 2002 had a contract which obliged the defendants to fund the Kinvara sites purchase. Even, assuming that there was such an obligation in December, 2002 the plaintiffs would still have to overcome the argument that in September, 2003 the existing contract was varied. The suggestion, which is implicit in the plaintiffs’ case that the Area Manager West for the bank, agreed to fund the acquisition of the sites unconditionally and irrevocably without reference to a credit committee meeting, would once have been unthinkable and even now would be seen by many as improbable.
17. However, that a suggestion or allegation might seem improbable is not a basis for dismissing the plaintiffs’claim. On the contrary, it is clear that disputed areas of fact must at this stage be resolved in favour of the party against whom the application to strike out and dismiss the proceedings has been brought. In that regard it seems to me that this is a case where there is a dispute between the parties in relation to the facts and accordingly this is not a case where the jurisdiction to dismiss the proceedings should be exercised at this stage. It is not a question of deciding how that conflict in relation to fact should be resolved or even how the conflict is likely to be resolved but identifying whether a conflict of fact exists. In my view it does, and that being so, this is not an appropriate case for the court to exercise its jurisdiction to dismiss the proceedings at this stage.
Bennett v Egan [2011] IEHC 377
JUDGMENT of Mr. Justice Ryan delivered the 10th October 2011
Introduction
1. This is an application to strike out the action as against the third named defendant, the Garda Síochána Complaints Board.
2. The plenary summons is dated the 25th May, 2010. The plaintiff delivered a Statement of Claim on the 14th June, 2010. The State defendants, that is, all the defendants other than the first named defendant, John Egan, issued a notice of motion dated the 18th November, 2010, to strike out the claim. Pursuant to an order of this Court, the plaintiff delivered an amended Statement of Claim on the 14th March, 2011. The third defendant, the Garda Síochána Complaints Board, filed an affidavit dated the 9th June, 2011, in support of an application to strike out the amended claim as against the Board. The plaintiff filed a replying affidavit dated the 23rd June, 2011.
3. The application on behalf of the Board is that the claim should be struck out because it is frivolous, vexatious, an abuse of process and bound to fail.
4. The grounding affidavit sets out as follows the ground that a proceeding by way of plenary summons is not the appropriate mode of challenging decisions made by the Board, which it contends ought to be done by way of appeal under the statutory scheme or judicial review. –
“I say that it is inappropriate to issue plenary proceedings against the third named defendant in respect of the manner in which the body carries out its duties. Any grievance the plaintiff has in respect of a decision or decisions made by the third named defendant should be brought by way of appeal or judicial review, and the within proceedings should be struck out as against the third named defendant accordingly.”
5. The affidavit goes on to say that the proceedings would appear to be statute barred.
6. The case against An Garda Síochána Complaints Board is contained at paras. 25 to 51 inclusive of the new Statement of Claim.
7. The background to this case as it appears from the Statement of Claim is that an incident occurred at the first defendant’s public house in which the plaintiff was involved and which was investigated by the Gardaí. At a later date the plaintiff made a complaint to the Gardai about Mr Egan. The plaintiff was dissatisfied with the actions of the investigating Gardaí and the conduct of the investigation. He complained to the Garda Síochána Complaints Board. The Chief Executive of the Board made a report, the result of which was notified to the plaintiff. He sought and obtained a copy of the report which was sent to him in redacted form. He was dissatisfied with the report and also because some information was withheld from him.
8. The plaintiff did not appeal the findings of the report under the relevant statutory scheme and neither did he seek judicial review. The plaintiff’s claim concerning the Garda Complaints Board relates generally to alleged failures in the investigation of his complaint of Garda misconduct and to alleged defamation in the report of the Chief Executive. Among the complaints is that the Board “wilfully neglected” its duty and was “recklessly indifferent” to missing evidence. The Statement of Claim expressed in separate and discrete paragraphs, rather a series of factual statements leading to a concluding claim or prayer for legal relief. It is not, in other words, in a form where it says what are the facts that the plaintiff relies on and then claims appropriate relief. Rather it consists of a series of allegations or conclusions without factual underpinning.
Striking Out
9. In Barry v. Buckley [1981] 1.R. 306, Costello J. said that the jurisdiction to strike out arose in two ways, the first under O. 19, r. 28 and secondly, in the inherent jurisdiction of the court. Order 19, rule 28 provides that the court may order a pleading to be struck out because (a) it discloses no reasonable cause of action or (b) the action is shown by the pleadings to be frivolous or vexatious. Whether the claim disclosed by the pleadings is frivolous or vexatious is to be decided by reference only to the particular pleading, in this case the Statement of Claim. Extrinsic evidence is not relevant on this question. Costello J. at p. 308 explains the second basis on which a court may strike out proceedings.
“But, apart from O. 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 L.J. in Goodson v. Grierson at page 765.”
10. In considering abuse of process, including a case that the plaintiff’s claim must fail, the contents of the affidavits can be referred to. In this category is a point about privileged communications between the investigating officer and the Chief Executive and between the Chief Executive and the Board. Whereas on the Statement of Claim alone it would not be possible to say that the claim disclosed no cause of action or was frivolous or vexatious, in light of the affidavit as to the circumstances and the consideration of the matter by the Board, one can reach a conclusion about privilege.
Immunity from suit
11. Can the Garda Complaints Board be held liable in tort for its decisions? In Beatty v Rent Tribunal [2006] 2 IR 191 the Supreme Court unanimously held that the Rent Tribunal was a statutory body exercising statutory adjudicative duties in the public interest and could not be sued in negligence. The protection arose from common law and was not a matter that had to be provided for in the Act establishing the tribunal. Although the Act did not say that the tribunal had immunity or did not owe a duty of care, it enjoyed protection at common law. The court however was divided on the legal foundation of the exclusion of liability. The majority view was expressed in the judgment of Geoghegan J. who held that this was a common law immunity that applied to courts and tribunals exercising statutory adjudicative functions. The minority judgments of Fennelly J. and McCracken J. preferred the concept of the duty of care and whether it was reasonable to impose such a duty in the circumstances of a tribunal exercising statutory functions. Geoghegan J. was unhappy with including the protection of a tribunal in the general law of negligence and thought it important to assert the immunity, as such, of statutory adjudicative bodies.
12. The majority judgment relied on the English authorities but with an important distinction. At pp. 197/8 and at 198/9 Geoghegan J. cited with approval two passages from Lord Denning’s judgment in Sirros v. Moore [1975] Q.B. 118. The difference is that Lord Denning conceived that even if a judge was actuated by malice in hearing a case, he was nevertheless immune from action. He could be prosecuted, he could be removed from office perhaps, he could be subject to other possible sanctions, but not liability in negligence or any other tort including, it would seem, misfeasance in public office. Lord Denning was clear about this and the reason he gave for the protection is that a judge had to be free of the fear of being sued and the fear of its being suggested that he was actuated by malice. Lord Denning says at p. 132 of the Q.B. report:-
“No matter that the judge was under some gross error or ignorance or was actuated by envy, hatred and malice, and all uncharitableness, he is not liable to an action. The remedy of the party aggrieved is to appeal to a court of appeal or to apply for habeas corpus, or a writ of error or certiorari, or to take such step to reverse his ruling. Of course if the judge has accepted bribes or been in the least degree corrupt, or has perverted the course of justice, he can be punished in the criminal courts. That apart, however, a judge is not liable to an action for damages. The reason is not because the judge has any privilege to make mistakes or to do wrong. It is so that he should be able to do his duty with complete independence and free from fear.”
13. Geoghegan J. having cited the second paragraph that he relies upon, adds the following at p. 199 of the report:-
“As there are some possible ambiguities in the two passages from the judgment of Lord Denning already cited, I want to make it clear that if a judge or tribunal was to knowingly engage in behaviour that was criminal or malicious I would consider that, for the reason given in the last sentence of the second passage, the immunity to a claim for damages for misfeasance of public office would not apply.”
14. Lord Denning held that the only ground that could remove the immunity enjoyed by a judge or tribunal is the absence of belief that he had jurisdiction. If it could be shown that a tribunal or a judge did not believe that he had jurisdiction to do what he actually did, he would have no immunity. But that is the only circumstance that would deprive him of the immunity. The point Lord Denning is making, as I understand it, is that nothing the judge does exposes him to civil action, provided only he is of the belief that he is acting within jurisdiction.
15. The difference in the two views is that Geoghegan J. allows for liability under misfeasance in public office if it is shown that a tribunal behaves maliciously. The consequence of Lord Denning’s approach is that a pleading in a case brought against a tribunal or judge can be struck out and indeed ought to be struck out as disclosing no reasonable cause of action. The same does not apply of course under the rule as stated by Geoghegan J., provided the plaintiff asserts that the conduct was knowingly wrongful, criminal, malicious or similar. But I think it is reasonable to say by inference from Geoghegan J.’s judgment in Beatty that it is not sufficient to put an adjudicative body to all the trouble of dealing with an action simply by adding the relevant epithets or adverbs in describing the behaviour that the plaintiff is challenging. If there is immunity assuming the person or body is acting within jurisdiction and bona fides, it is reasonable to infer that a plaintiff must set out some basic facts that could take the case outside the immunity. It may thus be concluded that this is an essential requirement and that a failure to provide the necessary factual information to ground the alleged malice means that there is no reasonable cause of action disclosed. Moreover, it would be an abuse of process to put a defendant in the position of establishing his bona fides as opposed to requiring a plaintiff to demonstrate the absence of bona fides.
16. Pleadings make a case based on facts. A Statement of Claim ought not to be permitted to relocate the burden of proof to the defendant by the simple device of adding a descriptive epithet or adverb. Facts not law, was the traditional way of saying what a Statement of Claim should contain.
The Plaintiff’s Claim as Pleaded
17. The pleading relating to the Garda Complaints Board is comprised in paras. 25 to 51 inclusive of the Statement of Claim. The plaintiff makes the following complaints:-
Paragraph 25
The Chief Executive of the Garda Complaints Board restricted the scope of investigation and exonerated some of those complaints against him. This does not constitute a cause of action because the Chief Executive was required under the terms of the relevant legislation to determine admissibility in respect of a complaint received by the Board.
Paragraphs 26/27
The plaintiff complains that the copy report he received from the Board had names of individuals redacted “contrary to the Information Commissioner’s opinion”. That does not amount to a cause of action. Paragraph 27 goes on to say that the Board “wilfully neglected their duty to obtain the video evidence referred to at para. 15(g) and were recklessly indifferent to missing evidence when notified by the plaintiff. Paragraph 15(g) is as follows:-
“(g) Abuse of authority on 2/3/2006 in recording investigative bias directed at the plaintiff on video while the plaintiff was under a legal incapacity.”
The inference from this is that the plaintiff is alleging that the Board did not obtain what he considers to be relevant video evidence and did not respond in a manner agreeable to the plaintiff to some complaint that he made about missing evidence.
Paragraph 27 says that the Board “wilfully neglected their duty” and “were recklessly indifferent”. These are complaints about the Board in respect of their carrying out of their statutory functions and it is clear that if they were acting bona fide in exercise of jurisdiction they are immune from suit: Beatty v Rent Tribunal [2006] 2 IR 191.
Is it sufficient for the plaintiff to overcome the obstacle presented by the Beatty immunity (or non-liability for negligence because no duty of care, according to the minority of the Supreme Court who assented in the result of Beatty) for him simply to plead wilfulness or recklessness? I do not think that the mere characterisation of the decisions and behaviour of the Board which the plaintiff wishes to challenge as being deliberate or reckless is sufficient. The plaintiff is obliged to provide a factual basis on which he could succeed if the matters alleged in his Statement of Claim are accepted by the court. That means that if he is making a case that the defendant behaved deliberately or recklessly, he must show a factual basis from which the inference might be drawn as to the state of mind that he relies upon, in respect of these allegations and particularly the crucial adverbial exacerbations but no facts whatsoever are set out in these paragraphs.
Paragraph 28
This is a meaningless litany of wrongs which does not disclose a cause of action:
“The published documents were occasioned, contributed to or facilitated by the acts and omissions of servants or agents of the State, which acts and omissions amounted to conspiracy, misfeasance in public office, libel and infringements of data protection and the plaintiff has been injured in his credit, character, and reputation and suffered loss, damage and expense, mental distress, mental anguish and sorrow.”
Paragraphs 29 – 30
Paragraph 29 alleges unspecified steps in connection with untruthful statements. Paragraph 30 refers to “another serious matter” that is unrevealed and is wholly mysterious. These pleas also do not disclose a cause of action.
Paragraphs 31 and 32
These do not disclose any cause of action. It also appears that the allegation here is inferentially related to the behaviour of others, not the Garda Complaints Board or any servant or agent.
Paragraphs 33 and 34
Mr. Bennett pleads that the investigator appointed by the Garda Complaints Board made mistakes in reporting on the case. At para. 33, he pleads that the investigator failed to notice or realise that there was “a subtle variation” in a statement of evidence that was transcribed into another statement. At para. 34, the plaintiff refers to the contradiction of an alibi that he says the investigator did not pick up. The plaintiff then characterises these alleged errors as being misconduct amounting to deliberate corruption, reckless indifference or gross negligence. However, there is no factual basis for this description of the alleged errors; therefore these characterisations are no more than freestanding conclusions unsupported by any alleged fact. It is not enough simply to analyse the documents in a case, in this instance the redacted report of the Chief Executive and accompanying materials, and then to characterise any areas that a person disagrees with or errors that he may perceive to be present as being corruptly produced without in any way asserting facts that might be relevant and which would establish the crucial allegation of corruption that changes the nature of the conduct complained of and also materially alters the availability of legal remedies.
It is abuse of process in such circumstances simply to attach these descriptive words to categories of behaviour without tying them in to any specific facts.
Paragraphs 35 and 36
These paragraphs contain an allegation of libel. However, the words complained of are not defamatory. It is not even alleged that they are untrue. The occasion in which they were recorded was manifestly a privileged one, if not absolute then qualified and no circumstances are alleged that would remove it. There is no cause of action disclosed in these paragraphs.
Paragraphs 37 to 41
Again, no cause of action is disclosed. The allegedly offending material is contained in the report of the investigator appointed by the Board to report on his inquires into the complaint made by the plaintiff. The occasion was obviously privileged, either absolute or qualified and again without any material basis for removing the protection in the event that it is the latter form of immunity.
Paragraphs 42 and 43
The paragraphs appear to relate to the conduct of persons other than the Garda Complaints Board or its servants or agents. No cause of action is disclosed.
Paragraphs 44 to 47
These paragraphs complain about material in the Chief Executive’s report to the Board. The comments made above on the subject of the alleged defamation apply here similarly.
Paragraphs 48 and 49
These paragraphs do not disclose any cause of action. The plea is no more than a disagreement with the inference that was drawn by two persons.
Paragraphs 50 and 51
These do not disclose any cause of action.
Decision
18. It is immaterial to this decision that the Garda Complaints Board has gone out of existence or is going to do so once these and another set of proceedings have been disposed of. I think that the imminent dissolution of the Board and the fact that it has to continue albeit in attenuated form in order to deal with this case merely highlights the practical importance of the issue that the Board has raised in this motion.
19. I take into account the fact that the plaintiff is a lay litigant, although he possesses considerable facility in using legal vocabulary of considerable complexity. A court has to be careful in dealing with a lay litigant to make sure that a defect in procedural steps does not shut out a genuine claim. On the other hand, litigation is a serious matter and broad allegations of corruption and fraud and serious misconduct ought not to be made without some foundation of fact.
20. The plaintiff’s claim about the Board is an unfounded scattergun attack couched in terms of sweeping allegations of misconduct. No facts are pleaded that could establish malicious motive. If the grievances came about by reason of negligence, that would not be actionable. The plaintiff seeks to escape the consequences of this rule by the simple expedient of adding allegations of malice. To permit the case to proceed on this basis would be to reverse the onus of proof.
21. I propose to accede to the application made by the Garda Síochána Complaints Board to have this claim struck out as against the Board.
Loughrey v Dolan [2012] IEHC 578, Laffoy J
Judgment of Ms. Justice Laffoy delivered on 30th day of November, 2012.
The proceedings and the application
1. The plaintiff in these proceedings is a personal litigant. On 9th July, 2012 these proceedings were initiated by special summons. In setting out the title to the proceedings, I have adopted the approach adopted by the defendant, merely referring in the title to the Succession Act 1965. The plaintiff’s summons was headed “Administration Suits” and it then referred to “Order 3(1), (2), (3), (4), (5), (6), (7), (8), (11), (18), (19), (20), (21), (22) of the succession act”. The special summons was a one page document. In the special endorsement of claim at the foot thereof it was stated:
“The plaintiffs claim is monetary retribution in the sum of €8,000,000 (Eight Million Euro).”
There followed a reference to “Order 3(1),… (22)”, as set out above, but without referring to any Act. There then followed the following statement:
“Additionally, negligence, concealment and suppression of bank statements, concurrent wrongdoing over a period of eleven years and still ongoing.”
An unusual feature of the special summons was that there was tagged on to the statement in the prescribed form that the summons is required to be served not less than four days before the return date mentioned, which in this case was 2nd October, 2012, exclusive of the day of service, the following additional statement:
“and be served under the Succession Act, 1965 [No. 27] section 44 (jury trial).”
2. The special summons was served on the defendant in due course and it has been adjourned in the Master’s Court until 15th January, 2013.
3. This application was initiated by a notice of motion dated 19th October, 2012 wherein the defendant sought the following orders in the following terms:
(a) pursuant to Order 19, rule 28 of the Rules of the Superior Courts striking out the plaintiff’s proceedings on the grounds that no reasonable cause of action is disclosed;
(b) pursuant to the inherent jurisdiction of the Court striking out the proceedings on the grounds that they are frivolous and/or vexatious and/or an abuse of the process of the Court;
(c) restraining the plaintiff from instituting any further proceedings against the defendant without leave of the Court;
(d) restraining the plaintiff from instituting any further motions in proceedings bearing record No. 2005/218SP without leave of the Court; and
(e) restraining the plaintiff from instituting any motions in any proceedings currently in being in relation to the estate Michael Campbell, deceased, without the leave of the Court.
4. The plaintiff filed two affidavits in the Central Office to ground the special summons. One, which was sworn on 25th September, 2012, was filed on 25th September, 2012, but, apparently, was not served on the defendant. The other, which was sworn on 28th September, 2012, was filed on 28th September, 2012 and that was the affidavit which was served on the defendant. In fact, both affidavits are the same in substance.
5. The defendant’s application is grounded on an affidavit sworn by the defendant on 18th October, 2012. No replying affidavit has been filed by the plaintiff.
Background to the proceedings
6. The proceedings relate to the administration of the estate of Michael MacCollion (otherwise known as Michael Campbell) (the Intestate). The Intestate died intestate on 19th December, 2000. The following is a brief summary of the administration of the estate of the Intestate based on the affidavit of the defendant:
(a) By order of the High Court (Kearns J.) made on 30th April, 2001 it was ordered that the defendant be at liberty to apply for a grant of Letters of Administration of the estate of the Intestate limited to the collection of all his property, giving discharges for all the debts which might have been due to his estate on payment of same, and doing what further might be necessary for the preservation of the property, and it was further limited to taking appropriate steps to ascertain the next of kin.
(b) On 29th April, 2004 a grant of administration intestate to the estate of the Intestate limited as aforesaid was granted to the defendant, who is a practising solicitor.
(c) By further order of the High Court (Kearns J.) made on 26th July, 2004, it was ordered that the powers of the defendant under the order of 30th April, 2001 be extended to include the right to sell the lands of the deceased and related matters. The defendant did sell the lands of the deceased. She has averred that the proceeds of the sales are held in a separate controlled trust account at AIB, Donegal in the name of the Intestate and the current balance on the account is approximately €435,000.
(d) The defendant initiated proceedings by way of special summons on 3rd May, 2005 entitled “In the matter of the estate of Michael Campbell Deceased and in the matter of the Succession Act 1965 between Cathleen Dolan plaintiff and Mary Culloo and Brendan Loughrey defendants” (Record No. 2005/218SP) (the 2005 Proceedings). The purpose of the 2005 Proceedings was to ascertain the next of kin of the Intestate. The long drawn out process involved in the 2005 Proceedings and the ultimate outcome are recorded in the perfected order of the Court (Laffoy J.) made on 11th June, 2007. There is one obvious typographical error in the perfected order in that the order which was thereby discharged was an order dated 31st July, 2006. The outcome was that the Court declared that the defendant was entitled to distribute the estate of the Intestate to the plaintiff, Leo Campbell and the estate of Michael Campbell, the said parties being first cousins of the Intestate. There has been no appeal against that order. The effect of the order was that the plaintiff became entitled to one-third share of the net estate of the Intestate.
(e) Subsequent to the making of the order of 11th June, 2007, the plaintiff took a number of steps in the 2005 Proceedings, the most significant of which are outlined in paragraphs (f) and (g) below.
(f) On 21st May, 2008 the Master made an order on foot of an ex parte application made by the plaintiff that the plaintiff be at liberty to issue a citation for service upon the defendant to lodge in court the letters of administration to the estate of the Intestate. The defendant then brought a motion seeking an order to set aside the citation which had issued. By order of the Court (Laffoy J.) made on 14th July, 2008 it was ordered that the citation be set aside. The plaintiff appealed that order to the Supreme Court (Record No. 309/2008) and the appeal is still pending.
(g) On 29th March, 2011 the plaintiff applied to the Master ex parte seeking liberty to issue a citation. By order of the Master dated 29th March, 2011 the application was refused. The plaintiff brought a motion to the Court to set aside the order of the Master. By order of the Court (Murphy J.) made on 27th February, 2012 the plaintiff’s application was refused and the order of the Master was affirmed. The plaintiff has appealed that order to the Supreme Court (Record No. 125/2012). The appeal is still pending.
(h) The plaintiff initiated separate proceedings by way of special summons in 2010 (the 2010 Proceedings). The special summons in the 2010 Proceedings (Record No. 2010/566SP), which was issued on 29th July, 2010, was in precisely the same terms as the special summons issued in these proceedings save that the amount of the “monetary retribution” claimed by the plaintiff in the 2010 Proceedings was €5,000,000. The proceedings were returnable before the Master’s Court on 2nd December, 2010 and were struck out by the Master.
The plaintiff’s affidavit to ground the special summons
7. In his grounding affidavit the plaintiff refers to documentation generated in connection with the administration of the estate of the Intestate commencing with correspondence received by the defendant on 4th January, 2001 and ending with an affidavit sworn by the defendant, I assume in the 2005 Proceedings, on 26th July, 2006. The documents from the intervening period referred to by the plaintiff include correspondence, affidavits sworn by the defendant, what I assume was the Inland Revenue affidavit filed in connection with the estate of the Intestate, birth certificates and suchlike. In his affidavit, by reference to those documents, the plaintiff has made serious allegations against the defendant, alleging that she deceitfully and fraudulently applied for the grant of letters of administration in the estate of the Intestate, that she committed perjury, that she suppressed documents, that she deceived the Revenue Commissioners, and that she committed an offence under the Criminal Justice (Theft and Fraud Offences) Act 2001. All of the allegations made relate to the period before the final order was made in the 2005 Proceedings. During the course of the 2005 Proceedings the plaintiff was represented by a firm of solicitors, McCloughan, Gunn & Company. As is recorded in the order of the Court dated 11th June, 2007, the Court on that day declared that McCloughan, Gunn & Co. had ceased to be solicitors acting for the plaintiff.
8. In summary, all of the complaints made by the plaintiff in the grounding affidavit against the defendant relate to matters which occurred a long time ago: in some cases, almost twelve years ago, and, as regards the remainder, in excess of six years ago. They occurred at a time when McCloughan, Gunn & Co. were acting as solicitors for the plaintiff in relation to his claim to the estate of the Intestate. Further, they relate to matters in respect of which orders were made in the High Court on the Probate side permitting the 2005 Proceedings and in respect of which there has been a final determination of the Court in the 2005 Proceedings. Some of the complaints made are quite bizarre. For instance, the plaintiff has averred that, in an affidavit sworn on 8th July, 2004, the defendant claimed “to have true copies of the Grant of Probate for Michael Campbell, when in fact she did not or ever have these, having instead letters of administration in breech (sic) of the Criminal Justice (Theft and Offences) Act 2001”. To refer to a grant of probate, rather than a grant of administration, is an understandable mistake and it was of no consequence in the context in which it occurred.
The plaintiff’s response to the defendant’s application
9. The plaintiff did not file any affidavit in response to the defendant’s application. At the hearing of the application on 23rd November, 2012, the plaintiff handed in a bundle of copy documents to the Court. One document was dated 22nd November, 2012 and was headed “Note to Presiding Judge and The Attorney General”. The Court arranged for a photocopy of the document to be furnished to counsel for the defendant, no copy having been served on the defendant. The commencement of the document in bold type stated as follows:
“I Brendan Loughrey beg to request a Jury Trial under The Succession Act 1965, [No. 27] section 44(1), (2).”
It was stated in the document that under Order 60, presumably referring to Order 60 of the Rules of the Superior Courts, the Attorney General is now party to these proceedings. The Court was informed that the office of the Attorney General was represented on the first return date before the Master, because papers had been served on the Attorney General. No issue has arisen or arises in any of the proceedings referred to in this judgment as to the validity of a law having regard to the provisions of the Constitution and, accordingly, the Attorney General has no role in any of the matters referred to in this judgment. In the document dated 22nd November, 2012 the plaintiff has also referred to Order 79, rule 65 of the Rules, which requires notice to the Attorney General in all cases where an application is made for letters of administration intestate of the estate of a person dying or presumed to have died “without known relation”. It is quite clear on the plaintiff’s own grounding affidavit that, when the defendant applied to the Court for a limited grant of administration under s. 27(4) of the Act of 1965, it was known that the Intestate had at least one “known relation”, his second cousin, Mary Culloo, who subsequently was named as the first defendant in the 2005 Proceedings. The problem to be addressed in the 2005 Proceedings was to identify the next of kin of the Intestate, that is to say, whether there were any closer relations of the Intestate than a second cousin, and, if so, how many.
10. Unfortunately, the plaintiff appears to have a voice problem. It was impossible to understand what he was trying to convey in his oral submissions at the hearing of the application. Therefore, the Court has to rely on the grounding affidavit and the document of 22nd November, 2012.
Conclusions on the defendant’s application
11. The Court has had the benefit of helpful legal submissions prepared by counsel for the defendant, to which I have had regard.
12. Because of the difficulty in determining what cause of action the plaintiff is attempting to pursue against the defendant as pleaded in the special endorsement of claim on the special summons, even when considered in the context of the averments contained in the plaintiff’s grounding affidavit, I propose focusing primarily on whether these proceedings should be struck out on the ground that they are vexatious and an abuse of process either under Order 19, rule 28 or the Court’s inherent jurisdiction.
13. The following passage from the judgment of the High Court (Irvine J.) in Behan v. McGinley [2011] 1 IR 47 (at p. 66) explains that jurisdiction and the manner in which the Court should exercise it:
“For the purpose of the court’s adjudication as to whether or not proceedings are vexatious within the meaning of O. 19, r. 28 of the Rules . . . or, indeed, for the purpose of the court’s consideration as to whether it will exercise its inherent jurisdiction to stay or dismiss proceedings, the court must consider whether the proceedings have been brought without any reasonable grounds. The High Court (Ó Caoimh J.), in Riordan v. Ireland (No. 5) [2001] 4 I.R. 463, has referred to a helpful decision of the Ontario High Court in Re Lang, Michener and Fabian (1987) 37 D.L.R. (4th) 685 at p. 691, where the following matters were held to be indicators of proceedings which were potentially vexatious, namely:-
(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.”
14. In applying the foregoing principles to the facts of this case, the following observations are apt.
15. Indicator (a) is certainly present. The Court determined by the order of 11th June, 2007 in the 2005 Proceedings that the estate of the Intestate is to be distributed between the plaintiff, Leo Campbell and the estate of Michael Campbell in equal shares. As I have already emphasised, that decision has not been appealed. The authority of the defendant to bring the 2005 Proceedings was derived from the grant of administration to the estate of the Intestate, which was granted pursuant to the order of the High Court dated 30th April, 2001, and which specifically authorised the plaintiff to take appropriate steps to ascertain the next of kin of the Intestate. In considering whether indicator (a) is present, it would clearly be inappropriate for this Court to have regard to the applications made by the plaintiff to the Master after the order of 11th June, 2007 was made, which are the subject of orders of the High Court which have been appealed, and which are still the subject of the pending appeals to the Supreme Court referred to earlier (Record No. 309/2008 and Record No. 125/2012). However, it is appropriate for the Court to consider what the objective of the plaintiff was in bringing the 2010 Proceedings and in bringing these proceedings, which, as has already been recorded, replicate the 2010 Proceedings save that the “monetary retribution” has escalated to €8m in these proceedings. The only reasonable inference is that one of the objectives of the plaintiff was in some way to undo the effect of the order of 11th June, 2007. Finally, the plaintiff brought these proceedings notwithstanding that the 2010 Proceedings, which they replicate, were struck out by the Master.
16. Indicator (b) is also present. In my view, no reasonable person could reasonably expect to obtain €8m in an action against the personal representative of a deceased person, where the Court has already directed that the personal representative distribute the estate of the deceased person on the basis that such person is entitled to one third of the estate and at the present time the estate, before costs are discharged, has a value of €435,000, and the person was a party to the proceedings in which the Court made that direction and for most of those proceedings had legal representation.
17. Indicator (c) is also present, because it is reasonable to conclude that the plaintiff has brought these proceedings with a view to harassing and oppressing the defendant, by making very serious allegations against her in relation to her involvement in the process which was before the Court, in which the plaintiff participated, mostly with the benefit of legal representation, and which process was transparent.
18. As regards indicator (d), while the defendant in the grounding affidavit has referred to the existence of proceedings brought by the plaintiff by way of special summons against his former solicitors, McCloughan, Gunn & Co. in 2010 claiming monetary compensation in the sum of €5m (Record No. 2010/568SP), which were struck out by the Master on 2nd December, 2010, I am not attaching weight to that matter in determining whether these proceedings are vexatious.
19. Apart from the presence of those indicators, the proceedings are procedurally flawed. An action for “monetary retribution” or for damages for, say, negligence cannot be brought by way of special summons. The very serious allegations made against the defendant are not particularised. The service of the proceedings on the Attorney General was inappropriate, for the reasons previously explained. The request for a trial by a jury is wholly misconceived. No undecided question of fact remains in relation to the identification of the beneficiaries of the estate of the Intestate.
20. For all of the foregoing reasons I have come to the conclusion that these proceedings are vexatious and should be dismissed.
Isaac Wunder Order
21. The purpose of making an order of the type which has come to be known as an Isaac Wunder Order, that is to say, an order restraining a person from instituting any other proceedings against parties to earlier proceedings without first obtaining the leave of the Court was outlined by Keane C. J. in Riordan v. Ireland (No. 5) [2001] 4 I.R. 463 as follows (at p. 370):
“It is, however, the case that there is vested in this court as there is in the High Court, an inherent jurisdiction to restrain the institution of proceedings by named persons in order to ensure that the process of the court is not abused by repeated attempts to re-open litigation or to pursue litigation which is plainly groundless and vexatious. The court is bound to uphold the rights of other citizens, including their right to be protected from unnecessary harassment and expense, rights which are enjoyed by the holders of public office as well as by private citizens. This court would be failing in its duty, as would the High Court, if it allowed it processes to be repeatedly invoked in order to re-open issues already determined or to pursue groundless and vexatious litigation.”
22. The history of the 2005 Proceedings, the 2010 Proceedings and these proceedings, as outlined in the affidavit of the defendant, strongly suggests that the plaintiff, in the absence of Court intervention, will continue to institute groundless and vexatious litigation against the defendant and, in so doing, will abuse the process of the Court. Therefore, while acutely conscious of the need to exercise caution in making such an order, I think it is appropriate to make an order restraining the plaintiff from –
(a) instituting any proceedings against the defendant or in relation to the estate of the Intestate without the leave of the Court;
(b) from instituting any motion, application or procedure in the High Court in the 2005 Proceedings or in any proceedings currently in being in relation to the estate of the Intestate without the leave of the Court.
An order in the foregoing terms will not in any way inhibit the plaintiff in prosecuting the appeals currently pending in the Supreme Court.
Orders
Talbot v Hibernian Group plc & ors [2012] IEHC 464
JUDGMENT of Ms. Justice Dunne delivered the 25th day of October 2012
Hibernian Group plc., the first named defendant in the first proceedings in the title above, (hereinafter described as the “2007 proceedings”) and Aviva plc., the second named defendant in the second proceedings, (hereinafter described as the “2009 proceedings”) is the same corporate entity and was formally the employer of the plaintiff herein. Amicus the Union and Unite the Union who are named as defendants in the 2007 and 2009 proceedings are also the same entity. The plaintiff was a member thereof during his time as an employee of the company. For ease of reference I will refer to Hibernian Group plc./Aviva pic. as “the Company” and I will refer to Amicus the Union/Unite the Union as “the Union”.
Background
There are identical applications in the 2007 and 2009 proceedings brought by the Company against the plaintiff. In each case the relief sought is the same, in that the Company seeks:-
1. An order pursuant to O. 19, r. 28, and/or the inherent jurisdiction of this Court striking or dismissing the plaintiffs claim herein on the grounds that same is frivolous, vexatious and discloses no reasonable cause of action and represents an abuse of the process of this Court;
2. Further and in addition to the foregoing, an order pursuant to the inherent jurisdiction of this Court that no further proceedings be instituted by the plaintiff without the leave of the Court.
At the outset, I wish to refer to an order of the High Court made herein on the 10th August, 2012, before Herbert J. in the 2009 proceedings to the following effect:-
“This matter being listed before the court on this day (by the President of the High Court on the 30th day of July, 2012) and same coming on accordingly in the presence of the plaintiff in person, solicitor for the Messrs McCann Fitzgerald Solicitors and counsel for the second named defendant.
Upon and on reading the judgment of Hanna J. herein dated the 8th day of October, 2010, the orders made herein dated the 17th day of November, 2011, the 8th day of March 2011, and on the 18th day of October, 2011, and on hearing the applicant in person said solicitor and said counsel
These proceedings having previously been struck out as against the first named and third named defendants.
The court determining
(a) That the only litigation remaining before the courts is the action between the plaintiff and the second named defendant
(b) That the remaining matter before the court is the notice of motion dated the 16th day of December 2009 by the second named defendant to strike out the plaintiffs claim herein on the grounds that same is frivolous, vexatious and discloses no reasonable cause of action and represents an abuse of the process of this court
The court doth fix the 2nd day of October, 2012, as a hearing date for the said notice before Mr. Justice Herbert.”
The order went on to note that the plaintiff objected to Herbert J. hearing the notice of motion. It was ordered that the hearing date was to stand and that the notice of motion was to be transferred to the non-jury list on the 2nd October, 2012, for the purpose of the President assigning another judge to hear the same. It was on that basis that the matter came before me for hearing.
History of the Proceedings
As can be seen from the order referred to above, a number of applications have been made in the 2009 proceedings and, as was pointed out, the only litigation remaining before the courts is the action between the plaintiff and the Company. Orders have been previously made striking out the proceedings against the first named and the third named defendants. I will refer to the history of the proceedings in general insofar as it concerns the other defendants and it would also be useful to make brief reference to earlier proceedings involving the plaintiff, the Company and the Union. The plaintiff in these proceedings commenced earlier proceedings in 2006 entitled “the High Court, record no. 2006/848 P, between Thomas Talbot, plaintiff, and Lionel Hogan, company secretary, Hibernian General Insurance Limited, defendant,” and “the High Court, record no. 2006/1726 P, between Thomas Talbot, plaintiff, and Hibernian Group plc., and Amicus the Union, Defendants”.
The Company issued a notice of motion seeking the dismissal of those proceedings on the grounds that the same were frivolous, vexatious and disclosed no reasonable cause of action and represented an abuse of the process of this Court. Order 19, r. 28 of the Rules of the Superior Courts was also invoked. The notices of motion in those proceedings ultimately came before me for hearing and I delivered an ex tempore judgment on the 11th January, 2007. I made orders at that stage striking out the proceedings. There was also before the Court on that occasion an application by the Union to strike out the proceedings against them and that application was also dealt with and granted on the same date. I have had the benefit of a note on the ex tempore judgment of the 11th January, 2007. In the course of that judgment I observed that it was clear that the plaintiff had a sense of grievance arising from his employment with the first named defendant and he also complained about a maintenance order which had been made in the Family Law Courts. He appeared to have a claim for wages or money which he contended he was entitled to have been paid in the course of his employment going back many years. However, I observed:-
“It is clear that Mr. Talbot had grievances. However, it is impossible to see what precisely is being claimed. Is there a claim for damages for personal injuries suffered? Maybe. A claim for back money? Maybe: but how much; what cause of action; what remedy?”
I went on to note that Mr. Talbot had been given the opportunity prior to the hearing before me to deliver an amended statement of claim. However, what was furnished did not provide any clarity as to what his claim was. Ultimately as indicated above, I struck out the proceedings. It is noteworthy that having made that order on the 11th January, 2007, the 2007 proceedings were then issued against the Company and the Union on the 22nd January, 2007, some eleven days later.
The 2007 Proceedings
The plenary summons in the 2007 proceedings contained a list of complaints against the Company and the Union respectively. Included amongst the complaints were allegations of fraud, intimidation, perverting justice and discrimination. A subsequent document described as a fifth general endorsement of claim was also provided by the plaintiff. A statement of claim was delivered by the plaintiff on the 30th October, 2007. Defences were delivered on behalf of the defendants and ultimately a motion was brought on behalf of the second named defendant, the Union, pursuant to O. 19, r. 28 of the Rules of the Superior Courts and/or the inherent jurisdiction of the court seeking to strike out the plaintiffs claim and other ancillary relief.
That application was heard and determined by Irvine J. A judgment was delivered by Irvine J. on the 14th November, 2007, granting the relief sought. I propose to refer to part of the judgment in that case. Irvine J. noted at p. 3 of the judgment as follows:-
“The court notes with significant regret that it appears likely that Mr. Talbot because of his ongoing dispute with the defendants in this action has received no pension payments from the first named defendant since his retirement in November, 2001 and that he has been effectively surviving upon the State old age pension for a number of years. A significant “once off’ offer by the solicitors on record for the first named defendant was rejected on the basis that the same might compromise his rights in the within proceedings.”
I might comment at this point that when I dealt with the matter in respect of the 2006 proceedings, I noted also that Mr. Talbot had not at that point received his pension. The position remains the same today and I have encouraged Mr. Talbot, so far as I can, to take up his entitlement to his pension although I understand from his comments that his view is that the pension on offer does not reflect the full amount of what he should be entitled to by way of pension, but more importantly he is concerned, notwithstanding the assurances of the Company, that accepting the pension would in some way compromise his position in relation to these proceedings.
Returning to the judgment of Irvine J. she continued:-
“I have carefully considered the content of the plenary summons delivered on 22nd January, 2007 and also the statement of claim delivered on 30th October, 2007 for the purposes of adjudicating upon the second named defendant’s application. I have also compared the statement of claim to the pleas made by the plaintiff in his earlier proceedings which were dismissed by Miss Justice Dunne on 11th January, 2007. Once again the present proceedings assert wrongdoing on the part of Mr. Talbot’s employers in terms of the nature and volume of the work which he was required to undertake and also the level of remuneration received by him for such work. Mr. Talbot complains about the manner in which his complaints were dealt with by his employers and he refers to these matters being dealt with by way of an internal appeals system in 1999 and by further complaints being processed through the Labour Court in 2001 and the Employment Appeals Tribunal in 2002. Once again the assertion now made by Mr. Talbot is that he is due extensive payments in respect of arrears of salary from 1984 up to the date of his retirement and significant pension and lump sum payments based upon uplifted salary payments with effect from 31st November, 2001. Interspersed with this claim in respect of salary, lump sum entitlement and pension the plaintiff supplements his claim with damning allegations of fraud, malicious intent, defamation, theft, collusion, conspiracy, bribery and corruption. These allegations are made as against his former employers and it is asserted by the plaintiff that his union the second named defendant not only failed to protect him from such activities but actively colluded and conspired to act against his interests through the agency of one Jerry Shanahan.
In terms of the plaintiffs complaints the timeframe of the alleged wrongdoing is significant and much of the wrongdoing is ascribed to actions on the part of the defendants commencing in 1973 and extending beyond his retirement in November, 2001. There are clearly very significant issues as to whether or not or any of these complaints, even if valid are maintainable at this point in time having regard to the statute of limitations. Further, some of the complaints now made by the plaintiff have been already been adjudicated upon in some shape or form in other tribunals and this fact may well stifle the validity of any potential valid complaints.”
That passage is a useful summary of the position which presented itself before Irvine J. in the 2007 proceedings in relation to the application by the Union to strike out. It summarises, so far as one can, the general nature of the complaints, the history of those complaints, the steps taken over the years in relation to those matters by Mr. Talbot and the breadth of the allegations being made by Mr. Talbot against the Company and the Union. The Court went on to grant the reliefs sought by the second named defendant in its notice of motion.
The plaintiff then appealed that decision to the Supreme Court. Judgment was delivered by the Supreme Court on the 26th March, 2009, and in the judgment of the Court, Kearns J., at p. 2, made the following observation:-
“The plaintiff may nowadays perhaps be better described as a serial litigant. He has engaged in one or other form of litigation over the past twenty years. Some of this litigation arose from the break up of his marriage, but lengthy and protracted proceedings were also undertaken by or on behalf of the plaintiff against his employers, his trade union and even his golf club. His multiple complaints deriving from his employment were the subject of hearings before the Rights Commissioner, the Labour Court and the Employment Appeals Tribunal. While voluminous papers have been lodged by the plaintiff for the purpose of this appeal, many consist of newspaper clippings, internal communications within the insurance company for which he worked and other documentation with little or no relevance to the issue which this Court must decide. However, a useful summary of the nature of the dispute which existed between the plaintiff and his employers is set out in the decision of the Labour Court on 18th June, 2001 where the dispute was characterised in the following terms.”
Kearns J. then set out the summary of the workers’ arguments and the Company’s arguments as recited in a decision of the Labour Court, for the purpose of setting out the nature of the plaintiff’s complaints to the Labour Court in respect of his employer, the Company.
In the course of the decision, having referred at length to the decision of the High Court as set out in the judgment of Irvine J., Kearns J., at p. 6 of the judgment, continued:-
“In the course of the appeal before this Court, I have heard nothing in the plaintiff’s submissions to suggest that the learned trial judge erred in any way in reaching the conclusion which she did. She found that the various claims, contained in numerous handwritten documents, which purport to set out a claim against Amicus remain completely amorphous and are not pleaded in accordance with the Rules of the Superior Courts. I agree. Nor do his pleadings in any way set out facts or contentions which are adequately particularised so as to support any maintainable cause of action. The learned trial judge was, in my view, restrained in her characterisation and comments about the documentation furnished by the plaintiff. I am in this context adverting not only to the seven statements of claim advanced by the plaintiff, but also to his voluminous submissions, including those filed following the conclusion of the appeals herein. The same are in my view prolix, unfocused and irrational to a high degree and almost entirely unrelated to the issue before the Court. There is no attempt made to engage with the reasoning of the learned trial judge or to provide grounds for challenging her conclusions both that the proceedings are frivolous and vexatious and that they fail to disclose a reasonable cause of action. For this simple and basic reason the plaintiffs appeal must fail.”
That decision was confined to the position of the Union only, the Union having brought the motion. I now have to consider the application of the Company in respect of those proceedings for the reliefs sought in the notice of motion herein. Many of the comments made by Irvine J. and Kearns J. in respect of the position of the Union can be echoed in respect of the Company. One of the observations I would make at this stage is that as time has progressed and as the plaintiff furnished further documents to the Court by way of pleadings, more details have emerged as to the nature of the complaints and allegations being made against the Company. That is not to say that there is more clarity as to the nature of any cause of action pleaded against the Company. However before dealing with my conclusions in relation to the 2007 proceedings I now want to look at what transpired following the decision of the High Court and the outcome of the appeal of that decision to the Supreme Court in relation to the 2007 proceedings.
The 2009 Proceedings
Following the decision of the Supreme Court in the 2007 proceedings, the plaintiff issued a further plenary summons in proceedings bearing the record no. 2009/8581 P entitled “The High Court, between Tom Talbot, plaintiff, and McCann Fitzgerald Solicitors, Aviva plc., Unite the Union, defendants”.
As can be seen, McCann Fitzgerald solicitors were joined as a defendant for the first time in these proceedings. They had acted for Mrs. Talbot in the matrimonial proceedings between Mr. and Mrs. Talbot. The plenary summons was issued on the 24th September, 2009. The plenary summons is in a most unusual form and contains three distinct parts which appear in the form of a sworn statement by the plaintiff in respect of his complaints against the respective defendants. Following the service of that plenary summons, the notice of motion herein was issued on behalf of the Company. That notice of motion was re-entered at a subsequent date. In the meantime a series of other applications were brought to court in connection with the proceedings. They included an application by the solicitors and the Union to strike out the proceedings. The application came on for hearing before the High Court and judgment was delivered by Hanna J. on the 8th October, 2010. In the course of the judgment, Hanna J. explained the reasoning behind the decision to adjourn generally with liberty to re-enter the motion (that is at present at hearing before me). He then went on to deal with the applications by the solicitors and by the Union in that case. I want to refer to a number of passages from the judgment of Hanna J. He first dealt with the application of the Union and stated:-
“Having read the papers and having heard the legal submissions in this case advanced by the plaintiff, I am satisfied that the case he seeks to make against his trade union is substantially the same, if not identical, to the case he sought to advance in two previous sets of proceedings. The plaintiff did not, in my view, make any effort to attempt to identify some new or fresh cause of action. Thus, we are left in a situation where two sets of previous proceedings levelling much the same case against the third named defendant have been struck out by the High Court. The most recent (the 2007 proceedings) were struck out on the grounds that the pleadings failed to disclose the cause of action and the proceedings were frivolous and vexatious and an abuse of process of the courts. The correctness of this decision by Irvine J. has been endorsed by the Supreme Court. As regards the case brought against the third named defendant, I am of the same view. In my view the case is unsustainable and is frivolous and vexatious. It is my opinion that the plaintiff seeks to use the courts of Ireland as a battlefield to wage unrelenting war against, inter alia, the third named defendant. It is my view that such recycling of an unsustainable case is both oppressive of the third named defendant and abuse of the processes of this Court.”
He went on to say at p. 6:-
“As regards the third named defendant, I am satisfied that the proceedings against it should be struck out both pursuant to the Rules of the Superior Courts and by way of exercise of the inherent jurisdiction of this Court to do so upon the grounds that the pleadings disclose no sustainable cause of action and that they are bound to fail and that the proceedings are frivolous and vexatious and constitute an abuse of the process of this Court. I am satisfied from the way the plaintiff has conducted the litigation over the years that he is likely to attempt yet again to bring proceedings under some other form or guise. It is, in my view, of importance to note that when his 2006 proceedings were struck out by Dunne J. his almost immediate reaction was not to seek to appeal her decision, but to issue fresh proceedings levelling, in effect, the same allegations, inter alia, at the third named defendant. I am fully conscious of the fact that the court must exercise great caution in considering any act restraining the citizen’s right of access to the courts.
Nonetheless, the third named defendant comes before this court with rights certainly no greater than, but at least equal to those of the plaintiff and, most importantly, is entitled to the benefit of finality of litigation and protection from oppressive litigious conduct by another party (see judgment of Keane C.J. in Riordan v. An Taoiseach [2001] IESC 83 (Unreported, Supreme Court, 19th October, 2001)).”
Accordingly, he not only struck out the proceedings, but also made an order restraining the plaintiff from taking any further proceedings against the third named defendant in those proceedings, the Union.
Hanna J. then went to consider the application on behalf of the first named defendant, the solicitors. He pointed out that the legal principles applicable to the third named defendant also applied to the position of the first named defendant. The complaints against the first named defendant related to their involvement on behalf of his wife in family law proceedings. Hanna J. noted at p. 7 of his judgment as follows:-
“The last act in that sequence was the order of Abbott J. on the 26th June, 2002, refusing the plaintiffs appeal from the pension adjustment order of the Circuit Family Court. Thus over eight years have elapsed since this matter was concluded. In his oral submissions and in the documents prepared by him in this and in the previous cases, the plaintiff repeated a number of allegations against the first named defendant and, indeed, several members of the judiciary. Of course, one must accept the factual matrix, i.e. that the plaintiff was engaged in no doubt torrid and upsetting litigation over a period of some twelve or thirteen years. His wife was legally represented and so was he at one stage but, as noted above, his solicitors and counsel came off record. A number of court orders went against him and, no doubt, this weighed heavily on him then and still does. But that does not mean that this Court must go on to accept the inferences, some of them quite scandalous, which he invites the courts to draw from the sequence of events, which undoubtedly took place, namely the conduct of family law proceedings. The Court is not obliged to accept the inferences of corruption and impropriety levelled by the plaintiff.”
He concluded:-
“In my view, the documents, insofar as they set out allegations against the first named defendant, disclose no reasonable cause of action against it and are unsustainable in law and are frivolous and vexatious. In my view, they constitute a vehicle whereby the plaintiff seeks to vent his spleen and frustration in respect of legal “reverses” which he cannot otherwise reopen. It was apparent in his oral submissions to me that the plaintiff availed of the court time to recite in full his complaints in respect of the family law proceedings, his union representative and his employer (even though their legal representatives were no longer present).”
In the course of the hearing before me I had the benefit of submissions from counsel on behalf of the Company. Reference was made in the course of the submissions to the decision in Riordan v. Ireland (No. 5) [2001] 4 I.R. 463, to the judgment of Ó Caoimh J. therein and in particular to a passage at p. 465 of the judgment where it was stated as follows:-
“Where the court is satisfied that a person has habitually or persistently instituted vexatious or frivolous civil proceedings it may make an order restraining the institution of further proceedings against parties to those earlier proceedings without prior leave of the court. In 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. 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. then referred to an unreported decision of the Alberta Court of Queen’s Bench in Dykun v.Odishaw (Unreported, Alberta Court of Queen’s Bench, Judicial District of Edmonton, 3rd August, 2000). In that case the following matters were set out and identified by Ó Caoimh J. as showing that a proceeding is vexatious:-
“(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.”
It was submitted on behalf of the employer that many of those criteria were applicable and could be identified in the circumstances of the present proceedings.
Reference was also made to the decision of the Supreme Court in Fay v. Tegral Pipes Limited [2005] 2 IR 261 in which McCracken J. in the Supreme Court stated at p. 266 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 ofbeing asked to defend a claim which cannot succeed.”
Reliance was also placed by counsel on behalf of the employer on that passage.
I also had the benefit of submissions in the form of a number of documents submitted by Mr. Talbot on his own behalf. Some bundles of documents were handed in to the Court and read by Mr. Talbot. They were in the form of sworn statements or affidavits. The longest of those documents was described as an affidavit and was sworn by Mr. Talbot on the 23rd May, 2011. The material contained in the various documents submitted by Mr. Talbot tends to be repetitive and I do not propose to refer in any detail to those documents save to say that I have carefully read the documents submitted by the plaintiff.
Those documents were described by the plaintiff as showing that he had “just cause” to have a trial of his various complaints before a judge and jury. Indeed, he expressed concern that the application at hearing before me was listed in the “non jury list”. The documents furnished by the plaintiff are a reiteration of his various complaints against McCann Fitzgerald, the solicitors, various judges, solicitors, counsel, registrars and court staff. They are also a reiteration of his complaints against the Company and the Union. Much of what is contained in the documents is irrelevant in respect of any complaint against the Company. Many of the allegations made by the plaintiff against judges, counsel, solicitors and court staff are quite simply outrageous. The one thing that the documents do not provide is a coherent, or focused, or appropriate response to the application in both sets of proceedings before me. Quite simply Mr. Talbot did not engage with the issue before the Court as one might have hoped or expected.
Decision
I first encountered the plaintiff in the context of the 2006 proceedings. Since then the plaintiff has issued the 2007 and 2009 proceedings. As in the 2006 proceedings, it is possible to derive a sense of the plaintiff’s grievances against his employer from the pleadings. I have read the pleadings before me in respect of both sets of proceedings and I think it is fair to say that the plaintiff has provided more detail of his grievances in the pleadings as they have developed over the years. However, I have to say that I find it just as difficult now as I did in 2007 to identify a cause of action properly pleaded and particularised in accordance with the Rules of the Superior Courts in respect of the Company. The pleadings before the Court contain much that is irrelevant, some of which is simply impossible to understand and some of which is outrageous. The complaints against the Company go back to 1973. It is clear that the plaintiff availed of internal appeals in respect of his terms and conditions of employment. He has been to the Labour Court and the Employment Appeals Tribunal. He continues to attempt to litigate issues in respect of his employment in these proceedings, many years on.
What is clear from the pleadings is that these proceedings have become a means by which the plaintiff has chosen to “vent his spleen and frustration in respect of legal ‘reverses’ which he cannot otherwise reopen” to quote once more the comments of Hanna J. in respect of the application before him by the solicitors and the Union in the 2009 proceedings.
The plaintiff has not advanced matters in the pleadings furnished subsequent to the 2006 proceedings which I first dealt with in 2007. There is and has been no attempt by the plaintiff to frame a coherent claim disclosing any reasonable cause of action against the Company in accordance with the Rules of the Superior Courts. The content of the pleadings and the conduct of the 2007 and 2009 proceedings to date by the plaintiff is now such that it can clearly be said that these proceedings are frivolous and vexatious and an abuse of the process of the Court. In that context, I would refer briefly to a motion which was brought before me following the decision of Hanna J. which attempted to re-open the application that had been heard and determined before Hanna J. In that regard I made an order on the 8th March, 2011, refusing the application of the plaintiff. It is noteworthy that the plaintiff did not appeal the order of Hanna J. and in fact did not appeal the order made by me on the 8th March, 2011, referred to above.
One of the more troubling aspects of the conduct of the plaintiff in this litigation is the joinder of the firm of solicitors who acted for his wife in matrimonial proceedings as a defendant in the 2009 proceedings. It is hard to understand why that was done in the context of proceedings involving grievances against the Company and the Union. There is no practical or logical reason for having done so. However, the plaintiff in so doing availed of the opportunity to make scurrilous allegations against many of those who had to deal with the plaintiff in the course of those proceedings as described above. To my mind, this is the essence of abuse of process.
When I first dealt with similar proceedings commenced by Mr. Talbot in January 2007, I referred to a passage from the judgment of the Supreme Court in Fay v. Tegral Pipes Ltd. [2005] 2 IR 261 at p. 265 and I have again set out that passage in this judgment. I also referred previously to the palpable sense of grievance felt by Mr. Talbot towards his former employer, the Company herein and his former Union; to that list can now be added his wife’s former solicitors, his union’s solicitors, various court officials and judges. I think it is clear that contrary to the intended purpose of the right of access to the courts for the resolution of genuine disputes as referred to in Fay v. Tegral Pipes Ltd., Mr. Talbot is attempting to use these proceedings as a forum for a lost cause- one which has not given rise to a reasonable cause of action, discernible from the proceedings before the Court. The passage of time and the proliferation of documentation have not produced a clearly pleaded cause of action against the Company. It has previously been noted that an equally important purpose of the jurisdiction of the courts to strike out frivolous and vexatious proceedings is to ensure that litigants should not be put to the trouble and expense of defending litigation that cannot succeed. (See Fay v. Tegral Pipes Ltd.)
In all the circumstances I am satisfied that it is appropriate to make the orders sought by the company herein striking out the plaintiffs claim on the grounds that it is frivolous, vexatious and discloses no reasonable cause of action and represents an abuse of the process of this Court.
A further application has been made on behalf of the Company in these proceedings that no further proceedings be instituted by the plaintiff against the Company without leave of the court. The history of these proceedings is such that it is clear that notwithstanding previous orders made striking out the proceedings by the plaintiff against several of the defendants, the plaintiff has then instituted further proceedings without advancing new evidence or new causes of action. In general, the reaction of the plaintiff to an order striking out proceedings has been to institute fresh proceedings. It is worth noting that the plaintiff sought before me to deal with a motion he issued seeking to add back defendants against whom proceedings have been struck out, individual members of McCann Fitzgerald, the solicitors acting for the Company, and the solicitors who acted for the Union. In those circumstances it seems to me to be appropriate to make an order restraining the plaintiff from taking further proceedings against the Company and its servants and agents, without leave of the court.
Talbot v Hibernian Group plc & ors [2012] IEHC 464
JUDGMENT of Ms. Justice Dunne delivered the 25th day of October 2012
Hibernian Group plc., the first named defendant in the first proceedings in the title above, (hereinafter described as the “2007 proceedings”) and Aviva plc., the second named defendant in the second proceedings, (hereinafter described as the “2009 proceedings”) is the same corporate entity and was formally the employer of the plaintiff herein. Amicus the Union and Unite the Union who are named as defendants in the 2007 and 2009 proceedings are also the same entity. The plaintiff was a member thereof during his time as an employee of the company. For ease of reference I will refer to Hibernian Group plc./Aviva pic. as “the Company” and I will refer to Amicus the Union/Unite the Union as “the Union”.
Background
There are identical applications in the 2007 and 2009 proceedings brought by the Company against the plaintiff. In each case the relief sought is the same, in that the Company seeks:-
1. An order pursuant to O. 19, r. 28, and/or the inherent jurisdiction of this Court striking or dismissing the plaintiffs claim herein on the grounds that same is frivolous, vexatious and discloses no reasonable cause of action and represents an abuse of the process of this Court;
2. Further and in addition to the foregoing, an order pursuant to the inherent jurisdiction of this Court that no further proceedings be instituted by the plaintiff without the leave of the Court.
At the outset, I wish to refer to an order of the High Court made herein on the 10th August, 2012, before Herbert J. in the 2009 proceedings to the following effect:-
“This matter being listed before the court on this day (by the President of the High Court on the 30th day of July, 2012) and same coming on accordingly in the presence of the plaintiff in person, solicitor for the Messrs McCann Fitzgerald Solicitors and counsel for the second named defendant.
Upon and on reading the judgment of Hanna J. herein dated the 8th day of October, 2010, the orders made herein dated the 17th day of November, 2011, the 8th day of March 2011, and on the 18th day of October, 2011, and on hearing the applicant in person said solicitor and said counsel
These proceedings having previously been struck out as against the first named and third named defendants.
The court determining
(a) That the only litigation remaining before the courts is the action between the plaintiff and the second named defendant
(b) That the remaining matter before the court is the notice of motion dated the 16th day of December 2009 by the second named defendant to strike out the plaintiffs claim herein on the grounds that same is frivolous, vexatious and discloses no reasonable cause of action and represents an abuse of the process of this court
The court doth fix the 2nd day of October, 2012, as a hearing date for the said notice before Mr. Justice Herbert.”
The order went on to note that the plaintiff objected to Herbert J. hearing the notice of motion. It was ordered that the hearing date was to stand and that the notice of motion was to be transferred to the non-jury list on the 2nd October, 2012, for the purpose of the President assigning another judge to hear the same. It was on that basis that the matter came before me for hearing.
History of the Proceedings
As can be seen from the order referred to above, a number of applications have been made in the 2009 proceedings and, as was pointed out, the only litigation remaining before the courts is the action between the plaintiff and the Company. Orders have been previously made striking out the proceedings against the first named and the third named defendants. I will refer to the history of the proceedings in general insofar as it concerns the other defendants and it would also be useful to make brief reference to earlier proceedings involving the plaintiff, the Company and the Union. The plaintiff in these proceedings commenced earlier proceedings in 2006 entitled “the High Court, record no. 2006/848 P, between Thomas Talbot, plaintiff, and Lionel Hogan, company secretary, Hibernian General Insurance Limited, defendant,” and “the High Court, record no. 2006/1726 P, between Thomas Talbot, plaintiff, and Hibernian Group plc., and Amicus the Union, Defendants”.
The Company issued a notice of motion seeking the dismissal of those proceedings on the grounds that the same were frivolous, vexatious and disclosed no reasonable cause of action and represented an abuse of the process of this Court. Order 19, r. 28 of the Rules of the Superior Courts was also invoked. The notices of motion in those proceedings ultimately came before me for hearing and I delivered an ex tempore judgment on the 11th January, 2007. I made orders at that stage striking out the proceedings. There was also before the Court on that occasion an application by the Union to strike out the proceedings against them and that application was also dealt with and granted on the same date. I have had the benefit of a note on the ex tempore judgment of the 11th January, 2007. In the course of that judgment I observed that it was clear that the plaintiff had a sense of grievance arising from his employment with the first named defendant and he also complained about a maintenance order which had been made in the Family Law Courts. He appeared to have a claim for wages or money which he contended he was entitled to have been paid in the course of his employment going back many years. However, I observed:-
“It is clear that Mr. Talbot had grievances. However, it is impossible to see what precisely is being claimed. Is there a claim for damages for personal injuries suffered? Maybe. A claim for back money? Maybe: but how much; what cause of action; what remedy?”
I went on to note that Mr. Talbot had been given the opportunity prior to the hearing before me to deliver an amended statement of claim. However, what was furnished did not provide any clarity as to what his claim was. Ultimately as indicated above, I struck out the proceedings. It is noteworthy that having made that order on the 11th January, 2007, the 2007 proceedings were then issued against the Company and the Union on the 22nd January, 2007, some eleven days later.
The 2007 Proceedings
The plenary summons in the 2007 proceedings contained a list of complaints against the Company and the Union respectively. Included amongst the complaints were allegations of fraud, intimidation, perverting justice and discrimination. A subsequent document described as a fifth general endorsement of claim was also provided by the plaintiff. A statement of claim was delivered by the plaintiff on the 30th October, 2007. Defences were delivered on behalf of the defendants and ultimately a motion was brought on behalf of the second named defendant, the Union, pursuant to O. 19, r. 28 of the Rules of the Superior Courts and/or the inherent jurisdiction of the court seeking to strike out the plaintiffs claim and other ancillary relief.
That application was heard and determined by Irvine J. A judgment was delivered by Irvine J. on the 14th November, 2007, granting the relief sought. I propose to refer to part of the judgment in that case. Irvine J. noted at p. 3 of the judgment as follows:-
“The court notes with significant regret that it appears likely that Mr. Talbot because of his ongoing dispute with the defendants in this action has received no pension payments from the first named defendant since his retirement in November, 2001 and that he has been effectively surviving upon the State old age pension for a number of years. A significant “once off’ offer by the solicitors on record for the first named defendant was rejected on the basis that the same might compromise his rights in the within proceedings.”
I might comment at this point that when I dealt with the matter in respect of the 2006 proceedings, I noted also that Mr. Talbot had not at that point received his pension. The position remains the same today and I have encouraged Mr. Talbot, so far as I can, to take up his entitlement to his pension although I understand from his comments that his view is that the pension on offer does not reflect the full amount of what he should be entitled to by way of pension, but more importantly he is concerned, notwithstanding the assurances of the Company, that accepting the pension would in some way compromise his position in relation to these proceedings.
Returning to the judgment of Irvine J. she continued:-
“I have carefully considered the content of the plenary summons delivered on 22nd January, 2007 and also the statement of claim delivered on 30th October, 2007 for the purposes of adjudicating upon the second named defendant’s application. I have also compared the statement of claim to the pleas made by the plaintiff in his earlier proceedings which were dismissed by Miss Justice Dunne on 11th January, 2007. Once again the present proceedings assert wrongdoing on the part of Mr. Talbot’s employers in terms of the nature and volume of the work which he was required to undertake and also the level of remuneration received by him for such work. Mr. Talbot complains about the manner in which his complaints were dealt with by his employers and he refers to these matters being dealt with by way of an internal appeals system in 1999 and by further complaints being processed through the Labour Court in 2001 and the Employment Appeals Tribunal in 2002. Once again the assertion now made by Mr. Talbot is that he is due extensive payments in respect of arrears of salary from 1984 up to the date of his retirement and significant pension and lump sum payments based upon uplifted salary payments with effect from 31st November, 2001. Interspersed with this claim in respect of salary, lump sum entitlement and pension the plaintiff supplements his claim with damning allegations of fraud, malicious intent, defamation, theft, collusion, conspiracy, bribery and corruption. These allegations are made as against his former employers and it is asserted by the plaintiff that his union the second named defendant not only failed to protect him from such activities but actively colluded and conspired to act against his interests through the agency of one Jerry Shanahan.
In terms of the plaintiffs complaints the timeframe of the alleged wrongdoing is significant and much of the wrongdoing is ascribed to actions on the part of the defendants commencing in 1973 and extending beyond his retirement in November, 2001. There are clearly very significant issues as to whether or not or any of these complaints, even if valid are maintainable at this point in time having regard to the statute of limitations. Further, some of the complaints now made by the plaintiff have been already been adjudicated upon in some shape or form in other tribunals and this fact may well stifle the validity of any potential valid complaints.”
That passage is a useful summary of the position which presented itself before Irvine J. in the 2007 proceedings in relation to the application by the Union to strike out. It summarises, so far as one can, the general nature of the complaints, the history of those complaints, the steps taken over the years in relation to those matters by Mr. Talbot and the breadth of the allegations being made by Mr. Talbot against the Company and the Union. The Court went on to grant the reliefs sought by the second named defendant in its notice of motion.
The plaintiff then appealed that decision to the Supreme Court. Judgment was delivered by the Supreme Court on the 26th March, 2009, and in the judgment of the Court, Kearns J., at p. 2, made the following observation:-
“The plaintiff may nowadays perhaps be better described as a serial litigant. He has engaged in one or other form of litigation over the past twenty years. Some of this litigation arose from the break up of his marriage, but lengthy and protracted proceedings were also undertaken by or on behalf of the plaintiff against his employers, his trade union and even his golf club. His multiple complaints deriving from his employment were the subject of hearings before the Rights Commissioner, the Labour Court and the Employment Appeals Tribunal. While voluminous papers have been lodged by the plaintiff for the purpose of this appeal, many consist of newspaper clippings, internal communications within the insurance company for which he worked and other documentation with little or no relevance to the issue which this Court must decide. However, a useful summary of the nature of the dispute which existed between the plaintiff and his employers is set out in the decision of the Labour Court on 18th June, 2001 where the dispute was characterised in the following terms.”
Kearns J. then set out the summary of the workers’ arguments and the Company’s arguments as recited in a decision of the Labour Court, for the purpose of setting out the nature of the plaintiff’s complaints to the Labour Court in respect of his employer, the Company.
In the course of the decision, having referred at length to the decision of the High Court as set out in the judgment of Irvine J., Kearns J., at p. 6 of the judgment, continued:-
“In the course of the appeal before this Court, I have heard nothing in the plaintiff’s submissions to suggest that the learned trial judge erred in any way in reaching the conclusion which she did. She found that the various claims, contained in numerous handwritten documents, which purport to set out a claim against Amicus remain completely amorphous and are not pleaded in accordance with the Rules of the Superior Courts. I agree. Nor do his pleadings in any way set out facts or contentions which are adequately particularised so as to support any maintainable cause of action. The learned trial judge was, in my view, restrained in her characterisation and comments about the documentation furnished by the plaintiff. I am in this context adverting not only to the seven statements of claim advanced by the plaintiff, but also to his voluminous submissions, including those filed following the conclusion of the appeals herein. The same are in my view prolix, unfocused and irrational to a high degree and almost entirely unrelated to the issue before the Court. There is no attempt made to engage with the reasoning of the learned trial judge or to provide grounds for challenging her conclusions both that the proceedings are frivolous and vexatious and that they fail to disclose a reasonable cause of action. For this simple and basic reason the plaintiffs appeal must fail.”
That decision was confined to the position of the Union only, the Union having brought the motion. I now have to consider the application of the Company in respect of those proceedings for the reliefs sought in the notice of motion herein. Many of the comments made by Irvine J. and Kearns J. in respect of the position of the Union can be echoed in respect of the Company. One of the observations I would make at this stage is that as time has progressed and as the plaintiff furnished further documents to the Court by way of pleadings, more details have emerged as to the nature of the complaints and allegations being made against the Company. That is not to say that there is more clarity as to the nature of any cause of action pleaded against the Company. However before dealing with my conclusions in relation to the 2007 proceedings I now want to look at what transpired following the decision of the High Court and the outcome of the appeal of that decision to the Supreme Court in relation to the 2007 proceedings.
The 2009 Proceedings
Following the decision of the Supreme Court in the 2007 proceedings, the plaintiff issued a further plenary summons in proceedings bearing the record no. 2009/8581 P entitled “The High Court, between Tom Talbot, plaintiff, and McCann Fitzgerald Solicitors, Aviva plc., Unite the Union, defendants”.
As can be seen, McCann Fitzgerald solicitors were joined as a defendant for the first time in these proceedings. They had acted for Mrs. Talbot in the matrimonial proceedings between Mr. and Mrs. Talbot. The plenary summons was issued on the 24th September, 2009. The plenary summons is in a most unusual form and contains three distinct parts which appear in the form of a sworn statement by the plaintiff in respect of his complaints against the respective defendants. Following the service of that plenary summons, the notice of motion herein was issued on behalf of the Company. That notice of motion was re-entered at a subsequent date. In the meantime a series of other applications were brought to court in connection with the proceedings. They included an application by the solicitors and the Union to strike out the proceedings. The application came on for hearing before the High Court and judgment was delivered by Hanna J. on the 8th October, 2010. In the course of the judgment, Hanna J. explained the reasoning behind the decision to adjourn generally with liberty to re-enter the motion (that is at present at hearing before me). He then went on to deal with the applications by the solicitors and by the Union in that case. I want to refer to a number of passages from the judgment of Hanna J. He first dealt with the application of the Union and stated:-
“Having read the papers and having heard the legal submissions in this case advanced by the plaintiff, I am satisfied that the case he seeks to make against his trade union is substantially the same, if not identical, to the case he sought to advance in two previous sets of proceedings. The plaintiff did not, in my view, make any effort to attempt to identify some new or fresh cause of action. Thus, we are left in a situation where two sets of previous proceedings levelling much the same case against the third named defendant have been struck out by the High Court. The most recent (the 2007 proceedings) were struck out on the grounds that the pleadings failed to disclose the cause of action and the proceedings were frivolous and vexatious and an abuse of process of the courts. The correctness of this decision by Irvine J. has been endorsed by the Supreme Court. As regards the case brought against the third named defendant, I am of the same view. In my view the case is unsustainable and is frivolous and vexatious. It is my opinion that the plaintiff seeks to use the courts of Ireland as a battlefield to wage unrelenting war against, inter alia, the third named defendant. It is my view that such recycling of an unsustainable case is both oppressive of the third named defendant and abuse of the processes of this Court.”
He went on to say at p. 6:-
“As regards the third named defendant, I am satisfied that the proceedings against it should be struck out both pursuant to the Rules of the Superior Courts and by way of exercise of the inherent jurisdiction of this Court to do so upon the grounds that the pleadings disclose no sustainable cause of action and that they are bound to fail and that the proceedings are frivolous and vexatious and constitute an abuse of the process of this Court. I am satisfied from the way the plaintiff has conducted the litigation over the years that he is likely to attempt yet again to bring proceedings under some other form or guise. It is, in my view, of importance to note that when his 2006 proceedings were struck out by Dunne J. his almost immediate reaction was not to seek to appeal her decision, but to issue fresh proceedings levelling, in effect, the same allegations, inter alia, at the third named defendant. I am fully conscious of the fact that the court must exercise great caution in considering any act restraining the citizen’s right of access to the courts.
Nonetheless, the third named defendant comes before this court with rights certainly no greater than, but at least equal to those of the plaintiff and, most importantly, is entitled to the benefit of finality of litigation and protection from oppressive litigious conduct by another party (see judgment of Keane C.J. in Riordan v. An Taoiseach [2001] IESC 83 (Unreported, Supreme Court, 19th October, 2001)).”
Accordingly, he not only struck out the proceedings, but also made an order restraining the plaintiff from taking any further proceedings against the third named defendant in those proceedings, the Union.
Hanna J. then went to consider the application on behalf of the first named defendant, the solicitors. He pointed out that the legal principles applicable to the third named defendant also applied to the position of the first named defendant. The complaints against the first named defendant related to their involvement on behalf of his wife in family law proceedings. Hanna J. noted at p. 7 of his judgment as follows:-
“The last act in that sequence was the order of Abbott J. on the 26th June, 2002, refusing the plaintiffs appeal from the pension adjustment order of the Circuit Family Court. Thus over eight years have elapsed since this matter was concluded. In his oral submissions and in the documents prepared by him in this and in the previous cases, the plaintiff repeated a number of allegations against the first named defendant and, indeed, several members of the judiciary. Of course, one must accept the factual matrix, i.e. that the plaintiff was engaged in no doubt torrid and upsetting litigation over a period of some twelve or thirteen years. His wife was legally represented and so was he at one stage but, as noted above, his solicitors and counsel came off record. A number of court orders went against him and, no doubt, this weighed heavily on him then and still does. But that does not mean that this Court must go on to accept the inferences, some of them quite scandalous, which he invites the courts to draw from the sequence of events, which undoubtedly took place, namely the conduct of family law proceedings. The Court is not obliged to accept the inferences of corruption and impropriety levelled by the plaintiff.”
He concluded:-
“In my view, the documents, insofar as they set out allegations against the first named defendant, disclose no reasonable cause of action against it and are unsustainable in law and are frivolous and vexatious. In my view, they constitute a vehicle whereby the plaintiff seeks to vent his spleen and frustration in respect of legal “reverses” which he cannot otherwise reopen. It was apparent in his oral submissions to me that the plaintiff availed of the court time to recite in full his complaints in respect of the family law proceedings, his union representative and his employer (even though their legal representatives were no longer present).”
In the course of the hearing before me I had the benefit of submissions from counsel on behalf of the Company. Reference was made in the course of the submissions to the decision in Riordan v. Ireland (No. 5) [2001] 4 I.R. 463, to the judgment of Ó Caoimh J. therein and in particular to a passage at p. 465 of the judgment where it was stated as follows:-
“Where the court is satisfied that a person has habitually or persistently instituted vexatious or frivolous civil proceedings it may make an order restraining the institution of further proceedings against parties to those earlier proceedings without prior leave of the court. In 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. 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. then referred to an unreported decision of the Alberta Court of Queen’s Bench in Dykun v.Odishaw (Unreported, Alberta Court of Queen’s Bench, Judicial District of Edmonton, 3rd August, 2000). In that case the following matters were set out and identified by Ó Caoimh J. as showing that a proceeding is vexatious:-
“(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.”
It was submitted on behalf of the employer that many of those criteria were applicable and could be identified in the circumstances of the present proceedings.
Reference was also made to the decision of the Supreme Court in Fay v. Tegral Pipes Limited [2005] 2 IR 261 in which McCracken J. in the Supreme Court stated at p. 266 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 ofbeing asked to defend a claim which cannot succeed.”
Reliance was also placed by counsel on behalf of the employer on that passage.
I also had the benefit of submissions in the form of a number of documents submitted by Mr. Talbot on his own behalf. Some bundles of documents were handed in to the Court and read by Mr. Talbot. They were in the form of sworn statements or affidavits. The longest of those documents was described as an affidavit and was sworn by Mr. Talbot on the 23rd May, 2011. The material contained in the various documents submitted by Mr. Talbot tends to be repetitive and I do not propose to refer in any detail to those documents save to say that I have carefully read the documents submitted by the plaintiff.
Those documents were described by the plaintiff as showing that he had “just cause” to have a trial of his various complaints before a judge and jury. Indeed, he expressed concern that the application at hearing before me was listed in the “non jury list”. The documents furnished by the plaintiff are a reiteration of his various complaints against McCann Fitzgerald, the solicitors, various judges, solicitors, counsel, registrars and court staff. They are also a reiteration of his complaints against the Company and the Union. Much of what is contained in the documents is irrelevant in respect of any complaint against the Company. Many of the allegations made by the plaintiff against judges, counsel, solicitors and court staff are quite simply outrageous. The one thing that the documents do not provide is a coherent, or focused, or appropriate response to the application in both sets of proceedings before me. Quite simply Mr. Talbot did not engage with the issue before the Court as one might have hoped or expected.
Decision
I first encountered the plaintiff in the context of the 2006 proceedings. Since then the plaintiff has issued the 2007 and 2009 proceedings. As in the 2006 proceedings, it is possible to derive a sense of the plaintiff’s grievances against his employer from the pleadings. I have read the pleadings before me in respect of both sets of proceedings and I think it is fair to say that the plaintiff has provided more detail of his grievances in the pleadings as they have developed over the years. However, I have to say that I find it just as difficult now as I did in 2007 to identify a cause of action properly pleaded and particularised in accordance with the Rules of the Superior Courts in respect of the Company. The pleadings before the Court contain much that is irrelevant, some of which is simply impossible to understand and some of which is outrageous. The complaints against the Company go back to 1973. It is clear that the plaintiff availed of internal appeals in respect of his terms and conditions of employment. He has been to the Labour Court and the Employment Appeals Tribunal. He continues to attempt to litigate issues in respect of his employment in these proceedings, many years on.
What is clear from the pleadings is that these proceedings have become a means by which the plaintiff has chosen to “vent his spleen and frustration in respect of legal ‘reverses’ which he cannot otherwise reopen” to quote once more the comments of Hanna J. in respect of the application before him by the solicitors and the Union in the 2009 proceedings.
The plaintiff has not advanced matters in the pleadings furnished subsequent to the 2006 proceedings which I first dealt with in 2007. There is and has been no attempt by the plaintiff to frame a coherent claim disclosing any reasonable cause of action against the Company in accordance with the Rules of the Superior Courts. The content of the pleadings and the conduct of the 2007 and 2009 proceedings to date by the plaintiff is now such that it can clearly be said that these proceedings are frivolous and vexatious and an abuse of the process of the Court. In that context, I would refer briefly to a motion which was brought before me following the decision of Hanna J. which attempted to re-open the application that had been heard and determined before Hanna J. In that regard I made an order on the 8th March, 2011, refusing the application of the plaintiff. It is noteworthy that the plaintiff did not appeal the order of Hanna J. and in fact did not appeal the order made by me on the 8th March, 2011, referred to above.
One of the more troubling aspects of the conduct of the plaintiff in this litigation is the joinder of the firm of solicitors who acted for his wife in matrimonial proceedings as a defendant in the 2009 proceedings. It is hard to understand why that was done in the context of proceedings involving grievances against the Company and the Union. There is no practical or logical reason for having done so. However, the plaintiff in so doing availed of the opportunity to make scurrilous allegations against many of those who had to deal with the plaintiff in the course of those proceedings as described above. To my mind, this is the essence of abuse of process.
When I first dealt with similar proceedings commenced by Mr. Talbot in January 2007, I referred to a passage from the judgment of the Supreme Court in Fay v. Tegral Pipes Ltd. [2005] 2 IR 261 at p. 265 and I have again set out that passage in this judgment. I also referred previously to the palpable sense of grievance felt by Mr. Talbot towards his former employer, the Company herein and his former Union; to that list can now be added his wife’s former solicitors, his union’s solicitors, various court officials and judges. I think it is clear that contrary to the intended purpose of the right of access to the courts for the resolution of genuine disputes as referred to in Fay v. Tegral Pipes Ltd., Mr. Talbot is attempting to use these proceedings as a forum for a lost cause- one which has not given rise to a reasonable cause of action, discernible from the proceedings before the Court. The passage of time and the proliferation of documentation have not produced a clearly pleaded cause of action against the Company. It has previously been noted that an equally important purpose of the jurisdiction of the courts to strike out frivolous and vexatious proceedings is to ensure that litigants should not be put to the trouble and expense of defending litigation that cannot succeed. (See Fay v. Tegral Pipes Ltd.)
In all the circumstances I am satisfied that it is appropriate to make the orders sought by the company herein striking out the plaintiffs claim on the grounds that it is frivolous, vexatious and discloses no reasonable cause of action and represents an abuse of the process of this Court.
A further application has been made on behalf of the Company in these proceedings that no further proceedings be instituted by the plaintiff against the Company without leave of the court. The history of these proceedings is such that it is clear that notwithstanding previous orders made striking out the proceedings by the plaintiff against several of the defendants, the plaintiff has then instituted further proceedings without advancing new evidence or new causes of action. In general, the reaction of the plaintiff to an order striking out proceedings has been to institute fresh proceedings. It is worth noting that the plaintiff sought before me to deal with a motion he issued seeking to add back defendants against whom proceedings have been struck out, individual members of McCann Fitzgerald, the solicitors acting for the Company, and the solicitors who acted for the Union. In those circumstances it seems to me to be appropriate to make an order restraining the plaintiff from taking further proceedings against the Company and its servants and agents, without leave of the court.
Coleman v O’Neill [2012] IEHC 112
JUDGMENT of Mr. Justice Roderick Murphy dated the 8th day of March 2012
1. The applicants are directors of the Balinrobe Credit Union (the Credit Union). The respondent at all material times practiced as a solicitor on his own as Coleman and Company. By notice of motion filed on the 14th November, 2011, the applicants sought an order (pursuant to the provisions of O, 19, r. 28 of the Rules of the Superior Courts) striking out the plaintiffs proceedings on the grounds that the plaintiff had no reasonable cause of succeeding with his claim. Alternatively they sought an order pursuant to the inherent jurisdiction of the court, dismissing the plaintiffs claim on the ground that the plaintiff’s action constituted an abuse of process.
2. The grounding affidavit of Finn O’Neill referred to the reliefs sought by the plaintiff for alleged negligence, breach of duty and/or breach of fiduciary duty on the part of each of the defendants in and about the granting of loan facilities to Eamon Kenny, and his two brothers Darragh Kenny and Sean Kenny. Sean Kenny had worked as a legal executive with the plaintiff. The deponent referred to the plaintiffs claim that the defendants had wrongfully accepted various written undertakings given by Sean Kenny on behalf of Coleman and Company, Ballinrobe, Co. Mayo.
Allegations of fraud and misfeasance of public office and breach of duty had also been made by the plaintiff against the defendant directors. Damages in the amount outstanding and/or due and owing to the Credit Union from Eamon Kenny, Darragh Kenny and Sean Kenny were also sought.
It was averred that the plaintiff had gradually become actively involved in the affairs of the Credit Union. On the 9th December, 1999, he was appointed to the credit committee and on the 28th November, 2001, was elected to the Board of Directors.
On the 17th December, 2002, the plaintiff was appointed legal adviser. The defendants and each of them were ordinary members of the Credit Union and members of the Board of Directors and as such were reliant on the plaintiff proffered legal advice in the best interest of the Credit Union.
On the 16th September, 2005, the Credit Union received a letter of undertaking from Coleman and Company, solicitors on behalf of Sean Kenny, in respect of a loan
€113,000, sanctioned by the Credit Union
Further letters of undertaking in respect of borrowings by Eamon Kenny and by Darragh Kenny were received by the Credit Union from Coleman and Company, solicitors.
These loans were approved by the Board of Directors which at all material times included the plaintiff. Minutes of meetings of the Board together with the attendance of the plaintiff were exhibited.
The matter of the security of the loans issued to Sean Kenny, Darragh Kenny and Eamon Kenny, were raised by the Board with the plaintiff in January, 2008. The plaintiff assured the Board of Directors that there would be compliance with the letters of undertaking. He offered and provided a further letter of undertaking dated the 6th February, 2008, reaffirming the undertakings furnished to the Credit Union. It was averred that the plaintiff made no allegation regarding the illegality or otherwise of the undertakings furnished by his firm to the Credit Union until the 10th September, 2009.
It was averred that the plaintiffs alleged concerns regarding the undertakings furnished by his firm resulted not by reason of his own internal audit as alleged in the statement of claim, but more particularly, by reason of an audit of his practice by the
Law Society on or before the 15th July, 2008.
It was averred that on the 11th September, 2009, the plaintiff attended a meeting with McDarby and Company who had, at that stage, been appointed as solicitors for the Credit Union. At that meeting, the plaintiff put a proposal to the Board that the undertakings would be offered by Eamon Kenny, Darragh Kenny and Sean Kenny. That proposal was rejected by the Credit Union on the advice of its solicitors.
On the 14th September, 2009, the plaintiff tendered his resignation from the Board of Directors, which resignation was accepted by the Board.
3. By replying affidavit the respondent Mr. Coleman said that he was an arranging debtor who, on the 14th December, 2009, obtained the protection of the court exercising it jurisdiction in bankruptcy. This matter was still pending.
He referred to an order obtained from Dunne J. in the bankruptcy proceedings in reference of the claim of Balinrobe Credit Union Limited. Dunne J. ordered that William O’Connell on behalf of the Credit Union make discover y on oath of the documents which were or had been in its possession or power relating to the matters in question in the action.
Arising from the non compliance of that order, Mr. Coleman issued a motion to strike out the plaintiff’s case in Ballinrobe Credit Union v. Daniel Coleman (2009/1303 SP).
The court notes that this is an earlier and separate action.
The plaintiff s claim in those proceedings related to the loans made by the Credit Union to Sean Kenny, Eamon Kenny and Darragh Kenny.
In these proceedings the plaintiff put Finn O’Neill on full proof of acting on the plaintiff’s authority.
He averred to the partisan and select interpretation of events evidenced in paras.34 to 36 of the affidavit of Finn O’Neill in relation to the undertaking signed by him on the 6th February, 2008. At that time the loan book of the Credit Union had deteriorated to an alarmingly high level, thereby necessitating exact scrutiny of each and every loan. He listed the factors which caused such deterioration.
Mr. Coleman said that his composite undertaking of the 6th February, 2008, was procured by the Chief Executive of the Credit Union. Billy (William) O’Carroll, who met him after meeting Sean Kenny, regarding debt collection files. Mr. O’Carroll had informed him that the auditors had requested him to obtain from Mr. Coleman a composite undertaking regarding the loans to Sean Kenny, Eamon Kenny and Darragh Kenny.
Mr. Coleman averred that he was not aware of, nor had ever heard any reference to the date of the 24th January, 2007, when Sean Kenny had proffered three undertakings to the Credit Union for himself and for his brothers Eamon Kenny and Darragh Kenny.
The plaintiff disputed the averments of Finn O’Neill regarding to what happened at the meeting with McDarby and Company, solicitors. He said that it was hearsay, incorrect and fully disputed.
He alleged that Billy O’Carroll had loans drawn down in his office in similar circumstances to that of Sean Kenny, Eamon Kenny and Darragh Kenny, by means of undertakings to which he had not signed nor had sight of. Mr. O’Carroll had failed to furnish any documents of undertaking. This left Mr. Coleman with no choice but to notify his professional indemnity insurance company of a potential claim.
Mr. Coleman said that he had initiated a third proceeding, Daniel Coleman v. William and Anne O’Carroll, in 2010, where Charleton J. made an order joining KCB Bank.
Mr. Coleman said that he offered no terms of settlement to the Credit Union or their legal advisers. He had told the Board of Directors on the 10th September, 2009, that he could not act in the transaction as there was a total conflict of interest in his position regarding the parties.
He averred that Sean Kenny, through his then solicitor, offered to replace the security required by the Credit Union in consideration of Mr. Coleman paying the sum of €1 50,000 to Mr. Kenny by means of compensation and/or damages for loss of office. He said he was advised by Ms. Cliona Pierse of Mr. Kennys’s solicitors practice, that this was a small price to pay to retain his office and business to which he had built up over the previous ten years. He said that he refused this offer, advising that he would not “concede to blackmail under any circumstances”.
He referred to Geraldine Quinn, who was employed by the Credit Union and who had the benefit of funds to purchase lands which “emanated from my office through fraudulent acts of her husband”.
He asked the court to take cognisance of the manner in which the Credit Union had prosecuted him without recourse to Sean Kenny, Eamon Kenny and Darragh Kenny and Geraldine Quinn.
Proceedings were not for the sole purpose of “intimidating, embarrassing and discrediting the defendants herein” but rather a vindication of his right to take action against Billy O’Carroll for his breach of undertaking.
He said he suffered substantial loss while Sean Kenny, Eamon Kenny and Darragh Kenny and Geraldine Quinn still retained all their assets and houses.
The court notes that neither Billy (William) O’Carroll nor Geraldine Quinn are parties to the proceedings.
4. The court has also considered the replying affidavit of Finn O’Neill sworn on the 21st February, 2012, the affidavit of Michael G. Ryan, solicitor sworn on the 22nd February, 2012 and several affidavits sworn in relation to further proceedings by the plaintiff en titled Daniel Coleman v. Sean Kenny, Eamon Kenny and Darragh Kenny (Record No. 2009/8944 P).
5. Mr. Sean Kenny in his affidavit of the 20th October, 2009, filed in those further proceedings had sworn, in para. 17 that it was the practice in Coleman and Company to give undertakings liberally. He averred that such practice was approved of by the plaintiff. He said that the letters of undertaking exhibited in the plaintiff’s affidavit, and in particular, those undertakings dated the 19th September, 2007, the 18th August, 2007, and the 25th April, 2007, were signed by him on behalf of Coleman and Company Solicitors. He said there was nothing whatsoever sinister in him signing the letters in the context of what went on for all of the years that he worked in the plaintiff’s practice. He said this was standard practice and that not alone would he, as legal executive, have been authorised to sign such letters, but that, in addition, other staff members including secretaries and receptionists would have done so also. He averred that this practice was fully approved of by the plaintiff and was the custom and practice in the office.
Mr. Kenny averred that it was the practice in the office that all undertakings were removed from files when and where necessary and in particular, before the Law Society of Ireland audit or before any audit of the Assigned Risk Pool of the Law Society which conducted insurance audits at the plaintiffs practice, including one in February, 2009.
6. The plaintiff, in an affidavit filed in the further proceedings answered those allegations in para. 37 of his affidavit filed on the 30th October, 2009, in the following
terms:-
“37. Furthermore, and by way of complete traverse, I say that no member of my staff, receptionist or otherwise, was permitted to sign off or give undertakings as is suggested by the first named defendant as this was the explicit function of your deponent herein. Additionally, and as is evidenced by the tenor of the replying affidavits filed it would, respectfully submit, amount to a futile exercise to set out in successive paragraphs traverses as proposed and encouraged by the defendants save that in this regard it is fair and safe to say that all material facts are in dispute with the exception of the primary fact asserted by your deponent herein to the effect that the first named defendant fraudulently created undertakings for his benefit and for those of his brothers, the second and third named defendants, as a result whereof a considerable sum of money was obtained by Balinrobe Credit Union.”
7. Order 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 judgement to be entered accordingly, as may be just.”
The jurisdiction to dismiss an action on the basis that, on admitted facts, it cannot succeed is one which the court should be slow to exercise: Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 25. Where the statement of claim admits for an amendment which might save the action, the proceedings should not be dismissed. A judge to an application to dismiss has to be confident that, no matter what might arise in discovery or at the trial of the action, the course of the action would be resolved in the manner fatal to the plaintiff’s contention.
While the court should exercise great caution in striking out a claim, it should do so where convinced that the plaintiffs claim must fail: Tassan Din v. Banco Ambrosiano [1991] 1 I.R. 569.
Moreover, where the defendants have no evidence to support their plea and therefore are unable to furnish particulars, the plea must be struck out: Kennedy v. Midland Oil Company 110 I.L.T.R. 26.
Nonetheless, when the plaintiff might ultimately fail to establish a claim, but important questions of law or fact are to be determined, the claim should not be stuck out: Irish Permanent Building Society v. Caldwell [1979] I.R.L.M. 273.
While the court may order any pleading to be struck out on the grounds that it discloses no reason for the cause of action or answer, the court is not limited to considering the pleadings of the parties, but, is free to hear evidence on affidavit relating to the issues in the case (Barry v. Buckley [1981] I.R. 306).
8. Solicitors’ Undertakings
The Guide to Professional Conduct of Solicitors in Ireland (2nd Ed), October 2002, gives a comprehensive definition in the following terms:-
An undertaking is any unequivocal declaration of intention addressed to the someone who reasonably places reliance on it which is made by a solicitor in the course of his practice, either personally or by a member of the solicitor’s staff, whereby the solicitor, or in the case of a member of his staff, his employer, becomes personally bound .
The elements of the definition are clear: any unequivocal declaration of intention; made by a solicitor in the course of hi s practice; either personally or by a member of the solicitor’s staff; whereby the solicitor becomes personally bound.
It is a formal declaration in writing which should be signed by the principal or
a partner of the firm giving the undertaking.
From a practical point of view the solicitor should obtain an irrevocable instruction in writing from the client authorising the solicitor to give the undertaking. This should be obtained before the undertaking is given.
Of course, undertakings should be signed by the principal or partner of the solicitors firm, giving the undertaking. However, the recipient of an undertaking is entitled to assume that an undertaking given has been duly executed. Any ambiguity is generally construed in favour of the recipient.
The Guide to Professional Conduct provides specifically that:-
“6.5.7 The solicitor is responsible for honouring an undertaking given by a member of the solicitor’s staff, whether such staff member is admitted to the Role of Solicitor or not.”
A solicitor will be required to honour the terms of a professional undertaking as a matter of conduct. In addition to the Law Society’s power to enforce undertakings is a matter of conduct, the court, by virtue of its inherent jurisdiction over its own officers, ahs power of enforcement in respect of undertakings.
Accordingly, the undertakings executed by Sean Kelly by way of illegible signature with no indication of the undertaking being otherwise that of the firm does bind the plaintiff.
Moreover, it would appear that the plaintiff was aware of his requirement to honour the terms of such a professional undertaking by virtue of his agreeing to execute a composite undertaking at the request of McDarby and Company. While it is clear that a solicitor should not seek an undertaking from another solicitor, when the first solicitor knows, or ought to know, it should not be given (See Law Society book let: “Principles Relating to Professional Undertakings”, July 1996). There i s no evidence to suggest that McDarby and Company knew, or ought to have known, that the previous undertakings should not have been given.
There is nothing in the undertakings given that indicate that the undertaking was given by the respondent as agent on behalf of his client as principal (See Callahan: The Law and Solicitors in Ireland , 2000, at 4.12). Where the undertaking is that of the solicitor, then it is the solicitor who must honour the undertaking (Re. Marchant [1908] 1 K.B. 998 cited as authority.
The court is satisfied that the conditions outlined in the United Bank of Kuwait v. Hammoud [1988] 1 W.L.R. 1051 had been satisfied. Funds may reasonably be expected to come under the control of the solicitor and originate from some transaction which is within the usual course of a solicitor’s business.
In that case refers an undertaking given by legal assistance to transfer funds when they came within the firm’s control was held to be within the normal course of business of the firm.
Callahan at 7.11 to 7.22 refers to the considerable care which should be exercised by solicitors when giving undertakings.
The Law Society booklet: “Principles Relating to Professional Undertakings” July 1996, stresses that a solicitor must proceed with caution and should never give an undertaking in respect of a matter over which the solicitor has no personal control.
An undertaking given by a solicitor is, of course, more than a guarantee insofar as the solicitor is required to honour the terms of a professional undertaking as a matter of conduct. The Law Society and the court have power to enforce the undertakings.
The breach of an undertaking results in personal liability on the part of the person who gives the undertaking irrespective of whether the undertaking was given with or without authority in the firm of principal solicitor in the firm (See Callahan 7.30). Reference was made to Shangan Construction v. TP. Robinson Limited, (Unreported, High Court, 10th July, 1990) in relation to the defendant’s solicitors undertaking to release a mortgage. Barron J. held:-
“It is not, however, material that the defendant had such reasons for not honouring his undertaking. Once he had given it he had an immediate obligation to take the necessary steps to obtain the release and to go on doing whatever was necessary until it was furnished to him. Not done statement of opposition was not only a breach of contract but also professional misconduct.”
In I.P.L.G. v. Fry (Unreported, High Court, March, 1992), per Lardiner J. the nature of the solicitors undertaking was described at p. 25 of the transcript as follows:-
“The solicitors undertaking is commonly understood as being one which can be safely relied upon. He is an officer of the court and it is long established that where a solicitor gives an undertaking, the court will compel him to carry it out, unless there is good reason for his not doing so. This jurisdiction is based on the court’s right to require its officers to observe a high standard of conduct. It is exercised where a solicitor acting professionally for a client and in that character gives his personal undertaking whether to the client or to a third party or to the court in the course of proceedings. Further requirements are that the undertaking is clear on its terms; that the whole of the agreement to which it relates is before the court and that it is one which is not impossible for the solicitor ab initio to perform.
The Law Society Gazette in its issue of July 2010 published a notice to all practicing solicitors regarding undertakings from the complaints and client relations committee stressing that a solicitors undertaking is a professional conduct issue.
Under the heading “good management” the committee stated that principals are responsible for undertakings given by staff, whether qualified or not and that clear guidance should be given to all staff as to who is permitted to give or accept undertakings. Solicitors should make sure that undertakings are not overlooked, by indicating on the file that an undertaking has been given and its date.
9. Solicitor’s undertakings, such as those in the present case of the 16th September, 2005, the 23rd January, 2007, the 25th April, 2007 and the 18th May, 2007, place a heavy onus on the plaintiff as solicitor. The plaintiff averred that he did not sign such undertakings nor, indeed, was he aware of such undertakings until 2008.
The plaintiff as solicitor signed the undertaking of the 6th February, 2008, but appears now to challenge it on the basis of Mr. O’Carroll requiring him to do so. There is no pleading or evidence of coercion or undue influences.
However, it was not until the 10th September, 2009, that the plaintiff alleged that the earlier undertakings were complied with by virtue of Sean Kenny’s alleged fraud. The court notes that this was some four years after the first undertaking given on the 16th September, 2005.
The respondent denied any knowledge of the undertakings, notwithstanding the minutes of meetings of the Board of Directors which noted the loans and which minuted his attendance.
The respondent a so asked the court to note that in many of the loan application forms there is no confirmation under the heading, “for office use only”, that the Board of Directors had approved the loan. There was no suggestion that this, in any way, invalidated the loan.
10. The court is satisfied that in relation to the Kenny loans, undertakings were given by Coleman and Company, and had to be in place before funds could be drawn down.
Moreover, the plaintiff was, at all material times, acting as solicitor for the Kenny brothers. There is no averment that he was not so acting nor that he did not know when loans were applied for. No evidence was given as to whether previous loans were discharged from the proceeds of subsequent loans, or that loans were given without solicitors undertakings from his firm.
The court is satisfied, on the balance of probabilities that Mr. Coleman as respondent, should have been and on the balance of probability was aware of those undertakings, which awareness led him, on the request by the auditors through Billy O’Connell, Billy O’Carroll, to procure the composite undertaking of the 6th February, 2008. Indeed para. 69 of his affidavit he referred to six houses, five of which were valued at €185,000 together with a detached house valued at €220,000. This was well in excess of the amount in the undertaking of the 6th February, 2008.
No evidence was adduced that the undertakings had or had not been included in a register or that files were or were not marked “undertaken given” as would be normal in a solicitors practice.
The court notes, that notwithstanding that all eleven defendants were represented by McDarby and Company, that the plaintiff served papers on each defendant individually. The court asked counsel for the respondent to particularise the claims that were made against each of the el even defendants. No such particulars were given, other than the general assertion that the members of the Board owed a duty of care to the respondent, also a member of the Board, but, more importantly, a legally qualified member who had acted for the Credit Union and, it seems, for some of the borrowers.
If the eleven defendants were acting ultra vires as pleaded then, it seems to this Court, the Credit Union should have been a party.
Allegations were made against Billy (William) O’Carroll, Scan Kenny, and his wife Geraldine Kenny. None of these were included as defendants.
The court is not satisfied that the members of the Board owed a duty of care to the respondent, that their actions were ultra vires or that they were in breach of fiduciary duties to the respondent. The general assertion was not particularised. It was submitted that the board owed the respondent a duty of care to notify him as guarantor of irregularities and non compliance of the borrowers. An undertaking is not a guarantee.
While fraud is pleaded, it is not, as is required, pleaded particularly nor as against any of the eleven defendants.
The court is unaware from the pleadings and, indeed, from the evidence on affidavit, as to how the eleven defend ants had knowledge of Mr. Coleman’s client’s transactions other than in relation to those client’s applications for loans.
The court is satisfied that no matter what could arise in discovery or in the course of the trial that the plaintiff s case against his fellow directors cannot succeed. There have been no particulars to support the plaintiff’s claim. The plaintiffs claim must fail.
In the circumstances, the Court will grant an order in terms of para. 1 of the motion pursuant to O. 19, r. 28 striking out the plaintiff s proceedings on the grounds that the pleadings do not show cause of action.
The court, in the alternative will on the basis of the affidavit evidence dismiss the plaintiff’s claim pursuant to the inherent jurisdiction of the court on the grounds that the plaintiff’s action constitutes an abuse of process.
Malone v Allison [2012] IEHC 87
Judgment of Miss Justice Laffoy delivered on 27th day of February, 2012.
1. The application in the context of the proceedings
1.1 These proceedings (the 2011 Proceedings) were initiated by a plenary summons which issued on 15th July, 2011. At the time the plaintiff was represented by a firm of solicitors. In the general endorsement of claim on the plenary summons the following reliefs were sought:
(a) a declaration that the agreement dated Iih December,2006 made between the plaintiff and the defendant is illegal;
(b) a declaration that the agreement dated 22nd February (sic) 2009 made between the plaintiff and the defendant is void;
(c) a declaration that the interest rates charged by the defendant on foot of the said agreement dated 12th December, 2005 (sic) were excessive;
(d) damages for misrepresentation;
(e) interest thereon pursuant to Statute; and
(f) costs.
In the interests of clarity I will refer to the plaintiff as Mr. Malone and to the defendant as Ms. Allison.
1.2 There were earlier proceedings between the parties in which Ms. Allison was plaintiff and Mr. Malone was defendant (Record No. 2007 No. 979 SP) (the 2007 Proceedings). By order of the Court (Laffoy J.) made on 22nd January, 2009, after the matter had been called on for hearing, it was ordered by consent of the parties that:
(a) the special summons be struck out; and
(b) the parties be at liberty [to apply] in relation to the implementation of the settlement (the 2009 Settlement), which had been handed into Court, and which was annexed as a schedule to the order.
Having recited that the parties each had the benefit of legal advice and were agreeable to compromise their differences, the 2009 Settlement provided as follows:
(i) On consent that the Court make an order for the sale of the lands set out in the appendix to the summons by public auction or private treaty, carriage of the sale to be borne by Brian Berills, solicitor, and Laurence Gunne, auctioneers, Dundalk to be retained as auctioneer.
(ii) Upon sale of the lands and payment out of the proceeds to the solicitor and auctioneer referred to at (i) above of their fees and costs, the plaintiff was to be paid €230,000 together with Courts Act interest thereon from the date of the terms of settlement (i.e. 22nd January, 2009) to the date of completion in full and final settlement of all issues between the parties.
(iii) In respect of the sale of the lands, both parties agreed to be bound by the expert opinion of Laurence Gunne, auctioneers, Dundalk as to a fair and reasonable value and/or offer for the said lands.
(iv) Both parties would “sign/execute all documentation required to give effect to the sale”, and, in the event of a failure by either party in that regard, either party was at liberty to apply to the Court for directions.
The 2009 Settlement also provided for liberty to apply, but stipulated “no further order”. The 2009 Settlement was signed by each of the parties in the presence of a solicitor. The lands set out in the appendix to the special summons were the lands registered on Folio 11743 and Folio 3583, County Louth.
1.3 The 2009 Settlement is the agreement, which was incorrectly dated 22nd February, 2009 rather than 22nd January, 2009, referred to in the general endorsement of claim on the plenary summons. The agreement dated 12th December, 2006 referred to in the general endorsement of claim on the plenary summons is not before the Court at this juncture, but, on the basis of the totality of the documentation before the Court, I am aware that it is the deed of charge dated 12th December, 2006 (the 2006 Charge), which was the subject of the 2007 proceedings.
1.4 Following the initiation of the 2011 proceedings, Mr. Malone brought a motion against Ms. Allison in this Court. It appears that there was confusion as to whether the motion was brought in the 2011 proceedings or in the 2007 proceedings. In any event, the primary objective of the motion was to obtain an order preventing the lands registered in Folio 11743 being auctioned, the auction being due to take place on 28th July, 2011, until the proceedings, presumably meaning the 2011 proceedings, had been determined. Mr. Malone’s affidavit sworn on 14th July, 2011, which grounded the motion, contained some facts in relation to the agreement dated 12th December, 2006, i.e. the 2006 Charge. It was averred that it was an agreement whereby Mr. Malone agreed to borrow from the plaintiff the sum of €160,000 and that he had executed a charge dated 12th December, 2006 over the lands at Louth Village, Dundalk, County Louth, being the lands registered on Folio 11743, County Louth. Mr. Malone set out the terms of the 2006 Charge in relation to repayment of the loan. He also referred to the 2009 settlement. He then averred that, although it was accepted that he was legally represented at the settlement talks leading up to the 2009 Settlement, he had since been advised that the entirety of the agreement between him and Ms. Allison and, in particular, the mortgage and charge which he gave to Ms. Allison on 12th December, 2006 is tainted with illegality for the reasons set out, namely:
(a) that the plaintiff did not have a moneylender ‘s licence;
(b) that she was not licensed to carry on business as a bank; and
(c) that the penalties imposed by her in respect of late payment were illegal as they were imposed while she was purporting to act in her capacity as a bank.
1.5 Mr. Malone’s application was heard on 22nd July, 2011. The order made by the Court (Laffoy J.) was in fact perfected on the basis that it was made in the 2007 proceedings. In any event, the outcome of the application was that the Court ordered that the motion stand refused. However, the order recorded that the Court accepted an undertaking on behalf of Ms. Allison to hold any net proceeds of sale of the lands greater than the sum of €160,000 to abide any further order of the Court. The question of costs was adjourned.
1.6 A motion for security for costs was issued by Ms. Allison in the 2011 proceedings on 22nd September, 2011. That application has been adjourned from time to time.
1.7 A motion was brought in the 2007 proceedings, which came before the Court on 19th October, 2011, in which Ms. Allison sought an order for directions as to the execution by Mr. Malone of a contract for the sale of the lands the subject of the 2009 Settlement. On the date of the hearing of that application the solicitors on record for Mr. Malone, Ahem and McDonnell, came off record. The outcome of that application was that on 19th October, 2011 the Court made an order directing the defendant to sign the contract for sale within one week and the order provided that, in default of his so doing, the contracts should be executed by the registrar of the Court and, insofar as should be necessary, the registrar should execute a conveyance of the said lands. That order is currently under appeal to the Supreme Court.
1.8 Since his solicitors came off record, Mr. Malone has appeared in person assisted by a “McKenzie friend”, Mr. Declan O’Callaghan.
1.9 The application currently before the Court was brought by Ms. Allison on foot of a notice of motion dated 30th November, 2011, which was first returnable before the Court on 16th January, 2012. The reliefs sought by Ms. Allison on this application are as follows:
(a) an order striking out the 2011 proceedings on the grounds that they do not disclose any and/or any reasonable cause of action against Ms. Allison, Order 19, rules 27 and 28 of the Rules of the Superior Courts (the Rules) and the Court’s inherent jurisdiction being invoked; and
(b) an order dismissing Mr. Malone’s claim on the grounds that “any cause of action is either frivolous or vexatious or is bound to fail”, the inherent jurisdiction of the Court being invoked.
This application is grounded on the affidavit of Ms. Allison sworn on 7th December, 2011. The factual basis advanced by Ms. Allison in support of this application in her affidavit may be summarised as follows:
(a) the subject matter of these proceedings has been dealt with in full by the Court under the 2007 proceedings, in which all matters were fully settled between the parties and the settlement made the subject of the order of the Court dated 22nd January, 2009;
(b) the matters raised were set out in the affidavit sworn by Mr. Malone which grounded his application for the injunction restraining the auction, and were the same matters as were raised by way of defence in the 2007 proceedings, and there has been no appeal against the order dated 22nd January, 2009 nor has Mr. Malone moved to set aside the 2009 Settlement, Ms. Allison suggesting that it is doubtful if he could make such a move as he was represented in the proceedings by solicitor and counsel and the 2009 Settlement was ruled by the Court with liberty to apply only in relation to the implementation of the 2009 Settlement;
(c) by the order of the Court of 22nd July, 2011 the Court refused to halt the sale of the lands the subject of the 2009 Settlement;
(d) the 2011 proceedings were issued by Mr. Malone as a tactic in his attempt to delay the auction;
(e) the lands the subject of the settlement were subsequently sold for €164,000, and notwithstanding the Court order of 19th October, 2011, Mr. Malone had not signed the contract.
In summary, Ms. Allison’s position is that the 2011 proceedings constitute an attempt tore-litigate matters already settled between the parties and, in the circumstances, it would be unreasonable and unfair that Ms. Allison should be required to incur further time and legal expenses in defending issues which have already been litigated in full and in respect of which Mr. Malone is bound to fail.
1.10 When this application was for hearing before the court on the 27th January, 2012, there was no response by affidavit from Mr. Malone. No statement of claim had been delivered in the 2011 proceedings. I formed the view that the application was premature, given that a statement of claim had not been delivered. In the circumstances, I adjourned the matter until 17th February, 2012 so that Mr. Malone could deliver his statement of claim and could file a replying affidavit, if he wished to do so.
1.11 What was represented as being the statement of claim, a five page document in manuscript, was furnished to the Court on 17th February, 2012. The document, which I will refer to as “the Plaintiffs Statement”, did not comply with the requirements of the Rules, to the extent that it did not even contain the title of the proceedings. There are various serious allegations made against Ms. Allison in the document, which I will endeavour to record as accurately as possible.
1.12 The alleged factual basis of the claims is that Mr. Malone borrowed the money from Ms. Allison to buy a bungalow, the title to which was understood to be registered on Folio 11743, but it was not and he never got title to it. The bungalow is registered on a folio in the name of third parties and is subject to a substantial charge in favour of a bank. It is alleged that the outcome, namely, that Mr. Malone did not get title to the bungalow was due to “Fraudulent Endeavour” on the part of Ms. Allison. It is also alleged, that as Mr. Malone did not get title to the bungalow, there was no “meeting of minds” and “therefore no contract could be legal and binding”. It is also alleged that the reason Ms. Allison “sought a lien” against Folio 3583, which is described as Mr. Malone’s “ancestral home”, which I understand was already owned by Mr. Malone, was that the bungalow was not on Folio 11743, thereby affecting the value of the land on that folio. It is alleged that Ms. Allison thereby “conspired to defraud” Mr. Malone. It is also alleged that, by devious and premeditated fraudulent endeavour and with full knowledge, Ms. Allison sought to gain unfair and illegal advantage by “abuse of power” and “abuse of position”. It is further alleged that she pressed for the auction, notwithstanding that by then Mr. Malone had proof that the bungalow could not be included in the sale as it was not registered on either Folio 11743 or Folio 3583. It is alleged that, as a result of the pursuit of the auction, Mr. Malone has suffered serious loss at the hands of Ms. Allison. It is further alleged that no monies are due, presumably, to Ms. Allison “on the back of a Contract which is illegal and unenforceable”, presumably meaning the 2006 Charge, although it is not identified as such.
1.13 As regards the loan of €160,000 repayable with interest, it is alleged in the Plaintiff’s Statement that it was not a personal loan but was “an extortionate business loan”. There is a reference to the loan being an illegal loan purporting to come from a bank, which Ms. Allison is not. There is reference to the rate, presumably, meaning the rate of interest charged, and the Jack of a licence to lend. There follows an allegation that Mr. Malone has suffered great loss on a financial and personal level. There is also an allegation of “blatant perjury with knowledge” in relation to averments on previous applications in affidavits sworn by Ms. Allison, without identifying the affidavit or the alleged untruth. There is also an allegation which I would interpret as an allegation of negligence on the part of Ms. Allison in not perfecting the title to the bungalow.
1.14 Finally, there is criticism of this Court in the conduct of Ms. Allison’s application which was before the Court on 19th October, 2011, in the Plaintiff’s Statement. As I have stated, the order made on that date is subject to appeal to the Supreme Court and the appeal is due to be heard on 5th March, 2012.
1.15 There is no prayer for relief in the document. Therefore, I can only assume that the relief being sought by Mr. Malone against Ms. Allison is the relief set out in the general endorsement of claim on the plenary summons, which I have outlined in paragraph 1.1 above.
1.16 Although given leave to do so, Mr. Malone did not file an affidavit in response to this application.
1.17 Ms. Allison responded to Mr. Malone’s Plaintiffs Statement in an affidavit sworn on 15th February, 2012. As regards the allegation by Mr. Malone that the bungalow he was to acquire was not contained within Folio 11743, she has averred that the plaintiff may or may not be correct in that regard. She simply does not know and goes on to explain why she does not know. She averred that in or about 27th January, 2006 Mr. Malone came to her seeking a loan to complete the purchase of a property he had already contracted to buy by a contract dated 21st November, 2005 at a price of €162,000. In the contract the property for sale was described as:
“The dwelling house and premises at Ardpatrick Road comprised in Folio 11743, County Louth being the property shown on the map attached hereto and numbered 1 and edged red for identification purposes only”.
Ms. Allison has exhibited the contract dated 21st November, 2005. She has averred that there had been considerable delay on the vendor’s side leading up to the execution of the contract. A completion notice had been served on Mr. Malone on 27th December, 2005. It was in those circumstances that he sought finance to complete the purchase. Ms. Allison has exhibited an out of date version of Folio 11743 showing the registered ownership as at 1976. Quite frankly, it is impossible to form any view whether there is any substance in the allegation made by Mr. Malone that he did not get title to what he contracted for, apparently, in November 2005. Ms. Allison’s case, as I understand it, is that he was contractually bound before he came to her seeking finance. Folio 3583 is also exhibited by Ms. Allison, which shows that Mr. Malone had been the registered owner of that property since 7th August, 1997. Ms. Allison has averred that, in the replying affidavit in the 2007 proceedings, Mr. Malone admitted the debt and that he took no issue about “the folio boundary”. The 2007 proceedings were compromised to cover all issues including interest. In the affidavit of 15th February, 2012 Ms. Allison has contended that, even if Mr. Malone is able to substantiate his claim that he did not acquire the bungalow, which it appears it is admitted is not registered on Folio 11743, nothing contained in the Plaintiffs Statement shows why the transaction to buy, the charge in favour of Ms. Allison (i.e. the 2006 Charge) and the sale on foot of that charge are void. It has been suggested by Ms. Allison, that, if Mr. Malone has a cause of action, it is against the vendor of the lands registered on Folio 11743. It has been contended that the matters set out in the document do not amount to an illegal contract and could not lead to the conclusion that the 2009 Settlement is void and, further, that the claims of fraud are wholly unsubstantiated. Ms. Allison has averred that it would be very much to her interest if a valuable bungalow had been included in the property charged by Mr. Malone to her.
2. Analysis of the plaintiff’s claim
2.1 The manner in which I propose considering whether the Plaintiffs Statement discloses any cause of action against Ms. Allison is by attempting to connect the allegations in that document with the relief sought on the endorsement of claim in the plenary summons.
2.2 As I understand the position, there is a typographical error in the general endorsement of claim on the plenary summons and the reference to an agreement dated 12th December, 2005 should be to an agreement dated 12th December 2006. It is clear from Mr. Malone’s affidavit grounding his application for an interlocutory injunction, the salient points of which I have summarised at para. 1.4 above, that the so-called agreement dated 12th December, 2006 is the 2006 Charge executed by Mr. Malone in favour of Ms. Allison, which was the subject of the 2007 proceedings. The basis on which Mr. Malone asserts that the 2006 Charge was illegal and void in the Plaintiffs Statement of claim appears to be a reiteration of the matters outlined in his affidavit sworn on 14th July, 2011 and summarised at para. 1.4 above. The reality of the situation is that, in entering into the 2009 Settlement, which is the subject of the consent order of the same day, Mr. Malone implicitly acknowledged the validity of the 2006 Charge•. The existence of that consent order precludes Mr. Malone from re-opening the issue of the validity of the 2006 Charge.
2.3 However, in the general endorsement of claim on the plenary summons in the 2011 proceedings Mr. Malone also seeks a declaration that the 2009 Settlement is void. In endeavouring to ascertain on what basis Mr. Malone alleges that the settlement is void, as he does not have the benefit of legal representation, I have reviewed his affidavit of 14th July, 2011 to see what, if any, case is made therein in support of the claim that the settlement was void. In fact, it is only on the basis that the 2006 Charge• was tainted with illegality for the reasons I have outlined. No other basis for setting aside the 2009 Settlement was advanced in that affidavit. However, as I have recorded at para. 1.4 above, it was acknowledged that Mr. Malone had been legally represented at the settlement talks leading up to the settlement and he also exhibited independent legal advice which he had obtained from a solicitor in Dundalk in connection with the granting of security to Ms. Allison.
2.4 I can see nothing in the Plaintiffs Statement which could form the basis of a case to set aside the 2009 Settlement. The kernel of Mr. Malone’s complaint, as set out in that document, is that he did not get title to a bungalow, which is registered on another folio, when he completed the purchase of the lands registered on Folio 11743, County Louth on foot of the contract for sale dated 21st November, 2005. Ms. Allison’s position, as in understand it, is that the fact that the bungalow is not registered on Folio 11743 and that Mr. Malone did not get title to it, a factor which is prejudicial to her, is not due to fault on her part. Nothing in the case put before the Court by Mr. Malone contradicts that. Moreover, he has not substantiated the various allegations of fraud on the part of Ms. Allison which he has made, by setting out the relevant facts adequately in the Plaintiffs Statement, and he has not sworn an affidavit as to the facts, as he could have done. Accordingly, there is nothing in the case as set out by him in the Plaintiffs Statement, when read in conjunction with the general endorsement of claim on the plenary summons, or otherwise before the Court, which demonstrates that Mr. Malone has a stateable cause of action to set aside the 2009 Settlement.
3. The Law
3.1 When the plaintiffs application was before the Court on the 27th January, 2012, counsel for Ms. Allison referred the Court to the decision of the Supreme Court in Charalambous v. Nagle [2011] IESC 11. In delivering judgment in that case, Denham J. stated in her judgment (at para. 27 et. seq.):
“… the kernel of the case is that it relates to a consent order of the Circuit Court.
There were no grounds raised upon which to set aside the consent order on a basis recognised by law. The appellant has brought several sets of proceedings subsequent to the order of the 5th February, 2008. However, there has been no claim of fraud.
These were final orders. Final orders are final and conclusive and may not be re-litigated except in circumstances such as indicated in Belville Holdings v. Revenue Commissioners [1994] I I.L.R.M. 29. Such circumstances do not arise in this case.”
3.2 Similarly., in this case, in my view, the document presented as a statement of claim by Mr. Malone, that it so say, the Plaintiffs Statement, does not disclose that a circumstance exists in which the issues which arose in the 2007 proceedings could be re-litigated. While there are various allegations of fraud made by Mr. Malone, I can see nothing “pleaded” which would substantiate a claim to set aside the 2009 Settlement on the ground of fraud.
4. Decision
4.1 I am satisfied that the plaintiff has not shown that he has a cause of action to have either-
(a) the 2006 Charge (given the existence of the 2009 Settlement), or
(b) the 2009 Settlement and the consent order dated the 22nd January, 2009,
declared void and inoperative,
However, I am conscious of the fact that I have strayed outside the pleadings, although I have done so in aid of Mr. Malone, who is not legally represented. In the circumstances, I propose making a declaration, under the court’s inherent jurisdiction, that the 2011 proceedings, as presently constituted, are bound to fail.
4.2 However, there is a considerable amount of unfinished business in the 2011 Proceedings, and I am concerned, in particular, to address the undertaking given by Ms. Allison on 22nd July, 2011 and recorded in the order of that day, referred to at para. 1.5 above. In the circumstances, I do not intend making an order dismissing the 2011 proceedings at this juncture. I propose adjourning the matter for further submissions by the parties.
APPROVED: LAFFOY, J
.O’N v S.McD [2013] IEHC 135
JUDGMENT of Mr. Justice Birmingham delivered the 22nd day of March 2013.
1. Before the Court are motions that have been brought by eight of the nine defendants, the exception is the sixth named defendant, C.M. who has not brought a motion. While the notices of motion brought by the defendants are not structured identically, in essence each of the defendants seeks to achieve the same objective. The defendants seek orders pursuant to O.19, r. 28 of the Rules of the Superior Courts striking out the plaintiff’s claim for failing to disclose a reasonable cause of action and as being frivolous and/or vexatious. The motions also seek an order pursuant to the inherent jurisdiction of the Court striking out the plaintiff’s claim on the grounds that the proceedings are an abuse of process. Also before the Court are motions brought by the plaintiff to strike out the notices of motion brought against him by the first, third and seventh named defendants. These counter motions have not really been the focus of attention and instead the grounding affidavits in these cases have been regarded and dealt with as if they were affidavits in reply to the motions brought by the defendants and the affidavits on which those motions were grounded.
The background to the present applications
2. The background to the present applications is to be found in the fact that the plaintiff and the ninth named defendant, who is his former wife, have been involved in protracted and acrimonious family law proceedings. Issues relating to custody and access to the two children of the marriage have proved particularly difficult.
3. On the 12th November, 2010, the family law proceedings were before His Honour Judge Michael White, as he then was. The question of the possible appointment of a guardian ad litem was canvassed and it appears that Judge White invited the parties to consider this. When the matter next appeared before Judge White on the 27th January, 2011, the plaintiff, who at the time was represented by a solicitor, opposed the appointment of a guardian ad litem, while the suggestion was supported by the ninth named defendant. The fifth named defendant, E.D. acted as solicitor for her and the first named defendant was her counsel. Judge White decided to appoint the guardian ad litem. The matter was back in the Circuit Court on the 11th May, 2011, when Judge White directed that no further action was to be taken on foot of his order providing for a guardian ad litem which had been made on the 28th January, 2011. This was in a situation where a question had been raised as to whether there was jurisdiction to appoint a guardian ad litem in the course of family law proceedings. At a later stage Judge White reversed his decision regarding the appointment of a guardian ad litem and the guardian who had been nominated was stood down. It should be noted that no report was ever produced by the proposed guardian ad litem, nor did she ever give evidence at the hearing of the family law case. Notwithstanding that, the plaintiff has described the decision to appoint a guardian ad litem as the step that triggered the present proceedings. At this stage it may be noted that s. 28 of the Act of 1964, as inserted by s. 11 of the Children’s Act 1997 makes provision for the appointment of guardian ad litem in family law cases in circumstances where this is necessary in the best interests of the child. However, while the bulk of the Children’s Act 1997 came into operation one month after the date of its passing, this was not true in the case of s. 11 which inserted ss. 20, 21, 22, 26, 28 and 29 into the Act of 1964 which comes into operation on such day or days as may be fixed by the Minister by order. To date, s.11 has not been commenced by ministerial order.
4. The plaintiff has launched the present proceedings naming nine persons as defendants. The first named defendant is a barrister who, as I have stated, acted as counsel on behalf of the plaintiff’s former wife. The second named defendant is the county registrar for the county where the family law proceedings were listed. The third named defendant is a general practitioner. He has performed that role on behalf of the ninth named defendant and for “C”, daughter of the ninth named defendant and the plaintiff. Following a consultation in July, 2010, he referred “C” to a child and family consultation service, which responded stating that the service would recommend referral to the primary care and child psychology service. The fourth named defendant is an experienced guardian ad litem. She was appointed to perform that role by Judge Michael White but was then “stood down”. In this situation the role of the fourth named defendant was confined to meeting with “C” and her mother on one occasion after she had been appointed by order of the Circuit Court. She was stood down before she had an opportunity to meet with the son of the plaintiff and the ninth named defendant. It was not in dispute that she had at all times complied with all the orders of the Circuit Court. I indicated that I was in a position to deal with the motion brought by her summarily and that I would dismiss the case against her. The fifth named defendant is a solicitor and acted in that capacity on behalf of the plaintiff’s former wife, the ninth named defendant. The sixth named defendant has not brought a motion but is described on the plenary summons as a social worker. The seventh named defendant is a general practitioner. In October, 2008 he was requested to prepare reports on the two children of the plaintiff and the ninth named defendant. Reports were prepared but it appears these reports were never handed into court nor did the seventh named defendant give evidence at any stage. The eighth named defendant is described on the plenary summons as a relationship counsellor. The eighth named defendant was requested by the ninth named defendant to see her daughter and did so on the 22nd September, 2008, and again on the 2nd October, 2008. The eighth named defendant was served with a subpoena requiring her attendance at a hearing to take place on 18th November, 2008. She attended but was not called on to give evidence on that occasion. The ninth named defendant is the plaintiff’s former wife.
In camera proceedings
5. At the start of the case counsel on behalf of the first named defendant, supported by a number of his colleagues sought an order directing that the case should be heard in camera. It was urged that this was necessary and appropriate as dealing with the motions before the Court would involve disclosing in considerable detail what occurred during the course of the family law proceedings, proceedings which were themselves heard in camera. This application was strongly opposed by the plaintiff who stated that the proceedings would serve to reveal grave wrongdoing on the part of the defendants and that it was important that details of this wrongdoing should be made public. I indicated that because it appeared that there was going to be reference, and indeed quite extensive reference, to what had occurred during the family law proceedings that it was appropriate that the application should proceed in camera. However, I stated that if ultimately grave wrong doing on the part of individuals was established I would consider permitting the identity of those against whom the findings had been made to be disclosed. I referred in that context to the approach of McGuinness J. in Eastern Health Board v. E. (No. 2) [2000] 1 IR 451 where the media was permitted to identify a pregnancy counselling agency which had been referred to during the course of an Article 40 inquiry.
The pleadings
6. The plaintiff has delivered what might be described as a composite plenary summons in the sense that it sets out a case that is being made against each of the nine defendants. The plaintiff then delivered individualised statements of claim. A number of the defendants protest that the case that is made against them in the statement of claim is a different one to that which had been set out in the plenary summons. The plaintiff has also sworn an affidavit on the 16th January, 2012, which is of general application and which exhibits some of the documents which are central to the plaintiff’s claims.
7. It is convenient to set out here, in edited form the contents of the plenary summons and the affidavit to which I have referred.
8. Dealing first with the plenary summons at para. 11 thereof, it is pleaded that the first named defendant, barrister for the plaintiff’s ex-wife, knowingly colluded with and concocted an agreement with the sixth named defendant, social worker, with the fifth named defendant, solicitor for the plaintiff’s ex-wife and with the plaintiff’s ex-wife to execute a guardian ad litem order pursuant to s. 28 of the Act of 1964 which is prohibited by law in the presence of Judge Michael White. At para. 12 it is pleaded that the fifth named defendant, solicitor for the plaintiff’s ex-wife, knowingly, illegally and unlawfully, colluded with the plaintiff’s ex-wife to put this matter before the court without prima facie evidence which is expressly prohibited by law. At para. 13 it is pleaded that the first named defendant, barrister for the plaintiff’s ex-wife, knowingly colluded with and concocted an agreement with the sixth named defendant, with the fifth named defendant and with the ninth named defendant to obtain an unlawful order without the plaintiff’s consent and against the plaintiff’s wishes.
9. At para. 14 it is pleaded that the first named defendant and the fifth named defendant knowingly lied, deceived and cheated the court in order to obtain an order pursuant to s. 28 of the Act of 1964, which is prohibited by law, in the presence of Judge Michael White. At para. 15 it is pleaded that the first named defendant, the fifth named defendant and the second named defendant, the country registrar, knowingly colluded with, deceived and concealed prima facie evidence from the court which is expressly prohibited by law in the presence of Judge Michael White.
10. In para. 16 it is pleaded that the fourth named defendant, described as a psychologist, knowingly facilitated and colluded with the first named defendant and the fifth named defendant to illegally, unlawfully and without proper authority carry out an assessment and make unlawful and illegal representations to the court in the presence of Judge Michael White.
11. At para. 17 it is pleaded that the second named defendant, the County Registrar, knowingly concealed and withheld court documents which is expressly prohibited by law and that this fact has been brought to the attention of Judge Michael White. At para. 18 it is pleaded that the seventh named defendant knowingly authored an unlawful report without the consent of both guardians to deceive the court in the presence of Judge Michael White and to present material in court not relevant to the matter in hand in order to purposely mislead the court, and lead the court to an illegal, unlawful judgment. At para. 19 it is pleaded that the eighth named defendant, ninth named defendant and fifth named defendant knowingly deceived the court in the presence of Judge Michael White unlawfully and without proper authority and consent, authored an unlawful report and presented material in court not relevant to the matter in hand in order to purposely mislead the court and lead the court to an illegal and unlawful judgment. Paragraph 20 deals with the situation of the sixth named defendant and is not relevant to the motions before the court. Paragraph 21 pleads that the third named defendant involved himself with the plaintiff’s daughter, without the consent of the plaintiff and referred her to social workers and authored an unlawful report without the knowledge or consent of both guardians.
12. The plenary summons then goes on to seek the following reliefs:
(a) Injunctive relief from the court against the defendants to restrain all defendants from trespass into or on to his family,
(b) Damages where the defendants have destroyed the life, peace and mental well being of the plaintiff.
There is also a claim for further and other relief and costs as the court may deem fit.
13. The affidavit sworn by Mr. O’N. repeats the contents of paras. 11 to 21 of the general endorsement of claim.
14. I will refer to the contents of the individual statements of claim where necessary when dealing with the individual motions.
The motion brought by the first named defendant
15. The first named defendant is applying for the following orders:-
(i) an order pursuant to O.19, r. 28 of the Rules of the Superior Courts striking out the entirety of the plaintiff’s claim insofar as it relates to the first named defendant on the basis that it fails to disclose a reasonable cause of action and/or is frivolous and/or is vexatious.
(ii) an order pursuant to O.19, r. 27 of the Rules of the Superior Courts striking out such parts of the plaintiff’s claim as the court sees fit on the basis that such parts are unnecessary and/or scandalous and and/or tend to prejudice and/or embarrass and and/or delay the trial of the action.
(iii) an order pursuant to the inherent jurisdiction of the court striking out the entirety of the plaintiff’s claim or such parts thereof as the court sees fit in so far as it applies to the first named defendant.
Order 19, r. 28 of the Superior Courts provides as follows:-
“The Court may order any pleadings 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.”
16. Order 19, r. 27 provides as follows:-
“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.”
17. Before considering how the Court should address this application and before considering the arguments that have been advanced, it is convenient to refer to the statement of claim. At para. 3 of the statement of claim it is pleaded that the first named defendant made representations to and within and without the court of a grievous and damaging nature, to and about the plaintiff and about the plaintiff’s character and good name. At para. 4 it is pleaded that because of the actions of the first named defendant and by reasons mentioned in the affidavit, the plaintiff has suffered substantial financial loss, damages and inconvenience. It is then pleaded that the plaintiff claims:-
(1) Judgment in the sum of €312,000,
(2) Such further sums as to this Honourable Court shall deem appropriate for:
• Damages for slander,
• Damages for libel,
• Damages for defamation of character,
• Damages for stress,
• Damages for mental trauma.
• Interest to pursuant to the Courts Acts 1981 and for an order for costs.
18. So far as the application under O. 19, r. 28 is concerned, and this applies also to O. 19, r. 27 applications, the court focuses only on the pleadings. See in that regard the observations of White J. in Rayan Restaurant Limited v. Gerald Kean practising as Kean Solicitors [2012] IEHC 29 (Unreported, High Court, White J., 17th January, 2012), where he commented:-
“The court in dealing with an application pursuant to O. 19, r. 28 must deal with it on the pleadings only, and ignore any extraneous evidence.”
While the court is concerned with the form and contents of the pleadings, it must be noted that an application under O. 19, r. 28 will fail if the deficiency in the pleadings can be rectified by means of an amendment that will set out a good cause of action or defence. See in that regard Delaney and McGrath, Civil Procedure in the Superior Courts, 3rd Ed., at para. 16.06. In my view, that observation which is of general application has a particular relevance when pleadings have been drafted by a lay litigant. Clearly, there can be no questions of a lay litigant being deprived of his right of access to the courts by reason of any lack of skill as a draftsman. It is also important to avoid a situation where the tone and style of the pleadings so grate on one that it leads to an assumption on the part of the reader that the pleadings are frivolous or vexatious. In that regard the words “frivolous” and “vexatious” are terms of art, they are legal terms and they are not used in a pejorative sense. They merely mean that the plaintiff has no reasonable chance of succeeding and that, because there is no reasonable chance of success, it is frivolous to bring the case. By the same token it imposes a hardship on the defendant if he has to expend time, effort and money in defending an action which cannot succeed and that is regarded as vexatious. See the judgment of Barron J. in Farley v. Ireland (Unreported, ex tempore, Supreme Court, 1st May, 1997). However, while the phrase “frivolous or vexatious” as it appears in O. 19, r. 28 is not necessarily pejorative it must be said that the arguments advanced on behalf of the first named defendant, and indeed arguments advanced on behalf of other defendants, categorise the proceedings as vexatious in the ordinary meaning of that word and indeed as wrong headed and malicious. It is clear that the jurisdiction provided by O. 19, r. 28 and indeed the parallel jurisdiction to dismiss under the inherent jurisdiction of the court is not one to be exercised lightly. It is to be exercised only when the appropriateness of doing so is very clear.
19. However, while it is not a jurisdiction to be exercised lightly but rather one to be exercised with real caution, it is the case that if a court is convinced that a claim will fail then the pleadings will be struck out. In the course of his judgment in Bula Holdings Limited and Others v. Roche [2008] IEHC 208 (Unreported, High Court, Edwards J., 6th May, 2008), Edwards J. commented as follows:-
“It is clear from the decision of the Supreme Court in Aer Rianta v. Ryanair [2004] 1 IR 506 that the jurisdiction conferred by O. 19, r. 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, that ’if a court is convinced that a claim will fail [the] pleadings will be stuck out‘. (At 509, per Denham J.).”
20. On behalf of the first named defendant, and this is a point that is echoed by other defendants, it is noted that the statement of claim pleads an entirely different cause of action to what had been pleaded in the statement of plenary summons. It is contended that this is an impermissible form of pleading and that for this reason the proceedings should be struck out. There is no doubt that the form of pleadings is unorthodox and indeed quite irregular. However, I am conscious that the pleadings have been drafted by a litigant in person and, if I was of the view that the plaintiff was seeking to pursue a legitimate cause of action and had identified such a cause of action, I would not be prepared to strike out the proceedings but rather would afford him an opportunity to regularise his pleadings.
21. There are, however, more fundamental difficulties with what the plaintiff is setting out to do. The first named defendant is alleged to have made representations “to and within and without the court of a grievous and damaging nature to and about the plaintiff and about his character and good name”. The plaintiff then seeks inter alia damages for slander, libel and defamation of character. By virtue of s. 6 of the Defamation Act 2009, the torts of libel and slander ceased to be so described. However, in ease of the defendant/plaintiff, the statement of claim already refers to damages for defamation of character and I would in any event have readily been prepared to regard the references to slander and libel as being references using outdated language to the tort of defamation.
22. However, what is clear is that the plaintiff is seeking to sue the defendant in defamation arising from what he had to say in his role as advocate during the family law proceedings.
23. The difficulty for the plaintiff is that s. 17 of the Defamation Act 2009 affords absolute privilege to a statement made by a party, witness, legal representative or juror in the course of proceedings presided over by a Judge, or other person, performing a judicial function. The first named defendant was acting throughout as counsel on behalf of the ninth named defendant and so the provisions of s. 17(2) (g) apply. The already formidable difficulties confronting the plaintiff are compounded still further by the fact that the proceedings in which the first named defendant acted were proceedings that were held in camera.
24. So far as the claim in respect of damages for stress and damages for mental trauma is concerned, this element is in the nature of a claim for personal injuries. It does not appear that the plaintiff ever made an application to the Personal Injuries Assessment Board (P.I.A.B.) seeking authorisation to issue proceedings. It is clear from Sherry v. Primark [2010] IEHC 66 [2010] 1 IR 407 and Cunningham v. North Eastern Health Board [2012] IEHC 190 (Unreported, High Court, Hedigan J., 15th May, 2012) that the requirement to seek authorisation is a jurisdictional matter and without authorisation a court has no jurisdiction to entertain proceedings.
25. Even if the plaintiff could somehow have found a way around the P.I.A.B. difficulty, the position would still be that the first named defendant does not as a matter of tort or contract law owe a duty of care to the plaintiff who is not his client.
26. The first named defendant complains, and again this is a complaint which is supported by other defendants, that the proceedings as constituted amount to an impermissible collateral attack upon a decision of the Circuit Court. A decision, which it is noted was arrived at a time when Mr. O’N. was legally represented and a decision which he has never appealed nor sought to have judicially reviewed. In my view while it is the case that the plaintiff is seeking to re-canvass issues that were before the Circuit Court, insofar as it is possible to determine what reliefs he is seeking, it is to overstate matters to describe the proceedings as a collateral attack on the decision. That is not to say that there is not an element of this.
Mr. O’N. for his part is adamant that there is nothing frivolous or vexatious about his proceeding. Certainly his approach to these proceedings is not frivolous in the ordinary meaning of that word. On the contrary he feels a deep sense of grievance and is utterly convinced that he has been gravely wronged. The strength of his convictions in that regard are linked to the contents of a letter from the Legal Aid Board to his former wife’s then solicitors. The letter that has so agitated Mr. O’N. was written in a situation where the fifth named defendant was exploring options for funding the involvement of a guardian ad litem. In response to queries directed to the Legal Aid Board, Kathleen Lynch of the Private Practitioners Scheme section of the Legal Aid Board laid out the position of the Legal Aid Board with regards to guardians ad litem. The material portion of the email with the section on which the plaintiff places such emphasis is as follows:-
“This is the Board’s position regarding Guardian Ad Litem.
The Board is a statutory body and acts in accordance with the Civil Legal Aid Act 1995 and the Regulations made thereunder. Section 5(1) of the Act states as follows:
5(1) The principle function of the Board shall be to provide, within the Board’s resources and subject to the other provisions of this Act, legal aid and advice in civil cases to persons who satisfied the requirements of this Act.
Section 11(7) of the Act provides that:
S.11(7) The Board may engage under contracts for services such, and such number of persons to provide such services to the board under such terms and conditions as may, with the approval of the Minister given with the consent of the Minister of Finance be determined by the Board.
The board has not been empowered to retain or pay for the costs of guardians ad litem. It is noted in this regard that section 28 of the Guardianship of Infants Act 1964 provides for the appointment of guardian ad litem in private family law proceedings, (though it is the Board’s understanding that this section has yet to be commenced).
Section 28(5) of the Act provides as follows:
S.28(5) The fees and expenses of a guardian ad litem appointed pursuant to subsection (1) and the costs of obtaining legal representation pursuant to an order under subsection (4) shall be paid by such parties to the proceedings concerned, and in such a proportions, or by such party to the proceedings, as the court may determine.
This section was inserted by the Children’s Act 1997 which at the same time amended the Civil Legal Aid Act 1995 to provide that where a guardian ad litem is appointed on foot of section 28 and a solicitor is appointed to the guardian ad litem, the Board shall present a legal aid certificate in respect of the solicitor’s appointment. The subsection would not contemplate that the Board would be responsible for guardians ad litem fees.
I should also point out that the function of granting legal is vested in the Board on foot of the aforementioned Act. The Board is obliged to determine applications for legal aid in accordance with the provisions of the Act and also to determine what ancillary services or expense may or should be authorised on foot of any application. That function is not vested in the judiciary.”
It was the decision to appoint a guardian ad litem which provoked the proceedings that the plaintiff has launched; this was the document that, to quote the plaintiff, ignited the proceedings.
28. What the plaintiff seeks to achieve in the proceedings against the first named defendant emerges most clearly from the affidavit sworn by Mr. O’N. in support of his motion to strike out the motion brought by the first named defendant.
29. Paragraphs 5, 6 and 10 are worth quoting. I do so substituting the first named defendant for this defendant’s name.
30. Paragraph 5:-
“The first named defendant’s actions are a direct contravention of Court Rules and clearly demonstrate this defendant’s Contempt for due process and for this Honourable Court. The first named defendant is and has falsely misrepresented the matter to at least ten other persons that are NOT concerned with “any previous history” of any other matters, directly or indirectly related to the matter in hand. The matter being that the first named defendant did factually and wilfully inculcate and involve himself in an UNLAWFUL Order and set of actions. This is proven. Now he is contemptibly attempting to weasel his way out of being prosecuted for his crimes.”
31. Paragraph 6:-
“The first named defendant is in Contempt of this Honourable Court. This is the act of a Criminal and that of a guilty man. He has set out on a “dirty tricks” campaign from the start”…
32. Even assuming in favour of the plaintiff that the first named defendant withheld from the court the fact that a ministerial order bringing s.28 of the Act of 1997 into operation had not been signed, that could not provide any basis for the present proceedings. No report was ever prepared by a guardian ad litem; no evidence was ever given by a guardian ad litem. Nothing of substance happened on foot of Judge White’s order appointing a guardian ad litem, an order that was thereafter stayed and then reversed. In my view the proceedings against the first named defendant failed to disclose any reasonable cause of action and are vexatious. In the course of his judgment in Farley v. Ireland (Unreported, ex tempore, Supreme Court, 1st May, 1997) Barron J. made the point that the phrase frivolous and vexatious is a legal term and not pejorative. He commented as follows:-
“So far as the legality of the matter is concerned frivolous and vexatious are legal terms, they are not pejorative in any sense or possibly in the sense that Mr. Farley may think they are. It is merely a question of saying that so far as the plaintiff is concerned if he has no reasonable chance of succeeding then the law says that it is frivolous to bring the case. Similarly, it is hardship on the defendant to have to take steps to defend something which cannot succeed and the law calls that vexatious.”
In my view the plaintiff has no reasonable chance of succeeding against the first named defendant and it would be oppressive to require the defendant to have to take on the burden of defending proceedings which are fundamentally misconceived.
33. Accordingly, I will strike out the plaintiff’s claim as against the first named defendant in its entirety; for failing to disclose a reasonable cause of action and for being vexatious. I will do so pursuant to O.19, r.28 but also pursuant to the inherent jurisdiction of this Honourable Court. I regard these proceedings as an abuse of process.
The fifth named defendant
34. Issues very similar to those that required consideration in the case of the motion brought by the first named defendant also arise in the case of the motion brought by the fifth named defendant who had acted as solicitor for the plaintiff’s former wife. The proceedings brought by the plaintiff against her are wholly concerned with her role in the family law proceedings and to a very large extent with her role in the appointment of the guardian ad litem. The fifth named defendant is entitled to absolute privilege in respect of statements made in the course of the judicial proceedings by virtue of s. 17(2) of the Defamation Act 2009.
35. The immunity is a wide one extending to words spoken by an advocate in court, to statements contained in pleadings or other documents incidental to the action, including inter parties correspondence.
36. In my view the plaintiff’s claim in defamation is misconceived and doomed to failure.
37. It is also the case that the fifth named defendant as solicitor to the wife in the family law proceedings did not owe a duty of care to the husband who was not her client, but an opposing party. In Al-Kandari v. J.R. Browne and Company, [1988] 1 Q.B. 665, the Court of Appeal held, at p. 672:-
“A solicitor acting for a party who is engaged in ‘hostile’ litigation owes a duty to his client and to the court, but he does not normally owe any duty to his clients opponent… In the context of ‘hostile’ litigation, public policy will usually require that a solicitor be protected from a claim in negligence by his client’s opponent, since such claims could be used as a basis for endless re-litigation of disputes”.
It must be said that Mr. O’N. is not the first disappointed family law litigant who has sought to bring proceedings against the solicitors who acted for the opposing party in the family law proceedings. An example is Talbot v. McCann Fitzgerald and Others [2010] IEHC 383 (Unreported, High Court, Hanna J., 8th October, 2010), where the plaintiff sought to institute the proceedings against his former wife’s solicitors. The proceedings were dismissed as being an abuse of process by Hanna J. who said that:-
“In my view, the documents, insofar as the set out allegations against the first named defendant, disclose no reasonable cause of action against it and are unsustainable in law and are frivolous and vexatious. In my view, they constitute a vehicle whereby the plaintiff seeks to vent his spleen and frustration in respect of legal “reverses” which he cannot otherwise reopen. It was apparent in his oral submissions to me that the plaintiff availed of the court time to recite in full his complaints in respect of the family law proceedings… I therefore accede to the first named defendant’s application to strike out the proceedings for the reasons stated.”
38. The Canadian case of Dykun v. Odishaw, (Unreported, Alberta Court of Queen’s Bench, Judicial District of Edmondson, 3rd August, 2000), has been referred to in the course of a number of decisions. See Riordan v. Ireland (No. 5), [2001] 4 I.R. 463, in Bula Holdings Limited and Others v. Roche and Others [2008] IEHC 208 (Unreported, High Court, Edwards J., 6th May, 2008) and McCabe v. Minister for Justice, (Unreported, High Court, Murphy J., 29th June, 2006). The Canadian courts commented that the following matters had been indicated as tending to show that a proceeding is vexatious:-
(a) The bringing up of one 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 persons can reasonably expect to obtain relief,
(c) Where an 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 decision.
Paragraphs (a) to (d) would seem relevant to the present proceedings, which bear the classic hallmarks of proceedings that are frivolous and vexatious.
39. So far as the question of the appointment of the guardian ad litem is concerned and in particular so far as the email from the Legal Aid Board on which the plaintiff places such emphasis is concerned, the fifth named defendant in the course of her grounding affidavit has sworn that she understood from the Legal Aid Board email of the 7th December 2010 and in particular from the last paragraph therein that the Legal Aid Board could exercise its discretion to engage a guardian ad litem. She has sworn that she certainly did not and would not have asked the court to make an order that she knew to be unlawful. However, even making the assumption in favour of the plaintiff that the fifth named defendant, contrary to what she has sworn, knew or ought to have known that s. 28 had not been brought into force, this would not provide a justification for the present proceedings. As in the case of the proceedings against the first named defendant, the proceedings brought by Mr. O’N. against his wife’s former solicitor offer no reasonable prospect of success, do not disclose any reasonable cause of action, are vexatious and amount to an abuse of process and, accordingly, I will also strike out the proceedings against the fifth named defendant.
The second named defendant
40. I turn now to the motion brought by the second named defendant. The relevant paragraphs of the plenary summons are paras. 15 and 17. These paragraphs are as follows:-
“I say that the first named defendant (barrister for my ex-wife) and the fifth named defendant (solicitor for my ex-wife) and the second named defendant (County Registrar) did knowingly collude with and deceive and conceal prima facie evidence from the court that which is expressly prohibited by Law in the presence of Judge Michael White (exhibit D )”– (a reference to the Legal Aid Board email).
Paragraph 17:-
“I say that the second named defendant (County Registrar) did knowingly conceal and withhold court documents that which is expressly prohibited by “law” which has been brought to the attention of Judge Michael White. (Exhibit M).”
(Exhibit M comprises correspondence passing between the plaintiff and the County Registrar beginning with the letter of 20th July 2011, from the plaintiff in which he asks to be forwarded a full copy of his attested file, enclosing €10 to cover photocopying expenses and ending with the letter from the plaintiff of the 1st November 2011. In the course of that letter the plaintiff comments that his difficulty in obtaining documentation is causing him a great deal of stress and delaying justice. He describes the attitude of the County Registrar of being cavalier and as being outrageous.)
41. The operative part of the statement of claim is as follows:-
“That the second named defendant did pervert the course of justice, by purposely and wilfully withholding prima facie evidence from the court, that which was supplied by the fifth named defendant.
Because of the actions of the second named defendant and by reasons mentioned in the affidavit the Court Record No. 2012/462P, the plaintiff has suffered financial loss, damages and inconvenience.”
The plaintiff claims judgment in the sum of €78,000 and such further sums as the court should deem appropriate for:-
(1) Damages for stress,
(2) Damages for mental trauma.
So far as the claim for €78,000 is concerned, the plaintiff responded to a notice of particulars and explains that that figure represents 5% of his overall claim of €1.56M calculated on the basis of working 50 hours per week, 52 weeks per year for twelve years at €50 per hour. In so far as the plaintiff is claiming only 5% of his overall claim from the second named defendant, it might be thought that the plaintiff does not see the County Registrar as prime culprit.
42. While the plaintiff and the second named defendant have exchanged correspondence in relation to the plaintiff’s efforts to access the court files, the plaintiff has failed to particularise his claim that the second named defendant perverted the course of justice by purposefully and knowingly withholding prima facie evidence from the court, that which was provided by the fifth named defendant.
43. In so far as the appointment of the guardian ad litem is central to the plaintiff’s claim it seems to me that the plaintiff fundamentally misunderstands the role and function of the county registrar. The county registrar is not a co-decision maker.
44. The plaintiff’s claim might be seen as one in deceit, misfeasance, and conspiracy. In addition the reply to particulars contains for the first time a reference, almost a passing reference to damages for libel. In Ennis v. Butterly, [1997] 1 ILRM 28, Kelly J., at p. 40, commented that in order to sustain the common law of deceit, the following facts must be established, i.e. they must be pleaded and proved:-
(1) There must be a representation of fact made by words or by conduct,
(2) The representation must be made with knowledge that it is false,
(3) It must be made with the intention that it should be acted upon by the plaintiff in the manner which resulted in damage to such plaintiff,
(4) It must be proved that the plaintiff acted upon such false statement,
(5) It must be proved that the plaintiff has sustained damage by so doing.
None of the five constituent elements identified by Kelly J. have been made out in the present case. In particular in a situation where the order appointing the guardian ad litem was reversed and where no report was ever prepared or submitted to the court, the plaintiff cannot establish any loss. Insofar as the plaintiff is seeking to bring proceedings against a public official it seems proper to consider whether the plaintiff might have a stateable claim for misfeasance of public office, even though the proceedings have never been so categorised by the plaintiff. The ingredients that go to make up misfeasance in public office were considered by Kearns J., as he then was, in Kennedy v. The Law Society of Ireland (No. 4) [2005] 3 IR 228 and again by the Supreme Court on appeal. From the decisions in both courts it emerges clearly that misfeasance in public office encompasses two forms of misconduct, namely where there was targeted malice towards an individual involving the exercise of the public power for an improper or ulterior motive or, where there was reckless indifference as to the illegality in question and the consequence of same. Both forms involve an element of bad faith on the part of the officer. No matter how the proceedings brought by Mr. O’N. are viewed, it seems to me to be clear that he is not in a position to formulate a stateable claim that the County Registrar was guilty of misfeasance of public office. In my view the claim against the County Registrar is misconceived, discloses no reasonable cause of action, is bound to fail, is frivolous and vexatious, and amounts to an abuse of process. Accordingly, I will strike out the claim against the second named defendant pursuant to O. 19, r.28 and pursuant to the inherent jurisdiction of the court.
The third named defendant
45. The third named defendant is a medical doctor practicing as a general practitioner. He has acted as general practitioner for the ninth named defendant and her children, including C. who is the daughter of the ninth named defendant and of the plaintiff. The relevant paragraph of the plenary summons is para. 21. It states that the third named defendant involved himself with his daughter C. without the plaintiff’s consent, referred her to social workers and authored an unlawful report without the knowledge or consent of both guardians (exhibit L). (Exhibit L comprises a letter dated the 4th October, 2010, from the fifth named defendant to the plaintiff’s then solicitors in which they advise that C. has been referred by her G.P. (the third named defendant), to Dr. Filomila Grigoriou, network psychologist of the Primary Care and Child Psychology Service in Kilkenny. A copy of a handwritten referral note was enclosed.) The statement of claim pleads that the third named defendant did make representations to and within and without the court of a grievous and damaging nature, to and about the plaintiff and about his character and good name. Now, there are a number of somewhat curious aspects to this claim. Notwithstanding the reference in the statement of claim to the defendant making representations to and within and without the court of a grievous and damaging nature, this defendant had no involvement with the litigation. Nor, despite the reference in the plenary summons to the defendant authoring an unlawful report does it appear that he did this. Indeed, it is not alleged that he authored a formal report as such; rather the objection is taken to the referral note or referral form. It appears that the plaintiff’s complaint against this defendant relates to a visit to the defendant’s surgery by the ninth named defendant and her daughter C. Arising from that consultation, the plaintiff referred “C.”, to a child and family consultation service. Thereafter, and unknown to this defendant, the fifth named defendant provided the plaintiff with a copy of the referral note.
46. Insofar as the plaintiff is seeking an injunction, matters have been overtaken by the order of the Circuit Court. The Circuit Court order of the 29th June, 2011, had directed that the plaintiff might nominate a general practitioner to treat the son of the marriage without the consent of the ninth named defendant and refer him for counselling if necessary without consent and had also directed that the ninth named defendant might nominate a general practitioner to treat “C”, without the consent of the plaintiff and might refer her to counselling, if necessary, without that consent. The injunction now sought would seem designed to set-aside the order of the Circuit Court. This is impermissible. There is a further reason why an injunction cannot be pursued at this stage. The plaintiff in the course of his submission informed the court that given the history of conflict between the parties that the third named defendant had ceased to act as general practitioner on behalf of C. In these circumstances granting an injunction would not achieve any practicable purpose.
47. Insofar as the claim for damages is concerned, the point made in earlier motions arises. The claim for damages for stress and damages for mental trauma would seem in substance to be a claim for damages for personal injuries and no authorisation from P.I.A.B. has been obtained.
48. Implicit in the plaintiff’s case is that the third named defendant acted wrongfully in consulting with C. without the plaintiff’s consent and in referring her for counselling. Even assuming in favour of the plaintiff, that the third named defendant ought to have sought the consent of both parents, I do not believe the present proceedings can be maintained. The proceedings operate on the assumption that as a parent the plaintiff enjoyed some form of property right vis a vis his daughter and that in consulting with her and referring her on, that the third named defendant had interfered with the plaintiff’s property rights. I do not believe that even on the assumption that the doctor should have sought the consent of the plaintiff that his failure to do so gives rise to an action for damages. A highly relevant consideration is that the referral did not proceed. The letter from the fifth named defendant of the 4th October, 2010, had stated that the assessment appointment had been made for the 13th November, 2010. In the time that was available the plaintiff vetoed the daughter’s assessment. He cannot now establish loss or damage.
49. While I approach the case on the view most favourable to the plaintiff that his consent should be sought before the third named defendant referred on his daughter, I am not convinced that the third named defendant was not entitled to act as he did. However, one way or another the plaintiff’s claim against the third named defendant does not disclose any reasonable cause of action, is incapable of achieving what is sought and is bound to fail. That being so it would be oppressive to require the defendant to defend the proceedings. Accordingly I will strike out the proceedings against the third named defendant.
The fourth named defendant
50. I am in a position to deal with the claim against the fourth named defendant very briefly. By order of Judge White, the fourth named defendant was appointed as guardian ad litem on the 27th January, 2011. Following her appointment the fourth named defendant met with “C”. and the ninth defendant on the 26th April, 2011. It was the intention of the fourth named defendant to make an appointment to meet with R., the son of the plaintiff and the ninth named defendant, and to meet with “C”. again, but her appointment was brought to an end before this could happen.
51. In a situation where the only involvement of the fourth named defendant was to hold one meeting with C. at a time when she had, as she believed, been appointed as guardian ad litem, it seemed to be that the plaintiff’s case against the fourth named defendant was quite unstateable. The plaintiff puts his case on the basis that the fourth named defendant, as an experienced guardian ad litem, should have realised that the court was acting outside its jurisdiction. In my view there is just no reality to that argument. The fourth named defendant was entitled to begin acting on foot of a court order. When her appointment was first suspended and then reversed she took no further action and no report was ever prepared by her and she took no part in the subsequent family law proceedings. In those circumstances the proceedings against the fourth named defendant lacked any reality or substance and accordingly I will strike out the proceedings as failing to disclose any reasonable cause of action and as proceedings that were bound to fail.
The seventh named defendant
52. So far as the seventh named defendant is concerned, the relevant section of the plenary summons is para. 18 which pleads that the seventh named defendant knowingly authored an unlawful report without the consent of both guardians to deceive the court in the presence of Judge Michael White and present material in court not relevant to the matter in hand in order to purposely mislead the court and lead the court to an illegal and unlawful judgment. There is then a reference to exhibit F. (Exhibit F consists of two medical legal reports dated the 7th October, 2008, one in respect of “C.” and one in respect of “R.”) The statement of claim pleads that the seventh named defendant made representations to and within and without the court of grievous and damaging nature to and about the plaintiff and about the plaintiff’s character and good name. The statement of claim then claims judgment in the sum of €78,000 and further sums by way of damages for defamation as well as damages for stress and mental trauma.
53. After the seventh named defendant’s motion papers were served, a letter from the plaintiff was sent requesting that the seventh named defendant swear a verifying affidavit in relation to correspondence he had sent to the Medical Council in 2009. By way of background it should be explained that the plaintiff lodged a complaint with the Medical Council against this defendant, which concluded in January, 2010 as there was insufficient cause to warrant further action. In the usual way the seventh named defendant corresponded with the Medical Council following the complaint. The solicitor for the seventh named defendant responded to this request pointing out that in the context of the existing proceedings there was no requirement on their client to swear the affidavit requested. This produced a very unpleasant response from the plaintiff. This asserted that the solicitor had a duty of care not only to her client but also to the plaintiff and that ensuring that her client was truthful and honest was one of the elements of the duty of care. The letter then concluded:-
“Now that I have made you aware of your legal responsibilities and obligations I insist you address this issue immediately and give it your utmost attention as you too may find yourself before the courts for your conduct. We will give you four days in which to respond.”
Now, in fairness to the plaintiff, he accepted an invitation from me to apologise to the solicitor in question for the tone of that letter and this is to his credit. Nonetheless the original correspondence is quite disconcerting and is suggestive of a willingness on the part of the plaintiff to use proceedings and the threat of proceedings to harass and intimidate. Insofar as the correspondence with the solicitor for the seventh named defendant might indicate a desire on the part of the plaintiff to re-open the matters that were before the Medical Council, this is not something that can be countenanced. The plaintiff’s focus, indeed pre-occupation with the Medical Council issue also emerges from an affidavit sworn by him on the 19th October, 2012. So far as the medical legal reports that were prepared by the seventh named defendant are concerned, these were prepared for the purpose of proceedings and enjoy absolute privilege. The plaintiff’s defamation claim based on the contents of these medical reports cannot succeed and is bound to fail. As it happens, it does not appear that the reports were ever actually submitted to court but whether they were, or were not, absolute privilege attaches to them. The points made in relation to the claim for damages for shock and mental trauma that had been considered in the context of other motions, also apply in the present case.
54. The plaintiff has requested that this motion should be struck out on the basis that an affidavit sworn by the solicitor for the seventh named defendant contains hearsay. That application ignores the fact that the motion to dismiss the proceedings was grounded on the affidavit of the seventh defendant sworn on the 27th July, 2012. The affidavit sworn by the solicitor deals with matters subsequent to the service of the motion to dismiss the proceedings and it is an affidavit which is appropriate for the solicitor to swear. Once again the case against the seventh named defendant is one that is bound to fail, has no reasonable prospect of success, and is vexatious and an abuse of process. The pleadings fail to disclose any reasonable cause of action and accordingly for all these reasons I will dismiss the claim as against the seventh named defendant.
The eighth named defendant
55. So far as the eighth named defendant is concerned, the relevant paragraph of the plenary summons is para. 19. It pleads that the eighth named defendant, the ninth named defendant and fifth named defendant knowingly deceived the court in the presence of Judge Michael White unlawfully and, without proper authority and consent, authored an unlawful report and presented material in court not relevant to the matter in hand in order to purposely mislead the Court, and lead the Court to an illegal and unlawful judgment. Then there is reference to exhibit G. (Exhibit G is described as a psychological report dated the 7th October, 2008. The report records that “C” accompanied by her mother presented for counselling on the 22nd September, 2008 and on the 2nd October, 2008.) It also records that the ninth and fifth named defendants requested a report on “C” for an access and custody application that was before the Circuit Court on the 10th October, 2008. A number of points that have been considered in the context of other motions arise for consideration. So far as the claim for an injunction to restrain the eighth named defendant from trespassing into or on to the family of the plaintiff is concerned, this either ignores the order of the Circuit Court that permits the ninth named defendant to bring her daughter C to a general practitioner and for C to be referred on for counselling, without the consent of the plaintiff, or alternatively it is an attempt to set-aside the order of the Circuit Court. If it is such an attempt, then it is clearly impermissible. Furthermore, the report of the 7th October, 2008, was clearly prepared for the purposes of the Circuit Court proceedings that were scheduled to take place on the 10th October, 2008, and, accordingly, the report enjoys absolute privilege.
56. It is not suggested that the eighth named defendant had an involvement in the family law proceedings in 2011 when the question of the appointment of a guardian ad litem was under consideration. Her involvement was confined to 2008 and was confined to preparing a report for the purpose of court proceedings. It thus brings the question of defamation into particularly sharp focus and the fact that in preparing a report for the court the eighth named defendant enjoyed absolute privilege.
57. In these circumstances, this is a claim that is misconceived, has no realistic prospect of success but rather is bound to fail. The proceedings fail to disclose any cause of action and that is so whether one focuses on the plenary summons or on the statement of claim, where a cause of action quite different to what had been pleaded in the plenary summons is pleaded. In the circumstances I am satisfied that this is a case where, pursuant to O. 19, r. 28 and pursuant to the inherent jurisdiction of the Court it is proper to strike out the proceedings.
The ninth named defendant
58. So far as the ninth named defendant is concerned, who is the plaintiff’s former wife; a number of paragraphs of the plenary summons contain references to her role. Paragraph 11 pleads that the first named defendant, her barrister, knowingly colluded with and concocted an agreement with the sixth named defendant, social worker, with the fifth named defendant, solicitor for the ninth named defendant with the ninth named defendant to execute a guardian ad litem order pursuant to s. 28 of the Act of 1964 which was prohibited by law. Paragraph 12 pleads that the fifth named defendant knowingly illegally and unlawfully colluded with the ninth named defendant to put this matter before the court without prima facie evidence which is expressly prohibited by law. Paragraph 13 states that the first named defendant knowingly colluded with and concocted an agreement with the sixth named defendant, social worker, with the fifth named defendant, and ninth named defendant to obtain an unlawful order without the consent of the plaintiff and against the plaintiff’s wishes. Paragraph 19 pleads that the eighth named defendant, the ninth named defendant and fifth named defendant knowingly deceived the court in the presence of Judge Michael White, unlawfully and without proper authority and consent, authored an unlawful report and presented material in court not relevant to the matter in hand in order to mislead the court and lead the court to an illegal and unlawful judgment.
59. So far as the reliefs sought against the ninth named defendant are concerned, these failed to take into account that the ninth named defendant is the mother of C and R and the injunctions would inhibit contact with her family members. Moreover, the proceedings either fail to take into account the fact that the Circuit Court has made orders in relation to custody and access or alternatively seeks to set-aside the orders of the Circuit Court.
60. It seems to me that the argument that this in an impermissible attempt to re-litigate matters that have already been considered and decided in the Circuit Court has a particular resonance in the case of the ninth defendant.
61. So far as the ninth named defendant’s involvement in the appointment of a guardian ad litem is concerned, she was at the time represented by both solicitor and counsel and no doubt acted on their advice. There is a complete lack of reality in any suggestion that she could be expected to second guess her solicitor and counsel in relation to the jurisdiction of the Circuit Court to make a particular order.
62. In my view the criticisms that can be made of the proceedings that have been brought against the various professional defendants apply with equal, if not greater force to the proceedings against the ninth named defendant. I am quite satisfied that these proceedings are vexatious, are bound to fail, and amount to an abuse of process, and as such ought to be dismissed pursuant to O. 19, r. 28 and the inherent jurisdiction of the court.
63. I will conclude with one general observation. The plaintiff has stressed that he has been involved in family law proceedings of one sort or another for some thirteen years now and that over that time his wife has had a number of different professional advisors but that until he issued the present proceedings, he never had cause to sue any of them, nor, as I understand him to say, did he have any acrimonious dealings with them. He says that this establishes that it is unfair to categorise the present proceedings as vengeful and vexatious.
64. It is unfortunate that these family law proceedings should have gone on as long as they have. It may be that the present proceedings were prompted by the fact that an order was made without jurisdiction appointing a guardian ad litem and in particular to use the word chosen by the plaintiff it may be that the present proceedings were ignited by the plaintiff coming across the Legal Aid Board email but nonetheless the contents of the proceedings, the tone and style of the pleadings and the multiplicity of defendants, some with the most peripheral involvement in the matters at issue strongly suggest that the plaintiff is prepared to issue proceedings in an indiscriminate and irresponsible fashion. The present proceedings are, in every sense of the word vexatious. They are an abuse of process. Accordingly, as I have indicated, I will make the orders sought by the defendants who have brought motions.
Anderson v Finavera Wind Energy Inc. [2013] IEHC 489
JUDGMENT of Mr. Justice Ryan delivered on the 31st October, 2013
Introduction
1. The plaintiff Mr Anderson is a retired businessman of great age. In March 2010, when he was aged 95 years, he made a loan of Can$ 1.5 million to a Canadian company engaged in developing wind farms. The agreement for the loan was contained in a written document that provided for security for the lender in the form of a lien over 110 shares in the wholly owned Irish subsidiary company that was developing a major wind farm project in Co. Galway. The issued share capital was 220 shares, made up of33 class A and 187 class B shares, so Mr Anderson’s security was over 50% of the company’s shares.
2. The claim in the proceedings arises out of this loan transaction. Mr Anderson is seeking a number of reliefs in order to protect his position. His son who is a solicitor has taken over the running of the case in view of his father’s age and with the latter’s consent. The Andersons senior and junior became concerned about the loan in early 2011 and sought repayment. When Mr Anderson Jr failed to get satisfactory results from his enquiries with the first defendant and his investigations of the company’s activities revealed transactions that potentially affected his father’s security, he instituted proceedings and applied for injunctive relief.
3. This court granted interim injunctions on the 3rd July 2013 restraining the first and second defendants from disposing of or reducing or transferring or otherwise dealing with their shares in the third defendant and from reducing their assets below the present value of the plaintiff’s investment.
4. The matter then came back before the court on the interlocutory application by the plaintiff on 31 July, 2013 on which date the parties consented to continuing orders until the 16th September when the motion was heard. On that occasion, the first and second defendants submitted to injunctions in a modified form of those granted by Gilligan J as interim relief. The third defendant, however, did not consent and proceeded with an application to dismiss the plaintiffs claim as against that party.
5. The application by the third defendant is to dismiss the plaintiffs claim under the inherent jurisdiction of the court on the basis that there is no cause of action and/or there is no reasonable prospect or possibility on which it might succeed. Among the points relied on is the fact that the statement of claim does not seek any specific relief against the third defendant; neither is it suggested that this party has done anything wrong or has been guilty of any conduct amounting to a civil cause of action.
6. In his statement of claim, the plaintiff seeks a variety of reliefs which are based on the underlying claimed legal foundation that he has an equitable claim over the shares in Cloosh Valley Wind Farm Ltd. Thus, he applies for declarations and orders to give effect to the promised pledge that he says applies to the shares in the third defendant.
7. The applicant company submits that the plaintiff cannot succeed in its claim insofar as it relates to their shares or any interest in the third defendant. The grounds for the application may be summarised as follows:–
a. The third defendant did not exist at that time when the loan and the agreement in respect of the shares pledge were made;
b. The first defendant, the borrower, never had any legal or equitable interest in the shares of the third defendant;
c. The agreement to pledge the shares was never executed and was and remained ineffective to impose any charge on them;
d. The articles of association of the third defendant do not permit a transaction whereby its shares would be pledged, without the consent of the company owning the class A shares and contractually entitled to purchase the bulk of the issued class B shares and such consent was not obtained.
8. It is not in dispute that the plaintiff lent Can$ 1.5 million to the first defendant company, which agreed to execute and deliver to him, inter alia, a share pledge agreement over 110 common shares in the capital of the company, Cloosh Valley Wind Farm Ltd. But what is not agreed is that that pledge applies to the shares of the third defendant, which is a company with the same name but which is claimed by the third defendant and SSE Renewables (Ireland) Ltd, the owner of its 33 ‘A’ voting shares, to be an entirely different corporate entity. Two related questions are central to the third defendant’s application to dismiss, namely
a. what happened to the security the plaintiff got for his €1.5m?
b. what happened to the shares of the original company?
The Plaintiff’s Claim
9. The statement of claim describes a series of transactions involving changes in the structure, assets and identity of Cloosh Valley Wind Farm Ltd that took place without notice to the plaintiff and notwithstanding the fact that he had been granted a prior lien over 110 shares in the company as security for his loan.
10. The plaintiff pleads that the first named defendant was in a position to discharge his loan but in breach of contract did not do so.
11. The plaintiff demanded repayment of his loan but the first named defendant has failed, refused and neglected to discharge the monies owed and, further, failed at all material times to disclose any of the aforementioned transactions to the plaintiff. It is pleaded that on 19th April, 2013, Mr. Jason Bak stated in a telephone conversation with the plaintiffs solicitor that the first named defendant intended to complete the sale of the Cloosh Valley wind farm without repaying the plaintiff his loan.
12. In May 2013, the plaintiff registered a Notice and Affidvait as to Stock in this Court in respect of his interest in the shares of Cloosh Valley Wind Farm Ltd. On 3rd May, 2010, a charge was purportedly created over all of the assets of the second defendant, including its 187 shares in the third defendant, in favour of Pattern Renewable Holdings Canada ULC. This charge was created despite the fact that the first defendant’s financial statements record the plaintiffs loan as being secured against that company’s interest in Cloosh Valley Wind Farm.
13. The plaintiff claims that as of the gth July, 2013, the sum of Can$ 2,170,440.55 was due and owing by the first defendant.
14. The plaintiff pleads that the shareholding in the third defendant held by the second defendant is held subject to a constructive trust in his favour and that a constructive trust ought to be imposed against the second named defendant’s shareholding in the third named defendant to hold the same subject to the repayment of the plaintiffs loan and contractual interest.
The Affidavit Evidence
15. In his affidavit filed on behalf of the first and second defendants, Jason Bak says that SSE Renewables (Ireland) Ltd owns shares in the third defendant Cloosh and that the loan to Mr. Kevin Anderson is not concerned with the Cloosh shares. It is important to note that Mr. Bak’s references to Cloosh, that is the third defendant, are not references to the original company of that name – Cloosh Valley Wind Farm Ltd. The original company of that name is now called Finevera Renewables Galway Ltd.
16. At para. 15, Mr. Bak says the following:-
“It did not come to the attention of Finevera that Kevin Anderson had not registered his security and when a subsequent loan agreement was agreed with General Electric (with the use of proceeds focused only on the BC wind projects). Consequently, General Electric (“GE”) obtained a ranking security. When Pattern Energy recently assumed the GE loan, it also inherited GE’s security position.”
I do not know precisely what this means, but its import in general is clear in saying that because the plaintiff did not register his security, he suffered a disadvantage and the loss of priority when a subsequent loan was made and security given to the lender. But I do not at all understand how it could be that Finevera was unaware of Kevin Anderson’s interest and his entitlement to security that Finevera had agreed since all these events were quite recent.
17. Mr. Bak says that the loan agreement does not contain an obligation that Cloosh “would end up with any assets whatsoever”. He says that it is incorrect of David Anderson the deponent on behalf of the plaintiff to assert that Finevera intended to dishonour its agreement with Kevin Anderson. “This is entirely inaccurate”. Mr. Bak says that the old company changed its name on the 13th October, 2010 and the third defendant changed its name to Cloosh on the 26th October, 2010 and both of the changes were promptly notified to the Companies Registration Office and that that was done as part of the transaction with SSE and on the basis of tax advice. He says that the transaction with SSE, if it is permitted to proceed, will enable Finevera to repay the plaintiff. It follows therefore, that Mr. Bak is anticipating that the closing of this sale will result in the repayment of the plaintiff of his money and presumably such interest as has accrued on it.
18. Having regard to this expectation if not promise by Mr. Bak, it is not obvious why there should be an objection to giving the plaintiff some security over the shares in the third defendant. The intention is that SSE Ireland Ltd will then proceed with the development of the wind farm project. Mr. Bak says that the second defendant, Finevera Renewables Ireland Ltd, registered a charge against it in favour of Pattern on the 3rd May, 2013, two days after David Anderson registered the Notice as to Stock but says that the second defendant was not aware of that notice until after the execution of the charge in favour of Pattern.
19. It appears from this affidavit that the company in respect of which the plaintiff Kevin Anderson was given the pledge or lien – Cloosh Valley Wind Farm Ltd- changed its name and its shares became the property of a separate and new company which changed its name to Cloosh Valley Wind Farm Ltd. We therefore have Cloosh (old) which was the subject of Mr. Anderson’s protection and we have Cloosh (new). Mr. Bak does not describe just how this transmutation came about, how the 33 A and 187 B shares in the original company were transplanted from the donor company to their new location in Galway West Wind Farm Ltd which became Cloosh Valley Wind Farm Ltd. He does say that it happened because of tax advice but the precise mechanism of the transfer is not described. Mr. Bak says that there was no obligation in the loan agreement, whereby the borrower undertook that the shares would remain in the ownership of the original Cloosh company, a proposition that strikes me as being perhaps somewhat audacious but it is not my function to decide that at this stage. Having said that, he does appear to accept that Mr. Anderson is entitled to be paid out of the sale of the windfarm company.
20. The affidavit of Mr. Stephen Wheeler, a director of the third named defendant, was sworn on 12th July, 2013 and is the basis of the application made by the third named defendant to be released from the proceedings. It is Mr. Wheeler’s contention that no cause of action has been made against the third named defendant and he also seeks the removal of the Notice as to Stock filed on 1st May, 2013.
21. Mr. Wheeler is vague as to how the shares in Cloosh old became the shares in Cloosh new. He does give details of the various inter-company transactions and changes but it is to be noted, I think, that these are not always consistent with other affidavits and there may accordingly be questions of fact that arise.
22. Mr. Wheeler says that the acquisition of Cloosh new was a joint venture between Coilte, SSE Renewables and Finavera Ireland under which SSE would acquire the 33 voting class A shares. As I understand, SSE would control Cloosh by reason of having the A voting shares and would provide most of the finance. SSE would be entitled by contract to purchase the majority of the non-voting B shares retained by Finavera when they reached financial close as defined with consideration for the 147 B shares up to €7.14 million. Coilte would have an option to subscribe for shares in Cloosh new so that it would be or become a partner with SSE and Finavera Ireland and Finavera Ireland would retain a minority shareholding with no voting rights. Absent from this explanation is of course any reference to the plaintiffs interest in any shares.
23. At para. 12 of his affidavit he states:-
“Shortly after its incorporation in June 2010, Cloosh Valley had an authorised share capital of €100,000 divided into 50,000 voting class A ordinary shares of €1.00 each and 49,998 non voting class B ordinary shares of €1.00 each and 2 redeemable shares of €1.00 each. The issued share capital of Cloosh Valley as of August 2010 was 33 class A ordinary shares (“the A shares”) and 187 class B ordinary shares (“the B shares”) which were fully paid up.”
This can only be a reference to Cloosh old. Galway West Wind Farm Ltd had been incorporated but there had not been a change of name and there does not appear to have been any transfer of shares at this point.
24. Mr. Wheeler describes a share purchase agreement dated 24th August 2010, between SSE and Finavera Ireland, whereby Finavera sold SSE all of the A class shares in Cloosh Valley for €1.26 million. A redacted version of the agreement was available at the hearing. Under Clause 16 of the share purchase agreement, Finavera Ireland is restricted from transferring its shareholding in Cloosh new to any other party without first offering them to SSE. Clause 13 precludes Finavera Ireland from charging its shares or providing security without the consent of SSE or pursuant to Project Finance Agreements:
“Prohibition on Charging the Shares
Except pursuant to the Project Finance Agreements, no shareholder shall, except with the prior written consent of the other shareholder, create or permit to subsist any Encumbrance over or in any of the Shares held by it (otherwise than by a transfer of such Shares in accordance with the provisions of this Agreement) and any person in whose favour any such Encumbrance is created is permitted to subsist shall be subject to and bound by the same limitations and provisions as embodied in this Agreement”.
25. Regarding the loan agreement between the plaintiff and Finavera Incorporated, Mr. Wheeler makes a number of observations:-
(a) Finavera Incorporated is not and never has been the owner of any of the issued Shares in the third named defendant and therefore it was never within its authority to offer shares on its behalf.
(b) At the time of the pledge being granted to the plaintiff in respect of the shares, the third named defendant company did not exist.
(c) The Cloosh company which existed then is now Finavera Renewables Galway Ltd.
(d) Therefore any charge over the shares in the third named defendant is invalid as it contravenes the Shareholder Agreement.
(e) No pledge has ever been delivered to the third named defendant by the plaintiff, nor was any pledge ever executed on his behalf.
26. It is apparent from the affidavits of Mr. Bak and Mr. Wheeler that Finavera has entered into a share purchase agreement with SSE. However, there remains uncertainty. It does not appear the case that Cloosh old, with its 33 A shares and 187 B shares was taken over. Nor is it the evidence that those issued shares were sold by one company to another company.
27. Eimear Lyons, Counsel for SSE, swore an affidavit dated 19th July, 2013 where she followed much of the same line of argument as Mr. Wheeler, averring that Finavera Incorporated had no authority to offer any legal or beneficial interest in any shares in Cloosh new to the plaintiff. Ms. Lyons noted that in the ‘Notice as to Stock and Affidvait as to Stock’, the share description is stated as ‘one hundred and ten (110) common shares in the capital of Cloosh Valley Wind Farm’. This, she stated, does not correspond with the issued shares in Cloosh new.
Chronology
28. As gleaned from the affidavit and exhibits, the wind farm project in Galway comprises a series of different companies whose names and identities have changed a number of times over the course of the last few years. It may be helpful at this point to set out a chronology of the principal changes.
• 20th April, 2005: Finavera Renewables Ireland Ltd (Company No. 400923) incorporated.
• 15th January, 2010: Cloosh Valley Wind Farm Ltd (Company No. 479704) incorporated.
• 24th January, 2010: General Electric register charge over 200 ordinary shares in Finavera Renewables Ireland Ltd (Company No. 400923)
• 8th April, 2010: Plaintiff lent CND$1.5 million to Finavera Renewables Incorporated (Company No. 400923).
• 15th March, 2010: 1% BC wind projects. Finavera agrees to provide security in the form of a lien over 110 shares in Cloosh Valley Wind Farm Ltd (Company No. 479704)
• 9th June, 2010: Galway West Wind Farm Ltd (Company No. 485334) incorporated.
• 24th August, 2010: Cloosh Valley Wind Farm Ltd (No. 479704) transferred all of its assets and interest in the Cloosh Valley Wind Farm to a company called Galway West Wind Farm Ltd (No. 485334). The only shareholder in this company is Finavera Renewables Ireland Ltd (No. 400923).
• 25th August, 2010: Confidential share purchase agreement between Finavera Renewables Ireland Ltd (No. 400923) and SSE Renewables Ireland Ltd. SSE purchased all 33 A voting shares for €1.26 million and is entitled to purchase 147 of the 187 B shares for a maximum sum of €7.14 million when ‘financial close’ occurs.
• 13th October, 2010: Cloosh Valley Wind Farm Ltd (No. 479704) changed its name to Finavera Renewables Galway Ltd.
• 26th October, 2010: Galway West Wind Farm Ltd (No. 485334) became Cloosh Valley Wind Farm Ltd.
• 29th April, 2013: Notice as to Stock to Cloosh Valley Wind Farm Ltd regarding 110 common shares.
Submissions
29. Mr Declan McGrath SC for the third defendant submitted that the jurisdiction to strike out a claim arose in two circumstances; by virtue of the court’s inherent jurisdiction and following the rule on O.19, r. 28 of the RSC which provides:-
“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.”
30. Citing the decision of Costello J. in Barry v. Buckley [1981] IR 306, Mr. McGrath submitted that the court has an inherent jurisdiction to strike out proceedings where there is no prospect of success in the claim. The circumstances in Rogers v. Michelin Tyre Plc [2005] IEHC 294 were similar to this case insofar as the decision of Clarke J. striking out the proceedings was based on the construction and application of contractual documents.
31. He argued that the fact that the plaintiff entered into the loan agreement with Finavera Canada did not equate to the creation of a lien over shares Cloosh new. The charge which the plaintiff claims Finavera Canada agreed to grant over the shares in consideration for the loan has never been executed and, in the absence of execution, an agreement by Finavera Canada is not sufficient to create any security interest over those shares.
32. No charges can be created over the shares in Cloosh new without the consent of SSE and the articles of Cloosh new prohibit the transfer or disposition of any interest in a share. Mr. McGrath referred the court to the decision of Arden L.J. in McKillen v. Misland (Cyprus) Investments Ltd & Others [2013] ECWA Civ. 781 where it was held that because the share transfer in contention was contrary to the pre-exemption rights in the shareholders agreement, the transfer was invalid.
33. Mr Robert Barron SC for the plaintiff argued that Finavera agreed to repay the plaintiffs loan out of the proceeds of sale of the Cloosh Valley transaction and in doing so they created an equitable charge over the shares over Cloosh Valley Wind Farm. The third defendant cannot rely on s. 123 of the Companies Act 1963, which provides:-
“No notice of any trust, express, implied or constructive, shall be entered on the register or be receivable by the registrar.”
because actual notice or knowledge is involved and the third defendant had actual notice of the plaintiffs claims.
34. Counsel submitted that the third name defendant’s reliance on the change to the articles of association is not sufficient for the plaintiffs claim to be struck out in accordance with the principles laid down in Barry v. Buckley [1981] IR 306. That case establishes that for O. 19, r 28 application to be invoked, the vexatiousness or frivolousness must appear from the pleadings only. Costello J. stated at 308:-
“…the court can only make an order under this rule when pleading discloses no reasonable cause of action on its face.”
Costello J. further emphasised that the jurisdiction of the court to strike out proceedings is one to be exercised sparingly and only in clear cases.
35. Mr. McGrath referred to the decisions in Tett v. Phoenix Property and Investments Company Ltd [1986] BCLC 149; in Re Claygreen Ltd [2005] EWHC 2032 (CH) and in Re Champion Publications Ltd (The High Court, Unreported, 4th June 1991). In the last case Blayney J. considered the validity of shares which were transferred contrary to the articles of a company and said:-
“It seems to me that there is only one construction that could be put on the article. While article 11 is far from being clear, when one takes every provision of it into account, in particular clause (g), the construction that must be given to it is that where a member wishes to sell, the other members must be given an opportunity of purchasing. It seems to me that this is the only construction that can be given to clause (g) of article 11.”
36. Mr Barron referred to HKN Invest Oy v. Incotrade PVT Ltd. [1993] 3 IR 152, where Costello J. held at p. 162:-
“A constructive trust will arise when the circumstances render it inequitable for the legal owner of property to deny the title of another to it. It is a trust which comes into existence irrespective of the will of the parties and arises by operation of law. The principle is that where a person who holds property in circumstances which in equity and good conscience should be held or enjoyed by another, he will be compelled to hold the property in trust for another.”
37. This proposition was applied by Barr J. in the subsequent decision in Kelly v. Cahill [2001] 1 IR 56, where the Court said at p. 62:-
“In my opinion a “new model” constructive trust of that nature the purpose of which is to prevent unjust enrichment is an equitable concept which deserves recognition in Irish law.”
38. The plaintiff argued that the decision of Gilligan J. in In Varko Ltd (In Liquidation) (Unreported, High Court, Gilligan J. 3rd February 2012), supports the plaintiffs claim that a constructive trust is an appropriate remedy. In that case Gilligan J. deals with the new model constructive trust, referring to the authority in Eves v. Eves [1975] 1 WLR 1338 where Lord Denning held:-
“It is a constructive trust imposed by law whenever justice and good conscience require it…..
It is an equitable remedy by which the Court can enable an aggrieved party to obtain restitution.”
39. The plaintiff relied on Fitzpatrick v. DAF Sales [1988] 1 I.R. 464 to support the claim that a promise to pay someone out of a particular fund creates an equitable charge. In that case O’Hanlon J. held that in order to give the second named defendant’s claim priority over that of the first named defendant, the plaintiff had to prove a specific agreement with the second named defendant that his liability to the second named defendant would be discharged out of a particular fund. Mr. Barron says that the same consideration extends to this case because the plaintiff had an agreement by virtue of the promissory note that he would be repaid with interest on the completion of the Cloosh Valley transaction.
Conclusions
40. The first question is whether the plaintiff’s case should be dismissed as against the third defendant pursuant to Order 19 rule 28. That company has been joined to the proceedings because its shares are alleged to be the subject of the plaintiff’s lien and any alienation would eviscerate or destroy that security. Although the plaintiff does not allege wrongdoing against the third defendant, he considered it prudent to join the company to the proceedings to protect his security. The claim against the third defendant is made in pursuance of the right to security for the loan.
41. The fact that a case may require some amendment of pleadings is not sufficient for dismissal in limine. If the plaintiff can demonstrate a rational basis that is sound in law, assuming the facts he asserts were to be established, the case cannot be dismissed.
42. The second question is whether the applicant has established that there is no reasonable prospect that the plaintiff could succeed if the case were to proceed to a hearing.
43. My conclusions are as follows.
1) The plaintiff may establish at the hearing that he is entitled to a lien over 110 of the 220 shares issued in Cloosh. In those circumstances, it would greatly diminish the plaintiff’s security to treat the shares of Cloosh new as being free of any claim by him to a lien over them.
2) It would deprive the plaintiff of security that was agreed with the first defendant without examining or evaluating the evidence as to the circumstances in which it is contended that he lost his security.
3) The transactions involving the Cloosh companies and the other defendants and others as outlined in the affidavits are open to challenge by the plaintiff as to their contractual and legal validity in depriving him of the agreed security. That is not to say that they are prima facie unlawful but rather that, at this stage, it is legitimate for the plaintiff to question and examine their legality and their impact on his interest.
4) The plaintiff, while disavowing any case of impropriety against SSE, has raised sufficient ground for exploring whether that company, the owner of the 33 A class shares in the third defendant and claimant to a contractual right to purchase the remainder, was, or ought to have been, on notice of his interest in 50% of the issued shares in Cloosh Valley Wind Farm Ltd.
5) It is at least arguable that the transactions that are alleged to have deprived the plaintiff of his agreed security are of such nature as to give rise in all the circumstances to a constructive trust in his favour over the shares in the third defendant.
44. The motion to dismiss will accordingly be dismissed and the plaintiff is entitled to interlocutory orders in respect of this defendant’s shares. The question arises as to whether the 33 A and 187 B shares in Cloosh Valley Wind Farm Ltd, the third defendant, should be the subject of an injunction prohibiting their sale or whether an order should be confined to the sale proceeds of the shares. In the course of the proceedings, Mr. Barron SC expressed himself satisfied if only the purchase price of the shares were to be the subject of an injunction.
45. Mr. McGrath submitted that there could be commercial implications and serious disadvantage if an injunction were to be imposed. It seems to me that any such risks do not defeat the claim of the plaintiff to the protection he was granted over the shares and, in addition, the balance of justice demands that Mr. Anderson’s protection be given priority over this potential risk.
46. I propose therefore to make an Order restraining the payment or other distribution or disposal of the proceeds of sale of shares in the third defendant until the hearing of the action otherwise than (a) on notice to the plaintiff and (b) with his consent. I will however give Counsel an opportunity of agreeing the form of the restraining order.
Murray v Irish National Insurance Public Ltd Co [2013] IEHC 513
JUDGMENT of Mr. Justice Ryan delivered on the 8th November 2013
1. Introduction
The plaintiff issued these proceedings by Plenary Summons dated the 24th August 2010 arising out of the alleged failure of the first, second and third defendants to process the arbitration of his claim for an illness pension that he applied for in 1994. In his Statement of Claim dated July 2010, the plaintiff pleads that he has been pursuing a claim for an ill-health pension from the first or second defendant since 1994. He says that the issue to be arbitrated is whether the first, second or third defendants were correct in deciding that his ill-health did not constitute serious ill-health in accordance with clause 17 of the plaintiff’s pension scheme. He pleads that the defendants “have engaged in an arbitration process to resolve the dispute but over a considerable number of years they have negligently ignored the plaintiff and/or misrepresented their position to him.” He alleges that the defendants wrongfully failed to participate in the arbitration process and bring it to a conclusion and that that constitutes negligence, breach of contract and a variety of other torts. The plaintiff seeks reliefs that include a declaration that the first and second defendants’ conduct in the arbitration is a breach of the plaintiff’s employment contract, a mandatory injunction and damages.
In further and better particulars the plaintiff gave details of the allegation that the second and third defendants misrepresented their position. Although their solicitors confirmed that they were defending the arbitration proceedings and had instructed counsel, they failed to progress the arbitration despite regular communications from the plaintiff or his solicitors.
In its defence dated 11th June 2012 the first defendant raised preliminary issues, as did the second and third defendants in their defence dated 2nd November 2012, as follows, which they pleaded in similar terms:-
a) that the claim is barred by the statute of limitations
b) that the pleadings disclose no cause of action and/or that the proceedings are frivolous or vexatious
c) that the claim is an abuse of process
d) the plaintiff is estopped from litigating because he invoked the arbitration process but did not prosecute it
e) that the question in issue in the case is the subject of the arbitration, namely, whether the plaintiff is entitled to a pension
f) that the plaintiff has been guilty of inordinate and inexcusable delay.
The defences go on to traverse the plaintiff’s claims.
The defendants now seek Orders, pursuant to O.19, r. 28 of the Rules of the Superior Courts and under the Court’s inherent jurisdiction, striking out the plaintiff’s claim. They submit that the plaintiff’s proceedings ought to be struck out on the grounds that they are procedurally flawed; disclose no cause of action and / or have no reasonable prospect of success; the facts pleaded do not support the case being made against the first defendant; they are an abuse of process; the proceedings are oppressive; there has been significant delay meaning the claim is time barred and prejudice has accrued by reason of the delay.
2. Factual Background and Chronology
The plaintiff, Mr. Eamonn Murray, commenced employment with the first defendant in 1979. In 1986, he was diagnosed with Ménière’s Disease but continued to work. Following a road traffic accident on the 3rd July, 1992, the symptoms of his disease became exacerbated, resulting in his being absent for 61 working days during 1992. On 8th March, 1994, the first defendant wrote to the plaintiff, stating that he was being released from his employment due to illness and being permanently unavailable to resume his duties. The first defendant further outlined in that letter that the plaintiff could apply for a pension on the grounds of ill health. The plaintiff made this application on 24th March, 1994 and ceased employment on the 31st March, 1994. The plaintiff submitted medical reports from three separate practitioners with his application for an illness pension. The first defendant, by letter dated 10th May, 1994 was not satisfied that the evidence presented was of the level required to award a pension on the grounds of ill health and refused the claim under Rule 17 of the New Ireland-Irish National Superannuation Fund.
The plaintiff sought to challenge the rejection of his pension claim by referring the matter to arbitration but that never actually happened. He delivered Points of Claim in February 2000 but nothing further took place. His solicitor wrote a series of letters between 2001 and 2005 to Beauchamps Solicitors, who had been instructed to defend the claim but he got no reply. Then the plaintiff himself wrote letters between 2005 and 2009 following the death of his then solicitor but again he failed to achieve anything.
Chronology of relevant dates
1 October 1979 Plaintiff commenced employment with first defendant
1986 Plaintiff diagnosed with Meniere’s Disease
3 July 1992 Plaintiff injured in RTA. Exacerbates his condition
24 March 1994 Plaintiff applies for illness pension under Rule 17
31 March 1994 Termination of plaintiff’s employment
6 April 1994 Plaintiff notified application for pension refused
30 November 1994 Offer of Arbitration under Rule 57
9 February 2000 Points of Claim served
2 February 2001 –
21 June 2005 Letters to Beauchamps Solicitors from plaintiff’s solicitor
1 July 2005 –
5 November 2009 Correspondence between plaintiff and second and third defendants
24 August 2010 Issue of plenary summons
14 September 2010 Letter to first defendant serving plenary summons and Statement of Claim
28 October 2010 Appearance entered by first defendant
30 March 2011 –
27 September 2011 Defence sought from first defendant
25 October 2011 Motion for judgment in default of defence issued
26 October 2011 Change of solicitor by first defendant
1 November 2011 Notice for Particulars by first defendant
9 May 2012 Replies to particulars
14 June 2012 Defence of first defendant
17 April 2013 Motion issued and served by first defendant
3. The Affidavits
John O’Connor, Director of Irish National Insurance plc, in his affidavit sworn on 10th April, 2013 says that the company decided and notified the plaintiff by letter of 10th May, 1994 that
“Having regard to the medical evidence and the long-term nature of the pension benefit applied for, the company is not satisfied that your ill-health is sufficiently serious and long-term to justify payment of an ill health early retirement pension.”
The deponent says that the plaintiff sought to challenge the refusal by way of arbitration but he delayed for almost six years before delivering Points of Claim dated 9th February 2000. He says that it is not clear whether the plaintiff wrote to the first defendant in the period between February 2000 and August 2005 or indeed contacted the first defendant at any point. Mr O’Connor asserts that the proceedings are misconceived.
Franklin O’Sullivan, Legal and compliance officer with the second defendant, in an affidavit sworn on 1st May, 2013, also deems the declarations sought by the plaintiff as inappropriate because he failed to prosecute his arbitration proceedings and has provided no explanation for the extraordinary delay.
Mr. O’Sullivan avers that the sole premise and basis of the plaintiff’s claim against the second and third defendants is that they were negligent or otherwise culpable for not engaging with or progressing the arbitration process. The plaintiff wrote five letters to Beauchamps Solicitors, acting for the second and third defendants, in the five and a half year period between February 2000 and August 2005 but did not issue proceedings until 2010.
All the defendants argue that while the plaintiff seeks damages for alleged breaches of contract, misrepresentation, breach of warranty, negligence, breach of duty and the alleged infringement of his legitimate expectations, the pleadings do not make out a case in respect of any of those titles. The plaintiff’s primary concern is the refusal of the pension in 1994.
Mr. O’Sullivan further argues that the second and third defendants would be prejudiced as a consequence of the delay, as employees who are likely to be witnesses and who originally dealt with the matter, are no longer available.
The plaintiff says in reply that in essence the case concerns the defendants’ failure to pay him an ill health pension to which he was entitled in or around 1994 and their ongoing misrepresentations and prevarications. He engaged in an arbitration process to try to settle his pension claim but it stalled. He has been trying to pursue the case for a long time and has been exhausted by the manner in which the defendants have dealt with him. They have disregarded him for years and now seek to block him from having his case heard due to their delay.
The arbitration never got up and running and it would be unjust, in the absence of hearing oral evidence, to determine where the fault lies. The defendants are responsible for the delay and the evidence must be heard and challenged to determine this matter. The plaintiff argues that he was repeatedly led to believe that the arbitration would progress and, despite his efforts, was continually ignored. He further argues that if the defendants are seeking to rely on an argument that he is statute barred from bringing the within proceedings, this is a matter that they can only seek to rely on in their defences at hearing but not at this stage of the proceedings.
Mr Murray refers to a book of correspondence that he exhibits, from which he says it is clear that he has been in regular contact with the defendants throughout the years seeking to progress the matter.
4. The Submissions
The first defendant argues that the entire shareholding of the defendant was bought by Eagle Star Insurance Company (Ireland) Limited in 1997, which was subsequently purchased by Zurich Insurance Plc. Due to the significant delay and lapse of time since the plaintiff initiated his claim, scant records are available.
This defendant rejects the allegation that it delayed or failed to progress the arbitration process, noting that no allegation has been made that it is responsible for the delay between the date of the original claim in March 1994 and the delivery of the Points of Claim in February 2000. The plaintiff did not allege that the first defendant received any of the five letters which he sent to the second and third defendants between August 2000 and August 2005. Letters were also sent between the plaintiff’s solicitor and the second and third defendants’ solicitor between 2006 and 2009. There is no allegation that the first defendant was involved with this or was requested to do anything by the plaintiff. The first defendant further argues that more than 16 years elapsed from the time the plaintiff’s pension claim was rejected to the issuing of these proceedings.
It is submitted that the circumstances of the case give the first defendant a ground in estoppel or abuse of process following the authority in Henderson v. Henderson (1843) 3 Hare 100. The plaintiff is attempting to litigate the subject matter of the arbitration, namely, the refusal of an illness pension, under the guise of alleged delay on the part of the defendants in progressing the arbitration, meaning therefore that the court would have to determine the validity of the plaintiff’s claim before it could assess whether any damage arose.
The defendant argues that the claim must fail. The arbitration has not been discontinued and the current proceedings represent a clear abuse of the process of the Court.
The proceedings should be dismissed on the grounds of inordinate and inexcusable delay. The plaintiff was not in contact with the company between 2000 and service of the proceedings in 2010.
The court, in addition to O. 19, r. 28, also has an inherent jurisdiction to strike out proceedings which are vexatious, frivolous or bound to fail in accordance with the principles laid down in Barry v. Buckley [1981] IR 306. The court has authority to strike out proceedings where the pleadings disclose no cause of action and/or there is an abuse of process.
Mr. Quirke, counsel for the first defendant, submits that Riordan v. Ireland [2001] 4 IR 463, is authority which lays down a number of factors which the court may have regard to when deciding whether proceedings are vexatious.
The first defendant also relied on Primor Plc v. Stokes Kennedy Crowley and submits that it would be unjust and unfair to have to defend a case after such an extraordinary lapse of time and in circumstances where the ownership of the company has changed on two occasions, the personnel have changed and there appears to be a deficit in the documentation available. Further, the plaintiff’s claim is time barred by virtue of the Statute of Limitations 1957, having failed to issue the summons within six years.
Mr Brennan, Counsel for the second and third defendants adopted the arguments of Mr Quirke and cited the points made by Mr O’Sullivan in his affidavit.
Mr. Kennedy, counsel for the plaintiff, relied on the decision of Denham J. (as she was then) in Aer Rianta cpt v. Ryanair Ltd [2004] 1 IR 506, where it was held that the court’s jurisdiction under r. 28 is one which will be used sparingly unless it is clear that the claim will fail. The plaintiff argues that the defendants breached their duties by failing to pay him an illness pension and failing to engage in the arbitration process. There is a reasonable cause of action in which the defendants must answer why there was such ambiguity in the carrying out of the arbitration process and the interpretation of the pension scheme in respect of arbitration. The plaintiff relies on the authority in Lawlor v. Ross (Unreported, Supreme Court, 22nd November, 2001) where Fennelly J. held:-
“. . . the court should be willing to assume in favour of the plaintiff that an appropriate amendment of the pleadings might save his case.”
The plaintiff further submitted that the principles in Primor plc v. Stokes Kennedy Crowley [1996] 2 IR 459 assist his case in rebutting the defendants’ motion to strike out the proceedings insofar as it held that where delay is inordinate and inexcusable, the court must consider the balance of justice. The plaintiff contends that the delay in the within proceedings is attributable to the defendants as they failed to engage in the arbitration process, despite repeated attempts by the plaintiff to correspond with them.
6. Conclusion
There is no answer to the defendants’ application to dismiss this action. The arguments in support of the motion are compelling and the plaintiff’s reply is an ad misericordiam appeal that cannot counter them.
The fact that a case is weak or unlikely to succeed or may require some amendment of pleadings is not a sufficient ground for dismissal. If the plaintiff can demonstrate a rational basis of claim that is sound in law, assuming the facts he asserts were to be established, the case cannot be dismissed. But that is not the situation here.
Mr Murray’s real complaint was that he was not awarded an ill-health pension on his cessation of employment in 1994. That question is still the subject of arbitration that has never been brought to a conclusion. It was open to him to take measures under the arbitration legislation to bring about a hearing of the dispute, but he did not do that. While such process is in existence, it is not permissible for a claimant to bring parallel proceedings in this court. It may be that the only course open to a disappointed applicant is arbitration under the terms of the particular scheme but that is not something that arises on this application.
Mr. Murray provided no explanation for his failure to take any steps under the provisions of the Arbitration Acts to secure the appointment of an arbitrator or progress the arbitration. What occurred during the period 1994 to 2000 is unaccounted for. The plaintiff has not alleged any of the defendants are responsible for the delay during this period. The only action taken by the plaintiff between 2000 and 2005 was to have one letter per annum sent to the second and third defendants’ solicitors. He took no steps to bring on the arbitration.
I think it is correct to say that this court would have to adjudicate on the validity of Mr Murray’s claim if this action were to proceed and the question of damages to be addressed. That I think is another confirmation that the court action however expressed is actually a replication of the original pension claim.
The plaintiff is in difficulty in seeking to establish a factual basis for this claim against the first defendant that it failed to respond to correspondence. I think that Mr O’Connor is correct in questioning whether the plaintiff is even claiming that his company was in default in this regard. But there is a more fundamental point, which is that the Statement of Claim does not actually disclose a cause of action even if all the facts as alleged are assumed to be correct and also assuming that each of the defendants is equally responsible. Failing to reply to correspondence may give rise to criticism, it may be bad business practice, it may be impolite or a host of other social infractions but it does not give rise to a cause of action. It is of course possible to envisage some hypothetical legislative obligation that might be imposed on a party so as to give rise to some legal liability but nothing of that kind arises in this case. On this ground alone, the claim cannot succeed against any of the defendants.
The plaintiff’s delay in this case is indeed inordinate and inexcusable and I do not think that it can be saved by an appeal to the interest of justice. The defendants have claimed prejudice, not surprisingly in view of the quite extraordinary length of time that has elapsed and the alterations in corporate ownership affecting the first defendant. Recent jurisprudence on the question of delay highlights not only the interest of the parties in having disputes expeditiously determined but also the obligation on courts to ensure that their procedures achieve a measure of efficiency consistent with justice. Those concepts are not in conflict. Indulgence of delay on one side imposes a burden on the other of having to endure the strain of litigation for longer than necessary or of having to make long-term financial provision for a stale claim.
I propose therefore to make an Order striking out the plaintiff’s claim pursuant to O. 19, r. 28 of the RSC and under the inherent jurisdiction.
Webster v Commissioner of An Garda Síochána [2013] IEHC 499
JUDGMENT of Kearns P. delivered on the 14th November, 2013.
This is a case stated by Judge Catherine Murphy of the District Court pursuant to s. 52 of the Courts (Supplemental Provisions) Act 1961 in which four questions are asked of this Court concerning the interpretation of certain procedural matters that arise in relation to cases under s.4 of the Criminal Law (Insanity) Act 2006. The accused had been charged under s.2(1) of the Criminal Damage Act 1991 and s.2 of the Non-Fatal Offences Against the Person Act 1997. An issue was raised by the defence as to the fitness of the accused to be tried.
THE CASE STATED
The charge before the District Court is that the accused:-
“On the 28th March 2012 at Berlin Opticians 157 Capel Street, Dublin 7, did without lawful excuse damage property to wit, front plate glass display window and door belonging to Mr. Tim Cashman” contrary to s.2(1) of the Criminal Damage Act 1991. The accused was granted legal aid and bail in respect of the charge which he took up; and
“On the 28th February 2012 at Berlin Opticians 157 Capel Street, Dublin 7 he assaulted Mr. Tim Cashman” contrary to s.2 of the Non Fatal Offences Against the Person Act 1997. Bail was extended to this charge.
An issue was raised on the 26th July, 2012, when the charges came before the District Court as to the fitness of the accused man to be tried and the matter was adjourned to the 5th October, 2012, to hear the issue of fitness to be tried.
A report from Dr. Paul O’Connell of the Central Mental Hospital of the 29th June, 2012, found that in the opinion of the author the accused was unfit to stand trial by virtue of a mental disorder.
On the 13th November, 2012, it was ordered by the District Court that the accused should be assessed under s.4(6) of the Criminal Law (Insanity) Act 2006. The accused was committed to the Central Mental Hospital for that purpose. When the accused was presented by the gardaí on foot of the committal warrant the Clinical Director Dr. Harry Kennedy stated that the accused could not be committed due to lack of available space. The accused was brought back to the District Court and the court was advised of the lack of space at the Central Mental Hospital. However, the court was of the view that the allocation of resources was not a matter for the District Court and the order had been made under the Act of 2006.
The accused was then brought to the garda station which prompted an Inquiry under Article 40.4.2 of the Constitution. The detention was deemed unlawful and an order to release the accused there from forthwith was issued. See the decision of MacEochaigh J. in A.B. v. The Commissioner of an Garda Síochána, the Director of Public Prosecutions, the Clinical Director of the Central Mental Hospital et all [2013] IEHC 88 (Unreported, High Court, MacEochaigh J., 8th February, 2013).
Immediately following his release the accused was arrested under s.12 of the Mental Health Act 2001 and brought to St. Vincent’s Hospital, Fairview in Dublin where he remains as a patient.
The learned District Court Judge seeks the opinion of the High Court on the following questions:
(a) With respect to the substantive criminal proceedings must I adjourn the matter generally with liberty to re-enter, the case to be re-entered if and when it is contended that the accused is now fit to be tried?
(b) In the circumstances where my original order of 13 November 2012 was not given effect to by the accused being committed to the Central Mental Hospital for assessment may I now give effect to that order by reissuing a warrant, committing the accused for a period of up to 14 days so as to facilitate further assessment?
(c) If neither of the above are permitted, may I revisit the issue afresh and make a new order under 4(6)(a)(i)(I) of the Criminal Law (Insanity) Act 2006 to ensure that the accused is examined by a consultant psychiatrist attached to the Central Mental Hospital and for a report to be prepared for me by such psychiatrist under section 4(6)(b)?
(d) If neither these courses of action is open to me, must I now strike the charges out in circumstances where there is no evidence before me to suggest that the accused has recovered his fitness to plead?
REPLIES
(a) Yes – the Director of Public Prosecutions and counsel for the accused agree that the proceedings may be adjourned until the accused is deemed fit to be tried.
(b) Contentious – see discussion below.
(c) No – unless there is an application to reverse the finding of fitness to be tried.
(d) No – as where the court finds an accused unfit to be tried the only consequence is that the District Court must adjourn the matter, with liberty to re-enter should the accused become fit to be tried.
MAIN ISSUE IN CONTENTION
The main issue that arises on the basis of this consultative case stated is the issue of whether the District Court, in circumstances where the original order to commit an accused to the Central Mental Hospital for assessment was not fulfilled, i.e. it was frustrated due to unforeseen and extraneous circumstances, can the District Court reissue the warrant committing him for assessment for a period of up to 14 days so as to facilitate further assessment.
Under s.4(6) of the Act of 2006 the court has to determine two salient issues. Firstly, is the person fit to be tried, and secondly if not, then as per O’Callaghan v. The Director of Public Prosecutions [2011] IESC 30; [2011] 3 I.R. 356 the court must adjourn the matter. In O’Callaghan, a nolle prosequi was entered and then the accused was re-arrested. A majority in the Supreme Court held that the proceedings under the second arrest were not allowed. Once the court decides that an accused is unfit to be tried then there is no other option but to adjourn. In the cases of E.C. v. Clinical Director of the Central Mental Hospital [2012] IEHC 152 (Unreported, High Court, Hogan J. 5th April, 2012) and F.X. v. Clinical Director of the Central Mental Hospital and the Director of Public Prosecutions [2012] IEHC 271 (Unreported, High Court, Hogan J., 3rd July, 2012), the court stated at paras. 7-8:-
“…it will be seen that where the District Court has determined that the accused is unfit, it is obliged to adjourn the proceedings. Section 4(3)(b) then continues by providing that the Court may:-
‘(i) if it is satisfied, having considered the evidence of an approved medical officer adduced pursuant to subsection (6) and any other evidence that may be adduced before it that the accused person is suffering from a mental disorder (within the meaning of the Act of 2001) and is in need of in-patient care or treatment in a designated centre, commit him or her to a specified designated centre until an order is made under section 13, or
(ii) if it is satisfied, having considered the evidence of an approved medical officer adduced pursuant to subsection (6) and any other evidence that may be adduced before it that the accused person is suffering from a mental disorder or from a mental disorder (within the meaning of the Act of 2001) and is in need of out-patient care or treatment in a designated centre, make such order as it thinks proper in relation to the accused person for out-patient treatment in a designated centre.’
8. It will be seen that in addition to its obligation to adjourn the proceedings, the Court may also order – and it is a permissive power- that the accused person receive either in-patient (s. 4(3)(b)(i)) or out-patient care (s. 4(3)(b)(ii)) at a specified designated centre. The Central Mental Hospital is the designated centre for this purpose: see s. 3(1) of the Act of 2006. So far as the present case is concerned, it is only necessary to examine the in-patient care option.”
The District Court’s Order of the 13th November, 2012, committing the accused for further assessment to the Central Mental Hospital cannot be held to be a nullity. It is a valid order of the District Court. The detention in conveying the accused to the Central Mental Hospital was lawful, and there appears to be no dispute about this. Article 40 proceedings were taken when the accused was taken into garda custody when the accused was turned away from the Central Mental Hospital. The High Court in those proceedings held that the accused was in unlawful detention when detained by the gardaí after being turned away from the Central Mental Hospital, see A.B. v. The Commissioner of an Garda Síochána, the Director of Public Prosecutions, the Clinical Director of the Central Mental Hospital et all [2013] IEHC 88 (Unreported, High Court, MacEochaigh J., 8th February, 2013).
The District Court is a court of local and limited jurisdiction. Therefore it cannot go beyond its statutory remit once a valid order has been issued. No power to re-issue a warrant is expressed in s.4 of the Act of 2006 and the court is of the opinion that a paternalistic view of the Act of 2006 whereby this power might be implied cannot be taken in the given circumstances, even if ordinary common sense would so suggest.
Order 26 Rule 11 of the District Court Rules specifically sets out the jurisdiction for the re-issuing of warrants:
“[Return of unexecuted warrants —Court may reissue]
11. Where a warrant, other than
—a warrant for the arrest of a person charged with an indictable offence,
—a warrant for the arrest of a person who has failed to appear in answer to a summons in respect of an offence,
—a bench warrant for the arrest of a person who has failed to appear in compliance with the terms of a recognisance, or
—a search warrant,
is addressed, transmitted or endorsed for execution, to any person and he or she is unable to find the person against whom the warrant has been issued or to discover where that person is or where he or she has goods, such person having the execution of the warrant shall return the warrant to the Court which issued the same (within such time as is fixed by the warrant or within a reasonable time, not exceeding six months where no time is so fixed) with a certificate (Form 26.4, Schedule B) endorsed thereon stating the reason why it has not been executed, and the Court may re-issue the said warrant, after examining any person on oath if the Court thinks fit so to do concerning the non-execution of the warrant, or may issue any other warrant for the same purpose from time to time as shall seem expedient.”
Nothing in these rules could apply to the within case. The jurisdiction of the District Court is clearly confined under this Order in its ability to re-issue warrants. The mere fact that the committal warrant was “frustrated” does not automatically mean that the warrant can re-issue.
The problem that would arise if it was deemed that such an order for committal could be re-issued is the uncertainty that surrounds that proposition. The facts relating to the accused’s state of mental health were assessed over a year ago and it is unclear what his present position is. A completely de novo fact-finding process would require to be undertaken but the Act of 2006 makes no provision in this regard. The decision in Ejerenwa v. The Governor of Cloverhill Prison [2011] IEHC 351, (Unreported, High Court, Hogan J., 5th September, 2011) notes that any instrument depriving an accused of their liberty must be clear on its face. It cannot be said that an option to re-issue a committal warrant without any certainty or statutory basis would not impact on the rights of the accused.
It appears in the circumstances of the within case that the only option available to the District Court is to adjourn the matter with liberty to re-enter. A new warrant cannot issue nor can a warrant re-issue. The court can, if the accused is deemed fit to be tried, continue the case in hand as per O’Callaghan.
The structure is a statutory structure wherein there are two options, if the accused is unfit then the proceedings are adjourned, if the accused is no longer unfit then the case can be re-entered.
Insofar as the questions posed by the learned District Court Judge are concerned I would answer them in the following manner:-
(a) The substantive criminal proceedings must be adjourned generally with liberty to re-enter, the case to be re-entered if and when the accused is fit to be tried.
(b) The warrant for committal for assessment in the Central Mental Hospital cannot be re-issued. This would be to go beyond the jurisdiction of the District Court and impinge on the rights of the accused.
(c) A new order under s.4(6)(a)(i)(I) of the Act of 2006 cannot be made unless an application is made on behalf of the accused to reverse the finding of unfitness to be tried.
(d) The only available option for the District Court within its jurisdiction is to adjourn the matter unless and until the accused is deemed fit to be tried.
Ashcoin Ltd (in Creditors Voluntary Liquidation) v Moriarty Holdings Ltd [2013] IEHC 8
JUDGMENT of Mr. Justice Hogan delivered on the 16th January, 2013
1. Does the special feature of the general abuse of process jurisdiction known as the rule in Henderson v. Henderson (1843) 3 Hare 100 apply where it has proved necessary to reconstitute proceedings? That, in essence, is the issue which now arises for consideration, given that the receiver of the plaintiff company (“Ashcoin”) now accepts that the debenture instrument on which he originally moved the court was insufficient for this purpose. The issue arises in the following way.
2. In these proceedings the receiver of Ashcoin seeks to recover on its behalf what it contends is its share of the proceeds of a grant which Sustainable Energy Ireland agreed to make in April 2007 to the defendant (“Moriarty Holdings”) in respect of a housing development at Spicers Mill, Balbriggan, Co. Dublin. As Ashcoin had provided engineering solutions for these heat efficient dwellings, it is contended that Moriarty Holdings agreed in June, 2007 to share the proceeds of that grant with it on an equal basis. A grant of some €328,500 was paid by Sustainable Energy Ireland in June 2008, but the relevant moiety allegedly payable to Ashcoin remains in dispute and has not been paid.
3. When the matter originally came before me (Ashcoin Ltd. v. Moriarty Holdings Ltd. [2012] IEHC 365), the receiver sued pursuant to a debenture which had charged all debts of Ashcoin (other than book debts) in favour of Ulster Bank Commercial Services Ltd. as well as creating a first floating charge over the property and assets of the company. On 20th June, 2008, the debenture holder had appointed Mr. Kieran Wallace as receiver over the assets of the company.
4. In Ashcoin (No.1) Mr. Wallace now maintained these proceedings against Moriarty Holdings in that capacity as receiver. Moriarty Holdings disputed his entitlement to do so on the grounds that if any monies are in fact due to Ashcoin, they would constitute a book debt within the meaning of the December, 2007 debenture and that Mr. Wallace accordingly had no standing to maintain these proceedings, since book debts were expressly excluded from the scope of the debenture from which Mr. Wallace derived his authority. In my judgment in Ashcoin (No.1) I agreed that any such proceeds would so constitute a book debt, so that the action was not maintainable in its present form.
5. In arriving at that conclusion, I deliberately refrained from expressing any view in relation to any issues which might arise were the proceedings to be reconstituted. Whereas Mr. Wallace’s standing to act had originally derived from a debenture executed in December, 2007 in favour of Ulster Bank Commercial Services Ltd. (“UBSC”), in these reconstituted proceedings that renewed standing is said to derive from an invoice discounting agreement which Ashcoin had entered into with UBSC which has since been terminated. It is, however, not now in dispute but that UBSC is owed some €121,000 (including VAT) pursuant to that agreement. It is likewise agreed from the evidence that UBSC purchased the entirety of the debt allegedly due to the plaintiff from the defendant. For its part, UBSC has agreed that it will return the balance of any recoverable proceeds (after payment of appropriate costs and expenses and the processing of any preferential claims) to the liquidator of Ashcoin for the benefit of the liquidation of the company.
6. It is against this background that Moriarty Holdings objects to the reconstitution of the proceedings. Counsel for Moriarty Holdings, Mr. Walker, contends that the maintenance of these proceedings in their reconstituted form amounts to an abuse of process and that under the rule in Henderson v. Henderson, Ashcoin are debarred from electing to sue for the same debt under a different basis. It is this preliminary issue which accordingly now falls to be determined.
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.
8. Thus, for example, in Re Vantive Holdings [2009] IESC 69, [2010] 2 I.R. 118 the Supreme Court held that it would be an abuse of process for a company deliberately to suppress evidence relevant to an examinership petition and then attempt to resurrect that evidence when presenting a second such petition. It would likewise be prima facie abusive to endeavour to raise a new ground in a second set of proceedings when no explanation had been offered in respect of the failure to raise this ground, especially when this endeavour would be oppressive to witnesses who would then have been required to give evidence of intimate matters on yet a further occasion: see AA v. Medical Council [2003] IESC 70, [2003] 4 IR 302.
9. But there are several persuasive factors which tell against its application in the present case. First, it 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.
10. The objects of the rule were described by Fennelly J. in McFarlane v. Director of Public Prosecutions [2008] IESC 7, [2008] 4 IR 117:-
“The rule is aimed to prevent abuse of the courts’ process and to protect parties from being subjected to harassment by successive proceedings dealing with the same subject-matter. In essence, it discourages parties from keeping points over from one legal proceeding to another. If a point could have been raised in a first action (either by way of claim or defence), a party may not be permitted to raise it in a second.”
11. Fennelly J. then quoted with approval the following passage from the judgment of Lord Bingham in Johnson v. Gore Wood & Co. [2002] 2 AC 1, 31:
“It is, however, wrong to hold that because a matter could have been raised in the earlier proceedings it should have been, so as to render the raising of it in a later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focussing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.”
12. In SM v. Ireland (No.1) [2007] IESC 11, [2007] 3 IR 283 Kearns J. advocated a similar approach, saying that the rule in Henderson v. Henderson must not be “applied in a rigid or mechanical manner so as to deprive the court of any discretion to hold otherwise in an appropriate case.”
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.
14. Second, the entitlement of the plaintiff to reconstitute proceedings concern a procedural – rather than a substantive – matter. It is important here to note that there has been no adjudication by me of the underlying merits of Ashcoin’s claim. All that was determined in Ashcoin (No.1) was that the first set of proceedings were improperly constituted inasmuch as the proceedings had been brought by Mr. Wallace qua receiver pursuant to the terms of a debenture which expressly excluded book debts, yet the proceedings themselves sought recovery of a sum which I held to be a book debt.
15. Third, the motives of the plaintiff and the conduct of the proceedings by the plaintiff are all therefore relevant to the assessment of whether the re-constitution of the proceedings may be regarded as abusive. It seems perfectly clear from the affidavits that, as counsel for the plaintiff, Mr. O’Reilly SC submitted, all that happened was that the plaintiff took a legal view that the (alleged) debt which is the subject of the proceedings was not a book debt, a view which this Court held to be incorrect. There was no intention to overreach or to act oppressively or to circumvent unfairly an adverse judicial ruling. It is true that it has been held that the original set of proceedings were defective and required to be re-constituted. But the plaintiffs have been penalised by the award of costs at the conclusion of Ashcoin (No.1). Moreover, while the ensuing procedural complications have doubtless been deeply frustrating for Moriarty Holdings, I nonetheless consider that to bar Ashcoin from proceeding to have its claim adjudicated on its merits would in itself represent too dogmatic an attitude in respect of a discretionary jurisdiction whose ultimate aim is to safeguard the legitimate interests of a defendant rather than to penalise a plaintiff for having taken a legitimate – if ultimately erroneous – view of the scope of a legal instrument.
Conclusions
16. While acknowledging, therefore, that Ashcoin’s application potentially comes within the scope of the rule in Henderson v. Henderson, given that there was no intention on the part of the receiver to overreach and that the necessity to reconstitute the proceedings stems from the fact that it took a legitimate (if erroneous) view of the scope of a legal instrument, it would be oppressive and dogmatic in these circumstances to utilise the rule to bar the reconstitution of these proceedings. This would be especially so where there has as yet been no adjudication on the legal merits of the claim.
17. It is essentially for these reasons that I am of the view that the plaintiff’s application to reconstitute the proceedings in the manner I have already described is not barred by the application of the Henderson v. Henderson rule.
Lopes v Minister for Justice, Equality and Law Reform [2014] IESC 21
Judgment of Mr. Justice Clarke delivered on the 27th March, 2014.
1. Introduction
1.1. Just over a quarter of a century ago, a road traffic accident occurred. Surprisingly, legal issues arising out of that accident remain before the courts. The plaintiff/appellant (“Mr. Lopes”) was injured in the accident. He instructed solicitor and counsel to bring a claim for damages for negligence arising out of the accident and those injuries. Those proceedings were heard in the Circuit Court and resulted in an award of IR£12,000 (IR£10,000 for general damages and IR£2,000 for special damages). Mr. Lopes was not happy with his legal representation in that case and has pursued the remainder of the litigation, which I will briefly outline, on his own behalf as a litigant in person.
1.2. First, Mr. Lopes brought professional negligence proceedings against the solicitor who acted for him in his personal injury action and against one of his medical advisors, a consultant neurologist. In 1995, Morris J., in the High Court, dismissed both claims. While it will be necessary to say a little more about the basis of the claim brought by Mr. Lopes in professional negligence in due course, in simple terms, his allegation against his solicitor was that, as a result of instructions given by Mr. Lopes to the solicitor concerned, the general evidence available and the prospect of obtaining further evidence, an application should have been made to remit the case to the High Court and an expanded claim for damages, including, in particular, damages for loss of earnings, should have been pursued.
1.3. In 1996, this Court (O’Flaherty, Barrington and Murphy JJ.) dismissed an appeal brought by Mr. Lopes against that aspect of the order of Morris J. which dismissed his negligence claim against his consultant neurologist. However, this Court (Murphy, Lynch and Barron JJ.) allowed, in 1997, an appeal by Mr. Lopes against the dismissal of his claim against his solicitor and, in terms which remain relevant to what now has to be decided, remitted the question of damages back to the High Court for assessment.
1.4. That assessment hearing was tried before Geoghegan J. in June and July, 1998. The Court’s assessment of the full value of Mr. Lopes’ original injury claim (excluding special damages) was IR£52,125.47 (the equivalent of €66,185.69). That sum included the IR£10,000 initially awarded in the Circuit Court for general damages but was in addition the sum of IR£2,000 awarded in the Circuit Court for special damages. The High Court award was broken down as to IR£5,000 for loss of earnings, IR£7,125.47 for other special damage together with IR£20,000 for pain and suffering to date and IR£20,000 for pain and suffering in the future together with loss of earning capacity.
1.5. Mr. Lopes again appealed to this Court, this time against the award of Geoghegan J. The appeal was initially heard before O’Flaherty, Lynch and Barrington JJ. However, for reasons which it will be necessary to address in due course, a second hearing was required at which this Court (Hamilton C.J., Lynch and Barrington JJ.) allowed his appeal and substantially increased his damages to a sum of IR£155,000. This was broken down as to IR£80,000 for past, continuing and future pain and suffering, IR£25,000 for past special damages, principally if not exclusively loss of earnings, and IR£50,000 for future special damages, being loss of earning capacity. Thus, the total sums recovered by Mr. Lopes were IR£157,000 or just short of €200,000.
1.6. It is necessary to comment that Mr. Lopes has, therefore, by diligence and the acquisition of no small knowledge of the law, managed on two occasions, against the opposition of experienced counsel, to persuade this Court that decisions of the High Court were wrong.
1.7. However, these proceedings involve a claim, commenced on the 26th March, 2007, brought by Mr. Lopes for damages under E.U. law, under the European Convention of Human Rights (“ECHR”) and under the Constitution arising out of what he alleges was discrimination against him by the courts in the various cases which he has brought. Certain more detailed claims are also made. The particular focus of his allegation is that he was not, he argues, properly or adequately compensated, even after the substantial increase in the award made to him by this Court on appeal, for future loss of earnings. He says that this result was due to bias and discrimination against him and/or corruption and that the defendant/respondent (“the Minister”) is responsible in law for such losses.
1.8. The basis of Mr. Lopes’ claim that he was not properly or adequately compensated for future loss of earnings in the proceedings against his solicitor as pleaded by him in the general endorsement of claim on the plenary summons issued in these proceedings on 26th March, 2007, and in the statement of claim subsequently delivered by him, following reference to the High Court proceedings determined in 1995 and the appeal in the Supreme Court determined in 1997, is set out as follows:
“The issue here was whether the defendant was negligent for not having claimed claimant’s loss of earnings, in personal injuries Claim in which he represented him following a Road Traffic Accident which left the claimant permanently disabled to resume his career.
The defendant contested that he did not claim claimant’s loss of earnings because at the time of the accident he had been sometime without exercising that job (for two or three years). The claimant argued that it does not matter whether or not he was working at the time; the fact is that he is fully qualified as a navigator on ocean going vessels therefore, if someone has permanently disabled him from resuming his career he is entitled to compensation. When the appeal was heard in the Supreme Court in 1997, the Court found the defendant 100% negligent.
The Supreme Court judges decided that regardless whether or not the claimant had indicated his intention to resume his career, the fact remains that he is fully qualified to do that job, therefore, it is obvious that if he had been in good health he would have resumed his career as a navigator.
The Supreme Court then, remitted the case to the High Court to be dealt on the issues of damages only. The High Court judge overruled the Supreme Court decision on the grounds that he believed that the claimant wouldn’t have resumed his career anyway, and he refused to allow him any compensation for his loss of earnings.
Then, the claimant went back to the Supreme Court and the High Court trial judge decision was held, on the following grounds: that the trial judge views that the claimant wouldn’t have resumed his career would stand.”
1.9 The primary relief which Mr. Lopes sought on the plenary summons was formulated as follows:
“The claim in this case is the difference between what the claimant would have received if he had not been discriminated on the grounds of his nationality and the amount he was awarded on grounds of discrimination and in particular his loss of earnings as a navigator on ocean going vessels.”
In the statement of claim, Mr. Lopes included an additional claim framed as follows:
“In addition to the claimant’s additional claim, the claimant seeks compensation of €1,500,000 Euros for inconvenience, trauma and hardship sustained by him and his family during this period of uncertainty for him and his family future, due to injustice and discrimination practiced (sic) against him by the judges who dealt with his cases, on the grounds given above.”
Both the plenary summons and the statement of claim also included a claim for “payment for the work he did regarding the case”.
1.10 Thus, the claim which Mr. Lopes brings in these proceedings in effect asserts that, had his original personal injury claim been properly conducted he would have been awarded the full actuarial value of those earnings which he asserted he would have obtained by returning to sea. His claim against his former solicitor suggested that the negligence of that solicitor led to him not obtaining proper compensation for those lost earnings so that the measure of the damages to which he claims to have been entitled as against his solicitor was said to include those same lost earnings. Thus, he claimed the full value of loss of earnings attributable to not being able to return to sea as against his solicitor. In these proceedings, he asserts that a failure to award him that full value in those proceedings was due to discrimination.
1.11 As appears from the relief claimed by him, as already cited, in substance what he sought was the difference between what he says he should have been awarded were he not discriminated against and what he was actually awarded. In that context, it is necessary to note what Mr. Lopes was actually awarded in that regard. In that context Lynch J. stated (at p. 20 of his judgment) the following:-
“. . . I think it unlikely that the plaintiff would ever be fit to return to work as a seaman. While the finding of the learned trial Judge that the plaintiff would not have returned to sea if he had not had the road traffic accident must stand, the amount to be awarded for the loss of the opportunity of returning to sea in the event of unforeseen circumstances arising must nevertheless be substantial.”
Later in the judgment, Lynch J. stated that the assessment of IR£50,000 for future special damages included “loss of opportunity to work and to return to the sea”.
1.12 Finally, it should be noted, although this is a matter which will need to be addressed in more detail in due course, that the claim which was put forward by Mr. Lopes against his solicitor sought the full actuarial value of what he asserted would have been the earnings up to retirement date which he would have achieved had he returned to sea. Actuarial evidence was called in that regard.
1.13 Against the background of that claim, the Minister brought a motion before the High Court in which he sought either an order under Order 19, Rule 28 of the Rules of the Superior Courts dismissing or striking out Mr. Lopes’ claim on the grounds that it discloses no cause of action, or, alternatively, an order under the inherent jurisdiction of the court dismissing Mr. Lopes’ claim on the basis that it is an abuse of process and has no reasonable prospect of success or is bound to fail.
1.14 For reasons which it will be necessary to address, Hanna J., in a judgment delivered on the 11th June, 2008 (Lopes v. Minister for Justice, Equality and Law Reform [2008] 4 IR 743), came to the view that the Minister’s application was well founded and dismissed the proceedings. Mr. Lopes has appealed to this Court against that finding. As in all previous relevant proceedings, save the initial Circuit Court personal injury action, Mr. Lopes represented himself on this appeal. He filed detailed written submissions and made extensive oral argument. Much material was placed before the Court which it will be necessary to consider. However, before going on to deal with the specifics of that argument, it is appropriate to start by referring to the jurisdiction of the Court to dismiss in cases such as this. I, therefore, turn to that question.
2. The Jurisdiction to Dismiss
2.1 Applications to dismiss at an early stage of proceedings are, when brought, frequently based alternatively on the provisions of O.19, r.28 of the Rules of the Superior Courts (“RSC”) and the inherent jurisdiction of the Court. It is important to emphasise that the inherent jurisdiction of the Court should not be used as a substitute for, or means of getting round, legitimate provisions of procedural law. That constitutionally established courts have an inherent jurisdiction cannot be disputed. That the way in which the ordinary jurisdiction of those courts is to be exercised is by means of established procedural law including the rules of the relevant court is also clear. The purpose of any asserted inherent jurisdiction must, therefore, necessarily, involve a situation where the Court enjoys that inherent jurisdiction to supplement procedural law in cases not covered, or adequately covered, by procedural law itself. An inherent jurisdiction should not be invoked where there is a satisfactory and existing regime available for dealing with the issue under procedural law for to do so would set procedural law at nought.
2.2 Against that background, it is important to distinguish between the jurisdiction which arises under O.19, r. 28 of the RSC and the inherent jurisdiction often invoked. The inherent jurisdiction can be traced back to the decision of Costello J. in Barry v. Buckley [1981] I.R. 306. However, that jurisdiction needs to be carefully distinguished from the jurisdiction which arises under the RSC, precisely because it would be inappropriate to invoke the inherent jurisdiction of the Court in circumstances governed by the rules. In that context, I said, at para. 3.12. of my judgment in the High Court in Salthill Properties Limited & anor v. Royal Bank of Scotland plc & ors [2009] IEHC 207, the following:
“3.12 It is true that, in an application to dismiss proceedings as disclosing no cause of action under the provisions of Order 19, the court must accept the facts as asserted in the plaintiff’s claim, for if the facts so asserted are such that they would, if true, give rise to a cause of action then the proceedings do disclose a potentially valid claim. However, I would not go so far as to agree with counsel for Salthill and Mr. Cunningham, to the effect that the court cannot engage in some analysis of the facts in an application to dismiss on foot of the inherent jurisdiction of the court. A simple example will suffice. A plaintiff may assert that it entered into a contract with the defendant which contained certain express terms. On examining the document the terms may not be found, or may not be found in the form pleaded. On an application to dismiss as being bound to fail, there is nothing to prevent the defendant producing the contractual documents governing the relations between the parties and attempting to persuade the court that the plaintiff has no chance of establishing that the document concerned could have the meaning contended for because of the absence of the relevant clauses. 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.”
2.3 The distinction between the two types of application is, therefore, clear. An application under the RSC is designed to deal with a case where, as pleaded, and assuming that the facts, however unlikely that they might appear, are as asserted, the case nonetheless is vexatious. The reason why, as Costello J. pointed out at p. 308 of his judgment in Barry v Buckley, an inherent jurisdiction exists side by side with that which arises under the RSC is to prevent an abuse of process which would arise if proceedings are brought which are bound to fail even though facts are asserted which, if true, might give rise to a cause of action. If, even on the basis of the facts as pleaded, the case is bound to fail, then it must be vexatious and should be dismissed under the RSC. If, however, it can be established that there is no credible basis for suggesting that the facts are as asserted and that, thus, the proceedings are bound to fail on the merits, then the inherent jurisdiction of the Court to prevent abuse can be invoked.
2.4 It is important to keep that distinction in mind. It is also important to note the many cases in which it has been made clear that the inherent jurisdiction of the court should be sparingly exercised. This was initially recognised by Costello J. in Barry v Buckley and by the Supreme Court in Sun Fat Chan v Osseous Ltd [1992] 1 I.R. 425. In the latter case, McCarthy J. stated that “generally the High Court should be slow to entertain an application of this kind”. This point has been reiterated more recently in Kenny v Trinity College Dublin [2008] IESC 18 at para. 35 and in Ewing v Ireland and the Attorney General [2013] IESC 44 at para. 27.
2.5 It is also important to remember that a plaintiff does not necessarily have to prove by evidence all of the facts asserted in resisting an application to dismiss as being bound to fail. It must be recalled that a plaintiff, like any other party, has available the range of procedures provided for in the RSC to assist in establishing the facts at trial. Documents can be discovered both from opposing parties and, indeed, third parties. Interrogatories can be delivered. Witnesses can be subpoenaed and can, if appropriate, be required to bring their documents with them. Other devices may be available in particular types of cases. 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.
2.6 At the same time, it is clear that certain types of cases are more amenable to an assessment of the facts at an early stage than others. Where the case is wholly, or significantly, dependent on documents, then it may be much easier for a court to reach an assessment as to whether the proceedings are bound to fail within the confines of a motion to dismiss. In that context, it is important to keep in mind the distinction, which I sought to analyse in Salthill Properties, between cases which are dependent in themselves on documents and cases where documents may form an important part of the evidence but where there is likely to be significant and potentially influential other evidence as well.
2.7 The allegation made by Mr. Lopes in these proceedings is, of course, one of fact. He asserts that the outcome of his litigation was unjustly determined to his disadvantage by reason of bias, discrimination or corruption on the part of judges. There are a range of legal issues which arise in that context, not least the question of whether judicial immunity from action would afford a defence and whether, even if it does not, the Minister is vicariously liable for the actions of judges. Those questions raise important legal issues but, before coming to those issues, it is necessary that there be a credible case on the facts as to bias, discrimination or corruption.
2.8 It seems to me, therefore, that this case is more appropriately considered under the inherent jurisdiction of the Court rather then under the RSC. There is an allegation of bias, discrimination or corruption. If it is made out, then those difficult legal questions which I have just mentioned will arise. But the necessary facts are pleaded and, therefore, for the purposes of an application to dismiss under the RSC as vexatious, it would have to be assumed that those facts could be established.
2.9 On the other hand, so far as the inherent jurisdiction of the Court to protect against abuse of process is concerned, the Court can at least consider whether there is a credible basis for suggesting that Mr. Lopes might be able to establish the facts which he asserts. If there is no such basis, then these proceedings are bound to fail and their maintenance must, therefore, be an abuse of process, such that the proceedings ought now be dismissed. It is true that Hanna J., in dismissing the proceedings, had regard to some of the legal issues which might potentially arise in a claim such as this. However, for reasons which I hope to address, I am satisfied that it would not be appropriate, in all the circumstances of this case, to dismiss the claim sought to be brought by Mr. Lopes by virtue of forming a view that his claim was bound to fail on the law. Rather, it seems to me that the judgment of Hanna J. should only be upheld if it is appropriate to agree with the conclusions which he reached to the effect that there was no credible basis, on the facts, on which Mr. Lopes could hope to establish bias, discrimination or corruption. It is to that question that this judgment is directed. As the principal complaint which Mr. Lopes makes centres on the way in which his claim for damages for loss of earnings was assessed, I would, before going on the consider the credibility of his accusation of bias, feel it appropriate to make some general observations about the way in which claims for damages for loss of earnings are dealt with in the Irish legal system.
3. Damages for Loss of Earnings
3.1 Claims for loss of earnings are commonplace in personal injury litigation. That is hardly surprising. Persons who suffer even relatively modest injuries are often prevented from working for a period of time and may, as a result, suffer losses. At one end of the scale, a claim may simply be for losses incurred over a short period when the relevant claimant was out of work and not paid. In such cases, the claim is likely to be supported by medical evidence to suggest that it was reasonable for the claimant to be absent from work, as a result of injury suffered in the accident the subject matter of the proceedings, for the period in question, together with evidence (for example from the claimant’s employer) as to the amount of salary lost. Indeed, in the experience of this Court, in routine cases, such amounts are often agreed (without admission of liability) between the parties without the need to produce any evidence. If the claimant succeeds on liability, the agreed amount is then included in the damages awarded.
3.2 At the other end of the spectrum, there are, however, cases where it is asserted that a claimant, because of their injuries, will suffer future long-term financial loss. Such a claimant may contend for a complete incapacity to work or alternatively may maintain that they have a permanently reduced working capacity. The latter type of claim may be based on an alleged inability to work full time or alternatively on the grounds that, because of their injuries, they will in the future only be fit to do a less demanding and less well paid job. It is important, in that context, to set out the evidence which as a matter of common practice, is tendered in such cases in order to justify any such a claim.
3.3 In all cases where any significant future loss of earnings claim is made, it is necessary for the claimant to produce medical evidence to support the claim they make in respect of their inability to work. However, while doctors are well qualified to detail their views as to the extent of a claimant’s injuries and to advise as to whether these are likely to improve in the future, they are not best qualified to give evidence as to whether those injuries should necessarily preclude their patient from doing the job they had when they were injured nor advise on their potential ability to carry out other types of work. There will be exceptions to that proposition. The hand surgeon will be able to conclusively state that his patient, a concert pianist, who has lost his index finger, will not be able to work in that capacity for the rest of his life. But he will not be able to advise the court as to what if any other type of employment he may be able to do in the future having regard to that injury.
3.4 What type of future employment a claimant may be able to undertake in the future, having regard to their injuries, is extremely important because all claimants must seek to mitigate their losses. They are under an obligation to do such work as might reasonably be expected of them notwithstanding their injuries and thus reduce the amount of their loss of earnings claim. Once a claimant has a capacity to work at any level into the future, the maximum they will be able to recover is the difference between what they would have earned but for their injuries and what they will be able to earn having regard to their injuries.
3.5 In these circumstances, it is the invariable practice in this jurisdiction for claimants who make any substantial claim for future loss of earnings not only to call medical evidence to endorse the extent of their injuries but also to call an expert in vocational/ occupational assessment. This expert witness will advise the court as to progression that the claimant was likely to enjoy in their career had they not been injured and as to how this progression would have impacted on their earnings. They will advise as to the age at which the claimant might have expected to retire, the type of pension they would have enjoyed and as to the likely continuity of that employment. Such a witness will also give expert evidence as to the type of employment, if any, which the claimant ought to be able to carry out in the future having regard to their injuries, and they will advise the court as to the rates of pay that pertain to that particular type of job. They will also advise on matters such as the availability of work of a type that would suit a particular claimant having regard to their injuries, and the volatility of any particular type of employment, including that which the claimant was working at prior to their injury.
3.6 The focus of the vocational evidence is to try to work out the likely annual net earnings that a claimant would have enjoyed for the rest of their working life were it not for their injury and to establish how much money, if any, they are likely to earn in the future having regard to their injuries. The claimant, if their evidence withstands attack, will expect to recover something close to the difference in these sums, subject to a further deduction which will be made to reflect the risk that, for a whole range of reasons, no one can be certain that they will be able to work until normal retirement age. They may for example get something such as cancer or may have a sick child who will need their full time care and they may have to leave the workforce prematurely.
3.7 The aforementioned evidence is almost always extremely contentious with competing expert views, from both medical and occupational experts, on the precise extent to which it can properly be said that a plaintiff is unable to work and the extent to which it might be reasonable to expect the plaintiff concerned could obtain other, although sometimes less remunerative, work.
3.8 The reason for such disputes is obvious. To take a case at one end of the spectrum, one might envisage a claimant who was in permanent and secure employment prior to the accident giving rise to a claim. In order to be able to maintain a claim for the full actuarial value of the salary which that claimant was enjoying prior to the accident in question, a range of issues are likely to arise. A claim for the full actuarial value of lost salary necessitates actuarial evidence concerning life expectancy and mathematical calculations based on appropriate assumptions. In many cases, it will be necessary to present evidence of fact to substantiate at least some of those assumptions. In typical cases, these may include any or all of the following:-
a. Was the loss of the claimant’s existing job truly attributable to the accident;
b. What was the likelihood of the plaintiff being able to remain in such permanent and secure employment up to normal retirement age? In that context, the courts have consistently recognised that, depending on the security of the employment concerned and any other relevant factors, it may be appropriate to make a reduction from the full actuarial value to reflect the risk that the person concerned might not, even had there been no accident, have remained in full employment for the duration of their normal working career;
c. Whether there was any employment which, having regard to any medical condition attributable to the accident, it might be reasonable to expect the claimant to obtain, and whether it is appropriate to make a further deduction (often significant) to reflect the fact that the plaintiff has not lost the entire value of their net earnings but rather only a portion of same? In that context, not only other types of employment not impaired by what ever injuries may have been suffered but also less strenuous (including part-time) employment needs to be considered. It is incumbent on a claimant, who wishes to assert the full value of an actuarially calculated loss of income, to satisfy the Court that they have truly lost that full value.
3.9 All of those considerations apply even in the straightforward case where a person was in permanent and secure employment at the time of the accident in question. Where a person was not in such employment, then the question of calculation of damages for loss of earnings becomes even more problematic. In such circumstances, it is incumbent on the plaintiff to put forward evidence to allow the Court to estimate the likelihood of them obtaining employment of any particular type had it not been for the accident.
3.10 In addition, other factors can loom large on the facts of any individual case. It is, however, important to emphasise that issues of the type just identified are commonplace in significant personal injury litigation in this jurisdiction where the claim put forward suggests that the plaintiff is entitled to the full actuarial value of lost income.
3.11 One further important aspect of the way in which such cases are typically assessed needs emphasis at this stage. There frequently is an issue as to whether it is appropriate to permit actuarial evidence at all. In order for actuarial evidence to be admissible, it is necessary that the plaintiff lay the ground for same. In general terms, the Court will only engage in an actuarial assessment where there is a sufficient level of certainty, both concerning the income lost and any income which might be expected to replace it in the light of the plaintiff’s obligation to mitigate damage, to justify an actual and detailed calculation. In other cases, where the requisite level of certainty cannot be established, the Court approaches the question of future loss of earnings on a different basis by attempting to award a round sum in general damages to reflect the loss of opportunity to earn which the relevant plaintiff has suffered. The reason for the difference in approach is simple and straightforward. In some cases, the calculation is capable of being done with a sufficient level of precision to make it meaningful to approach it as a relatively precise calculation, capable of actuarial assessment, even though it may be necessary to make appropriate reductions for matters such as the risk that someone might not have, even in the absence of the relevant accident, worked for the entirety of their life up to normal retirement age or the like. In other cases, such a calculation is simply fraught with so many imponderables and variables that it is unrealistic, and ultimately, therefore, unjustified, to attempt to do a rigorous calculation, for to do so would be to imply that the losses were capable of being determined with the requisite degree of precision.
3.12 Finally, it needs to be noted that, in some cases, the actuarial evidence is not admitted at all, even though sought to be led on behalf of the plaintiff, because the Court is not satisfied that, even taking it at its height, the plaintiff’s other evidence could be sufficient to justify an actuarial calculation. In other cases, the court admits the actuarial evidence but, when it has had the opportunity to review the totality of the evidence, finds that it should not carry out an actuarial calculation for the range of imponderables are such as make such a course of action unjustified.
3.13 Against that background, it is necessary to consider the evidence, or potential evidence, on which Mr. Lopes seeks to rely in order to establish that his claim for bias is not bound to fail. I will start by making some general observations on the way in which Mr. Lopes suggests he can establish his claim.
4. Some General Observations
4.1 Mr. Lopes put forward, at least before this Court, a significant volume of documentation together with written commentary. The documentation referred to includes extracts from the transcripts of various hearings and, in particular, the assessment of damages trial conducted by Geoghegan J. In addition, documents relevant both to the conduct of the various hearings and the assessment of damages itself were made available. Mr. Lopes filed a lengthy document setting out the basis on which it was asserted that Hanna J. was incorrect in dismissing his claim. For reasons which I hope will become obvious, I propose to pass over some parts of the ruling of Hanna J. and the submissions made in respect of same.
4.2 First, insofar as there was a question that the claim which Mr. Lopes sought to bring at this stage might be statute barred, counsel for the Minister indicated that the Minister made no such assertion and, therefore, I do not consider it appropriate to determine, on this application, whether the claim is statute barred. This appeal must progress on the assumption that Mr. Lopes’ claim is not barred by any limitation period. Second, Hanna J. placed reliance on the immunity of judges from suit. This question, coupled with the issue as to whether the Minister can be vicariously liable for the acts of judges, raises important legal questions both under the Constitution, Irish law generally, and, perhaps, under the ECHR (although the question of whether any rights which Mr. Lopes may enjoy under the ECHR can be pursued in this case in Irish domestic law, by virtue of the fact that any events of which he complains predates the European Convention on Human Rights Act 2003, is highly problematic). However, precisely because of the complex legal issues raised under this heading, I do not feel that it would be an appropriate exercise of the Court’s jurisdiction (to dismiss on the grounds of being bound to fail), to dismiss these proceedings on those legal grounds. If there were a credible or stateable basis for suggesting that bias, discrimination or corruption could be made out, then it would, in my view, be appropriate to allow the case to go to a full trial at which there could be a detailed consideration of the facts and a determination of those complex legal issues in the light of whatever facts might be established.
4.3 For those reasons I propose only to consider whether Hanna J. was correct in deciding that there was no credible basis for suggesting that Mr. Lopes could be able, at a full hearing, to establish the bias, discrimination or corruption which he alleges.
4.4 In that context the question of the extent to which this may be said to be a documents case is of some relevance for if the case were to turn significantly on the credibility of oral evidence to be tendered, then that would be a material factor which would weigh against the Court attempting to reach any view on the likelihood of the case being capable of being established on the facts. As noted earlier, a distinction is noted in Salthill Properties between the type of documents case where the legal rights and obligations of the parties depend on the documents themselves (such as contract cases where the contract is in writing) and the type of documents case where the documents do not define legal rights and obligations but may be important in determining the facts. This case is, in my view, something of a hybrid between those two positions but is towards the end of the spectrum where it can properly be said that the case will actually turn on the documents rather than on any oral evidence. This is so because the great majority of the complaints made by Mr. Lopes and the evidence or materials on which he relies to support his allegations involve references to transcripts, the record of proceedings, and documents referred to in those proceedings. This is not, or at least not to any material extent, a case where a determination of the facts depends on hearing oral evidence and assessing the credibility of witnesses. Rather it is a case where the factual allegation is dependent on what actually occurred during various court hearings. What occurred is to be found in the court record and in the transcripts. Either that record and those transcripts are sufficient to provide Mr. Lopes with a case which is not bound to fail on the question of bias or they do not. That question can be assessed by considering the documentation concerned in the light of the submissions and arguments made both by Mr. Lopes and the Minister.
4.5 For completeness, it is also important to observe that, to the extent that there might be any evidence (as opposed to argument) put forward by Mr. Lopes himself, then any assessment of whether his claim is bound to fail must, of course, take that evidence at its high water mark. In the light of those observations, it is necessary to refer to the specific aspects of the hearing before Geoghegan J. and the appeal to this Court which Mr. Lopes asserts provides evidence of bias, discrimination or corruption. It is also important to emphasise, in that context, that this Court is not now concerned with whether those allegations are made out but rather is only concerned with whether any or all of the arguments and materials put forward are such as lead to a credible basis for the possibility that Mr. Lopes might succeed in establishing those allegations so as to render it impossible to say that his claim is bound to fail.
5. The Basis for the Allegations
5.1 It is important to start by recording the materials which were placed before the Court on this appeal by Mr. Lopes in addition to the pleadings and the motion papers. These materials included two Books of Appeal, “Supreme Court/Book of Appeal” and “Supreme Court/Book of Appeal No.2” (containing inter alia the pleadings, transcript extracts from the High Court hearing before Geoghegan J., correspondence between Mr. Lopes and various Government departments and the office of the President, correspondence from Mr. Lopes to Geoghegan J., relevant certificates of disability; references to various provisions of the European Treaties and the Charter of Fundamental Rights, and extracts from European case-law); the High Court Book of Pleadings; two booklets of case law (to supplement the joint book of authorities); the full transcript of the High Court hearing before Hanna J.; and an 81-page “Written Submission” with an accompanying “Book of Evidence” of 78 pages to substantiate it (which again included transcript extracts and authorities). Although sometimes difficult to pinpoint, Mr. Lopes’ points of legal argument are contained in the pleadings and his written submissions, and are supported by the case-law he relies upon in the various books of authorities and Books of Appeal. The relevant evidence in support of his legal arguments is primarily to be found in his Book of Evidence and the transcript extracts contained in the Books of Appeal.
5.2 While a significant number of separate points were put forward by Mr. Lopes, it is important to consider, at least initially, each of them on an individual basis. It is, of course, the case that a range of individual occurrences, no one of which taken by itself might be sufficient to warrant a finding of bias, discrimination or corruption, may nonetheless cumulatively allow a court to reach a conclusion that such allegations have been made out. On the other hand, it also needs to be acknowledged that, as Denham J. pointed out in Bula Ltd v Tara Mines Ltd (No.6) [2000] 4 I.R. 412 at p.462, “seventeen noughts are still nothing”. Thus the fact that there may be a large number of allegations, or that attention is drawn to a large number of separate items which are said to give rise to an inference of wrongdoing, cannot, as a matter of logic, in itself, demonstrate that a claim is not bound to fail. If none of the instances put forward are capable of giving rise to an appropriate inference, then the fact that there may be many of them is neither here nor there. The proper approach is, therefore, to look at each of the materials which, it is suggested, might lead to a conclusion of bias, discrimination or corruption. Each needs to be assessed as to whether any weight can be attached to same. To the extent that some weight may be attached to all or some of them, then, but only then, should the Court assess the cumulative effect of such matters keeping in mind, of course, that, on this application, the threshold which Mr. Lopes would require to pass is a very low one, being simply that his allegation is not bound to fail.
5.3 As noted earlier, the materials placed before the Court by Mr. Lopes are somewhat disparate. However, I have attempted to distil, from those materials, and from the oral submissions made before the Court by Mr. Lopes, the points which he urges provide, or at least potentially provide, a basis for suggesting that his factual allegations are not bound to fail.
5.4 However, I will first turn to what was, in the oral submissions made by Mr. Lopes, the single most significant point relied on and one which influenced some of the other contentions which he made. That allegation is that Geoghegan J. ignored the previous judgment of the Supreme Court which remitted the matter back for assessment of damages. It is said that such a course of action is so inappropriate on the part of a High Court judge that it bears the inference that the judge must have been biased or corrupt to adopt such a course of action. However, the starting point has to be to consider whether, on the facts, there is any credible basis for suggesting that Geoghegan J. ignored or went against the earlier ruling of this Court.
6. Did Geoghegan J. “overrule” the previous judgment of the Supreme Court?
6.1 The starting point has to be to recall the sequence of events. Mr. Lopes had lost his claim on liability in his negligence claim against his solicitor in the High Court. He succeeded on appeal to this Court. This Court, on the occasion in question, consisted of Murphy, Lynch and Barron JJ. Each delivered a judgment. Not surprisingly much of each of the judgments was concerned with the question of whether the High Court was wrong in finding that Mr. Lopes’ former solicitor was not guilty of negligence. Barron J., at p. 20 of his judgment, did note that a central problem was “the failure to claim loss of earnings as special damage”. It is also clear from the judgment of Barron J. that it was accepted that Mr. Lopes had given instructions to his solicitor to have the case transferred from the Circuit Court to the High Court. Barron J. noted that the solicitor concerned should either have carried out those instructions by gathering additional medical evidence and evidence to support a claim for loss of earnings or else withdrawn from the case. Barron J. also noted that the reality of the loss of earnings was never properly explored.
6.2 Mr. Lopes places special reliance on the way in which Barron J. dealt with the question of loss of earnings. It is appropriate to quote the full relevant passage which commences at p. 17 of the judgment:-
“There was not originally nor was there ever any particulars of special damage given as to loss of earnings. Why this is so has never emerged in the evidence that was given at the trial. It was clear to the defendant and to the plaintiff’s former solicitor that he had been unable to keep his newsagent shop open and that he had lost income as a result. I am aware that it is said that no claim could be made because there were no records. Again the evidence is that the plaintiff offered records and the defendant said that he did not require them for the present. Even if no records had been available this of itself did not mean that the Court or such court that would hear the matter could not do its best to arrive at a fair result. Even if the plaintiff had never expressed, prior to the accident, any intention of returning to sea and the view was taken that the business would have failed any way the fact would still have remained that had he been in full health and his business had failed for economic reasons he would have been in a position to return to sea. Accordingly, as a result of the failure of his business he was either entitled to the loss of profits which he was earning from his business or the loss of profits which he would have obtained had he been physically fit to return to sea. There was also evidence to the effect that he had bought what is commonly known as a chipper. This however was being run by somebody else so that he did not have all the profit of that enterprise as a substitute for the profits of his shop. Whatever may have been the realities of the situation it is strange that no effort was ever made to set out the loss of earnings as a particular of special damage.”
6.3 However, it is also important to refer to the final conclusions of Barron J., which start on p. 24 of his judgment, in which he indicates that he “would allow the appeal and remit the matter to the High Court to assess damages upon the basis of the evidence to be adduced”. In that context Barron J. indicated the Mr. Lopes should have liberty to amend the details of his claim.
6.4 While Mr. Lopes places particular reliance on the judgment of Barron J., it is also important to note that both of the other judges gave separate judgments.
6.5 Lynch J., in setting out his reasons for finding that Mr. Lopes’ former solicitor was negligent, concluded that, rather than allowing the original trial of Mr. Lopes’ claim for damages to go ahead in the Circuit Court, an adjournment should have been sought which would, in the words of Lynch J., “have enabled up to date medical reports to be obtained; the issue of negligence to be clarified; and the question of loss of earnings to be properly considered and pleaded” (see p. 9). In conclusion, Lynch J. indicated that he would allow the appeal and “send the matter back to the High Court for trial on the issue of damages only” with permission to Mr. Lopes to amend his statement of claim.
6.6 There is absolutely nothing in the judgment of Lynch J. to suggest that he made any finding to the effect that Mr. Lopes was necessarily entitled to recover damages attributable to loss of earnings in the context of his claim in negligence against his solicitor. Rather what Lynch J. found was that the solicitor in question was negligent in not exploring properly the question of the extent to which loss of earnings might be capable of being recovered. It obviously follows that, in Lynch J.’s view, any claim for loss of earnings which might have been capable of being pursued was lost due to the negligence of the relevant solicitor and could, if it be established, be recovered in damages against that solicitor. However, he made no finding that such losses necessarily did arise and clearly referred back, to the High Court, the question of whether such damages were, in fact, lost.
6.7 Murphy J. was in a minority in holding that Mr. Lopes’ appeal should be dismissed. He placed particular reliance on the evidence which had been given at the trial before Morris J. from the experienced counsel who had acted on Mr. Lopes’ behalf in his personal injury action. Because of the views which Murphy J. took on the question of negligence, he did not express any direct view on the question of an entitlement to damages for future loss of earnings. However, given that Murphy J. was of the view that there was no negligence in the way in which the original claim for damages as a whole was put forward, it must necessarily follow that Murphy J. did not consider that Mr. Lopes was necessarily entitled to damages for future loss of earnings even if negligence were established.
6.8 That review of the judgments of this Court makes clear that there was no finding to the effect that Mr. Lopes was entitled to recover from his solicitor damages based on a loss of earnings claim attributable to such earnings as he might have obtained had he returned to sea. There is no mention of any such finding in either the judgments of Lynch J. or Murphy J. While Barron J. does, in the passage already quoted, make mention of the fact that Mr. Lopes would be entitled to loss of profits from business or loss of profits which he would have obtained had been physically fit to return to sea, those comments are clearly made in the context of dismissing arguments put forward on behalf of the defendant solicitor to the effect that there was no point in pursuing such claims because of the fact that there were no records of the business and that Mr. Lopes had not expressed, prior to the accident, any intention of returning to sea. In substance, I do not read the comments of Barron J. as going further than making clear that, at the level of principle, neither the absence of such records or prior comments concerning return to sea would have been fatal to any claim to loss of earnings which Mr. Lopes might want to pursue.
6.9 On that basis, and as part of the analysis as to why his former solicitor was found to be negligent, it was held that the relevant solicitor ought to have investigated the extent to which such a claim for future loss of earnings could have been pursued. It is reading far too much into a single sentence from the judgment of Barron J., taken out of context, to suggest that it represents a formal finding of even that judge to the effect that Mr. Lopes was necessarily entitled to recover loss of earnings on the basis of a return to sea. Indeed, Barron J. himself went no further than commenting that Mr. Lopes might be entitled to either those losses or losses arising from the collapse of his business. If there could be any doubt about this matter, it is, in my view, resolved by the final conclusions reached by Barron J. which must be taken to form the operative part of his judgment. The order suggested by Barron J. was that the matter be referred back to the High Court to be decided on the evidence. There is nothing in that section of the judgment which suggests that Mr. Lopes was other than obliged to put before the High Court any evidence which he might have concerning his losses, that the High Court was to come to its conclusion on that evidence, and that there was no predetermination as to the way in which the High Court should approach that evidence.
6.10 In addition, even if it were possible to read into the judgment of Barron J. an indication that, in his view, there should be a binding decision of this Court to the effect that Mr. Lopes must be entitled to recover for loss of earnings (which it is not), it is absolutely clear that Barron J. would, in that eventuality, have been in a minority on the Court and his judgment could not, in those circumstances, even if it were to be construed in that way, amount to a judgment of this Court.
6.11 In that context, Mr. Lopes suggested that it would, even in that eventuality, be wrong for Geoghegan J. to have come to a different view than that of Barron J. by virtue of the fact that Geoghegan J. was, at that time, a judge of the High Court, while Barron J. was a judge of the Supreme Court. That is, unfortunately, a complete misunderstanding by Mr. Lopes of the legal position. It is true that lower courts, in our system and in many others, are bound by the decisions of higher courts. It is, however, the actual decision of the higher court itself (rather than the views of individual judges of those higher courts – where the court concerned consists of more than one member) to which that principle applies. A judge of a lower court is not, in any way, bound by the views of a judge of a higher court which does not represent the majority view of that court (and thus form part of the decision of that court).
6.12 In those circumstances, it seems to me that there is just no factual basis for the suggestion made by Mr. Lopes to the effect that Geoghegan J., in any way, disregarded or disapplied the previous judgment of the Supreme Court. The suggestion that such occurred is based on a misreading and misunderstanding of what the Supreme Court said. In that context, it is striking that the only quotations made by Mr. Lopes in the significant volume of documentation from the previous judgment of this Court which he placed before the Court in the Books of Appeal were taken from the judgment of Barron J. Mr. Lopes appears to have totally ignored the other judgments of the Court while describing the reasoning of the Court as to be found in the judgment of Barron J. As indicated earlier, I am not, in any event, satisfied that Barron J. was in significant disagreement with the other members on the future loss of earnings question. However, even to the extent that Barron J. might have expressed a different view from the other members of the Court, this cannot, as Mr. Lopes sought to argue, therefore, represent the ratio of the Court. That deals with para. 5, ground (b) in the submissions made by Mr. Lopes to this Court. The factual basis for that submission is unsustainable and the legal issues which he seeks to raise do not, therefore, arise.
6.13 While still on this general topic, I propose to deal with a related point whereby Mr. Lopes seeks to raise, at para. 5, ground (c), what he suggests is a claim that Geoghegan J. “deviated from a proper course” and, indeed, changed his mind in the course of the action being at hearing. Reference is made to p. 26 of the Book of Evidence where Geoghegan J. made a ruling admitting actuarial evidence following an objection by counsel for the defendant to Mr. Joseph Byrne, actuary, being called as a witness. I have explained earlier in this judgment the circumstances in which there may be a debate concerning the admission of actuarial evidence. Such evidence may be excluded when the relevant plaintiff has not put forward an arguable case for the proposition that future loss of earnings, capable of being calculated with some degree of precision, might be allowed. The fact that such actuarial evidence is admitted is no more than a decision by the trial judge that it is possible that actuarially calculated future loss of earnings may be allowed. It does not amount to a finding that actuarially calculated future losses will, in fact, be allowed. Indeed, this is all that Geoghegan J. said at p. 26 of the Book of Evidence. Geoghegan J. pointed out that Mr. Lopes had made out an arguable case for the admission of actuarial evidence. He did no more than that. The fact that, when all the evidence had been heard, that case was not accepted is not unusual. Events such as that are common place. Evidence is permitted on the basis that there is an arguable case for a proposition but ultimately the proposition, in the light of all the evidence, is not accepted. The point made at ground (c) is, therefore, misconceived. Having dealt with those two points, being grounds (b) and (c) in para. 5 of Mr. Lopes’ written submissions, I now propose to turn to the remaining bases put forward for suggesting that there is a credible case to the effect that Mr. Lopes might be able to establish bias, discrimination or corruption at a full trial.
7. The remaining grounds on which it is asserted that Geoghegan J. committed fraud upon the court
7.1 In an endeavour to deal with each of the grounds which Mr. Lopes has put forward in para. 5, I propose to start with the bases which he advances in his written submissions document for suggesting that it might be possible to establish the wrongdoing which he alleges. I have already addressed what seemed to me to be somewhat overarching grounds being those specified at grounds (b) and (c). For clarification, ground (a) deals with the fundamental question before the court as to whether Hanna J. was correct to strike out Mr. Lopes’ claim. This point is obviously dependent on the other grounds and factual allegations already addressed or addressed below, and determined later in this judgment. I also propose to consider certain additional materials or arguments in favour of the contention that wrongdoing might be made out which can be derived not from those written submissions but from other materials submitted by Mr. Lopes to the Court or from the oral argument. However, before commencing with the task of considering the materials and issues referred to in the written submissions document, I feel it is appropriate to make some general observations about the way in which Mr. Lopes sought to persuade the Court that there was a credible basis for his factual allegations.
7.2 In that context, it is important to emphasise that the way in which Mr. Lopes sought to make his case was to point to various aspects of the trial process which he says could only have occurred if there was bias, discrimination or corruption on the part of the relevant judge or judges. Mr. Lopes does not suggest any basis for putting forward any direct evidence of such corruption, bias or discrimination. It is, thus, necessary to examine the events at the High Court trial before Geoghegan J. on which he places reliance.
Grounds (d) to (g)
7.3 Ground (d) concerns the legal issue, on which Hanna J. placed some reliance, as to judicial immunity. As noted earlier, I am not of the view that this motion to dismiss as being bound to fail should be determined on that issue. I am prepared to assume, for the purposes of this application, that, if bias could be made out, Mr. Lopes would have some prospect of succeeding.
7.4 Ground (e) suggests that the trial judge “conspired to pervert the course of justice” with the key witness called by Mr. Lopes. Mr. Lopes draws attention to a passage from the transcript of the trial where Mr. Lopes expressed concern that the relevant medical witness was giving a different view in oral evidence than he had in a previous medical report. Clearly Mr. Lopes sought to argue that the relevant medical witness was going back on a previously held view. The consultant doctor concerned gave an explanation which Mr. Lopes does not consider to be satisfactory. However, the only point made by Mr. Lopes which touches on the trial judge is to draw attention to the fact that the trial judge said the following:-
“Mr. Lopes, you can’t cross-examine (the medical consultant) and I have given you a good deal of latitude because you are a lay man, but please remember this is your witness.”
Mr. Lopes then says, in relation to the medical report, that it is in “his (the doctor’s) report and it is as clear as day in the report”. I frankly find it impossible to see how that intervention on the part of the trial judge provides any evidence of the serious allegation made by Mr. Lopes to the effect that it could establish a conspiracy between the trial judge and the doctor concerned. Likewise grounds (f) and (g) of his submissions are concerned with further evidence given by the same doctor. Again this single intervention of the trial judge does not in itself provide any basis for suggesting any improper involvement on the part of the trial judge.
7.5 The witness was giving evidence having already been called by Mr. Lopes. The witness had already produced a medical report which was before the Court. Mr. Lopes was concerned that the witness was giving evidence which was unfavourable to him and which was said to be at variance with the views contained in his medical report. Whether Mr. Lopes had a legitimate complaint about the witness or not is an entirely separate question. The trial judge was under an obligation to be fair to both sides. Requiring that the case be conducted in accordance with the rules of evidence, and requiring, despite giving some leeway, that Mr. Lopes act in accordance with procedural law, cannot amount to evidence of impropriety on the part of the trial judge. In that and other extracts from the transcript, the trial judge is at pains to point out to Mr. Lopes that the doctor was his witness.
7.6 It was for Mr. Lopes to prove his damages. He bears the burden of proof. If his witness did not appear to be giving evidence which he liked, then that may cause a difficulty for his case. But there is absolutely no basis put forward for a sustainable suggestion that any difficulties which Mr. Lopes may have had with his witness could be attributed to the trial judge. All that the trial judge did was to require Mr. Lopes to keep within procedural law. In addition, it must be recalled that what we now have is a transcript of an oral hearing. Words spoken at an oral hearing cannot be parsed and analysed like a carefully drafted contract. It must also be recalled that trial judges can be wrong both in their previous recollection of individual items of evidence as the case progresses, in their assessment of the evidence at the end of the case and in their application of the law to that evidence. That is why there are appeals. However, to suggest that a minor error, even if there be one, is evidence of impropriety is, frankly, so unstateable as to amount to an abuse of process.
7.7 Finally, it should be recorded that Mr. Lopes has suggested that, subsequent to the trial, he sought the advice of a neurologist in Portugal as a result of which he had further surgery. On that basis, it would appear it is suggested that the assessment given by his consultant doctor of his condition at the trial was incorrect. It would, of course, be impossible for this Court, at this stage, to reach any view as to the merits or otherwise of such a suggestion. But even if it could be shown that the evidence given by the relevant consultant at the trial before Geoghegan J. was incorrect, same would not, without much more, provide any basis for the serious accusations which Mr. Lopes makes in these proceedings. In adversarial proceedings, conflicting medical opinion is frequently addressed to the Court by way of evidence. Almost by definition, in such cases, some of the medical evidence will be wrong. The Court’s job is to assess the evidence as best it can and determine the facts on the balance of probabilities. The fact that subsequent experience may show that a medical opinion given in evidence may not have been correct will not even provide a basis for reopening the case between the parties for the principle of finality requires that the proceedings come to an end and cannot be reopened in the absence of fraud. Even if it could be shown that a judge accepted evidence which turned out to be incorrect, same does not even establish that the judge was wrong, let alone guilty of bias or discrimination or corrupt, for the judge may well have been more than entitled, on the basis of the evidence available at the trial, to accept the evidence over which a question mark might subsequently hang.
Grounds (h) and (l)
7.8 That leads to ground (h). This ground is based on a fundamental misunderstanding by Mr. Lopes of the way in which evidence is assessed in the common law system. He presupposes that, because the defence did not call evidence of fact on the question of his intentions concerning a return to sea, the Court was obliged to accept his evidence. That is simply and plainly wrong. It is the duty of any court to assess the credibility of any evidence presented. That assessment is, in civil cases, made on the balance of probabilities. It is particularly important to emphasise that, in cases where there could not be, or is unlikely to be, contradictory evidence (such as evidence given by a person about their own intentions), there is a particular duty on the Court to carefully scrutinise such evidence with a view to forming a conclusion as to whether it can be regarded as sufficiently credible to satisfy the requirement that the facts be established on the balance of probability.
7.9 A similar comment must be made in respect of ground (l). Mr. Lopes draws attention to the fact that no contradictory medical evidence was called on behalf of the solicitor defendant. However, it is important to emphasise that, whether Mr. Lopes was happy with same or not, his own witness (being his own consultant doctor) had, under cross examination, made a number of admissions which were favourable to the case which the defendant/solicitor sought to make. Indeed, the disputes between Mr. Lopes and that doctor which form the basis for some of the grounds already considered arose out of those very admissions.
7.10 There is no obligation on a defendant to call evidence. However, if the plaintiff’s evidence goes unchallenged, then difficulties may very well be caused for the defendant. Where, however, the plaintiff’s evidence is challenged and, in particular, where admissions are made or it is felt that the credibility of the plaintiff’s evidence has been damaged, a defendant may well decide that it is unnecessary to call its own evidence for the defendant may be happy with the state of the evidence reached at the close of the plaintiff’s case in the light of whatever admissions were made. The admissions made by Mr. Lopes’ consultant doctor formed part of the evidence on which the defendant was entitled to rely. The approach of the trial judge in assessing all of the evidence, including those admissions, is entirely proper and a normal approach of any judge assessing evidence, whether of fact or of expert opinion, in the common law system. There is just nothing unusual about that approach either generally or in the way in which it was conducted in this case. No conceivable inference of any impropriety on the part of the trial judge, therefore, arises.
Grounds (i), (j) (k) and (m)
7.11 The next two grounds, (i) and (j), allege that the trial judge conspired with the defence solicitors in relation to making the judgment not appear in the public domain and in the manner in which Geoghegan J. came to hear this case. Firstly, it is incorrect, as Mr. Lopes suggests, that it would have been typical, in the late 1990s, for all judgments of the High Court to appear in the public domain in the sense of a published written document. In fact, Geoghegan J. delivered an ex tempore oral judgment in open court on the 2nd July, 1998 and a transcript of that judgment is available. Secondly, there is nothing unusual in a single judge managing and dealing with a case in the manner in which Geoghegan J. did in this case. There is simply no factual basis for the assertion that there was anything untoward in the way in which Geoghegan J. came to be the judge who heard this case and the way in which the judgment was dealt with after delivery.
7.12 In ground (k), Mr. Lopes seeks to link these latter allegations with his erroneous suggestion that this Court had previously decided that he was automatically entitled to loss of earnings. It is unfortunate that Mr. Lopes is under that misunderstanding. It may be that it has coloured his view of many other aspects of the case. But on that question he is, for the reasons already analysed, just plainly and completely wrong. This question is returned to in ground (m). That ground also lacks any conceivable substance for like reasons.
8. Mr. Lopes’ arguments in relation to the acts of the Supreme Court and/or the defence team said to amount to a perversion of justice
8.1 At para. 6 of Mr. Lopes’ written submissions, he goes on to deal with the alleged deficiencies in the second appeal to the Supreme Court. Many of the lettered grounds put forward by Mr. Lopes under this paragraph again raise the alleged failure to apply the Supreme Court judgment of 1997, in particular, grounds (c), (d), (e). This issue has been addressed in detail in section 6 of this judgment and, thus, there is no necessity to reiterate the relevant findings here.
8.2 In his submissions on the Supreme Court appeal, Mr. Lopes submits various reasons at grounds (a), (f), (g) (h), (i) and (j) for suggesting that judicial immunity should not apply in this case. For the reasons already identified, I do not consider it appropriate to determine this motion on the basis of judicial immunity. If a credible case for suggesting that a factual claim of bias, discrimination or corruption against a member or members of the judiciary could be made out then, in my view, it would have been, as I pointed out earlier, appropriate to allow the matter to go to a full trial at which, amongst other things, the question of judicial immunity could be analysed. Likewise, for the reasons already set out, I do not consider it appropriate to deal with this case on the basis of the Statute of Limitations and, thus, it is unnecessary to consider the submissions in that regard made by Mr. Lopes.
8.3 Attention is drawn in grounds (b) and (c) to the fact that the appeal had to be heard a second time because of the fact that one of the judges who sat on the original appeal resigned before judgment had been given. It is important to emphasise that the circumstances which led to the judge in question resigning had absolutely nothing to do with the facts of this case and also occurred in sudden circumstances. Contrary to what Mr. Lopes suggests, there were a number of cases which had to be dealt with by different panels of judges precisely because of that resignation. Mr. Lopes makes the suggestion in his written submissions that the trial judge and the defence team were apparently unhappy with the way in which the first panel was likely to decide the case and contrived to have a different panel deal with the case. There is simply no factual, or evidential, basis put forward to give rise to even the prospect of that allegation being made out. It is a bare allegation and no more than that. There is no evidence to support any such suggestion, nor is there any prospect put forward as to a means by which such evidence might be forthcoming. The resignation of the judge in question was an unfortunate event which disrupted a number of cases where judgments were pending. It had absolutely nothing to do with the case brought by Mr. Lopes.
8.4 Mr. Lopes next, at para. 7 of his submissions, makes suggestions concerning an allegation of bribery of one of his witnesses (the same doctor to whom reference has already been made) and perjury by that witness. If an allegation of bribery of a witness could be made out on the facts, then that might well provide a legal basis for having the original decision, which was based on the evidence of the bribed witness, set aside on the grounds of fraud. But it provides, even if it were true, no basis for suggesting that the trial judge or the appeal court judges who dealt with the case brought by Mr. Lopes were in any way involved. I would emphasise that I am not, in any way, suggesting that it has been established that bribery or perjury resulting from it did, in fact, occur. I confine myself to commenting that no basis for any connection with the judiciary has been put forward.
8.5 The remainder of the submissions made by Mr. Lopes in paras. 6 and 7 concern a variety of legal propositions concerning the way in which a claim for bias, discrimination or corruption might lead to a cause of action under either EU law, the provisions of the ECHR or under the Irish Constitution. Those submissions raise, potentially, many interesting questions of law not least questions concerning whether EU law is engaged (whether it can be said that any party was acting within the scope of EU law in the context of an Irish personal injury action), whether, as a matter of Irish law, the ECHR can be relied on given that the events predate the Convention having any formal status in Irish domestic law, and questions concerning judicial immunity and the like under the Irish Constitution. Doubtless other legal issues could arise. However, the fundamental point is that for any of those important and interesting legal issues to arise there has to be a credible case on the facts in bias, discrimination or corruption in the first place. As already indicated, I am prepared to accept, for the purposes of this application, that, in the event that a credible case for such bias, discrimination or corruption were put forward the case should go to trial to enable those issues of law to be explored.
8.6 If there were a credible basis for suggesting that the claim sought to be put forward by Mr. Lopes in relation to bias, discrimination or corruption, could be sustained on the facts, then the Court would have to give very serious consideration as to the legal consequences of the situation which would then be established to have occurred. Rights under both Bunreacht na hÉireann and the ECHR would certainly be engaged. It is also possible (but by no means certain) that rights under the Charter of Fundamental Rights might also arise. However, in the absence of a credible case on the facts, then those legal issues simply do not arise in this case.
8.7 In passing, although it is not a factor which this Court on this appeal has taken into account, it does need to be emphasised that Mr. Lopes did not place before the Court any evidence or any suggestion of it being likely that there could be evidence, to suggest why the various judges, against whom he makes complaint, would have discriminated against him. When asked what evidence there might be to substantiate his allegation, as set out in his pleadings, that he was discriminated against on the basis of his nationality, he did no more than indicate that, given the result of the various hearings, there must have been discrimination against him on some basis even if it were not on the grounds of nationality. However, for the reasons which I have sought to analyse in detail, I am not satisfied that the result of his case provides any basis for the suggestion that the damages awarded to him were wrong, let alone wrong on the basis of a discriminatory action on the part of the judges concerned. It is next necessary to turn to some additional points raised.
9. Some Additional Points
9.1 Some final aspects of the potential case which Mr. Lopes might seek to make need to be commented on. Not least because he is a litigant in person, but also because the jurisprudence of the Irish courts makes clear that a case should not be dismissed as being bound fail if there is any credible basis (including an amendment of pleadings) which could arguably save it from dismissal, I propose to deal with some points which were not expressly made in his written submissions but which nonetheless might be said to form part of the case which he seeks to bring.
9.2 In a document entitled “Supreme Court/Book of Appeal”, a number of items are included which require some comment. First, as per the index, there is contained between pp. 46 and 52 what is said to be “Evidence of Joseph Byrne who testified about Seamanship affairs”. In fact, the evidence of Mr. Byrne is actuarial evidence which is simply about the proper basis for the calculation of various multipliers which might be actuarially applied to any established loss of earnings.
9.3 Next, between pp. 53 and 72, is to be found the evidence (again from the transcript) described as that of “the doctor who found the Appellant permanently unfit to resume his career”. The doctor in question was a doctor who was involved in a certification process on behalf of the Department of the Marine and who did, indeed, certify that Mr. Lopes was unable to act as a seaman. Before dealing with the evidence of that doctor, however, it is striking to note that, between pp. 60 and 62 from that transcript extract, it is clear that, despite the attempts by counsel for the defendant solicitor to admit in evidence a medical report to which Mr. Lopes objected, the trial judge refused to allow the defence to rely on the report in question. Hardly the act of a judge who was biased against Mr. Lopes.
9.4 Next, some attention was drawn by Mr. Lopes to the fact that the trial judge indicated that he was not bound by the certificate in question. What Geoghegan J. stated was that the mere existence of the permanent certificate was not itself sufficient given that the certificate was reversible and that the certifier did not himself have all the facts before him. In so indicating, the trial judge was simply complying with the law which requires the Court to consider the case on the basis of the evidence presented in court. Mr. Lopes sought to suggest, in oral argument, that the trial judge was in breach of the commonly accepted common law principles for the resolution of ordinary civil proceedings, by, Mr. Lopes argued, the trial judge using his own discretion rather than deciding the case on the balance of probability. To so suggest is to misread the transcript and, indeed, the judgment. A court is required to come to a view on the facts on the balance of probability. In so doing, a court is entitled to form a rational view, on the balance of probability, as to the credibility of any evidence even if no counter evidence is put forward. The fact that the trial judge said that he would come to his own view does not mean that the trial judge was exercising any discretion. Rather, the trial judge was simply indicating that he would come to a view on all of the evidence. That is, of course, what the trial judge’s duty was. The trial judge was required to form a view on Mr. Lopes’ capacity to work as a seaman and, indeed, other aspects of his capacity to earn. Doubtless the trial judge had proper regard to the evidence of the doctor who certified him as unfit to return to sea. But the trial judge was required, as a matter of law, to come to an overall conclusion on all of the evidence. That evidence includes the testimony of Mr. Lopes’ former specialist consultant notwithstanding the fact that Mr. Lopes sought to question the credibility of that witness. The extent to which the trial judge was prepared to accept the evidence of those various witnesses is a matter for the trial judge who had the benefit of hearing them give evidence. The fact that the trial judge preferred some and was less impressed by other evidence could in no circumstances, certainly of itself, amount to a basis for suggesting that the trial judge was even wrong, let alone biased, discriminatory or corrupt.
9.5 Finally, on this particular issue, it is important to note what the doctor in question said at p. 58 of the first Book of Appeal prepared by Mr. Lopes. He declined, on questioning by Mr. Lopes, to offer any opinion on general injuries (as opposed to fitness to return to sea) when asked by Mr. Lopes about persistent symptoms and a suggestion about difficulties to walk for more than twenty minutes “or something like that”. The answer was that the witness was a general practitioner, and that his brief was confined to giving an opinion as to fitness or otherwise to work aboard a ship. The doctor said he would not be an expert on other areas. It is clear, therefore, that the witness in question gave no evidence concerning the continuing injuries of which Mr. Lopes complained and no evidence concerning his fitness or otherwise to do any type of work other than as a seaman.
9.6 Next, Mr. Lopes included in his papers a newspaper article concerning an award of IR£468,000 given to a nurse which award he said demonstrated that the amount he ultimately received was wholly inadequate and, thus he inferred, one which could only have arisen from bias, discrimination or corruption. Mr. Lopes had referred to this case in his pleadings. It is important to point out that counsel for the State was able to produce evidence that the award to which reference had been made had been significantly reduced by this Court on appeal (Allen v O’Suilleabhain and the Mid-Western Health Board (Unreported, Supreme Court, 11th March, 1997). The ultimate result in Allen was that the plaintiff received damages for pain and suffering in the sum of IR£125,000. It is also important to draw attention to the comments made by the Supreme Court in Allen to the effect that, at that time, the absolute maximum of damages which could be awarded, in accordance with the case law of the courts, for pain and suffering was fixed in the sum of IR£200,000. Damages of that amount were paid only in the case of catastrophic injuries such as quadriplegia. The ultimate award for damages for pain and suffering which Mr. Lopes achieved, in the sum of IR£80,000, needs to be seen in that context. It also needs to be seen in the context of the evidence ultimately given to the Court by his consultant doctor concerning his ongoing condition together with the fact that the certifying doctor in respect of his fitness to return to sea declined to express any view on his general medical condition.
9.7 In Allen, in addition to damages for pain and suffering, a total sum was awarded by the Supreme Court to cover special damages together with past and future loss of earnings in the amount of IR£241,571. However, it does need to be noted that some element of that sum (not specified in the Court’s judgment) related to special damages other than past or future loss of earnings. In addition, a specific sum of IR£23,843 was awarded in respect of loss of pension rights. In those circumstances it would seem that the approximate final award in respect of past and future loss of earnings was of the order of IR£200,000. By contrast it would appear that Mr. Lopes was ultimately awarded a sum of IR£75,000 for past and future loss of earnings.
9.8 A number of comments are appropriate. First, the outcome of every case depends on its own facts and, crucially, the evidence of those facts placed before the Court. Second, it is clear that the plaintiff in Allen was in secure and permanent employment at the time when the relevant accident occurred. As the trial judge in that case had noted, she also would have had opportunities to work in that capacity abroad. The plaintiff was also engaged in business studies which might have expanded her work opportunities. The judgment of this Court in respect of loss of earnings was delivered by Murphy J. It is important to note, as Murphy J. did, that notwithstanding the secure employment of the plaintiff and the good prospects for future employment which she had, the trial court nonetheless made a deduction of 20% in the actuarial calculation of her damages to reflect the risk that she would, for whatever reason, not have been able to achieve in full employment for her entire working career up to 65.
9.9 Any distinction between the damages awarded in Allen and the damages ultimately awarded to Mr. Lopes must take into account the fact that Mr. Lopes’ position in respect of both past and future loss of earnings was significantly more problematic than that of Ms. Allen. There was a strong basis for suggesting that Mr. Lopes’ business would have collapsed in any event and would not, therefore, have provided him with earnings into the future irrespective of his injuries. The question of whether he would truly have returned to sea and, if so, when and for what period, was a significant issue in the case. The evidence as to whether he could have done other, even part-time, work, which, while less remunerative, would nonetheless have mitigated his damage was also relevant. Any difference between the damages awarded in Allen and those ultimately awarded to Mr. Lopes under the loss of earnings heading must be seen in the light of those significant differences.
9.10 It is, of course, the case that the factors which can influence the proper award of damages are many. Similar injuries can give rise to significantly different awards in our system because of the effect of those injuries on the individual in question. All this Court can do at this stage is to indicate that the ultimate award to Mr. Lopes, as a result of the various hearings before various courts to which reference has been made, left him with a sum of damages which does not seem out of the range of damages which might potentially have been awarded, at the relevant time, for a case of his type, particularly where the principal focus of his claim for loss of earnings related to an occupation which he was not pursuing at the time of the accident.
9.11 The Book of Appeal also includes, at p. 73, an extract from the transcript before Geoghegan J. in which counsel for the defendant asked Mr. Lopes about his citizenship. It is clear that that question was asked in the context of the case being made by the defendants that Mr. Lopes had settled in Ireland and was, thus, unlikely to go back to sea. There is no basis for suggesting that any inference of bias, discrimination or corruption could flow from that question and, in any event, it is hard to see how it has any relevance to an accusation against a judge or judges.
9.12 Finally, I should note that, at the hearing, some question arose as to whether Mr. Lopes had, in his second appeal to this Court, raised the question of whether this Court had previously decided that he was entitled to damages for loss of earnings. At the Court’s request Mr. Lopes furnished a copy of the relevant notice of appeal from which it is clear that he had raised that question. However, it is important to emphasise that this Court, in significantly increasing the damages awarded by Geoghegan J., did actually allow a rounded sum for damages to reflect loss of opportunity in respect of future earnings. Even on the basis of the case made by Mr. Lopes, there could be no suggestion that this Court had previously, on the first appeal, decided that he was entitled to damages for future loss of earnings calculated in any particular way. All of the judges made it clear that the assessment of damages was to be on the basis of the evidence tendered at the retrial. Given that this Court, on appeal, found that Mr. Lopes was, indeed, entitled to some damages for future earnings, the issue of whether that question had been determined at the previous appeal hearing or not just did not arise at the second appeal hearing.
10. Conclusions on the Evidence
10.1 I should emphasise again that the proper approach to a motion like this is to take the evidence which it is suggested might be capable of being secured and presented to the High Court, at its high point. However, for the reasons already analysed, almost all of that evidence concerns what transpired at the hearings before the various courts which dealt with Mr. Lopes’ case. The fact that Mr. Lopes makes assertions about many things does not amount to evidence. Either the evidence or potential evidence is capable, on an arguability basis, of supporting his accusations or assertions, or it is not.
10.2 Having carefully analysed each of the matters which were set out in his written submissions, in the documents which he filed in support of same and in his oral submissions, it seems to me that there is just no basis for suggesting that there is any evidence, or any prospect of there being evidence, to support his factual accusations. On that basis, I am satisfied that the underlying factual assertion which lies at the back of all of the submissions made is bound to fail. If that factual assertion fails, then the legal issues, however interesting and important, just do not arise.
11. Final Conclusion
11.1 The overall conclusion must, therefore, be that these proceedings are bound to fail and that the ultimate conclusion which Hanna J. reached to that effect was correct. In so stating, I would emphasise that, as pointed out in respect of certain aspects of the judgment of Hanna J. earlier mentioned, I would not propose to reach a finding of these proceedings being bound to fail on exactly the same basis as Hanna J. did.
11.2 However, the finding that Hanna J. was correct to conclude that these proceedings were bound to fail on the facts is sufficient to allow an overall conclusion to be reached that the proceedings are bound to fail. It follows that the appeal must be dismissed, and that the order of the High Court dismissing these proceedings as being bound to fail must be upheld.
Clohessy v Legal Aid Board [2014] IEHC 72
Judgment of Mr Justice Michael Peart delivered on the 20th day of February 2014:
1. The plaintiff has issued proceedings against all of the above defendants and has delivered a Statement of Claim.
2. The third named defendant, being the Minister for Justice and Law Reform, and the fourth and fifth named defendants, being Ireland and the Attorney General, have issued a Notice of Motion dated 18th January 2012 in which they seek orders dismissing the plaintiff’s proceedings against them because the plaintiff makes no claim seeks any relief against them; and in the alternative they seek orders striking out proceedings on the basis that they disclose no reasonable cause of action and/or on the basis that they are frivolous and/or vexatious within the meaning of Order 19, Rule 28 of the Rules of the Superior Courts.
3. The present proceedings arise against a background of protracted dispute in relation to land which was litigated between the present plaintiff’s father and the present plaintiff going back to 2001. The plaintiff’s father was legally represented by solicitors employed by The Legal Aid Board which issued the necessary legal aid certificate in that regard.
4. The Statement of Claim is a lengthy, detailed and carefully prepared to document and it makes a number of allegations against the Legal Aid Board arising out of what is alleged to be a failure by it to properly assess the true nature of the claims being made against the present plaintiff by his father, failure to properly take into account when assessing the means of the plaintiff’s father the fact that he had deliberately reduced his assets by placing them in a joint bank account with his daughter the fifth named defendant for the purposes of obtaining a legal aid certificate. It is also pleaded that the Legal Aid Board never made any attempt to properly determine whether the plaintiff’s father had previously disclosed to the Department of Social and Family Affairs that he was not the owner of any lands at Ballincurrig, Co Cork.
5. In addition to the claims against the Legal Aid Board in relation to the granting of a legal aid certificate to the plaintiff’s father, the plaintiff in the present proceedings alleges that “the litigation instituted and maintained by the first named defendant for 9 years against this plaintiff was a champertous arrangement for the ultimate benefit of its client Peter Clohessy (now deceased) and the fifth named defendant who benefited from the fact of having the State finance the costs of the litigation”.
6. In addition, he alleges that the Legal Aid Board, through its servants and agents, between 2001 and 2010 “concocted, instituted, and unlawfully maintained litigation for Peter Clohessy (now deceased) based upon unfounded, misleading and fraudulent facts”. Specifically, it is pleaded that the Legal Aid Board failed in its duty of care “by embarking on litigation against the plaintiff on or about the 31st July 2001 when it was aware that its client Peter Clohessy (now deceased) and his natural daughter Valerie Coleman, the fifth named defendant, had been previously legally advised against attacking the Deed of Patrick Clohessy …”. There are other parts of the Statement of Claim in which further allegations are made against the Legal Aid Board.
7. In addition to containing allegations and claims against the Legal Aid Board, there are allegations and pleas made against the sixth, seventh and eighth named defendants.
8. But nowhere in the Statement of Claim is there any allegation made against any of the third, fourth or fifth named defendants, and no reliefs are sought against any of them specifically.
9. At paragraph 10 of the Statement of Claim, it is simply pleaded in respect of the third named defendant that he is appointed by the Government of Ireland and that “its mandated statutory functions are many and varied including the overseeing of the proper lawful functioning of the statutory bodies under its ministerial control which includes the Legal Aid Board its servants and agents, and the employees of the Court Services working within the office of the County Registrar in so far as those functions relate to an executive function of the Government performed by the Courts Services”.
10. At paragraph 11 of the Statement of Claim, it is pleaded in respect of the fourth and fifth named defendants (Ireland and the Attorney General) that “the Attorney General advises the Government in matters of law and legal opinion, parliamentary drafting, statute law revision, and has as part of its office and under its umbrella the office of the Chief State Solicitor whose function includes providing a solicitor service to its principal clients, which are all government departments, the Director of Public Prosecutions, and the Garda Siochana.”.
11. It seems clear to me, and it has been so is submitted, that the only justification for including the third, fourth and fifth defendants is on the basis of some vicarious liability for the actions of the first named defendant. The plaintiff has submitted that ultimately Legal Aid Board is responsible to and controlled by the Minister for Justice and Law Reform, and must ultimately be liable for the actions of that Board. However, it is clear from the Civil Legal Aid Act, 1995 that while the Minister may, by order, from time to time as occasion requires, issue to the Board such general directives as to policy in relation to legal aid and advice as he or she considers necessary, the Board nevertheless is independent in its functions. In fact, Section 3 (2) of the Act provides:
“(2) the Board shall be a body corporate with perpetual succession and an official seal and power to sue and be sued in its corporate name and, with the consent of the Minister, to acquire, hold and dispose of land or an interest in land or rights over or in respect of land and to acquire, hold and dispose of any other property.”
In addition, Section 7 (3) of the Act provides;
“Nothing in this Act shall be construed as enabling the Minister to exercise any power or control in relation to any particular case with which the Board is or may be concerned.”
12. I am completely satisfied that the third, fourth and fifth named defendants, being the applicants on foot of the present Notice of Motion, should not be required to remain in these proceedings and to defend them given that no claim is made out against them and no relief is sought against them. Any claims being made in these proceedings by the plaintiff are in reality aimed at the other defendants against whom and in respect of which reliefs are sought and claims are made. It would be oppressive and unfair, and therefore unjust, that these three defendants should not be permitted to have the proceedings struck out as against them.
13. I will therefore make the order is sought, namely striking out these proceedings as against the third named defendant, being the Minister for Justice and Law Reform, the fourth named defendant, namely Ireland, and the fifth named defendant namely The Attorney General, and I do so on the basis that no reasonable cause of action is disclosed on the pleadings in respect of the defendants.
Murphy v Allianz plc [2014] IEHC 692
JUDGMENT of Mr. Justice Gilligan delivered on the 5th day of December, 2014
1. This is an application brought by the defendant, pursuant to Order 19, Rule 28 of the Rules of the Superior Courts 1986, to strike out proceedings commenced by the plaintiff on the basis that they disclose no reasonable cause of action and are bound to fail.
Background
2. The reliefs sought by the plaintiff in these proceedings refer to earlier proceedings of 2004 entitled Michael Murphy v Bri-Mo Limited and Patrick McShane. In the 2004 proceedings, the second named defendant, Patrick McShane, was a labour-only sub-contractor on a site on which Bri-Mo Limited, the first named defendant, acted as the main contractor. The plaintiff was a bricklayer employed by, and working under, the direction and supervision of Mr. McShane. On or around the 9th of January, 2004, some blocks fell from a wall on the foot of the plaintiff, causing him damage.
3. The incident of 9th January, 2004, was reported to Allianz over a year after its occurrence, on foot of which Allianz engaged with Bri-Mo’s brokers, Jardine Lloyd Thompson. By letter dated 27th May, 2005, to Bri-Mo’s brokers, Allianz noted that, as this was the first notification, it could not confirm indemnity, and it made certain inquiries in relation to the accident. By further letter dated 10th June, 2005, to Bri-Mo’s brokers, Allianz sought outstanding wage declarations under Policy Condition No. 8 and reserved its rights under the policy pending resolution of this and any other issues. During this time, Allianz also received certain correspondence from the solicitor for the plaintiff, providing information in respect of the claim and noting that the solicitors firm Fitzsimons Redmond had entered an appearance on behalf of Bri-Mo. Allianz’s request for outstanding wage declarations was repeated in a letter dated 21st March 2006 to Bri-Mo’s brokers, wherein Allianz advised that it might repudiate the claim if the broker was not resolved within 14 days. However, neither Bri-Mo nor its brokers supplied the outstanding wage declarations. By letter dated 17th May 2006, Allianz wrote to Bri-Mo’s brokers, noting that the declarations had not been furnished and confirming that it was withdrawing indemnity under the policy and that the policyholder must make its own arrangements to defend the claim of Michael Murphy. Allianz confirmed that it was closing its file in relation to the matter. Bri-Mo Limited never sought to challenge, at that time or since, Allianz’s refusal of an indemnity and repudiation of liability in respect of the plaintiff’s claim.
4. On or around 19th September, 2010, Bri-Mo was struck off the Register of Companies. By order dated the 14th of November, 2011, this Court (Ryan J.) granted the plaintiff judgment in default of defence against Bri-Mo with the amount of damages to be assessed before a judge without a jury.
Submissions
5. I think it is appropriate at this juncture to deal with submissions in a thematic way in order to properly reflect on the issues raised.
Section 62 of the Civil Liabilities Act, 1961
6. The plenary summons of the plaintiff, dated 15th May, 2012, seeks five substantive reliefs: the first two substantive reliefs seek respectively a declaration and an order pursuant to s. 62 of the Civil Liability Act 1961 that such damages and costs as may be awarded to the plaintiff in the 2004 set of proceedings against Bri-Mo Ltd. and Patrick McShane constitute monies payable to the plaintiff in a discharge of a valid claim which the defendant is obliged, under the terms of an insurance policy between it and Bri-Mo Ltd., to pay the plaintiff; the third, fourth and fifth substantive reliefs seek damages for breach of statutory duty, breach of contract and negligence and negligent misstatement and/or misrepresentation and breach of duty, respectively.
7. Counsel for the defendant submits that, insofar as s. 62 of the Civil Liability Act 1961 is concerned, the plaintiff’s claim discloses no reasonable cause of action and/or is bound to fail for two reasons:
(A) Firstly, s. 62, on its terms, applies only where a person who has effected a policy of insurance in respect of liability for a wrong “if an individual becomes bankrupt or dies or, if a corporate body is wound up, or if a partnership or other unincorporated association is dissolved.” In this case counsel submits, Bri-Mo, a corporate body, had affected a policy of insurance with Allianz. However, while Bri-Mo was struck off the Register of Companies in 2010 for failure to file annual returns, it was not wound up, either voluntarily or by order of this Court. Thus, the defendant submits that s. 62 of the civil liability act 1961 has no application to these proceedings because Bri-Mo Ltd. is not now and never was in liquidation. It is clear from oral submissions as made to the Court that the plaintiff has no fixed intention to wind up Bri-Mo Ltd. The defendant argues that the plaintiff has taken no steps to place the company in liquidation either since the institution of these proceedings on 15th May 2012 or since the restoration of the company to the register on 25th November, 2013. The defendant argues that the liquidation of Bri-Mo Ltd is not a mere technical requirement that might be overlooked at the discretion of the parties or the Court. It is a fundamental precondition to the insurer’s liability under s. 62 of the Civil Liability Act 1962. On this basis alone, the defendant submits that the proceedings ought to be struck out. For this reason, counsel for the defendant contends that s. 62 of the Act of 1961 does not apply in this case.
(B) Further, s. 62 goes on to provide that “monies payable to the insured under the policy shall be applicable only to discharging in full all valid claims against the insured in respect of which those monies are payable…” Mr. McShane did not hold employer’s liability insurance. However, Bri-Mo maintained employer’s liability insurance with Allianz under a Combined Construction Policy. Policy Condition No. 8, entitled ‘Premium Adjustment,’ requires the insured party to supply certification of wages, salaries, and other earnings or of turnover for the period of insurance within 90 days of the expiry of the said period and provides inter alia that, if this is not supplied, Allianz will not provide any indemnity for bodily injury which might otherwise be the subject of an indemnity. As set out by Policy Condition No. 1, the observance and fulfilment of the terms and conditions of the policy are conditions precedent to any liability on the part of Allianz to make any payment under the policy. As such, counsel for the defendant submits that due to the failure of Bri-Mo to observe the condition precedent under Policy Condition No. 8 relating to the supply of wage certification, Allianz was entitled to, and did in fact, refuse an indemnity and repudiated liability in respect of the plaintiff’s claim against Bri-Mo under the relevant policy of insurance. Bri-Mo never, at the time of repudiation or since, has challenged the said refusal of indemnity and repudiation of liability. Counsel argues that the plaintiff cannot now go behind that decision. The only party entitled to challenge that decision would have been Bri-Mo itself and even that party could not do so at this juncture, over seven years after it was made.
8. The defendant also submits that there is no contract or contractual nexus between the parties which could found a claim for damages for breach of contract. Further, it is submitted that the defendant owes no duty of care to the plaintiff. Counsel relies on the case of Hu v Duleek Formwork Ltd. (In Liquidation) and Aviva [2013] IEHC 50 in this regard. Having considered certain classes of relationship where a duty of care had been found to exist on the basis of sufficient proximity, such as the duty of a solicitor to a beneficiary under a will, Peart J. stated at paragraph 20:
“But I know of no case where the Courts have found a duty of care to exist between an insurance company and a potential claimaint against the insured party, and have been referred to none. It would not be right in the present case in such circumstances to extend the law that far, so as to find that the plaintiff might reasonably argue his claim against Aviva under the law of negligence.”
9. Counsel for the plaintiff submits that the defendant’s notice of motion should be struck out and the plaintiff be allowed to proceed with his action. Following the authority of McCarron v Modern Timber Homes Ltd (In Liquidation) & Ors [2012] IEHC 530 counsel states that it is clear from the judgment of Kearns P. that the plaintiff has adopted the entirely correct procedure in first seeking judgment as against his employer Bri-Mo Ltd. before seeking redress against Allianz as Bri-Mo’s insurer. In McCarron, Kearns P. held that it was inappropriate to join an insurer in proceedings until the primary claim as against the employer had been determined. Thus the plaintiff’s case against Allianz could only proceed upon determination of the primary claim against Bri-Mo Ltd. That claim has been duly determined in the plaintiff’s favour with only the matter of the assessment of damages being outstanding. Counsel argues that Allianz, being aware of the original proceedings against Bri-Mo Ltd. could have applied to be joined as a party to those proceedings but it chose not to) The claim against Allianz should now proceed in order to establish their liability to pay those damages.
10. Moreover, counsel for the plaintiff argues that given the serious nature of the application of Allianz for Mr. Murphy, effectively terminating the possibility of his recovering compensation for his injuries by way of these proceedings, Mr. Murphy is entitled to have the evidence adduced by Allianz tested in the normal way. Mr. Murphy should be entitled to cross-examine a witness from Allianz as to whether the policy being relied on by Allianz to see whether or not the policy was entered into and whether the terms and conditions were furnished to Bri-Mo Ltd or its broker. In addition, in the course of these proceedings, Mr. Murphy will seek third party discovery from Bri-Mo Ltd and its broker (if any) and any other relevant parties which evidence may strengthen the plaintiff’s case. Counsel argues that it would be premature and an unwarranted intrusion on the plaintiff’s right to litigate to dismiss this claim at this time.
Repudiation of indemnity
11. Fundamentally, the plaintiff challenges the repudiation of the insurance claim by Allianz on three main grounds:
(1) That the correspondence exhibited by the defendant constitutes hearsay;
(2) That there is no evidence of JLT’s role or of communication with BRI-MO directly;
(3) And that the repudiation was not a valid one because the condition invoked did not entitle Allianz to repudiate
12. Counsel for the plaintiff submits that no evidence has been exhibited to show that Bri-Mo Ltd. were ever informed of or knew about any repudiation of indemnity. No evidence has been exhibited to show that Jardine Lloyd Thompson (“JLT”), acting as broker for BRI-MO Limited, were ever informed of or knew about any repudiation. No evidence has been exhibited to show that Allianz were entitled to ignore Bri-Mo Ltd in dealing with the matter the way they did. No evidence has been exhibited to show that there were valid grounds for any repudiation in the first place.
13. The plaintiff further submits that the difficulty that the plaintiff has is that Allianz is seeking to avoid its direct liability to Bri-Mo Ltd and its contingent and indirect liability to Mr. Murphy by relying on a clause to repudiate its policy with Bri-Mo Ltd. In fact, the plaintiff argues, the legal position is that the clause being relied on by Allianz does not entitle to it and would not entitle it to repudiate its policy to Bri-Mo Ltd or its ultimate contingent liability to Mr. Murphy.
14. In response, the defendant argues that there can be no real dispute about the repudiation of the claim in this case and that the evidence before the Court confirms that the claim was validly repudiated. The defendant points to the correspondence between JLT and Allianz – which has been exhibited behind the affidavits of Ms Helen Rackard (solicitor for the defendant) and, most recently, behind the affidavit of Paul Griffin (claim’s handler in defendant company) – which the defendant claims puts the position beyond doubt. Counsel submits that the correspondence confirms that BRI-MO Ltd at all times acted through its broker JLT; that the claim was first notified on 20th May, 2005, over 16 months after the accident occurred, and over a year after the plaintiff had initiated his proceedings; that Allianz at all times reserved its position in respect of policy indemnity; that Allianz sought, on a number of occasions over the course of almost a year, outstanding declarations in respect of wages which were required under the policy but that these were never furnished; that eventually, after affording the insured every opportunity to comply with this requirement, Allianz repudiated the claim on this basis; and that there was no response, still less a challenge, to the repudiation from either BRI-MO or its broker, JLT.
15. In response to the statements of Mr. Adrian Ledwith’s (solicitor for the plaintiff) affidavit, supporting the contention that the policy was not validly repudiated by Allianz, the defendant submits that these statements simply speculate or suggest uncertainty about the modalities of repudiation. There is no denial of the repudiation or the basis of repudiation as such by Mr Ledwith. There is no suggestion that the repudiation was ever challenged by or on behalf of Bri-Mo.
16. The defendant submits that the plaintiff simply has no standing or authority to make these arguments challenging the repudiation of the claim because there is no privity of contract between Allianz and the plaintiff. If the repudiation were to be challenged, it is submitted by the defendant, it is the insured (Bri-Mo Ltd.) which would have the necessary standing and authority to challenge it. However, even an insured would have to do so in a timely fashion. It is submitted by counsel for the defendant that such a claim at this remove would not only be impermissible under the policy (policy condition no. 11 provides that “claims not referred to arbitration within 12 calendar months from the date of disclaimer of liability shall be deemed to have been abandoned”) but it would also clearly be statute-barred (Section 11(1) (a), Statute of Limitations Act 1957.) It is further submitted by counsel that there is no basis in law for permitting a third party to challenge a repudiation of a claim for indemnity some eight years after the repudiation took place.
17. The plaintiff takes issue with the role of Jardine Lloyd Thompson and the failure to communicate the repudiation to Bri-Mo Ltd directly. As requested by the Court, the defendant submitted that it has placed all communications in relation to this claim between Allianz and the solicitor for the plaintiff before the Court in chronological order in the affidavit of Mr. Paul Griffin. The defendant further contends that it is abundantly clear from the evidence before the court that JLT at all times acted as broker and agent for Bri-Mo Ltd.
18. In relation to the policy condition at paragraph 1, the plaintiff contends that an obligation to return an “auditor’s certificate” in respect of “wages, salaries and other earnings and/or turnover” within “90 days of the expiry of each period of insurance” is an event which simply cannot occur before the policy itself comes into effect. It is therefore argued that it is not a condition precedent to the validity of the policy. Counsel argued that this term of the policy could not be and could not have been a condition precedent either to the policy coming into effect or the obligation to pay out on foot of the policy. It is clear, the plaintiff suggests, on its true construction, that this is a “condition subsequent” or a “collateral stipulation.”
19. The plaintiff seeks to rely on the judgment of the English Court of Appeal in Re Bradley v Essex and Suffolk Accident Indemnity Society [1912] 1 KB 4 & 5. In this case, there was a clause making “observance and fulfilment” of the policy conditions a condition precedent to any liability. The plaintiff in this case was a farmer. His proposal form indicated that there were one or two employees. Condition 5 of the policy required the insured to keep a wages book and required him to furnish a correct account to the insurance company. The wages book was not kept. Cozens-Hardy M. R. held:
“I think the fifth condition is one and entire, and it is to my mind unreasonable to hold that one sentence in its middle is a precedent while the rest of the condition cannot be so considered. A policy of this nature, in case of ambiguity or doubt, ought to be construed against the office and in favour of the policy-holder, and it seems to me unreasonable to hold that the office can escape from all liability by reason only of the omission to duly record in a proper wages book the name of every employee and the amount of his wages. This is only required for the purpose of the statement which, by the proposal, the insured agreed to render at the end of each period of insurance. In my opinion, it ought not to be regarded as in any sense a condition precedent, and it follows that, in my opinion, the appeal fails and must be dismissed with costs.”
20. The plaintiff submits that this authority lends substantial support to the plaintiff’s claim. It is submitted that, on any analysis, it renders the plaintiff’s claim that the policy has not be repudiated as, at an absolute minimum, a viable claim. The plaintiff contends that there is no evidence before the court that the policy was ever sent to Bri-Mo Ltd and there is no evidence that BRI-MO Ltd was ever notified that anything was outstanding. The letters to Jardine Lloyd Thomas referred to “declarations” on 10th June 2005 and “outstanding wage declarations,” on 23rd March, 2006. At no time is there reference to the actual condition being relied on or to the allegedly outstanding “auditor’s certificate.” The plaintiff submits that the letter reporting to repudiate the policy, dated 17th May, 2006, referred to outstanding “audited wage declarations” rather than an outstanding “auditors’ certificate.” The plaintiff submits that the repudiation, even on its own terms, was defective.
21. The plaintiff further relies on the judgment of the English Court of Appeal in George Hunt Cranes Limited v Scottish Boiler and Insurance Company Limited [2002] 1 All ER (Comm) 366. This judgment has been noted in Buckley on Insurance Law (3rd Editions at paragraphs 538-539.) There, the author noted that “a blanket classification of a series of terms as ‘conditions precedent’ was to be viewed with suspicion and each terms had to be considered separately.” The plaintiff submits that the term of the policy is not a condition precedent but was either a mere warranty or a collateral stipulation.
22. Alternatively, the plaintiff submits that the identified condition relied upon by Allianz was, if not a mere condition or collateral stipulation, a condition subsequent. The plaintiff contends that it is clear that the policy was effective as of the date of Mr. Murphy’s accident on 9th January, 2004. When the claim was notified to Bri-Mo Ltd on 11th March, 2004, the plaintiff argues that the policy was effective and subsisting. The plaintiff states that the complaint about an outstanding “auditors’ certificate” could not have arisen until 90 days after, until March 2005 i.e. 90 days after the conclusion of the relevant insurance period. The plaintiff submits that it would be illogical that Allianz have an ongoing liability to Bri-Mo Ltd from January 2004 to March 2005 and then it disappeared. That would be to operate as a retrospective invalidity. There is no provision for that in the contract.
23. The judgment of Kearns J. in McCarron v Modern Timber Homes Limited (Kearns J, 3rd December 2012) was delivered after the plaintiff issued his proceedings. The plaintiff argues that it would appear from this decision that the Court held that the Statute of Limitations does not run against a plaintiff seeking to rely on s. 62 of the Civil Liability Act 1961 until the insured company has been put into liquidation and damages have been assessed. In these circumstances, the plaintiff argues that the issuing of proceedings by Mr. Murphy was necessary and prudent. These proceedings ought to be seen as a “protective writ” in that regard, the plaintiff argues, and it should be noted that the proceedings were issued two days before the expiry of six years from the date of the purported repudiation of the policy.
24. In relation to the plaintiff’s reliance on Bradley v Essex & Or [1012] 1 KB 4 & 5 in submitting that Allianz was not entitled to repudiate because the condition relied upon was not, or ought not to have been, a condition precedent, counsel for the defendant submits that this authority is of no assistance to the plaintiff. Firstly, it is argued that Bradley is entirely distinguishable from the present case because the challenge to the refusal of an indemnity was taken by the insured himself against the insurer and in a timely fashion. In this instant case, the defendant submits that there is simply no privity of contract between the plaintiff and Allianz, and the challenge is being made some eight years after the repudiation. Secondly, the defendant submits, the condition precedent in Bradley is in any event distinguishable from the condition at issue in these proceedings, Policy Condition No. 8. This condition explicitly provides, at (b) (ii), that “should the insured fail to supply such auditors’ certificate in accordance with this Condition then the company will not provide any indemnity for any bodily injury nuisance or loss of or damage to material property which might otherwise be the subject of indemnity under this policy in the period of insurance for which the auditors’ certificates remain outstanding.” The defendant submits that the consequences of non-compliance with Policy Condition No. 8 in this case could not have been set out in clearer terms in the provision.
25. In the plaintiff’s supplemental submissions, it is stated that, in having purported to repudiate its policy with Bri-Mo Ltd, Allianz “has behaved in an opportunistic manner.” In the affidavits filed on its behalf, it is suggested that Allianz gave the plaintiff an undertaking which it failed to honour and that, had the plaintiff been advised of the repudiation, “the plaintiff’s case would have been dealt with in an entirely different manner” (Second affidavit of Adrian Ledwith sworn on 15th May 2014.) However, counsel for the defendant argues that none of this is borne out by the facts before the Court. The plaintiff initiated the proceedings on 29th April 2004. By the time the claim was notified to Allianz in its capacity as Bri-Mo’s insurer, Bri-Mo had already instructed solicitors, Fitzsimons Redmond, to act on its behalf in respect of the proceedings. The statement of claim was delivered to the first named defendant in late 2007 and to the second named defendant in early 2008. Solicitors entered an appearance on behalf of Mr McShane on 25th June, 2008. In January 2010, Fitzsimons Redmond informed the plaintiff’s solicitor that Allianz was not providing an indemnity. In July 2010, Fitzsimons Redmond informed the plaintiff’s solicitor of their intention to come off record. Between May 2005 and July 2010, Bri-Mo had solicitors on record for it in the proceedings with whom the plaintiff’s solicitor dealt directly. On or around 19th September 2010, Bri-Mo was struck off the Register of Companies. It was not until 14th November 2011 that the plaintiff obtained judgment in default of defence against Bri-Mo Limited, well over 7 years after initiating the proceedings. The plaintiff does not appear to have pursued Mr McShane, who was his direct employer, and has offered no explanation for not doing so. It was only some months after he obtained judgment in default of defence against Bri-Mo, in March 2012, that the plaintiff’s solicitor sought to re-engage with Allianz, which, counsel alleges, he had known for some time, had long since repudiated the claim. While it is for the plaintiff to explain why the proceedings were advanced in this manner, and why the plaintiff’s solicitor never engaged with Allianz from 18th January 2006 until March 2012, it is implausible for the plaintiff or his solicitor to suggest, in the context of this motion, that the responsibility for the manner in which the proceedings have been conducted like with Allianz. The plaintiff’s claim, insofar as it subsists, is against Bri-Mo Limited and Mr McShane, not Allianz, the defendant submits.
26. In respect of the claim, as appears from the correspondence between Allianz and JLT, notwithstanding the late notification of the claim on behalf of Bri-Mo, Allianz investigated the claim and engaged with both Bri-Mo and the plaintiff’s solicitor in this regard. However, despite being afforded every opportunity to submit the required documentation over the course of almost 12 months, Bri-Mo failed to furnish the necessary auditor’s declarations in respect of wages required under policy condition no. 8. For this reason, Allianz eventually repudiated liability in respect of the claim on 17th May 2006.
27. In respect of these proceedings, when Mr Ledwith re-engaged in correspondence with Allianz in March and April 2012, Allianz confirmed the refusal of indemnity to him under cover of letter dated 25th April 2012. Although the plaintiff’s solicitor knew of the repudiation since at least 2012, the plaintiff’s solicitor nonetheless threatened proceedings against Allianz, which then issued on 15th May 2012. Despite issuing the proceedings, and Allianz’s entry of an appearance on 30th May 2012, no statement of claim has ever been delivered and no steps whatsoever were taken in relation to the proceedings. Having received no response to correspondence from solicitors for the defendant to the plaintiff’s solicitor asking that proceedings be discontinued, the defendant thereafter issued this motion to strike out the proceedings.
28. Counsel for the defendant argues that at the time these proceedings were instituted, on 15th May, 2012, the plaintiff’s solicitor was, or ought to have been, aware that Bri-Mo was not and never had been in liquidation. The plaintiff’s solicitor was also aware, from at least January 2010, that Bri-Mo’s claim for an indemnity had been repudiated by Allianz. In the circumstances, it is argued by the defendant, the plaintiff’s solicitor was, or ought to have been, aware that the plaintiff had no valid cause of action against Allianz. Notwithstanding this knowledge on the plaintiff’s solicitor’s part, proceedings were threatened and then issued on behalf of the plaintiff against Allianz. Having taken no steps in the proceedings since they issued on 15th May 2012, and having failed to comply with its obligation to deliver a statement of claim, the plaintiff now seeks to resist this motion to strike out on the basis that the plaintiff might now proceed to have damaged assessed against Bri-Mo and have Bri-Mo placed in liquidation. The defendant concludes by saying that in the interests of the efficient use of court time, the proceedings should have been discontinued following the letter from the solicitors for the defendant dated 27th January 2014.
Hearsay Evidence
29. Counsel for the plaintiff argues that that affidavit of Ms. Rackard is almost entirely comprised of hearsay evidence. Ms. Rackard’s averments represent out of court statements from employees of Allianz or they are relying on documents which would have to be proved by an employee of Allianz. In that regard, the plaintiff notes the recent judgment of O’Malley J. in Ulster Bank Ireland Limited v Darmody [2014] IEHC 140 where she upheld the well-established proposition that an employee of a related company could not give evidence as to the books and records of that company in proceedings. O’Malley J. placed reliance upon The Criminal Assets Bureau v Hunt [2003] 2 IR 168.
30. In response, counsel for the defendant argues that it is specifically provided in article 40, rule 4 of the Rules of the Superior Courts, and well-established in the practice of the Courts, that hearsay may be included in affidavits in interlocutory applications. In this case, Ms. Helen Rackard has exhibited the correspondence and other documents, including the policy, from her client’s file. This documentation speaks for itself and it is hearsay only on the most technical sense. Insofar as the plaintiff relies on the decision of O’Malley J. in the High Court in Ulster Bank v Dermody [2014] IEHC 140, it is submitted by the defendant that this decision concerned the very different issue of the admissibility of banking records and, in any event, arose in the context of an application for summary judgment, as opposed to an interlocutory application in plenary proceedings.
Application to “Stay” Proceedings
31. Counsel for the plaintiff, in its oral and supplemental submissions, argues that conflicts in evidence between parties are to be resolved in favour of the party against whom a dismissal is sought (CNN v Butterley [1997] 1 ILRM 28 and Mehta v Marches The High Court 5 March 1996.) Applying this legal tenet to the application of Allianz, counsel argues that it is clear that there is a factual contest as to whether Allianz in fact sought any information from Bri-Mo Ltd and there is a further contest as to whether Allianz or Jardine Lloyd Thompson communicated Allianz’s information requirements to Bri-Mo Ltd or warned Bri-Mo Ltd of the potential repudiation. These matters are clearly and directly in dispute. The Courts have established that a claim should not be dismissed where a stay of proceedings might afford a fair resolution for the parties.
32. It is submitted by the defendant that this is not an appropriate case in which to grant a stay of proceedings for the following reasons:
(1) As things currently stand, the plaintiff has no cause of action against Allianz;
(2) While the plaintiff now seeks a stay on the basis that it would proceed to seek an assessment of damages and to place Bri-Mo in liquidation, the plaintiff has not offered any undertaking to the Court in this regard;
(3) Even if such an undertaking were offered at this late stage, it is appropriate to have regard to the fact that the plaintiff has taken no steps on either front since he obtained judgment in default of defence on 14th November, 2011, almost two and a half years ago, and since he initiated these proceedings on 15th May, 2012, over two years ago;
(4) The plaintiff has also failed to comply with the Rules of the Superior Courts by failing to deliver a statement of claim. Indeed it is suggested that, having initiated the proceedings, a statement of claim could not be drafted and delivered “pending advices from Allianz as to why they were repudiating liability and their failure to provide this information”;
(5) Even if the plaintiff sought an assessment of damages and placed Bri-Mo in liquidation at this stage, he would still face the fundamental difficulty that he has no valid claim in respect of which moneys are payable within the meaning of s. 62 of the Civil Liability Act 1961 because the claim under Bri-Mo’s policy has been validly repudiated over eight years ago;
33. For all these reasons, and in light of the broader circumstances in which the proceedings have been instituted, it is submitted by the defendant that this is an appropriate case for the exercise of the Court’s sparingly used jurisdiction to strike out proceedings. In circumstances such as the instant case, it is clear from the two recent authorities of this Court, Richard McCarron v Modern Timber Homes Ltd (In Liquidation) & Ors [2012] IEHC 530 and Hu v. Duleek Formwork Ltd. (In Liquidation) and Aviva [2013] IEHC 50, that the appropriate course of action where there is no valid cause of action is to strike out the proceedings entirely.
Conclusion
34. The jurisdiction to strike out proceedings can arise in two ways, which are clearly set out in the seminal judgment of Costello J. in Barry v. Buckley [1981] 1 I.R. 306. First, Order 19, rule 28 of the Rules of the Superior Courts permits the Court to strike out any pleading “on the ground that it discloses no reasonable cause of action…” or, in the case of the action being shown by the pleadings to be frivolous or vexatious, permits the Court to stay or dismiss the action. Secondly, apart from Order 19, rule 28, “the Court has an inherent jurisdiction to stay proceedings”, a jurisdiction which “exists to ensure that an abuse of the process of the Court does not take place”. 3 Costello J. continued:
“This jurisdiction should be exercised sparingly and only in clear cases; but it is one which enables the Court to avoid injustice, particularly in cases whose outcome depends on the interpretation of a contract or agreed correspondence. If, having considered the documents, the Court is satisfied that the plaintiffs 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.”
35. In Sun Fat Chan v Osseous Ltd [1992] 1 IR 425, the Supreme Court (McCarthy J.), after referring to Barry v. Buckley, commented:
“… 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 procedure is peculiarly appropriate to actions for the enforcement of contracts, since it is likely that the subject matter of the contract would, but for the existence of the action, be the focus of another contract.”
36. These principles have been consistently upheld in the Superior Courts of Ireland and most recently in the Supreme Court judgment of Clarke J. in Lopes v. Minister for Justice, Equality and Law Reform [2014] IESC 21 at paras. 2.3 – 2.9, which judgment succinctly deals with the distinction between the inherent jurisdiction and the jurisdiction under the Rules of the Superior Courts, and the entitlement of this Court acting under its inherent jurisdiction to look beyond the pleadings to the facts of the case which have been placed before the court. This Court accepts that the jurisdiction involved is one to be used sparingly.
37. The central issue in my view in this matter is the application of s. 62 of the Civil Liability Act 1961, which states:-
“Where a person (hereinafter referred to as the insured) who has effected a policy of insurance in respect of liability for a wrong, if an individual, becomes a bankrupt or dies or, if a corporate body, is wound up or, if a partnership or other unincorporated association, is dissolved, moneys payable to the insured under the policy shall be applicable only to discharging in full all valid claims against the insured in respect of which those moneys are payable, and no part of those moneys shall be assets of the insured or applicable to the payment of the debts (other than those claims) of the insured in the bankruptcy or in the administration of the estate of the insured or in the winding-up or dissolution, and no such claim shall be provable in the bankruptcy, administration, winding-up or dissolution.”
38. It is in my view quite clear that in order for the plaintiff to be in a position to succeed under s. 62 of the Civil Liability Act 1961, the insured company must, in this instance, be wound up and secondly, monies payable to the insured under the policy shall be applicable only to discharge in full all valid claims against the insured in respect of which monies are payable.
39. The factual situation which is not contested is that the insured, in this instance Bri-Mo Ltd, is not now and never has been in liquidation and despite the submissions as made by counsel on behalf of the plaintiff in an effort to circumvent the factual situation that prevails, in my view it is a basic principle for the plaintiff to set up its case that Bri-Mo Ltd would have to be wound up. Accordingly, the facts of this case do not bring the plaintiff within the provisions of s. 62 of the Civil Liability Act 1961, and on this principal basis alone it is the view of this Court that the plaintiff’s case cannot succeed and is, in effect, doomed to failure.
40. In respect of the subsidiary argument that even if Bri-Mo Ltd was in liquidation, again to set up the plaintiff’s case he would have to satisfy the court that he was entitled to monies payable to the insured under the policy and I am satisfied, having regard to the particular circumstances of this case, that the claim that was brought in respect of the plaintiff’s injury was validly repudiated by the defendants over seven years previously and that the solicitors for the plaintiff were aware of this fact from at least January, 2010. furthermore, the repudiation was never challenged by the insured.
41. Further, in this regard, in McCarron v. Modern Timber Homes Limited & Ors , Kearns P. stated that it has long been established that an insured person’s rights of indemnity under a policy of insurance against the liability to third parties does not arise under the existence and amount of his liability to the third party is first established either by action, arbitration or agreement, and that a valid claim can not be so characterised until liability has been established against the employer and the quantum of the claim assessed.
42. In Hu v. Duleek Formwork Limited (in liquidation) & Aviva [2013] IEHC 50, this Court (Peart J.) considered in some detail the provisions of s. 62 of the Civil Liability Act 1961, and stated:-
“I am satisfied in this case that the plaintiff has no privity of contract with Aviva. That is very clear. He cannot seek to enforce the contract of insurance as between the first named defendant and Aviva, especially in circumstances where he does not dispute that the excess payment was a condition precedent to liability under the policy, and does not dispute that the excess payment was requested to be paid and was not paid. Monies are therefore not payable to the insured under the policy. If there was some arguable doubt still existing as to whether or not Aviva was entitled to repudiate liability, then the judgment of the Supreme Court in Dunne v. P.J. White & Co. Ltd [supra] could be of assistance, given the remarks of Finlay C.J, albeit obiter in his judgment, that the onus fell upon the insurer to prove what it was alleging, namely that it was entitled to repudiate liability. But that issue is not live in the present case on the evidence which has been adduced. In my view, s. 62 of the Act of 1961 does not provide the plaintiff with a remedy in this case against Aviva.”
43. Accordingly, I am satisfied that even if Bri-Mo Ltd was in liquidation, the plaintiff’s claim would still be unsustainable because it does not constitute a valid claim against the insured in respect of which monies are payable under the policy of insurance, particularly by reason of the fact that the quantum of the insured liability has not been assessed.
44. There is no privity of contract between the defendant and the plaintiff in these proceedings, and the defendant owes no duty at law under contract, statute or in tort to the plaintiff such as might give rise to a claim against it in damages.
45. Issue was taken with the content of the affidavit of Ms. Rackard, solicitor for the defendants, on the basis that the averments as therein contained were based on and contained matters of hearsay evidence. Counsel for the plaintiff took the view that the documents should be proved and made reference to the recent judgment of O’Malley J. in Ulster Bank Ireland Limited v. Darmody [2014] IEHC 140. The issue, however, in the matter before O’Malley J. centred on the well established proposition that an employee of a related company cannot give evidence as to the books and records of that company in proceedings, and further reliance was placed on The Criminal Assets Bureau v. Hunt (the Supreme Court, 18th March, 2003).
46. I take the view relying on the specific provisions in Article 40, r. 4 of the Rules of the Superior Courts that it is the well established practice of the Superior Courts that hearsay evidence may be included in affidavits in interlocutory applications, and in this particular instance all that Ms. Rackard has done is exhibited correspondence and other documents, including the relevant policy of insurance from her client’s file which documentation, in my view, effectively speaks for itself and can only be described as hearsay in the most technical sense. In an application such as is presently before the court, in accordance with the Rules of the Superior Courts and well established practice, I take the view that this Court is entitled to have regard to the content of Ms. Rackard’s affidavit, albeit based on hearsay evidence and to attach such weight to the evidence as the court in the exercise of its discretion deems appropriate. The situation that arises in this case, having regard to the particular material referred to, would clearly not warrant the costs involved in having several different parties swear affidavits in respect of documents such as the defendant’s policy of insurance which, in any event, is not disputed. Accordingly, I do not consider that there is any merit in the objection as raised on the plaintiff’s behalf in this regard.
47. As regards the proposal on the plaintiff’s behalf that the proceedings be stayed I prefer the arguments as advanced on the defendant’s behalf and do not consider that there is any merit in granting a stay, particularly having regard to the conclusion I reach herein, in relation to s. 62 of the Civil Liability Act 1961 and the passage of time since the cause of action herein arose.
48. In my view the particular circumstances of this application warrant the exercise of the sparingly used jurisdiction of the court to strike out proceedings. Section 62 of the Civil Liability Act 1961, has no application in the particular circumstances that arise, and for the reasons as set out herein in my view the plaintiff’s claim as against the defendant is doomed to failure and accordingly, pursuant to O. 19, r. 28 of the Rules of the Superior Courts the plaintiff’s claim will be struck out on the ground that the proceedings disclose no reasonable cause of action and further, there will be an order pursuant to the inherent jurisdiction of the court striking out the proceedings on the ground that they are bound to fail.
Irish Bank Resolution Corporation v Purcell [2014] IEHC 525
JUDGMENT of Mr. Justice Cregan delivered on the 24th day of October, 2014
Introduction
1. This is an application brought by the Central Bank of Ireland (as a third party in these proceedings) seeking the dismissal and/or striking out of the first named defendant’s third party statement of claim against the third party. The application to strike out the first named defendant’s proceedings is brought pursuant to the inherent jurisdiction of the High Court and/or pursuant to Order 19 rule 27 and/or rule 28 of the Rules of the Superior Courts and/or pursuant to Order 16 rule 8 (3). The grounds upon which the application is brought is that the first named defendant’s third party statement of claim discloses no reasonable cause of action against the third party and/or that the claims are frivolous and/or vexatious and/or an abuse of process and/or are bound to fail.
2. The third party and the first defendant have filed numerous affidavits in this application and have also filed legal submissions. The matter was at hearing for four days.
The parties to the proceedings
3. The first named plaintiff (IBRC) is a limited liability company incorporated in the state. IBRC was formally known as Anglo Irish Bank Corporation Ltd but on 7th February, 2013, a special liquidation order was made pursuant to section 4 of the Irish Bank Resolution Corporation Act 2013 for the purposes of winding up IBRC. Kieran Wallace and Eamonn Richardson of KPMG were appointed as joint liquidators of IBRC. As is stated at paragraph 8 of the affidavit of Sean Barton dated 5th June, 2013, (sworn on behalf of the plaintiffs) “In accordance with the provisions of regulation 17 (4) of the European Communities (Reorganisation and Winding up of Credit Institutions (Regulations) 2011, IBRC (in special liquidation) is operating with the consent and under the supervision of the Central Bank of Ireland.”
4. The second plaintiff – Irish Nationwide Building Society – is a building society registered under the Building Societies Act 1989 with its registered office at Grand Parade, Dublin 6 within the state. INBS was one of the financial institutions whose debts were guaranteed by the State in September, 2008. Between 2008 and 2010 it suffered financial losses in excess of 6 billion euros arising from bad loans. INBS was effectively nationalised on 31st March, 2010.
5. On 1st July, 2011, the High Court made a transfer order (pursuant to an application by the Minister for Finance) whereby all the assets and liabilities of INBS were transferred by INBS as beneficial owners to IBRC. The assets and liabilities which were transferred to IBRC included all causes of action, that related to any period prior to the transfer time which INBS were entitled to make against any person, in respect of any negligence, or wrongdoing on any ground whatsoever.
6. The first named plaintiff – IBRC – therefore joins in the proceedings as the person entitled, pursuant to the transfer order to prosecute the causes of actions and claims set out in the statement of claim. INBS also joins in the proceedings as a plaintiff to the extent necessary having regard to the terms of the transfer order.
7. The first defendant Mr. Purcell is a company director and he was an executive director of Irish Nationwide Building Society from 30th December, 1994, to 31st March, 2010. In addition Mr. Purcell was Chief Financial Officer (CFO) and secretary of INBS from the 5th May, 1993, to 31st March, 2010.
8. The second named defendant is also the company director and was non executive director of INBS from February, 2006 to April, 2009.
9. The third named defendant was a non executive director of INBS from April, 2001 to June, 2009.
10. The fifth named defendant was chairman of the Board of directors of INBS from May, 2001 to February, 2009 and also a non executive director from April, 1995 to February, 2009.
11. The proceedings have been discontinued as against the fourth named defendant in the proceedings Dr. Cornelius P. Power.
12. The Central Bank of Ireland was joined to the proceedings as a third party by order of the High Court (Kelly J.) made on 18th November, 2013, on the application of the first named Defendant. Thereafter a third party notice was served dated the 5th December, 2013. An Appearance was entered on behalf of the third party to the third party notice dated 16th December, 2013. The third party Statement of Claim was served on 17th January, 2012.
13. In addition, KPMG, a firm of accountants were joined as another third party in a separate application.
Application to the Commercial List
14. On 5th June, 2013, the plaintiffs made an application to admit the proceedings to the Commercial List of the High Court. On 10th June, 2013, the High Court (Kelly J.) made an order transferring the proceedings to the commercial list. The application to transfer the proceedings to the commercial list was in itself unremarkable. However the grounding affidavit of Sean Barton, a solicitor with McCann Fitzgerald, solicitors for the plaintiffs in these proceedings contained a number of averments which set out the background to the litigation and the background to the application. Some of these averments have a bearing on my judgment in this case and I therefore set out these averments below.
15. At paragraph 19 of his affidavit Mr. Barton states as follows:
“It is a particular feature of the plaintiff’s claim that an unusual management structure operated in INBS. In particular, it is alleged by the plaintiffs that until his resignation in April 2009, the INBS Board, which at all material times, included each of the defendants, delegated by resolution to the Chief Executive officer, Mr. Fingleton all its powers for the effective management and control of INBS. This included significant responsibility and autonomy in respect of the lending functions and decision making powers of INBS, meaning that there was unusual and excessive concentration of the powers of INBS in the hands of Mr. Fingleton. It is an essential element of the plaintiff’s case that this excessive or improper delegation, allied with a lack of effective supervision or control of Mr. Fingleton was in breach of the duties owed by the defendants to INBS. (Emphasis added).
16. Mr. Barton then sets out in his affidavit that up to the 1990s the INBS loan book was predominantly based on residential lending but that in the early 2000s INBS significantly increased its activity in commercial lending and, in particular, in lending for commercial property development. He also states that a considerable part of the extraordinary losses suffered by INBS arose from huge impairments in its commercial property development lending in the period up to 30th September, 2008. He also stated that these “catastrophic losses and impairments are further particularised in the Statement of Claim by reference to the recent financial statements by INBS, and the significant discounts or “haircuts” applied by NAMA in acquiring distressed loans from INBS.” (see paras. 21 and 21 of the affidavit)
17. In paragraph 26 of his affidavit Mr. Barton, (having set out various investigatory work which had been carried out by the Board of INBS and accountants Ernst and Young) continued as follows:
“Following the further INBS investigation work arising from the preliminary findings, further reports were delivered by Ernst and Young and my firm – to the 2009 – 2011 Board of INBS in the period from February 2011 to June 2011 on lending practices and legacy governances at INBS and on civil liability issues and other matters arising from the INBS investigation. These reports have been shared with the Central Bank on terms that INBS continues to assert privilege over them as against any person other than the Central Bank of Ireland and that the reports remain confidential as among the authors, INBS and the Central Bank of Ireland and they may not be disclosed by any one of those three parties to any other person without the prior written consent of the other two parties. (Emphasis added).
18. Moreover at para. 29 Mr. Barton states as follows:
“On 22nd December, 2011 the Central Bank of Ireland commenced an administrative sanctions procedure against INBS pursuant to Part III (c) of the Central Bank Act 1942. I understand that former officers of INBS including the defendants may also be interested in that administrative sanctions procedure which is ongoing. The plaintiffs have co-operated with the Central Bank of Ireland in progressing their procedure. I should alert this court to the fact that these proceedings may need to be managed so as to avoid any conflict (in terms of timing) between steps or events in these proceedings and steps or events scheduled in the Central Bank of Ireland procedure. Having regard to this feature of the proceedings, the Central Bank of Ireland has been put on notice of the present application for entry to the commercial list.”
19. At para. 40 of the affidavit Mr. Barton states as follows:
“These proceedings relate to essentially to the manner in which INBS was managed, principally by the defendants and Mr. Fingleton as its Board and also by those, principally Mr. Fingleton, to whom the Board had delegated powers, over the period of years prior to the state guarantee both generally and as reflected in specific lending transactions entered into by INBS. In order to obtain a full understanding of these matters it was necessary to review very significant quantities of documents and information referred to in more detail below, which reflected the governance arrangements in place in INBS in the period up to 2008 and to review in great detail the large number of lending transactions entered into by INBS in the same period. These proceedings, in my view, should be distinguished very clearly from the more conventional breach of contract or tort claim which usually has its focus in a specific transaction or set of events. The nature of this case is that it relates to the management generally of INBS over time and necessarily required the review of a very large number of transactions and sets of events. The scale of material that had to be reviewed was, in my view, of a different order to what would be the case in a more conventional breach of contract or tort claim. In addition to arriving at an understanding of the general corporate governance issues, it was deemed necessary to identify particular transactions in respect of which there are grounds for complaint against the defendants, having regard to the role they played or ought to have played. (Emphasis added).
20. Again at para. 43 Mr. Barton states as follows:
“Additionally, arising from the State’s investment in (or rescue of) each of INBS and IBRC, each of the plaintiff has been party to a relationship framework with the Minister for Finance arising from which the Minister must be informed and/or consulted about, or the Minister’s consent may be required to authorise, certain key decisions including decisions in relation to the prosecution of the present proceedings”. (Emphasis added).
The pleadings
21. The statement of claim was delivered on 17th April, 2013. It is a lengthy document running to some 65 pages. It sets out the details of the plaintiffs, the defendants, the functions, powers and duties of the defendants and, at para. 21, deals with the issue of delegation by the Board to the Chief Executive/managing director.
22. Rule 23 (1) of the rules of the INBS provided that the society shall be under the control and management of the Board of directors of the society. Paragraph 21 of the statement of claim pleads that under rule 23 (4) of the rules of the building society, the Board of directors of the building society “shall have power to delegate any of its powers or duties to such committee or committees of the Board or to such senior officials of the society as it thinks fit”.
23. Paragraph 22 of the statement of claim provides as follows:
“Notwithstanding the provisions of rule 23 (4) it was not within the competence of the Board and the members of the Board could not reasonably have understood it to be within the Board’s competence, to delegate its functions in such a manner and/or to such an extent that the society was in reality no longer under the control and management of the Board as required by rule 23 (1) (and by the provisions of the act of 1989 set out above)” (Emphasis added)
24. It is clear therefore that a central plank of the plaintiffs’ case against the defendants is that there was, in effect, a wholly unlawful delegation of powers.
25. Paragraph 23 of the Statement of Claim provides:-
“The Board and the defendants as members of the Board owed a duty to the society:
a. Not to abdicate or surrender their respective functions and duties as such
b. To ensure that the business of the society was under the control and management of the Board at all times in accordance with rule 23 (1)
c. Not to make or to allow to continue an excessive delegation of the powers duties discretions and/or authorities of the Board relating to the business of the society to the Chief Executive”.
26. Paragraph 24 of the statement of claim pleads that, where the Board did delegate powers to the Chief Executive, the Board and members of the Board owed a duty to the society to “supervise, review and carefully monitor the exercise by the Chief Executive of same”.
27. Paragraph 25 of the statement of claim pleads that the Board and members of the Board of directors remained, at all times, responsible for the acts and omissions of the Chief Executive in the exercise by the Chief Executive of all powers delegated to him by the Board.
28. Paragraph 26 of the statement of claim pleads the three effective delegations by the Board to the Chief Executive, Mr. Fingleton, and given the centrality of this plea to the issues in this application I set it out in full as follows:
“At all times material to these proceedings, and for the avoidance of doubt from at the latest 31st March, 1981 until his resignation in April 2009, the Board delegated to the Chief Executive Mr. Fingleton, all its powers for the effective management and control of INBS as particularised hereunder.
(a.) By resolution of the Board passed at its meeting on 31st March, 1981 it was resolved that the Board delegate to the Chief Executive all powers necessary
“for the practical, effective and efficient management, promotion and development of the society.” The powers delegated included those “to set vary and alter interest rates, these terms and conditions of all loans, whether secured or unsecured, and on all investment and deposit accounts, to review and settle all documentation whether legal or otherwise, to initiate legal action in connection with arrears and in the pursuance and protection of all the societies assets and interests, to make arrangements with individual borrowers, investors and depositors in the normal course of business.”
(b.) By resolution of the Board passed at its meeting on 13th December, 1994, it was resolved as follows:
“It was proposed by Mr. Murphy seconded by Mr. Maloney and unanimously agreed that all powers vested in the Board necessary for the effective and efficient management, promotion and development of the society be delegated to the managing director.”
(c.) By resolution of the Board passed at its meeting on 25th August, 1997 the resolution of 13th December, 1994 was amended by the replacement of the first paragraph with the following:
“It was agreed that such powers vested in the Board necessary for the practical effective and efficient management promotion and development of the society be formally delegated to the managing director”.
29. Paragraph 27 is the foundation stone of the plaintiffs’ case against the defendants. It provides as follows:-
“The delegation and/or the continuation and/or failure to revoke the said delegation aforesaid was in breach of the duties of the Board and of the defendants as members of the Board pleaded at para. 23 above and constituted an unlawful and improper abdication by the Board and its members of their respective functions and duties and a serious failure to comply with rule 23 (1).” (Emphasis added).
30. Paragraph 28 also provides as follows:-
“Further, at all material times as aforesaid, contrary to what was appropriate for an institution of its scale and in breach of the duty of the Board and of the defendants as members of the Board pleaded at para. 23, in practice the Chief Executive enjoyed complete (or near complete) autonomy and freedom from oversight by the Board in his conduct of the business of the society such that there was unusual and excessive concentration of the powers of the society in the hands of the Chief Executive. The Board (including for the avoidance of doubt the defendants and each of them) failed to take any or any appropriate steps to ensure that the necessary oversight was established or maintained or the concentration of the powers of the society in the hands of the Chief Executive was diluted”. (Emphasis added).
31. Paragraph 29 of the statement of claim pleads that in practice the Chief Executive exercised control over and enjoyed very significant responsibility for, the lending functions of the society, including commercial and development lending, without any or any sufficient Board oversight, such that there was unusual and excessive concentration in the hands of the Chief Executive of the decision making power of the society. Furthermore, the Chief Executive made, and was permitted by the Board to make, lending decisions which were the function of the Board and/or sought and obtained retrospective approval for these decisions already made by him.
32. There follows at para. 29 eighteen specific transactions in respect of this allegation.
33. Paragraph 30 of the statement of claim pleads that the Board is legally responsible for the decisions, and actions of the Chief Executive in the exercise of the power delegated to him by the Board.
34. Paragraph 31 of the statement pleads that, although the lending procedures of the building society required a credit committee recommendation and Board approval for all loans of €1m or more, in practice the Chief Executive was able to authorise such loans prior to reference to the credit committee and/or the Board, and did so without any adequate assessment of the loans. It also pleads that “the Board retrospectively approved such loans without any or any adequate consideration of the breach of procedures occasioned by the authorisation of loans prior to Board approval having been obtained”.
35. Further paragraphs of the statement of claim pleaded that the defendants owed a duty to INBS to ensure that the building society kept proper accounting records and established and maintained proper systems of control, that the defendants had duties, including fiduciary duties, as directors to INBS, and that the defendants had a duty to exercise reasonable care, skill and diligence in the exercise of their powers and duty.
36. Paragraph 49 in the statement of claim also pleads that the failures and breaches of duty on the part of the defendants caused and contributed to the massive losses sustained by INBS from 2008 onwards.
37. In the prayer to the statement of claim the plaintiffs claim damages for breach of contract, damages for negligence, damages for breach of duty including breach of fiduciary duty and damages for breach of statutory duty and an order directing the repayment by the defendants of all amounts that may be due and owing by them to the plaintiffs. The plaintiffs’ claim, although not particularised, was agreed to run to hundreds of millions of euro.
The Defence of the first named defendant
38. It is also important to note certain paragraphs of the Defence of the first named defendant. In particular para. 15 of the Defence pleads as follows:-
“It is admitted that certain powers were formally delegated to the Chief Executive through delegations passed at Board meetings which are pleaded as particulars at para. 26(a), 26(b) and 26(c) of the Statement of Claim. It is denied that there was any wrong on the part of the first named defendant in approving the said delegation. It is expressly pleaded that the power of delegation is provided for in the rules of the Society at rule 23(4) (d). It is further pleaded that the Financial Regulator was fully aware of and approved the delegation which existed to the managing director. The said delegation was considered by the Financial Regulator and amended at its request at the time of its implementation.” (Emphasis added)
39. Thus the first named defendant pleads fully that this delegation was done with the full knowledge and consent of the Central Bank.
40. Paragraph 94 of the defence pleads:
“It is denied that the first named defendant failed to exercise and/or adequately monitor or supervise the activities of the Chief Executive in order to secure his compliance with duties owed by him to INBS and with the requirements of the Act.”
41. Likewise there is a full denial that there was any negligence, gross negligence, breach of duty, breach of fiduciary duty or breach of contract by the first named defendant.
42. Likewise at para. 101 there is a plea that the losses sustained by INBS were caused by the acts and/or omissions of the Regulator, the Central Bank and the Society’s auditors KPMG.
Replies to particulars
43. The plaintiffs raised a notice for particulars arising out of the defence of the first named defendant on 11th November, 2013. The first defendant replied to these notice for particulars. Certain of these replies to particulars are also relevant to the first named defendant’s defence in these proceedings.
44. The following are of most relevance.
1. Arising out of para. 15
(b) When did the Financial Regulator allegedly approve the delegation to the Managing Director and how and by whom was this approval communicated?
This is a matter for evidence.
Without prejudice to the foregoing, the Central Bank approved of the delegation as in 1997 at the latest [sic]. The Central Bank added a rider to the 1997 amendment to the delegation.
(c) In what respect was the delegation amended in line with a request from the Financial Regulator and how and by whom was that request communicated to INBS?
The Central Bank requested the addition of a rider in the following terms:
“It was agreed that it be formally noted that policy decisions in the following areas are reserved for the Board.
(a) Acquisition and disposal of assets of the Society or its subsidiaries that are material to it
(b) Investment, capital projects, Authority levels, Treasury and Risk Management Policies.
At No. 9:
Arising out of para. 101:
(a) Furnish particulars of all acts and omissions of the Regulator alleged to have cause loss to INBS?
The first named defendant will particularise the relevant acts and omissions on the part of the Regulator and the Central Bank after he has been furnished with discovery. Without prejudice to the foregoing the Central Bank of Ireland has been joined as third party to these proceedings and the particulars pleaded against the Central Bank of Ireland at present are:
1. The Central Bank of Ireland considered and approved the specific wording of the delegation passed at a meeting of the Board of INBS on the 25th August 1997.
2. The Central Bank of Ireland (including the former office of the Financial Regulator) continued their approval of the delegation, and never revoked same.
3. The Central Bank of Ireland (including the former office of the Financial Regulator) its servants or agents acted with reckless disregard as to the consequences of their continuation of the said delegation and their failure to revoke same.
45. In the Reply to the defence of the first defendant, the plaintiffs plead at para. 5 inter alia:
“It is not admitted that the Financial Regulator was fully aware of or approved the delegation to the Chief Executive nor is it admitted that the delegation was considered by the Financial Regulator and amended at its request at the time of its implementation. Further, the plaintiffs deny that the Regulator was fully aware of the manner in which the delegation operated in practice. Further and in any event the plaintiffs plead that, even if the matter as pleaded in para. 15 as regards the Financial Regulator are correct (which is not admitted) the same would not constitute a defence to the plaintiffs claim or mitigate or dilute the first named defendant’s liability to the plaintiffs”.
Third party statement of claim
46. In the third party’s statement of claim, the first defendant pleads as follows at para. 10:
“10. A central plank of the plaintiffs’ claim pleaded in the statement of claim (and in particular paras. 21 – 32 thereof) is that the delegation of certain powers, duties, discretions and/or authorities of the Board of the Irish Nationwide Building Society to the Chief Executive of the Society and/or continuation and/or failure to revoke the delegation aforesaid was in breach of the duties of the Board and of the defendants (including the first named defendant) as members of the Board. Further it is pleaded that the delegation constituted an unlawful and improper abdication by the Board and its members of their respective functions and duties and a serious failure to comply with rule 23(1) of the rules of the Building Society.”
47. Paragraph 11 pleads that the initial delegation of powers to the Chief Executive of the Society occurred in 1981 when the Board passed a resolution to delegate significant powers to the Chief Executive.
48. Paragraph 12 pleads that there was a further resolution of the Board on 13th December, 1994, delegating all powers vested in the Board necessary for the effective and efficient management, promotion and development of the Society to the managing director.
49. Paragraph 13 pleads that this 1994 resolution was amended on 13th December, 1997, and was reworded.
50. Paragraph 14 pleads that a rider or amendment to the said delegation was approved by the Board on 25th August, 1997.
51. Paragraph 19 pleads that INBS was at all material times regulated by the Central Bank who had a duty to maintain proper and effective regulation of the Society and that the specific powers and duties of the Central Bank were set out at para. 37 of the Building Societies Act 1989.
52. In paragraph 21, the first defendant pleads that the Central Bank owed a duty of care to the first named defendant, so that any approval and/or assent communicated by the Central Bank to INBS in respect of any act or decision of the Board of the Society was at all material times appropriate and that the relevant act and/or decision of the Board was neither unlawful and/or improper.
53. Paragraph 22 of the third party statement of claim pleads that:
(a) That if the plaintiffs succeed in their claim against the first named defendant in respect of the delegation of powers by the Board to the Chief Executive, the Central Bank is in turn liable to indemnify and/or contribute with respect to all costs, losses, damages and expenses payable to the plaintiffs by the first named defendant….
(b) The Third Party is liable for the losses and damage on the basis that it is a concurrent wrongdoer in the alleged losses suffered by the plaintiffs and on the basis that such loss, damage, inconvenience and expense were caused by the negligence, breach of duty and misfeasance in public office on the part of the third party.
54. The third party’s statement of claim then sets out the particulars of negligence, breach of duty and misfeasance in public office of the Central Bank. These particulars include:
1. At para. 23 – that the nature and scope of the wording of the delegation were approved by the Central Bank.
2. At para. 24 – that the Central Bank wanted a rider to the delegation and furnished the wording of this rider which was approved by the Board and included in the minutes of the meeting dated the 25th August, 1997.
3. That at all material times from 1997 onwards, the Central Bank were aware of, and approved, the delegation of powers to the Chief Executive.
4. That the delegation of powers by the Board was the subject of correspondence between the Chief Executive and the Financial Regulator in 2006 and 2007 wherein the Financial Regulator accepted the wide-ranging scope of the delegation.
5. That the delegation was authorised and approved by the Central Bank of Ireland and the continuation of the delegation was approved by the Central Bank and subsequently by the Financial Regulator. It is also pleaded that the approval for the delegation was never revoked by the Central Bank or the Financial Regulator.
6. That the Central Bank was at all material times aware that, in certain circumstances, approval of loans by the Board were given retrospectively by the Board.
7. That the Central Bank acted with reckless disregard as to the consequences of its continuation of the said delegation and their failure to revoke same.
8. That the Central Bank were aware that the continuation of the delegation of powers to the Chief Executive including the approval of loans was likely to cause loss to the society.
In the prayer of the first defendant’s claims against the third party, he pleads:-
1. A declaration that the third party must indemnify and/or provide a contribution in relation to any liability and/or damages which the first defendant must discharge to the plaintiffs.
2. Damages for negligence, breach of duty including breach of statutory duty and misfeasance in public office.
(An issue arose as to whether such damages for negligence would arise as a breach of a duty to the first defendant separately).
Affidavit of John Purcell grounding the application to serve a third party notice.
55. Mr. Purcell swore an affidavit on 13th November, 2013, grounding his application to issue and serve the third party notice. He refers to the fact, (in para. 16 of his affidavit) that the delegation of powers by the Board to the Chief Executive constitutes a central plank of the plaintiffs’ claim. His evidence is:
(a) The first delegation of powers to the Chief Executive by the Board occurred in 1981.
(b) The second delegation of powers by the Board to the Chief Executive occurred on 13th December, 1994.
(c) That the Central Bank wanted an amendment to the Board resolution delegating powers to the Chief Executive and that the Central Bank considered and approved a rider or amendment to the Board resolution delegating these powers;
(d) That the Central Bank rider was approved by the Board and included in the minutes of the Board meeting dated 25th August, 1997.
(e) The 1994 delegation was amended by resolution of the Board dated 13th December, 1997.
(f) Thus he says that the Central Bank had full knowledge and consent of this delegation of powers to the Chief Executive and indeed were intimately involved in the wording of the delegation and approving the wording of same.
56. He states at para. 22 of his affidavit that neither the Central Bank nor the Financial Regulator ever sought a revocation of the delegation.
57. At paragraph 23 he also states as follows:
“The delegation was the subject of correspondence between the Chief Executive of INBS and the Financial Regulator in the period between 20th November, 2006 to 14th March, 2007.
58. At paragraph 24 he states “Whilst the Regulator expressed his wish that the delegation be monitored and that risk tolerance controls be in place, there was no attempt whatsoever by the regulator to revoke the delegation. The delegation continued in being until Mr. Fingleton’s resignation from the Society in April, 2009.
59. At para. 25 he stated:-
“I say and believe and am advised that the Central Bank had a duty to INBS to maintain proper and effective supervision and regulation of the society. If the plaintiffs succeed in their plea that the delegation was an unlawful and improper abdication of powers and/or in breach of duty then, through their continued approval of the delegation, the Central Bank failed in their duty to maintain proper and effective supervision of INBS. I am entitled to indemnity and contribution for the Central Bank for any loss or damage arising from such finding.
26. Further and/or in the alternative, if the plaintiffs’ case against me succeeds I am entitled to indemnity and contribution from the Central Bank because had the Central Bank not approved the delegation or had they revoked the delegation, loss or damage to INBS would have been avoided or substantially reduced.
27. I say and believe and I am advised further that if the plaintiffs are proven correct in their case about the delegation, the Central Bank of Ireland, its servants or agents acted with reckless disregard as to the consequences of their failure to maintain proper and effective supervision of INBS insofar as their approval for the delegation continued unrevoked over a period of 12 years.
28. I say and believe and am advised that my claim for indemnity and contribution from the Central Bank arises from the same facts as the facts giving rise to the Plaintiffs’ claim against me in respect of the delegation pleaded at para. 22 – 31 of the Statement of Claim and damages claimed elsewhere in the body of the Statement of Claim.”
Correspondence between the Financial Regulator and the INBS.
60. Mr. Purcell in his affidavit also referred to certain correspondence which took place between the Central Bank/Financial Regulator and the INBS. It appears from this correspondence that the Central Bank/Financial Regulator conducted an inspection of INBS in June, 2006. As is stated in the letter from the Financial Regulator dated 20th November, 2006, to Michael Fingleton, Managing Director of INBS:-
“the purpose of the inspection was to conduct a review of the internal audit function, corporate governance procedures and, to a limited extent, the credit review function. A number of issues identified by the inspectors are outlined in the attached schedule together with recommendations in relation to these issues.”
61. In the schedule to the letter at page seven under the heading “Corporate Governance” it is stated as follows:
“Board
– M9 – Delegation of powers by the Board
The inspectors noted the Board extract dated 4th January, 2006 which details Board resolutions dated 13th December, 1994 and 25th August, 1997 dealing with the delegation of powers by the Board to the managing director.
. . . . . . .
Because the powers delegated only include certain specified powers, it is not clear to the inspectors as to the extent of the powers delegated. In addition it is not clear from a review of the Board minutes as to the monitoring by the Board of the exercise of such powers.
Recommendations.
The society shall confirm the following:
(1) Whether there is a list of delegated powers other than those set out in the Board extract dated 4th January, 2006. If applicable provide the Financial Regulator with this list.
(2) Whether the Board monitors the exercise by the managing director of powers delegated by the Board and if so how this is achieved.
(3) Whether the Board has set a risk tolerance in relation to the powers delegated to it by the managing director.”
62. On 31st January, 2007, Michael Fingleton on behalf of the INBS replied to the Financial Regulator. On the issue of corporate governance and delegation of powers by the Board Mr. Fingleton stated as follows:
“Corporate Governance.
Delegation of Powers by the Board.
The resolution dated 25th August, 1997 delegated “powers vested in the Board necessary for the practical effective and efficient management promotion and development of the society.” The powers delegated are not limited to the powers set out in the second sentence of the resolution.
The memorandum and rules and the mortgage deed require that many decisions, authorisations and variations in agreements be determined by the Board. In order to ensure that the Society, in the event of it being challenged legally, is in compliance with these requirements, the Board decided to delegate such powers, duties, discretions and authorisations relating to the management of the society to the managing director. This delegation relates to the practical day to day administration of the society.
Other than what is set out in the Resolution, the Memorandum and Rules and the mortgage deed, there is no listing of delegated powers. As the delegation relates to practical day to day matters there is no separate monitoring or setting of risk tolerance”.
63. On 14th March, 2007, the Central Bank/Financial Regulator replied to Mr. Fingleton and at page 4 of the letter dealing with the issue of delegation of powers by the Board stated as follows:
“Delegation of powers by the Board.
The Financial Regulator would expect the Board of the society:
• To monitor the powers delegated to the managing director on a periodic basis.
• To set risk tolerance levels. In particular the Financial Regulator would expect the Board to set risk tolerance levels for the risk to which it is exposed.
Affidavit of John Purcell dated 13th March, 2014
64. Mr. John Purcell, the first defendant, swore a replying affidavit in this application, dated 13th March, 2014.
65. At para. 24 of his affidavit, having set out his role within the Building Society, he stated that during his 24 years with INBS “I was in almost weekly contact with the Central Bank and subsequently, the Financial Regulator’s Office from 1989”.
66. At para. 31 he states that he is currently the subject of an ongoing administrative sanction procedure under the auspices of the Central Bank as prescribed by s. 33 of the Central Bank Act. He says that “there is a very significant degree of overlap between the issues being determined in these proceedings and the subject matter of the administrative sanction procedure”.
67. At para. 33, Mr. Purcell states as follows
“The Central Bank/Financial Regulator’s role in overseeing the activities of the Board of INBS can be described as paternalistic in nature. I was required to correspond with and contact the Central Bank and subsequently the Financial Services Regulatory Authority to ensure compliance with the wide variety of issues that arose on a regular basis. If there was uncertainty regarding any aspect of the Society’s functions, we sought and followed guidance from the Central Bank/Financial Regulator. Furthermore, the Central Bank did not hesitate to give directions. For example, in 2006, I recollect the Financial Regulator requiring the Board to have a contest for the election of a non-executive director, despite the fact that this was not required by the rules of the Society or the 1989 Act.
68. At para. 34 of his affidavit, he refers to the fact that “a central plank of the plaintiffs’ lengthy statement of claim is that the delegation of certain powers and functions of the Board of INBS to the Chief Executive, Michael Fingleton, constituted “unlawful and improper abdication of powers by the Board”.
69. At para. 35, he says “I describe the pleas regarding the delegation of power to the Chief Executive as being ‘a central plank’ to the plaintiff’s claim because many of the allegations in the statement of claim (particularly relating to lending) flow from the alleged wrongful delegation of power to the Chief Executive.
70. At para. 36 he notes that in his defence he has denied that this delegation constituted an unlawful and improper abdication of powers and he denies any breach of duty.
71. At paras. 38 – 40 of his affidavit, he says the delegation of powers to the Chief Executive was envisaged by Rule 23(4)(d) of the INBS Rules which stated that:-
“The Board shall have power from time to time to delegate any of its powers, duties, discretions and authorities relating to the business of the society to such committees, committees consisting of such member or members of the Board and/or such senior officials of the society as it thinks fit.”
39. As set out above, it was the function of the Central Bank to approve the rules of the society, to approve amendments to the rules, to prescribe changes and to prohibit restrictions on a society in respect of how it operates. (sic)
“40. In that context and in the context of the overall relationship between the Board and the Central Bank, the Board was involved in approving and amending the delegation of powers to the Chief Executive.”
72. He also refers at para. 44 to the Financial Regulator’s final letter of 14th March, 2007, but he goes on to state at paras. 45 – 50 of his affidavit as follows:-
“45. The Financial Regulator’s Office had expressed some concerns historically regarding the ‘overdependence’ of the society on the Chief Executive. Notwithstanding this, there was never any suggestion by the Central Bank or the Regulator that the delegation of powers to the Chief Executive was either unlawful or improper or that it ought to be reviewed, amended or revoked.
46. As far as I was concerned, the delegation was for the effective day to day management of the society and the Central Bank.[sic] Any concerns I might have had regarding the delegation were satisfied by the approval given to it by the Central Bank. I relied on their guidance with regard to the implementation of the rules of the society. (Emphasis added).
47. As is pleaded at para. 28 of the third party statement of claim, the Central Bank/Financial Regulator were aware that in certain prescribed circumstances, the Board of INBS retrospectively approved loans. This was made clear in various reports furnished to the Central Bank.
48. Furthermore, the Central Bank was fully aware of the manner in which the society shifted focus from home mortgage lending to commercial lending over time. There is no suggestion of the Central Bank not being kept up to date. In fact, the Central Bank/Financial Regulator was more fully informed as to the nature and extent of lending at INBS than it might have been with regard to other institutions. This was because of the proposed demutualization of the society which required extremely detailed due diligence in 2006/2007.
49. Insofar as the Central Bank had concerns about any ‘overdependence’ the society might have had on the Chief Executive, it was open to the Central Bank to request a revocation to the delegation or an amendment to the delegation. They never did.
50. If the plaintiff’s case in respect of the delegation is ultimately proven, and there is any finding of liability against me in respect of the delegation, I am advised that the third party has a liability to the plaintiffs [as] a concurrent wrongdoer and they have a liability to me in negligence.”(Emphasis added).
73. At para. 52, Mr. Purcell states that it is most certainly arguable at the trial of the action that the Central Bank owed a duty of care to INBS.
74. At para. 53, Mr. Purcell refers to the comprehensive defence which has been entered on his behalf to the plaintiffs’ claim and states that, without prejudice to that defence, in the event that he is found liable for any loss to the society arising out of or in connection with the delegation, that the Central Bank bears responsibility to the plaintiffs. He states at para. 54 that the third party is a concurrent wrongdoer within the meaning of s. 12 of the Civil Liability Act 1961.
75. Mr. Paschal Finn, who swore an affidavit on behalf of the Central Bank, sought to rely on the fact that the plaintiffs had not joined the Central Bank as a co-defendant. The Central Bank sought to argue from that that this was because the plaintiffs did not believe that Central Bank owed any duty to the Building Society directly. However, Mr. Purcell in reply submits that no significance whatsoever ought to attach to the decision of the plaintiffs not to join the Central Bank as a co-defendant because IBRC, INBS and the Central Bank are now all State bodies of one sort or another and therefore it would be most unusual for one State body to issue proceedings against another. Mr. Purcell also states that these proceedings appear to arise directly from reports commissioned both by the Central Bank and the INBS together. At para. 59, he states:-
“To some extent at least the Central Bank of Ireland and the plaintiffs have been acting in unison in bringing about these proceedings. I am not privy to the full extent of communication and co-operation between the Central Bank and the plaintiffs (including the terms of any formal agreement between them).”
76. At para. 58 of his affidavit, he sets out the various points at which the plaintiffs and the Central Bank have apparently co-operated in relation to the investigation into INBS and the taking of these proceedings.
77. Mr. Purcell also deals with his allegation that the Central Bank owes a duty of care to him and states that at para. 75:-
“75. Specifically I was entitled to rely on the fact that the Central Bank approved, amended and never revoked the delegation as being a representation to the effect that the delegation was neither unlawful nor improper. Given the nature of my relationship with the Central Bank I had an entitlement to rely on the imprimatur of the Central Bank for the delegation and they owed [a duty] of care as regulator not to approve an act of mine which might be subsequently be found to be unlawful. The fact that the Central Bank involved itself in the wording of the delegation cannot be ignored.
76. In the premises I say, believe and am advised that the Central Bank owed me a duty of care in the particular circumstances described above and insofar as any finding is made against me personally arising from or in connection with the delegation in these proceedings, I am entitled to an indemnity and/or contribution from the Central Bank in respect of any award of damages relating to same.”
78. At para. 81, he states:-
“The plain fact is that one state body is seeking to hold me wholly liable for the act for which another state body bears responsibility. This constitutes in effect double or enhanced claim on the part of the state against me. I am advised that as a matter of law it is neither proportionate nor fair and this will be fully addressed in legal submissions”.
82 “The purported reliance by the third party on the immunity must be further tarnished by the collusion and co-operation between the Central Bank and INBS by acting in unison in preparing the ground work to bring these proceedings and the Central Bank’s own administrative sanction procedure against me”.
83. “I am advised that the purpose of the immunity is to afford protection to the State and the Central Bank in respect of losses sustained by third parties. It cannot be permitted to be used to enable one state body to claim damages against an individual or person arising from a claim for which the body relying on the immunity also bears responsibility. In this case the IBRC being an arm of the state is suing me for alleged losses which prima facie can be said to have been caused by the approval of the delegation of the Central Bank (another arm of the state).”
The Nyberg Report.
79. Various sections of the Nyberg report were also opened to the Court. At para. 2.4.6 Nyberg states:
2.4.6. “INBS business model during the period was unique. Earlier INBS had grown modestly over a number of years as a provider of residential mortgages. The Building Societies Act 1989 however empowered building societies to make loans for, inter alia, residential housing development. Subsequently INBS entered the development finance market where interest margins and fees were greater and consequently the business was deemed to be more profitable……”
2.4.7. “There is no evidence of the Board having approved a formal business model or strategy during this period…..Notwithstanding this, it was commercial property lending rather than residential mortgages that showed significant growth over the period. By the end of the period no less than 85% of its loan book comprised commercial property lending”.
2.4.9. “This business model was in principle and in practice risky because of the planning permission risks involved and because of the reliance on the refinancing of borrowers by other banks.”
2.5.9. “INBS operated with a very flat organisational structure and had a relatively small number of staff responsible for the large commercial loan book. The managing director had been given extraordinary powers by the Board and many staff reported directly to him. In August 1997 the Board had formally delegated its powers for the practical effective and efficient management promotion and development of the bank to the MD. This delegation of powers was most unusual given its vague and general formulation. Indeed it is not immediately apparent what the limits to this empowerment were.”
2.5.10. “Though INBS had an asset and liability committee and an audit committee it operated without a number of other standard Boards of committees (risk or nominations committees.)Moreover there were functional inconsistencies in the operation of the committees that were in place. Often basic procedural requirements for the operation of these committees such as terms of reference were only put in place following protracted representations from the Financial Regulator”.
2.5.11. “INBS essentially appears to have attempted to manage risk through its choice of trusted borrowers and correctly identifying profitable property development projects. Therefore its risk of credit functions do not appear to have been effective in any traditional sense. For instance the credit committee was populated at times primarily by the lenders who should normally be challenged by such a committee. INBS also operated without a head of commercial lending and a CRO for most of the period. The functions that did exist lacked independence as they all reported directly to the MD”
2.5.12. The Board had only three non executive directors for most of the period. Rotation was modest and Board members had little practical banking experience. Despite this they were responsible for assessing virtually all large commercial loan proposals; though documentation was limited few proposals were apparently ever refused. The INBS NEDs nevertheless seemed to have accepted the unique method used to assess manage and monitor risks. The frequent requests from the FR to improve governance were noted but did not for various reasons, lead to much improvement. Great comfort appears to have been taken by the NEDs from the past profitable activity of INBS. Past performance seems to have been taken as a sign that governance (and risk) on the whole was appropriate”.
80. At para. 5.3.3 under the heading the “The Financial Regulator” and under “Findings” the Nyberg Report found as follows:-
“Provided the appropriate structures and processes were in place, the FR’s approach was to trust bank leadership to make proper and prudent decisions. However even when problems were identified and remarked upon, the FR did not subsequently ensure that sufficient corrective action was taken. Thus even insightful and critical investigation reports tended to have little impact on banking practices. Furthermore, readily available information on, for instance, sector or borrower concentrations was not sufficiently critically analyzed by the FR. Even if it were accepted that the FR was significantly under resourced throughout the period, this would not explain why available information was not acted upon. (Emphasis added).
5.3.4. It seems remarkable that the FR in practice accepted the severe governance problems in INBS. Allowing this bank to continue operations without major reforms or sanctions must, on the part of the FR, have reflected either a reluctance to pursue legal action or a profound trust in bank management and the Board.
5.3.5. The Commission is aware of the view that the FR did not have sufficient powers to intervene. This view is not persuasive given that the FR could have acted in concert with the Central Bank and ideally though perhaps unrealistically with government support. The real problem was not lack of powers but lack of scepticism and the appetite to prosecute challenges” (Emphasis added).
Central Bank
“The CB chose to rely on the FR appropriately handling individual banks stability issues much as the FR in turn chose to trust bank leadership. By implication, unless there were problems in the individual banks, there could not be major stability issues in the system as a whole. The Financial Stability Report (FSR) was constrained to present benign conclusions with a number of almost routine warnings voiced in the text itself. Simultaneously macro economic data as signalling the emergence of the two key risks – growing dependence on foreign funding and the concentration of bank lending in the property sector – did not appear to have caused acute concern.”
5.3.7 “At least at policy level, the CB seems not to have sufficiently appreciated the possibility that, while each bank was following a strategy that made sense, in the aggregate, when followed by all banks, this strategy could have serious consequences for overall financial stability. This was a classic macro economic fallacy that must have been recognised in the CB and it remains unclear why it was not appreciated at senior levels there. However there are signs that a hierarchical culture, with elements of self censorship at various levels, developed in the CB. Of course this eventually made it even harder to address the increasing instabilities in the financial market.”
81. Mr. Finn for the Central Bank swore a replying affidavit in which he took issue with many of the points made by Mr. Purcell in his affidavit. In particular he stated at para.12 of his affidavit that – for the purposes of this application only – he did not propose to contest the factual account which Mr. Purcell had given of the issue about the Central Bank involvement in the delegation of powers by the Board to the Chief Executive, but that it was the Central Bank’s case that the factual background as explained by Mr. Purcell was not accurate and represented only a part of the story.
82. It is in the light of these pleadings and this affidavit evidence that I must consider the application to strike out the proceedings against the Central Bank.
The principles relevant to a strike out application
83. The principles which are relevant to a strike out application are agreed between the parties. The relevant principles can be summarised as follows:
1. The Court has jurisdiction pursuant to Order 19 Rule 28 and also pursuant to its inherent jurisdiction to strike out proceedings if they are bound to fail.
2. In considering an application to strike out proceedings pursuant to its inherent jurisdiction the Court is not limited to considering the pleadings of the parties but is free to consider evidence on affidavit relating to the issues in the case (per Costello J. in Barry v. Buckley [1981] IR 306).
3. This jurisdiction to strike out proceedings is one to be “exercised sparingly and only in clear cases”. (See Costello J. in Barry v. Buckley [1981] IR 306).
4. Moreover as McCarthy J. stated in Sun Fat Chan v. Osseous Ltd [1992] 1 IR 425 “Generally the High Court should be slow to entertain an application of this kind”.
5. In addition as was stated by Keane J. in Lac Minerals v. Chevron Corporation [1995] 1 I.L.R.M. 161 (High Court, 6th August, 1990) (and quoted with approval by the Supreme Court) in Supermacs Ireland Ltd v. Katesan (Naas) Ltd [2000] 4 I.R. 273 “a judge in considering an application to strike out or dismiss a claim must be confident that the plaintiff’s claim cannot succeed no matter what might arise on discovery or at the trial of the action.”
6. If the pleadings can be amended in such a manner as to save the action then the proceedings should not be dismissed (see McCarthy J. in Sun Fat Chan v. Osseous Ltd).
7. The Court can only exercise a jurisdiction to strike out a claim on the basis that “on admitted facts it cannot succeed” (per McCarthy J. in Sun Fat Chan v. Osseous Ltd).
8. The Court in considering whether to strike out a claim “must treat the plaintiff’s claim at its high water mark” (per Clarke J. in McCourt v. Tiernan [2005] IEHC 268.
9. The burden of proof lies on the defendant to establish that the plaintiff’s claim is bound to fail. (See Salthill Properties Ltd v. Royal Bank of Scotland [2009] IEHC 207)
10. The Court should not require a plaintiff to be in a position to show a prima facie case, merely a stateable case, in an application to strike out. (See Clarke J. in Salthill Properties Ltd v. Royal Bank of Scotland.)
84. Mr. Barniville S.C. for the Central Bank submitted that the legal principles which the court has to consider in an application to strike out a third party statement of claim were similar to the principles which the court has to consider in an application to strike out a statement of claim on the part of a plaintiff. Whilst I think that proposition is broadly speaking true, there is however an important point of distinction between the two applications which is of relevance in this case. This is that in a more usual application to strike out a claim, the plaintiff maintains that it has suffered a wrong by virtue of the actions of the defendant. By contrast, in a third party claim for indemnity and/or contribution the defendant is not claiming that he has suffered a wrong but rather that the third party owes a duty to the plaintiff and that the defendant and third party are concurrent wrongdoers in respect of the plaintiff.
Statutory interpretation in a strike out application
85. Another issue which arose in this case is that if the question at issue is one of statutory interpretation, and if there are two possible interpretations of the statute, the question arises as to which interpretation the court should consider in an application to strike out a claim.
86. In my view the answer to that question is that if the statute admits of more than one interpretation then it should be interpreted in a manner which assists the plaintiffs’ case. This is because if there is an interpretation of the statute under which the plaintiffs have a case, then the plaintiffs’ case is clearly stateable and is not bound to fail. It is then a matter for the trial judge, having heard all the evidence and all the legal submissions on the case, to consider whether the plaintiffs’ interpretation of the statute is correct.
Review of authorities
87. The essential issues in this application are whether the Central Bank owes a statutory duty to building societies (such as INBS) and/or directors of building societies and whether a building society such as INBS (anad its directors) have a cause of action for negligent breach of statutory duty against the Central Bank.
88. Before considering these issues, I turn to a review of the authorities and the principles which apply to a consideration of these issues.
89. Counsel for the Central Bank sought to lay considerable reliance on Pine Valley Developments Ltd & Ors v. The Minister for the Environment & Ors. [1987] IR 23. In that case the Minister for the Environment granted outline planning permission to a Mr. Patrick Thornton on certain lands. The plaintiff then purchased these lands from Mr. Thornton together with the benefit of the outline planning permission. In 1980 the County Council refused to grant approval for the development in the terms of the outline planning permission. The plaintiff sought an order of mandamus in the High Court directing the County Council to consider and adjudicate upon the application for approval within the parameters of the outline planning permission already obtained in respect of the lands. The High Court made a conditional order of mandamus and subsequently made an absolute order of mandamus on 27th May, 1981. The County Council appealed that decision to the Supreme Court. The Supreme Court reversed the decision of the High Court and set aside the order of mandamus on the grounds that the grant of outline planning permission was ultra vires and a nullity.
90. Thus the plaintiff having purchased a site with planning permission found that they could not in fact realise the benefit of developing the site with that planning permission. They therefore instituted proceedings against the defendants for damages.
91. It was agreed between the parties in the High Court in the second action that there were certain preliminary questions of law which arose. The matter was heard before McMahon J. in the High Court on the basis of the pleadings and the oral evidence of a senior legal assistant in the department of the environment as no other evidence was given.
92. Finlay C.J. stated, at page 34 of his decision:
“The learned trial judge dealing with the evidence given before him by the principal legal advisor to the first defendant stated as follows:
“The evidence, which I accept, was that all planning appeals to the Minister were scrutinised by the legal section of the department before a submission to the minister and that when the Local Government (Planning and Development) Act 1963 became law the legal section of the department had advised the planning section that the Minister had power on appeal to allow a development which materially contravened the plan. The legal advisors had not appreciated that s.26 subsection 3 of the Act imposed any conditions precedent to a grant of permission by the Minister in those cases and over the years permission had been granted for many developments of that kind”.
93. Finlay C.J. continued
“I am satisfied that these inferences or findings of fact made by the learned trial judge are supported by the evidence given and therefore cannot be disturbed or interfered with by this court”.
“Having regard to that finding, I am quite satisfied that the learned trial judge was right in reaching the conclusion which he did that the first defendant could not be said to have been negligent or to have been guilty of negligent misrepresentation. If a Minister of State, granted as a persona designata a specific duty and function to make decisions under a statutory code (as occurs in this case), exercises his discretion bona fide, having obtained and followed the legal advice of the permanent legal advisers attached to his department, I cannot see how he could be said to have been negligent if the law eventually proves to be otherwise than they have advised him and if by reason of that he makes an order which is invalid or ultra vires…..I am therefore satisfied that insofar as the plaintiffs have appealed against the learned trial judge’s findings, that an action for damages for negligence or for negligent misrepresentation does not and cannot lie, the appeal must fail.”(Emphasis added).
94. Thus the decision in Pine Valley must be understood on the facts of that case and in the context of those facts. Although the hearing in the High Court was by way of a trial of a preliminary issue, certain evidence was heard. Having heard that evidence the High Court held – as a fact – that there was no negligence on the part of the Minister. The Supreme Court held that these inferences or findings of fact were supported by the evidence and therefore could not be disturbed or interfered with by the Supreme Court. Having regard to that, the Supreme Court therefore concluded that the High Court judge was correct in reaching the conclusion that the first defendant could not be said to have been negligent or to have been guilty of negligent misrepresentations.
95. The decision in Pine Valley, therefore, is based on the premise that the minister was not negligent in the exercise of his duties, and that he made a bona fide error of law as a result of his which his actions were ultra vires and unlawful.
96. The Central Bank also seeks to rely on other passages of Finlay C.J.’s decision at page 35 and 36. Finlay C.J. stated at page 35:-
“I am satisfied that this submission also fails. The Minister in making his purported decision to grant an outline planning permission was exercising a decision making power invested in him for the discharge of a public purpose or duty. The statutory duty thus arising must, however in law, be clearly distinguished from the duties imposed by statute on persons or bodies for the specific protection of the rights of individuals which are deemed to be absolute and breach of which may lead to an action for damages.” (Emphasis added).
“The decision making power or duty purporting to have been exercised on this occasion, in my view, falls, with regard to the question of damages arising from its performance into a quite different category.
I would adopt with approval the clear summary contained in the 5th edition of H.W. R. Wade, Administrative Law at page 673 where the learned author states as follows:
“The present position seems to be that administrative action which is ultra vires but not actionable merely as a breach of duty will found an action for damages in any of the following situations:
(1) If it involves the commission of a recognised tort, such as trespass, false imprisonment or negligence.
(2) If it is actuated by malice e.g. personal spite or a desire to injure for improper reasons.
(3) If the authority knows that it does not possess the power which it purports to exercise.”
I am satisfied that there would not be liability for damages arising under any other heading.
It is, of course, conceivable that proof of what was being submitted in this appeal as a gross abuse of the exercise of a statutory power of decision, or proof of a wholly unreasonable exercise of that power, would be taken by a court to be evidence that the authority knew or must have known that it did not possess the power which it purported to exercise.”
“I am quite satisfied however that the exercise by the defendant of this power in 1977, in the manner in which he did, and having regard to the legal advice which he sought and obtained prior to doing so, could not possibly constitute such a gross abuse of power or wholly unreasonable exercise of power so as to lead to an inference that he was aware that he was exercising a power which he did not possess. The only evidence led in this case quite clearly indicates the contrary and that the Minister was of the belief that he was exercising a power which he possessed.”
97. Thus the decision of the Supreme Court in Pine Valley must be distinguished from the present case. Firstly, there was no evidence at all in that case of negligence. In the present case however the first defendant has made an allegation of negligence and breach of duty against the Central Bank and for the purposes of this application those allegations must be regarded as being true.
98. Secondly, I would note, even applying the principles set out in Wade on Administrative Law, approved by Finlay C.J., that the present position is that administrative action will found an action in damages if it involves the commission of a tort of negligence. That is the allegation made by the first defendant here and therefore it follows that the Pine Valley case must be distinguished.
99. Thirdly, Counsel for the Central Bank submitted that the legislative scheme in the Pine Valley case was similar to the legislative scheme under the Building Societies Act in that both were for the benefit of the public rather than for the benefit – in this case – of building societies. I do not agree with that submission and I will deal with the legislative scheme under the Building Societies Act 1989 later in my judgment.
100. Counsel for the Central Bank also placed considerable reliance on Glencar Explorations plc v. Mayo County Council (No. 2) [2002] 1 IR 84. In Glencar, the applicants who were public companies had obtained a number of prospecting licences from the State in respect of certain lands in Co. Mayo. Licences which had been held from the Minister since 1986 had been continuously renewed. Based on these licences, the applicants carried out extensive prospecting. However, Mayo County Council proceeded to ratify a Development Plan which incorporated a ban on mining in respect of extensive tracts of land. This ban affected the applicants. The applicants brought an application to set aside the decision of the County Council. The High Court (Blaney J.). held that the inclusion of the mining ban in the Development Plan was ultra vires the respondent’s powers and was null and void.
101. Having succeeded in having the mining ban set aside, the applicants then claimed damages from the respondent for inter alia, breach of statutory duty, negligence and breach of legitimate expectations. The applicants claimed recovery of all the monies they had expended prior to the imposition of the bans. The High Court dismissed their claim for damages. The applicants appealed to the Supreme Court. The Supreme Court dismissed the appeal. In the course of the judgment in the High Court, (Kelly J.) and in the course of the judgments in the Supreme Court – in particular the judgment of Keane C.J. and Fennelly J.- the court considered the issues of statutory duty.
102. Keane C.J. in the Supreme Court in considering the issue of breach of statutory duty stated at p. 127 of the judgment:
“However, apart from that consideration, it seems to me that, in any event, a claim for damages for breach of the statutory duty imposed by s. 19 could not arise in the circumstances of the present case. The applicants, in abandoning their claim based on the tort of misfeasance in public office, have in effect conceded that the respondents, in adopting the mining ban, were not deliberately and dishonestly abusing the powers conferred on them under the 1963 Act. The decision by the respondents to include the mining ban constituted the purported exercise by them of a power vested in them by law for the benefit of the public in general. It was not the fulfilment by them of a duty imposed by statute for the specific protection of particular categories of persons, the breach of which may lead to an action for damages. It follows that the ultra vires exercise of the power in the present case could not of itself provide the basis for an action in damages. This view of the law is authoritatively confirmed by the judgment of Finlay C.J. in Pine Valley Developments .v. Minister for the Environment where he cited with approval the following statement of the law in the Fifth Edition of Wade on Administrative Law. [Keane C.J. then set out the relevant quotation and continued]
In the present case, paras. 2 and 3 in the passage cited are clearly not applicable. It will be necessary to consider at a later point in this judgment whether the ultra vires act in the present case involved the commission of the tort of negligence.” (Emphasis added)
103. Keane C.J. also considered the issue of whether Mayo County Council owed Glencar a duty of care. After a detailed review of the authorities, he set out the principles which apply in considering whether a duty of care exists and stated at p. 139:
“There is, in my view, no reason why courts determining whether a duty of care arises should consider themselves obliged to hold that it does in every case where injury or damage to property was reasonably foreseeable and the notoriously difficult and elusive test of ‘proximity’ or ‘neighbourhood’ can be said to have been met, unless very powerful public policy considerations dictate otherwise. It seems to me that no injustice will be done if they are required to take the further step of considering whether, in all the circumstances, it is just and reasonable that the law should impose a duty of a given scope on the defendant for the benefit of the plaintiff, as held by Costello J. at first instance in Ward v. McMaster [1985] 1 I.R. 29, by Brennan J. in Sutherland Shire Council .v. Heyman [1985] 157 CLR 424 and by the House of Lords in Caparo Industries Plc. .v. Dickman [1990] 2 AC 605. As Brennan J. pointed out, there is a significant risk that any other approach will result in what he called a ‘massive extension of a prima facie duty of care restrained only by undefinable considerations.’”
104. There is one further matter which is of significance in this case and which was adverted to by Keane C.J. in his judgment at p. 141, where he stated as follows:
“In considering whether such a relationship of ‘proximity’ existed and whether it would be just and reasonable to impose a duty of care on the respondents, I think one also has to bear in mind that this was not a case in which it could reasonably be said that the applicants, in incurring the expense of their prospecting activities, could be said to have been relying on the non-negligent exercise by the respondents of their statutory powers. Their position is in contrast to that of the plaintiffs in both Siney v. Corporation of Dublin [1980] I.R. 400 and Ward .v. McMaster [1985] I.R. 29, where, in each case, they belonged to a category of persons for whose benefit a particular statutory framework had been created and who might reasonably be said to have relied on the local authority in each case taking reasonable care in the exercise of the statutory powers vested in them. The applicants in the present case could rely on no more than a general expectation that the respondents would act in accordance with the law which is not, in my view, sufficient to give rise to the existence of a duty of care.” (Emphasis added)
105. The second judgment of the Supreme Court in Glencar was given by Fenelly J. At p. 150 in considering the issue of a breach of statutory duty, Fennelly J. stated:
“A duty imposed by statute on a public body will not be held to create a right to damages for its breach unless it can be shown to have within the scope of its intendment a reasonably identifiable protective purpose and identifiable class intended to benefit.” (Emphasis added)
106. As stated by Fennelly J. at p. 151:
“The statutory duty, in the sense of obligation, which is imposed by the Local Government (Planning and Development) Act 1963 on planning authorities is, as the Chief Justice has made clear and as seems to be accepted by the appellants, is to adopt a ‘plan indicating development objectives for their area’. However, that is a duty imposed for the benefit of the public and not for the protection of any particular class of the public. Moreover, it is not the duty whose breach is invoked by the applicants. It was, in fact, observed when the Plan was adopted. Their complaint is that the respondent acted ultra vires when it decided to include the mining ban in the Development Plan. The decision to include any particular objective in such a Plan is more appropriately characterised as the exercise of a discretion. Whether the decision fell properly within the range of the statutory powers of the body in question is nihil ad rem. No breach of statutory duty is involved.”
107. Fennelly J. also when considering the tort of negligence stated at p. 154:
“The elements of the tort of negligence are the existence of a duty of care, lack of proper care in performing that duty and consequential damage. The lack of care which we commonly call negligence consists in commission or omission of acts. In order to be actionable, the acts or omissions must be such as will reasonably foreseeably cause damage to any person to whom the duty is owed. Mere causation is not enough. As a matter of principle, it seems to me that the failure to exercise due care can only be established by reference to a recognised duty. Then one can know what sorts of act are liable to cause damage for which one is liable.”
108. I have also considered the recent decision of the Supreme Court in Whelan v. AIB [2014] IESC 3. At para. 64 of his judgment O’Donnell J. stated as follows:
64 In the landmark case of Glencar this court, through the medium of two comprehensive judgments by Keane C.J. and Fennelly J., with which the other members of the court agreed, reviewed and provided clear guidance in relation to some of the most troublesome areas of the modern law of torts. Thus, the judgments considered the law on the existence of a duty of care, the negligence liability of local authorities for failure to use discretionary powers, the tort of misfeasance of public office, the limits of the tort of breach of statutory duty, and the doctrine of legitimate expectations. In his judgment, Keane C.J. reviewed the development of the law on the existence of a duty of care starting with the famous speech of Lord Atkin in Donoghue v. Stevenson [1932] AC 562 and that judgment’s treatment of the earlier decision of Lord Esher in Le Lievre v. Gould [1893] 1 Q.B. 491. The judgment then traces the development of the law of negligence in England and Ireland and concludes that the oft cited portion of the judgment of McCarthy J. in Ward v. McMaster, which appeared to endorse the approach taken by Lord Wilberforce in Anns v. Merton London Borough Council [1977] 2 All ER 118, could not be taken to be part of the ratio of the decision in Glencar and accordingly, could not be considered to foreclose further consideration of the underlying jurisprudence. Thereafter, in what has become the foundation stone of modern jurisprudence on the tort of negligence, Keane C.J. stated:
“There is, in my view, no reason why courts determining whether a duty of care arises should consider themselves obliged to hold that it does in every case where injury or damage to property was reasonably foreseeable and the notoriously difficult and elusive test of “proximity” or “neighbourhood” can be said to have been met, unless very powerful public policy considerations dictate otherwise. It seems to me that no injustice will be done if they are required to take the further step of considering whether, in all the circumstances, it is just and reasonable that the law should impose a duty of a given scope on the defendant for the benefit of the plaintiff, as held by Costello J. at first instance in Ward v. McMaster [1985] IR 29, by Brennan J. in Sutherland Shire Council v. Heyman (1985) 157 C.L.R. 424 and by the House of Lords in Caparo plc. V. Dickman [1990] 2 AC 605. As Brennan J. pointed out, there is a significant risk that any other approach will result in what he called a ’massive extension of a prima facie duty of care restrained only by undefinable considerations …’” (p. 139)
65 To the casual observer it might appear that there is little difference between an approach which imposes liability where there is prima facie a duty of care unless considerations of policy negative the existence of such a duty, and one which imposes a duty of care only when there is sufficient proximity and considerations of policy make it just and reasonable that such a duty should exist. One approach might seem to be merely the negative image of another and to the mathematically minded, five minus two is exactly the same as one plus two. However, there is and has been in practice a very significant difference between the two which might be illustrated by this case. The formulation in Anns v. Merton London Borough Council and Ward v. McMaster of prima facie liability only negatived by considerations of policy loads the balance heavily in favour of finding liability. Furthermore, it tends to ensure that the general issue as to the existence of a duty of care in such circumstances will be addressed in the particular circumstances of the case and the question becomes, almost imperceptibly, whether a plaintiff who has now been found to have been injured by the carelessness of a person whose acts could foreseeably cause damage to the plaintiff, should nevertheless be deprived of damages.”
66. “Second, the just and reasonable test in Glencar is also essentially a policy consideration and it has been determined long ago that it is just and reasonable that a solicitor, or indeed any other professional advisor, should owe a duty of care in such circumstances. It is also important that the question must be approached at that level of abstraction. As Lord Browne-Wilkinson observed in Barrett v. Enfield London Borough Council [2001] 2 AC 550 (pp. 559-560);
“… the decision as to whether it is fair, just and reasonable to impose liability in negligence on a particular class of would-be defendants depends on weighing in the balance the total detriment to the public interest in all cases from holding such class liable in negligence as against the total loss to all would-be plaintiffs if they are not to have a cause of action in respect of the loss they have individually suffered. … Questions of public policy and the question whether it is fair and reasonable to impose liability in negligence are decided as questions of law. Once the decision is taken that, say, company auditors though liable to shareholders for negligent auditing are not liable to those proposing to invest in the company … that decision will apply to all future cases of the same kind. The decision does not depend on weighing the balance between the extent of the damage to the plaintiff and the damage to the public in each particular case.”
The test does not mandate or permit a consideration of each individual case and whether the imposition of a duty of care, and therefore liability, meets some undefined concept of fairness in the particular case. If that were so, then the law would be no more than the application of individual discretion in different facts or circumstances which might well be decided differently from court to court. In such circumstances, the law of negligence would be little more than the wilderness of single instances criticised by Tennyson.”
67. If indeed it is necessary to consider afresh the question of policy then at the appropriate level of abstraction at which that issue must be addressed, it seems clear that the law has consistently and correctly held that an advisor such as a solicitor will owe a duty of care when giving advice to a client on an area within his or her expertise and where the request for the advice, and provision of it, is neither in casual circumstances nor entirely separate from the business then being transacted.”
109. A helpful analysis of private law claims for damages against public authorities is set out in the decision of Lord Brown Wilkinson in the House of Lords in X (minors) v. Bedfordshire County Council [1995] 2 AC 633. At page 730 Lord Brown stated as follows:
“General Approach
Introductory – Public Law and Private Law.
[…]
Private law claims for damages can be classified into four different categories. viz:
(A) Actions for breach of statutory duty simpliciter (i.e. irrespective of carelessness);
(B) Actions based solely on the careless performance of a statutory duty in the absence of any other common law right of action;
(C) Actions based on a common law duty of care arising either from the imposition of the statutory duty or from the performance of it;
(D) Misfeasance in public office, i.e. the failure to exercise, or the exercise of, statutory powers either with the intention to injure the plaintiff or in the knowledge that the conduct is unlawful;
Category (D) is not in issue in this case. I will consider each of the other categories but I must make it clear that I am not attempting any general statement of the applicable law: rather I am seeking to set out a logical approach to the wide ranging arguments advanced in these appeals.
(A) Breach of statutory duty simpliciter.
This category comprises those cases where the statement of claim alleges simply (a) the statutory duty, (b) a breach of that duty, causing (c) damage to the plaintiff. The cause of action depends neither on proof of any breach of the plaintiffs’ common law rights nor on any allegation of carelessness by the defendant.
The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult.
The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: Cutler v. Wandsworth Stadium Ltd. [1949] A.C. 398; Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No.2) [1982] A.C. 173. However, the mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy. Thus the specific duties imposed on employers in relation to factory premises are enforceable by an action for damages, notwithstanding the imposition by the statutes of criminal penalties for any breach: see Groves v. Lord Wimborne [1898] 2 Q.B. 402.
Although the question is one of statutory construction and therefore each case turns on the provisions in the relevant statute, it is significant that your Lordships were not referred to any case where it had been held that statutory provisions establishing a regulatory system or a scheme of social welfare for the benefit of the public at large had been held to give rise to a private right of action for damages for breach of statutory duty. Although regulatory or welfare legislation affecting a particular area of activity does in fact provide protection to those individuals particularly affected by that activity, the legislation is not to be treated as being passed for the benefit of those individuals but for the benefit of society in general. Thus legislation regulating the conduct of betting or prisons did not give rise to a statutory right of action vested in those adversely affected by the breach of the statutory provisions, i.e. bookmakers and prisoners: see Cutler’s case [1949] A.C. 398; Reg v. Deputy Governor of Parkhurst Prison, Ex Parte Hague [1992] 1 AC 58. The cases where a private right of action for breach of statutory duty have been held to arise are all cases in which the statutory duty has been very limited and specific as opposed to general administrative functions imposed on public bodies and involving the exercise of administrative discretions.
(B) The careless performance of a statutory duty – no common law duty of care.
This category comprises those cases in which the plaintiff alleges (a) the statutory duty and (b) the “negligent” breach of that duty but does not allege that the defendant was under a common law duty of care to the plaintiff. It is the use of the word “negligent” in this context which gives rise to confusion: it is sometimes used to connote mere carelessness (there being no common law duty of care) and sometimes to import the concept of a common law duty of care. In my judgment it is important in considering the authorities to distinguish between the two concepts: as will appear, in my view the careless performance of a statutory duty does not in itself give rise to any cause of action in the absence of either a statutory right of action (Category (A) above) or a common law duty of care (Category (C) Below).
110. Then further at page 734 Lord Browne Wilkinson continued:
“In my judgment the correct view is that in order to found a cause of action flowing from the careless exercise of statutory powers or duties, the plaintiff has to show that the circumstances are such as to raise a duty of care at common law. The mere assertion of the careless exercise of a statutory power or duty is not sufficient. (Emphasis added).
(C) The common law duty of care
In this category, the claim alleges either that a statutory duty gives rise to a common law duty of care owed to the plaintiff by the defendant to do or refrain from doing a particular act or (more often) that in the course of carrying out a statutory duty the defendant has brought about such a relationship between himself and the plaintiff as to give rise to a duty of care at common law. A further variant is a claim by the plaintiff that, whether or not the authority is itself under a duty of care to the plaintiff, its servant in the course of performing the statutory function was under a common law duty of care for breach of which the authority is vicariously liable.
Mr. Munby, in his reply in the Newham case, invited your Lordships to lay down the general principles applicable in determining the circumstances in which the law would impose a common law duty of care arising from the exercise of statutory powers or duties. I have no doubt that, if possible, this would be most desirable. But I have found it quite impossible either to detect such principle in the wide range of authorities and academic writings to which we were referred or to devise any such principle de novo. The truth of the matter is that statutory duties now exist over such a wide range of diverse activities and take so many different forms that no one principle is capable of being formulated applicable to all cases.
111. Further at page 739 of his decision Lord Browne-Wilkinson continued as follows:
“If the plaintiff’s complaint alleges carelessness, not in the taking of a discretionary decision to do some act, but in the practical manner in which that act has been performed (e.g. the running of a school) the question whether or not there is a common law duty of care falls to be decided by applying the usual principles, i.e. those laid down in Caparo Industries Plc. v. Dickman [1990] 2 AC 605. 617-618. Was the damage to the plaintiff reasonably foreseeable? Was the relationship between the plaintiff and the defendant sufficiently proximate? Is it just and reasonable to impose a duty of care?
“However the question whether there is such a common law duty and if so its ambit, must be profoundly influenced by the statutory framework within which the acts complained of were done. (Emphasis added).
112. The Central Bank also sought to rely on McMahon & Ors v. Ireland, the Attorney General and the Registrar of Friendly Societies [1988] I.L.R.M. 610. The issue Blayney J. had to consider in that case inter alia was whether the Registrar of Friendly Societies owed a duty of care to the plaintiff. But as Blayney J. stated at page 613 of the report:-
“It seems to me that the first issue that has to be considered is whether the Registrar owed any duty of care to the plaintiffs as, in the absence of such a duty, he could not have any liability in negligence. And this involved considering whether there was a sufficient relationship of proximity or neighbourhood between the Registrar and the prospective depositors as to place the Registrar under a duty of care towards persons who came within that class, as did the plaintiff. It is clear that there was nothing the Registrar could have done to save the plaintiff from loss after she had deposited the money. So the enquiry is limited to the question of whether the Registrar owed her a duty when she was still a prospective or would-be depositor.”
113. Thus it is clear and understandable that the court in that case should have come to the conclusion that the registrar owed no duty of care towards prospective depositors. However that is quite different from the issue here which is whether the Central Bank owed a duty of care to individual building societies.
114. The Central Bank also sought to rely on the similar case of Yuen Kun Yeu v. Attorney General of Hong Kong [1987] 3 W.L.R. 776 which was also considered in McMahon v. Ireland. The issue which arose in that case was whether the Commissioner of Deposit Taking Companies owed to members of the public who might be minded to deposit their money with deposit taking companies in Hong Kong a duty, in the discharge of its supervisory powers, to exercise reasonable care to see that members of the public did not suffer loss through the affairs of such companies being carried on by their managers in a fraudulent or improvident fashion. The Privy Council held that the court was unable to discern any intention on the part of the Legislature that in considering whether to register or deregister a company the Commissioner should owe any statutory duty to potential depositors.
115. However in my view that case also should be distinguished from the present case. Firstly each regulatory and statutory scheme must be considered separately as they are all different. Secondly the issue of law in that case was whether the Commissioner owed a duty of care toward the depositors not whether he owed a duty of care to each deposit taking institution.
116. Counsel for the Central Bank also sought to rely on Beatty v. The Rent Tribunal [2006] 2 IR 191. The decision of Fennelly J. in Beatty is of particular interest. At page 206 of his judgment Fennelly J. noted that the underlying principles are:
1. that there is a relationship of such proximity between the parties such as to call for the exercise of care by one party towards the other;
2. that it is reasonably foreseeable that breach of the duty of care will occasion loss to the party to whom the duty is owed; and
3. that it is just and reasonable that the duty should be imposed.
117. In Beatty Fennelly J. held:-
1. There was a relationship of proximity between the parties;
2. It was reasonably foreseeable that breach of the duty of care would occasion loss to the party to whom the duty was owed and;
3. However it was not just and reasonable that the duty should be imposed.
118. He also noted at page 212:-
“ The alternative formulation, namely whether it is just and reasonable that liability be imposed, on the other hand, asks whether the duty exists. It is a threshold question. It is also a more flexible formulation. It is more adaptable to the many circumstances presented in litigation and preferable for cases such as the present…..I would emphasise that it is necessary to consider all the relevant circumstances of the case.”
119. In holding that it was not fair and reasonable to impose a duty of care on the Rent Tribunal, Fennelly J. noted that the duty of the Rent Tribunal to determine a fair rent was owed as a matter of public interest to both landlord and tenant and this issue, whilst not determinative, was an important element.
120. Fennelly J. also noted on page 216:
“ Whether it would be just and reasonable to impose a duty of care sounding in damages for negligence on the respondent should be considered having regard to all the circumstances of the particular relationship.”
121. Fennelly J. concluded at page 216:
“ Against this background, I believe that two considerations work against the imposition of liability. Firstly, this does not appear to be the sort of case of reliance on the behaviour of the other party which would justify departure from the normal reserve in respect of damages for pure economic loss. In both Siney v. Corporation of Dublin [1980] I.R. 400 and Ward v. McMaster [1988] I.R. 337, the court found that the plaintiff had relied on the local authority to perform a particular function. Secondly, I believe the respondent performs a role akin to that of an arbitrator; the existence of a remedy in damages might tend to compromise the independence of the respondent by inhibiting its judgement in performing its essentially adjudicative role.”(Emphasis added)
122. In my view however neither of these considerations apply in the present case. Indeed the central fact in this case as pleaded by the plaintiffs against the defendants and as pleaded by the first defendant against the third party is that the Central Bank was centrally involved in the delegation of powers to Mr. Fingleton, that it approved the delegation of powers to Mr. Fingleton and that the defendants relied on the Central Bank’s guidance and approval.
Summary of principles applicable to alleged breach of statutory duty
123. It appears therefore from this review of the authorities that the following principles can be derived from the case law on breach of statutory duty:
1. The general principle is that there is no private law action for damages for breaches of statutory duty simpliciter (i.e. without negligence) where the statutory duty is being exercised in the discharge of a public purpose or duty (Pine Valley/Glencar)
2. However, there is a private law action for damages for breach of a statutory duty simpliciter (i.e. without negligence) if the statutory duty exists for the specific protection of an identifiable class of persons (Pine Valley /Glencar)
3. There is a private law action for damages for negligent breach of statutory duty – provided that the statutory body owes a duty of care to the person affected (Pine Valley/Glencar).
4. Such a duty of care on the part of the statutory body could arise in two ways:
(1) Under the statutory scheme itself.
(2) Under the common law principles for the establishment of a duty of care.
5. In deciding whether the statutory body owes a duty of care under the statutory scheme the court must consider the statutory scheme as a whole.
6. In deciding whether a duty of care exists under the statutory scheme the court must consider:
(1) Whether it is reasonably foreseeable that the actions or omissions of the statutory body would be likely to cause damage to the plaintiff (i.e. whether the plaintiff is a person who is so closely and directly affected by the statutory body that the defendant ought reasonably to have them in contemplation) (the concepts of reasonable foreseeability and proximity).
(2) Whether it is just and reasonable to impose a duty of care (Keane C.J. in Glencar)
7. In considering whether there is a common law duty of care the courts must also consider the same criteria as set out at 6 (1) and (2) above.
124. I turn now to consider the issues in this case in the light of these principles.
The issues in this application.
125. Having considered the authorities above and the submissions of the parties I am of the view that the issues which require to be considered in this application are as follows:
1. Does the Central Bank owe a statutory duty to INBS or to put it another way, does INBS have a stateable cause of action against the Central Bank for breach of a statutory duty simpliciter (i.e. without negligence).
2. Whether the INBS has a stateable cause of action against the Central Bank for negligent breach of a statutory duty.
3. Whether the INBS has a stateable cause of action against the Central Bank for the common law tort of negligence.
4. Whether the Central Bank owes a statutory duty to the directors of Irish Nationwide Building Society or to put it another way: do the directors of INBS have a stateable cause of action against the Central Bank for breach of a statutory duty simpliciter.
5. Whether the first defendant as a director of INBS has a stateable cause of action for negligent breach of statutory duty against the Central Bank.
6. Whether the first defendant has a stateable cause of action against the Central Bank for the common law tort of negligence.
7. Whether the first named defendant’s claim for misfeasance is unstateable.
8. Whether the Central Bank’s statutory immunity from damages means that there is no stateable cause of action against it.
9. Whether, given the pleadings in the third party statement of claim, the first defendant could plead a separate and free standing cause of action for negligent breach of duty and breach of statutory duty and damages against the Central Bank in an application for a third party indemnity and/or contributions.
126. I turn now to consider each of these issues in turn.
The First Issue: Does the Central Bank owe a statutory duty to the Irish Nationwide Building Society?/ Does INBS have a stateable cause of action against the Central Bank for breach of statutory duty simpliciter (i.e. without negligence).
127. The first issue to be considered in this application is whether the Central Bank owes a statutory duty to the Irish Nationwide Building Society.
128. This issue is in fact whether the INBS has a stateable cause of action against the Central Bank for breach of a statutory duty.
129. The Central Bank submits that it is not liable in a private law action to INBS – on the authority of Pine Valley and Glencar. The first defendant for its part submits that the INBS does indeed have such a stateable cause of action against the Central Bank.
130. Thus the question which arises in the present case is whether the statutory duty imposed by the Building Societies Act on the Central Bank is a duty which has “within the scope of its intendment a reasonably identifiable protective purpose and an identifiable class intended to benefit” to use the later formulation of Fennelly J. in Glencar.
131. In other words, if the statutory duty imposed on the Central Bank was enacted for the benefit of a particular class of persons rather than for the benefit of the general public, the members of that class have a cause of action for breach of that statutory duty.
132. In order to answer the question (of whether the statutory duty imposed on the Central Bank was enacted for the benefit of a particular class of persons i.e. building societies) it is necessary to have regard to the detailed provisions of the Building Societies Act 1989
The Statutory Scheme of the Building Societies Act 1989
133. Part 2 of the Act is headed: “Formation and Authorisation of Building Societies. Section 9(1) of the Act provides:
“(1) A building society may have as its objects the undertaking of any of the activities permitted by or under this Act and shall have as one of its objects the raising of funds for making housing loans.
(2) A society shall have the powers conferred by or under this Act and any incidental powers that are necessary for the achievement of its objects subject to –
(a) compliance with any requirement that, for a power to be exercisable by a society, it must be adopted by the society; and
(b) the exercise by the Central Bank of its functions under this Act, the Currency and Central Bank Acts, 1927 to 1971, or regulations made under any such Act.”(Emphasis added).
134. Thus although each building society has the powers conferred under that Act, the exercise of these powers is subject to the exercise by the Central Bank of its functions under the Acts. Thus it is clear that all building societies are placed under the supervision of the Central Bank.
135. Section 10 deals with the formation, registration and incorporation of building societies. Section 10(1) provides that:-
“(1) A building society is formed under this Act on compliance by the persons forming it with the requirements of this Act in relation to the formation of a society and is incorporated under this Act on the issue of a certificate of incorporation.”
136. Section 10(3) provides that it is the Central Bank who registers the memorandum and rules of the society and issues the society with the certificate of incorporation. However, the Central Bank will only issue the society with a certificate of incorporation under s. 10(3):
(a) If it is satisfied that the memorandum and rules are in conformity with this Act and any regulations made hereunder and that the name of the proposed society is not undesirable.
(b) It has no reason to believe that the society will not be authorised under section 17 , and
(c) It is satisfied that registration would not be prejudicial to the orderly and proper regulation of building societies generally.”
137. Therefore the Central Bank has a role even in allowing a building society come into existence. The Central Bank must be satisfied that the memorandum and rules of the society are in conformity with the Act and that the registration would not be prejudicial to the orderly and proper regulation of building societies generally.
138. Section 11(2) provides that:-
“(2) The Central Bank may, in the interests of the orderly and proper regulation of building societies, by regulation –
(a) make further provision as respects the form and content of the memorandum . . .
(b) prescribe rules in respect of any of the matters in Part II of the Second Schedule . . . or any of the following matters as respects housing loans or loans of the type referred to in section 6(2)(a) – (i) the prohibiting or restricting of the charging of redemption fees [and various other matters].”
139. Thus the Central Bank has a statutory power to make further regulations in respect of specific aspects of building societies in the interest of the orderly and proper regulation of building societies. Again this is stated to be “in the interests of the orderly and proper regulation of building societies”.
140. Section 13(6) provides that where in the opinion of the Central Bank the society is registered by a name which, in the opinion of the Bank, is undesirable, the Bank may require the society to change its name by giving it notice to that effect.
141. Section 14(1) provides that a building society may alter its memorandum or its rules by special resolution. However, such amendments have to be approved by the Central Bank. Thus under s. 14(3), the Central Bank must be satisfied that the memorandum and rules are in conformity with the Act and any regulations made under the Act, and that the registration would not be prejudicial to the orderly and proper regulation of building societies generally. Again such a provision shows the element of control and supervision by the Central Bank over individual building societies.
142. Section 17(1) deals with the authorisation of a building society to raise funds. It provides that a building society shall not raise funds unless there is in force an authorisation granted by the Central Bank in respect of this matter. Section 17(4) provides that the Central Bank may grant such an authorisation if is it satisfied that:-
“(i) the society has qualifying capital of an amount that is not less than the prescribed minimum.
(ii) the chairman and members of the board of directors, the chief executive and secretary are each fit and proper persons to hold their respective offices in the society, and
(iii) the board of directors, with the chief executive and secretary, have the capacity and intention to direct and manage the affairs of the society with prudence, integrity and adequate professional skills.”
143. Again this provision shows the degree of regulatory control and supervision exercised by the Central Bank over each individual building society.
144. Section 17(5) provides that the conditions of an authorisation may be revoked, amended or added to where the Bank thinks proper. Section 17(6) provides that the types of conditions which may be imposed by the Central Bank in relation to such an authorisation may require the society to take specified steps with regard to the conduct of the business of any subsidiary or any other associated body and may require the removal of any director or any other officer or may require the society to take certain steps or refrain from adopting or pursuing a particular course of action or to restrict the scope of its business in a particular way.
145. Section 17(8) provides that if a society raises funds without such an authorisation, the Central Bank may apply to the Court for the winding up of the society.
146. Part III sets out the powers of a building society. Section 18 of the Act provides that a building society may raise funds including – with the approval of the Central Bank – funds in a currency other than the currency of the State.
147. Section 18(8) also provides that a building society shall notify the Central Bank of all loans received by it from other societies in such a manner as may be specified by the Bank. Thus the power of a building society to raise funds and borrow money is also, in many respects, subject to the regulatory control of the Central Bank.
148. The ability of a building society to make housing loans is also subject to the approval of the Central Bank in certain circumstances. (See s. 22).
149. Likewise, under s. 23, the ability of a building society to make certain loans is also, subject – in certain circumstances – to the approval of, or limits which may be specified by, the Central Bank. Likewise at s. 28 the ability of a building society to invest in shares in other corporate bodies is also, in certain circumstances subject to the approval or restrictions of the Central Bank. (See s. 28(3)).
150. Section 36 of the Act deals with the exercise of a building society of any of its powers under certain sections of the Act. Section 36(4) provides that, having adopted a power, a society shall not exercise that power except with the approval of the Central Bank and in accordance with the terms and conditions of such an approval.
151. Section 36(5) provides that the Central Bank may specify, in relation to any such power, the circumstances in, and conditions under which, a power may be exercised by a society (without the specific approval under subs. (4).)
152. Section 36(7) provides that the Central Bank may specify such requirements as it considers necessary for societies exercising any power to which this section applies and it may specify different requirements for different powers.
153. Section 36(9) provides that an application for approval by the Central Bank, of a society exercising a specific power must be made in such a manner as the Central Bank may specify and shall be accompanied by such information as the Central Bank may require either generally or in any particular case.
154. Section 36(10) provides that, having considered an application, the Central Bank may grant an approval, refuse to grant an approval or grant an approval, subject to whatever conditions, restrictions or exclusions the Central Bank considers appropriate in respect of the approval of the exercise of specific powers by specific building societies.
155. Section 36(11) provides that the Central Bank may in particular include provisions as to:
“(a) the class or classes of persons for whom a service may be provided;
(b) whether the activity may be undertaken by the society itself or by a subsidiary or other associated body;
(c) the amount of funds that may be applied by the society or its subsidiary or other associated body to the activity;
(d) whether the society may act as principal or agent in undertaking the activity;
(f) limits on any guarantees, bonds, contracts of suretyship or indemnities given or entered into by the society;
(h) conditions which must be fulfilled as regards any subsidiary or other associated body of a society undertaking the activity;
(i) the qualifications required to be held by employees of the society or its subsidiary or other associated body undertaking the activity;
(j) the avoidance of conflicts of interest;
(k) charges to be made in relation to the provision of any service;
(l) the maintenance by the society of separate accounting records and the preparation of accounts in respect of the service being provided.”
156. It is clear therefore, that the Central Bank maintains a pivotal and central role in all aspects of each and every building society’s activities – from the name of the building society to the activities in which it is engaged. The Act itself gives a detailed control and regulation function to the Central Bank over each individual building society separately.
157. Part IV of the Act is headed “Control and Supervision of Building Societies by the Central Bank. It is in this context that s. 37 of the Building Societies Act 1989 must be considered. Section 37 does not appear in isolation. The preceding sections of the Act have set out in considerable detail the provisions of the formation and authorisation of building societies and the powers of a building society. It is also clear from the above review of the statutory scheme that the Central Bank is centrally involved in each and every activity of a building society.
158. It is necessary to set out this statutory scheme in some detail because the argument of the Central Bank rests to a large extent on s. 37 of the Building Societies Act. The Central Bank’s argument is that under s. 37, the Central Bank owes no duty of care to an individual building society.
159. Section 37(1) of the Building Societies Act provides as follows:
“(1) Subject to the general function and duty of the Central Bank under s. 6 of the Central Bank Act, 1942 , the Bank shall administer the system of regulation and supervision of building societies provided for by or under this Act with a view to –
(a) the protection by each society of the funds of its shareholders and depositors, and
(b) the maintenance of the financial stability and well being of societies generally.” (Emphasis added.)
160. Section 39 of the Act sets out the provisions applicable to the asset and liability ratios and structures of a building society. Section 39(4) provides that the Central Bank may from time to time require a building society to maintain a specified ratio between its assets and liabilities.
161. Section 39(5) provides that such a requirement may be in relation to all societies or to societies of a specified category, it may be in relation to total assets or total liabilities or to specified assets or specified liabilities or in relation to a specified period of time.
162. Section 39(7) provides that the Central Bank may, from time to time, specify requirements as to the composition of its assets and requirements as to the composition of its liabilities.
163. Again it is clear that the statutory scheme envisages specific actions which the Central Bank may take in respect of an individual building society.
164. Section 40 of the Act provides for the revocation of authorisations and the giving of directions by the Central Bank to individual building societies. Section 40(1) provides that the Central Bank shall revoke a building society’s authorisation if it is satisfied that the building society has done, or not done, certain matters. Thus under s. 40(2) an authorisation may be revoked by the Central Bank if it is satisfied that the society has failed to comply with the requirement of the Act or a requirement or condition of notices from the Bank, if a society no longer possesses adequate capital resources, if it is expedient to do so in the public interest or in order to protect the funds of shareholders or depositors.
Observations on the Act.
165. Thus when one considers the detailed provisions of the statutory scheme, it is clear that the Central Bank has extensive powers over all building societies. It supervises them from the cradle to the grave i.e. from inception to winding up. There are numerous activities building societies cannot carry out without Central Bank approval and there are numerous duties imposed on the Central Bank in respect of building societies.
166. Moreover the heading at part 4 of the Act is entitled “Control and supervision of building societies by Central Bank”. Thus the duty of the Central Bank is the “control” and “supervision” of building societies. The concepts of “control” and “supervision” must mean, as a matter of statutory interpretation, that the Central Bank has a statutory duty to building societies in general and to the INBS in particular.
167. In addition the side note to s.37 provides “Duty of Central Bank as respects building societies”. This, in my view, means as a matter of statutory interpretation that the Legislature intended to impose a statutory duty on the Central Bank in respect of building societies. It is difficult if not impossible to construe the words in any other way.
168. Moreover s.37 (1) of the Act provides that the bank shall administer the system of regulation and supervision “with a view to” the maintenance of the financial stability and well-being of societies generally. This clearly means, as a matter of statutory interpretation, that the Central Bank has a duty to control and supervise building societies and to administer the system of regulation and supervision of building societies with the objective of maintaining the financial stability and well-being of building societies generally. Again this, together with the side note to s.37 is consistent with the imposition of a statutory duty towards the building societies for the benefit of building societies as an identifiable class within the statute.
169. Mr. Barniville S.C. for the Central Bank submitted that these duties were imposed on the Central Bank for the benefit of the public not for the benefit of the building societies. However in my view, as a matter of statutory interpretation, the Act confers duties on the Central Bank for “the specific protection of particular categories of persons” (namely building societies) to use the formulation of Keane C.J. in Glencar. It may well be that in protecting building societies, the Central Bank is also acting for the benefit of the public. But that is a different matter.
170. Thus, having considered the provisions of the 1989 Act, I am of the view that there is certainly a stateable cause of action that the Central Bank owes a statutory duty to building societies in general and thus to the INBS in particular. Indeed in my view it is not only a stateable cause of action, it is, on the basis of my analysis of the Act, a prima facie case. However I would emphasis that in an application to strike out all the plaintiffs have to do (or in this case the first named defendant) is to establish that there is a stateable case and that it is not bound to fail. In my view there is certainly such a stateable case and on this ground alone the first defendant’s third party statement of claim against the Central Bank should not be struck out on the grounds that it is bound to fail.
The Second Issue: Does INBS have a stateable cause of action against the Central Bank for negligent breach of statutory duty?
171. Having considered whether there is a stateable case against the Central Bank for breach of statutory duty simpliciter, I now turn to consider the issue of whether the INBS has a stateable case against the Central Bank for negligent breach of statutory duty.
172. Having already found that the Central Bank has a statutory duty to individual building societies, I must now consider the “negligent” aspect of the claim i.e. the negligent breach of statutory duty. To do that I must consider whether the Central Bank has a statutory duty of care towards INBS, or towards building societies generally.
173. In assessing that issue I must apply the principles set out by Keane C.J. in Glencar in considering whether a duty of care arises. This means that I must consider:
1. Is it reasonably foreseeable that the actions/omissions of the Central Bank would be likely to injure or cause damage to its neighbour (i.e. a person who is so closely and directly affected by the Central Bank that the Central Bank ought reasonably to have them in contemplation as being so affected.)
2. Is it just and reasonable that the law should impose a duty of care on the Central Bank for the benefit of the plaintiffs.
174. In considering the issue of whether it is reasonably foreseeable that the actions of the defendant would be likely to cause damage to the plaintiff, and the issue of whether the plaintiff is so closely and directly affected by the actions of the defendant that the defendant ought reasonably to have them in contemplation as being so affected, it is necessary to have regard to the statutory framework in which the parties are operating.
175. In my view the first limb of the twofold test is fulfilled and the Central Bank does indeed owe a duty of care to the INBS for the following reasons:
1. I have set out in detail the provisions of the statutory framework governing the relationship between the Central Bank and building societies. It is clear from this analysis that the Central Bank is involved in the control and supervision of building societies from inception to winding up. It is therefore reasonably foreseeable that if the Central Bank were to exercise its powers and duties in a careless and negligent fashion that an individual building society in question might suffer some harm. Moreover it is clear from the statutory framework that the relationship between the Central Bank and building societies is sufficiently proximate.
2. It is also clear from the heading of part 4 that the duty of the Central Bank is the “control” and “supervision” of building societies. These concepts of “control” and “supervision” – especially “supervision” – must mean as a matter of statutory construction that the Central Bank is in a relationship of proximity to the building societies and that it is reasonably foreseeable that any of its acts or omissions could cause them damage.
3. In normal cases a “supervisor” would owe a duty of care to those whom he supervises because they are sufficiently proximate as a matter of law. So it is here. Indeed as a matter of construction all the indicators point to the existence of a duty of care and there is nothing in the Act in my view which excludes a statutory duty of care being imposed upon the Central Bank in relation to building societies.
4. The side note to s.37 refers to a “Duty on Central Bank”. The exact terms of this duty are set out in s.37 and it is a duty on the Central Bank to maintain the financial stability and well-being of building societies generally. This is consistent with the imposition of a duty of care.
176. It is clear therefore in my view, as a matter of statutory construction, that there is certainly a stateable cause of action that the Central Bank owes each individual building society a duty of care.
Just and reasonable
177. I turn now to consider the second limb of the test set out by Keane C.J. in Glencar: is it just and reasonable that the law should impose a duty of care on the Central Bank for the benefit of building societies?
178. As McCracken J. stated in Beatty v. Rent Tribunal:
“What is to be considered as just and reasonable is not merely what would be just and reasonable as between the parties, but also what would be just and reasonable in the public interest. Where a public body, such as the respondent, performs a function which is in the public interest, then in many cases and I believe this to be one of them, that body ought not to owe a duty of care to the individuals with whom it is dealing. It is in the public interest that it should perform its functions without the fear or threat of action by individuals. The fact that it is performing a function which is in the public interest may outweigh any duty of care to private individuals. Whether it does or not, of course, is a matter for decision based on consideration of the position of any particular public body.”
179. In my view it is just and reasonable that a duty of care should be imposed on the Central Bank for the benefit of building societies for the following reasons:
1. The statutory framework in this case clearly means that the Central Bank is closely involved with building societies in every part of its activities. If it fails to exercise this power properly or if it exercises this power negligently then individual building societies suffer damage and it would be unjust and unreasonable that an individual building society should not have redress against the Central Bank for such a breach of its statutory duties.
2. Both Keane C.J. in Glencar and Fennelly J. in Beatty adverted to the concept of “reliance” as a factor in considering whether a duty of care arises. In the present case the central issue in these proceedings is that the plaintiffs allege an unlawful delegation or abdication of powers by the board to the Chief Executive. The first defendant’s defence however is that this was all done with the full knowledge and consent of the Central Bank and that the directors relied on the authorisation of the Central Bank to engage in this delegation. In those circumstances the Central Bank has a central role in these proceedings and it would be unjust and unreasonable if a duty of care were not imposed on the Central Bank in such matters.
3. Where a person relies on the Central Bank and the Central Bank is fully aware of such reliance for approval of certain actions then it would be unjust and unreasonable not to hold that the Central Bank has a duty of care towards building societies in such circumstances.
4. There was some concern expressed by Finlay C.J. in Glencar that a private law action for damages for breach of statutory duty simpliciter might lead to a “freezing effect” on the actions of public officials. However in my view that consideration does not apply in a case of allegations of negligent breach of statutory duties. Indeed it is just and reasonable as between the parties that a duty of care should be imposed precisely to avoid negligent acts by public officials.
5. As McCracken J. pointed out in Beatty v. The Rent Tribunal what is to be considered as just and reasonable is not merely what is just and reasonable as between the parties but what is just and reasonable in the public interest. I am of the view that it is overwhelmingly just and reasonable in the public interest that a duty of care should be imposed on the Central Bank on the facts of this case. The Central Bank was charged with a vital public duty. That duty was the regulation and supervision of building societies. It was given immense regulatory powers and supervision powers under the Building Societies Act 1989. It is alleged that it exercised those powers in an extraordinary way. It is alleged that it permitted the abdication of powers by an entire Board of directors to a single individual – Michael Fingleton – for a protracted period of time without proper monitoring and supervision. It had full knowledge of the exact circumstances of the delegation. Indeed it got involved in the drafting of company resolutions authorising such delegations. It is alleged that it allowed the situation continue year after year after year without interruption. The court cannot ignore, and should not ignore, the fact that this building society lost billions of euros and that these crushing losses were imposed upon the tax payer. The public is entitled to ask how could this have happened? To impose a duty of care on the Central Bank in its supervision of building societies is simply to require that the Central Bank should carry out its functions of supervising this sector of the financial sector in a careful manner. The question could be asked rhetorically: how could it not be in the public interest that a duty of care be imposed on the Central Bank towards individual building societies given the statutory scheme and given the particular facts of this case?
180. In the light of all of the above I am firmly of the view that there is a stateable cause of action that there is a duty of care imposed on the Central Bank towards individual building societies under the statute. Indeed I am of the view that the first defendant has made out a prima facie case on this issue.
The Third Issue: does the Central Bank owe a common law duty of care to the INBS?
181. I have set out above the formulation of Keane C.J. in Glencar as to when a duty of care arises.
182. I have also concluded based on the statutory relationship between the parties that the Central Bank does owe a statutory duty of care to building societies generally and the INBS in particular.
183. Similar principles apply in relation to the consideration of the common law tort of negligence.
184. Thus I am of the view that the Central Bank does indeed owe a common law duty of care to the INBS. Both limbs of the Glencar test are fulfilled in this case.
185. In my view when one applies that principle to the facts of this case, the answer is clear. Building societies are clearly persons so closely and directly affected by the acts of the Central Bank that they are, as a matter of law, directly affected by acts of the Central Bank. Moreover when one considers the proximity test in this context, one asks the question: would the Central Bank know that a building society would be directly affected by a careless act of the Central Bank? Again, in my view, the answer to this question is yes and the application of this proximity principle on the facts of this present case would mean that there is a duty of care owed by the Central Bank to building societies within the specific statutory scheme of the Building Societies Act 1989.
186. Applying those principles to the facts of this case, I am of the view that in this case there does exist between the Central Bank and individual building societies a relationship characterised by the law as one of proximity and that it is reasonably foreseeable that acts of the Central Bank could cause damage to the plaintiffs. Moreover I am also of the view that it is fair, just and reasonable that the law should impose a duty upon the Central Bank for the benefit of individual building societies.
187. Thus again, I am of the view that the first defendant has made a stateable cause of action. Indeed I am of the view that he has made out a prima facie case.
The Fourth Issue: Does the Central Bank owe a statutory duty under the Building Societies Act towards individual directors?/Does the first named defendant have a stateable cause of action against the Central Bank for breach of statutory duty simpliciter (i.e. without negligence)?
188. In answering this question it is necessary to consider the statutory scheme in the Building Societies Act of the role of the Central Bank in the regulation and supervision of directors of building societies.
189. Section 48(1) of the Act provides that a building society should have at least three directors. Section 48(4) provides that the chairman of the Board of directors shall not also be the Chief Executive of the society except with the consent of the Central Bank.
190. Section 49(1)(a) provides a building society shall have:-
“(a) a Chief Executive who, either alone or jointly with one or more other officers of the society, shall be responsible, under the immediate authority of the Board of directors, for the conduct of the business of the society; and
(b) a secretary.” (Emphasis added).
191. Section 49(3) provides that:-
“(3) The Chief Executive and the secretary of a society shall be appointed by the Board of directors of the society who shall take all reasonable steps to ensure that the persons appointed are persons who have the knowledge and experience to discharge the functions of those offices.
(4) The Board of directors of a society shall give to the Central Bank prior notice of a proposal to appoint a person as Chief Executive stating the person’s full name and address, the date on which he is to take office and such other information as the Bank may require and the Bank shall record the person’s name and the date on which he begins to hold office in the public file of the society.”
192. Section 50 (15) provides that a building society shall notify the Central Bank of all valid nominations of persons for election as directors as soon as possible after the closing date for nominations, giving in each case information that the bank may require.
193. Moreover s.51 has supplementary provisions about the election of directors and provides inter alia that the person appointed under the rules of a society to supervise the conduct of an election of directors shall prepare and submit to the Central Bank a report on the conduct of the election.
194. Section 51 (7) also provides that the Central Bank may, following consideration of the report if it thinks proper, apply to the court for an order setting aside the result of an election of directors and directing the society to hold another election.
195. Section 59 provides that the building society shall maintain a register containing all transactions and loans made between the building society and a director for the current financial year and any of the preceding ten financial years. Section 59 (4) provides that two copies of the statement shall be sent by the society to the Central Bank.
196. Section 60 provides that a building society must keep a record of, and disclosure of, certain businesses in which a director of the building society was involved.
197. In effect this section seeks to keep a record of disclosures by directors of the building society of business interests they have in other areas which may carry on business with the building society. Section 60 (9) provides that two copies of such a statement shall be sent by the building society to the Central Bank.
198. However, having considered the provisions of this part of the Act, I do not find any words comparable to those in s.37 (1) that the Central Bank must carry out these supervisory tasks “with a view to” the protection of directors specifically.
199. Moreover although s.37 (1) does refer to the system of regulation and supervision of building societies as being “with a view” to “the maintenance of the well-being of building societies generally”, I am of the view that this includes the statutory duties in respect of the management of building societies, including directors. This means, in my view, that the statutory duties imposed by the Act on the Central Bank in respect of directors are imposed for the benefit of building societies not for the benefit of directors individually.
200. Therefore I would conclude that the statutory duties imposed on the Central Bank in respect of directors are not for the benefit of directors. The directors are not an identifiable class intended to benefit within the statute and therefore the first defendant has no stateable case against the Central Bank for breach of statutory duty simpliciter (i.e. without negligence).
The Fifth Issue: Does the first defendant as a director have a stateable cause of action against the Central Bank for negligent breach of statutory duty?
201. However different considerations apply in respect of the issue as to whether individual directors such as the first named defendant have a stateable cause of action for negligent breach of statutory duty against the Central Bank. In my view directors such as the first named defendant do have a stateable cause of action for negligent breach of statutory duty against the Central Bank for the following reasons:
1. There is a specific statutory provision – s.49 (1) (a) which provides that it is the Chief Executive who shall be responsible for the conduct of the business of the society under the immediate authority of the Board of Directors. Thus there are crucial statutory provisions which deal with corporate governance of building societies under the statute.
2. It is the plaintiffs’ case against the defendants that the defendants unlawfully abdicated their powers to Mr. Fingleton in breach of the Act and in breach of the rules of the building society.
3. It is the director’s case that this was done only with the full knowledge and consent of the Central Bank and that the director relied on the Central Bank in respect of this matter.
4. Therefore it appears that if, what the plaintiffs say is true (and there was an interference with the corporate governance provisions set out in the Act) and this was done with the full knowledge and consent of the Central Bank, not as a breach of statutory duty simpliciter but negligently, then that constitutes a different cause of action on the part of the director against the Central Bank.
5. In deciding that, I must consider whether having regard to the statutory scheme set out above
(1) It was reasonably foreseeable that the acts/omissions of the Central Bank would be likely to injure or cause damage to its neighbour i.e. a person who is so closely and directly affected by the Central Bank that the Central Bank ought reasonably to have been in contemplation as being so effected and
(2) Whether it is just and reasonable that the law should impose a duty of care on the Central Bank for the benefit of directors.
202. In my view on the facts of this case the directors were persons who were so closely and directly affected by the Central Bank that the Central Bank ought reasonably to have been in contemplation as being so affected. Therefore there was sufficient proximity between the Central Bank and the directors based on the statutory scheme and also on the facts of this case. Moreover it was reasonably foreseeable that any actions or omissions on the part of the Central Bank would be likely to injure or cause damage to the directors. Thus the reasonable foreseeability part of the test is also fulfulled.
203. I am also of the view for the reasons set out above that it is just and reasonable both as between the parties but also in the public interest that the law should impose a duty of care on the Central Bank in respect of any of its alleged careless acts towards directors.
204. Therefore I would conclude that the first defendant has a stateable cause of action against the Central Bank for negligent breach of statutory duty. Indeed I am of the view that he has made out a prima facie case.
The Sixth Issue: Does the first defendant have a stateable cause of action against the Central Bank for the common law tort of negligence?
205. Having regard to tests set out above and also to the conclusion set out above in relation to a negligent breach of statutory duty, I am of the view that the Central Bank does owe a duty of care under the common tort of negligence to directors for any alleged negligent acts or omissions on its part because:
1. The parties are sufficiently proximate as a matter of law and it is reasonably foreseeable that the Central Banks acts or omissions could cause damage to such directors and
2. It is just and reasonable to impose a duty of care on the Central Bank in respect of any of its acts or ommissions.
206. I would therefore conclude that the first named defendant does have a stateable cause of action against the Central Bank for the common law tort of negligence.
207. I am conscious that it might appear paradoxical that the Court could conclude that the Central Bank has no statutory duty to directors and yet has a duty of care to directors. However this paradox is more apparent than real. It arises out of the fact that different tests are to be applied in relation to each matter. Thus, given the jurisprudence which has developed in relation to whether the directors have a cause of action for breach of duty simpliciter (i.e. without negligence), I conclude that they have no such private law action for damages for breach of statutory duty simpliciter. But they do have a stateable action against the Central Bank for negligent breach of statutory duties. There is no inconsistency in holding that (i) a director has no claim for a breach of statutory duty simpliciter (ii) but has a claim for negligent breach of statutory duty. In my view when considered in those terms the paradox dissolves.
(5) The Seventh Issue: Should the claim for misfeasance be struck out?
208. The first named defendant has pleaded misfeasance of public office against the Central Bank.
209. At paras. 63 – 69 and following in his affidavit, Mr. Purcell deals with the claim of misfeasance in public office.
210. Paragraph 63 states as follows:
“63. If the plaintiffs are successful in demonstrating at the trial of this action that the delegation of power to the Chief Executive was unlawful and proper, I say and am advised that such a finding could form the basis of a finding in misfeasance in public office on the part of the third party.
64. The basis of my claim against the Central Bank in this regard rests on the purported unlawfulness of the delegation of powers to the Chief Executive, Mr. Fingleton. If the plaintiff establishes that the delegation was unlawful, then prima facie the Central Bank approved and involved itself in an unlawful act.
65. In the third party statement of claim it is pleaded…
“The Central Bank (including the former office of the Financial Regulator) its servants or agents acted with reckless disregard as to the consequences of their continuation of the said delegation and their failure to revoke same.”
66. I am advised that this can be particularised more fully (strictly without prejudice to my defence to the plaintiffs’ claim) as follows:-
(i) It was not within the powers of the Central Bank, its respective servants or agents to approve and/or amend the delegation.
(ii) The Central Bank approved the delegation notwithstanding the fact that this was beyond its power.
(iii) The Central Bank, its respective servants or agents were aware that the approval of the delegation was beyond its power and knowingly acted with reckless indifference as to the consequences of its own unlawful act.
(iv) That the Central Bank acted with reckless disregard as to the consequences of their continuation of the said delegation and their failure to revoke same.
67. The claim in misfeasance can be more properly understood in the context of the overall behaviour of the Central Bank/Financial Regulator in monitoring and supervising Irish banks and building societies under the regulatory cloak up to 2009.
68. All of the significant Irish banks and building societies failed and had to be bailed out by the State.
69. [Mr. Purcell refers to Prof. Honohan’s report on the Irish banking crisis dated 31st May, 2010, in which it is stated:-]
‘The key protection in any national system against the emergence of a banking crisis should be the Central Bank and regulatory function. It is clear that a major failure in terms of bank regulation and maintenance of capital stability occurred.’”
211. At para. 70 of the affidavit, Mr. Purcell also refers to the Nyberg report entitled Misjudging Risk: Causes of the systemic banking crisis in Ireland and at para. 71, Mr. Purcell states as follows:
“71. With regard to the delegation which is the subject matter of this application, Prof. Nyberg states:-
‘The Managing Director (MD) had been given extraordinary powers by the Board and many staff reported directly to him. In August 1997, the Board had formally delegated its powers for the practical and efficient management, promotion and development of the Bank to the MD. This delegation of powers was most unusual given its vague and general formulation. It is not immediately apparent what the limits of this empowerment were. (Emphasis added).
72. In light of the foregoing, I say and am advised that there is a clear basis on which I can seek to maintain that there was misfeasance on the part of the Central Bank in the approval, amendment to and continuation of the delegation.”
212. Counsel for the Central Bank submits that this is not sufficient and that these pleadings fall far short of what is required to sustain a claim of misfeasance in public office.
213. Both parties agree that the relevant test for misfeasance is that set out by the Supreme Court in Kennedy v. The Law Society (No. 4) [2005] IESC 23 i.e. that a public official can be guilty of the tort of misfeasance of public office in circumstances where that official is subjectively reckless as to whether his actions are lawful. That is to be distinguished from objective recklessness and indeed deliberate misconduct (see Omega Leisure Ltd v. Barry [2012] IEHC 23; Kennedy v. The Law Society No. 4 2005 IESC 23 and Beatty v. The Rent Tribunal [2006] 2 IR 191.
214. The pleadings alleging misfeasance are set out above. To a large extent they overlap with the particulars of negligence. The main particulars of misfeasance/negligence are:
1. That the Central Bank knew of and consented to and were involved in and actively approved the allegedly wrongful delegation of powers.
2. That the Central Bank knew that there was no monitoring of the Chief Executive Officer and nevertheless did nothing to intervene.
3. That the Central Bank knew of the fact that approval of certain loans was given retrospectively and yet never intervened.
4. That the Central Bank was aware that this continuation of the delegation of powers and the retrospective approval of loans was likely to cause loss and damage to the society.
5. That despite all of the above the Central Bank failed to intervene and in so doing acted with reckless disregard as to the consequences of their actions in permitting this delegation to continue.
215. Mr. Barniville S.C. for the Central Bank submits that these particulars are not sufficient to ground a case of misfeasance. However I do not agree. The necessary facts to ground a stateable plea of misfeasance are pleaded. The first defendant also pleads “reckless disregard”. The only word missing is “subjective”. In addition it is a stateable cause of action i.e. a cause of action known to the law. Moreover many more facts may well emerge from the discovery or witness statements. In any event the issue of proof of “subjective recklessness” is a matter which might only be proved at trial either in direct examination or more particularly in cross examination. Indeed the question of the “subjective” mindset of a public official is a matter which might only be established in cross examination.
216. Mr. Barniville also submitted that a plea of misfeasance of public office is similar to a plea of fraud and therefore must be stated with specific particularity. However I do not agree with that comparison. Fraud occurs when a person seeks to personally benefit from a wrongful act. Moreover it is an objective assessment. Neither of these elements are present in the tort of misfeasance.
217. Misfeasance in public office is a stateable claim. It is a claim known to the law. It is also the case that the first defendant has pleaded this matter here. I must also have regard to the fact that in the light of the nature of the tort it is a matter which, by its nature, might only come out during the trial of the action. In my view the observations of Keane J. in Lac Minerals v. Chevron Corporation [1995] 1 I.L.R.M. 161 (High Court, 6th August, 1993) are apposite in this context: a judge in considering an application to dismiss must be confident that no matter what may arise on discovery or at the trial of the action of the plaintiffs’ claim cannot succeed. I am not confident that the plaintiffs’ claim in misfeasance “cannot” succeed. This application has been brought at a very early stage in the proceedings. Matters may arise in discovery or in the witness statements or indeed in direct evidence or cross examination at the trial of the action which might well establish misfeasance in public office. I am of the view therefore that it is not appropriate to strike out this part of the first defendants claim on such an application.
The Eighth Issue: Central Bank immunity from damages
218. Mr. Barniville S.C. for the Central Bank also submitted that the third party Statement of Claim against the Central Bank was either unstateable or was bound to fail because the Central Bank has a statutory immunity in damages. The legal foundation for this argument is as follows: the Central Bank was established on 1st February, 1943, under the provisions of the Central Bank Act 1942; under the Central Bank and Financial Services Authority of Ireland Act 2003 on 1st May, 2003, the Central Bank was reconstituted as the Central Bank and Financial Services Authority of Ireland; in 2003 to 2010 the regulation and supervision of building societies under the 1989 Act was carried out by the Financial Regulator. In accordance with s.33 C (12) of the 1942 Act, the Financial Regulator performed the functions of the Central Bank and Financial Services Authority of Ireland. The 2003 Act, by way of amendment to the 1942 Act, introduced certain statutory protections for the bank, its servants and agents. In particular s.33 AJ provides as follows:
“Section 33 AJ
(1). This section applies to the following persons:
(a) The Bank.
(b) The members of the Board and of the Regulatory Authority.
(e) Employees of the Bank.
(f) Agents of the Bank or any of its constituent parts.
(2) A person to whom this section applies is not liable for damages for anything done or omitted in the performance or purported performance or exercise of any of its functions or powers unless it is proved that the act or omission was in bad faith.
(3) The fact that the Bank has authorised or revoked the authorisation, or regulates the activities, of a person, under any of its functions is not a warranty by the Bank as to the person’s solvency or performance.
(5) Neither the State nor the Bank is liable for losses incurred because of the insolvency, default or performance of a person or body referred to in subsection (3) or (4).
(6) Nothing in subsections (3) to (5) limits the effect of subsection (2)”.
219. Mr. Barniville submits that these provisions mean that the Central Bank has an immunity in damages.
220. Mr. Rogers S.C. for the first defendant submits that the statutory immunity is not relevant to a consideration of this application for the following reasons:
(1.) The Central Bank has no immunity from suit; it only has an immunity – if at all – in damages.
(2.) Statutory immunity is for damages only; it is not an immunity for a third party claim for indemnity and/or contribution.
(3.) Under the provisions of the Civil Liability Act as set out above the definition of “liable” under the Civil Liability Act 1961 refers to “legal liability whether or not enforceable by action”. Thus the Central Bank could be joined as a third party because they have a legal liability. This legal liability may result in a declaration that the Central Bank was a concurrent wrongdoer and/or a declaration that the Central Bank is liable for an indemnity and/or contribution. However the fact that the Central Bank has a statutory immunity in damages does not operate as a matter of law to prevent them being joined as a third party.
(4.) The issue of bad faith could remain a live issue in these proceedings.
(5.) If the Central Bank seeks to rely on statutory immunity then there would be a constitutional challenge to that provision.
221. In relation to the third argument above, it is necessary to consider some of the provisions of the Civil Liability Act.
222. In Section 2 (1) of the Act the following words are defined:-
“Liable” refers to legal liability whether or not enforceable by action”
“Negligence” includes breach of statutory duty”.
“Wrongdoer” means a person who commits or is otherwise responsible for a wrong.”(Emphasis added)
223. Section 11 (2) provides as follows:
“Without prejudice to the generality of subsection (1) of this section
(a) persons may become concurrent wrongdoers as a result of vicarious liability of one for another, breach of joint duty, conspiracy, concerted action to a common end or independent acts causing the same damage;
(b) The wrong on the part of one or both may be a tort, breach of contract or breach of trust, or any combination of them;
(c) It is immaterial whether the acts constituting concurrent wrongs are contemporaneous or successive.
224. As is stated in Kerr on The Civil Liability Acts (Fourth Edition) at page 25:
“But a claim against a third party for a contribution or indemnity will only succeed if it can be shown that the third party committed a “wrong” in respect of which the injured plaintiff could have sued the third party” (see Staunton v. Toyota (Irl) Ltd (Unreported, High Court, Costello J., April 15th , 1988.)” This proposition is well illustrated by the decision of the Supreme Court in Conole v. Redbank Oyster Co. Ltd [1976] IR 191.”
225. The learned author then continues at page 26:
“Payment on foot of a judgment for damages is not necessary to establish the right to contribution. Subsection 1 provides that a concurrent wrongdoer may recover contribution from any wrongdoer “who is, or would if sued at the time of the wrong have been liable in respect of the same damage”. The ordinary meaning of the word “liable” is that a person is under an obligation enforceable by legal process: see George Whimpey & Company Ltd v. British Overseas Airway Corporation 1955 AC 169. For the purposes of the 1961 Act however “liable” is defined as referring to legal liability whether enforceable by action or not. In typical cases of injury caused by two wrongdoers, both will be “liable” to the victim in the ordinary sense of the word. In certain cases, however one wrongdoer will not be liable because of some immunity or other defence. An example given in the explanatory memorandum accompanying the bill was the liability as a concurrent wrongdoer of a person who damages the property of a deceased person before the executor obtains probate. Another example would be the immunity provided in s.12 of the Industrial Relations Act 1990 to a member or official of an authorised trade union i.e. trade union with a negotiation licence who in contemplation of furtherance of a trade dispute has induced the breach of contract of employment.
“Glanville Williams argued that persons under an unenforceable liability should still be considered liable for the purposes of tortfeasor statutes. Such an unenforceable liability would exist when there was a “defence which is a complete defence to the action …..and yet…..is not sufficient to take away all wrongful quality from the act.” It is essential therefore to distinguish between cases where there is an unenforceable liability, such as where injuries caused by the carelessness of someone who owes the victim a duty of care but at the same time enjoys diplomatic immunity and cases where there is no liability at all, such as where injury is caused by the carelessness of someone who does not owe the victim a duty of care. In the latter situation, it was not the case of a special defence preventing victim from obtaining judgement but of one of the essential elements of liability being absent.” (Emphasis added).
226. Mr. Rogers S.C. for the first defendant relies on the above passage in Kerr to say that even if the Central Bank seeks to rely on a statutory immunity – as it does – that does not prevent the Central Bank being joined as a concurrent wrongdoer because under the 1961 Act “liable” is defined as referring to legal liability whether enforceable by action or not.
227. In my view Mr. Rogers S.C. is correct in his submission. I am of the view that the Central Bank can be correctly joined as a third party even though at a later stage in the proceedings they may wish to rely on a statutory immunity in damages.
228. Having regard to all of the above I do not believe that the third party’s Statement of Claim could be struck out on the basis of the statutory immunity points
The Ninth Issue: Can a defendant claim Damages against the third party in respect of a wrong done to him?
229. The final issue which arose is that the third party statement of claim against the Central Bank also contains a claim that the Central Bank owed a separate and stand-alone duty of care to the first defendant as a director of a building society. This claim is set out in the body of the statement of claim and also in the prayer where there is a claim for damages for negligence and breach of statutory duties. The Central Bank submitted that it was wrong, as a matter of law, to plead in a third party statement of claim a separate claim for damages owed by the third party to one of the defendants.
230. Mr. Rogers S.C. for the first named defendant sought to clarify the issue by saying that although the first defendant was claiming a separate cause of action for negligence and breach of statutory duty and negligence owed to him, he was not seeking any damages in respect of same but simply an indemnity or contribution. Mr. Barniville S.C. countered that that was simply not procedurally nor substantively possible within the four corners of a third party statement of claim.
231. In my view Mr. Barniville is correct in this submission.
232. Section 11 (1) of the Civil Liability Act 1961 provides as follows:
“For the purpose of this part, two or more persons are concurrent wrongdoers when both or all are wrongdoers and are responsible to a third party (in this part called the injured person or the plaintiff) for the same damage, whether or not judgment has been recovered against some or all of them”.
233. It is clear from the provisions of this section, that a third party claim for indemnity and/or contribution is founded on the principle that the third party is a concurrent wrongdoer with the defendant. The governing principle is that:
(a) Both the defendant and the third party are allegedly wrongdoers and
(b) The defendant is responsible to the plaintiff
(c) The third party is also responsible to the plaintiff.
234. Thus it cannot be the case in third party proceedings that the defendant can claim a separate and stand-alone cause of action owed by the third party to the defendant seperately. That is a matter for separate proceedings.
Conclusions
235. I would therefore conclude as follows:
1. There is a stateable case that the Central Bank owes a statutory duty to the INBS. Thus there is a stateable case that INBS could sue for breach of a statutory duty simpliciter (i.e. without negligence). Thus there is a stateable case that the first named defendant can join the Central Bank as a third party in respect of this matter.
2. There is a stateable case that the Central Bank is liable to INBS for negligent breach of statutory duties. Thus the first defendant can join the Central Bank as a third party in respect of this matter also.
3. There is a stateable case that the Central Bank owes a common law duty of care to the INBS. Thus the third party can join the Central Bank in respect of this matter.
4. There is no stateable case that the Central Bank owes a statutory duty simpliciter (i.e.without negligence) to directors of a building society. Thus directors of individual building societies such as the first named defendant have no stateable case against the Central Bank in respect of this matter.
5. There is however a stateable case that the Central Bank owe directors of building societies a duty of care. As such therefore there is a stateable case that the first named defendant as a director has a cause of action against the Central Bank for negligent breach of statutory duty.
6. There is also a stateable case that directors of a building society have a common law case of negligence against the Central Bank for negligence.
7. However these claims by directors of a building society – in this case the first named defendant against the Central Bank – cannot form part of a third party claim for an indemnity of contributions. They can only form part of separate proceedings.
8. There is a stateable claim for misfeasance of public office on the part of INBS against the Central Bank. Therefore the third party is entitled to include this in its third party Statement of Claim against the Central Bank.
9. The Central Bank’s statutory immunity in damages does not prevent it from being joined as a third party.
236. In the circumstances therefore I would dismiss the application of the Central Bank to strike out the third party Statement of Claim.
Kearney v KBC Bank Ireland plc [2014] IEHC 260
JUDGMENT of Mr. Justice Birmingham delivered the 16th day of May 2014
1. The matter before the court sees the defendants seeking an order pursuant to O. 19, r. 28 of the Rules of the Superior Courts and/or pursuant to the inherent jurisdiction of the court striking out the plaintiff’s claim on the grounds that the pleadings disclose no reasonable cause of action and that the proceedings are frivolous, vexatious and bound to fail. The factual background is that the bank has advanced six loans to the plaintiff, who is a property investor/developer. The loan facilities were secured by way of mortgages over various investment properties mainly located in Ireland, but in the case of two apartments in Birmingham in England.
2. In summary, the position in relation to the loans was as follows. The first loan facility was advanced on foot of a letter of offer dated the 1st November, 2004, and was in the amount of €156,000. A form of acceptance that was appended to the letter of offer was signed by the plaintiff and witnessed by his solicitor. This loan was secured by way of a mortgage dated the 24th December, 2004, in respect of 21 Pearse Court, Athlone, Co. Westmeath. A letter of demand issued and in a situation in which the sum demanded was not repaid, a receiver was appointed on the 28th September, 2012. The second loan facility involved three loan letters dated the 10th January, 2005, in the amount of €1.2m, the 9th June, 2005, in the amount of €154,700 and the 13th February, 2007, in the amount of €180,000. Forms of acceptance were appended to each loan letter and were signed by the plaintiff and witnessed by his solicitor. All three elements of the loan facility were drawn down by way of a cheque made payable to his then solicitors. The loans in question were secured by way of a mortgage dated the 20th April, 2005, over a number of properties in Castlegar, Co. Galway, a second legal charge was in place over three other properties. A letter of demand was served, but the sum demanded was not repaid and a receiver was appointed on the 28th September, 2012.
3. The third loan facility was advanced on foot of a letter of offer dated the 3rd June, 2005, in the amount of €267,600. Again the form of acceptance appended to the letter of offer was signed by the plaintiff and witnessed by his solicitor and drawn down by way of loan cheque payable to the plaintiff’s solicitor. This loan was secured by way of a mortgage dated the 31st August, 2005, over two properties in Tarmonbarry, Co. Roscommon. When the sum demanded through a letter of demand was not repaid, a receiver was appointed in this case on the 18th December, 2012.
4. The fourth loan facility was advanced on foot of a letter of offer dated the 11th August, 2005 and the sum involved was €300,000. On this occasion the plaintiff’s wife was a party to the loan and the form of acceptance was signed by both the plaintiff and his wife and was witnessed by their solicitor. This loan was secured by way of a mortgage dated the 1st November, 2005 and a supplemental indenture of mortgage of the 10th November, 2005, over Apartment 13, Amhra House, St. Brendan’s Avenue, Co. Galway. In this case a receiver was appointed over the secured property on the 19th October, 2012.
5. Loan facilities 5 and 6 related to properties in Great Britain. There were two loan offers dated the 27th November, 2007 and the sums advanced were Stg£163,000 and Stg£113,080.15. As in the case of the earlier loans the form of acceptance that was appended to the facility letters was signed by the plaintiff, but on these occasions, was witnessed by his financial consultant rather than his solicitor. The funds in question were drawn down by the plaintiff. The loan facilities were secured by two mortgage deeds both dated the 15th February, 2008 over Apartment 25 and Apartment 32, Arena View, Clement Street, Birmingham. In these cases a receiver was appointed to the secured property on the 3rd October, 2012.
6. The present proceedings were commenced by the issue of a plenary summons on the 11th September, 2012. Somewhat unusually the plenary summons was accompanied by a grounding affidavit. On the 22nd October, 2012, two different statements of claim were served. One statement of claim was directed to the position of the first named defendant and the second statement of claim was directed to the position of the second named defendant. The second named defendant, it may be noted was the then Chief Executive of the first named defendant bank.
7. The plaintiff’s pleadings, might, I think fairly be described as diffuse and do not easily lend themselves to being summarised. In the circumstances I have decided to append to this judgment the plenary summons, the grounding affidavit and the two statements of claim.
8. Notwithstanding, the difficulties in summarising the plaintiff’s pleadings which has led me to appending the pleadings, counsel on behalf of the defendant has undertaken that task. I did not understand the plaintiff to take significant issue with the summary presented and so I will make use of the defendants’ summary. Counsel for the defendant has offered the following summary of the plaintiff’s claim as against the bank.
(a) The bank has failed to prove that the plaintiff entered into binding contracts with the bank.
(b) The bank has acted in breach of the loan agreement from the outset.
(c) The bank fraudulently misrepresented and wilfully misled the plaintiff in relation to a property development in Birmingham, England in order to unjustly enrich the bank and its employees and agents.
(d) The loan facilities and/or mortgages were sold or securitised. On this basis, the plaintiff contends that the bank no longer holds full ownership of the loans and as a result is not a “real party of interest” and accordingly does not have the right to enforce the loans.
(e) The bank failed to obtain the consent of the plaintiff to the securitisation of the loans, which constituted a breach of the Central Bank Asset Securitisation Document.
(f) The bank offered the plaintiff a loan of money, but instead created a debt or deposit.
(g) The bank did not fund the loans advanced to the plaintiff and never informed the plaintiff of its plans to ‘outsource’ the funding of the loans/mortgages.
(h) The bank, by way of the loans advanced to it, created a financial instrument, which could be sold or assigned to a third party. On this basis, it is contended that the bank had committed ‘a criminal offence of creating currency’.
(i) The bank was not entitled to appoint a receiver to the secured properties, absent documentation evidencing the existence of lawful contracts as between the bank and the plaintiff.
(j) The bank has failed to prove that it is a solvent bank with the right to trade and to repossess property.
9. As against the second named defendant, the former Chief Executive Officer of the bank, the plaintiff’s claim is that:
(a) The second named defendant, through his stewardship as CEO of the bank has been complicit in the unlawful practices of the bank.
(b) The second defendant had the ultimate responsibility within the bank to ensure that the bank adhered to the trading requirements laid down by Irish law, and failed in that responsibility.
(c) The second named defendant ‘stood by’ while the bank committed the acts complained of.
(d) The second defendant knows that the bank committed the acts complained of.
(e) The second defendant has failed to provide the plaintiff with information that he requested from the bank.
(f) The second defendant officiated over the bank and therefore shares responsibility with the bank for fraudulently misrepresenting and wilfully misleading the plaintiff in relation to a property development in Birmingham.
(g) The second named defendant allowed the bank to commit the offence of creating currency.
(h) The second named defendant has failed to explain the basis upon which receivers were appointed to the plaintiff’s property by the bank.
10. There can be no doubt, but that the court has power pursuant to both O. 19, r. 28 and pursuant to its inherent jurisdiction to strike out proceedings that are frivolous or vexatious. It must be said immediately, that it is not a jurisdiction to be exercised lightly. In Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425, 428 McCarthy J. commented:-
“Generally, the High Court should be slow to entertain an application of this kind and grant the relief sought.”
11. In the particular circumstances of this case, I attach significance to the fact that the authorities clearly establish the proceedings should not be dismissed if they are capable of amendment. See in that regard Delaney and McGrath on Civil Procedure in the Superior Courts, (3rd Ed.) at para. 1606 and the cases therein cited. Accordingly, if the proceedings can be saved by amendments, even radical amendments, then the proceedings will not be struck out at this stage.
12. The defendants have gone on to seek to distil the claims against them further. Again, the plaintiff did not seem to dissent significantly from this summary though placing particular emphasis in oral argument on two matters. The summary offered by the defendants was as follows:-
(i) that the bank has failed to prove that the plaintiff entered into a binding loan agreement with the bank;
(ii) that the bank engaged in the illegal creation of currency;
(iii) that the bank does not retain the entitlement to enforce the loans following the securitisation of the loans;
(iv) that the bank acted in breach of the Central Bank Asset Securitisation Document in failing to obtain the consent of the plaintiff to the securitisation of the loans;
(v) that the bank was not entitled to appoint a receiver to the plaintiff’s properties without court application;
(vi) that the bank is or was insolvent or has failed to prove that it is solvent; and
(vii) that the bank, its servants or agents fraudulently misrepresented matters in relation to a proper development in Birmingham in order to unjustly enrich the bank and its employees and agents.
Alleged failure to prove binding contract between plaintiff and bank
13. The plaintiff has written repeatedly to the bank calling on it to provide:-
(i) what is described as validation of debt – there is some dispute as to where or with whom this phrase originated;
(ii) verification of the bank’s claim against the plaintiff by a sworn affidavit or signed invoice; and
(iii) a copy of the contract binding on both parties.
14. These letters stated that:-
“[I]f all related valid documentary evidence exists and is supplied, we are more than happy to pay any and all amounts that we lawfully owe.”
15. The bank has furnished the plaintiff with copies of each of the signed letters of offer, all witnessed, copies of the mortgages, copies of account statements demonstrating the sum said to be due and owing and redemption statements.
16. The form of acceptance appended to each of the letters of offer, each signed by the plaintiff and, in one case also signed by his wife, and each witnessed by the plaintiff’s solicitor or, in the case of the Birmingham loans by the plaintiff’s financial adviser, provide that the loan is governed by the terms and conditions set out in the letter of offer, the particulars of advance, the bank’s general conditions, the special conditions, the bank’s standard form mortgage and the assignment of life policy.
17. In my view, there can be absolutely no doubt whatever about the contractual basis for the six loans. There are two other aspects. There is something somewhat incongruous about the plaintiff alleging a failure on the part of the bank to prove a binding contract when it is the plaintiff that has commenced the proceedings. The obligation on the bank to prove its case will arise if and when it issues proceedings. Furthermore, even if there was some issue in relation to the form of contract which there does not appear to be, that would not necessarily relieve the plaintiff of the liability to repay the loans. In Irish Bank Resolution Corporation v. Cambourne [2012] IEHC 262, in a situation where there were difficulties with the facilities letters, Charleton J. still held that the defendant was liable to repay money loaned. Again, in ACC Bank v. Deacon [2013] IEHC 427, a case where there was a dispute about whether certain documents had been signed, Ryan J. commented, if the bank had been unable to establish the terms on which it had advanced the funds to Mr. Deacon, there would have been an implied obligation on him to repay in a reasonable time after demand.
“The bank engaged in the illegal creation of currency”
18. I have identified this as one of the two areas in which the plaintiff attaches particular emphasis. His interest in this area is related to his success in accessing an article in the Bank of England Quarterly Bulletin, 2014, Q.1, entitled “Money Creation in the Modern Economy” by members of the Bank’s Monetary Analysis Directorate.
19. The argument is not a new one. The thrust of the allegation which is that the bank did not advance to the plaintiff a loan of money, but created currency has been canvassed in other cases. Specifically the same argument was considered by Gilligan J. in Freeman v. Bank of Scotland Ireland [2013] IEHC 371. There, he referred to the case of Meads v. Meads, a decision of the Alberta Queens Bench. He did so in these terms:-
“The Court accepts the submission by counsel for the defendants that this ‘creation of currency’ argument resembles the so-called ‘money for nothing schemes’ discussed in Meads v. Meads 2012 ABQB 571. Such arguments are coming before the Courts in numerous jurisdictions with increasing frequency since the economic and property market collapse. In Meads, Associate Chief Justice Rooke stated that such arguments are often advanced by a particular type of vexatious litigant which he termed ‘Organised Pseudolegal Commercial Argument (OPCA) litigants’. He described these arguments as ‘fanciful’ and ‘completely devoid of merit’ and said they are often made by distressed litigants, particularly those who find themselves in financial difficulty, acting under pressure and on the instruction of organised groups or individuals who have a vested interest in disrupting court operations and frustrating the legal rights of governments, corporations and individuals.”
20. In my view the phrases “fanciful” and “completely devoid of merit” are very appropriate to describe this argument and indeed significantly more robust language would be justified. Quite simply the plaintiff drew down funds and thereby took on the responsibility to repay. What the source of these funds was matters not a whit. The position is not altered by the sourcing of the article on which the plaintiff places such reliance.
Bank does not retain entitlement to enforce loan following securitisation
21. That the bank does not retain the entitlement to enforce the loans following the securitisation of the loans. This issue is closely linked to contention 4, which is that the bank failed to observe the terms of the Central Bank Asset Securitisation Document, in that it failed to obtain the consent of the plaintiff to the securitisation of the loans. Again, these joint issues taken together constitute an area on which the plaintiff places particular emphasis. Notwithstanding the emphasis laid by the plaintiff, it is necessary to observe that only two of the six loans were securitised. The first loan facility secured by way of mortgage over 21 Pearse Court, Athlone, Co, Westmeath and the fourth loan facility drawn down by the plaintiff and his wife. The difficulty facing the plaintiff and it seems to me an insuperable difficulty is that in accepting the facility letters and in executing the mortgages, he appears to have acknowledged the bank’s right, without seeking further consent from or notice to the plaintiff to securitise the loans. Clause 6 of the general conditions appended to the letter of offer provides as follows:
“The applicant(s) attention is drawn to clause 11(iii) of the Mortgage Indenture. The applicant(s) hereby acknowledge the Lenders right, without further consent from or notice to the applicant(s) to transfer the benefit of this letter of offer, the mortgage loan and the lenders mortgage security (including any insurance policy or policies of life or endowment terms of assurance) over the property to any person, company or corporation on such terms as the lender may think fit, without any further consent from or notice to the applicant(s) or any other person or any consequential assurance or re-assurance or release under such scheme whereupon all powers and discretions of the lender shall be exercisable by the transferee. In the event that any such transfer and/or assignment and/or disposal the lender shall continue to be responsible, as agent for such transferee or assignee, for all matters relating to the administration of the loan, including but not limited to the setting of the interest rates and the handling of arrears in respect of the loan subject to the powers and discretions of the transferee. In regard to the setting of the interest rates and the handling of arrears, the policy of any such transferee shall be the same as that of the Lender. The applicant(s) hereby irrevocably and unconditionally authorises the Lender, for the purpose or in connection with any proposed transfer, assignment, disposal, submortgage, subcharge, trust or arrangement of this agreement, to disclose to the propose transferee and every person proposing to participate in or promote or underwrite or manage any such transfer or securitisation scheme to disclose to every person to whom the lender is obliged thereunder to make disclosure, details of this agreement, without prejudice to the generality of the aforegoing any information and documentation in the Lender’s possession in relation to the borrower, the mortgage loan and the Lender’s mortgage security over the Mortgage premises and so far as such information constitute personal data within the meaning of the Data Protection Act 1988, this authority shall be consent for the purpose of s. 8(h) of the said Act.”
22. Clause 11(ii) of the mortgage dated the 24th December, 2004, provides as follows:-
“The borrower hereby acknowledges the lender’s right, without any further consent from or notice to the Borrower, to transfer the benefit of this mortgage, the mortgage loan and the lender’s mortgage security (including any insurance policy or policies of life or endowment term assurance) over the Mortgaged Premises to any person, company or corporation on such terms as the lender may think fit, without any further consent from or notice to the borrower or any other person or any consequential assurance or reassurance or release under such scheme whereupon all powers and discretions of the lender shall be exercisable by the transferee . . .”
23. Mr. Kearney makes the point and I accept that in this regard he is correct that the only express reference to securitisation is in the context of disclosure and data protection issues. However, while acknowledging that, it still seems to me that in relation to both of the 21 Pearse Court transactions, that there is no doubt whatever, but the plaintiff consented to the transfer of the mortgage, without further reference to him, including transfer by way of securitisation.
24. In relation to the emphasis that the plaintiff places on the issue of securitisation; observations made by Peart J. in Wellstead v. Judge White and Others [2011] IEHC 438, are very much on point. There, Peart J. observed:-
“But there is another obstacle which faces the applicant, and which he has not addressed, and it is that there is nothing unusual or mysterious about a securitisation scheme. It happens all the time so that a bank can give itself added liquidity. It is typical of such securitisation schemes that the original lender will retain under the scheme, by agreement with the transferee, the obligation to enforce the security and account to the transferee in due course upon recovery from the mortgagors.”
25. The views expressed by Peart J. with which I find myself in complete and respectful agreement, also, accords with the approach of the English Court of Appeal in the case of Paragon Finance plc v. Pender [2005] 1 WLR 3412. The Court of Appeal was of the view that all that the special purpose vehicle acquired, under an uncompleted agreement to transfer the legal charge, was an equity in the mortgage. Paragon remained the legal owner, and as registered proprietor of the charge, retained all the powers of a legal chargee, including the right to possession, nor was it necessary to join the special purpose vehicle. The arrangement here was similarly structured to the arrangements with which the English Court of Appeal was concerned and I reach similar conclusions.
26. In summary then as far as this issue is concerned, and it is worth repeating that it is relevant to only two of the loans, the defendant bank retains legal title to the loan facilities and mortgages and the interest that was transferred by the bank to the special purpose vehicles was an equitable interest only and accordingly the bank is clearly entitled to enforce the loan facilities and the security for same.
Alleged failure to comply with Central Bank of Ireland Asset Securitisation Documents
27. The plaintiff contends that the bank has failed to comply with the Central Bank of Ireland Asset Securitisation Documents while the bank firmly maintains that it has complied in full with its obligations. Assuming at this stage that if the matter goes to trial that the plaintiff will be in a position to establish non-compliance, then this would still not serve to render invalid the loan agreements that were entered into between the plaintiff and the first named defendant. The asset securitisation document is not a statutory code, but rather it is a voluntary code.
28. In Zurich Bank v. McConnon [2011] IEHC 75, a case dealing with a commercial loan to fund a supermarket/shopping centre development, I took the view that any alleged breach of the Consumer Protection Code would not exempt a borrower from repaying. It is true that a somewhat different approach is to found in the cases of Stepstone Mortgaging Funding Limited v. Fitzell [2012] 2 I.R. 318, and Irish Life and Permanent plc v Duff [2013] IEHC 43. Indeed, this difference in approach between these two cases and the Zurich v. McConnon line of cases caused Gilligan J. to refrain from striking out this aspect of the proceedings in Freeman v. Bank of Scotland [2013] IEHC 371. If matters rested there, I would have been minded to take the same approach as Gilligan J. However, I have been referred to the decision of Ryan J. in ACC Bank v. Deacon [2013] IEHC 427, who rejected a contention that a failure to comply with the Central Bank Codes of Conduct for lending to S.M.E.’s rendered a loan invalid. He distinguished Fitzell and Duff on the basis that these decisions related to claims for repossession of family homes.
29. It seems to me that there is a world of difference between suggesting, that a failure to comply with the Code may be relevant to how a court will exercise its discretion whether to grant possession of a family home or not, and on the other side of the coin a suggestion that a failure to comply with a non-statutory voluntary code provides a cause of action, so as to allow a borrower invalidate a transaction and secure an exemption from repaying monies that he has borrowed.
Appointment of receiver to plaintiff’s properties
30. The arguments that the plaintiff seeks to make in this regard have evolved somewhat with the passage of time. Initially, the argument appeared to be that there was no entitlement to appoint a receiver absent an application to court. Given the terms of the loan and mortgage documentation, any such argument would have faced formidable, indeed insurmountable difficulties.
31. However, the plaintiff’s position has, as I have indicated evolved somewhat. In his fourth affidavit, delivered on the 21st March, 2014, the plaintiff argued that in circumstances where the mortgages made reference to the Conveyancing Acts 1881 to 1911, which have been repealed by the Land and Conveyancing Law Reform Act 2009, the power of sale does not arise and contends that the appointment of the receiver “was in contravention of the repealed Act and thus unlawful”. This leads the plaintiff to seek an order for the immediate dismissal of the receivers and an order to have all money “stolen” by the receivers returned to him. It seems to me to be clear that what the plaintiff is seeking to do is to bring himself within the Start Mortgages v. Gunn [2011] IEHC 275, line of authority. The difficulty for the plaintiff is that in Start Mortgages v. Gunn, Dunne J. was dealing with the right to apply for possession in a summary manner and as we know, she held that the right to apply for an order for possession summarily under s. 62(7) of the Registration of Title Act 1964, which was repealed by s. 8 of the Land Conveyancing Law Reform Act 2009, only survives in circumstances where the monies secured by the charge became due and demand was made prior to the 1st December, 2009.
32. The relevance of the Start Mortgages v. Gunn decision on the entitlement to appoint a receiver under a deed of mortgage or charge was considered by Laffoy J. in Kavanagh and Lowe v. Lynch [2011] IEHC 348. Laffoy J. commented:-
“On this point, it seems to me that there is a clear distinction between the impact of the repeal of s. 62(7) of the Act of 1964, which provided a statutory remedy to the owner of registered land to apply to court in a summary matter for possession of the land when repayment of the money secured by the charge had become due, as found by Dunne J. in Start Mortgages Limited & Ors v. Gunn & Ors, and the impact, if any, of the repeal of the Act of 1881 on the drafting device universally availed of by draftsmen of security documents of conferring powers on mortgagees by incorporating statutory provisions in force at the time of creation of the security, with or without variation. As I have found, in the latter situation, the ascertainment of the rights and liabilities of the parties to the security document is a matter of construction of the document and the repeal of the statutory provisions does not have the impact advocated by counsel for the defendants.”
33. Feeney J. reached a similar conclusion in the case of McEnery v. Sheahan [2012] IEHC 331, indeed it must be said that the judgment of Feeney J. goes considerably further than the defendants in the present case require.
34. Furthermore, it seems to me that there is a more fundamental objection to what the plaintiff is seeking to do. It is one thing to say that the repeal of a statute may avail a party by providing a shield against certain procedures when invoked, but it is an altogether different matter to suggest that the repeal provides a sword capable of striking down agreements freely entered into and obliterating an obligation to repay loans that were drawn down. Indeed, the distinction between arguments that may serve as a shield and provide a defence in particular circumstances and what arms a plaintiff on the offensive is not confined to this right to appoint a receiver aspect of the case, but is of a general application in the context of this case.
Contention bank is or was insolvent or has failed to prove its solvency
35. The contention that the bank is or was insolvent or has failed to prove its solvency, again, assuming in favour of the plaintiff for the purpose of this exercise that this is or was the situation, something which is of course firmly denied by the bank, this does not have any impact or effect on the validity or enforceability of the loan arrangements and mortgages entered into between the plaintiff and the bank and certainly would not provide the plaintiff with a cause of action. The obligation to repay remains in full force and effect whether the bank is solvent or insolvent.
Alleged fraudulent misrepresentation
36. In the statement of claim served by the plaintiff, damages are sought to include “all payments and interest unlawfully stolen” by the bank and also sought are damages for theft, deception, breach of duty/care, misrepresentation, causation, fraud, non performance, collusive self enrichment through fraud, breach of contract, deceit, dishonest/insolvent trading, false pretence, intent to fraud, breach of promise, intent to induce reliance, attempted damage by perjury, attempted extortion and counterfeiting.
37. These allegations of extraordinary seriousness are scattered about with abandon, but are not particularised. Order 19, r. 5(2) of the Rules of the Superior Courts 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.”
38. In Keaney v. Sullivan [2007] IEHC 8, Finlay Geoghegan J. commented that the court had an inherent jurisdiction to strike out a claim for failure to comply with O. 19, r. 5(2) and in that case she proceeded to strike out claims. A similar approach was taken by Edwards J. in Bula Holdings v. Roche [2008] IEHC 208, where Edwards J. made an order striking out the proceedings on the basis that the pleadings were frivolous, vexatious and scandalous and that the particularisation of the claims of fraud, deceit, conspiracy and attempted perversion of the course of justice is so inadequate and deficient that no reasonable cause of action was disclosed. For my part, if I thought there was any possibility that the gross deficiencies in the pleadings which are apparent were simply the result of poor draughtsmanship by a lay litigant who did not realise what was expected of him, I would be minded to amend. However, it seems to me that these allegations if seen in the context of the proceedings as a whole, and those proceedings are appended to this judgment that it is clear that the allegations are made without any sense of probity or responsibility whatever.
The bank, its servants or agents, fraudulently misrepresented matters in relation to a property development in Birmingham in order to unjustly enrich the bank and its employees and agents.
39. The key allegation here is that the defendant bank funded the Cornerstone Development Project in Birmingham and funded the plaintiff’s acquisition of units and that this gave rise to a conflict of interest. Again, I assume in favour of the plaintiff that he will be able to establish that K.B.C. funded the development in Birmingham. I am making that assumption in the plaintiff’s favour, notwithstanding the wholly unsatisfactory state that the plaintiff has left the evidence in. His assertion that K.B.C. funded the development by Cornerstone is based on the fact that he says that he has seen an email which he sent, which referred to that fact, but which he was not able to produce. The bank, for its part, denies that it funded the development. Cogent as the denial is, I will assume that the plaintiff would be able to prove that K.B.C. funded the Birmingham development. However, even if that were so, it would still not provide the plaintiff with a cause of action. I can see no stateable case or stateable argument which would preclude a bank that had participated in the funding of a residential development from lending to the purchaser of individual units. The arguments that the plaintiff seeks to advance in this regard are bound to fail.
40. In summary then, in my view, the pleadings are indeed frivolous and vexatious in the sense that phrase is used in authorities such as Farley v. Ireland, (Unreported, ex tempore, Supreme Court, 1st May, 1997), judgment of Barron J, but also in the everyday use of that phrase. The proceedings are unmeritorious, so unmeritorious indeed as to amount to an abuse of process and are bound to fail. Accordingly, I will accede to the defendants’ application and strike out the proceedings, doing so pursuant to O. 19, r. 28 of the Rules of the Superior Courts and also pursuant to the inherent jurisdiction of the court.
Healy v Stepstone Mortgage Funding Ltd [2014] IEHC 134
JUDGMENT of Mr. Justice Hogan delivered the 19th March 2014
1. The plaintiff is a customer of the defendant mortgage company (“Stepstone”) having taken out a mortgage in September 2007, of €120,000 in respect of a property in Co. Westmeath. As it happens, the plaintiff has fallen somewhat behind in his mortgage payments and in 2013 Stepstone commenced separate proceedings in respect of these arrears. Those separate proceedings are not before me and I refrain from expressing any view in respect of them.
2. In these present proceedings, however, the plaintiff has sued Stepstone for what is described as “gross negligence and misrepresentation” which it is claimed has been orchestrated “by the mortgage company. The general endorsement of claim contends that Stepstone broke “serious liquidity laws which has caused the financial collapse” and it claims that by reason of this conduct the mortgage contract is “seriously flawed”. The plaintiff also claims damages for “reckless lending procedures” by Stepstone and it seeks a declaration that any liens or charges registered on the folio of the plaintiff’s family home otherwise secured by the mortgage be removed.
3. By motion dated the 13th January, 2014, Stepstone applied to have these proceedings struck out pursuant to both O. 28, r. 18 and the Court’s inherent jurisdiction on the grounds that they disclose no reasonable cause of action. I have already ruled in Stepstone’s favour on this point and now give my reasons for this conclusion.
4. In essence the plaintiff’s claim is that there exists in law a tort of reckless lending It is however, absolutely clear that there is no such common law tort of reckless lending. The matter has, in any event, been put beyond doubt by two recent decisions of this Court that have considered the matter in some detail.
5. In ICS Building v. Grant [2010] IEHC 17, Charleton J. stated:
“. . . the argued for tort of reckless lending does not exist in law as a civil wrong. It is not within the competence of the court to invent such a tort. Oireachtas could, if it saw fit, pass a law creating such a civil wrong. It is difficult to imagine the parameters of such a law since those who seek a loan will have different views to what should be borrowed, and if a loan is badly made by a bank, how can the issue of contribution be escaped from by the borrower who sought the money in the first place. Defining that civil wrong would tend to remove the presumption of arms length dealing as between borrower and bank and replace it with a new relationship based on a duty of nurture that other common law countries do not see it as their duty to put into the marketplace as any argued-for law as to reckless lending does not appear in the works on tort that I have consulted from other common law jurisdictions.”
6. These views were followed in McConnon v. President of Ireland [2012] IEHC 184, [2012] I.R. 449 at 446 where Kelly J. stated, “such a tort does not exist as a civil wrong in Irish law”.
7. One might add that there is no known example in the common law of a claim of this kind being judicially recognised as an established tort. Nor could a claim of this kind be said properly to represent an incremental development of the existing common law by the application of established (or even developing) principles to new sets of facts and circumstances. As Lardner J. acknowledged in RT v. VP (orse VT) [1990] 1 I.R. 545,558, this type of incremental change is a core feature of the common law system which has been performed by the superior courts for centuries and it is not, as he put it, “in its proper exercise an impermissible exercise of the judicial function”.
8. The common law as it existed immediately prior to the coming into force of the Constitution was carried over into our law by Article 50.1, save to the extent that such law was unconstitutional. While the common law is not frozen as of the date of the coming into force of the Constitution (29th December 1937), in the case of the common law torts, the courts are, broadly speaking, confined to the general parameters of the law of torts as then existed as of that date. Entirely different considerations naturally apply where aspects of those common law rules are later found to be unconstitutional (as in McKinley v. Minister for Defence [1992] 2 I.R. 333) or where these common law torts have subsequently been modified, re-stated or even abolished by legislative enactment. Yet whatever might have been the case in the early days of the common law, the courts certainly do not have any authority now to invent entirely new categories of torts, as this is a matter which is reserved to the Oireachtas by Article 15.2.1 of the Constitution.
9. Leaving aside the incremental change and development which are standard features of the common law method, the courts can generally only develop or supplement the law of torts where this corpus of law has been shown to be “basically ineffective” to protect constitutional rights in a particular case: see, e.g., Meskell v. Coras Iompair Éireann [1973] I.R. 121, Hanrahan v. Merck, Sharp & Dohme Ltd. [1988] ILRM 629, 636, per Henchy J., Herrity v. Associated Newspapers Ltd. [2008] IEHC 249, [2009] 1 I.R. 326 and Sullivan v. Boylan [2013] IEHC 104.
10. It is true that the common law may also occasionally develop by reason of inveterate and established judicial practice, although this is highly unusual and exceptional. Thus, for example, in Kennedy v. Gibbons [2014] IEHC 67 I recently held that this was true of the poor box system operated by the District Court, even though this practice had no clear common law roots. But this was because:
“…..the poor box system was nevertheless so widespread and inveterate through out the State both before and after 1922, that it must accordingly be regarded as part of the common law which was carried over into our modern legal system by Article 50.1 of the Constitution, its obscure and uncertain origins notwithstanding. Although, moreover, the existence of such a jurisdiction is not to be found in any of the acknowledged sources – such as textbooks or decisions of venerable judges of some antiquity – referencing the pre-1937 common law which was carried over on the coming into force of the Constitution, its existence is nonetheless such an embedded feature of our legal system that it must be now regarded as part of that common law, if only by reference to the principle communis error, facit jus.”
11. This cannot, however, be said of the alleged tort of reckless lending, since there are no examples at all of where the existence of such a tort can be said to have been acknowledged prior to the coming into force of the Constitution on 29th December 1937. It could not plausibly be asserted, for example, that the courts had in practice frequently awarded damages in respect of this tort, even if the existence of such a tort had not been the subject of a considered judgment from this Court or the Supreme Court. In fact, there is not a single pre-1937 instance of where this (or anything like it) had ever occurred.
Conclusions
12. It follows, therefore, that there is simply no tort of reckless lending which is known to the law. In that respect, I entirely agree with the comments of Charleton J. in Grant and those of Kelly J. in McConnon. Since the entirety of the present proceedings is premised on the assumption that there is such a tort, it further follows that the present proceedings are completely unsustainable in law and are doomed to fail.
13. For these reasons, therefore, I will accordingly grant an order striking out the claim pursuant to the inherent jurisdiction of this Court.
Quinn v Fennell [2014] IEHC 20
Neutral Citation: [2014] IEHC 20
THE HIGH COURT
[2013 No. 1603 P]
BETWEEN
MICHAEL QUINN AND BRIGID QUINN
PLAINTIFFS
AND
KEN FENNELL
DEFENDANT
JUDGMENT of Mr. Justice Birmingham delivered on the 27th day of January, 2014.
1. The matter before the court sees the defendant, and moving party, who is the well known insolvency practitioner, seeking orders to have the present proceedings dismissed as an abuse of process and/or dismissed essentially on the basis that the issues which the plaintiffs now seek to litigate are res judicata. The defendant has by separate motion sought what is sometimes referred to an Isaac Wunder order, i.e. an order restraining the plaintiffs from issuing any further proceedings against him without first obtaining leave of the High Court.
2. Listed before the court at the same time was a motion brought by the defendants seeking direction as to the mode of sale of certain lands and premises, and a motion brought by the plaintiffs which purported to seek directions in relation to certain matters pursuant to s. 316 of the Companies Act 1963, as amended. So far as the “mode of sale” motion is concerned it was indicated that this need not concern the court for the present.
So far as the s. 316 motion is concerned it was indicated on a number of occasions during the course of the proceedings and before me that the scope of this application was much reduced. Initially it appeared that there were 22 issues involved, but during the course of the proceedings and the hearing before me, it was indicated that there were only three live issues, then that there were two and then that there was one. Eventually on the afternoon of the first day that the matter was at hearing before me, there appeared to be agreement, and specifically the plaintiffs appeared to agree that the s. 316 motion served no practicable purpose and was no longer necessary. The plaintiffs agreed that there was no reason why the motion should not be struck out and the focus of attention concentrated on the real issues between the parties and I proceeded to do this. On the second day of the hearing before me, the plaintiffs sought to resile from their earlier position and suggested that the proceedings should be let lie in place, lest they or indeed Mr. Fennell need to resort to them on some aspect or other at some stage in the future. I am not persuaded by this change of heart and I do not propose to revisit my decision of the 3rd December, 2013, made with the consent of the parties. Accordingly this ruling will deal with the strike out motion and the application for an Isaac Wunder order.
3. The background to the present application, and it is an application which has already been heard before the late Feeney J., but sadly he died before delivering judgment, is that the plaintiffs in the proceedings, who are husband and wife were directors and shareholders of a company known as Cloughvalley Stores Limited (Ltd.) which, since 1988 or thereabouts, operated a petrol station and grocery store at Castleblayney Road, Carrickmacross, County Mongahan.
4. In 2006 or thereabouts Cloughvalley Stores Limited (Cloughvalley /the Company) came up with a proposal to develop a larger supermarket and to rebuild the petrol station. The development was duly carried out. In order to carry out the development Cloughvalley Stores Ltd borrowed €6.5m from Allied Irish Banks pic. (hereinafter “AlB”), an amount that was subsequently increased somewhat. Default occurred in relation to payment obligations and AlB purported to appoint Mr. Fennell as receiver.
5. Soon thereafter, it emerged that there were complications or complexities in relation to the Bank’s security.
6. The redevelopment took place on the lands where the original petrol station and land had been located but also on adjoining land. The area where redevelopment took place involved four distinct plots or sub-plots referred to as plots A, B, C and D. The overall area involved being approximately two acres. The complications or complexities to which I have referred arise from the fact that the development involved these four distinct plots or sub-plots. Plot A consisted of O.29 acres, it was held by Cloughvalley on foot of a deed of conveyance. The building from which the Company carried on the business of a shop and petrol station was originally contained entirely within plot A. However, over the years the business was expanded on a number of occasions and the building as enlarged extended onto plot B. Plot B consists of 0.586 acres approximately and was held by the defendants personally. Likewise, plot C which consists of0.58 acres approximately was held by the defendants, Mr. and Mrs. Quinn personally. Plot D, which has not been directly in issue, in the course of the proceedings before me comprised O.63 acres and was held by the Company on foot of a lease to the Company from Carrickmacross Town Council.
7. The 2006 redevelopment which was financed by AlB saw the Company building a supermarket and retail units on plot A, but also on a significant portion of plot B. The petrol pump and overhead canopies were relocated and extended onto plot C in part. Plot C also provided car parking spaces associated with the supermarket. In all the development comprises approximately 40,000 sq.ft located on plots A, B and C. Plot A as we have seen is held in the Company name, while plots Band Care in the name of the defendants personally.
8. AIB advanced the €6.5m that was borrowed pursuant to a facility letter from it to the directors of Cloughvalley Stores Ltd dated the 3rd May, 2006. The section of the letter dealing with the security for the loan included a reference to “legal charge over 40,000 sq.foot building premises on c. 2 acres at Carrickmacross, Co. Monaghan”.
9. Following the appointment of Mr. Fennell on 12th January, 2011, as receiver he initially operated the supermarket with the involvement and assistance of Mr. and Mrs. Quinn. However, in May 2011, he dispensed with their services. There followed a protest, including a sit-in protest, leading to a successful application to MacMenamin J. for an injunction on the 9th June, 2011, in proceedings entitled Fennell and by Order Clough Valley Stores Ltd v. Michael and Brigid Quinn, Record No. 2011/4878 P.
10. Thereafter, Mr. Fennell set about making arrangements for the sale of the premises. The complications in relation to security to which I have referred emerged. The matter came back before the court. The plaintiffs sought to apprise the Court of what had emerged and the defendants sought the discharge of the injunction. The issue was whether an injunction granted on the basis that acts of trespass had occurred could continue. Mr. and Mrs. Quinn argued that given their interests in the plots B and C, that they could not be regarded as trespassers. However, Hedigan J. agreed with the submissions that were advanced on behalf of the receiver that although two of the plots had remained in the legal ownership of the defendants, that the Company enjoyed an exclusive license to occupy the lands since the Company had redeveloped the premises on the lands with the permission of the defendants. On the 26th August, 2011, Hedigan J. made an order continuing the injunction restraining the defendants from, inter alia, trespassing on the Company’s premises which included property held by the Company on foot of an implied license which had been granted to it by the defendants over the two plots of land.
11. In proceedings entitled Allied Irish Banks Plc v. Michael Quinn and Bridget Quinn Record No. 2011/9355 P, Feeney J. in a judgment delivered on the 21st December, 2012, upheld two distinct claims made by AIB. The first claim being that under and by virtue of an equitable mortgage made between the plaintiff and the defendants that the sum of €7,693,932.14 together with €18,648.46 for interest stood well charged on the lands and premises described in the schedule. The second and alternative claim was for a declaration that the lands and premises in question were held by the defendants to the benefit of the plaintiff by way of constructive trust. In the course of his judgment, Feeney J. commented that the evidence of the defendants was contradictory and inconsistent. He also commented that insofar as the defendants gave evidence to suggest that there was not an agreement to provide a legal charge over all of plots A, B and C that he was satisfied that the evidence not only contradicted their own evidence but was both fabricated and untrue.
12. When the case of AIB v. Quinn Record No. 2011/9355 P was before the court as it was on the 12th, 13th, 141h, 15th and the 21st June, 2012, there was also before the Court a linked case entitled Fennell v. Quinn (otherwise Micheal O’Cuin) and Bridget Quinn Record No. 2011/4878 P. In these proceedings, Mr. Fennell had sought to restrain the Quinns from trespassing on the company’s property and lands. It appears that, with the agreement of both sides, the Court dealt initially with the AIB v. Quinn case as it was recognised that depending on the outcome of that case that might well see 4878 P. disposed of. When judgment in the linked action was delivered on the 21st December, the matter was adjourned to the 11th and the 18th January, 2013, for the purpose of dealing with the form of orders that was appropriate. The orders made by Feeney J. in 2011/4878P declared:-
(i) That the plaintiff was entitled to a declaration that the defendants were not entitled to enter on or use the lands and premises in question.
(ii) That the plaintiff was entitled to a declaration that the defendants whether by themselves or their servants or agents or otherwise were restrained from entering on or using the lands and premises in question.
(iii) That the plaintiff was entitled to a declaration that the defendants were not entitled to retain or use any of the property in question.
(iv) That the plaintiff was entitled to a declaration that the defendants whether by themselves or their servants or agents or otherwise restrained from taking of interfering with any of the property in question, other than the defendants’ own personal property.
(v) That the plaintiff was entitled to a declaration that the defendants had granted an irrevocable license dated the 3rd May, 2006, to the Company (Cloughvalley Stores Limited) to occupy such part of the lands as was retained in the legal ownership of the defendants.
13. While both the orders in AIB v. Quinn Record No. 2011/9355 P and in Fennell v. Quinn Record No. 2011 /4878 P, provided for a stay on the order for 42 days, my understanding is that an appeal has been lodged and is pending in the case of AIB v. Quinn but that there has been no appeal in the case of Fennell v. Quinn.
14. In essence, the case made by the moving parties is that the issues sought to be litigated in the present proceedings are identical to matters that were raised in the course of Fennell v. Quinn, and that the reliefs now sought are reliefs which cannot be granted having regard to the terms of the order of the court of the 18th January, 2013.
15. In these circumstances, it is necessary to examine carefully the terms of the present pleadings and to compare them with the pleadings and orders in Fennell v. Quinn. with particular reference to the defence and counterclaim. Such an examination leaves no room for doubt but that the present proceedings are to a very large extent indeed merely a rehash of Fennell v. Quinn. Even if it could be established that the formulation of any of the current claims that existed prior to the 21st December, 2012 did not fall within the terms, pleadings and orders in the earlier case they are certainly matters that could and should have been litigated. It cannot be litigated now having regard to the rule in Henderson v. Henderson. There is a public interest in ensuring that litigation comes to an end and that the same matters are notre-litigated when they have already been decided. The current proceedings which so clearly seek tore-litigate what has already been decided have to be regarded as vexatious and as amounting to an abuse of process.
16. Looking in more detail at the plenary summons and statement of claim I mean no disrespect of the drafters, who of course are not lawyers, if I described the proceedings as taking a shotgun approach. There are aspects that immediately run into difficulties. It is clear that the High Court has already determined the extent of the security provided by the defendants and related to that determined the entitlement of Mr. Fennell to possession of the property. That is not a matter that can be re-litigated further. The avenue for pursuing that which does remain open to the Quinn’s is through the appeal to the Supreme Court that they have brought against the decision of Feeney J. I pause merely to observe that the complications in relation to security that emerged were unusual and that the defendants would want to litigate the point and would believe that the issue might avail them is entirely understandable. Equally the points of law that Feeney J. had to deal with in the particular factual context that he had to were quite unusual. So, that the defendants would wish to take the matter further by way of appeal is perfectly understandable. However, even when a point of potential significance is identified, there is a limit to how often and in how many different fora it can be argued.
17. From what Mr. and Mrs. Quinn have had to say I understand that they are unhappy about the way that the case ran before Feeney J. There are a number of aspects to their unhappiness, including the fact that they are critical of the lawyers that acted on their behalf. Indeed, I understand that they have issued proceedings against their former solicitor. However, that does not provide any justification for seeking to litigate the matter afresh. The Quinn’s remedy, if they have one, is to be found in the Supreme Court.
18. Again, the challenge to Mr. Fennell operating as receiver is res judicata and cannot be raised again in the current proceedings.
19. The present proceedings raise an issue about the operation of a spirit, beer and wine off licence. This did not feature specifically in the proceedings dealt with by Feeney J., but given the breadth of the complaints that were raised, it was a matter, that, if there was any substance, could and should have been raised. It is not a matter that can be raised now.
20. The current proceedings contain complaints about the receiver taking possession of personal property belonging to the plaintiffs. There are two points that arise. If this is a general complaint, then it could and should have been dealt with in the earlier proceedings. If it relates to property allegedly taken from a premises in the Shercock Road, along with other property alleged to belong to a different company, Cloughvalley Hire Nationwide Limited, then the position is that further proceedings dealing specifically with this have been issued bearing Record No. 2013/3614 P. It seems to me to be unreasonable that Mr. Fennell should have to face multiple proceedings raising the same issue. Given that there are six defendants in those proceedings and that the plaintiffs have, as it were, cast their net wider in those proceedings, it would seem more advantageous for them to keep those proceedings live and that they would agree to this aspect being discontinued in the present proceedings. If the plaintiffs are not agreeable to that suggestion, and that is all it is at this stage, I will give the defendants leave to bring a motion dealing with the Shercock Road issue and the fact that it is being litigated simultaneously in duplicate proceedings.
21. There is, however, one issue where quite different considerations arise relating to the fact that the first named plaintiff spent a week in prison for non payment of a fme imposed by the District Court on foot of a complaint by the Irish Medicines Board. Mr. Quinn says that he was unaware of the summons and unaware of the fact that a fine was imposed with provision for imprisonment in default of payment and he blames the receiver for that who was in occupation of the supermarket at the time. In effect, Mr. Quinn blames the receiver for the fact of his incarceration, an event which he says has had a devastating effect on him. I regard it as of some significance that Mr. Quinn has indicated that the “primary purpose” of these proceedings is to raise issues in relation to his imprisonment. Given that the hearing before Feeney J. took place in June 2012, and that the imprisonment occurred in December 2012, it is obvious that arguments relating to res judicata or Henderson v. Henderson can have no relevance whatever. While I, obviously, express no view on the prospects of success, it seems to me that the plaintiffs are perfectly entitled to pursue this issue and nothing that has happened to date places any obstacle in their way.
22. In summary then, I propose to strike out the present proceedings, but subject to two exceptions. So far as the imprisonment issue is concerned, the plaintiffs are free to pursue this. The plaintiffs, therefore, are entitled to pursue their “primary purpose”. So far as the personal property/Shercock Road issue is concerned, if the plaintiffs are not agreeable to discontinuing this aspect of the present proceedings on the basis that if the issue is to be pursued it will be pursued in proceedings Record No. 20I3/36I4 P., then the defendant will have liberty to bring a motion to deal specifically with this issue.
23. So far as the application for an Isaac Wunder order is concerned, it goes without saying that this is not an order to be made lightly. It represents a significant restriction on the right of access to the courts. It is of course not a complete bar on access as it merely requires that leave be obtained before further proceedings are launched, but nonetheless it is a real and significant impediment.
24. That the defendants have lodged the present proceedings seeking to litigate what has already been litigated would not of itself, in my view, be sufficient to justify making the order sought. If that was the only issue I would take the view that a mistake had been made by lay litigants and that there was no reason to believe that it would be repeated.
25. However, the present proceedings which I have categorised as vexatious and an abuse of process do not stand alone. There was the further set of proceedings Record No. 2013/51 COS. entitled Michael Quinn, director and beneficial shareholder of Clough Valley Stores Limited and Clough Valley Hire nationwide Limited and Bridget Quinn, director and company secretary and beneficial shareholder of Cloughvalley Stores Limited and Cloughvalley Hire Nationwide Limited, plaintiffs/applicants and Ken Fennell of the firm Kavanagh Fennell and Cloughvalley Stores Limited (in receivership) defendants/respondents. In those proceedings Mr. and Mrs. Quinn purported to seek directions in relation to various matters relating to Mr. Fennell’s role as receiver. Taken in the round, the proceedings advanced the claimed entitlement of the Quinn’s to own and occupy the lands. It is true that those proceedings have now been struck out, but not before Mr. Fennell had to engage with them.
26. Then there is a further set of proceedings Record No. 2013/3614 P. entitled Michael Quinn and Bridget Quinn, plaintiffs and Ken Fennell, Johnny Hoey, Brigid Hoey, Chris Elliott, Vincent Dullaghan and David McKeown, defendants. In those proceedings the Quinn’s seek the following reliefs as emerges from the plenary summons:
“As against the first named defendant, the plaintiff claims damages and aggravated damages for trespass to the plaintiffs’ goods, breach of bailment, breach of contract, breach of duty including breach of statutory duty and breach of fiduciary duty, negligence and detinue and conversion in the wrongful interference with and retention of the plaintiffs good and his refusal to investigate the ownership of goods and return same to the plaintiffs.”
27. Of particular concern is that in the course of a letter to the bank from the Quinn’s dated the 22nd May, 2013, they indicated an intention to issue what would be a fourth set of proceedings, in addition to the counterclaim. The letter commented:-
“Please be advised that High Court proceedings against Mr. McDonnell, (the solicitor for the receiver) Mr. Fennell and Allied Irish Banks plc are imminent.
We have suffered substantial losses personally and to our associated companies at the hands of the above named parties and we are putting you on notice that we expect our claim to be in excess of€10million plus costs restrained.”
28. In saying that I acknowledge Mr. Quinn in the course of the proceedings before me commented and indeed repeated that he had no desire to issue any further proceedings. I am concerned that Mr. Quinn’s position may be that while he has no desire to issue proceedings, that he may be compelled to do so.
29. It seems to me that the pattern of multiple proceedings litigating the same and overlapping issues is so clear cut that the making of an Isaac Wunder order is justified. If Mr. Quinn is in a position to confirm and if Mrs. Quinn agrees with him that there is no desire to issue further proceedings and that further proceedings will not be issued and that the dispute will be pursued through proceedings already in being, including the appeal that has been lodged with the Supreme Court then I will be prepared to accept undertakings to that effect and that would obviate the necessity for making an order which the Quinn’s might reasonably feel would reflect poorly on them. However, absent satisfactory undertakings, I will make an order prohibiting the plaintiffs from issuing any further proceedings against Mr. Fennell without the leave of the President of the High Court or his nominee.
D&L Properties Ltd v Yolanda Ltd [2015] IEHC 674
JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 20th day of October, 2015
1. The defendant in these proceedings has brought a motion to dismiss the plaintiff’s claim on two grounds; namely:-
(a) under O. 19, r. 28 of the Rules of the Superior Courts 1986 on the grounds that the plaintiff’s statement of claim discloses no reasonable cause of action and/or on the grounds that the plaintiff’s claim is frivolous and/or vexatious; and
(b) under the inherent jurisdiction of the court on the grounds that the plaintiff’s claim is frivolous, vexatious and/or bound to fail.
2. In the statement of claim, the plaintiff claims that it entered into an agreement with the defendant that it would advance a sum of up to €3.8m to the defendant on terms set out in the statement of claim. The plaintiff asserts that pursuant to the agreement entered on or about 5th November, 2008, it advanced to the defendant the sum of €2.2m, “…which for expediency was paid from the bank account of Mr. Derek O’Leary and Ms. Linda O’Leary to the account of the defendant”. The plaintiff claims that the defendant has not repaid the monies lent by it to the defendant and pursuant to the agreement which it contends for, seeks judgment in the sum of €9,739,880 and damages for breach of contract, breach of duty, breach of statutory duty and fiduciary duty. The plaintiff also seeks damages for misrepresentation and conversion and other reliefs set out in the statement of claim.
3. The defendant has met the plaintiff’s claim head-on with a plea that it never received monies from the plaintiff. In the affidavits filed on behalf of the defendant in support of this motion to dismiss the claim, the defendant claims that any monies lent to the defendant were lent by Mr. Derek O’Leary on foot of an agreement entered into personally between Mr. O’Leary with the defendant. The defendant also denies the other claims made in the statement of claim.
Jurisdiction Under Order 19, rule 28
4. Order 19, rule 28 states:-
“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 judgement to be entered accordingly, as may be just.”
5. In McCabe v. Harding [1994] ILRM 105 at 108, O’Higgins C.J. stated that in order for rule 28 to apply “vexation or frivolity must appear from the pleadings alone”.
6. It is necessary for the court to consider the pleadings only and assume that any statements of fact contained in the pleadings sought to be struck out are true and can be proved by the party.
7. Applying these principles to the pleadings and the information put before the court on affidavit, it seems to me that it is not possible to come to the conclusion that the pleadings are frivolous or vexatious. There is nothing in the way of prior litigation between the parties which would tend to establish that these proceedings are brought in respect of matters that have already been canvassed before the courts, or have been decided by the courts and that the defendant is “vexed” by these proceedings being brought against it as understood in the normal way. Neither can it be said that the pleadings on their face disclose a frivolous action. For these reasons, I have come to the conclusion that the defendant has not met the test required by O. 19, r. 28 to have the statement of claim struck out or the action stayed or dismissed.
Jurisdiction to strike out pleadings pursuant to the inherent jurisdiction of the court
8. The test for striking out under the inherent jurisdiction of the court has been developed in a series of cases since Barry v. Buckley [1981] I.R. 306, which established that there is a concurrent and parallel inherent jurisdiction in the High Court to dismiss or strike out proceedings where they amount to abuse of process and/or are bound to fail. The starting point for the exercise of such jurisdiction is that it must be exercised sparingly. See Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425. The test is not whether the plaintiff’s case is likely to fail but whether it is bound to fail. What has to be apparent is that no matter what may arise on discovery or at the trial of the action the plaintiff cannot succeed. See Lac Minerals v. Chevron Corporation (Unreported, High Court, 6th August, 1993) per Keane J. The recent authorities were reviewed by Clarke J. in Salthill Properties Limited v. Royal Bank of Scotland [2009] IEHC 207, in which he held that the plaintiff is not required to establish a prima facie case but rather it is for the defendant to prove that the plaintiff’s claim is bound to fail. At para. 3.14 of his judgment, Clarke J. said:-
“It is clear from all of the authorities that the onus lies on the defendant concerned to establish that the plaintiff’s claim is bound to fail. It seems to me to follow that the defendant must demonstrate that any factual assertion on the part of the plaintiff could not be established. That is a different thing from a defendant saying that the plaintiff has not put forward, at that time, a prima facie case to the contrary effect.”
9. Where there are disputed issues of fact, they have to be resolved in favour of the plaintiff and the plaintiff’s case must be taken at its high watermark. See Kennedy v. Minister for Agriculture [2011] IEHC 187 and Keaney v. Sullivan [2015] IESC 75, where Dunne J. reaffirmed this principle in a general review of recent jurisprudence on this topic.
10. The defendant has made out a robust case, to the effect, that the plaintiff in these proceedings was not the contracting party at all, and has exhibited documentary evidence in support of this position. But in the face of that evidence, the plaintiff maintains that it was the contracting party and that the monies advanced to the defendant by Mr. Derek O’Leary were advanced on behalf of the plaintiff and that this was, at all times, understood to be the case. There is a clear conflict of fact on this matter and this is an issue which is central to these proceedings. On 11th September, 2015, Mr. Declan Lernihan, an Accountant, who advised Mr. Derek O’Leary and Ms. Linda O’Leary in relation to the matters in dispute and the loan that they, or one of them, made to the defendant states that the accountant who represented the defendant was aware that the structure for the loan and investment had not been finalised. He also informed the court that by the end of February 2009, his advice to Mr. and Mrs. O’Leary was that the loan would be provided by the plaintiff and he had discussed this with the accountant for the defendant during the period from December 2008 to January 2009. In the statement of claim it is pleaded that the loan agreement was entered into on 4th November, 2008, and the defendant has pointed out the discrepancy between this and Mr. Lernihan’s evidence that it was sometime later (by the end of February 2009) when he said it was clear to him that the loan would be provided by the plaintiff.
11. My attention has also been drawn to the plaintiff’s accounts for the year ending 31st December, 2008, which shows among the creditors, a directors’ current account at €2,260,000 and a note to the accounts stating that on 31st December, 2008, Mr. Derek O’Leary advanced that sum to the company.
12. It is not necessary for the court to resolve such conflicts of evidence or even improbabilities in the evidence which have been pointed out by the defendant.
13. Insofar as the defendant argues that the agreement is unenforceable by operation of s. 2 of the Statute of Frauds (Ireland) Act 1695, the plaintiff argues in its submissions:-
“It is patently evident from emails both before and after the money was paid, that should a note or memorandum be required, that requirement has been more than met.”
14. I do not accept at all that this is patently evident. Any evidence suggestive of a note or memorandum is of the most tenuous nature. Is that enough? I think it is for the purpose of resisting an application of this type. The same could be said about the plaintiff’s argument on the issue of part performance. If there was part performance there is an issue as to whether it was by the plaintiff or by Mr. O’Leary, who is not a party to these proceedings. But in the light of the plaintiff’s assertion that it was understood between the parties that Mr. O’Leary was only making a loan on behalf of the plaintiff and that this was understood by the parties, I believe that this is a matter which should be permitted to go to trial and be tested in the light of the evidence produced in court.
15. The defendant has raised many issues which will have to be addressed by the plaintiff. So far as this application is concerned, I am not satisfied that the defendant has established that the plaintiff’s claim is bound to fail. That is the test I have to apply. Accordingly, I dismiss the application to strike out the proceedings and I refuse the defendant’s motion.
Butler v Nelson & Co Solicitors [2015] IEHC 656
JUDGMENT of Ms. Justice Baker delivered on the 20th day of October, 2015
1. The plaintiffs are brothers who together with two partners developed an estate of 111 residential units at a 15 acre site at Ard na Sidhe, Clonmel, Co. Tipperary in the year 2003 or thereabouts. The plaintiffs claim against the defendant as the solicitor who acted in certain transactions relating to the development. The precise role of the defendant firm is in issue in the proceedings, but it is common case that the defendant firm did act for the plaintiffs in the sale of the residential units and in drawing down loan finance from Anglo Irish Bank, and as legal advisor to the building or development company.
2. Michael Butler, the first plaintiff, represented himself but was called as a witness on behalf of the second plaintiff. The second plaintiff was represented by solicitor and counsel. From time to time Mr Michael Butler was assisted by a McKenzie friend.
3. This judgment is given in the application by the defendant on the conclusion of evidence by the plaintiffs to dismiss the claim as being bound to fail
Background
4. The second plaintiff is the registered owner of certain lands comprising 52 acres or thereabouts at Lewagh Mor comprised in Folios 3855 and 3856 Co. Tipperary. In 2002, he and his brother, the first plaintiff, purchased the lands containing 15 acres or thereabouts comprised in Folio 34763F Co Tipperary, being lands at Airmount, Cashel Road, Clonmel Co. Tipperary at a cost of approximately IR£800,000, financed with the assistance of loan finance from First Active PLC and secured by a first charge on those lands and on the lands at Lewagh Mor owned by the second plaintiff. Planning permission was obtained for the construction of 111 houses at the Clonmel site and was due to expire in 2006. The Butler brothers did not have access to sufficient development finance to construct the development.
5. The defendant firm had no involvement in the planning or in the purchase of the lands by the Butler brothers.
6. The two Butler brothers were introduced to Crohan O’Shea and Tom O’Driscoll some time in early 2003 and they discussed between themselves entering into a joint venture for the purposes of developing the lands at Clonmel. It was clear that the joint venture would require funding to develop the site and build out the houses, and the non-Butler partners, who had contacts in Anglo Irish Bank, agreed to negotiate finance from that bank, in consideration of which the Butler brothers were to provide the lands, and the four partners were to share equally in the partnership profits.
7. Almost all of the development has now been completed, and only seven sites remain unbuilt. All of the built houses were sold and the Anglo loan has been repaid.
8. The setting up of the partnership and the legal assistance given by the defendant firm to the joint venture, and the associated development company which was established for that purpose, BOSOD Limited, has given rise to this litigation.
The claim as formulated
9. The statement of claim was drafted at a time when neither of the plaintiffs had legal representation and it was difficult to discern precisely what claims the plaintiffs made. Counsel on behalf of the second plaintiff assisted and formulated the claim as one against the defendant firm of solicitors for breach of contract and/or negligence in and about the legal advice alleged to have been given to the plaintiffs concerning the setting up and operation of the partnership. Somewhat unusual language was used in the statement of claim, and in particular it is twice pleaded that John Nelson, the principal of the defendant firm, was “in cahoots” with the other partners in the joint venture. Counsel accepted that the expression “in cahoots” is not intended to import any claim of fraud or conspiracy, but was an index, or illustration, of the extent to which it is alleged John Nelson favoured one “part” of the partnership over the other, and it is argued by the plaintiffs that Mr Nelson did not act with the interests of the partnership as a whole in mind, but preferred the interest of the two non-Butler partners in any situation where a dispute arose between the partners.
10. The case was extensively case managed and Hogan J. had made 13 case management orders and directions. As a result of his order made on the 21st October, 2013 the claim of the plaintiffs for total damages in the sum of €15.850m was disallowed, by the removal of the claim in respect of the alleged loss of profits in the sum of €11m and the loss of the Lewagh Mor lands measured at €1m were disallowed. The remaining claim is measured as
a) half of the value of the Clonmel lands, claimed in the sum of €2,750,000
b) loss of moneys alleged to have been advanced to the plaintiffs by their siblings in the sum of €1.1m
The claim as now formulated
11. Following an order made by me on 5th March, 2015 the solicitors for the plaintiffs furnished updated particulars of breach of contract negligence and/or breach of fiduciary duty alleged against the defendant and the claim is now, in summary, formulated as follows.
The claim for breach of contract
12. The plaintiff claims that the defendant was in breach of his contract with the second plaintiff in:-
(a) Failing to take proper steps to ensure that the second plaintiff took independent advice. This is not pleaded with any particularity and in particular, it is not stated, the matter in respect of which it is alleged that this step ought to have been taken by the defendant.
(b) Acting for the partnership after it became apparent there was a breach of trust and/or preferred some of the partners over the others.
(c) Incorporated a company called BOSOD Limited but failed to ensure that it “performed its proper function” in relation to the partnership.
(d) Disbursed partnership funds and thereby left the plaintiffs short of funds to carry out the building works.
(e) Failed to make any payment out of partnership funds to the plaintiff.
(f) Acted for the partnership and/or BOSOD Limited when he knew or ought to have known that his previous professional relationship with one of the partners made it impossible for him to be independent, and/or failed to disclose the extent and/or duration of that professional relationship.
(g) “Engineered” the breakdown of trust between the partners.
(h) Made disbursements in a “chaotic” way thus causing “confusion and suspicion”.
The claim as formulated in negligence
13. The claim is formulated in negligence is somewhat different although there is a significant overlap. The matters pleaded in respect of alleged breach of contract are also alleged against the defendant under the heads of alleged breach of negligence, but there is a specific plea that the defendant “failed” to give independent advice and/or “failed” to give equal weight to the interests of all the partners. There is also a specific plea that the defendant closed the sale of various house sites without “due regard for” any payments that might be due to the legal owners of the lands.
Alleged breach of fiduciary duty
14. There is an additional plea that the defendant was in breach of fiduciary duty in failing to give an account of the disbursement of partnership assets, and/or failed to treat all partners equally.
The application for a non suit
15. The defendant argues that the plaintiffs have not made out any form of plausible case, and this judgment is given in the application that the proceedings should be dismissed. Counsel for the defendant has indicated that, should this application not succeed, the defendant intends to go into evidence, and in that context it is apparent and following the decision of the Supreme Court in O’Toole v. Heavey [1993] 2 IR 544, that in considering an application for the dismissal of a plaintiff’s claim that the court should approach the evidence by taking the case of the plaintiff at its height, and that the task for the court was whether the plaintiff had on the evidence adduced, made out a prima facie case on the balance of probabilities. The court must also, at this juncture, not have any regard to the witness statements which have been filed on behalf of the defendant, or to certain documentation introduced in the course of the cross-examination of the plaintiffs or their witnesses, save and insofar as the accuracy of the information in those documents was accepted by those witnesses in cross-examination.
16. It is clear also as a matter of law that for a plaintiff to succeed in defending an application to dismiss a claim at this stage, a plaintiff must do more than make mere assertions, and the plaintiff must show that sufficient evidence has been adduced on its side to establish a prima facie case, and to put the defendant on its defence. The court must consider all of the evidence adduced, but the court is also free in the context of an application to dismiss to take note of any conflict between oral evidence adduced in the course of the trial and affidavit evidence given at interlocutory stages of the proceedings, and the court is entitled to have regard to any internal contradictions or irreconcilable differences between that evidence and any oral evidence adduced at trial. This particular factor is one which bears noting in this case as certain affidavit evidence of Michael Butler is inconsistent with evidence that he has given in the course of this trial. In Aer Rianta C.P.T. v. Ryanair Ltd. [2001] 4 IR 607, at p.623, Hardiman J. made it clear that the court may consider questions of credibility and weigh evidence given on affidavit against that given in oral evidence when considering the strength of evidence.
17. The reason this distinction is important is that while it is settled law that for the purposes of determining an application to dismiss a claim following the completion of the plaintiff’s own evidence, and where a defendant indicates that it will go into evidence, the court must take the plaintiff’s evidence at its height, but this does not mean that the court must accept that the evidence is true. The court is entitled to, and indeed must, make a determination on the credibility or truth of evidence given before it, and in that regard may require to engage in the assessment of the case made by a plaintiff.
18. This is consistent with the approach of the court in applications for summary judgment and, as stated by Hardiman J. in Aer Rianta C.P.T. v. Ryanair Ltd, the court may require to engage questions of credibility and assess whether evidence is contradictory or not credible even in a motion for summary judgment where the test for the court is whether a plaintiff has made out a prima facie defence. By analogy the court equally has an entitlement where what is being asked is whether a plaintiff has made out a prima facie case to proceed and the court, in sifting the evidence, must have regard to the weight of the evidence, whether it is credible, and to the simple proposition that a plaintiff must do more than assert a claim in a plenary action, but must adduce evidence to establish such a claim.
The events
19. The events complained can broadly speaking be divided into two parts: the events leading up to the execution by the partners of the joint venture agreement on the 30th July, 2003, and the events thereafter up to the point in time when John Nelson ceased to act for either of the plaintiffs. I set out now the sequence of these events.
The events to mid-2003
20. Messrs Houlihans Solicitors Ennis, Co Clare acted for the Butler brothers in the purchase of the lands at Clonmel, and continued to act for them in the early part of 2003. Certain monies were owed to that firm arising from this, and perhaps other, legal work, and the firm had registered a judgment mortgage against the lands of the plaintiffs. The four persons who executed the partnership agreement or joint venture agreement on the 30th July, 2003 conducted their pre-execution negotiation as business persons and without legal advice or involvement until there came a point when some legal documentation was required to be executed. At that stage the defendant firm had some engagement with the two non-Butler partners and John Nelson prepared a short form document, “the Shelbourne agreement”, which came to be executed in June 2003. The plaintiffs do not deny that they signed this document but Mr Michael Butler says that it was not an agreement, and he is correct in this, as this agreement was an “agreement to agree”, and contained a sketch of how the parties would establish a partnership and when. In the events, nothing turns on the precise characterisation of that agreement as the parties ultimately did come to execute formal articles of partnership on the 30th July, 2003.
21. The first part of the claim of the plaintiffs is that John Nelson advised the Butler brothers in and about the decision to enter into the partnership agreement and that he negligently permitted them to enter into an agreement, and/or was instrumental in drafting an agreement, which did not properly reflect their instructions to him or the agreement that they had reached with their co-partners. Specifically, and for the present I state this in general terms, Michael Butler asserts that the articles of partnership entered into on the 30th July, 2003 improperly included a clause which provided that the lands at Airmount, Clonmel would be held by the two Butler brothers on trust for themselves and their other two partners equally. He also asserts that the inclusion at clause 1 of the articles of partnership that the Lewagh Mor lands would be offered as security for a loan to finance the development was not done on his instructions, or with his or his brother’s agreement.
Evidence of retainer of the defendant firm
22. The documentation shows that John Nelson was instructed some time in or around the 12th July, 2003 to act for the partnership, and with that in mind he wrote to Messrs Houlihans enclosing an authority, which the two Butler brothers had signed the previous day, for the transmission to him of the various documents of title and files relating to the Butler lands and the development. At that stage the main focus, and the purpose for which the authority was expressly sought, was to deal with the requirements of Anglo Irish Bank set out in its letter of loan offer of the 25th June, 2003, including the putting place of a first legal charge over the lands at Lewagh Mor and Airmount, Clonmel.
23. Michael Butler in the course of his evidence denied that John Nelson properly put in place the Anglo Irish security, and on a number of occasions asserted that the first legal charge registered on his land in favour of First Active PLC by which the sum of €3.25 million was secured, had never been discharged and that First Active never got the money secured thereby. He suggests this inter alia on the grounds that the solicitors who acted for First Active at that time, Messrs O’Donnell Breen Walsh O’Donoghue Solicitors, had furnished a receipt dated the 29th July, 2003 for the monies, when in fact it was on the day after, the 30th July, 2003, that the monies were drawn down from Anglo Irish when the parties met to execute the various documents. He did not accept that the reason for the one day difference was that the original draw down was to be on the 29th July, 2003 but that the meeting for the closing of the transactions was postponed to the following day by agreement of all parties but I consider that the evidence overwhelmingly points to this being the case.
24. The Anglo loan sanction was for finance in the sum of €5.4m, the first €3m whereof was stated to be for the redemption of the First Active loan, and the balance to assist in construction, and to be drawn down on the production of architect’s or surveyor’s certificates.
25. Michael Butler accepted that the instructions given to John Nelson in July 2003 were to act for the four persons intending to develop this land in the draw down of funds from Anglo Irish Bank, which involved him in securing a release of the First Active charge and the putting in place of a charge to satisfy the requirements of Anglo. It was at this stage that the question of the precise terms in which the parties would enter into their joint venture came to the fore. It is not doubted that John Nelson drafted the articles of partnership, and indeed the first draft of the agreement came to be varied following representations made by the Butler brothers.
26. Correspondence adduced in evidence shows that John Nelson refused to act for the Butler brothers in the execution of the articles of partnership, because he did not believe that it was proper for him to act for them until his undertaking to Messrs Houlihans was fully satisfied. In his letter of the 22nd July 2003 to the Butler brothers, Mr Nelson said he would not act for them for the purposes of negotiating the partnership agreement, but that they should take separate legal advice with regard to this. Michael Butler accepts that he received this correspondence, as did his brother.
27. Michael Butler also accepted in the course of his evidence in chief that a potential conflict of interest arose for Mr Nelson because of the undertaking that he had given to Messrs Houlihans but he insisted that John Nelson ought not to have had any part in the transaction, including the redemption of the First Active loan, the draw down of the Anglo loan or in putting the required security in place, without ensuring that the Butler brothers had separate and independent legal advice in respect to each item of business.
28. When pressed with regard to the draft partnership agreement Mr Michael Butler’s evidence was that his main complaints were first, that it was never agreed that the Lewagh Mor land would be treated as an asset of the partnership, and second he was not prepared to allow the Airmount lands to be held on trust for his co-partners, and that without his instructions this particular clause was inserted and not removed. He says indeed that when he asked Mr Nelson on the 30th July, 2003 whether there was anything in the partnership agreement about which he ought to be concerned, that Mr Nelson said no.
29. Mr Butler was elusive but he did accept, albeit not until he was pressed, that the First Active loan was redeemed, and the security interest was released. But he continues to complain that he is not sure how and when this happened and his evidence is that he has spent a lot of time seeking information from First Active and other banks with regard to the events. Mr Butler had no answer to the proposition evident from the events as are described both by him and by the defendant firm, namely that it was not possible to make title to the houses that were to be sold in this development without first dealing with First Active, because First Active had the benefit of a first legal charge registered against the lands. No other possible explanation is credible as to why First Active would have released its charge other than on the payment of the monies secured thereby. I have already at para. 23 of this judgment expressed the view that the perceived discrepancy in the dates is of no import.
Discussion
30. Michael Butler is an experienced businessman and it seems that he had been an experienced and busy builder and subcontractor since 1979, that he ran a number of successful developments, and was a director of a number of companies. He accepted that he had made 150 appearances in court arising out of this transaction, some of which relate to interlocutory applications in this case, and that other litigation around the joint venture has now concluded.
31. Mr Butler accepts that the first time he met Mr Nelson was on the 3rd July 2003 but he was elusive with regard to any phone conversations that he might have had with Mr Nelson before this. The documentary evidence that I have seen suggests that the first contact that Michael Butler had with John Nelson was a phone call of the 27th June 2003, and this came after negotiations had resulted in a letter of loan offer from Anglo Irish of the 25th day of June 2003, and after the Shelbourne “agreement to agree” was entered into between the four intended partners on the 18th June, 2003. Michael Butler accepts that Messrs Houlihans were still acting for the Butler brothers on the 4th July 2003, and that at the time he met John Nelson on 3rd July, 2013 that Messrs Houlihans remained his solicitors. He says he knew that John Nelson at the time of his first meeting was acting for Tom O’Driscoll and Crohan O’Shea.
32. Michael Butler accepts that he signed the authority sent by John Nelson to him on the 11th July 2003 for the taking up of the title deeds to his land and those of his brother for the purposes of clearing the First Active loan. It is very clear from the documentation that John Nelson was retained to deal with the redemption of the First Active loan and the putting in place of the relevant securities to enable the Anglo loan to be drawn down. It is also clear to me that ancillary to this John Nelson had to ensure that the title to the lands was clear of the judgment mortgage registered by Michael Houlihan & Co and another judgment mortgage registered or threatened to be registered by another solicitor.
The partnership agreement
33. It is not denied that John Nelson drafted the document which came to form the basis for the partnership agreement between the four partners. The main focus of the plaintiffs’ claim is that John Nelson advised them with regard to the terms of the partnership and whether the partnership articles sufficiently protected their interests.
34. Michael Butler when pressed in cross examination said that he was unhappy with the early draft of the partnership agreement and that he successfully negotiated the removal of certain clauses, and he took what he described as “tentative” advice from another solicitor, a Mr Scott, although he sought to stress in the course of his evidence that he took this advice “on the street”. He accepted in cross examination that he did discuss in detail with Mr Scott the contents of the draft, but says that he did not engage any other solicitor or take any other financial advice before he signed. The steps and advice he took were taken on his own behalf and on behalf of his brother, the second plaintiff.
35. I consider that no credible evidence has been adduced in the long hearing before me that points to any involvement whatsoever by the defendant firm in the agreement negotiated with regard to the terms of the articles of partnership. The evidence overwhelmingly points to the fact that the Butler brothers were advised to seek separate legal advice with regard to this agreement. I consider that no evidence I have heard points to any breach of contract or negligence or breach of duty by Mr Nelson in the redemption of the First Active loan, but that even if I am wrong in this, no stateable loss has been shown as a result of his conduct of that part of the transaction.
36. Messrs Houlihans were joined in these proceedings as co-defendant on a motion brought by Michael Butler in November of 2009 and for the purposes of that application he swore in two affidavits in which he swore that Messrs Houlihans continued to act for the two Butler brothers until the 3rd August 2003. He exhibited various letters from Messrs Houlihans to him and to Messrs Nelson & Co for that purpose.
37. The correspondence that occurred between John Nelson and Messrs Houlihan makes it quite clear that on or before the 11th July 2003 Messrs Houlihans had received instructions from the Butler brothers that they no longer wished to retain them as solicitors, and that Messrs Houlihans were prepared in those circumstances to hand over their files on foot of an undertaking from John Nelson to discharge the fees secured by the judgment mortgage and other outstanding fees which were then identified, although the figure was as yet untaxed and ascertainable only in broad terms. John Nelson did give an undertaking in terms sufficient to satisfy Messrs Houlihans on the 12th July 2003.
38. Michael Butler had a remarkable and almost perfect recall of many letters that were exchanged between the parties in the course of this transaction and he had precise recall of exact and uneven figures, and was an expressive and articulate witness. He was from time to time in the course of his evidence, however, elusive and on several occasions he used the phrase “I will not affirm or deny” with regard to a matter that was put to him, and when he was pressed as to when Messrs Houlihans ceased to act for him and when John Nelson came to act for him he used that phrase on a number of occasions.
39. It is clear further from the documentation I have that Messrs Houlihans prepared initial replies to requisitions for the Anglo solicitors on the 7th July 2013 but this seems to be the last involvement that Messrs Houlihans had in the transaction.
40. Michael Butler accepts that he received the letter of the 22nd July 2003 advising him to instruct a solicitor for the purposes of the partnership agreement. At times in the course of his evidence he insisted that Messrs Houlihans acted for him in regard to the partnership, and his complaint against John Nelson was that he had failed to insist that Messrs Houlihans were present at the signing of that document and/or at the time the various documents necessary to close the transaction with Anglo were put in place.
41. I find that the documentary evidence points me to the conclusion that Messrs Houlihans from 12th July, 2003 no longer acted for the Butler brothers, with regard to any matter relating to the lands in Clonmel, the loan with First Active or any other related matter relevant to these proceedings. No other finding is possible on the evidence.
42. Michael Butler gave evidence that he did take legal advice with regard to the inclusion of the Lewagh Mor lands in the title of William Butler in the partnership agreement, which was initially agreed would be held on trust for the partners. The evidence of the plaintiffs is that after they had taken advice from Mr Scott, and whether as a result of that advice or otherwise, negotiations with their partners led to an agreed concession that the Lewagh Mor lands would not be included as trust lands in the articles of partnership signed on 30th July 2003. Thus even were the plaintiffs to be in a position to argue that the evidence points to some, however minor, involvement of the defendant firm in the partnership agreement, no loss can be shown to have arisen from the inclusion in the initial draft partnership of the Lewagh Mor lands, and the draft was amended to take account of the concerns of the plaintiffs with regard to those lands. Thus no loss can flow from the draft when the plaintiffs’ own evidence is that it was amended to reflect their wishes.
43. Further, the plaintiffs complain as to other matters in the draft: first, it is asserted that an arbitration clause was wrongly included in the agreement. Mr Butler accepts that no arbitration ever happened and accordingly I consider that the plaintiffs can show no loss as a result of the inclusion of the arbitration clause, even were it to be established in evidence that the defendant firm had a duty to advise or failed in this duty by permitting or advising the plaintiffs to execute an agreement containing such clause.
44. Second, it is claimed that Crohan O’Shea was wrongly given a casting vote. Mr Butler accepts that Crohan O’Shea never came to exercise his casting vote, and again even if there was negligence or a breach by Mr Nelson of the terms of his retainer, this clause is not actionable as no loss is shown or claimed to flow therefrom.
45. Third, it is claimed that a clause was wrongly included in the draft providing for the dissolution of the partnership on the bankruptcy of any one of the partners. Again, this happening did not occur in the events that transpired and accordingly no actionable loss has been shown to have been occasioned by the inclusion of this provision, even if the Butler brothers can show that it was wrongly included as a term of the articles of partnership.
Conclusion on this head of claim
46. I consider that the plaintiffs have not adduced any or any credible evidence that John Nelson acted for either Michael or William Butler in or around the partnership agreement, or advised them with regard to its terms, or whether those terms properly protected their interests. Taking their evidence as a whole I consider that there can be no doubt that Michael Butler and William had each been advised by Mr Nelson to seek independent legal advice prior to the execution of the partnership agreement, that Michael Butler did take this advice from Mr Scott, and that the fact that he took the advice while he was “on the street” is irrelevant. The evidence is overwhelming that the two Butler brothers opted not to seek any further advice.
47. Further, I consider that their evidence is that the retainer of Mr Nelson was specific and related to the sale of the residential units, the redemption of the First Active loan, the putting in place of security as required by Anglo Irish Bank and the draw down of funds. I consider that the evidence points to no other finding but that the plaintiffs were aware of the nature of the retainer. Further, the engagement of the defendant firm to act in the sales was done after negotiations by the partners and another firm of solicitors was also in the picture as a possible alternative. Further as events show, and as will appear later in this judgment, the Butler brother employed various different solicitors, including Messrs. Binchy, and Chris O’Shea solicitor, to act on their behalf in the course of related but different matters and disputes at the time.
The partnership post July 2003
48. The plaintiffs evidence points to the fact that the development ran out of money and that this factor gave rise to the supplemental articles of partnership made on the 24th August, 2004 which had the result that the two non-Butler partners gained an advantage by an increase in their equity share. The plaintiffs claim damages against the defendant arising from what they say is a breach of contract or negligence arising from the disbursement of sale proceeds. The argument at its height comes down to an assertion that the defendant firm failed to make provision for the arrangements that would be needed to finance the balance of the build.
49. John Nelson was involved as solicitor for the development and between the 12th July 2003 and March 2004 he acted for the partnership in and about the drawing down of the monies from Anglo and the initial preparation of the booklets of title and other preparatory work for the purpose of selling the houses. He ceased to act for the Butlers with regard to certain disputes they had with their partners on the 8th March 2004, and John Nelson continued to act for the partnership only and insofar as that entity had separate interests from those of the individual partners. By 8th March 2004 cracks had appeared in the partnership, and Fred Binchy solicitor, of Binchy solicitors. Clonmel, Co. Tipperary came to act for the Butler brothers and I note also the clear evidence from Michael Butler that he and his brother had separate financial advice.
50. It is clear however that disputes had arisen, or were close to the surface, between the four partners as to the precise monies to be paid to the Butler brothers, either to both or one of them personally, or to a building company they owned or controlled Michael and Thomas Butler Ltd. and the dispute centred on the value of the works on site. A meeting was held on the 11th March, 2004, 7th April, 2004 and on diverse dates thereafter. Fred Binchy, solicitor, of Binchy Solicitors represented the two Butler brothers in regard to the inter partnership dispute. John Nelson represented the other two partners and that arrangement continued for a number of months, through a number of long and detailed meetings at which the Butler brothers attended and were represented by Mr Binchy. No complaint was made by the plaintiff as to the involvement of Mr Nelson at that time.
51. A particular series of difficulties arose with regard to the title to the development lands and three problems emerged as follows:
1) One Elizabeth Tuohy claimed to have title to certain lands on the eastern boundary of the site and she, through her solicitor, John Shee & Co brought proceedings for declaratory relief. The Butler brothers employed Chris O’Shea, solicitor in regard to this dispute which was ultimately resolved by the payment of certain monies to Ms Tuohy.
2) The second difficulty that arose with the title to the lands was what came to be called in the course of the case “the McMenamin issue”, namely that four identified persons had an option to purchase serviced sites in the development at a cost of €100,000 per site, less than the market value, and that dispute too was resolved again with the assistance of Chris O’Shea, solicitor and later Brian Long, solicitor.
3) The final dispute related to an unregistered wayleave in respect of which Chris O’Shea, solicitor acted for the Butler brothers.
52. It is quite clear to me that neither John Nelson nor the non-Butler partners had been informed of these claims or encumbrances before the Anglo loan was drawn down, or before the partnership agreement was executed. There can be no possible breach of duty of Mr Nelson with regard to how and when the title issues were resolved. No evidence was before me that the defendant firm acted in any of these disputes, or that John Nelson was, or could have been, aware of these potential impediments to sale at the time he certified the title to Anglo and at the time he prepared the booklets of title for the purposes of the sales of the houses in the development. The matters were peculiarly in the knowledge of the plaintiffs, no impediment was apparent on the folios and the Butler brothers, for whatever reason, failed to disclose the disputes or claims.
53. These issues were resolved through the payment of monies which came from partnership funds or more accurately from the proceeds of the development itself and the decision to do this was not made as a result of any advice from Mr Nelson.
54. The argument was made that Mr. Nelson was negligent in the way in which he dealt with certain title matters in regard to the development. It is unequivocally the case that Mr. Nelson was not involved in resolving those title difficulties, and Mr. Michael Butler confirmed in evidence that he had not informed Mr. Nelson of the option agreements nor of the boundary dispute with the neighbour before he was employed to act as solicitor for the vendors of the development. There was nothing on the title by which Mr. Nelson might have become aware of these from his investigation on title and accordingly as a matter of law and fact the responsibility either for the title difficulties themselves, or for the fact that they required resolution lies with the plaintiffs. There is no causative connection between the delay in closing the sales and any action or inaction of Mr. Butler. I find that the claim with regard to the title difficulties cannot be sustained even taking the case of the plaintiffs at its height.
The supplemental partnership agreement
55. A supplemental partnership agreement came to be executed by the parties in 24th August 2004 and this arose in the context of a short term, or what was perceived to be likely to be a short term, financing issue in that the sale of completed house was held up as a result of the three title problems identified above. The supplemental articles of partnership provided that Crohan O’Shea would lend the partnership the sum of €500,000 and it was considered that this would encourage Anglo to advance another €500,000 which duly did happen. The evidence is that John Nelson had no involvement whatsoever in the negotiation of or in advising the parties with regard to this supplemental partnership agreement. Furthermore, as discussed above he ceased to act for the Butler brothers in March 2004.
56. At its height Michael Butler asserts in evidence is that if John Nelson had “done his job properly” the need for a second or supplemented partnership agreement would never have arisen. This assertion is wholly unfounded on the evidence and it seems to be undoubtedly the case that the reason the funds had dried up for the development was because of the delay in closing the sales arising from the three title problems, and it was not until September 2004 that these were resolved and that money could come in from the individual purchasers.
57. Further, the evidence points unequivocally to the fact that the initial funds advanced by Anglo could never have been sufficient to build the anticipated number of 111 residential units and some arrangement was clearly required by which the partners and/or BOSOD Ltd would obtain additional finance.
58. I consider that the plaintiffs have not adduced any evidence to support a claim that the defendant was negligent or in breach of duty with regard to the drafting of the partnership agreement. This is for the reasons outlined above, and also because, at best, the argument of the plaintiffs, and in respect of which they did adduce evidence, was that Mr. Nelson failed to alert them to problems that might arise in the course of the development and in respect to which the partnership agreement might apply. The two plaintiffs did not adduce evidence that the agreement as drafted did not accord with their instructions, and even were I to accept that instructions were given by the plaintiffs to the defendant to draft the agreement, which I do not, at the very least the plaintiffs in order to succeed in this claim would have to establish either that the agreement did not meet their instructions, or perhaps more narrowly that the agreement did not meet their needs as developers.
59. The plaintiffs have not adduced any evidence that this is so. They did not for example adduce evidence that the partnership agreement ought to have contained a provision to deal with the obvious need that the development would have for further finance beyond the initial tranche that was to be drawn down from Anglo Irish Bank, and which on any reading of the figures was sufficient to deal only with the First Active charge (which reflected the cost of the land itself) and the building out of the first fifteen units. In that context it cannot be ignored by me that the partnership provided that the four partners would be equal partners, but that it would be fair for the purposes of the exercise now engaged to assume that, while the partners were equal, there were two “camps”, or sets of interests, which were to be protected by the partnership agreement, the interest of the Butlers as land owners on the one hand, and the interest of the other two partners as the persons who provided the capital or the link or introduction to the bank that itself provided the capital. The height of the borrowings at the time the partnership agreement was entered into was the sum of €5.4 million to be drawn down from Anglo Irish Bank, and the evidence points to this being at best funding for 15 houses. I accept that the plaintiffs have adduced evidence that the intention was to build the 111 residential units in respect of which planning existed, and their own evidence would suggest, and no contrary evidence has been adduced before me, that a multiple of €5.4 million would be required to build out the balance of the units.
BOSOD
60. The other complaint made is that Mr. Nelson and his wife Ms. O’Neill were registered in the Companies Office as the first directors of BOSOD Ltd from the time of its incorporation until the B10 was filed the following year, having been signed by the four shareholders of that BOSOD on the 11th of August 2003. No evidence was adduced as to any involvement of Ms. O’Neill in the management of the company or of any decisions made by Mr. Nelson in his capacity as director in that period. Thus no loss can arise under this head.
The Lewagh Mor lands
61. Another argument that is made is that the putting in place of a security over the farm at Lewagh Mor as a security for the Anglo Irish facility was done without instructions, and/or negligently. In that regard it cannot be forgotten that from the point of view of causation the facility letter from Anglo of the 25th June, 2003 showed that this security was one of the specific requirements of Anglo for the advance of these monies. The Anglo facility was not negotiated by or through or with the assistance of Mr. Nelson and there was no evidence before me that would suggest that Anglo might have removed the requirement for security over those lands had this been requested of it. Thus no fault has be shown on the part of Mr. Nelson, and no loss arising from the putting in place of a security over the Lewagh Mor lands arose from any act or default of Mr. Nelson.
62. Further, the Lewagh Mor farm was removed voluntarily from the security after Anglo agreed to and did in fact release the security on that farm when the facility had been sufficiently paid down. The fact that the farm was used by Mr. William Butler at a later time to secure further advances has not been put in issue in this case and there is no plea or evidence that Mr. Nelson had any involvement in the offering of the lands as security for any further advances.
The disbursement of sale proceeds
63. A further argument made against Mr. Nelson is that he failed to ensure that on the completion of each individual sale the proportionate amount in respect of the site value was not paid to Mr. William Butler. A number of observations can be made about this assertion. In the first place the partnership agreement did not provide for a payment to the site owner in this way, nor indeed was there an agreement between the partnership and the site owners or between the partnership and the builder, or for the distribution of funds. Payments were made and agreed on a somewhat ad hoc basis between the partners and the Butler brothers and the building company Michael and Thomas Butler Ltd. There was no evidence that Mr. Nelson was instructed to put in place a structure to ensure that this was done in an orderly way. Furthermore I am also persuaded by the fact that there was no evidence that pointed to any request by the Butler brothers to their partners for the payment out of monies to represent their respective interests, and the simple truth is that the development struggled to find finance after the first Anglo tranche was fully spent. This is apparent from the fact that the two non-Butler partners, and in particular Crohan O’Shea, put up some of their personal monies to finance the ongoing development and to build out the units in respect which planning had been obtained. Thus the evidence points the other way, namely that the development did not have sufficient surplus funds to make a distribution or a proper distribution to the individual partners, or to the landowner or builder as the case may be.
64. Further, insofar as monies are claimed in respect of building works, such a claim is one that may be maintained by the company Michael and Thomas Butler Ltd., not a plaintiff in these proceedings.
65. Finally, Binchy solicitors acted for the Butler brothers from March 2004 and dealt inter alia with the claims of the brothers and/or their building company for payments form time to time. It is not credible that no monies were paid to the building company, and had that happened the building work would quickly have ground to a standstill. Mr Nelson is not shown by the evidence to have had any role to pay in acting for the Butler brothers with regard to the cost of materials or the building works.
Money advanced by siblings
66. Hogan J. permitted the plaintiffs to make their claim for losses arising as a result of family borrowings. Both of the Butler brothers gave evidence in the most general terms of having borrowed money from family members. No evidence was adduced as to the amount of money, when it was borrowed, nor was any documentary evidence adduced to show any money trail. Further, no evidence was adduced as to any involvement of the defendant in regard to these borrowings. Thus any claim for any loss arising from such borrowings is not supported by any evidence and must fail.
Conclusion on contractual role of Mr. Nelson
67. Mr. Nelson was employed to act as solicitor for the development and to prepare booklets of title, deal with enquiries and purchasers, and deal with the requirements of making good title. He was not engaged in the resolution of the title difficulties that arose as a result of matters of which he had no knowledge, and which were not apparent on any investigation of the title. His second involvement was with the drawing down of the Anglo monies. He did this in accordance with instructions no complaint is made that the monies were not drawn down, or indeed that they were not fully repaid to Anglo. Mr. Butler did what he was engaged to do and there is no complaint made against him that he failed in his role as conveyancing solicitor, or as solicitor with responsibility for drawing down the funds.
A conflict of interests
68. It seems to me that the height of the case made by counsel who made submissions on this application on behalf of William Butler is that Mr. Nelson had a conflict of interest and ought not to have acted for the partnership at all. I reject the suggestion that Mr. Nelson admitted he had a conflict of interest, and insofar as he admitted that a conflict of interest might arise, that arose in the context of the undertaken he had given to Messrs. Houlihans in July 2003 which was discharged before Mr. Nelson came to be engaged as solicitor to deal with the conveyancing aspect of the development.
69. Counsel for the second plaintiff however argues that another conflict of interest arose, namely that Mr. Nelson had for a long number of years acted for Crohan O’Shea in various business matters, and that that fact alone put him in a position where a conflict of interest might arise should he act for the partnership and/or for the development company BOSOD. It is argued in particular that Mr. Nelson preferred Mr. Crohan O’Shea in that on the 1st September, 2004 a payment of over €576,000.00 was made to Mr. Crohan O’Shea, as he puts it “without difficulty”, from the proceeds of sale. This particular payment arose in contents of the second partnership agreement and from the fact that Mr. O’Shea had put personal monies into the partnership to assist in the obtaining of further finance from Anglo Irish Bank. Mr. Nelson had no involvement with that partnership, whether with the events leading up to the execution of that agreement or the enforcement of it. He cannot be faulted for making that payment when the partners themselves had agreed the context in which that payment was to be made, and no evidence was adduced before me to point to the payment having been made other than as expressly agreed in the supplemental partnership agreement.
Did Mr. Nelson have a general retainer?
70. A certain amount of difficulty became apparent at the conclusion of the plaintiffs’ case as to the precise role that Mr. Michael Butler played in the development. He was a partner, and a shareholder and a director in BOSOD Limited. He was described by his counsel as “the builder”, but in the course of argument at the end of this application counsel accepted that Mr. William Butler was a foreman or manager of the site, and not the builder employed by the partnership to build out the units. The builder was either Michael Butler, or the company Michael and Thomas Butler Limited, for whom Mr. Nelson did not act.
71. It is submitted however that Mr. Nelson by agreeing to take on the role he took as conveyancing solicitor, and as the solicitor who dealt with the Anglo security, the drawing down of funds and the repayment of the Anglo monies in accordance with the agreed repayment schedule, expressly or by implication took on a general advisory role in respect of the two Butler brothers. I consider it important in that context that Mr. Fred Binchy Solicitor acted for the Butler brothers in their personal capacity from March 2004, and in so far as a separate interest might have arisen, in regard to the interest of the building company Michael and Thomas Butler Limited. No connection has been shown between any decision made by the Butlers and/or the building company and the alleged breaches by Mr. Nelson. Put simply, the chain of causation was broken by the involvement of Mr. Binchy as solicitor for the Butler brothers at a time when it became clear that conflicts had arisen in the partnership and separate interests, or groups of interest, came to be in conflict.
72. I consider that at its height the claim of the plaintiffs that Mr. Nelson failed to put in place a structure to enable the builder to be paid the monies that he or it expected to be paid from the development, either in the amounts or at the times expected. I will take the plaintiffs’ case at its height, and assume the builder to be Mr. Michael Butler, Mr. William Butler and/or Michael and Thomas Butler Limited, noting too that the company is not a party to these proceedings. Both of the Butler brothers in the course of their evidence accepted that Mr. Nelson was never engaged to advise them with regard to the role and position of the building company, or to advise either of them personally as builder, or to negotiate in respect of individual claims by the building company for monies from time to time. Indeed the evidence quite clearly points to the fact that from March 2004 until February 2007 Mr. Fred Binchy was acting for Mr. Michel Butler, in his role as builder, and the evidence points also to the fact that if any solicitor had an involvement with the building company Michael and Thomas Butler Limited it was Mr. Fred Binchy and no other solicitor has been identified to me.
73. I also cannot ignore the fact that, not only did cracks appear in the relationship between the parties as early as 2004 when Mr. Binchy was instructed, but the development ran into financial difficulties and cash flow problems in the summer of 2004. Some of these problems arose as a result of the title difficulties that emerged and made it impossible to close the sales, but the fundamental reason for the cash flow problems was that the initial monies borrowed from Anglo Irish Bank could not possibly have been sufficient to build 111 houses in respect of which planning existed, and that is so particularly in context were over €3 million of the €5.4 million borrowed went immediately to discharge the First Active loan in respect of which a first legal charge was registered on the lands to be developed. The evidence of the Butlers taken at its height was that the development cost in total was €22 million, and even though there was some dispute with regard to the precise figure in the evidence before me, it was certainly a figure which was a multiple of the €5.4 million borrowed, and if one excludes the €3 million in respect of the land purchase, the final cost was many multiples of the €2.4 m available from the initial draw down. Thus the development and the ongoing needs of the business of the partnership and of BOSOD required continued finance and that could not have been provided merely from the profits from the sales of the units. The Butler brothers both accepted this to be the case, and the evidence clearly points to this fact.
74. I consider that what arose was a commercial problem, one in respect of which Mr. Nelson had no instructions, but even were I to hold that he had instructions, there cannot be said to be any causal connection between his role as solicitor and the steps taken by the partnerships or individual members of the partnerships to negotiate development finance from a bank. Mr. Nelson was never employed to negotiate with any of the lending institutions, or to secure additional finance or seek capital. His role was to act as solicitor in the draw down of monies and in the completion of the sale, and while this of course involved him in dealing with the lending institutions, his dealings were in respect of the performance of the obligations reached between the partnership and the lending institutions from time to time, and not in putting in place those agreements or advising any of the parties with regard to the terms and conditions offered or ultimately agreed with the banks.
Conclusion on general retainer
75. I consider that the plaintiffs have not made out even a stateable case on the evidence that Mr. Nelson was, or could even by implication be considered to have been, employed as solicitor for them personally in so far as they had a conflict with their partners, or in regard to their claim for monies to represent their interest in the development lands, and/or as builders..
Conclusion on the claim as pleaded
76. Although the evidence in this case was heard over a number of days, and there was extensive argument with regard to the application of the defendant that the case be dismissed, it remained difficult to understand the precise nature of the claim and the evidence frequently strayed into matters which were irrelevant or not pleaded. I have endeavoured to deal with the claim in the various headings in this judgment. Nonetheless I will conclude by considering in sequence each of the separate heads of claim made in the updated particulars delivered to the court on the 10th March on behalf of the second defendant.
The claim in contract
77. Using the subheadings at para. 12 above I conclude as follows:
78. (a) I have dealt in detail with this part of the claim and consider that the evidence points overwhelmingly to the fact the defendant advised the plaintiffs to take separate advice, and that they did so take advice from Mr Scott
79. (b) I have dealt with this head of claim and consider that the evidence does not point to any preference by the defendant of the interest of one partner over that of others. The disbursement of funds was made in accordance with the partnership agreements
80. (c) No evidence was heard by me in regard to any alleged failure of the defendant to deal properly with the company BOSOD
81. (d) The evidence overwhelmingly points to the fact that the partnership did obtain additional finance, and indeed most of the units for which planning permission was granted were in fact built. The claim by the builders is not before me, but even accepting that the plaintiffs did act a builders they have not adduced evidence of any agreement with the partnership for the disbursement of the proceeds of sale. Furthermore the defendant firm did not act for the plaintiffs in their capacity as builders, and another firm of solicitors acted.
82. (e) This head of claim is dealt with at para. 63 ff.
83. (f) The evidence of Mr Michael Butler is that he and his bother knew of the prior professional involvement that the defendant firm had with Crohan O’Shea. No negligence arises as a result. Furthermore, no loss was shown as having arisen as a result of any alleged lack of independence. The claim as made is that Mr O’Shea was preferred in the making of certain payments at a time when another firm of solicitors was acting for the plaintiffs.
84. (g) The trust between the parties broke down early in the course of the partnership. The Butler brothers as a result had separate legal and financial advice from March 2004 at the latest. No loss is shown to arguably have arisen as a result of the action or inaction of the defendant. I consider that no evidence has been adduced that Mr. Nelson caused the loss of trust between the business partners
85. (h) No evidence was adduced as to a “chaotic” disbursement of funds, and no loss was shown as arguably arising therefrom.
The claim in negligence
86. This aspect of the claim has been fully dealt with in the body of my judgment.
The claim in breach of fiduciary duty
87. This aspect of the claim has been fully dealt with in the body of my judgment.
Decision
88. The jurisdiction to strike out a claim is relatively seldom used. Nonetheless I consider for the reasons stated, and bearing in mind the conclusion that I have come to in regard to the credibility of some of the evidence adduced by the plaintiffs, and further noting that I must for the purpose of the exercise engaged take the case of the plaintiffs at its height, that this is a case were I should accede to the application on the part of the defendant that the plaintiffs’ case be dismissed on the grounds that it cannot possibly succeed and that even taking the evidence and argument at its height, for the reasons stated I consider that the plaintiffs have not made out a case that the defendant has to answer.
89. Accordingly, I will make an order that the claim be dismissed.
Ex tempore Judgment of Mr. Justice Kelly delivered on the 22nd day of June 2015
1. The court has before it this afternoon two appeals which have been brought by Cecilia Griffin and Caroline Barnes in litigation which they took against Kerry County Council.
2. The appeals relate to orders which were made by Murphy J. in the High Court. He heard an application brought by Kerry County Council seeking to strike out the litigation which has been in being since 2011 and on the same day he had before him an application for judgment in default of defence against Kerry County Council.
3. He decided to hear the application to strike out the litigation first. He acceded to that application and consequently there was no necessity and no basis upon which he could go on to consider making an order requiring delivery of a defence in proceedings which were no longer in being.
4. Criticism has been made of the trial judge that he took the applications in that order, but logically it made sense to do so. I do not believe that he can be the subject of any legitimate criticism in that regard.
5. The hearing today has been largely concerned with the conclusion that the judge reached to the effect that he ought to exercise his jurisdiction to strike out this litigation on the basis that it had no reasonable prospect of success. To examine that it is necessary to refer briefly to the claim which is made in these proceedings and to the factual background attendant upon it.
6. The statement of claim in the action is short. It recites that the first plaintiff resides at Cahernard, Castleisland, Co. Kerry and is a pensioner and that the second plaintiff resides at Ballybrown, Careena in Limerick and is a niece of the first plaintiff and a company director. The meat of the claim is contained at para. 3. It says the plaintiffs claim is for damages for fraudulent misrepresentation on the compulsory purchase by the defendant of a disused railway line situate at Keelgorm Castleisland, Co. Kerry owned and leased by the first and second plaintiff for the purpose of constructing a link road connecting the N21 Tralee Road to the N23 Killarney Road.
7. The prayer in the statement of claim seeks first, an order for discovery, second, an order for the restoration of the plaintiffs’ lands and thirdly, an injunction restraining the defendants from trespassing and interfering with the land following reinstatement.
8. The factual position is that the lands which are the subject matter of the litigation were compulsorily purchased by Kerry County Council. Compulsory purchase is a process with goes on for a long period of time and this case was no exception in that as far back as October 2001, public consultations were being held in respect of the matter. Those public consultations gave rise ultimately to a compulsory purchase order being made. In that regard there were public hearings which took place before an Inspector appointed by An Bord Pleanála on the 21st and 22nd February, 2006. Neither of plaintiffs appeared before that hearing. The compulsory purchase procedure continued to its finality and in due course the compulsory purchase order was confirmed and the plaintiffs’ lands were entered upon.
9. There is no doubt but that they have a very great affection for the lands. They have been in the family for some considerable period of time. There is a lot of history attached to them and a description of the lands which has been given in court, suggests that they provided a very pleasant and comfortable living for the plaintiffs. They perceive that that has been considerably disrupted as a result of the works which were undertaken and the construction of this road. They also have an equally deep seated feeling that the road was an unnecessary element for the development which was taking place.
10. Unfortunately the time for making all of those complaints is over, because the works have been completed and the road is now open. The question therefore arises is what rights do the plaintiffs have in respect of all that has happened.
11. Insofar as this action is concerned, I am of the view that the trial judge was correct in concluding as he did, that it has no reasonable prospect of success. I come to that conclusion for two reasons.
12. First, the land which was formerly owned by the plaintiffs is now owned by the County Council. Any rights that the plaintiffs have in that regard are translated into an entitlement to monetary compensation. Monetary compensation is available to them under the scheme of compensation which is provided for in the legislation of 1919, dealing with compensation payable for compulsory acquisition of lands.
13. No owner likes to have lands compulsorily acquired and that is particularly so in this case. I have a good deal of sympathy for the position in which the plaintiffs find themselves. But they did not participate in any of the procedures which would have given them a platform and an opportunity to make their case against the compulsory purchase order and in particular, for reasons best known to them, chose not to appear before the planning Inspector who conducted the hearing way back in 2006.
14. So the compulsory purchase mechanism proceeded to finality and there was no objection taken by the plaintiffs in that regard.
15. They cannot now seek to effectively undo what has already been done. Their remedy is one which sounds in compensation. That is readily available by applying for compensation under the relevant legislation which to date they have not done. Secondly, in any event having regard to the nature of the claim here, which is a claim of a fraudulent misrepresentation, the statement of claim is silent as to whom that representation was made and equally it is silent as to whether anybody acted to their detriment as a result of it.
16. However as a result of the particulars which were sought and were furnished, it is clear and Murphy J. came to a firm conclusion on this, that there could be no element of fraud or fraudulent misrepresentation involved. It may well have been a mistake, but it was simply that. Even if there was some form of misrepresentation, there is not the slightest evidence that the plaintiffs acted to their detriment in respect of it, because they were aware of the true position which obtained in respect of these lands.
17. I have come to the conclusion that the trial judge was correct in making the order which he did in striking out this piece of litigation.
18. I want to say this by way of assistance to the plaintiffs and I do hope that they will take this to heart. There is available to them a mechanism for recovering compensation. They would be foolish indeed not to avail themselves of that because that money is there almost for the asking. They have an apprehension that they would be forced to deal with Kerry County Council on some unfair basis. They are not at all dependent upon Kerry County Council. Well and good if they can reach an accommodation with them, but if they cannot, they can go before an independent arbitrator who will fix the amount of compensation to which they are entitled. There are well defined headings which seek to compensate a person who is the subject of a compulsory purchase order in full for the loss sustained by them.
19. Kerry County Council have made it very clear that they are not going to raise any time point against the plaintiffs because all of this happened years ago and this claim for compensation should be over and done with at this stage. They have given them time and will give them until the 1st September of this year within which to apply. I do hope that Ms. Griffin and Ms. Barnes avail themselves of that opportunity. If I may I would like to advise them that they ought to obtain professional help in order to bring this claim for compensation. It is a rather tricky area and it is not straightforward, but there is no doubt but that there is compensation available to them if they would only apply under the relevant legislation.
20. They must do so within the time which is stipulated, that is before the 1st September and I would not be waiting until the end of August or the end of July before I would seek advice and make my claim. I would be doing it straightaway because that compensation is there, as I say, almost for the asking.
21. But insofar as this piece of litigation is concerned, for my part I have to come to the conclusion that Murphy J. was correct. I would dismiss the appeal which is brought against the order which he made dismissing this claim and I would likewise dismiss the appeal against the order which he made declining to make an order requiring delivery of a defence to litigation which he had already at that stage struck out.
Ms. Justice Irvine: While I also sympathise with the position in which the plaintiffs find themselves concerning the compulsory purchase order of their farmland, I fully agree with the ruling and indeed the advice which has just been tendered by Mr. Justice Kelly and for those reasons I would dismiss both appeals.
Mr. Justice Hogan: I also agree with the judgment which has just been delivered by Mr. Justice Kelly and the comments of Ms. Justice Irvine. I would further add that while all members of the court express their sympathy with the dilemma faced by Ms. Griffin and by Ms. Barnes, the remedy which is provided for in law is that contained in the 1919 Act. Ms. Murphy for the Council has very fairly indicated that the Council will not take any time objection if the application is made before the 1st September of this year. I think if I may respectfully say so that the appellants would be very foolish to reject or repudiate that avenue which is open to them at this stage and I would respectfully endorse the comments made by Mr. Justice Kelly and Ms. Justice Irvine that both Ms. Barnes and Ms. Griffin would be very well advised to get professional legal advice to enable them to formally claim under the 1919 Act and to do so straight away. That is the remedy which is available to them, but for the reasons given by Mr. Justice Kelly I fear their action is unsustainable and I agree with the ruling of Mr. Justice Kelly.
SPV Osus Ltd v HSBC Institutional Trust Services (Ireland) Ltd [2015] IEHC 602
JUDGMENT of Ms. Justice Costello delivered on 5th day of October, 2015.
Introduction
1. On 11th December, 2008, the world learned of the massive fraud conducted by Bernard L. Madoff and the liquidation of Bernard L. Madoff Securities LLC (“BLMIS”) was commenced in the United States Bankruptcy Court for the Southern District of New York. A trustee, Mr. Irving Picard, was appointed to oversee the case under the Securities Investors Protection Act of 1970 (“SIPA”) (the “Trustee”). These proceedings are just one of the many proceedings which resulted from the Madoff fraud.
Investment in BLMIS and the BLMIS liquidation
2. Optimal Multiadvisers Limited (OML) is an investment company incorporated in the Bahamas and structured as an ‘umbrella fund’ with several series of shares linked to different investment strategies. It is part of the well known Santander Group. OML typically created a trading subsidiary for each series of shares. In 1997 OML formed Optimal Strategic US Equity Limited (“Optimal Strategic”) for the purpose of holding assets linked to OML’s series of shares which, in this judgment, are referred as the Strategic Series shares.
3. Optimal Strategic invested nearly all of its assets including the Strategic Series shares through a brokerage account at BLMIS. Upon the collapse of BLMIS there were virtually no assets in the estate. In reality, the investment was now represented by the claims Optimal Strategic had in the estate of BLMIS and any non bankruptcy claims against third parties as it might have for the loss it had sustained.
4. In the 90 days preceding the liquidation of BLMIS, Strategic Series shares to the value of approximately US$151 million had been redeemed on behalf of investors in OML. Under US bankruptcy law, payments made within 90 days of the bankruptcy amount to preferential payments and can be recovered by the Trustee. The Trustee made a demand of Optimal Strategic for the return of US$151 million in respect of the redeemed shares. In return Optimal Strategic had a claim against the BLMIS estate in respect of the investments lost due to the fraud of Mr. Madoff. The net asset value of these investments as of November, 2008 was approximately US$2.9 billion. The net equity value was approximately US$1.5 billion. The value of Optimal Strategic’s claim in the BLMIS liquidation therefore depended upon whether the claim was valued on a net asset value or on a net equity basis. There was a dispute between Optimal Strategic and the Trustee as to the correct basis upon which Optimal Strategic’s claim should be valued. Ultimately this was resolved in favour of the Trustee and there was a decree by the Supreme Court of the United States of America giving effect to this result in June, 2014, after the Assignment the subject matter of these proceedings.
5. Under US bankruptcy law, customers of an insolvent broker dealer, such as BLMIS, who are in a SIPA liquidation, are entitled to preferential treatment in the distribution of assets from the debtor’s estate. This is achieved through the creation of a fund, whereby customers holding allowed claims in the bankruptcy are entitled to share in such a fund based on the amount of their ‘net equity’ (the difference between the amount invested and the amount withdrawn). A claim against a SIPA estate is recognised to be a property interest.
6. Before Optimal Strategic would be allowed to share in this preferential customer fund, the Trustee insisted that Optimal Strategic would have to return the US$151 million it owed to the BLMIS estate. On 22nd May, 2009, Optimal Strategic entered into a settlement agreement with the Trustee whereby it returned certain amounts to the estate in exchange for an allowed customer claim in the SIPA case in the amount US$1,540,141,277.60 (which was essentially its net equity claim increased by the amount it was repaying under the Settlement Agreement) (the “Allowed Customer Claim”). The investors in the Strategic Series shares had no claims as individuals to the return of the Allowed Customer Claim. Their claim was indirect through Optimal Strategic.
7. The Trustee has brought a multitude of proceedings against many different parties seeking to swell the assets of the estate by means of recoveries from third parties. Inevitably this means that administration of the estate will take some time. There are many uncertainties in the process. This means that it is unknown whether all or part of the Allowed Customer Claim will in fact be paid out and it is unknown when this may occur. It is also not clear whether there will be a surplus to be distributed amongst the unsecured creditors of the estate. To date the Trustee has paid over approximately US$750 million in respect of the Allowed Customer Claim.
8. Optimal Strategic has a claim as an unsecured, non preferential, creditor in the BLMIS estate for the difference between any distributions in respect of the Allowed Customer Claim (approximately US$2.9 billion less US$1.5 billion). It is uncertain whether any distribution will be paid to unsecured creditors and, if so, how much. In addition, it has in fact received US$500,000 from the Securities Investor Protection Corporation (“SIPC”). There is also the possibility that it might receive a payment under a victim remission scheme established by the Department of Justice. These claims, together with the Allowed Customer Claim, are referred to as claims in the bankruptcy in this judgment. In addition, Optimal Strategic may have causes of action against third parties arising out of the loss of the investments due to the fraud of Mr. Madoff. In this judgment these are referred to as third party claims or non bankruptcy claims.
9. Thus, while obtaining the Allowed Customer Claim was a significant step in seeking the recovery of the lost investment, it did not imply that Optimal Strategic would immediately obtain funds for its investors.
The secondary market
10. Beginning in 2010, parties, including distressed debts investors and hedge funds, expressed an interest in purchasing allowed customer claims in the BLMIS liquidation. By 2011, a secondary market of selling and trading allowed claims in the BLMIS liquidation had begun. Several distressed debt investors and hedge funds interested in acquiring such claims contacted OML to inquire about purchasing an interest in Optimal Strategic’s Allowed Customer Claim.
11. As a result of the emergence of an active secondary market for customer claims in October, 2010 the Trustee sought relief from the Bankruptcy Court to implement procedures for the assignment of allowed customer claims. On 10th November, 2010, the Bankruptcy Court issued a transfer procedures order. It established a procedure whereby the holder of an allowed claim could transfer his or her entire claim to a third party in a pre-approved manner. The Order prohibits the selling or assignment of part of a claim. This requirement was so that the Trustee could easily track the beneficiaries of customer claims and for other reasons of administrative convenience.
12. Given the emergence of the secondary market in allowed customer claims in the BLMIS liquidation and the Transfer Procedures Order, there was now a mechanism whereby the Allowed Customer Claim could be sold on to third parties, thereby realising funds which could be returned to the holders of the Strategic Series shares. However, all of the holders of Strategic Series shares would have to agree to sell all of their shares at an agreed price and only one buyer could purchase this very substantial claim. Thus there were very real practical challenges to actually selling the Allowed Customer Claim on the secondary market. To overcome this the directors of OML devised a mechanism whereby a holder of Strategic Series shares could receive an instrument which would allow such holder to take direct control of the disposal of his/her indirect interest in the Allowed Customer Claim and, if they so wished, to sell his/her indirect interest in the Allowed Customer Claim in the secondary market.
The transaction
13. The transaction involved four related steps. It could only be realised by completing all four steps. The first step was to be the Assignment of the Allowed Customer Claim to a new special purpose vehicle (the plaintiff) incorporated in the Bahamas for the purpose of giving effect to the scheme (“SPV”). Initially SPV was to be a 100% subsidiary of Optimal Strategic. SPV was to acquire the Allowed Customer Claim on an “as it, where is” basis. In consideration of the Assignment, SPV would issue 1,539,641,277.60 participating voting shares having no par value to Optimal Strategic (“the SPV shares”). Each SPV share notionally represented US$1 dollar of the Allowed Customer Claim (net of US$500,000 thousand already received from SIPC). The directors of OML (who were the same as those of Optimal Strategic) were to comprise the initial board of SPV. They were to serve until removed or replaced by resolution of the shareholders of SPV.
14. The business objective of SPV was clearly set out at pp. 13-14 of the Information Circular dated 29th April, 2011, sent to the holders of the Strategic Series shares as follows:-
“The business object of SPV will be to hold the [Allowed Customer Claim] of USD 1,540,141,277.60 and attend to any business affairs incidental to and necessary to the proper administration thereof for the benefit of the shareholders of SPV until such time as any and all recoveries made by the Trustee have been distributed to SPV in respect of the [Allowed Customer Claim] and the Trustee shall have been discharged from the office of trustee for the liquidation of BLMIS. SPV’s sole purpose is to hold the [Allowed Customer Claim] for the benefit of its shareholders and to act as a conduit through which the Strategic Series investors may dispose of their pro rata interest in the [Allowed Customer Claim]…
Although the [Allowed Customer Claim] will no longer be directly held by Optimal Strategic, by virtue of Optimal Strategic’s 100% ownership of SPV at incorporation current Strategic Series shares will continue to represent an indirect interest in the [Allowed Customer Claim].”
15. The second step in the procedure was to afford the holders of the Strategic Series shares an option to either (i) exchange their shares for SPV shares, (ii) exchange their Strategic Series shares for shares in SPV and for those SPV shares to be sold or (iii) to retain their existing shares. The purpose of exchanging their Strategic Series shares for SPV shares was set out in the Information Circular at p. 14 as follows:-
“[e]ffecting such exchange would allow holders of Strategic Series shares to trade the SPV Shares… and, in as much as the SPV Shares will represent an interest in [Allowed Customer Claim], realise their interest in such a claim if they can find a buyer for the SPV Shares.
Furthermore, holders of Strategic Series shares may mandate OIS, the investment manager of OML, to sell such SPV Shares on their behalf so that they receive any proceeds thereof in lieu of their SPV Shares.”
16. The third step was the compulsory redemption of the Strategic Series shares of those investors who elected to exchange them for SPV shares or to have their Strategic Series shares exchanged for SPV shares and sold by OIS.
17. The final step was then to be the sale of SPV shares for electing investors on the secondary market which was to be by way of an auction of the SPV shares. At any time prior to the auction, it could be cancelled. There was to be in effect a reserve price so that if the shares did not sell at the auction the investors would retain their new SPV shares.
18. The procedure was adopted and the Strategic Series shares representing the investment by Optimal Strategic in BLMIS were largely exchanged for SPV shares and the Strategic Series shares in OML cancelled. The SPV shares were in fact sold in three separate auctions to investors in the distressed debt industry. In exchange for the Assignment of Claim (discussed below in more detail) SPV issued 1,539,641,277.60 voting shares to Optimal Strategic, the number of SPV shares being equal to the approved dollar amount of the Allowed Customer Claim. Thus each SPV share originally represented an indirect interest in US$1 of the Allowed Customer Claim. Optimal Strategic originally held 100% of SPV’s shares. In accordance with the four step procedures OML there upon held auctions in May, 2011, May, 2012 and May, 2013 at which shares in SPV were sold to investors. In June, 2011 Allowed Customer Claims in the BLMIS estate were trading a roughly US$0.70 to US$0.75 on the dollar. After the last auction in May, 2013 hedge funds and distressed debt investors held more than 93% of the shares of SPV. These new shareholders in SPV were not affiliated with Optimal Strategic or OML. On 30th June, 2014, the new shareholders of SPV removed the original directors, being the directors of Optimal Strategic and OML, from the Board of SPV and in December, 2014 they instituted these proceedings.
The Assignment
19. Central to this scheme was the transfer of the Allowed Customer Claim by Optimal Strategic to SPV. This was by an assignment of claim agreement dated 6th May, 2011. It provided that by the Assignment of Claim, Optimal Strategic assigned to SPV:-
“…(a) an undivided 100% interest… in Assignor’s right, title, and interest in and to the allowed claim filed by the Assignor [The Allowed Customer Claim]…(b) all rights and benefits of Assignor related to the Purchased Claim including (i) any right to receive cash, securities, instruments, interest, penalties, fees or other property that may be paid or distributed with respect to the Purchased Claim, (ii) any action or claim… of any nature whatsoever, whether against the Debtor [BLMIS] or any other party, arising out of or in connection with the Purchased Claim, (iii) voting rights, but only to the extent related to the Purchased Claim, (c) all rights of Assignor under paragraph 13 of the [Settlement Agreement]…, (d) any other rights, action or claim arising out of the Assignor’s investment in Debtor including, but not limited to, any claim the Assignor may have with respect to any current or future victim remission proceedings developed by the United States Department of Justice, and (e) any and all proceeds of any of the foregoing (collectively as described in clauses (a), (b), (c), (d) and (e) the ‘Transferred Rights’).”
19. The Assignment was in the form approved by the Transfer Procedures Order. It provided that Optimal Strategic transferred and assigned to SPV all rights, title and interest in and to the Allowed Customer Claim “together with any affirmative claims of the assignor against third parties.”
The present proceedings
20. The first named defendant, referred to as HSBC Custodian, held itself out as a provider of specialist trustee and custodial services and by an agreement entered into in November, 2002 with, inter alia, OML and Optimal Strategic it was appointed as custodian to, inter alia, Optimal Strategic. The second named defendant is referred to as HSBC Administrator. By an administration agreement dated December, 2002 between, inter alia, the second named defendant, OML and Optimal Strategic, HSBC Administrator agreed to act as administrator, secretary, registrar and accountant of Optimal Strategic (together “the defendants”).
21. In these proceedings it is claimed that HSBC Custodian and HSBC Administrator are each guilty of breaches of contract, misrepresentation, negligence and breaches of fiduciary duties in relation to the services to be performed by them for Optimal Strategic. In effect it is asserted that the failures of the defendants in relation to the investments by Optimal Strategic in BLMIS have wrongly caused or substantially contributed to the loss of the investments. Allegations have been made that HSBC Custodian and HSBC Administrator should have been aware that these funds were exposed or that Mr. Madoff was engaged in a fraud; that if they had respectively acted promptly and in accordance with their contractual and fiduciary duties and obligations the loss sustained as a result of this fraud would have been either avoided or diminished. The claim is for damages in the sum of US$2,919,934,627.70, less a credit for payments actually received, which at present is approximately US$750 million.
22. At para. 9 of the Statement of Claim it is pleaded:-
“[b]y Deed of Assignment dated 6th May 2011 (the ‘Assignment’), Optimal Strategic sold, transferred and assigned by way of an absolute assignment in writing, inter alia, all rights, causes of action or claims arising out of Optimal Strategic’s investment in BLMIS to SPV Optimal SUS Ltd. (now known as SPV OSUS Ltd.) including the causes of action and claims the subject of these proceedings. The Assignment is governed by the laws of the State of New York. The Plaintiff will refer to the entirety of the said Assignment for the purposes of establishing the terms and the true meaning and effect thereof. Notice in writing of the said Assignment was giving to each of the Defendants herein on the 18th November 2014.”
The American proceedings
23. After the institution of these proceedings, Optimal Strategic instituted proceedings in New York seeking a declaratory judgment that the right to bring claims against third party service providers such as HSBC Custodian and HSBC Administrator was not assigned by Optimal Strategic to SPV by the Assignment. The proper law of the contract is the law of the State of New York and so this issue is to be determined in the courts of the State of New York.
The present Motion
24. The defendants argue that the present case is brought by a plaintiff who is unconnected with the underlying contracts which give rise to the claims. They argue that the Assignment did not assign third party claims such as this claim against the service providers. They accept, for the purposes of this Motion, that the Court must assume that in fact the right to sue third parties including the service providers was assigned. They say that this amounts to the assignment of a bare cause of action and that the assignment accordingly is void as being champertous. They say that it follows that the plaintiff has no entitlement to bring these proceedings and they seek the following reliefs:-
“1. A declaration that the Assignment of Claim dated 6 May 2011 between Optimal Strategic US Equity Ltd and SPV Optimal SUS Ltd (the ‘Assignment’) is contrary to public policy, void and unenforceable as a matter of Irish law.
2. An Order dismissing or striking out the Plaintiff’s claim as against HSBC [the first and second named defendants].”
Maintenance and champerty
25. In Thema International Fund plc v. HSBC Institutional Trust Services (Ireland) Limited [2011] 3 IR 654 Clarke J. accepted the definition of maintenance as set out in Halsbury’s Laws of England (London: Butterworth & Co., 1907), vol. 1, at p. 51, para. 81, as:-
“the giving of assistance or encouragement to one of the parties to an action by a person who has neither an interest in the action nor any other motive recognised by law as justifying his interference”.
Clarke J. continued:-
“…a person guilty of maintenance ‘acts unlawfully and contrary to public policy’ and, therefore, is not entitled to enforce any agreement for any form of benefit made with the relevant litigant.
[13] Champerty is a particular form of maintenance whereby the person concerned obtains a share in the subject matter or proceeds of litigation in return for assisting with funding the litigation concerned.”
26. In Waldron v. Herring & Ors [2013] IEHC 294, Edwards J. followed the decision of Clarke J. and held that:-
“‘[m]aintenance’ is the intermeddling of a disinterested party to encourage a lawsuit. ‘Champerty’ is the maintenance of a person in a lawsuit on condition that the subject matter of the action is to be shared with the maintainer. It is therefore unlawful for a party without a legitimate interest to fund the litigation of another, or to fund litigation in return for a share of the proceeds.”
27. It has long been the law, as was pointed out by Clarke J. in Thema, that the courts will not enforce any agreement for any form of benefit where the agreement savours of maintenance or champerty. This is so because it offends against Irish public policy. It matters not that the agreement in question is valid under the proper law of the contract in question. It is for the Irish courts to determine whether the enforcement of the agreement would offend against Irish public policy.
28. This is clear from the first modern Irish authority, Fraser v. Buckle [1994] 1 I.R. 1. In the High Court, Costello J. approved the passage in Binchy, Irish Conflict of Laws (Dublin: Butterworth (Ireland) Ltd., 1988) at p. 549, as follows:-
“Under Irish internal law of contract, a contract may be invalid as being opposed to public policy. The fact that application of a foreign law would be contrary to Irish public policy is a reason for holding it invalid, not because it offends against the public policy of some foreign law (such as its proper law) but because it offends against our own.”(Emphasis added)
29. On appeal to the Supreme Court [1996] 2 I.R.L.M. 34, O’Flaherty J. noted that champerty agreements have been held to be void by the English courts although the contracts were governed by a foreign law which deemed them to be valid. The Supreme Court upheld the decision of the High Court. It follows, therefore, that the question of the validity of the assignment under the law of the State of New York is not determinative of whether or not the agreement offends Irish public policy as savouring of champerty.
30. As the Court is concerned with Irish public policy, the decisions from other jurisdictions in relation to what is or is not acceptable are of limited assistance. There are a number of recent Irish decisions which provide clear guidance in this area.
Irish authorities
31. Fraser v. Buckle concerned an heir-locator contract. In the High Court, Costello J. stated at p.13:-
“‘[m]aintenance’ has been defined as the giving of assistance or encouragement to one of the parties to an action by a person who has neither an interest in the action nor any other motive recognised by law as justifying his interference. ‘Champerty’ is a particular kind of maintenance, that is maintenance of an action in consideration of a promise to give to the maintainer a share in the subject-matter or proceeds thereof (See Halsbury’s Laws of England (4th ed.), Vol. 9, para. 400). A helpful summary of the law, and the reasons why champertous agreements are condemned, is to be found in a judgment of Lord Denning M.R. in In re Trepca Mines Ltd. (No. 2) [1963] Ch. 199, at pages 219 and 220):-
‘Maintenance may, I think, nowadays be defined as improperly stirring up litigation and strife by giving aid to one party to bring or defend a claim without just cause or excuse. At one time, the limits of ‘just cause or excuse’ were very narrowly defined. But the law has broadened very much of late (see Martell v. Consett Iron Co. Ltd. [1955] Ch. 363) and I hope they will never again be placed in a strait waistcoat. But there is one species of maintenance for which the common law rarely admits of any just cause or excuse, and that is champerty. Champerty is derived from campi partitio (division of the field). It occurs when the person maintaining another stipulates for a share of the proceeds: see the definitions collected by Scrutton L.J. in Haseldine v. Hosken [1933] 1 K.B. 811, 831). The reasons why the common law condemns champerty is because of the abuses to which it may give rise. The common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses. These fears may be exaggerated; but, be that so or not, the law for centuries had declared champerty to be unlawful and we cannot do otherwise than enforce the law; and I may observe that it has received statutory support, in the case of solicitors, in section 65 of the Solicitors Act, 1957.’”
32. Having considered the cases of: Martell v. Consett Iron Co. Ltd. [1955] Ch. 363; Laurent v. Sale & Co [1963] 1 W.L.R. 829; In re Trepca Mines Limited (No. 2) [1963] Ch. 199; Trendtex Trading Corporation v. Credit Suisse [1980] Q.B. 629 (C.A.); [1982] AC 679 (H.L.); and Giles v. Thompson and related appeals [1993] 3 All ER 321, he considered whether or not the heir-locators could be considered to have a legitimate interest in the litigation which they were maintaining so that no wrongdoing occurred. At p. 19, he held:-
“I cannot however agree that any of the decisions in the cases to which I have been referred or any part of the judgements in those cases oblige me to hold that the plaintiffs in this action had a legitimate and genuine interest in the proceedings in the New Jersey court such as would entitled them lawfully to maintain the defendants’ claim in them. They had no interest in the estate of Evelyn Herbert, apart from the interest they acquired in the November, 1988 agreements. As it is well established that the interest which the maintainer enjoys in a suit which he is maintaining must exist independently of the agreement which gives him a share in the proceeds of the suit, and as the plaintiffs have no such interest in this case, I cannot agree that the agreements in this case are not champertous because of some interest which the plaintiffs had in Evelyn Herbert’s estate prior to their agreements of November, 1988.”(Emphasis added)
33. It is clear that Costello J. held that in order to have a legitimate interest in the litigation which a party is maintaining, that interest must exists independently of the agreement which gives him his share in the proceeds of the suit. He so held having considered the cases cited above and in particular the decision in Trendtex. The Supreme Court upheld the High Court in holding that the agreements were contrary to Irish public policy as savouring of a champerty. The reasoning of the High Court was endorsed.
34. The Supreme Court again considered the law in relation to maintenance and champerty in O’Keeffe v. Scales [1998] 1 I.R. 290. Lynch J. gave the decision of the Court and he held at p. 295 as follows:-
“[i]t is clear from these authorities that the law relating to maintenance and champerty still exists in this State. A person who assists another to maintain or defend proceedings without having a bona fide interest independent of that other person in the prosecution or defence of those proceedings acts unlawfully and contrary to public policy and cannot enforce an agreement with that other person for any form of benefit, whether it be a share of the proceeds of the litigation or a promise of remuneration, such as money or a transfer of property if the claim is successfully defended.”
Thus the maintainer must have a bona fide interest independent of the other person whose suit he purports to maintain.
35. In Thema, at paras. 22 and 23, Clarke J. stated:-
“[i]n Ireland it is unlawful for a party without an interest (or some other legitimate concern including charity) to fund the litigation of another at all and, in particular, it is unlawful to fund litigation in return for a share of the proceeds. The only form of third party funding which is, therefore, legitimate in Ireland is one which comes within the exceptions to maintenance and champerty. Charitable intent, where the funder does not hope to benefit personally, would, of course, take the case outside the third party funder cost order jurisdiction identified in Moorview Developments Ltd. v. First Active plc [2011] IEHC 117, [2011] 3 IR 615, for that jurisdiction is confined to persons who fund litigation which they hope will indirectly benefit them in capacities such as shareholders and creditors.
[23] That such parties are, even though they may not be guilty of maintenance or champerty, exposed to potential orders for costs is clear from Moorview Developments Ltd. v. First Active plc [2011] IEHC 117, [2011] 3 I.R. 65. However, such parties are not, in my view, in the same category as professional third party funders who make a commercial decision to ‘invest’ in litigation in the hope of making a profit. After all, if the litigation is well founded then the shareholder or creditor is only getting their due. If an insolvent company has a good cause of action, then the shareholders or creditors who might benefit by any recovery on foot of that cause of action are getting no more than their entitlements. If the proceedings are bona fide progressed, then such parties are simply funding an entity in which they have a legitimate interest in the hope that that entity will be able to pay them monies due (in the case of creditors) or dividends or capital distributions (in the case of shareholders). The law of maintenance and champerty always made a distinction between such parties and professional third party funders. It seems to me that it is appropriate to maintain that distinction.”(Emphasis added)
36. At para. 26 he made clear that the crucial distinction from the point of view of Irish public policy is the existence of an independent legitimate interest on the part of the funder of the litigation. He stated:-
“[h]owever, a third party funder who is not guilty of champerty (i.e. who has the sort of legitimate interest in the case identified in the champerty jurisprudence) is, in my view, in a different situation. They are, even if only indirectly, already involved in the litigation. Any company which lacks funds always has the possibility that its shareholders (or its creditors) may choose to provide further funding for a whole range of reasons not confined to potential litigation. Commercial judgment will often lead to parties with a direct interest in a particular enterprise investing further sums. There is, therefore, in my view a substantial difference between a party who already has an indirect link to the impecunious party and who has, therefore, already got an indirect interest in the relevant litigation, on the one hand, and a party with no such prior link who simply buys into the litigation on the other hand.”(Emphasis added)
37. In Greenclean Waste Management Limited v. Leahy & Co. Solicitors (No. 2) [2014] IEHC 314 Hogan J. had to consider whether after the event (“ATE”) legal costs insurance was champertous. He noted that the scope of the application of the law of champerty must accommodate itself to modern social realities, but observed that there was no doubt at all that the tort of champerty not only still existed but that it also had a practical vibrancy. In addition he emphasised the constitutional right of access to justice as being important in assessing allegations of maintenance and champerty. He pointed out that Lynch J. made clear in O’Keeffe that the law in relation to maintenance and champerty must not be extended in such a way as to deprive people of their constitutional right of access to the courts to litigate reasonable statable claims. Hogan J. stated, at para. 24, that one of the principles flowing from the constitutional right of access to justice is that “the courts should not place any unnecessary obstacles in the path of those with a legitimate claim.” The important word in this sentence of course is “unnecessary”. He went on at para. 25 to state:-
“[a]gainst this background it can be said that agreements which involve the trafficking in litigation or – as in Simpson – which concern the assignment of a bare cause of action for purposes which the law does not recognise as legitimate will be held to be void as contrary to public policy on the ground that they savour of champerty. That, in my opinion, is the true leitmotif which runs through all of this case-law in this area.”
38. He applied the principle to ATE insurance and held as follows:-
“26. In truth, the real objection to ATE insurance is the size of the premium and the fact that it is normally payable only after a positive court decision or settlement. At one level it is easy to represent this as simply a disguised method of investing in litigation and recovering a share of the proceeds of the action under the guise of handsome premium. If ATE coverage was confined to this, then I think the argument that it savoured of champerty and was therefore void as contrary to public policy would be almost unanswerable.
27. Yet there is more to ATE then this… it should also be borne in mind that ATE also serves important needs within the community by facilitating access to justice for persons and entities who might otherwise be denied this. In this regard, ATE insurers provide a legitimate service by providing access to justice and this service cannot properly be regarded as simply as either investing in or trafficking in litigation.
28. Taken in the round, therefore, I find myself inclining that ATE Insurance – at least in the form which it manifests itself in these proceedings – is not on the whole champertous or amounting to maintenance.”
39. It is clear that Hogan J. was of the view that what would otherwise have been void as contrary to public policy was saved as ATE insurance served an important need within the community by facilitating access to justice to persons who might otherwise be denied this. Therefore, he was of the view that ATE insurers provided a legitimate service which could not properly be regarded as either investing or trafficking in litigation. It was the service aspect of the transaction facilitating access to justice which saved it from otherwise offending public policy.
40. The following principles relevant to the current dispute emerge from these Irish authorities and the English authorities cited in the judgments:-
(1) It is unlawful to fund or assign litigation in return for a share of the proceeds unless the funder or assignee has a lawful interest or some other legitimate concern in the litigation.
(2) The assignment of a bare cause of action for purposes which the law does not recognise as legitimate savours of champerty.
(3) Trafficking in litigation is contrary to public policy.
(4) Wanton and officious intermeddling in the litigation of others is contrary to public policy.
(5) The scope of the law of maintenance and champerty must accommodate itself to modern social realities.
(6) The law in relation to maintenance and champerty must be considered in the light of the constitutional right of access to justice.
(7) The law in relation to maintenance and champerty must not place any unnecessary obstacles in the path of persons with a legitimate claim.
(8) The assignment of a cause of action that is incidental or ancillary to a property right or interest is not champertous.
(9) The interest which a party maintains or enjoys in a suit which he is maintaining must exist independently of the agreement which gives him a share in the proceeds of the suit.
(10) The assignment of a cause of action to a party who has a genuine commercial interest in the cause of action is not champertous.
(11) A shareholder or creditor of a company (or other entity) who already has an indirect link to the impecunious company (or other entity) may have an indirect and therefore legitimate interest in the litigation of the company (or other entity) and may lawfully fund the company’s litigation.
(12) Professional third party funders who make a commercial decision to ‘invest’ in litigation in the hope of making a profit commit the torts of either maintenance and/or champerty.
(13) In considering whether an agreement is champertous, the Court should look at the totality of the transaction.
(14) The Court is concerned with substance rather than the form of a transaction in considering whether if offends the law of maintenance and/or champerty.
The defendants’ objections
41. In this case the defendants argue that the Assignment is void as savouring of champerty on two grounds. They say that the assignment of the third party claims and, in particular, this third party claim, amounts to the assignment of a bare cause of action. In addition they say that it constitutes trafficking in litigation. On either ground the Court should declare that the Assignment, insofar as it relates to the assignment of third party claims, savours of champerty and is void and unenforceable.
42. The plaintiff argues that the assignment of the Allowed Customer Claim is valid. The assignment of the third party rights is ancillary or incidental to the assignment of the Allowed Customer Claim. Therefore the assignment of the third party litigation rights is not the assignment of a bare right to litigate, as the defendants argue. In addition, the plaintiff argues that it has a genuine commercial interest in the enforcement of the third party claim. The sale of the Allowed Customer Claim and the third party rights does not amount to trafficking in litigation and the relief sought by the defendants should be refused.
Preliminary points
43. The parties are agreed upon certain preliminary points. The Court must look at the totality of the transaction and it must look at the substance rather than the form of the transaction. The law is evolving and the courts must not apply older authorities in a slavish fashion to modern situations. What was previously considered to be contrary to public policy fifty years ago may now be considered unexceptional and acceptable.
44. In Trendtex Trading Corporation v. Credit Suisse [1982] A.C. 679, Lord Roskill held at p. 703 as follows:-
“[m]y Lords, I do not therefore think that Mr. Brodie is correct in criticising the judgment of Oliver L.J. on the ground that the learned Lord Justice failed to distinguish between the interest necessary to support an assignment of a cause of action and the interest which would justify the maintenance of an action by a third party. I think, with respect, that this submission involves over-analysis of the position. The court should look at the totality of the transaction. If the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for its own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance.”
44. In Martell v. Consett Iron Company Limited [1955] 1 Ch. 263 at p. 415 Jenkins L.J. stated:-
“[b]ut it is an abuse of authorities to extract from judgments general statements of the law made in relation to the facts and circumstances of particular cases and treat them as concluding cases in which the facts and circumstances are entirely different and which raise questions to which their authors were not directing their minds at all.”
45. In Massai Aviation Services & Anor v. The Attorney General & Anor [2007] UKPC 12, Baroness Hale held:-
“19 But ‘trafficking’ is a pejorative term which takes the debate no further: it simple means trading in something (be it drugs or people) in which it is not permissible to trade. In order to decide whether the particular transaction is permissible, it is essential to look at the transaction as a whole and to ask whether there is anything in it which is contrary to public policy.”
46. It is thus clear that the Court must consider the totality of the transaction and not just its form. This means I must look at the circumstances of the Transfer Procedures Order and the restriction on the sale of interests in the Allowed Customer Claim, the terms of the Assignment and the Information Circulars, and the four steps in the transaction outlined in the Circular. I look to the fact that the losses arising from the fraud were indirectly but ultimately incurred by the holders of the Strategic Series shares and that the monies recovered will be paid to the holders of the shares in the plaintiff, which was a special purpose vehicle established to monetise the interests of the holders of the Strategic Series shares by the sale of shares in the plaintiff to third party investors.
47. Further, it is agreed that I should proceed for the purpose of this judgment on the basis that the third party claims were assigned by Optimal Strategic to SPV by the Assignment and that the Assignment is not champertous under the law of the State of New York, both of which propositions are currently contested before the courts in New York.
Assignment of a bare cause of action
48. It is common case that the assignment of a bare cause of action offends the rule against champerty and such an assignment is void. The assignment maybe saved if it is for a purpose which the law recognises as legitimate. As appears from the speech of Lord Roskill in Trendtex, quoted above, if the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in the taking the assignment and enforcing if for its own benefit, this is considered to be legitimate. The assignment of a debt and the right to sue to recover the debt would be a commonplace example of an assignment of a cause of action which the courts have long recognised as legitimate and not savouring of maintenance or champerty. In Thema, Clarke J. noted that charity might provide such a legitimate interest. In Greenclean, Hogan J. indicated that ATE insurance served an important need within the community by facilitating access to justice for persons who might otherwise be denied this and this was for a purpose which the law recognised as legitimate. In Martell, the plaintiffs had a common interest in protecting their rights as owners and occupiers of fisheries in the prevention of pollution of rivers. This was legitimate in the eyes of the law.
49. In this case, the plaintiff argues that the assignment of the right to sue the defendants is legitimate. It is not the assignment of a bare right to litigate as the assignment is:
(i) ancillary or incidental to the assignment of the Allowed Customer Claims or, in the alternative
(ii) that it has a genuine commercial interest in the litigation and therefore the assignment of the chose in action does not amount to the assignment of a bare right to litigate.
Ancillary or incidental: the law
50. While the law will strike down an assignment that is of only a bare cause of action, it will recognise the validity of an assignment of a cause action which is ancillary or incidental to a property right or interest. The two decisions of the Supreme Court, Fraser v. Buckle and O’Keeffe v. Scales, make it clear that the property right or interest must exist independently from the assignment of the cause of action. This is not to state that it must pre-exist the assignment of the cause of action, though frequently this will be the case. It has long been recognised that it is legitimate to assign debts together with the right to sue for the recovery of debts. The assignment of the cause of action – the right to sue for the debt – is incidental to the property right in the debt. They may, as a matter of fact, be created at the same time but the right to the debt is independent of the right to sue for the debt. In Fraser v. Buckle, Costello J. considered the speeches in Trendtex. In his judgment, he pointed out at p. 19 that “it is well established that the interest in which the maintainer enjoys in a suit which he is maintaining must exist independently of the agreement which gives him a share in the proceeds of the suit” if that latter agreement is not to offend the law against champerty. At p. 20, he stated that the agreements which the law of champerty condemns are agreements by which one party agrees to maintain litigation in which he has no genuine interest in consideration for a promise to receive a share of the proceeds of the litigation.
51. If the plaintiff is to succeed in this argument it must establish the existence of an independent right or interest and that the right to sue third party service providers is ancillary or incidental to that right.
A genuine commercial interest
52. As it appears from the speech of Lord Roskill in Trendtex, quoted at para. 44 above, the House of Lords also recognised that if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for his own benefit such an assignment did not savour of maintenance or champerty. The preceding passage in the judgment, at pp. 702-703, read as follows:-
“[m]y Lords, just as the law became more liberal in its approach to what was lawful maintenance, so it became more liberal in its approach to the circumstances in which it would recognise the validity of an assignment of a cause of action and not strike down such an assignment as one only of a bare cause of action. Where the assignee has by the assignment acquired a property right and the cause of action was incidental to that right, the assignment was held effective. Ellis v. Torrington [1920] 1 K.B. 399 is an example of such a case. Scrutton L.J. stated, at pp. 412-413, that the assignee was not guilty of maintenance or champerty by reason of the assignment he took because he was buying not in order to obtain a cause of action but in order to protect the property which he had bought. But, my Lords, as I read the cases it was not necessary for the assignee always to show a property right to support his assignment. He could take an assignment to support and enlarge that which he had already acquired as, for example, an underwriter by subrogation: see Compania Colombiana de Seguros v. Pacific Steam Navigation Co. [1965] 1 Q.B. 101. My Lords, I am afraid that, with respect, I cannot agree with the learned Master of the Roles [1980] Q.B. 629, 657 when he said in the instant case that “the old saying that you cannot assign a ‘bare right to litigate” is gone’. I venture to think that that still remains a fundamental principle of our law. But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance.”
53. Trendtex is the leading decision of the House of Lords in this area and was heavily relied upon by both the defendants and the plaintiff in their submissions. Trendtex, a trading company, instituted proceedings against the Central Bank of Nigeria (“CBN”). Trendtex had contracted to sell cement for shipment to Nigeria. The purchase price and demurrage would be paid under a letter of credit issued by CBN. It subsequently failed to honour the letter of credit. Credit Suisse had financed the transaction between Trendtex and CBN. Repudiation of the letter of credit by CBN had left Trendtex heavily indebted to Credit Suisse. Credit Suisse agreed to guarantee all costs incurred by Trendtex in proceedings against CBN where it claimed damages amounting to US$14 million. Subsequently, in a series of agreements, Trendtex assigned to Credit Suisse the whole of its residual interest in a claim for breach of contracts against CBN. The agreement recited that an offer had been received from a third party to buy Trendtex’s right of action against CBN for US$800,000.00. The agreement then provided (article 1) that Trendtex did not oppose the sale by Credit Suisse to a purchaser of its choice of all Trendtex’s claims against CBN and recognised that it had no further interest in the case against CBN. Five days later the claim against CBN was assigned to a third party for US$1.1 million. A few weeks later the claim against CBN was settled for sum of US$8 million. Trendtex sought to set aside the transactions on the ground that the assignment to Credit Suisse was contrary to public policy and void as “savouring of champerty” insofar as it contemplated the possibility that a third party would make a profit out of the litigation even though it was not a party to the transaction.
54. Both Lords Wilberforce and Roskill, in their speeches, indicated that if the assignment in Trendtex had been no more than an assignment of Trendex’s claim against CBN to Credit Suisse, the assignment in question would not have offended the law against maintenance and champerty. They were both clear that Credit Suisse had a genuine and a substantial interest in the success of the CBN litigation (in the words of Lord Wilberforce) or a genuine commercial interest in the litigation (in the words of Lord Roskill). They each agreed that the transaction offended the law against champerty because of the possibility that the cause of action would be further assigned by Credit Suisse to an anonymous third party who lacked the requisite interest which the House recognised was enjoyed by Credit Suisse in the litigation against CBN.
55. Lord Wilberforce stated at p. 694:-
“[t]he vice, if any, of the agreement lies in the introduction of the third party. It appears from the face of the agreement not as an obligation, but as a contemplated possibility, that the cause of action against C.B.N. might be sold by Credit Suisse to a third party, for a sum of U.S. $800,000. This manifestly involved the possibility, and indeed the likelihood, of a profit being made, either by the third party or possibly also by Credit Suisse, out of the cause of action. In my opinion this manifestly ‘savours of champerty,’ since it involves trafficking in litigation – a type of transaction which, under English law, is contrary to public policy.”
56. Lord Roskill held that the assignment to the third party was champertous in the following terms at p. 703:-
“[b]ut, my Lords, to reach that conclusion and thus to reject a substantial part of Mr. Brodie’s argument for substantially the same reasons as did Oliver L.J. does not mean that at least article 1 of the agreement of January 4, 1978, is not objectionable as being champertous, for it is not an assignment designed to enable Credit Suisse to recoup their own losses by enforcing Trendtex’s claim against C.B.N. to the maximum amount recoverable. Though your Lordships do not have the agreement between Credit Suisse and the anonymous third party, it seems to me obvious, as already stated, that the purpose of article 1 of the agreement of January 4, 1978, was to enable the claim against C.B.N. to be sold on to the anonymous third party for that anonymous third party to obtain what profit he could from it, apart from paying to Credit Suisse the purchase price of U.S. $1,100,000. In other words, the ‘spoils,’ whatever they might be, to be got from C.B.N. were in effect being divided, the first U.S. $1,100,000 going to Credit Suisse and the balance, whatever it might ultimately prove to be, to the anonymous third party. Such an agreement, in my opinion, offends for it was a step towards the sale of a bare cause of action to a third party who had no genuine commercial interest in the claim in return for a division of the spoils, Credit Suisse taking the fixed amount which I have already mentioned.”
57. In Thema, Clarke J. noted that persons who might satisfy this test of having a genuine commercial interest would be existing shareholders or creditors of an impecunious company who had a claim against a third party. At par. 23 he noted that:-
“[i]f the proceedings are bona fide progressed, then such parties are simply funding an entity in which they have a legitimate interest in the hope that that entity will be able to pay them monies due (in the case of creditors) or dividends or capital distributions (in the case of shareholders).”
He drew a clear distinction between such parties and professional third party funders. If an assignee lacked the requisite genuine commercial interest in the litigation then the assignment is not saved from being champertous and the sale of the chose in action amounts to trafficking in litigation. Thus, the maintainer of the action must establish the existence of the genuine commercial interest apart from the assignment of the right to litigate.
Incidental or ancillary: application to the facts
58. By agreement of the parties, this case is to proceed on the assumption that the Assignment assigned not only the interests of Optimal Strategic in the Allowed Customer Claim and all other claims in the BLMIS bankruptcy but also its third party non bankruptcy causes of action. The defendants argue that simply because the third party claims were assigned in the same document in which the Allowed Customer Claim was assigned that the third party claims do not become incidental or ancillary to the Allowed Customer Claim for the purposes of the law of champerty. The fact that two rights – (1) the Allowed Customer Claim and the bankruptcy rights and (2) the non bankruptcy causes of action against parties other than the BLMIS estate – are assigned in the same Deed of Assignment does not as a matter of fact or law automatically and without anything more make the latter ancillary or incidental to the former. The Court must look to the substance of the transaction to see if this assignment of the non bankruptcy claims is legally incidental to the assignment of the bankruptcy claims. The defendants submit that the third party claims do not form part of the claims in the bankruptcy of BLMIS. They say it is not a claim against BLMIS but against third parties. As such it is a stand alone claim. It is not necessary for the securing of the Allowed Customer Claim or other rights in the bankruptcy of BLMIS. They submit that it is not necessary to assign the third party claims in order to protect the Assigned Customer Claim. They submit that the prosecution of a third party cause of action would have no impact on the quantum or recovery of that Allowed Customer Claim. They point to the fact that the Information Circulars provided to the investors in the Strategic Shares series made no reference whatsoever to the assignment of third party rights. The entire focus of the Circular is directed towards realising the interest of the holders of Strategic Shares series in the Allowed Customer Claim. They therefore say that it is neither incidental nor ancillary to the assignment of the Allowed Customer Claim. They say that the evidence advanced by the plaintiff to the contrary amounts to mere assertion and is insufficient to establish that the assignment of the third party litigation is incidental or ancillary to the assignment of the Allowed Customer Claim. If it fails to satisfy this test, then the assignment of the third party litigation rights amounts to the assignment of a bare cause of action which is prohibited by the law of champerty.
59. The plaintiff argues that the assignment of the cause of action against the defendants herein was ancillary and incidental to the assignment of the Allowed Customer Claim and the other claims in bankruptcy, that the transaction must be viewed as one integrated transaction and therefore the assignment of the cause of action against the third party service providers is not champertous.
60. Mr. John W. Greene, Jr., a director of the plaintiff swore an affidavit on 27th April, 2015, in the proceedings. At para. 35 he avers as follows:-
“I believe and am advised that [SPV] had a genuine commercial interest in entering into and enforcing the Assignment. I say that the Plaintiff has a direct and legitimate interest in the within proceedings. I say further that the Plaintiff had a genuine and legitimate commercial interest in entering into the Assignment. I say and believe that the Plaintiff was assigned the ‘Transferred Rights’ pursuant to the Assignment. I say and believe that the primary intention at the time of the Assignment was to allow Optimal Strategic shareholders to transfer their portion of the Allowed Customer Claim.”
61. In Mr. Greene’s second affidavit, sworn on 26th May, 2015, he avers at para. 11:-
“I believe and am advised that the Plaintiff’s right to bring claims arising out of Optimal Strategic’s investment in BLMIS is incidental to the Allowed Customer Claim.”
He referred then to the evidence of Professor Bruce Green sworn on behalf of the plaintiff.
62. Prof. Green swore an affidavit on 22nd May, 2015. He said that he had been instructed by the plaintiff to consider the Assignment and to furnish his Opinion as to the nature of the rights the subject matter of the Assignment and whether the Assignment is champertous under the laws of the State of New York. To that extent his evidence is not directed towards the issue for determination by this Court. Even if the assignment of the cause of action the subject of these proceedings is not champertous under the law of the State of New York, this does not mean that it is not champertous under Irish law.
63. In his replying affidavit, sworn on 23rd June, 2015, Prof. Green states at para. 4(a):-
“[t]he Assignment included the transfer of the allowed SIPA Claim to SPV as well as causes of action, including the types of claims being pursued before this court. The Assignment was one integrated transaction that is commonplace in the distressed investing industry.”
In his Opinion, Prof. Green states:-
“The inclusion of the litigation claims [non bankruptcy claims against third parties] as part of the Transferred Rights was only incidental to the primary purpose of allowing investors to realize over a $1 billion of market value and is customary for secondary trades. Secondary purchasers typically want all rights the seller has that arise under, as a result of, or in connection with a claim, and there is nothing improper about that what so ever.”(Emphasis added)
He then gives a footnote:-
“For example, a secondary purchaser would not want to run the risk the original holder would bring, post-assignment, any litigation claims that could impair the secondary purchaser’s ability to recover on the claim.”(Emphasis added)
64. Mr. Matthew Heerde, legal counsel of the plaintiff and a member of the New York State Bar, swore an affidavit on 27th April, 2015. At para. 14 he averred:-
“[t]he transfer of the causes of action against third party service providers was ancillary to the transfer of the Allowed Customer Claim. Under the laws of the state of New York, the causes of action were freely transferrable. New York General Obligations Law § 13-101 states: ‘any claim or demand can be transferred,’ with limited exceptions inapplicable here.”
At para. 16 he stated:-
“Here, SPV has acquired the right of payment of $1,570,108,675 against the BLMIS estate (along with the right to receive payments made by the BLMIS estate to general unsecured creditors). Supplemental to that transfer, SPV has also acquired the right to pursue causes of action, relating to the Allowed Customer Claim against the BLMIS estate. There is no indication that SPV intended to ‘stir up litigation ‘in an effort to secure costs,’ but rather all evidence indicates it intends to pursue legitimate property interests and related causes of action.”(Emphasis added)
65. Professor Steven Shavell, Professor of Law and Economics at Harvard University swore an affidavit on 23rd May, 2015, furnishing his Opinion as to the nature of the rights the subject matter of the Assignment and whether the Assignment is champertous under the laws of the State of New York. At p. 7 he stated:-
“…the Assignment allowed the rights to litigation to be monotized. Buyers of shares in SPV on the secondary market presumably ascribed a value to the litigation rights that they purchased along with the Allowed BLMIS claim. It is standard in secondary markets for distressed assets that all rights and claims associated or related to an asset are included in the rights being transferred. Without the inclusion of the litigation of rights, buyers of SPV shares might not have been willing to purchase, or to pay the prices they did for the shares. Among other things, if, the right to litigate did not travel with the Allowed BLMIS claim, buyers may have been wary that the pursuit of such rights by another party could impair the value of the Allowed BLMIS claims.”(Emphasis added)
66. The plaintiff submits that this evidence establishes that the sale of the non bankruptcy claims was incidental to and indeed an integral part of the assignment of the Allowed Customer Claim and the other claims in the BLMIS estate. It submits that accordingly this satisfies the requirement that the assignment of the causes of action against the third parties be incidental to the assignment of the Allowed Customer Claim and therefore prevents the assignment from falling foul of the law of champerty. It says that Irish public policy should reflect the new reality emerging in relation to secondary markets in bankruptcy claims and accept that the transaction is not contrary to public policy.
67. Neither Prof. Green nor Mr. Heerde explain how the assignment of non bankruptcy claims is incidental to the assignment of all the claims against the BLMIS estate. Mr. Heerde’s evidence amounts to a mere statement that the transfer of the causes of action against third party service providers was ancillary to the transfer of the Allowed Customer Claim. As a matter of fact this is true. It does not advance the legal argument. Professor Green states that secondary purchasers typically want all rights the seller has that arise under, as a result of or in connection with a claim, being, in this case, a claim in the BLMIS estate. This falls very far short of establishing that the assignment of non bankruptcy claims is ancillary or incidental to the assignment of claims in the bankrupt estate. On the contrary, he emphasised that the inclusion of the litigation claims against third parties as part of the transfer right was only incidental to the primary purpose, which was the sale of the Allowed Customer Claim and associated rights in the bankruptcy. He says that secondary purchasers would not want to run the risk that the original holder would bring any litigation claims that could impair the secondary purchaser’s ability to recover on the claim. His emphasis and focus is upon recovering the claim in the bankruptcy estate. The plaintiff has not adduced any evidence that the failure to assign the non bankruptcy litigation rights would impair the ability to recover upon the claim in the bankruptcy, as was suggested was a possibility by Professor Green. Professor Shavell’s Opinion acknowledges the possibility of the third party litigation rights not travelling with the bankruptcy claim, which would suggest that they are not automatically and without something more incidental to the bankruptcy claims.
68. In argument, Mr. McGrath S.C., for the plaintiff, urged that the bringing of proceedings could delay payment by the Trustee on foot of the Allowed Customer Claim (and other possible claims) while the Trustee awaited the outcome of the litigation. The Trustee would wish to ensure that if damages were recovered from the third parties in respect of losses arising from the fraud of Mr. Madoff that there should not be a double payout in respect of the same loss suffered by the investors in Optimal Strategic. This argument is not supported by the evidence adduced by the plaintiff. None of the four affidavits go so far. The height of the evidence is to suggest that the price achievable in the secondary market for the shares in SPV might be reduced if the non bankruptcy claims were not included in the rights to be transferred.
69. The plaintiff argued that Optimal Strategic was, in reality, assigning the remnants of the investment with BLMIS in circumstances where all that was left of that investment was the prospective rights of recovery either from the BLMIS estate or from third party litigation. It argued that, as the third party claim it arose out of the investment by Optimal Strategic in BLMIS and the Allowed Customer Claim also arose out of the same investment therefore the two claims were related. The defendants, in reply, said that this was not the correct test. If this were correct, it followed that there were no circumstances in which an assignment of the third party claims could be champertous as they all arose out of the investment in BLMIS. There would be no requirement of an independent interest in the cause of action. On this basis it was submitted that the analysis of what the law meant by incidental or ancillary must be incorrect. They submitted that the claims against the service providers are different in kind to the claims made against the BLMIS estate.
70. In argument, Mr. McGrath S.C., for the plaintiff, pointed out that the Information Circulars made no reference whatsoever to the assignment of the right to third party litigation. He emphasised that such litigation was not contemplated by the directors of OML and SPV when they devised the scheme.
71. These arguments raise certain difficulties. It seems to me that the failure to make any reference whatsoever to the assignment of the right to third party litigation in the Information Circulars could equally be taken to support the view that assignment of these rights was not incidental to the assignment of the claims against the bankruptcy estate. Certainly, it would appear that the holders of the Strategic Series shares were not being informed that these rights were to be assigned. Furthermore, Optimal Strategic is disputing the fact that these third party rights were assigned as part of the Assignment. While I am accepting for the purposes of this case that the Assignment included assignments of the third party litigation rights, the fact that such point is being contested in the courts in New York is at least suggestive of the fact that assignment of such rights is not invariably part of the assignment of claims in bankruptcy estates and therefore that it is not inevitable that the assignment of non bankruptcy litigation rights is ancillary or incidental to the assignment of the claims against the bankruptcy estate.
72. It was argued that the assignment of the causes of action against third parties was necessary to protect the Allowed Customer Claim. It was pointed out that the bringing of third party proceedings could, or possibly even would, prejudice further payment out by the Trustee in Bankruptcy in respect of the Allowed Customer Claim. The Trustee would await the outcome of the third party litigation before determining when and how much more he should pay out in respect of the Allowed Customer Claim in light of the possible recovery from these proceedings. This argument is based upon the fact of third party proceedings rather than the identity of the plaintiff. If the purpose of the assignment of the right to pursue the third party claims was in order to protect the Allowed Customer Claim (and other lesser claims in the BLMIS estate) then by its actions in instituting these proceedings the plaintiff has triggered the very event which, according to its counsel, was sought to be guarded against by taking the assignment in the first place. This would suggest that the risk (if any) in bringing the proceedings is not so great as was suggested in argument and is not such as would justify the Court, in the absence of further evidence, in concluding that assignment of the third party causes of action are necessary to protect the Allowed Customer Claim. On the contrary, it would appear that in the eyes of the plaintiff the risk is out weighed by the potential commercial benefits in bringing the proceedings. Certainly, it does not reinforce the idea that assignment of the third party rights is necessary to protect the proprietary interest in the Allowed Customer Claim.
73. I am not satisfied that the plaintiff has established that the assignment of the cause of action against the defendants is incidental to the assignment of the claim against the estate of BLMIS. In my judgment, for a cause of action to be incidental to the assignment of a property right or interest (such as the Allowed Customer Claim), it must relate to the protection or realisation of that other interest which is independent of the assignment of the cause of action. So in Irish Bank Resolution Corporation Ltd. v. Morrissey [2014] IEHC 527, the assignment of litigation to enforce a debt was incidental to the assignment of the actual debt. In Waldron v. Herring, the assignment of a cause of action for damage caused to a building was incidental to the rights of a mortgagee in possession realising its security.
74. Further, in my judgement if the cause of action is to be described as ancillary to the Allowed Customer Claim it must be a claim in the bankruptcy of BLMIS. It cannot encompass non bankruptcy third party claims.
75. I therefore reject the argument that the assignment of the third party litigation rights is either incidental or ancillary to the assignment of the Allowed Customer Claim and associated bankruptcy rights. This is not a basis for holding that the assignment of the third party litigation rights is not void for champerty.
Genuine commercial interest: application to the facts
76. The plaintiff argued in the alternative that it had a genuine commercial interest in the enforcement of the claim of Optimal Strategic against the defendants and that it is entitled to enforce that assignment. The defendants point out that the commercial interest cannot arise from the agreement that is impugned. This is a correct statement of Irish law and arises from Fraser v. Buckle and O’Keeffe v. Scales. In Thema, Clarke J. elaborated upon the indirect interest in litigation which would justify a party taking an assignment of a cause of action or funding the litigation of another. In all the cases cited to me where shareholders or creditors of companies have been held to be entitled to either fund the litigation or to take an assignment of the cause of action and to pursue the litigation to enforce the claim on their own behalves, the shareholders or creditors had pre-existing interests, albeit indirect, in the claim of the assignor. The courts were concerned with the identity of the person or persons pursuing the litigation, whether directly or indirectly. Thus in Trendtex, all were agreed that Credit Suisse had sufficient genuine commercial interest in the outcome of the litigation between Trendtex and CBN to take an assignment of the claim of Trendtex against CBN but the unknown party to whom Credit Suisse assigned the claim did not.
77. The crucial distinction which the courts seek to draw is between pursuing such an indirect genuine commercial interest on the one hand and the trafficking in or purchasing of litigation on the other hand.
78. In this case the plaintiff had not yet been incorporated when the wrongful events, the subject matter of this litigation, are alleged to have occurred. The plaintiff is a special purpose vehicle which was set up for the purpose of enabling investors in Strategic Series shares to monetise their interest. The Information Circular of 29th April, 2011, stated at p. 13 as follows:-
“[t]he business object of SPV will be to hold the [Allowed Customer Claim] of USD 1,540,141,277.60 and attend to any business affairs incidental to and necessary to the proper administration thereof for the benefit of the shareholders of SPV until such time as any and all recoveries made by the Trustee have being distributed to SPV in respect of the [Allowed Customer Claim] and the trustee shall have been discharged from the office of Trustee for the liquidation of BLMIS. SPV’s sole purpose is to hold the [Allowed Customer Claim] for the benefit of its shareholders and to act as a conduit through which Strategic Series investors may dispose of their pro rata interest in the [Allowed Customer Claim].”
79. It is true to say that originally the shares in SPV were held by Optimal Strategic and that when the Assignment was effected there was thus no change in the holders of the indirect interest in both the Allowed Customer Claim and all the Transferred Rights as defined in the Assignment, including the third party claims. However, crucially, the avowed purpose of the entire scheme was that the shares held by the holders of the Strategic Series shares could be exchanged for shares in SPV on a pro rata basis and these SPV shares could then be sold to secondary purchasers. It was thus intended that at the end of the process most, if not all of the parties who suffered the loss arising from the Madoff fraud, would have sold their interest to third parties who had not been involved in the investment and thus who did not suffer the loss. Furthermore, the purchasers of the shares may be (indeed almost inevitably will be) parties who had no prior interest in the failed investment. They are purchasing shares in SPV which, in the scheme as established, necessarily involves indirectly buying the right to sue third parties. The shares are intended to be auctioned for sale in the secondary market for claims in the BLMIS estate. The purchasers will ascribe a certain value to the third party litigation rights according to Prof. Shavell. This, as a matter of fact and law, is trading in litigation. It will amount to trafficking in litigation if there is no genuine commercial interest legitimising transactions which otherwise the courts have traditionally condemned.
80. The courts are concerned with the identity of the person or person prosecuting or benefitting from the litigation. In considering the issue of a genuine commercial interest in relation to shareholders of the company, the critical matter is whether or not it is the original shareholders who, through the company, actually suffered the loss and who thus have the genuine commercial interest in pursing the litigation themselves, who are prosecuting the litigation either by taking an assignment of the chose in action through a new company in which they are also shareholders or through any other suitable vehicle or whether it is persons who had no connection with the original loss. The critical issue is whether the original wronged parties remain (directly or indirectly) the parties pursing the litigation. This is to be contrasted with such wronged parties realising their interest in the cause of action by selling it to a third party who then pursues it for the benefit of that third party. This is clear from the case of Laurent v. Sale & Co., quoted above, where Megaw J. held at p.834:-
“[i]n my view, the position is entirely different where the plaintiff in the action is one who does not have any original title in respect of the matter which he claims.”
81. Furthermore, if, as the authorities state, a prior existing commercial interest in the matter that gives rise to cause of action is a powerful consideration in support of the assignment being legitimate and not contrary to public policy as being champertous, the reverse must also be true: the absence of such prior existing commercial interest weighs heavily against the legitimacy of the transaction.
82. I do not accept that any of the decisions in the cases to which I have been referred or any part of the judgments of those cases oblige me to hold that the plaintiff in this action had a genuine commercial interest or a legitimate and genuine interest in taking an assignment of the non bankruptcy litigation rights. Just as the plaintiff’s evidence and arguments to the effect that the assignment was ancillary or incidental to the assignment of the Allowed Customer Claim were unconvincing to my mind, so also is the alternative argument that it had a genuine commercial interest in taking the assignment of the third party litigation rights.
Trafficking in litigation
83. As was pointed out by Baroness Hale in Massai Aviation Services, trafficking simply means trading in something in which it is not permissible to trade. In Stocznia Gdanska SA v. Latreefers Inc & other appeals [2000] All E.R. (D) 148 at para. 61 it was held that:-
“[a]buse of the court’s process can take many forms and may include a combination of two or more strands of abuse which might not individually result in a stay. Trafficking in litigation is, by the very use of the word ‘trafficking’, something which is objectionable and may amount to or contribute to an abuse of the process. We think that it is undesirable to try to define in different words what would constitute trafficking in litigation. It seems to us to connote unjustified buying and selling of rights to litigation where the purchaser has no proper reason to be concerned with the litigation. ‘Wanton and officious intermeddling with the disputes of others in which they [the funders] have no interest and where that assistance is without justification or excuse’ maybe a form of trafficking in litigation. Lord Mustill’s words, quoted by Simon Brown LJ in the context of an application to stay, are powerfully descriptive of the kind of plain and obvious champerty of which Chadwick LJ considered Faryab v. Smyth itself not to be an example.”
In Thema, Clarke J. clearly indicated that a party with no pre existing indirect interest in the relevant litigation who simply buys into the litigation is trafficking in litigation and commits the tort of a champerty.
84. In Trendtex, Lord Wilberforce made clear the critical distinction between the valid and the invalid assignment. If the assignment in that case had simply been to Credit Suisse there would have been no objection to the transaction. However, the vice in the agreement lay in the introduction of the third party:-
“[i]t appears from the face of the agreement not as an obligation, but as a contemplated possibility, that the cause of action against C.B.N. might be sold by Credit Suisse to a third party, for a sum of U.S. $800,000. This manifestly involved the possibility, and indeed the likelihood, of a profit being made, either by the third party or possibly also by Credit Suisse, out of the cause of action. In my opinion this manifestly ‘savours of champerty’, since it involves trafficking in litigation – a type of transaction which, under English law, is contrary to public policy.”
85. Lord Roskill pointed out that article 1 of the agreement showed that it was not designed to enable Credit Suisse to recoup their own losses by enforcing Trendtex’s against CBN. The purpose of article 1 of the agreement was to enable the claim against CBN to be sold on to an anonymous third party and for that anonymous third party to obtain what profit he could from the litigation. He held, at p. 704, that the agreement offended:-
“for it was a step towards the sale of a bare cause of action to a third party who had no genuine commercial interest in the claim in return for a division of the spoils”.
86. The plaintiff argued that in this case there was only one assignment and that there was no onward assignment and that therefore the Assignment was lawful applying the Trendtex test. The plaintiff also argued that the purpose of the transaction was to assign the Allowed Customer Claim and the purpose for which SPV was set up was to trade in the Allowed Customer Claim. It was submitted that the current litigation was not contemplated at the time of this transaction and was not so much as mentioned in the Information Circulars. It was urged upon the court that there was therefore no intention to trade in litigation and there could be no trafficking in litigation.
87. However, this submission ignores the fact that the Court has to look at the whole transaction. The test as established in Trendtex is whether or not there is a contemplated possibility of a further third party involvement in the litigation for a profit. In this case not only was it a contemplated possibility, it was the whole purpose of the transaction. As Mr. Greene, Jr., stated at para. 33 of his first affidavit sworn on 27th April, 2015:-
“…the Assignment effectively gave shareholders in Optimal Strategic the ability to sell their pro rata interest in the Allowed Customer Claim and the Transferred Rights.”
The Information Circular of 29th April, 2011, stated at p.14:-
“[e]ffecting such exchange [of strategic series share for shares SPV] would allow holders of Strategic Series shares to trade the SPV Shares…”.
It is clear that the transaction was set up to sell the Allowed Customer Claim and third party claims. This clearly involves the onward sale of litigation. This fact is clearly acknowledged by Professor Shavell on behalf of the plaintiff when he states that the Assignment allowed the rights to litigate (i.e. third party claims) to be monetised. He stated at p. 7 of his Opinion:-
“[b]uyers of shares in SPV on the secondary market presumably ascribed a value to the litigation rights that they purchased along with the allowed BLMIS claim.”
88. In my judgment the transaction as a matter of fact involves the sale of litigation. It is not the same as the purchaser of the business of a company incidentally purchasing an existing suit or cause of action as part and parcel of the business it is acquiring. The purchasers of SPV shares are purchasing with a view to either receiving distributions arising from the pro rata distribution of payments of the Allowed Customer Claim and other bankruptcy remedies and third party litigation proceeds, or so they, in turn, may sell the shares in SPV to other parties, presumably for a greater sum than they paid for them in the first place. They are not engaged in any business other than the realisation of claims to the greatest extent possible. This to my mind is professional trading in litigation. It is what is condemned as trafficking in litigation and is prohibited by Irish public policy.
89. A further test of the transaction is; does it amount to intermeddling or stirring up of litigation? It is clear that this suit would not have been brought if the cause of action had not been assigned to SPV and the control of SPV passed to parties who were not originally investors in the Strategic Series shares. The claim is now being brought on behalf of the persons who did not suffer the injury in respect of which damages are sought against the defendants (though it is likely that a small percentage of the shareholders in SPV are the original investors in the Strategic Series shares). This is not a situation where an impecunious plaintiff is being facilitated in the bringing of a claim that otherwise could not be brought such as arose in the case of Greenclean. The Trustee of the BLMIS estate has paid US$750 million on foot of the Allowed Customer Claim to date. The plaintiff says that this enables it to fund this litigation and that it does not require the investment of the purchasers of its shares to enable it to bring the case. This of course also means that had Optimal Strategic not entered into this elaborate transaction and if it had retained both the Allowed Customer Claim and all other rights that it would have received these monies and would have been in a position to fund this litigation if it saw fit.
90. The plaintiff pointed out that the Santander related companies (the ultimate parent of Optimal Strategic) held the majority of the Strategic Series shares. Holders of Strategic Series shares had instituted proceedings in Florida and Switzerland against, inter alia, the defendants. No proceedings were commenced against the defendants when Santander was in ultimate control of Optimal Strategic. If they, the majority of those who suffered as a result of the fraud, elected not to institute proceedings against the defendants and the proceedings, as a matter of fact, were only instituted once they had sold their controlling shareholding in SPV, it seems very clear to me that these proceedings have been brought, not in order to secure damages for the injured party, but rather are the very type of wanton or officious intermeddling in the litigation of another which has been condemned by the courts for centuries.
Conclusion
91. In my opinion the assignment of the right to litigate third party claims by means of the Assignment in the context of the entire transaction for the sale of the shares in SPV on the secondary market amounts to the assignment of a bare cause of action for no legitimate reason recognised by Irish law. The assignment is not incidental or ancillary to the assignment of the Allowed Customer Claim and the other associated rights in the bankruptcy of BLMIS for the purposes of Irish public policy, whatever about the legitimacy of such an assignment under the laws of the State of New York. The purchasers of the shares in SPV on the secondary market have no genuine commercial interest in the taking or enforcement of these proceedings. The assignment of the chose in action to SPV with a view to the sale of the shares in SPV on the secondary market amounts to trafficking in litigation and has resulted in unlawful stirring up of litigation.
92. In light of these conclusions the defendants are entitled to a declaration that the Assignment of Claim dated 6th May, 2011, between Optimal Strategic U.S. Equity Limited and SPV Optimal SUS Limited insofar as it purported to assign to SPV Optimal SUS Limited the right to bring these proceedings against the first and second named defendants is contrary to public policy, void and unenforceable as a matter of law.
93. It was agreed between the parties that the question as to whether or not the Assignment insofar as it purported to assign to the plaintiff the right to institute and maintain these proceedings was champertous or savoured of champerty and was void was to be tried as a preliminary issue. On 9th March, 2015, the Court gave the first and second named defendants leave to issue the present application. There does not appear to have been an order directing the trial of a preliminary issue as such. For the reasons set out in this judgment, I am satisfied to make the declaration sought in para. 1 of the Notice of Motion, as amended, quoted above at para. 24. That being so, the question that remains is whether or not the proceedings ought to be dismissed or struck out, as is sought in para. 2 of the Notice of Motion.
94. In the submissions on behalf of the plaintiff, counsel argued that the jurisdiction to strike out in proceedings at a preliminary stage is to be exercised sparingly. Of course this jurisprudence is well established. In deciding whether or not to grant the relief sought it is necessary to consider the Statement of Claim and to assess what part of the plaintiff’s claim, if any, survives after the declaration I have made. In this regard the judgment of the Supreme Court in O’Keeffe v. Scales is important. Lynch J. stated at p. 295 that if the case of the plaintiff was to be struck out, the defendant:-
“…would have to make out a clear case if she were to succeed, analogous to the onus on a party bringing a motion to dismiss an action on the basis that the statement of claim discloses no cause of action or that the proceedings are frivolous and/or vexatious.”
In the preceding paragraph, Lynch J. stated that a person who is unlawfully maintaining or champertously prosecuting or defending proceedings:-
“…cannot enforce an agreement with that other person for any form of benefit, whether it be a share of the proceeds of the litigation or a promise of remuneration, such as money or a transfer of property if the claim is successfully defended.”
95. This was reiterated by Clarke J. in Thema. Of course in this case there is no agreement between SPV and the defendants which is sought to be enforced. But if the plaintiff is to succeed in these proceedings, it necessarily would require the Court to enforce that assignment. Without the assignment it has no interest at all in the relevant events and causes of action. I am satisfied that the plaintiff, which was incorporated after all of the events the subject matter of these proceedings had occurred, has no cause of action in contract, misrepresentation or tort or any fiduciary claim against the defendants other than one which is based upon the assignment of the chose in action enjoyed by Optimal Strategic against the defendants. On that basis I see no purpose in simply staying the proceedings, as has occurred in some of the cases cited in argument. Accordingly, I dismiss the proceedings as being frivolous and vexatious and bound to fail in the light of the declaration given above.
Culkin v Sligo County Council [2015] IEHC 46
JUDGMENT of Kearns P. delivered on the 6th day of February, 2015
By notice of motion dated 28th July, 2014 the defendant seeks an order striking out the plaintiff’s proceedings issued by way of personal injuries summons dated 2nd February, 2011 as an abuse of process and/or duplication of the plaintiff’s equality claim against the defendant.
BACKGROUND
The plaintiff is a retired engineer who was employed by the defendant County Council in various capacities over a period of 39 years having commenced work as an apprentice technician in 1970. He attained two diplomas in engineering during the course of his employment and was promoted a number of times until he reached the rank of Senior Executive Technician. He also earned a B.Eng.Hons degree in 2005. It is contended that the plaintiff began experiencing difficulties at work in or around 1996 when a new supervisor was appointed.
A report prepared on 6th January, 2010 by the Anti-bullying Research and Resource Centre at Trinity College details the nature of the bullying the plaintiff was allegedly subject to during his employment. It is alleged that the plaintiff experienced various kinds of negative behaviours including that information regarding training courses and opportunities was withheld from him, that malicious rumours were spread about him, that he was ordered to perform tasks below his level of competence, that he was excluded and isolated socially, that he was denied pay increments and promotion opportunities, that his opinions and views were neglected despite his experience, and that he was treated with hostility. It is alleged that this behaviour has left the plaintiff suffering with a number of psychological and physiological symptoms.
On or about the 10th September, 2009 the plaintiff made a complaint to the Equality Tribunal pursuant to the provisions of the Employment Equality Acts 1998 to 2008. His EE1 form states that he was subject to discriminatory treatment in relation to “access to employment, promotion/re-grading, training, conditions of employment, discriminatory dismissal, victimisation, and victimisatory dismissal”. After completing his degree in 2005, the plaintiff applied for a number of engineering positions only to be deemed “not qualified” for promotion. He complained that he was continuously frustrated in his attempts to obtain relevant engineering experience within the Council because of his age and his disability, which he contends was induced by historic bullying and harassment. He instituted a grievance procedure in early 2000 but states that this was unsatisfactorily concluded in 2005 following “gross procrastination.” It is the plaintiff’s position that the respondent failed to deal appropriately with systematic bullying and exclusion until he was ultimately constructively dismissed in May 2009.
In addition to his equality complaint, authorisation from the Personal Injuries Assessment Board in relation to his High Court proceedings issued on the 19th November, 2010 and a Personal Injuries Summons issued on the 2nd February, 2011.
The plaintiff’s case before the Equality Tribunal was heard on the 25th July, 2012, 9th April, 2013, 10th April, 2013 and the 26th June, 2013. Mr. John Moran, Senior Executive Officer in the defendant Council, states that a preliminary submission was made to the Equality Tribunal expressing the Council’s view that the matters before the Tribunal were the same as those being pursued in the High Court proceedings and that the plaintiff was precluded from pursuing both claims. Mr. Moran avers that rather than seeking to have the matter before the Tribunal adjourned however, the plaintiff requested that the Equality Officer continue to hear the case.
STATUTORY PROVISIONS
The procedure for making a complaint to the Equality Tribunal is governed by the Equality Act 1998, as amended. (‘the Act’).
Section 77(1) of the Act states:-
“77.—(1) A person who claims—
(a) to have been discriminated against or subjected to victimisation,
(b) to have been dismissed in circumstances amounting to discrimination or victimisation,
(c) not to be receiving remuneration in accordance with an equal remuneration term, or
(d) not to be receiving a benefit under an equality clause, in contravention of this Act may, subject to subsections (3) to (9), seek redress by referring the case to the Director.”
Section 101 of the Act relates to ‘alternative avenues of redress and provides as follows –
“101.—(1) If an individual has instituted proceedings for damages at common law in respect of a failure, by an employer or any other person, to comply with an equal remuneration term or an equality clause, then, if the hearing of the case has begun, the individual may not seek redress (or exercise any other power) under this Part in respect of the failure to comply with the equal remuneration term or the equality clause, as the case may be.
(2) Where an individual has referred a case to the Director under section 77(1) and either a settlement has been reached by mediation or the Director has begun an investigation under section 79, the individual—
(a) shall not be entitled to recover damages at common law in respect of the case, and.
(b) where he or she was dismissed before so referring the case, shall not be entitled to seek redress (or to exercise, or continue to exercise, any other power) under the Unfair Dismissals Acts 1977 to 1993 in respect of the dismissal, unless the Director, having completed the investigation and in an appropriate case, directs otherwise and so notifies the complainant and the respondent.”
SUBMISSIONS OF THE DEFENDANT
The defendant submits that the plaintiff’s complaint to the Equality Tribunal is almost identical to the complaints raised in his personal injuries proceedings. It is submitted that once an investigation was commenced in relation to the complaint to the Equality Tribunal, s.101 of the Act became operative and the plaintiff is consequently precluded from pursuing a simultaneous claim in the High Court.
Counsel refers the Court to the decision of Hedigan J. in Cunningham v. Intel [2013] IEHC 207. It is submitted that the facts of Cunningham are on all fours with the present application and that the decision of Hedigan J. in relation to s.101(2), combined with the well established rule in Henderson v. Henderson, both of which are designed to prevent the duplication of proceedings, make clear that the plaintiff must elect to proceed either with the Equality Tribunal proceedings or the High Court proceedings, but cannot pursue both.
In Cunningham, the plaintiff instituted a claim for discrimination against the defendant in relation to access to employment, promotion and re-grading, conditions of employment, and harassment. The Equality Tribunal rejected the complaint and, as in the present case, an appeal to the Labour Court was pending at the time of the application before Hedigan J. It was claimed that the same events caused the alleged personal injury and the defendant objected to having to defend the same claim in two sets of proceedings. Hedigan J. stated that all matters and issues arising from the same set of facts or circumstances must be litigated in the one set of proceedings save for special circumstances. It was held that –
“…it is clear from her own pleadings and submissions in the two sets of proceedings that both her employment claim and her personal injury claim arise out of the same matters, i.e. alleged mistreatment in the working environment. This she alleges commenced on the announcement of her pregnancy, continued through her commencement of maternity leave, through that leave and culminated in her dissatisfaction with the way she was treated on her return to work. The plaintiff in issuing these personal injury proceedings after her employment equality complaints, in my view, drew an artificial distinction which does not stand up to analysis.
In terms of the reliefs sought, the claim in the personal injury proceedings is for compensation for the stress and the health problems arising therefrom. It is clear that such a remedy may be awarded by the Labour Court in the employment equality proceedings…
…Thus the plaintiff is not precluded from recovering compensation in the Labour Court in respect of the personal injury she alleges she has suffered. Moreover, the defendant herein has stated unequivocally in open court in this application that they will not oppose the plaintiff bringing into her claim before the Labour Court her complaints dating from her announcement of her pregnancy.”
Counsel submits that it is significant that Hedigan J. referred to two sets of proceedings arising out of the same “matters” rather than “case”. Hedigan J. concluded that the plaintiff had breached the provisions of s.101(2)(a) as well as the rule in Henderson and struck out the personal injury proceedings.
The defendant contends that, as was found to be the case in Cunningham, there is considerable overlap between the plaintiff’s equality complaint and the personal injury proceedings. In the affidavit of Mr. John Moran, Senior Executive Officer with the defendant Council, the nature of the plaintiff’s complaint to the Equality Tribunal is set out in detail and it is submitted that these are the “self-same matters that are being complained of in the proceedings before the High Court.” It is submitted that an examination of the anti-bullying report and the plaintiff’s EE1 complaint to the Tribunal shows that both claims arise from the same set of facts.
It is submitted on behalf of the defendant that the plaintiff was given the opportunity to make a fully informed decision as to which proceedings he wished to pursue. Counsel contends that even after issuing his 10th September, 2009 complaint the plaintiff could have opted instead to pursue personal injury proceedings, as long as he did so before an investigation was commenced pursuant to s.79. However, despite being put on notice that the present objection would be taken, he elected to proceed with an extensive Equality Tribunal hearing.
In relation to the interpretation of the relevant statutory provisions, counsel for the defendant submits that the word ‘case’ as it appears in s.101(2)(a) must be taken to have an all encompassing meaning which includes all of the underlying facts of a case and can not be said to relate only to a ‘case’ under s.77(1). It is submitted that ‘case’ is not defined in the Act and that the section was amended for the purpose of preventing complainants from having a second chance to recover in common law proceedings having failed in their statutory complaint. It is further submitted that ‘case’ can not be said to refer to s.77(1) cases as such cases are uniquely statutory causes of action and therefore the reference to a restriction on a common law claim would be irrelevant.
Furthermore, counsel submits that the Labour Court has a wider discretion than the High Court in respect of awarding medical damages and so there is no question of the plaintiff’s right to a remedy being curtailed. For those reasons, it is submitted that the plaintiff’s personal injuries proceedings should be dismissed.
SUBMISSIONS OF THE PLAINTIFF
Counsel for the plaintiff contends that the rule in Henderson does not arise for the purposes of this application, which instead turns solely on the question of statutory interpretation, and in particular the correct interpretation of s.101 (2)(a).
Sub-sections (a) to (d) of s.77 (1) of the Act set out four kinds of cases for which redress can be sought by referring a case to the Director. Counsel for the plaintiff submits that before it was amended, the previous s.101(2) only precluded common law claims in respect of the ‘failure’ to comply with an equal remuneration term or an equality clause as set out in s.77(1) (b) and (c) where such a complaint has already been made to the Tribunal. Complaints at s.77 (1) (a) and (d) were not within the ambit of s.101 (2).
However, it is submitted that s.101 (2)(a) as amended refers instead to a ‘case’ under s.77 (1) and the term ‘failure’ has been removed. It is submitted that the purpose of this amendment was to bring all of the complaints under ss.77 (1), including those at (a) and (d), within the ambit of s.101 (2)(a). For that reason, counsel submits that rather than precluding a common law case based on the broad underlying facts, s.101(2)(a) exists to preclude cases which are already covered and have been pursued pursuant to s.77(1). It is submitted that this is the constitutional interpretation which gives effect to the legislative intention.
In relation to the defendant’s reliance on Cunningham, counsel for the plaintiff contends that Cunningham is distinguishable as the plaintiff was a litigant in person and the decision of Hedigan J., while correct in relation to the facts and arguments advanced, is per incuriam. It is submitted that no finding was made in Cunningham in relation to the correct interpretation of the term ‘case’ as it appears in s.101(2)(a).
DECISION
I have carefully considered the relevant statutory provisions and the submissions of both parties and am satisfied that the plaintiff’s personal injuries proceedings must be dismissed. The rule in Henderson v Henderson is well established and is frequently applied as part of the policy of the courts to avoid double litigation of the same issues, as considered by the Supreme Court in A.A. v. Medical Council [2003] 4 IR 302. This rule is in the interests of all parties to a case, who should not be expected to prosecute or defend the same proceedings repeatedly, and to the public, who have an interest in ensuring that court time is not wasted.
The plaintiff in these proceedings issued a complaint before the Equality Tribunal on the10th September, 2009. His EE1 form details the nature of the bullying he was allegedly subjected to and he was afforded a four day hearing before the Tribunal. At the outset of the Tribunal hearing, following a preliminary submission by the defendant, the option of pursuing his Equality Tribunal complaint or his common law claim was made clear to the plaintiff and he opted to pursue a remedy before the Tribunal. I am satisfied that the plaintiff is now estopped from resiling from this position after having had his claim rejected by the Tribunal.
To allow the plaintiff to proceed with his common law claim would be to breach the rule in Henderson v. Henderson and, in my view, would also fail to give effect to the intention of the legislature in relation to s.101(2)(a) of the Employment Equality Act. As submitted by counsel for the defendant, s.77 (1) cases are purely statutory in nature. To interpret the provision in the manner contended for by the plaintiff would render sub-section (a) entirely redundant, for there is no entitlement to recover damages at common law in respect of such cases. The term ‘case’ therefore must be taken to include the underlying facts which give rise to the complaint.
Counsel for the defendant urges the Court to depart from the decision of Hedigan J. in Cunningham on the basis that the plaintiff in those proceedings was a litigant in person. It is suggested that this somehow minimises the precedential significance of the decision. In my view however, the fact that a litigant in person was involved in proceedings is more likely to have the effect of causing the deciding judge to take even greater care in examining the submissions and explaining his or her decision. In any event, while this Court is not strictly bound to follow decisions of other High Court judges, it is well established that there must be substantial reasons to warrant any departure. In Kearns v. Manresa Estates Ltd (Unreported, High Court, 25th July, 1975), it was held that:-
“Although I am not bound by decisions of other judges of the High Court, the usual practice is to follow them unless I am satisfied that they were wrongly decided.”
In Irish Trust Bank Ltd. v. Central Bank of Ireland [1976] ILRM 50 it was held that –
“…a court should not depart from a decision of another court of equal jurisdiction unless it is established that the decision was based on insufficient authority or incorrect submissions, or that the judgment departed in some way from the proper standard to be adopted in judicial determination.”
More recently, in the case of Re Industrial Services Co. Limited [2001] 2 IR 118 Clarke J. held that: –
“It is well established that, as a matter of judicial comity, a judge of first instance ought usually follow the decision of another judge of the same court unless there are substantial reasons for believing that the initial judgment was wrong.”
In the present case, counsel for the defendant has not suggested that the decision of Hedigan J. was in any way deficient or that it was ‘wrongly decided’. The facts of Cunningham are closely related to the present application and I am not satisfied that a substantial reason to depart from the decision has been raised.
The matters complained of in the plaintiff’s common law and Equality Tribunal proceedings both date from the time a new supervisor was appointed and arise from the very same alleged incidents of mistreatment. The rule in Henderson v. Henderson, coupled with the provisions of s.101 (2)(a), requires that where there is such a considerable degree of overlap the plaintiff should be precluded from pursuing his High Court proceedings. The plaintiff’s right of appeal to the Labour Court remains, and his right to an effective remedy is therefore unaffected.
For the reasons outlined above, the plaintiff’s personal injuries claim is dismissed.
Ryan v KBC Bank Ireland Plc [2015] IEHC 194
JUDGMENT of Ms. Justice Donnelly delivered on the 12th day of January, 2015
Introduction
1. The defendant bank (“the Bank”) seeks an order striking out the plaintiff’s proceedings on the grounds that the plaintiff’s proceedings are vexatious and/or frivolous and/or an abuse of process and/or disclose no reasonable cause of action. The order is sought pursuant to O.19 r.28 of the Rules of the Superior Courts and/or the inherent jurisdiction of the court. Further or in the alternative, the Bank seeks an order dismissing the plaintiff’s proceedings on the ground that they are statute barred. In the event that the Bank succeeds in toto in this application, the Bank seeks an Isaac Wunder Order against the plaintiff (“Mr. Ryan”). However, in the course of the hearing of the motion, it was agreed that argument on the Isaac Wunder Order application would be left over to another day should the Court decide to strike out the entirety of Mr. Ryan’s proceedings.
2. The Bank grounds this application primarily by reference to two prior sets of proceedings brought against it by Mr. Ryan. All three sets of proceedings revolve around Mr. Ryan’s ownership of a property known as Kinnitty Castle, Kinnitty, County Offaly and the fact that arising from his default in the repayment of substantial borrowing from the Bank, a receiver was appointed to the property. Mr. Ryan asserts that the property is correctly called “Castle Bernard” but for the purpose of these proceedings it will be referred to as Kinnitty Castle being the name by which it is commonly known. Kinnitty Castle operated at all material times as a hotel and continues to so operate.
The Litigation History
3. By plenary summons issued in December 2008 (“the first proceedings”) Mr. Ryan and his wife sought various reliefs against the Bank and the receiver. The first relief claimed was that the Bank was not entitled to appoint Mr. Declan Taite as receiver and manager of Kinnitty Castle. Mr. and Mrs. Ryan also sought an order injuncting the defendants from continuing with or concluding the tender process for the sale of Kinnitty Castle. Another relief sought the approval of the court should the defendants wish to accept a bid of less than €10 million. A further relief claimed was that Mr. Ryan be at liberty to enter into a contract for sale if a bid was received by him of sufficient amount to discharge his indebtedness to the Bank. Of note is that para. 9 of the plenary summons sought an order that the defendants include, together with the sale of Kinnitty Castle Hotel, the rights to the registered trademark “Kinnitty Castle” and the rights to the website www.kinnittycastle.com. That relief also sought that the defendants market the fact that the trademark and website would be included with the sale of the castle, with all issues relating to the apportionment of any additional revenues received (including whether same were outside the security held by the Bank) to be decided at a later date.
4. Mr. and Mrs. Ryan then issued a notice of motion seeking corresponding interlocutory relief. In para. 22 of the affidavit sworn by Mr. Ryan in those proceedings, he referred to his ownership of the above trademark and website. Mr. Ryan said that he was willing to include those matters in the sale of the hotel. He claimed that by not including them, the receiver was deliberately and/or negligently not seeking to achieve the best price for the hotel. He alleged that the receiver or any purchaser of the property may end up infringing his rights in the trademark and the website. Specifically, he averred “although I have drawn this aspect of matters to the attention of the defendants, it is not a course of action that I wish to pursue.” He said that he could not account for the receiver’s decision not to cooperate in relation to that matter. The Bank submits that by this assertion, Mr. Ryan clearly indicated that he did not wish to pursue the matter of the trademark and the website.
5. In any event, those matters came on for hearing before Charleton J. on the 22nd of December, 2008. It appears from the order placed before me that all reliefs were sought, including the relief concerning the trademark and the website. Furthermore, it is clear that Charleton J. refused to grant the reliefs sought. The costs of that motion were reserved.
6. A motion for directions in the case came before Kelly J. on the 26th of January, 2009. The order records that counsel for the defendants updated the court as to the outcome of the tender process, namely that the receiver had not accepted any tender received and that by default Kinnitty Castle was back for sale by private treaty on the open market. The order specifically records:-
“and said counsel for the plaintiffs intimating to the court that the plaintiffs are not proposing to proceed further with these proceedings…it is ordered and adjudged that the defendants do recover as against the plaintiffs the costs of these proceedings…”.
7. It was over four and a half years before any further proceedings issued. In the meantime, Kinnitty Castle was never sold. The receiver continued to operate the premises as a hotel.
8. By plenary summons dated the 15th of August, 2013, Mr. Ryan issued a plenary summons against the Bank (“the second proceedings”). In that claim, which was stated to be for gross negligence and misrepresentation, it was alleged the Bank had broken serious liquidity laws which had caused the financial collapse. Mr. Ryan claimed that but for that action and knowledge of same, he would or could have made different decisions about his financial affairs. He also claimed that without disclosure and forethought of the Bank’s intention, the contract was seriously flawed. He claimed that due to excessive securitisation the banks created the false boom and bust situation that crippled the country. He also claimed for reckless lending procedures saying the Bank had ignored its own guidelines in breach of the consumer protection code. He claimed that his health, wellbeing and personal relationships have suffered greatly as a result of the Bank’s actions. He claimed €7 million damages and an order declaring the mortgage null and void.
9. No statement of claim ever issued. Instead, the Bank brought an application under RSC O.27 r.1 dismissing Mr. Ryan’s claim for want of prosecution for failure on his part to deliver a statement of claim within the prescribed time. That motion issued on the 30th of January, 2014, and was returnable for the 24th of February, 2014. Mr. Ryan had, by letter dated the 6th of December, 2013, sought additional time to complete his statement of claim on the ground he was a plaintiff in person commonly referred to as a lay litigant.
10. On the 24th of February, 2014, an order was made dismissing the action for want of prosecution for failure to deliver a statement of claim. Mr. Ryan appeared in person to that motion. He informed the court that he was not opposing the motion. He was also ordered to pay the defendant the costs of that motion. Those costs have not been discharged but neither have they been taxed and ascertained.
11. A further plenary summons issued on the 24th of October, 2013, (“the present proceedings”). Thus it can be seen that they were issued before the second proceedings were struck out and indeed prior to the letter of Mr. Ryan seeking further time in which to file a statement of claim.
12. The present proceedings were initially brought against the Bank only. The general endorsement of claim states that the plaintiff’s claim is for an injunction against the Bank and the receiver. However, the receiver was not originally a party to those proceedings. Mr. Ryan issued and served the proceedings as a lay litigant.
13. The claim made in this plenary summons is in fact quite limited. It is a claim in respect of misuse of the trademark owned and registered exclusively to Mr. Ryan. It concerns an injunction in respect of the misuse of the trademark. Mr. Ryan sought interlocutory relief. At the hearing of the motion on the 12th of Deecember, 2013, counsel for Mr. Taite, the receiver, appeared as a courtesy to the court. It was ordered that Mr. Taite be joined as a co-defendant in the matter. Despite the receiver having been joined as a co-defendant, it appears that he was never served with the pleadings. Mr. Ryan was represented by solicitor and counsel at the hearing of this motion. I was informed that the solicitor had now served papers on the receiver.
14. The court refused the plaintiff’s application for interlocutory relief in respect of the use of the trademark “Kinnitty Castle”. Costs were awarded against the plaintiff – there was a three month stay on the costs but no costs have been discharged. I am informed that these costs have not yet been taxed.
15. In between the issuing of the plenary summons and the hearing of the interlocutory injunction, a statement of claim was drafted and served by Mr. Ryan as a lay litigant. That statement of claim made no reference to the trademark issue. Instead, Mr. Ryan claimed quite a number of other matters. In particular, Mr. Ryan claims he has suffered undue and persistent harassment by the defendant Bank or its agents “in constructed attempts to force him to sell the property and repay the mortgage in full”. He claimed that he was put under undue pressure by the Bank from late 2005 onwards, even though all mortgage payments were up to date at this stage within one year of drawdown. Mr. Ryan claims that as a result of the defendant’s foreclosure on the property on the 19th of November, 2008, he was prevented from selling the property to a genuine potential buyer.
16. Mr. Ryan also claims a separate and discreet issue with regard to a bank guarantee given to AIB bank by KBC bank in respect of the property. There is a further claim regarding mismanagement of chattels by the receivers. At para. 8, he claims that the receivers appointed had no proprietary rights to the chattels at Kinnitty Castle and says that any attempts by the receivers to sell the chattels will be challenged. At para. 9, Mr. Ryan sought clarification from the Bank regarding whether or not the mortgage had been securitised. Finally, he sought a complete discharge of any monies outstanding in respect of the mortgage and any associated costs.
17. The Bank sought particulars of the claim. Mr. Ryan replied on the 21st of February, 2014, and particularised certain matters. With respect to his claim that he was prevented from selling the property to a genuine potential buyer, he makes a reference to a Mr. Peter Behrends from Frankfurt, Germany, who he says led a consortium of investors that had intimated their interest in purchasing the property at potentially €10 million. Both the position of Mr. Behrends and the fact that a bid of €10 million for Kinnitty Castle had been made, was referred to at para. 27 of the affidavit of Mr. Ryan grounding his application for injunctive relief in the first proceedings. In particular, he claimed in his original affidavit that the failure to receive confirmation from the receiver that the bid had been received prejudiced his steps to secure a firm bid for the property. Furthermore, Mr. Behrends swore an affidavit in the first proceedings referring to the bid of €10 million and saying that it was necessary for him to carry out due diligence on behalf of his clients, the consortium, before committing to the final offer of €10 million.
18. In response to the request for particulars as to the chattels, Mr. Ryan said he would be unable to do so without visiting the property so that he could reconcile the list of chattels he had in his possession against that which was available to be viewed in the property. In relation to his securitisation issue, Mr. Ryan says that he believes that the mortgage facility was securitised. Finally, Mr. Ryan says that he cannot confirm that the reliefs that are pleaded in the statement of claim are all the matters that he is claiming. He says that upon receipt of further information from the defendant, further issues may subsequently arise.
19. The Bank says that the receiver was trying to sell the hotel and had identified a buyer. The Bank says that it is against the background of Mr. Ryan’s active and persistent attempts to derail the sales process, both through the courts and otherwise, that the within application is brought. The Bank relies upon the contents and procedural history of the prior proceedings to ground its claim for relief.
20. This application is brought solely by the Bank. As the receiver has now apparently been brought into the proceedings as a party, any issues between Mr. Ryan and the receiver will stand to be determined separately.
The response of Mr. Ryan
21. Mr. Ryan swore an affidavit in these proceedings on the 2nd of July, 2014. He describes himself as a businessman and an engineering professional. In relation to the first proceedings, he says he initiated them due to an existing conflict of interest concerning the appointment of FGS Partnership as receiver to Kinnitty Castle. In the affidavit, he gives great detail as to the circumstances that caused him concern arising out of the tender documents for the sale of the property on the 4th of December, 2008. He gives further detail about the potential German buyers led by Mr. Behrends. He claims that the attempts by the defendants to sell the property without proper preparation in combination with their failure to allow a bona fide buyer sufficient time to perform due diligence was a breach of the defendants’ duty of care.
22. In response to the claim that the proceedings were “withdrawn by the plaintiffs”, Mr. Ryan says that neither himself nor his wife were present in court that day. He makes a specific claim that, for reasons unknown to him, he was advised by counsel that there was no requirement for him to attend the court that day. He claims that counsel acted without instructions from either his wife or himself in withdrawing the case. He says that he cannot determine what the motive was in doing so but he says he assumes it was financial. He says that due to the loss of his business he was unable to continue to fund the action against the defendant. He says that he was so disgusted and confused by the entire episode that he lost the heart to continue the fight at the time. He says that this is the reason, which he admits was far from normal, that his case was never properly heard.
23. With respect to the second proceedings, he refers to his status as a person lacking in skills, knowledge and expertise in law. He refers to his inferior position because of his social background and his desperation and fear of losing his life’s work and his family. He says that he realised there was in fact duplication between the two respective cases and that it was for this reason he “withdrew from this case”.
24. Mr. Ryan says that it was an error that the trademark and website issue was omitted from the statement of claim in the present proceedings. In relation to the claim for harassment, he says that this has continued. He says that the receiver acting as an agent for the Bank accused him of cyber squatting which he says is a serious allegation for which there was no basis and can only be considered a continuation of the intent to harass. He further claims that there was a delay in the Bank replying to his Freedom of Information request. He says that the Bank also wrote to him asking for additional information and he says this was a delaying tactic. He says that this was the cause of the delay in his statement of claim. He says that there was a deliberate attempt by the Bank to utilise its superior knowledge of proceedings to have his case dismissed even though they had not provided him with data in a timely fashion.
25. This particular claim of deliberate delay was quite properly not pushed by counsel on behalf of Mr. Ryan. The solicitor for the Bank averred that a single request under the Data Protection Act (as the Freedom of Information Act does not apply to the Bank) was made by Mr. Ryan at the end of February, 2014. This was replied to by letter dated the 4th of April, 2014, asking Mr. Ryan to give a suitable time and place for collection. It appears that there was no reply to this but on the 4th of June, 2014, Mr. Ryan arrived unannounced at the Bank’s reception and the file was handed over. On this basis Mr. Ryan has no complaint about delay.
26. The letter which Mr. Ryan claims constitutes harassment was written by the solicitors for the receiver. The letter is dated the 11th of November, 2013. The letter outlines various issues through which the receiver claims that the use of the words “Kinnitty Castle” by any future owners or operators of Kinnitty Castle is not an infringement of any intellectual property rights. It is said the words used are the words by which the property is commonly known and which denote its geographical location. Solicitors for the receivers said that the current content of the website of Mr. Ryan under the heading “Kinnitty Castle for sale. Latest news, important notice to investors/buyers” is an attempt to interfere with the sale process. The letter from the solicitors for the receiver states –
“Please immediately remove any reference to the sale of the property by the receiver or by KBC Bank Ireland PLC (the Bank) and remove all statements about any alleged breach of your trademark. Please note that if you fail to do so we are instructed by our client that he will without further notice to you take the necessary steps, including, inter alia, the issuing of proceedings in the High Court seeking the necessary orders to compel you to do so and this letter will be relied upon in support of any such application and the legal costs of same.”
The letter went on to say –
“your letter of 4th November last and your website are attempts on your part to interfere with our clients interest, both tortuously and by way of passing off, and appear to constitute “cyber squatting”. Accordingly, we ask that you immediately relinquish all threats of trademark infringement and confirm our client’s entitlement to use its intellectual property.”
27. Further affidavits were exchanged between the parties. In his second affidavit, Mr. Ryan explains that the statement of claim did not produce the contents of the plenary summons in error as he believed he was not required to particularise again the claim that had been sufficiently particularised in the plenary summons. He requests time to issue a motion to seek leave to amend the statement of claim. In relation to the website, he repeats his own claim to the use of same. He says that he created the website KinnittyCastle.com in September 1998 and that the receiver created the website KinnittyCastleHotel.com in November, 2008. He queries why the Bank is claiming that he has continuously used the website KinnittyCastle.com to obstruct the sale of the property despite the fact that the Bank and receiver have not taken proceedings against him.
Generally applicable legal principles.
28. There can be little dispute as to the basis on which the court must approach a motion of this type. It is by now well established that an application to strike out proceedings as failing to disclose a reasonable cause of action and/or as vexatious and/or as frivolous and/or as an abuse of process can be processed in one of two ways by the court. In the first instance, the court can exercise its jurisdiction to strike out pursuant to RSC O.19 r 28. When exercising that jurisdiction, the court is restricted to considering the case disclosed by the pleadings and is not entitled to consider the context or the background to the proceedings in a more wide ranging manner.
29. By contrast, the court is entitled to make a broader enquiry into the context of and the background to the proceedings when exercising its inherent jurisdiction. Costello J. in Barry v. Buckley [1981] IR 306 at p.308 stated:-
“But, apart from O.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…the principles on which the court exercises its 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 L.J. in Goodson v. Grierson [1908] 1 KB 761 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, particularly in cases whose outcome depends on the interpretation of a contract or agreed correspondence. If, having considered the documents, 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.”
30. As Clark J. concluded in the case of Price and Lynch v. Keenaghan Developments Ltd. [2007] IEHC 190 at para. 24:-
“…where, as in this case, an examination of the facts contained in the affidavits reveals that the plaintiff has no chance of success although the pleadings advance a known and recognised remedy, the court should grasp the nettle and strike down such unmeritorious proceedings.”
31. In the case of Freeman v. Bank of Scotland [2012] IEHC 371 relied upon by Counsel for Mr. Ryan, Gilligan J. said that the jurisdiction was not one that the court exercises lightly. It was said that right of access to the court should be preserved if at all possible. In Freeman, Gilligan J. examined all the claims brought by the plaintiffs and found that two of them met the “the low threshold required in allowing these issues to be litigated”. Gilligan J. struck out the other heads pursuant to the courts inherent jurisdiction.
32. Counsel for Mr. Ryan also relies upon the judgment of Peart J. in Smyth and Others v. the Commissioner of An Garda Síochána and Others [2014] IEHC 453 in which the judgment of McCarthy J. in Sun Fat Chan v. Osseous [1992] 1 IR 425 was relied upon. That latter judgment held that if a statement of claim admits of an amendment which might rescue the action, then the action should not be dismissed. As indicated by Peart J., the position is that in an application of this kind the plaintiff is not required to prove anything, not even a prima facie case. The entire burden of satisfying the court that the plaintiff’s case has no chance of success rests upon the defendant.
33. Counsel for the Bank relies upon the rule in Henderson v. Henderson (1843) 3 Hare 100. Under the rule identified in that case, the court requires the parties to 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 a 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. This plea of quasi 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 judgment on, 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.
34. Murray C.J. in In Re Vantive Holdings [2010] 2 I.R. 118 stated that –
“the courts have always had an inherent jurisdiction to stay or dismiss proceedings which abuse the due process of the administration of justice where to do otherwise would seriously undermine its effectiveness or integrity.”
He went on to say “[a]buse of process may take many forms according to the context or the nature of the proceedings…” see para. 20. Although Re Vantive Holdings dealt with an application for an examinership I am satisfied that the principles cited therein are of general application.
35. At para. 24 of Vantive, Murray C.J. stated “…there still remains the inherent jurisdiction of the court to protect the integrity of the due process of the administration of justice and the finality, in principle, of a judicial decision”. Murray C.J. referred approvingly to the dicta of Hardiman J. in A.A. v. Medical Council [2003] 4 IR 302 in which it was said that the rule in Henderson v. Henderson was an aspect of an abuse of process. Hardiman J. said as follows:-
“…Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional elements such as a collateral attack on a previous decision or some dishonesty but where those elements are present the later proceedings will be much more obviously abusive and there will rarely be a finding of abuse unless the latter proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focussing attention on the crucial question whether in all the circumstances a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not”.
36. Denham J. (as she then was) in Re Vantive Holdings stated that “the fundamental principle is that it is in the public interest and for the common good that there should be finality in litigation.” She held that if the petitioner was entitled to make a second and a third petition it would commence an era where multiple applications would become the norm. In the circumstances of that case where there had been a deliberate strategy to hold documents back, it was held that the petitioner had abused the process.
The submissions
37. The Bank submits that the within proceedings are an even clearer and more egregious example of Henderson v. Henderson abuse of process. Counsel points out that in A.A. v. Medical Council the second proceedings were found to be an abuse of the process even though they were brought some two years after the first proceedings. By contrast, counsel submits this is the third set of proceedings arising out of the same fundamental complaint and the first set of proceedings issued some years ago.
38. Furthermore, the Bank submits that oppression is a hallmark of Mr. Ryan’s behaviour in this case. Counsel submits that it is very clear that the ultimate motive of Mr. Ryan in bringing each set of proceedings has not been to achieve any remedy likely to be granted at law but rather to obstruct and hinder in every way possible the defendants attempt to realise its security by selling the property. They rely on the averments of Ms. Lorraine Bergin in her affidavit dated the 4th of July, 2014, where she refers to Mr. Ryan’s website as set out above in which she says Mr. Ryan attempts to dissuade potential purchasers from buying the property on the basis of the existence of the within proceedings.
39. Counsel for the Bank also refers to the decision of Ó Caoimh J. in Riordan v. Ireland (No. 5) [2001] 4 IR 463 in which the indicia which generally identify proceedings as vexatious were summarised.
“(a) the bringing up on one or more actions to determine an issue which is already being 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 improper purposes including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate right;
(d) where issues are 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 decision.”
The Canadian cases relied upon by Ó Caoimh J. make clear that proceedings may be frivolous and vexatious if they satisfy any one of the above tests.
40. The Bank submits that many of the above indicia are present in the case. Counsel refers to (e) where the plaintiff has failed to discharge any part of the costs awards made against him in the first proceedings, the second proceedings or the interlocutory proceedings in the current proceedings. Counsel on behalf of the Bank submits that the matters described at (a) (b) and (c) are present here insofar as issues which were disposed of in the first proceedings have been rolled forward into the second proceedings and on into the third proceedings. Counsel submits that these are supplemented with further complaints with the objective of oppressing the Bank and obstructing the sale process rather than asserting legitimate rights. He also points to the serious and unsubstantiated allegations of professional misconduct made by Mr. Ryan against his lawyers in the first proceedings. Whereas no proceedings appear to have been taken against the former lawyers, counsel submits that the allegations made against them in the present proceedings are analogous to the indicator set out at (d) above. Counsel also points to the trademark issue as another indicator of how matters are rolled forward into subsequent proceedings. It is submitted the fact that that was contained in the plenary summons, abandoned in the statement of claim and now sought to be revived in these proceedings is simply not an acceptable manner in which to conduct litigation.
41. The Bank also submits that a number of strands of Mr. Ryan’s proceedings are clearly statute barred. Counsel submits that the remainder constitute an abuse of process for reason of the fact that they are being advanced to oppress the Bank and have already been litigated or could with reasonable diligence have been litigated in two sets of previous proceedings over the course of six years. Furthermore, counsel for the Bank submits that a number of the issues raised simply do not concern the defendant as they relate to the receiver’s conduct.
42. Counsel for Mr. Ryan submits in general that the doctrine of estoppel or res judicata only applies where a final and conclusive judgment has been reached. He relied upon Delaney and McGrath, Civil Procedure in the Superior Courts (3rd edn, Roundhall, 2012) that “an interlocutory judgment will generally not possess the requisite quality of finality”. Counsel also relies upon Dalton v. Flynn High Court Laffoy J. 20th May, 2004, in which the learned trial judge found that the counterclaim in the previous proceedings had not been adjudicated upon on the merits and that it could not be in issue as a bar to the prosecution of these proceedings. It is submitted that it has not been shown that any of the issues raised in these proceedings have been disposed of in any previous proceedings or that any final decision has been made. Counsel submits that the defendant has not shown any rule or authority for the proposition that issues raised in interlocutory proceedings or dismissed proceedings can be considered as falling within the rule of res judicata.
43. It is correct that for a plea of res judicata to succeed the judgment on which it is sought to ground the estoppel must be a final and conclusive judgment on the merits. A determination of an interlocutory matter “will generally not possess the requisite quality of finality between the parties but may do so if ‘it was clearly intended finally to determine rights between the parties’” as quoted in para. 32 – 14 of Civil Procedure in the Superior Courts. The Bank’s position in this case is not based upon a claim solely concerning the doctrine of res judicata, rather it is based upon the doctrine of abuse of process, that there is no reasonable cause of action, that the claim is frivolous and vexatious and that it is clear that the claim must fail.
44. In those circumstances, the focus by Mr. Ryan on the principle of res judicata is somewhat misplaced. The Bank’s claim of a Henderson v. Henderson abuse of process is much wider that the strictures of a classic claim of res judicata. Although an interlocutory injunction may not necessarily create a res judicata situation, the position here is that the first proceedings were in fact disposed of when the Court was informed by counsel for Mr. and Mrs. Ryan that no further proceedings were being proposed. Therefore, this was not merely a case of an interlocutory injunction but proceedings that were essentially withdrawn.
45. Counsel for Mr. Ryan submitted that Henderson v. Henderson did not apply as it had not been shown by the Bank to be an abuse of process. It was submitted that contrary to In Re Vantive Limited there had been no deliberate holding back of any matter in the previous litigation. It was further submitted that the Bank had not shown that the proceedings were frivolous or vexatious or bound to fail.
46. Counsel for the Bank and for Mr. Ryan dealt with specifics matters raised in the pleadings and these are addressed below in light of the principles set out above
The claims made by the plaintiff Mr. Ryan in the present proceedings.
1. The plaintiff’s claim that by reason of the defendant’s appointment of a receiver over the property in 2008 he was prevented from selling the property to a genuine potential purchaser.
47. The Bank’s argument is that this claim is an attempt to re-litigate the central issue which was disposed of in the 2008 proceedings. Under this heading, counsel for Mr. Ryan submits that the court should take into account that a receiver takes control of the property without reference to a court order. Counsel for Mr. Ryan submits that this is in essence an unsupervised jurisdiction of a receiver. Counsel submits that Mr. Ryan’s claim is the fact that he could have sold property for €10 million – that this is not a speculative claim but is based in fact. Counsel submits that it is of importance that the present proceedings were drafted by Mr. Ryan as a lay litigant. It is submitted that the draconian relief of striking out the proceedings is not appropriate in the circumstances of this case. Permission is sought to amend the statement of claim yet no specific amendment is identified. Counsel submits this is the first bite of the cherry as regards the challenge to the prevention of the sale to a genuine potential purchaser.
48. The main submission on behalf of Mr. Ryan under this heading is that no evidence has been put before the court to show that the present proceedings are an abuse of process or res judicata. In particular, counsel submits that the first proceedings were interlocutory in nature and so no final decision was made on that claim.
49. The submission on behalf of Mr. Ryan that the Bank has not put forward any evidence of abuse of process or res judicata in the Henderson v. Henderson sense ignores the fact that the first defendant has placed before the court the full contents of the first proceedings and the second proceedings including all of the orders made therein. Relevant portions of those proceedings have been referred to above. The first proceedings had at their core the issue that the defendants (i.e. the Bank and the receiver) should not be entitled to accept an offer for the property of less than €10 million (see para. 9 of the general endorsement of claim). One of the reliefs sought in the ex parte application made by Mr. and Mrs. Ryan in the first proceedings was that Mr. Ryan should be at liberty to enter into a binding agreement for the sale of Kinnitty Castle on notice to the defendants if a bid is received by him of sufficient amount to discharge the entirety of his indebtedness to the first defendant The offer of €10 million which the plaintiff said that he had received, was dealt with in considerable detail in the course of those proceedings. Mr. Behrends swore an affidavit in those proceedings dealing with the issue of the €10 million bid. Indeed, he said it was necessary for his clients to carry out due diligence in relation to the business of the hotel prior to committing to a final offer.
50. The first proceedings were withdrawn by counsel acting for the plaintiffs, Mr. and Mrs. Ryan. No attempt appears to have been made by Mr. Ryan to set aside the order that was made on foot of that withdrawal of proceedings. He does not appear to have launched proceedings against counsel or his solicitor but has made an allegation in the current proceedings of gross breach of professional duty by his then legal representatives.
51. In the present circumstances there is not a scintilla of evidence to support this claim of professional misconduct. For example, there is no correspondence between Mr. Ryan and his then solicitor and/or his then counsel and there is nothing to suggest that any step was taken to rectify the alleged gross misrepresentation of his position by counsel in the intervening six years to date. I am not prepared to accept Mr. Ryan’s mere assertion of such gross professional misconduct in these circumstances. That lends an air of dishonesty to his pursuit of the Bank under this heading.
52. However, even if there had been a misrepresentation by counsel of the position of Mr. Ryan, that would not necessarily entitle him to launch further proceedings four and a half years later. In my view, the proper procedure would have been to either seek to set aside that order or indeed more properly to seek to appeal it.
53. In all the circumstances, I am of the view that this particular claim by Mr. Ryan is an attempted collateral attack on the previous rejection of his application for an interlocutory injunction and on the final order which had been made in those proceedings.
54. The existence of the German consortium and their interest in a bid for the property at a potential purchase price of €10 million was a central feature of the first proceedings. Those proceedings were not pursued by Mr. Ryan or his wife and an order was made accordingly. To permit Mr. Ryan to go behind that order, in separate proceedings launched four and a half years later, would violate the principle of finality in litigation. His explanation that he was so disgusted and confused by the entire episode that he lost the heart to continue the fight at that time is not, even if true, a circumstance which in the context of the entire litigation history would justify the bringing of another set of proceedings, particularly at such a time delay. It is not in the interest of justice that the Bank be exposed to multiple litigations in relation to this claim. The Bank should be entitled to regard that issue as having been disposed of in the first set of proceedings particularly with the effluxion of time since those proceedings. The entirety of the circumstances amount to harassment of the Bank on this issue. Furthermore, it would not be in the public interest that the limited resources of the courts should be utilised to allow Mr. Ryan pursue this matter when it had already come to finality in the earlier proceedings.
55. I am quite satisfied that this particular claim amounts to an abuse of process under the rule in Henderson v. Henderson.
56. I also accept in general terms the characterisation of the litigation history of Mr. Ryan vis a vis the Bank as set out at para.41 above as satisfying many of the tests of vexatious and frivolous proceedings. This particular aspect of his claim was litigated before and determined against Mr. Ryan at an interlocutory stage whereupon he withdrew his case. He has rolled this forward into this claim and in doing so makes allegations against his former lawyers. Costs of previous litigation remain outstanding. I note the averment of the solicitor for the Bank as to the use Mr. Ryan has made of these proceedings by attempting to dissuade buyers. In light of the entire history of this matter and the findings I have made, I draw the inference that these proceedings have not been issued for the purpose of asserting a legitimate claim but for the purpose of dissuading potential buyers. I am quite satisfied on each of these grounds as well as on a cummulative basis that this is a vexatious claim.
57. Therefore, I will strike out this part of the claim as an abuse of process of the courts and on the basis that it is a vexatious claim.
2. The plaintiff’s claim that there was a discrepancy with regard to a bank guarantee given to Allied Irish Banks PLC by the defendant in respect of the property.
58. Mr. Ryan claims that there was a discrepancy with regard to a bank guarantee given to Allied Irish Banks PLC by the Bank in respect of the property. The Bank claims that this complaint is clearly statute barred as it relates to alleged actions on the part of the defendant which Mr. Ryan himself says occurred in 2005. Counsel for Mr. Ryan submits that he has raised an important issue in respect of an accusation of a deliberate act by the first defendant which put him into default on a loan. He submits that s.72(1) allows for the extension of the limitation time in respect of a right of action for relief for a consequence of a mistake.
59. In his particulars of claim, Mr. Ryan outlines that there were two bank guarantees provided as part of the overall loan facility. One of these was a guarantee “for an overdraft facility in favour of AIB.” He claims that on or about late 2005, even though AIB had a bank guarantee from KBC, AIB discontinued the overdraft facility with the result that the facility was at its limit and KBC paid the monies due and owing over to AIB. KBC then issued a demand letter for €250,000 and deliberately and negligently put him into arrears thus enabling them to cause a deliberate default. This claim is not amplified in any of the affidavits before me.
60. In the written submissions filed on behalf of Mr. Ryan, he states that in response to this issue of the statute barred nature of this claim that “the plaintiff has raised an important issue in respect of an accusation of a deliberate act by the first named defendant which put him into default on a loan. Section 72 (1) allow[s] for the extension of the limitation time in respect of a right of action for relief for a consequence of a mistake.”
61. From that submission, it is clear that it is accepted by Mr. Ryan that the claim is on its face statute barred, having first arisen in 2005. However he relies on the extension provisions concerning the consequence of mistake as set out in section 72 (1) of Statute of Limitation Act 1957 (“the Act”). In his oral submissions, counsel for Mr. Ryan did not advance any particular points in clarification of this. Indeed, at the commencement of his reply, counsel for the Bank raised the issue of whether there were any concessions being made in this regard. It was confirmed by counsel for Mr. Ryan that all matters were in issue and that nothing was in fact conceded. Indeed it can be said that counsel for Mr. Ryan has throughout the case assiduously advanced all possible arguments open to Mr. Ryan.
62. Section 72 (1) states “[w]here, in the case of any action for which a period of limitation is fixed by this Act, the action is for relief from the consequences of mistake, the period of limitation shall not begin to run until the plaintiff has discovered the mistake or could with reasonable diligence have discovered it”. The language of s.72 (1) is very particular in that it relates to an action for relief “from the consequences of mistake”. It is the fact of mistake and not its concealment which gives rise to the relief. In Phillips-Higgins v. Harper [1954] 1 QB 411, Pearson J. held in respect of equivalent English legislation that the mere concealment of a right of action from the plaintiff by a mistake did not extend the limitation period. Pearson J. held that the words were “carefully chosen to indicate a class of actions where a mistake has been made which has had certain consequences and the plaintiff seeks to be relieved from those consequences.”
63. There is some debate among the learned authors of the Irish text books on limitation of actions as to whether this does or should represent the law in Ireland. However, in Kearns v. McCann Fitzgerald [2008] IEHC 85, Peart J. held that an action in negligence arising out of a mistake on the part of a defendant did not fall within s. 72 of the Act.
64. In that case Peart J. stated as follows –
“Section 72 of the Act here is clearly intended to apply to a situation where a plaintiff seeks relief from the consequences of a mistake in the context for example of a contract entered into as a result of a mistake and where the action is seeking relief by way of rescission or rectification. The present action by the plaintiffs is an action for damages arising from an alleged negligent act by the defendants, and it is clearly only an action in tort to which the case referred to has no relevance. The alleged error by the defendants cannot be equated with a mistake in the context of s.72 of the Act”.
65. On the pleadings in this case, there is no action for relief for the consequences of mistake. This is an action for damages arising from an alleged deliberate act by the defendant Bank causing damage to Mr. Ryan. While this is an action primarily in contract or for the deliberate infliction of economic loss, it is not an action seeking relief from the consequences of a mistake.
66. Even if it were possible that s.72 could be construed as permitting an action to be taken outside a limitation period where a mistake prevented the discovery of the breach of rights, no evidence has been placed before the court to sustain such a claim. Mr. Ryan has sworn numerous affidavits in these proceedings but at no point did he address any issue with respect to his claim of mistake. In circumstances where a case is bound to fail on a direct application of the limitation period set by the Statute of Limitations, there is an obligation on a plaintiff to show (either by reference to something in the papers placed before the court by the defendant or on evidence produced his or herself) that he or she comes within an exception to the limitation period. No details of the particular “mistake” on the part of Mr. Ryan or any other party were placed before the court from which the Court could be satisfied that there was such a mistake (or more properly the possibility) of such a mistake so as to permit the claim to proceed on this basis.
67. In light of all of the foregoing there are no grounds for conceiving of the possibility that Mr. Ryan could rely on s. 71(1) of the Statute of Limitations Act, 1957. It is simply inapplicable to the nature of the claim that he is making against the Bank in these proceedings. In all the circumstances, I am wholly satisfied that Mr. Ryan’s claim under this heading is statute barred and that it is bound to fail.
3. The plaintiff’s claim that the receiver appointed in 2008 has failed to manage the contents of Kinnitty Castle as a result of which some chattels are unaccounted for and the remaining chattels have fallen into a state of disrepair.
68. The Bank makes a simple submission in relation to this claim: this is a complaint against the receiver and the receiver alone. Counsel for the Bank submits that the receiver is not its agent.
69. In his written submissions, Mr. Ryan refers to the order of Ryan J. joining the receiver as a co-defendant. The written submissions continue:-
“the plaintiff is entitled to continue his proceedings and the first named defendant may take whatever action they wish to seek an indemnity from their co-defendant but, even if the first named defendant should prove that this claim should only be progressed against the second named defendant, this does not meet the low threshold either pursuant to O.19 r.28 or the courts inherent jurisdiction to strike out the plaintiff’s proceedings.”
70. Counsel for Mr. Ryan repeated in oral submissions, that the Bank could seek an indemnity against the receiver in relation to this aspect of the claim. He said that in the normal course of proceedings one might pursue an action against two different sets of defendants and that the correct defendant would be identified during the course of proceedings.
71. In his oral submissions, counsel for Mr. Ryan also referred to the cases set out above in reliance on the statement that the threshold was a low one. In particular, he submitted he did not have to show a prima facie case (a submission which is undoubtedly correct).
72. It can be seen from para. 7 of the statement of claim served by Mr. Ryan that his claim is directed solely against the receivers. In his reply to particulars, he did not seek to extend that claim as against the Bank but merely asked the Bank for permission to visit the property so that he could reconcile the list of chattels in his possession with what is available in the property. Counsel for Mr. Ryan accepts that on the face of the statement of claim there is an issue with the proceedings. However, he submits that the claim is one which should be permitted to be made against the Bank. He relies upon the fact that his client was a lay litigant drafting the proceedings and that an amendment to the statement of claim would rescue the action. In particular, he relies upon the judgment of McCarthy J. in Sun Fat Chan.
73. At no stage did counsel engage with the central contention on behalf of the Bank on this issue which was to the effect that the receiver is the agent of the mortgagor and not that of the mortgagee unless the mortgage deed provides otherwise. Counsel for the Bank has relied upon Breslin, Banking Law (3rd edn, Round Hall, 2013) in which the author states the following at p.600:-
“The peculiar agency of the receiver – appointed by the bank yet agent of the charger – has been confirmed by the leading Irish authority on receivers, the judgment of the Supreme Court in Bula Ltd v. Crowley. The central issue in that case was a limitation point, namely, that the mortgagee bank’s title to the charger of company’s lands was defeated by the doctrine of adverse possession (the receivership was of some considerable duration). Denham J. (as she then was) noted that the position of the receiver is ‘unique’ and ‘exceptional’.”
74. The above passage from Mr. Breslin’s book goes on to detail how the particular form of agency relationship inherent in the receiver’s appointment had been explicitly recognised in Irish law prior to Bula and was also confirmed subsequently. As Mr. Breslin says, “the receiver’s position in the tripartite relationship comprising himself, the bank and the chargor, is such that he is the agent of the chargor but his function is to act for the benefit of the bank.”
75. Mr. Ryan’s principal complaint is set out at para. 9 of his second affidavit. He says that perhaps due to his limited knowledge of the law he cannot understand the argument that his action should be against the receiver and not the defendant. He says that the receiver was duly selected and appointed by the defendant and because of this the defendant should have an element of responsibility for the actions of the receiver, especially if they are not in the interest of either the defendant or the plaintiff. He says that if the receiver is his agent he should be entitled to dismiss him and he refers to his intention to join the receiver in the proceedings.
76. In his third affidavit, Mr. Ryan sets out in considerable detail his complaints regarding the receiver. At para. 4, he says that the receiver “working on behalf of and appointed by the KBC Bank Ireland PLC” was well aware of matters concerning the lack of claim of the defendant or the receiver to the chattels. At para. 5, he says that he is reiterating his contention that the defendant “represented by the receiver” has no claim to these chattels. He repeats that depiction of the defendant in para. 6 of that affidavit. He refers to clause 8.14 of the mortgage document which gives a power “at any time after the security hereby constituted has become enforceable” to the bank or any receiver as agent of the chargor to remove, store and sell at the expense of the chargor any chattels found on or about the mortgage property. His complaint in that paragraph is very much directed at the defendant as represented by the receiver. The remaining paragraph of the affidavit is also directed at the actions of the receiver who has been appointed and is acting he says on behalf of KBC Bank Ireland PLC.
77. It is abundantly clear from the foregoing that Mr. Ryan is labouring under a misapprehension as to the legal position with respect to the receiver. The law is clear: the receiver acts as the agent of the mortgagor/chargor who in this case is Mr. Ryan himself. Nothing in his affidavits, nothing in his written submission and nothing in the oral submissions on his behalf suggests even the merest hint that the clearly outlined principle articulated by the Supreme Court in Bula Ltd v. Crowley should not operate in the circumstances of this case.
78. While it is true that there is a low threshold and that in appropriate circumstances permission might be granted to amend a statement of claim for the purpose of “rescuing” a cause of action, Mr. Ryan has not come even close to meeting that low threshold. In the very clear circumstances of this case, even an amendment to reflect the fact that he wishes to proceed against the Bank in relation to the position with regard to the chattels would not give Mr. Ryan a case at all. Thus, I am quite satisfied that the Bank has established that Mr. Ryan’s claim under this heading against the Bank is bound to fail. Mr. Ryan’s assertions that the receiver is acting as agent of the Bank are simply wrong in fact and in law. It is a claim that is wholly misconceived as against the Bank. It discloses no reasonable cause of action against the Bank. It is bound to fail. In the context of the history of Mr. Ryan’s litigation with the Bank, and the fact that it is a claim that was obviously bound to fail as against the Bank, it is also a frivolous and vexatious claim. Finally, it must be stated that it is not a proper answer to a claim that a case is bound to fail to suggest that the party will be able to seek an indemnity against another proper defendant.
4. The plaintiff’s claim that the receiver has no right to sell the chattels.
79. The submissions of the Bank and Mr. Ryan are identical to their submissions on the claim above. For the reasons as set out above, I am of the view that this is a claim that is bound to fail and is frivolous and vexatious.
5. The plaintiff’s claim of harassment.
80. Mr. Ryan alleges that he has suffered harassment by the defendant or by its agents aimed at forcing him to sell Kinnitty Castle and to repay his loan to the defendant in full. The Bank says that this complaint is clearly statute barred as the plaintiff maintains that the said alleged harassment occurred in late 2005 and/or early 2006. In the statement of claim, Mr. Ryan says that the Bank put undue pressure on him from late 2005 onwards even though all mortgage payment were up to date at this stage within one year of drawdown. In his particulars, he refers specifically to on or about early 2006. Mr. Ryan in his affidavit of the 2nd of July, 2014, said that he was being harassed by the bank to put his property on the market from as early as September 2005 and to repay his loan in full even though repayments were up to date. He said that the whole exercise of being forced to eventually put the property on the market had an extremely negative effect on the trading position of the property. In his affidavit grounding his application for injunctive relief in the first proceedings, Mr. Ryan had sworn that a contract to sell the property was concluded in June of 2006. Nowhere does Mr. Ryan give any particulars of any incidents of harassments beyond the period of 2005 to 2006.
81. At the hearing of the action, counsel for Mr. Ryan positioned the claim with reference to the allegation of cyber squatting in 2013 as contained in the letter Mr. Ryan received from the solicitors for the receiver as set out above. In fact, counsel claimed that that was the central issue under this heading.
82. It is abundantly clear that insofar as there are allegations of harassment occurring in 2005 and in 2006, these matters are statute barred. While it may be suggested that the tort of harassment requires more than one incident in order for the tort to be completed, it appears that the initial claim in relation to harassment was made in the particular context of the claim to force him to sell the property and repay the mortgage in full. Mr. Ryan was given ample opportunity to particularise that claim and did so in his replies to particulars. His claim ended in relation to that aspect of it in 2006. I am quite satisfied even allowing a six year period for the statute of limitations, that his claim in relation to incidents of harassment in 2005 and 2006 is statute barred.
83. In relation to the claim regarding the allegation of cyber squatting, it is entirely unclear whether that claim could arise on the basis of a single letter being sent by a solicitor to another party concerning a genuine legal dispute in which proceedings are being threatened. However, the onus is on the Bank, as plaintiff, to show that such a claim is bound to fail. Perhaps the manner in which such a letter is worded could be said to go beyond legitimate legal correspondence and strays into harassment. I am of the view that it is unnecessary to decide that precise issue in light of the finding I will make that this particular claim is bound to fail against the Bank. The reason for that conclusion is based upon the legal position regarding the tri-partite relationship of the Bank as mortgagee/chargee, Mr. Ryan as mortgagor/chargor and the receiver as agent of the mortgagor/charger as discussed above.
84. As the receiver is not the agent of the Bank, any alleged wrongdoing of the receiver is not the responsibility of the Bank. There is nothing to suggest that the letter written by the solicitor for the receiver, which is alleged to constitute harassment by its claim of cyber squatting, is otherwise the responsibility of the Bank. The only claim is a general one that the receiver was acting as the agent of the Bank. The solicitor for the receiver wrote the letter on behalf of his client the receiver. In short, there is no ground at all for the advancement of this claim as against the Bank.
85. In all those circumstances and without deciding whether in fact the impugned letter could amount to the tort of harassment, the situation is quite clearly that that is a claim as against the Bank which is bound to fail. For the reasons identified under this heading and under previous headings this claim is also frivolous and vexatious.
6. The plaintiff seeks “clarification” on whether the mortgage monies have been securitised.
86. The Bank submits that this is a complaint which cannot constitute the basis for a cause of action in law. The Bank submits that a request for clarification is not capable of constituting a basis for legal proceedings. They further submit that the issue of securitisation was pleaded as the central cause of action in the second proceedings dismissed by Baker J. on the 24th of February, 2014. Mr. Ryan submits in his written submissions that there is no authority to support the claim that proceedings dismissed and not heard can be used as the basis that the present proceedings fall foul of the doctrine of res judicata. Counsel for Mr. Ryan submits that only a final decision of the court can give rise to a claim of res judicata.
87. Counsel for Mr. Ryan also submits that the Bank has raised no law or made a submission to support the claim that a request for clarification is not capable of constituting a basis for legal proceedings. In the circumstances, it is submitted that the low threshold required to strike out the proceedings has not been met in respect of the claim. It is also said that if there is a difficulty with the claim, an amendment to the statement of claim would be more appropriate rather than striking out the proceedings.
88. The seeking of clarification by Mr. Ryan on whether the mortgage money has been securitised is not on its face a claim against the defendant alleging any particular wrong. Order 4 rule 2 of the RSC requires that the endorsement of the relief claimed in a plenary summons shall be expressed in general terms in such one of the forms in appendix B part 2 as shall be applicable to the case, or if none be found applicable then such other similarly concise form as to the nature of the case may require. All of the claims set out in appendix B part 2 indicate a claim for a substantive wrong or a substantive relief which the plaintiff has claimed.
89. In Caudron v. Air Zaire [1985] IR 716, the Supreme Court refused leave to serve proceedings out of the jurisdiction under RSC O.11 r.1(g) on the basis that the relief sought was merely interlocutory in nature and no substantive relief was claimed in the endorsement of claim. While that case clearly relates to interlocutory proceedings, it does give an indication that it is necessary that proceedings contain a substantive relief.
90. In my view, RSC O.19 r.29 is also of assistance in understanding the position with regard to a claim for clarification. Order 19 rule 29 states that no action or pleading shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby and the court may, if it thinks fit, make binding declarations of right whether any consequential relief is or could be claimed or not. Such a rule would really be unnecessary if declaratory relief was appropriately claimed under any of the other rules of court.
91. It is of further assistance to consider the nature of the claim for clarification. It is not a claim of wrongdoing. It is not even an assertion of the plaintiff’s right to any particular thing. It is not a claim for declaratory relief. It is in the nature of a question being asked of the defendant. Therefore, it is similar to either an interrogatory or a claim for discovery. Those are matters which can only arise in very limited circumstances with respect to discovery, after pleadings have been issued and more usually replied to.
92. There is a very limited jurisdiction to permit an action solely for discovery as indicated by the Supreme Court in Megaleasing UK Ltd v. Barrett [1993] ILRM 497. It is unnecessary to delve into the details of that case but suffice to say that any of the principles identified by the Supreme Court as necessary before such exceptional relief would be granted do not exist in this case.
93. Mr. Ryan has made no real attempt to indicate to this court why the court should permit him to pursue this extraordinarily wide claim. On the contrary, he has sought to say that the Bank has failed to raise a point of law or a submission to support its case. In my view, the Bank is entitled to assert their position from what appears to be first principles.
94. Even taking into account that there is a very low threshold to be permitted to pursue an action a claim for clarification is not a relief which in the ordinary course is open to a plaintiff. However, it does seem appear that the particulars of the claim expand upon the relief claimed. In his particulars, Mr. Ryan says that he believes that the mortgage facility was securitised and that any such relief would include both the Bank and the receiver not having the required locus standi to have brought any proceedings and he says therefore damages shall apply in the circumstances and/or the re-instatement of the property to its rightful owner namely himself. In those circumstances and allowing for the fact that he is a lay litigant, I am of the view that the particulars save this claim from being merely one of clarification.
95. I will next consider the issue of the effect of the dismissal of the second proceedings for want of prosecution for failure to deliver a statement of claim within the time prescribed by the Rules of the Superior Courts. At issue here is whether that fact would give rise to a claim of res judicata in its strict sense. It appears that for a successful claim for res judicata there must be a judgment given by a court of competent jurisdiction which is final and conclusive on the merits.
96. In my view, there was no decision on the merits of the case in the earlier matter before Baker J. It was an order on consent that the action be dismissed for want of prosecution for failure to deliver a statement of claim within the time prescribed by the Rules of Superior Courts. In those circumstances, it was not a case where the merits were argued or indeed it was not a case where the merits of the actual claim could have been argued (which on occasion has sufficed to create a res judicata situation). This was simply a decision to dismiss on the basis that the rules had not been followed.
97. The further issue, as claimed by the Bank, is that this was a matter which could have been litigated with reasonable diligence in the context of the first proceedings and further could have been litigated in the context of the second proceedings. In those circumstances, the Bank says the present proceedings fall squarely within the principles outlined in Henderson v. Henderson and amount to an abuse of process.
98. Mr. Ryan then brought a second set of proceedings in which he made a claim relating to securitisation. Mr. Ryan’s explanation for consenting to the dismissal for failure to deliver a statement of claim was that he understood that he could proceed with his claims in the present proceedings. On balance, I am prepared to accept that as an explanation. It is a curious feature of this case that the present statement of claim was apparently served prior to the making of that final order in the second proceedings by Baker J. In circumstances where Mr. Ryan had not received any objection to the contrary, it is possible that he was labouring under a misapprehension that he could have proceeded with those claims in the present proceedings.
99. Mr. Ryan is now represented by counsel. Counsel has sought to amend the statement of claim to take into account that they were defective. The precise defects have never been identified with specifics. No application has been made to amend the general endorsement of claim on the plenary summons. It is clear that the statement of claim as delivered by Mr. Ryan has added new and distinct causes of action not covered by the endorsement on the plenary summons. RSC O.20 r.6 permits alterations, modification, or extending a claim without any amendment of the endorsement of summons. However, in the case of Moore v. Alwill (1881) 8 LRIR 245, it was held that it was impermissible to add a new and distinct cause of action under a rule similar to O.20 r.6 of the Rules of the Superior Courts. The Bank has made reference to the defect in the statement of claim. However, they have not brought an application to set it aside. I have held that I am prepared to consider Mr. Ryan’s reply to the notice for particulars as articulating a general claim regarding wrongful securitisation. In all the circumstances, without deciding if it would be permissible to rely upon a statement of claim which deviated so substantially from the general endorsement of claim, I have chosen to consider the statement of claim as if it was properly and fully drafted in accordance with the Rules of the Superior Courts.
100. I consider the existence of the second proceedings and the fact that the order of Baker J. was made on consent to dismiss for failure to deliver a statement of claim as not being indicators of themselves of an abuse of process. There are very peculiar circumstances which apply which would not render it so.
101. By contrast those circumstances do not apply to the failure to litigate this issue in the earlier set of proceedings. The current proceedings were launched five years after the first proceedings.
102. The first relief claimed in the first proceedings was a declaration that the Bank was not entitled to appoint Mr. Taite as receiver and manager over Kinnitty Castle. The claim relating to securitisation is fundamentally about the lack of entitlement of the Bank to appoint Mr. Taite as receiver and manager. In those proceedings, Mr. Ryan was represented by solicitor and counsel. As indicated above, the Court Order records that Mr. and Mrs Ryan did not pursue those proceedings. I make the same remarks and draw the same conclusions as I did earlier in this judgment as to Mr. Ryan’s explanation for not proceeding. I reject his explanation of the four and a half years in which there was no further action brought against the Bank in relation to its decision to appoint Mr. Taite as receiver and manager.
103. Furthermore, there is absolutely no explanation as to why the issue of securitisation was not raised in those first proceedings. There is nothing to indicate why that aspect of the claim was only brought forward in the second set of proceedings. Mr. Ryan’s belief in the securitisation of his mortgage was something that he could have litigated with reasonable diligence at an earlier stage.
104. The central relief claimed in those proceedings was as set out above. The allegation that the appointment of the receiver was invalid due to the issue of securitisation was an issue that could and should with reasonable diligence by Mr. Ryan, have been brought within those proceedings. In my view this is a collateral attack on the finality of the order in the first proceedings. The circumstances of the belated and unsupported allegations against his previous lawyers lend an air of dishonesty to these proceedings. There would be an injustice to the Bank to permit this claim to be made in these circumstances and at this remove from the original proceedings. There is a public interest also in the finality of litigation. In all of the circumstances of this case, I find that there is an abuse of process in the Henderson v Henderson sense in proceeding against the Bank on this issue in these proceedings.
105. In the circumstances of the litigation history and the findings I have made as set out previously in this judgment it is also vexatious to pursue this claim.
7. The plaintiff’s complaint concerning the receiver’s entitlement to use a trademark he professes to have in the words Kinnitty Castle.
106. The Bank’s case is that Mr. Ryan is attempting to re-litigate an issue fully addressed in the context of the first proceedings. I propose not to address that issue in light of the finding that I am going to make under this heading. I do so on the basis of my overall finding on this matter and that while there exists a possibility that the receiver might make an application to dismiss these proceedings under a similar heading, it is inappropriate for me to express what is an unnecessary finding in that regard.
107. The Bank also submits that this issue has not been pleaded in the statement of claim. Again, in the circumstances of the order that I am about to make, I do not believe it is necessary or appropriate to examine whether that fact is a final bar to Mr. Ryan pursuing this relief or whether it would be appropriate to permit him in all the circumstances, including the fact that he is a lay litigant, to amend his statement of claim.
108. The Bank’s primary submission under this heading is that this is a complaint against the receiver and the receiver alone. On the basis of the legal principles outlined above and the further matters referred to below, I am of the view that that is a correct submission. As stated previously, Mr. Ryan only claimed against the Bank in the plenary summons in these proceedings. The endorsement of claim, however, claimed as against both the Bank and the receiver for the misuse of the trademark. In the affidavits placed before the court from both parties to this motion, I am quite satisfied that Mr. Ryan’s claim in this regard is directed against the receiver and the receiver alone. I refer as an example to his replying affidavit at para. 6 in which he says that he has written many letters to the receiver Mr. Declan Taite in relation to the trademarks issue. Furthermore, in oral and written submissions, nothing has been raised that would in any way suggest that there is no merit to the Bank’s submission that this is a claim that is bound to fail against the Bank.
109. It is the receiver who has been operating the business at Kinnitty Castle. There is no suggestion that the Bank itself was involved in the trade or operation of Kinnitty Castle or in the use of the trademark or the website. The claim is factually directed by Mr. Ryan against the receiver’s use of the trademark or the website. The receiver is not the agent of the Bank. There is simply no basis whatsoever in fact or in law to claim against the Bank for the use of the trademark. There is no reasonable cause of action against the Bank.
110. In all the circumstances, this is a claim which is bound to fail and which in the context of the litigation history outlined previously is vexatious.
Conclusion.
111. In all of the circumstances and for the reasons set out above, I make an order striking out each of Mr. Ryan’s claims as against the Bank on the grounds that each particular claim either/and discloses no reasonable cause of action, is an abuse of the process of the court, is vexatious or is statute barred.
Moylist v Doheny [2016] IESC 9 Judgment of Mr. Justice Clarke delivered the 4th March, 2016.
1. Introduction
1.1 One of the most difficult tasks with which courts can be faced involves proceedings where both sides are entirely innocent of wrongdoing but where, as a result of the decision of the Court, it will be inevitable that one or other side will suffer loss. Such proceedings have sometimes been described as ones involving “the problem of the two innocents”. The underlying proceedings which are the subject of this appeal come within that category. The plaintiff/appellant (“Moylist”) was involved as the contractor in a building contract involving 18 holiday homes known as the Greens at Ballybunion in Co. Kerry. The developer was the fourth named defendant (who is not involved in this appeal) (“Mr. O’Carroll”). Much of the funding for the purchase of the lands on which the development was to take place and the construction of the holiday homes concerned came from the third named defendant/respondent (“Ulster Bank”).
1.2 The development occurred at what turned out to be an unfortunate time having regard to the collapse of the Celtic Tiger economy and the great recession which followed. There is no doubt but that Mr. O’Carroll owes a significant sum of money to Moylist for building works which were carried out but which were not paid for. Likewise, there is no doubt but that Mr. O’Carroll owes an even greater sum of money to Ulster Bank arising from borrowings to finance the project. It appears highly improbable that Mr. O’Carroll will ever be in a position to repay those monies. The principal asset which appeared to be available to pay either Moylist or Ulster Bank was the almost completed development. In those circumstances, it is, perhaps, hardly surprising if unfortunate that litigation ensued between Moylist and Ulster Bank which had at its core issues which could affect the question of who might be able to benefit from the sale of the almost completed development.
1.3 Ulster Bank had the benefit of a mortgage in the form of a charge created on the 21st June, 2006, which was entered into by Mr. O’Carroll over the lands in question (which were registered lands comprised in Folio 3855F Co. Kerry). For some reason as yet unexplained, the charge was not registered as a burden on that folio until the 27th February, 2008. Ulster Bank appointed the first named defendant/respondent (“the Receiver”) as receiver under its powers arising from the mortgage. In passing, it should be noted that the Receiver is a member of the second named defendant firm although, for reasons which will shortly be explained, that firm is not a party to this appeal.
1.4 Moylist commenced these proceedings, in which they claim that the Receiver and Ulster Bank have wrongly dispossessed Moylist of its entitlement to occupy the premises on foot of the building contract which was put in place between Mr. O’Carroll and Moylist. Moylist sought an interlocutory injunction to restrain any interference with its occupation of the lands. In response, the Receiver and Deloitte & Touche and (in a separate motion) Ulster Bank brought respective applications seeking to have the proceedings dismissed as being bound to fail. Both matters were heard by Laffoy J. in the High Court who gave judgment on the 21st April, 2010, (Moylist Construction Ltd -v- Doheny & ors [2010] IEHC 162). For the reasons set out in that judgment, Laffoy J. declined to grant Moylist the injunction sought but acceded to the applications to dismiss the proceedings as being bound to fail. It is against part of those orders that Moylist has now appealed to this Court.
2. The Appeal
2.1 It should first be recorded that Moylist has not sought to appeal the refusal of the interlocutory injunction. Second, it should be recorded that Moylist has not sought to appeal the dismissal of the proceedings as against Deloitte & Touche. Thus, the orders of the High Court which are the subject of this appeal are the orders dismissing the proceedings against, respectively, the Receiver and Ulster Bank on the basis of the finding of the trial judge that the proceedings are bound to fail.
2.2 For reasons which I hope will become apparent, it seems to me to be appropriate to commence the substantive part of this judgment by looking closely at the proper application of the undoubted jurisdiction of the Court to dismiss proceedings as being bound to fail.
3. The “Bound to Fail” Jurisdiction
3.1 At least since the decision of Costello J. in Barry v. Buckley [1981] I.R. 306, it has been clear that the courts have an inherent jurisdiction to strike out proceedings as being bound to fail, which jurisdiction is in addition to the somewhat separate entitlement of a court to strike out proceedings under O.19, r.28 of the Rules of the Superior Courts. The distinction between the two forms of jurisdiction is analysed in Salthill Properties Ltd. & anor v. Royal Bank of Scotland plc & ors [2009] IEHC 207, which was approved by this Court in Lopes v. Minister for Justice, Equality & Law Reform [2014] IESC 21. An application under the rules is based on a contention that the case as pleaded does not disclose a cause of action. The inherent jurisdiction under Barry v. Buckley extends to cases where it can be shown that there is no arguable basis in law and in fact for the claim made. That the facts, and in particular an analysis of documents, can be addressed at least to some extent in the context of such an application is clear form the judgment of this Court in Keohane v. Hynes [2014] IESC 66.
3.2 Having reviewed relevant authority in Keohane, I set out the following conclusions:-
“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.”
3.3 As to the extent to which it is appropriate to engage with the facts, I continued by noting the following:-
“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. Likewise, the Court can go into documentary facts where the relevant documents govern the legal relations between the parties or form the only possible evidential basis for the plaintiff’s claim (as in Lopes). As Barron J. noted in Jodifern, a court can look at a contract and it may become clear beyond argument as to what that contract means. On that basis, it may follow that a plaintiff’s claim may be bound to fail. But there may be cases where, notwithstanding the text of a contract, facts are asserted and backed up either by evidence or by the possibility that evidence might be found, which might lead to the contract being construed in some different way or the consequences for the wrong alleged in the proceedings being differently considered. In such cases, as Barron J. made clear, the case must go to trial.
6.9 In summary, it is important to emphasise the significant limitations on the extent to which a court can engage with the facts in an application to dismiss on the grounds of being bound to fail. In cases where the legal rights and obligations of the parties are governed by documents, then the court can examine those documents to consider whether the plaintiff’s claim is bound to fail and may, in that regard, have to ask the question as to whether there is any evidence outside of that documentary record which could realistically have a bearing on the rights and obligations concerned. Second, where the only evidence which could be put forward concerning essential factual allegations made on behalf of the plaintiff is documentary evidence, then the court can examine that evidence to see if there is any basis on which it could provide support for a plaintiff’s allegations. Third, and finally, a court may examine an allegation to determine whether it is a mere assertion and, if so, to consider whether any credible basis has been put forward for suggesting that evidence might be available at trial to substantiate it. While there may be other unusual circumstances in which it would be appropriate for the court to engage with the facts, it does not seem to me that the proper determination of an application to dismiss as being bound to fail can, ordinarily, go beyond the limited form of factual analysis to which I have referred.”
3.4 One might have hoped that it would not have proved necessary to revisit the general principles which underlie the inherent jurisdiction to strike out so soon after Keohane. However, the circumstances of this case do, in my view, make it necessary to add to the general analysis to be found in Keohane.
3.5 I should start by saying that I do not consider it necessary to depart in any way from, or to refine the views expressed in Keohane. As noted in the passages already cited, an application to dismiss under the inherent jurisdiction is not some form of surrogate summary disposal procedure. While the court can engage with the facts (and in particular documentary facts) there are what I described in Keohane as “significant limitations” to the extent to which such an engagement is appropriate.
3.6 However, in addition, it seems to me that the comments made in Keohane in reality stem from a more fundamental principle. The default position in respect of any proceedings is that they should go to trial. Depriving the parties of a full trial in whatever form is appropriate to the proceedings concerned is a departure from the norm, and one which should only be engaged in when it is clear that there is no real risk of injustice in adopting that course of action.
3.7 I would not wish to indicate that the criteria by reference to which the courts consider whether to adjourn proceedings commenced by summary summons to plenary hearing (and thus give the defendant leave to defend) are necessarily exactly the same as those which apply in an application to dismiss under the inherent jurisdiction. However, there are broad similarities which make it useful to refer to the ‘leave to defend’ jurisprudence, at least by analogy.
3.8 In McGrath v. O’Driscoll [2007] I.L.R.M. 203, I said the following at p.210:-
“So far as questions of law or construction are concerned the court can, on a motion for summary judgment, resolve such questions (including, where appropriate, questions of the construction of documents), but should only do so where the issues which arise are relatively straightforward and where there is no real risk of an injustice being done by determining those questions within the somewhat limited framework of a motion for summary judgment.”
3.9 That passage was expressly approved of in this Court in the judgment of Denham J. in Danske Bank v. Durkan New Homes [2010] IESC 22 (see para. 16).
3.10 There is at least a partial analogy between the position of a defendant faced with an application for summary judgment in summary summons proceedings and a plaintiff faced with an application to dismiss under the inherent jurisdiction. In both cases, the suggestion is that the relevant party should not get a full plenary hearing. In both cases, the reason why it is suggested that there should not be a full plenary hearing is based on a contention that there would be no point because there is either no defence (in the case of a defendant in summary summons proceedings) or no claim (in the case of a plaintiff faced with an inherent jurisdiction application) which would justify imposing the burden and expense of a full plenary hearing on the opponent in question.
3.11 However, it is clear from McGrath that, while the Court has an entitlement in a summary summons application for judgment to resolve questions of law or the interpretation of documents, that entitlement should only be exercised where it is possible and appropriate so to do within the confines of a motion without running the risk of injustice. It seems to me that a similar consideration necessarily applies concerning the extent to which it is appropriate to get into complex issues of law or construction on an application to dismiss a case as being bound to fail. Like the summary judgment motion, such an application will be heard on affidavit and within the confines of a motion rather than at a full hearing. The test which the court is required to apply is very similar. In a summary judgment application, it is as to whether it is very clear that the defendant has no defence (this test is now well established, going back at least to Aer Rianta cpt v. Ryanair Ltd. [2001] 4 IR 607). That is very similar to the test applied in a Barry v. Buckley application which requires the court to be satisfied that the claim is bound to fail or, to use the language of the summary judgment jurisprudence, that it is very clear that the plaintiff has no case and thus that the plaintiff’s claim is bound to fail.
3.12 It seems to me to follow from that analysis that there are cases which are just not suitable for an application to dismiss under the inherent jurisdiction. Clearly, cases involving factual disputes (save to the very limited extent to which it is appropriate to engage with the facts as identified in Keohane) have already been held to fall into that category. However, it seems to me that there are also limitations on the extent to which cases which involve issues of law or construction can properly be the subject of an application to dismiss under the inherent jurisdiction. The limitation is similar to that which was identified in McGrath as applying in the context of summary judgment motions. A court should not entertain an application to dismiss where the legal issues or questions of construction arising are themselves complex and such as would require the type of careful analysis which can only be carried out safely at a full trial and in circumstances where the facts can be fully explored.
3.13 As far back as Sun Fat Chan v. Osseous [1992] 1 I.R. 425, McCarthy J. made the apposite comment that:-
“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.”
3.14 A good example can be found in the distinction between the facts determined in Bakht v. The Medical Council [1990] 1 I.R. 515, and those found in the subsequent case of Philips v. The Medical Council & ors [1991] 2 I.R. 115. In the latter case, Costello J. felt free to depart from the facts found in Bakht (which had been heard on affidavit) because a more complete account became available as a result of the oral evidence tendered in Philips. That was so notwithstanding the fact that the issues were to a significant extent either legal or documentary. The fact that two High Court judges came to different conclusions on what were, to a significant extent, facts which were the subject of a documentary record in, respectively, judicial review proceedings heard on affidavit and plenary proceedings heard on oral evidence is a salutary lesson against the overuse of applications which prevent a full plenary hearing.
3.15 That is not, of course, to say that there will not be cases where the legal or documentary issues may be clear and straightforward such that it is safe for the court to reach a conclusion on those questions on the hearing of a motion to dismiss. That is also not to say that the fact that a plaintiff may make a large number of points, each one of which is clearly unstateable, should not prevent a dismiss from being ordered. As Denham J. observed in a different context in Bula v. Tara Mines Ltd. (No. 6) [2000] 4 I.R. 412 at p.462, “seventeen noughts are still nothing.”
3.16 But I would caution against the appropriateness of the use of the application to dismiss under the inherent jurisdiction of the court in relation to proceedings where, even if there are no factual disputes or any such factual issues as might arise come within the strictures identified in Keohane, nonetheless the legal issues or questions concerning the proper interpretation of documentation are complex. In such cases, the very complexity of the issues (even if the court has a fairly clear view on them) makes it difficult to determine, within the confines of a motion heard on affidavit, that the plaintiff’s case is such that it can safely be said that it is bound to fail.
3.17 For the reasons identified by Murray J. in Jodifern Ltd. v. Fitzgerald [2000] 3 IR 321, and as applied in Keohane, a motion to dismiss should not be used as a means of obtaining a summary disposal of the case in circumstances where the issues which will need to be addressed in deciding whether the proceedings are bound to fail are themselves complex. Leaving aside those cases which might fall into the “seventeen noughts are still nothing” category, it is necessary to consider whether a case where the issues have to be analysed on appeal, as they were in this case, for a full days hearing, can avoid the appropriate depiction of being too complex to be properly dealt with within the ambit of a motion to dismiss as being bound to fail.
3.18 Before going on to consider whether this case is appropriate for an application to dismiss, it is also necessary to touch on one general issue which arises from the argument strenuously put forward on behalf of both Ulster Bank and the Receiver to the effect that the case made on appeal on behalf of Moylist differed, to a very considerable extent, from the case made in the High Court. I turn to that question.
4. A New Case on Appeal
4.1 The circumstances in which it may be appropriate to allow for at least some evolution in a party’s case on an appeal were considered in detail by this Court in Lough Swilly Shellfish Growers Co-operative Society Ltd. & anor v. Bradley & anor [2013] 1 I.R. 227 at para. 27, in which the judgment of the Court was given by O’Donnell J. Lough Swilly reiterated the importance of a party bringing forward its full case at trial and identified the limited circumstances in which it may be appropriate for this Court to allow at least some evolution in the case made on appeal.
4.2 It is, however, appropriate also to have regard to one aspect of the decision of this Court in Lopes v. Minister for Justice, Equality and Law Reform [2014] 2 I.R.301 (see para. 78) as commented on in I.B.R.C. v. McCaughey [2014] 1 IR 749 at para. 24. It is clear that some additional leeway may properly be given on appeal to a party who is faced with being deprived of what might otherwise be their entitlement to a full trial. As McCarthy J. made clear in Sun Fat Chan, a case will not be dismissed if there is any reasonable amendment to the pleadings which could save it from being unstateable. That observation stems from the general principle that the court should be slow to dismiss proceedings as being bound to fail and should only do so in a clear case. While a plaintiff who is faced with a motion to dismiss has an obligation to put forward the basis on which it is suggested that a sustainable claim exists at the hearing of the motion, nonetheless the fact that the plaintiff may be deprived of a full hearing should any appeal result in a decision that the proceedings should be dismissed means that the court may in some circumstances be prepared to give greater latitude to such a plaintiff to argue further grounds on appeal.
4.3 As is implicit in the judgment of O’Donnell J. in Lough Swilly, it is necessary for a court which has to consider whether to allow an additional argument to be advanced on appeal to engage in a balancing exercise. On the one side, there is the risk that, if a party is excluded from arguing a new ground, a case which might otherwise be capable of being won may be lost. On the other side, there is the potential unfairness to a party which has met the case made against it at a hearing in the High Court and is then asked to meet a different case on appeal. The very factors identified by O’Donnell J. in Lough Swilly do, of course, touch on the extent of that prejudice. In addition, it is necessary for any court to take into account the fact that an excessive indulgence in favour of allowing parties to argue new cases on appeal can only be likely to lead to parties being less concerned to ensure that their full case is presented before the first instance court, thus, in turn, leading to a significant additional burden on court time and a risk of injustice across a whole range of cases. Except in the sort of cases identified by O’Donnell J. as being towards the appropriate end of the spectrum, that balance will lead to the exclusion of a new ground. The point which I would wish to make, however, is that where an appeal relates to an application to dismiss as being bound to fail, an additional factor has to be brought into that balancing exercise, being the fact that the plaintiff concerned will, if the application is ultimately successful as a result of the outcome of the appeal, be deprived of their opportunity to have a full hearing at all. That factor will not be decisive, but it may tip the balance in an appropriate case.
4.4 Having made those general observations, I now turn to the case which Moylist asserts is not bound to fail.
5. The Case Made by Moylist
5.1 As pointed out at the beginning of this judgment, the commercial issue which arises between the parties in truth centres on the question of who should suffer as a result of the collapse of Mr. O’Carroll’s development venture. The only substantial funds available were those which might be realised from a sale of the development in the state in which it was (quite close to completion) when the venture collapsed. Should those funds ultimately go to Ulster Bank (through the Receiver) which is, of course, the entity which put up the money (quite an amount of it unpaid) which allowed those aspects of the development, for which Moylist was in fact paid, to be constructed? On the other hand, is it to be Moylist, who constructed the development without having been paid for at least part of that construction? In such cases, the likely result will depend on a fine analysis of the technical legal position. (See for example the comments to the same effect in Headstart Global Fund Ltd. v. Citco Bank Nederland NV and ors [2010] IEHC 334).
5.2 Whether or not it is appropriate to refer to the issue as being one which fits neatly into the technical definition of “priorities”, there can be little doubt that the issues debated before this Court over the course of a full day at least fit within a colloquial description of priorities. That Moylist had a certain entitlement to enter into possession of the development as a result of the building contract which it entered into with Mr. O’Carroll is not in doubt. The legal extent of that entitlement may, however, be dependent on the proper construction of what was, in effect, a standard form RIAI contract. In particular, the question of whether Moylist could have any continuing entitlement, even as against Mr. O’Carroll, to possession in circumstances where all work had ceased and where, on the evidence currently available, the level of retained possession was, at its height, quite minimal is a further question.
5.3 On the other side of the equation, questions were raised as to whether, on the true construction of what appears to be a standard form Ulster Bank general mortgage agreement, Ulster Bank was entitled to go into possession or to put in a receiver having regard to the provisions of that deed, and relevant provisions of the Conveyancing Act 1881, the Registration of Title Act 1964 and the Land and Conveyancing Law Reform Act 2009.
5.4 But if it were to transpire that Ulster Bank and/or the Receiver had a right to possession vis a vis Mr. O’Carroll but that Moylist also had a similar right, then the issue of which entitlement would have to prevail would arise. That issue would require a consideration of the nature of the entitlement of Ulster Bank under its mortgage. This question may be complicated because of the unexplained fact that there was a considerable delay by Ulster Bank in registering its charge, thus giving rise to at least an argument as to the status of that mortgage, as against any entitlements established by a third party, during the period prior to its registration. In that context, it should be noted that it would appear that, whatever might have been the legal status of that possession, Moylist may well have been in possession prior to the registration of Ulster Bank’s charge. On the other hand, it would seem that the high water mark of the case which could be made by Moylist is to the effect that it held a contractual license. However, as noted earlier, there may be an argument as to whether that right to possession had been terminated in accordance with the terms of the contract. Furthermore, as also noted earlier, there may be a question as to whether the relatively minor acts of continuing possession which Moylist asserts could be sufficient to establish the retention of possession. On top of all of those matters, there is then the further question of the legal consequences of the agreement which was entered into between the receiver and Moylist after the receivership had come into being, whereby Moylist was contracted to finish out the works on the site for an agreed sum of money. At least some of those issues may turn out to involve mixed questions of law and fact. Equally, the result of some of those issues may, in turn, impact on other issues, and might have an effect on the overall assessment concerning which right to possession might be said to prevail.
5.5 In the High Court, Laffoy J. (at para. 32 of her judgment) cited the judgment of Vinelott J. in the High Court of England and Wales in Astor Chemical Ltd. v. Synthetic Technology Ltd. [1990] B.C.L.C. 1 as authority for the approval of the analysis to be found in Lightman and Moss, The Law of Receivers of Companies (1986) at p.81. It is not necessarily the case that the passage in question fully represents the law in this jurisdiction in all of its detail. The passage certainly recognises that there may be circumstances where a person is granted a charge on property where there is a contractual obligation in favour of another person which is inconsistent with either the grant or enforcement of the charge. In some such circumstances, it seems from that authority that an injunction may be available. There is no doubt but that the passage concerned refers to “actual” knowledge rather than any form of imputed knowledge of the conflicting contractual obligation. But whether a requirement, in this context, for actual knowledge in its purest form might represent the law in this jurisdiction may represent, in itself, a complex issue. If it were decided that there should be a departure from an “actual knowledge” test in its purest form then the fact that it may be inferred that Ulster Bank was well aware that a building contract was going to be entered into might be of some relevance to the competing interests in this case, particularly given that the form of contract actually entered into was in a standard form which might well be expected to be executed in any building arrangement. If that be so, then questions of who knew what and when might become relevant.
5.6 The above list of the questions which were debated before this Court is not exhaustive, but it perhaps explains why this appeal was at hearing for a full day. As I have concluded that this case is not appropriate for determination on a motion to dismiss, I will refrain from expressing any view on the merits of the points raised, for that might be taken to interfere with the proper role of the trial judge who will now have to hear this case. I should emphasise that nothing that I have said should be taken as in any way necessarily implying that the basis on which both Ulster Bank and the Receiver suggest that Moylist’s claim can be defended may not turn out to provide a clear and full defence. The problem is that to reach such a conclusion, in the circumstances of this case and on a motion to dismiss, would require the Court to engage in a detailed analysis of each of the points raised, not for the purposes of determining who was right and who was wrong, but rather to determine whether Ulster Bank and/or the Receiver was sufficiently and clearly right to the extent that it became manifest that Moylist had made a claim which was bound to fail. That sort of detailed analysis is not, in my view, appropriate on an application to dismiss a case as being bound to fail. To allow for that sort of detailed analysis would be to permit the form of summary disposal which Murray J. cautioned against in Jodifern.
5.7 To the extent that some of the argument ranged over issues which, it was said, had not been raised by Moylist in the High Court, I would, at least for the purposes of this application, be nonetheless prepared to take them into account. Ulster Bank in particular suggested that some of the matters raised in this Court for the first time gave rise to factual questions on which, had the issues concerned been raised in the High Court, the bank might have put forward additional evidence. There may well be some merit in that point, to a limited extent. However, quite a number of the points said to be new were, to a significant extent, purely legal or documentary and, where documentary, were based on the same documents which were already before the Court. In the light of the latitude which can properly be shown in respect of legal arguments, and in particular in circumstances where to do otherwise might lead to a plaintiff’s case being dismissed when it was not truly bound to fail, I would not exclude from Moylist the opportunity to rely on such arguments in this case.
5.8 In those circumstances, I have come to the conclusion that this case was just too complex to be properly disposed of in the context of an application to dismiss as being bound to fail. It may or may not have appeared to be so complex when the motion was originally brought. Indeed, the bringing of that motion has to be seen in the context of the fact that similar issues were required to be addressed in the context of the application for an injunction brought by Moylist in which it would have been necessary for Moylist to establish that it had a fair case to be tried. However, given the way in which the application to dismiss developed, it seems to me that it is, at a minimum, no longer appropriate to deal with these issues in the context of a motion to dismiss.
5.9 I should make clear that I have come to that view not just because there are a significant number of points raised on behalf of Moylist, for I am mindful of the fact that “seventeen noughts are still nothing”. However, in this case, the individual points, or at least many of them, are sufficiently complex in themselves that it cannot be said that each of them is a “nothing” so that each of them, in turn, can be found, in a simple and clear way, to provide no basis for a sustainable claim. It should be made clear, for the avoidance of doubt, that the High Court retains an obligation to assess whether, in the way in which an application to dismiss as being bound to fail may evolve, the issues raised remain sufficiently clear and easy to resolve as to render it appropriate to determine them within the confines of such a motion. Where that is not the case, then the High Court should be free to decline to enter into the merits of those points at all. To use a sporting analogy, the ‘dismiss as being bound to fail’ jurisdiction is intended to deal with the “slam dunk”. It can, perhaps, also be used to deal with a number of separate points, each one of which is clearly also a slam dunk. But where, to take a further sporting analogy from a different sport, it might be necessary to refer to the TMO, even if only on the basis of the question which invites an answer to whether there is any reason not to award the try, the case is not suitable for such a motion. To deal with such issues on such a motion is to slip into the error of giving the defendant the type of summary disposal which our procedural law does not provide for and which Murray J. cautioned against in Jodifern. Such issues, by analogy with McGrath, cannot safely be dealt with in the confines of a motion on affidavit.
6. Conclusions
6.1 For the reasons set out in this judgment I would, therefore, allow the appeal and discharge the order of the High Court dismissing these proceedings as being bound to fail.
6.2 It follows that the proceedings should now follow their ordinary course in the High Court. However, having regard to the considerable delay which has been encountered by reason of this excursion into what I have held to be an inappropriate form of summary disposal, it seems to me that every effort should be made to afford this case the earliest possible trial date in the High Court.
Vico Ltd v Bank of Ireland [2016] IECA 273.
JUDGMENT of Ms. Justice Finlay Geoghegan delivered on the 12th day of October 2016
1. This appeal as issued is against an order of the High Court (McGovern J.) of the 28th July, 2015, made pursuant to a written judgment delivered on the 24th July, 2015.
2. That judgment and order concerned an application made by the first, second and third named defendants (“the defendants”) pursuant to a notice of motion dated the 17th April, seeking orders:-
1. Directing the vacating of a lis pendens registered on the application of Vico Limited (“Vico”) in relation to the property and lands in Killiney Co. Dublin known as “Gorse Hill”.
2. An order striking out the claims of the plaintiffs against the defendants on the grounds that the claims are res judicata and/or an abuse of process.
3. In the alternative order striking out the said claim pursuant to O. 19, rr. 27 and 28 of the Rules of the Superior Courts.
3. The said motion was heard on affidavits sworn on behalf of the defendants and by the second to fifth named plaintiffs. Mr. Blake O’Donnell who is a solicitor admitted in England and Wales represented Vico and himself and his siblings relied upon his submissions. The order made by the High Court was that the lis pendens registered against Gorse Hill be vacated and that the claims of the plaintiffs against the defendants be struck out and an order for costs was made in favour of the defendants against the plaintiffs.
4. The remaining defendants did not participate in the motion before the High Court and are not respondents to the appeal and hence references in this judgment to “the defendants” are unless otherwise stated, means the first, second and third defendants only.
5. The notice of appeal served on behalf of the plaintiffs also sought to appeal against a determination of the High Court judge that he should not recuse himself. That decision had been made on the 27th April, 2015. This Court has the transcript of that hearing. On that date the High Court judge considered and determined a number of matters in relation to the defendants’ motion and the application for entry of the proceedings into the commercial list and related application for directions. These included directions in relation to further affidavits on the defendant’s motion. No order of the High Court was drawn at that time. Subsequent to the lodging of the appeal from the order of 28th July, 2015, to this court, an order in respect of the decisions made on 27th April, 2015, was drawn and perfected on the 3rd November, 2015.
6. By agreement between the parties to the appeal this Court was asked to determine, as part of this appeal, the plaintiffs appeal against the refusal of the judge to recuse himself from these proceedings, such decision having been made on the 27th April, 2015.
Background
7. The issues raised by this appeal can only be understood in the context of the disputes between the first named defendant (“the Bank”) and the third named defendant (“the Receiver”) and the plaintiffs and the parents of the second to fifth named plaintiffs (“Mr. and Mrs. O’Donnell”) and the related litigation. The second to fifth named plaintiffs have in a number of judgments, notwithstanding their majority, been referred to as “the O’Donnell Children” and I propose continuing that appellation.
8. In 2010, the Bank commenced summary proceedings against Mr. and Mrs. O’Donnell in respect of joint and several borrowings. Ultimately in those proceedings there was a judgment in favour of the Bank against Mr. and Mrs. O’Donnell in December 2011, for a sum of approximately €71m. Vico had guaranteed the liabilities of Mr. and Mrs. O’Donnell to the Bank and granted security over property of which it undisputedly was the legal owner. The property at Vico Road, Killiney, is known as Gorse Hill. In June 2012, the Bank made demand on Vico and in default of payment appointed the third named defendant as Receiver over Gorse Hill.
9. On the 30th July, 2012, the O’Donnell Children commenced plenary proceedings (2012 No. 7554 P) against the Bank, Bank of Ireland Private Banking Limited (“BOIPB”) and the Receiver seeking declarations that the deeds of mortgage, guarantees and indemnities executed by Vico in favour of the Bank were void and of no legal effect and related declarations. Those proceedings were heard by the High Court in July 2013 and by written judgment of the 31st July, 2013, the reliefs claimed were refused. Pursuant to that judgment by order of the 12th September, 2013, the High Court ordered, inter alia, that the O’Donnell Children vacate the premises at Gorse Hill by Monday the 21st October, 2013.
10. The O’Donnell Children appealed the High Court judgment and order and by agreement were not required to give up possession pending determination of the appeal. The appeal was dismissed for the reasons set out in a written judgment delivered by Laffoy J. on the 19th December, 2014.
11. Following a further hearing before the Supreme Court by order of the 2nd February, 2015, it ordered that the period in the High Court order of the 12th September, for the O’Donnell Children to vacate Gorse Hill be extended to 12.00 noon on Monday the 2nd March, 2015.
12. Throughout this period the O’Donnell Children, or some of them, had been living at Gorse Hill and Mr. and Mrs. O’Donnell had been living in England. Shortly prior to the 2nd March, Mr. and Mrs. O’Donnell returned to live at Gorse Hill.
13. On the 25th February, 2015, the present proceedings were issued by Vico and the O’Donnell Children (2015 No. 1553 P). The reliefs sought in the plenary summons include declarations that the guarantees, indemnities, mortgage and charges granted by Vico to the Bank are void and orders “overturning” the orders made by the High Court on the 12th September, 2013 and the Supreme Court on the 2nd February, 2015, requiring the O’Donnell Children to vacate Gorse Hill by the 2nd March, 2015.
14. In these proceedings a motion was issued on the 25th February, 2015, by the plaintiffs seeking interlocutory injunctions restraining the Bank, BOIPB and the Receiver from taking possession of Gorse Hill and also seeking a stay on the order of the High Court of the 12th September, 2013, as varied by the Supreme Court order of the 2nd February, 2015. The application was heard by McGovern J. and an ex tempore judgment delivered on the 3rd March, 2015, refusing the application upon the basis that the plaintiffs had not established a fair issue to be tried.
15. In the meantime the Bank and the Receiver had instituted proceedings against Mr. and Mrs. O’Donnell and issued a motion seeking an interlocutory injunction restraining the defendants and others with notice of the order from inter alia, trespassing, interfering with or entering Gorse Hill and also an order directing Mr. and Mrs. O’Donnell and others to vacate Gorse Hill and restraining interference and obstruction with the Receiver. Following a hearing, orders to that effect were made in those proceedings by McGovern J. on the 12th March, 2015. That order and judgment was the subject of an appeal to this Court. That appeal was inter alia against a refusal by McGovern J. to recuse himself from hearing the injunction application. The appeal was dismissed for the reasons set out in a judgment of the Court delivered on the 15th April, 2015. The members of the Court who subscribed to that judgment are the same members of the Court who heard the present appeal.
16. Subsequently leave was refused by the Supreme Court to appeal against the judgment and order of this Court.
17. There had been other proceedings between the Bank and members of the O’Donnell family, in particular in relation to the adjudication of Mr. and Mrs. O’Donnell as bankrupt. It is not necessary to refer to those proceedings for the purposes of an understanding of the issues in this appeal.
18. As already indicated, in these proceedings the defendants who are jointly represented issued a motion seeking to have the lis pendens vacated and the proceedings struck out. I propose firstly considering the appeal against the decision of the High Court on that motion. It was heard on extensive affidavit evidence which inter alia referred to the pleadings and judgments in the earlier proceedings. The motion was heard in June 2015 and the High Court judge reserved his judgment and delivered a considered written judgment on the 24th July, 2015.
High Court decision on defendants’ motion
19. The High Court in summary acceded to the defendants’ application that the plaintiffs’ claims be struck out in application of the principles in Henderson v. Henderson (1843) 3 Hare 100, as restated and expanded upon by Bingham L.J. in Johnson v. Gore Wood & Co [2002] 2 AC 1 and approved of and applied in this jurisdiction by the Supreme Court inter alia in Carroll v. Ryan [2003] I.R. 309, A.A. v. Medical Council [2003] 4 IR 302 and Re. Vantive Holdings [2010] 2 I.R. 118. In accordance with the principles set out therein the trial judge distinguished between the position of the O’Donnell Children who were parties to the prior Gorse Hill proceedings and that of Vico which was not a party to the proceedings, but as an Isle of Man company limited by shares, was a separate legal person albeit as he determined in the full control of the O’Donnell Children as of the 18th July, 2012, and could have been joined in the Gorse Hill proceedings as a co-plaintiff or could have initiated parallel proceedings at that time against the Bank.
Appeal
20. The appellants do not contend that the legal principles identified by the High Court judge were incorrect. Rather they submit that he incorrectly applied those principles to the facts. The relevant facts identified by the trial judge are not in dispute.
21. The primary submission of the appellants in relation to the position of Vico is that it was not a party to the Gorse Hill Proceedings and that those proceedings did not deal with the alleged breach of fiduciary duties of the then directors of Vico in entering into the relevant guarantees and indemnities with the Bank and granting security over the property at Gorse Hill. They submit that there was no finding by the High Court or Supreme Court in the Gorse Hill proceedings against Vico that the securities granted by it are valid. They seek to raise in these proceedings the absence of any resolution of Vico authorising the granting of the securities and to allege that the giving of the guarantees and granting of securities were ultra vires Vico.
22. In relation to the position of both Vico and the O’Donnell Children, they seek to rely upon the fact that the present proceedings include claims which were not made in the Gorse Hill proceedings and in particular an allegation that the Bank either negligently or fraudulently represented that BOIPB was a credit institution or bank within the meaning of s. 7 of the Central Bank Act 1971. However, Mr. O’Donnell was careful in his oral submission to this Court to state and whilst he contended, as appears to have been correct that witnesses on behalf of the Bank may have referred to BOIPB as a bank, that he was not saying that evidence was given that it was a licensed bank.
23. The appellants separately contended that the trial judge was in error in acceding to the application of the defendants in advance of their filing a defence in the proceedings.
24. The respondents relied upon the High Court judgment as correctly stating the applicable principles and applying them correctly to the facts. In particular they rely upon the identity of the purpose and object of the Gorse Hill proceedings and present proceedings; the similarity of the reliefs sought; the fact that the O’Donnell Children were the shareholders of Vico at the time of commencement of the Gorse Hill proceedings and their parents the directors of same and the subsequent application brought on their behalf in the Gorse Hill proceedings to join Vico as a defendant which was withdrawn before it was heard. They relied extensively upon the judgment of Laffoy J. in the Supreme Court in the Gorse Hill proceedings which addressed the relevant issues and identified other issues which had been before the High Court, but which were not proceeded with on appeal. They submit that there was no evidence before the High Court, in relation in particular to the Bank/BOIPB issue, that any relief in the Gorse Hill proceedings was obtained by fraud.
The Law
25. The rule in Henderson v. Henderson, as it is commonly known deriving from the decision in Henderson v. Henderson (1843) 3 Hare 100 is a rule to prevent abuse of process. The underlying principle is similar to that in res judicata namely the public interest in those who resort to litigation obtaining a final and conclusive determination of their disputes.
26. I would adopt the explanation of the rule given by Cooke J in the High Court in Re:Vantive Holdings & Others and the Companies Acts 1963-2006 [2009] IEHC 408, para. 32-33. and cited on appeal by Murray C.J. in Re. Vantive Holdings [2010] 2 I.R. 118, at p. 124:-
“The rule in Henderson v. Henderson is to the effect that a party to litigation must make its whole case when the matter is before the court for adjudication and will not afterwards be permitted to reopen the matter to advance new grounds or new arguments which could have been advanced at the time. Save for special cases, the plea of res judicata applies not only to issues actually decided but to every point which might have been brought forward in the case. In its more recent application this rule is somewhat mitigated in order to avoid its rigidity by taking into consideration circumstances that might otherwise render its imposition excessive, unfair or disproportionate.”
27. The special cases referred to by him are those primarily where the judgment was procured by fraud: see Dublin Corporation v. Building and Allied Trade Union [1996] I.R. 468 at 481. The nature of the fraud which must be proved was identified by Fennelly J. in Kenny v. Trinity College Dublin [2008] IESC 18, at paras. 54 to 55 where he set out the evidential requirements in an action to set aside a final judgment:-
“54. I am satisfied that, in order to ground an action to set aside a judgment, the plaintiff must allege fraud in the true sense, that is deliberate and purposeful dishonesty, knowing and intentional deceit of the court. That approach is consistent with the statement of principle made by Keane J, in Dublin Corporation v Building & Allied Trade Union and others, with the interests of parties to litigation who have secured a final decision of a court and with the overriding public interest in finality of litigation.
55. In addition, the fraud alleged must be such as to affect the impugned decision in a fundamental way. It will not suffice to allege that the new situation revealed by the uncovering of the fraud might have affected the judgment. It will not be enough to show, for example, that a witness lied unless it is shown that the true version of his evidence would probably have affected the outcome. . . . I believe that, in an action to set aside a judgment based on an allegation that the court was deliberately deceived into making the impugned decision no less stringent test should be required. There must be something fundamental, something that goes to the root of the case.”
28. The restatement of the abuse of process rule from Henderson v. Henderson by Lord Bingham in Johnson v. Gore Wood & Co. [2002] 2 AC 1 at 31, has been approved of by the Supreme Court in this jurisdiction in a number of cases including Re. Vantive Holdings [2010] 2 I.R. 118. There he stated:-
“. . . But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”
29. In the same decision Lord Bingham addresses the position where one or more of the parties to the second set of proceedings was not a party to the first proceedings. This is relevant given the addition of Vico (which was not a party to the Gorse Hill proceedings) as a plaintiff in the current proceedings. Lord Bingham at p. 32 determined that the courts below in those proceedings had correctly rejected a submission that the rule in Henderson v. Henderson did not apply because the personal plaintiff, Mr. Johnson had not been a party to the first action, but rather a company had been. He then identified as the correct approach that formulated by Sir. Robert Megarry V.C. in Gleeson v. J. Wippell & Co. Ltd. [1977] 1 WLR 510, where he said:-
“Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase ‘privity of interest’.”
Conclusion
30. I have concluded that the trial judge both correctly identified the above principles as those to be applied and correctly applied the principles to the facts herein in deciding to strike out the plaintiffs’ claims in these proceedings. My reasons are as follows.
31. It is necessary to distinguish between the position of the O’Donnell Children who were parties to the Gorse Hill proceedings and Vico which was not. In relation to the O’Donnell Children, I am satisfied from a careful consideration of the plenary summons and statement of claim in these proceedings, together with the grounding affidavits on the motion and the judgments, in particular that of Laffoy J. in the Supreme Court in the Gorse Hill proceedings that all of the claims which the O’Donnell Children now wish to pursue in these proceedings were claims which either were made and pursued or ought to have been made and pursued in the Gorse Hill proceedings. Mr. O’Donnell in the course of submissions accepted that the object of both sets of proceedings is the same, namely to have declared void the securities given by Vico to the Bank and to prevent the Bank or Receiver taking possession of Gorse Hill. It is of course necessary as identified by Lord Bingham that the court consider all the relevant facts and not just decide the question having regard to the object of the proceedings. Nevertheless it is relevant that in the Gorse Hill proceedings as identified by the Supreme Court per Laffoy J. at para. 2 of her judgment that “the primary objective of the appellants was and is to procure that the securities held by [the Bank and BOIPB] over Gorse Hill should be declared to have no effect or should cease to have effect”. That is similarly the primary object of the present proceedings.
32. In relation to the contention made on behalf of the appellants in relation to the position of BOIPB and either the evidence given or new facts available, in my judgment the appellants have not adduced any facts which would meet the test identified by Fennelly J. in Kenny, so as to claim that the earlier judgments were obtained by the Bank or BOIPB by reason of fraud. Further the evidence demonstrates that, from the outset, the facility letters to Mr. and Mrs. O’Donnell constituting the loan agreements guaranteed by Vico indicated that the monies were loaned by “The Governor and Company of the Bank of Ireland through its subsidiary Bank of Ireland Private Banking Limited”. Further certain of the facility letters i.e. that of the 10th May, 2006, exhibited as BOC8 to the affidavit of Brian O’Connor sworn on the 17th April, 2015, in the motion in the High Court states at p. 3: “Bank of Ireland Private Banking is regulated by the Financial Regulator as a Mortgage Intermediary”.
33. Further, I do not accept the appellants’ submission that the High Court was incorrect in deciding the defendants’ application to strike out the proceedings as an abuse of process in advance of their filing a defence. As pointed out by Lord Bingham in Johnson v. Gore Wood at p. 34 “an application to strike out for abuse of process is not a defence; it is an objection to an action being brought at all”. The nature of the action now sought to be brought by the plaintiffs herein was evident from the statement of claim filed and the application could be determined having regard to the statement of claim.
34. In relation to the position of Vico, I have concluded that the trial judge was correct in deciding that upon the facts herein, there was a “sufficient degree of identity” between Vico Limited and the O’Donnell Children in the words of Megarry V-C to make the decision in the Gorse Hill proceedings binding on it and preclude further proceedings seeking to declare void the security granted by it to the Bank.
35. The evidence is that on the 18th July, 2012, the shares in Vico Limited were transferred to the O’Donnell Children. At about the same time Mr. and Mrs. O’Donnell became directors of Vico Limited. Thus the O’Donnell Children could have joined Vico Limited as a party to the Gorse Hill proceedings when they commenced same on the 30th July, 2012, or could have sought to join it as a plaintiff at a later date. They did bring an application to join it as a defendant shortly before the hearing in the High Court in 2013, but did not proceed with that application. Mr. O’Donnell in submission referred to the fact that for some part of the period during which the Gorse Hill proceedings were extant Vico was struck off the register in the Isle of Man. That fact in my view does not alter the position that Vico, at relevant times, was wholly owned by the O’Donnell Children and it was within their power and procurement to join it as a party to the Gorse Hill proceedings. They arranged to have it restored to the register prior to commencement of these proceedings.
36. Further, Laffoy J. in her judgment in the Supreme Court in the Gorse Hill proceedings having stated the primary object of the proceedings was to declare the securities granted by Vico Limited void or of no effect, at para. 75 of her judgment identifies the basis upon which the O’Donnell Children pleaded that they were entitled to the relief sought which included matters now sought to be raised namely “the giving of the guarantees and the related securities to the Bank by Vico Limited contravened the relevant company legislation under which it was incorporated”.
37. Further notwithstanding that Vico was not a party to the Gorse Hill proceedings, the trial judge considered and determined certain claims in relation to the alleged ultra vires acts of Vico in granting the security and alleged breach of duty of the then directors of Vico. On appeal to the Supreme Court it appears that no appeal was pursued against those findings adverse to the plaintiffs in the Gorse Hill Proceedings. At para. 144 of her judgment Laffoy J. stated:-
“As, because of the re-orientation by the appellants of their case, there was no issue on the appeal as to the capacity of Vico Limited to grant the guarantees and related securities over its asset, Gorse Hill, to the Bank, and there was no contention that the directors of Vico Limited acted in breach of their fiduciary duties, they having obtained the sanction of the sole shareholder, the Trustee of the Discretionary Trust, to the giving of those guarantees and securities, there is no basis for concluding that the findings of the trial judge, on the basis of the evidence before him as to the law of the Isle of Man, that Vico Limited did have such capacity and that the securities were not given in breach of the fiduciary duties of the directors of Vico Limited were other than correct. Accordingly, those findings stand.”
38. Accordingly, following the approach of Bingham L.J. my conclusion on the “crucial question” is that the High Court was correct in determining that in all the circumstances of these proceedings that all the plaintiffs including Vico in commencing these proceedings is abusing the process of the court by seeking to raise in these proceedings issues which either have been raised or could have been raised in the Gorse Hill proceedings. Further in all the circumstances of this litigation the striking out of the proceedings is not excessive, unfair or disproportionate.
Decision not to recuse
39. As already indicated the appellants have included in this appeal against the order of the High Court made on the 28th July on the first to third named defendants’ motion to vacate the lis pendens and strike out the proceedings an appeal against the earlier decision made by McGovern J. in these proceedings on the 27th April, 2015, not to recuse himself from hearing the motion.
40. The respondents to the appeal have taken no technical procedural point against the court determining that appeal as part of this appeal. The court likewise is not taking any technical or procedural point in relation to how the appeal comes before it.
41. Nevertheless I have concluded that in the light of my decision to uphold the substantive decision of the High Court on the defendants’ motion to strike out (with which I am aware my colleagues agree) that this Court should not now determine the appeal against the decision of the High Court judge on 27th April, 2015, to refuse to recuse himself for the following reasons.
42. The application to the High Court judge to recuse himself was made at a hearing when the substantive proceedings and the defendants’ motion to strike out were before him on the 27th April, 2015. In addition to deciding that he would not recuse himself on either of the grounds advanced he also gave directions inter alia for the filing of further affidavits in preparation for the hearing of the defendants’ motion.
43. The Court has had the copy of the transcript of the hearing on the 27th April, 2015, including the judge’s ex tempore decision on the recusal application and the other directions given. Mr. Blake O’Donnell was present at that hearing. The plaintiffs were therefore aware of his decision not to recuse himself. It does not appear that the plaintiffs made any attempt to appeal that decision at that time or at any point prior to the hearing of the motion on 9th June, 2015. Rather the plaintiffs complied with the directions in relation to the preparation for the hearing of the defendants’ motion including the filing of written submissions and subsequently appeared and participated in the hearing of the defendants’ motion before McGovern J. without further objection. It was only subsequent to the judgment and order on that motion that the plaintiffs sought to include in their grounds of appeal the failure of the trial judge to recuse himself, a decision taken on the 27th April, 2015.
44. This Court has now determined that the substantive decision on the defendants’ motion should be upheld. It has further determined that the correct legal principles were applied to facts identified both in the affidavits on the motion and in the judgments in the earlier proceedings. The hearing on the defendants’ motion was not a hearing on oral evidence and there is no question of the credibility of a witness which a trial judge might have a better view than the appellate court being relevant.
45. The plaintiffs were aware in June 2015, when they participated in the hearing of the defendants’ motion before McGovern J. that he had made a decision to which they objected namely that he should not recuse himself from hearing the motion. Notwithstanding this objection they elected not to appeal the decision of the 27th April, but rather to proceed with the hearing before the same High Court judge to which they objected. In reaching this conclusion I have noted that the order of 27th April was not perfected until 3rd November 2015. However that is not relevant as there is no evidence that the absence of a perfected order was relevant to the appellants’ decision to proceed with the hearing of the defendants’ motion before McGovern J. in June 2015. Also a party who wishes to appeal a decision of the High Court in respect of which an order has not yet been drawn or perfected can always apply to the Chief Registrar or the judge to have the order drawn.
46. Even if this Court were now to hold that the High Court judge was in error in refusing to recuse himself and were upon that ground to allow the appeal against the substantive decision on the defendants’ motion, the only remedy it could give would be to remit the matter of the High Court for a further hearing of the defendants’ motion before another judge. This would be a pointless exercise as this Court has determined on all the material that was before the High Court that the correct decision in application of the correct legal principles was and is to strike out the proceedings. It follows from the strike out order that the lis pendens must be vacated.
47. In those circumstances it appears to me that in accordance with the principles set out by the Supreme Court in cases such as Corrigan v. Irish Land Commission [1977] I.R. 317 that even if this court were to determine that the High Court judge was in error in his decision of 27th April in failing to recuse himself from hearing the defendants’ motion it would not set aside the substantive decision of 24th July on the defendants’ motion in circumstances where the plaintiffs elected to participate in the hearing before the High Court judge in question in full knowledge of his prior decision not to recuse himself.
48. Lest this approach is taken as indicating that I am of the view that the High Court judge wrongly refused to recuse himself on the 27th April, 2015, it is necessary to add the following. The application for recusal was made without a formal notice of motion or affidavit. It is clear from the transcript that it was made on two grounds. The first ground related to allegedly new material available by reason of the publication of a judgment which had been previously delivered by White J. in the High Court in the Ryan v. Ryan proceedings. It was submitted that certain material there meant that this Court’s decision delivered on the 15th April, 2015, in proceedings between the Bank and Mr. and Mrs. O’Donnell; 2015 IECA 73 did not now govern the recusal issue. I have read the judgment of White J. referred to and a subsequent judgment of White J. in the same proceedings. In my view there is nothing in those judgments which would alter the conclusions reached in this Court’s judgment of the 15th April, 2015, in which the same grounds for recusal were relied upon by Mr. and Mrs. O’Donnell.
49. The second ground upon which the trial judge was asked to recuse himself related to certain comments made and indeed on one view conclusions reached in relation to the strength of the plaintiffs’ claims in these proceedings and question as to whether insofar as the O’Donnell Children were concerned certain issues were res judicata in his ex tempore ruling on the application for an interlocutory injunction by the plaintiffs on the 3rd March, 2015. No authorities were opened by either party to the trial judge and the application made in short form. Whilst he was handed up a copy of his ex tempore ruling, there was no detailed consideration of the issues which he would have to determine on the defendants’ motion to strike out the proceedings and their relationship with the issues which he had already decided or upon which he had expressed a view in the course of his ruling on the plaintiffs’ application for an interlocutory injunction.
50. The question as to when a High Court judge, who determines an interlocutory application and in the course of doing so decides issues on a prima facie or arguable case basis or expresses views in relation to the strength of a claim or defence should or should not recuse him or herself from further hearings in the proceedings is a difficult one which require a careful balance between the requirements of the fair and efficient administration of justice and the principles relating to objective bias. The Court was referred to the written judgments of Hedigan J. in E.P.I and Others v. Minister for Justice, Equality and Law Reform [2009] 2 I.R. 254 and McKechnie J. in the High Court in O’Sullivan v. Irish Prison Service [2010] 4 IR 562 on such issues. Since the hearing of this appeal this Court (Irvine J., Sheehan J. and Hogan J. conc) has delivered judgment in the Commissioner of An Garda Síochána and Others v. Penfield Enterprises Limited and Another [2016] IECA 141, which considers similar issues albeit in a slightly different context.
51. It is evident from those judgments that an application for recusal by reason of a prior decision or comments made in the same or related proceedings should not be lightly made. However, if made, it should be properly grounded and pursued in order that the judge may consider carefully in accordance with the relevant authorities whether the application meets the threshold of objective bias or whether the judge should in accordance with the declaration made pursuant to Article 34 of the Constitution continue to hear and determine the case or application. On 27th April, no motion had been issued, and no authorities opened by either party to the judge. It does not appear to me that this Court should on the limited matters raised before the trial judge on that date reach a conclusion as to whether he was or was not correct in circumstances where it is not necessary to do so to determine the appeal.
52. It is also appropriate to add that there is no evidence before this Court to suggest in any way that the trial judge in his written judgment of the 24th July, 2015, decided the defendants’ application other than in accordance with his constitutional obligations. The judgment as already stated correctly sets out the relevant law and applies it correctly to the facts.
Relief
53. In my view the appeals against the order of the 28th July, 2015, and the recusal decision in the order of 27th April, 2015, should be dismissed.
Osborne v KBC Bank Ireland Plc [2016] IEHC 220
JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 28th day of April, 2016.
1. This is an application by the first named defendant for the following relief:-
(i) An order pursuant to O. 19, r. 28 of the Rules of the Superior Courts and/or pursuant to the inherent jurisdiction of the court dismissing the plaintiff’s claim as against the first named defendant as being frivolous, vexatious and/or as disclosing no reasonable cause of action;
(ii) An order pursuant to the inherent jurisdiction of the court dismissing the plaintiff’s claim by reason of it being an abuse of process, contrary to public policy and/or by reason of the rule in Henderson v. Henderson; and,
(iii) An order dismissing the plaintiff’s claim by reason that same is barred by the provisions of s. 11 of the Statute of Limitations 1957, as amended.
2. By order of Barrett J., dated the 21st December, 2015, judgment was entered against James Osborne (the plaintiff in these proceedings) in the sum of €6,217,162.27, together with costs in proceedings bearing High Court record number [2015 1856 S] entitled KBC Bank Ireland plc v. James Osborne (“the earlier proceedings”). The order followed the delivery of a judgment by Barrett J. on 15th December, 2015, bearing neutral citation [2015] IEHC 795. On that same day, the plaintiff issued the plenary summons in this action. A statement of claim was delivered on 11th February, 2016, and an amended statement of claim was delivered on 4th March, 2016. In that amended statement of claim, the plaintiff acknowledged that he was not proceeding with his action against the second, third, fourth and fifth named defendants. Accordingly, the claim against these defendants was dismissed by order of this Court on 7th March, 2016. It is important to note that the “loan facility” referred to in the amended statement of claim is the same loan which was the subject matter of the earlier proceedings.
3. The plaintiff’s claim is based on allegations of negligence, breaches of statutory duty and breaches of contract. It is clear from the particulars of negligence, breach of statutory duty and breach of contract that, in effect, the allegation on which the plaintiff bases his claim is that the defendant completed the loan facility and lent the plaintiff monies without taking the appropriate steps to check whether there existed a fire safety certificate which, he claims, the defendant was obliged to do prior to completing the loan agreement. That is the gist of the plaintiff’s claim. It is clear that the loan referred to is one and the same as that which was the subject matter of the proceedings in which the defendant obtained judgment against the plaintiff in December, 2015.
4. The plaintiff has not appealed against the order of Barrett J. dated 21st December, 2015.
The Law
5. The jurisdiction to strike out proceedings in limine is one which must be exercised sparingly. This principle applies to applications brought pursuant to O. 19, r. 28 of the Rules of the Superior Courts or under the inherent jurisdiction of the court. Where an application is brought to dismiss proceedings as disclosing no reasonable cause of action under the provisions of O. 19, r. 28, the court must accept the facts as asserted in the pleadings setting out the plaintiff’s claim. The difference between applications under the inherent jurisdiction of the court and applications to dismiss under O. 19, r. 28, is that the court can look at the factual basis of the plaintiff’s claim in the former category of application: see, Salthill Properties Limited and Cunningham v. Royal Bank of Scotland plc and Ors. [2009] IEHC 207; and, Manning v. The National House Building Guarantee Company Limited and Anor. [2011] IEHC 98, which both followed Barry v. Buckley [1981] 1 I.R. 306.
6. In Salthill Properties Limited, Clarke J. addressed the fact that applications to dismiss proceedings as being bound to fail may be of particular relevance to cases involving the existence or construction of documents. But they are not solely confined to such matters. In this case, there is no dispute on the facts. Both parties agree that, at the time the monies were lent to the plaintiff, both the plaintiff, as borrower, and the defendant, as lender, knew that there was no fire safety certificate in place. So, on the issue which is alleged to constitute negligence and/or breach of statutory duty and/or breach of contract, there is no dispute. There is, in reality, only one issue in this case; namely, whether the failure on the part of the defendant to ensure that the premises were covered by a fire safety certificate at the time when the loan was made gives rise to a cause of action.
7. Although the amended statement of claim purports to furnish particulars of breach of statutory duty, it does not, in fact, do so. Nowhere in the statement of claim is any statutory duty referred to. While para. 5 of the statement of claim refers to the Building Control Act 1990, it is simply in the context of a requisition to furnish a fire safety certificate. At a minimum, one would expect the plaintiff to assert a statutory duty that is imposed on the defendant and then set out in what way and by reference to what part of the statute the breach has occurred.
8. Insofar as particulars of breach of contract are concerned, they state it in terms that the defendant completed the loan facility without appropriately checking and establishing the existence of a fire safety certificate “…which they were obligated (sic) to do prior to completion…”. No contractual clause is set out anywhere in the statement of claim, let alone the particulars, to indicate where the term existed. When one refers back to the reference to the contract at para. 4 of the statement of claim, it is clear that this refers to the loan agreements. There is no reference to any other contract. The liability of the plaintiff to the defendant under that contract has already been determined in the earlier proceedings by Barrett J. and is res judicata.
9. Insofar as requisitions on title were raised by the defendants’ predecessor in title as vendor, it was purely a matter for that party as to whether it wished to complete the contract of loan on the basis of the answers furnished. The obligation (if any) to obtain a fire safety certificate is one resting on the owner. So far as the defendant, as lender, was concerned, any want of a fire safety certificate was something that might have had an adverse effect on its security. The suggestion that a lender has a contractual or other duty to ensure that its security was adequately protected is an entirely novel one and, if accepted, would have very far reaching consequences indeed. At the hearing of this application, no legal authority was advanced for that proposition. While the defendant may have been foolish in advancing the funds to the plaintiff without ensuring that a fire safety certificate had been obtained in respect of the premises securing the loan, this is a matter for the defendant and it cannot give rise to any legal obligation on its part to the plaintiff. Furthermore, by virtue of clause 11(a) of the defendant’s standard terms and conditions, which were accepted by the plaintiff, the defendant was entitled to waive the obligation of the plaintiff to produce a fire safety certificate. It was not incumbent, however, upon the defendant to waive this entitlement in writing, as was suggested by the plaintiff. In effect, all that happened was that the defendant lent the money to the plaintiff on less onerous terms than would have been expected by the plaintiff if the defendant had insisted on the fire safety certificate being in place before the monies were transferred. But where all of this occurred, in circumstances where both parties knew there was no fire safety certificate in place, and in the absence of some express contractual term or statutory duty imposing some obligation on the defendant in that regard, it cannot give rise to a cause of action in favour of the plaintiff against the defendant.
10. Whatever way one looks at this, it is clear that the essence of the plaintiff’s claim is that the defendant was negligent. This can be seen from the plaintiff’s affidavit sworn on 5th April, 2016, in response to this application by the defendant. Although the plaintiff maintains that the requisitions on title and, in particular, requisitions 28.5 and 29.2, expressly make it clear that a fire safety certificate was a condition of the contract, it was for the purpose of protecting the defendants’ security and giving assurance to occupiers of the premises whether as tenants or otherwise. But, so far as the relationship between the plaintiff and the defendant, as borrower and lender, was concerned, it was a matter which the defendant was entitled to insist upon or waive as the case may be. As it happened, the defendant decided to advance the loans to the plaintiff without the fire safety certificate being obtained and the defendant accepted the loan in those circumstances. This does not give rise to a cause of action against the defendant. If there was any obligation to obtain a fire safety certificate under the Building Control Act 1990, and the Fire Services Act 1981, this was an obligation that fell on the owner of the premises, namely, the plaintiff.
11. In para. 13 of his affidavit, the plaintiff avers:-
“In relation to paragraph 19, it is contended that the Bank was negligent in lending and channelling loan facilities in the absence of insisting on a fire safety certificate the non-existence of which it was informed of on many occasions.”
12. That is what this case is about. The plaintiff claims that when the local authority insisted on a fire safety certificate being put in place that he had to incur expense in making the premises compliant with the appropriate regulations. He further contends that this consequent expense caused him financial hardship which led him to default on the loan repayments and thus led to judgment being entered against him by order of Barrett J.
13. The plaintiff accepts, as he must, that the expense to which he was put in order to obtain the fire safety certificate was expense that he would always have had to meet in any event regardless of whether or not the defendant insisted on the certificate in advance of the disbursement of the monies pursuant to the various loan facility agreements.
Discussion
14. The plaintiff accepts that there is no tort of reckless lending in this jurisdiction: see, ICS Building Society v. Grant [2010] IEHC 17; Healy v. Stepstone Mortgage Funding Limited [2014] IEHC 134; and McConnon v. President of Ireland [2012] IEHC 184; [2012] I.R. 449. It is clear that the plaintiff has raised issues of breach of contract and breach of statutory duty in an attempt to get around this difficulty. The plaintiff also maintains that, although there is no tort of reckless lending, nevertheless, he is entitled to argue that a claim based on negligent lending can exist. This is mere sophistry. The concept of “recklessness” is one connoting a greater lack of care than negligence simpliciter. It requires a party being indifferent to the likely consequences of his or her act. If there is no tort of reckless lending then a fortiori there is no tort of negligent lending.
15. These proceedings seem to have their genesis in para. 20 of the abovementioned judgment of Barrett J. delivered on 15th December, 2015, in the earlier proceedings. It is worth quoting in full that paragraph:-
“iii. The fire certificate.
20. As the court understands Mr Osborne’s contentions in this regard, it is that he was required to mortgage certain premises for the benefit of KBC and to the satisfaction of its solicitors. It appears that the absence of a fire certificate was not recognised when the requisite mortgage documentation was executed and that Mr Osborne has been seeking of late to resolve the issues that this presents. But taking Mr Osborne’s arguments at their height (and ignoring the obstacles that appear offhand to arise), even if he were able to establish that KBC and/or its solicitors were guilty of some form of negligence as regards the original procurement of the certificate, and he has as yet commenced no proceedings alleging such negligence, this is no defence to the within application”
16. The plaintiff appears to have latched onto these observations and interpreted them as raising the possibility of mounting a claim in negligence against the defendant arising out of the absence of the fire safety certificate. It is clear that Barrett J. did not reach any conclusion on whether or not a claim in negligence could be made out against the defendant or would give rise to a cause of action. His remarks on that issue are clearly obiter and only go so far as to say that, even if the plaintiff were to establish some negligence based on the absence of a fire safety certificate, that is no defence to the claim against him in respect of the outstanding loans. The plaintiff is inviting the court to read more into that statement than what appears on its face.
17. The plaintiff relies on the judgment of Kearns P. in Harrold v. Nua Mortgages Limited [2015] IEHC 15, in which the then President of the High Court referred to the judgment of the Supreme Court in KBC Bank Ireland v. BCM Hanby Wallace [2013] IESC 32 insofar as it relates to issues of negligence on the part of a bank. That case can be distinguished from the present one in that the parties to the proceedings were the bank and its solicitors and the issue concerned the failure of the solicitors to carry out the bank’s instructions with regard to the obtaining of security before funds were released to borrowers. One of the issues that arose on appeal to the Supreme Court was whether or not the bank’s own conduct might amount to contributory negligence. It was not a case involving a borrower and a financial institution. The plaintiff claims that that decision allows him to make the case in these proceedings that the bank was negligent. However, for the purposes of this application, what the court has to decide is whether or not there is a tort of negligent lending. I have already stated at para. 13 above that there is no tort of negligent lending and that raises the question as to whether the plaintiff’s claim in these proceedings should be dismissed as having no reasonable prospect of success and being doomed to fail.
Statute of Limitations
18. The defendant also seeks to have these proceedings dismissed on the basis that they are barred by the provisions of s. 11 of the Statute of Limitations 1957, as amended. The defendant asserts that the negligence and breach of duty and breach of contract complained of occurred in 2004 when the monies were advanced to the plaintiff without ensuring that a fire safety certificate was in place. The defendant argues that the negligence alleged by the plaintiff relates to events in December, 2004, and in particular on foot of a letter of 20th December, 2004, when the solicitors for the plaintiff informed the then solicitors for the defendant that the fire safety certificate was unavailable. If there was a breach of duty, this was a breach that was manifest or easily detectible in 2004.
19. The plaintiff maintains that the loans were restructured over the years and that the issue pertaining to the fire safety certificate was an ongoing one changing from time to time as loans were extended or restructured. It appears that, between 2002 and 2004, a total of €7,000,000.00 was drawn down by the plaintiff and that the loans were restructured as late as 28th September, 2009. The last disbursement of monies from the defendant to the plaintiff was on 28th September, 2009, when the loans were restructured. These proceedings commenced by plenary summons on 15th December, 2015, more than six years later.
Rule in Henderson v. Henderson
20. The final issue in this case concerns the rule in Henderson v. Henderson (1843) 3 Hare 100. To put it simply, the defendant contends that the plaintiff is trying to re-litigate matters already ruled on by Barrett J. in the earlier proceedings and, therefore, constitutes an abuse of process and is contrary to public policy and/or is barred by reason of the rule in Henderson v. Henderson.
21. There is no doubt that the fire safety certificate issue was raised in the earlier proceedings as they are referred to by Barrett J. in his judgment. The defendant argues that, if the plaintiff had intended to maintain that there was some distinction between “reckless lending” and “negligent lending”, this could and should have been raised before Barrett J. in those proceedings and the plaintiff cannot do so now.
22. The plaintiff maintains that these proceedings constitute a new cause of action separate and distinct from the summary proceedings before Barrett J.
Decision
23. As this case is essentially one based on negligent lending and the failure to ensure that the plaintiff had obtained a fire safety certificate before the monies were advanced, the claim is bound to fail. In the first place, if there was an obligation to obtain a fire safety certificate, it was the plaintiff’s obligation, under whatever statutory or regulatory regime applied to the owners of commercial premises. Furthermore, as indicated at para. 9 above, even if the obtaining of such a certificate was a requirement, as contended for by the plaintiff, it was one which was for the benefit of protecting the defendants’ security and in any event the defendant was entitled, pursuant to clause 11(a) of its standard terms and conditions, to waive that requirement and proceed in the absence of it being complied with. That is what happened. The plaintiff’s claim, as pleaded, discloses no reasonable cause of action, it is frivolous and vexatious and must be dismissed pursuant to O. 19, r. 28 of the Rules of the Superior Courts.
24. Furthermore, the claim amounts to an abuse of process as it is, on any objective view, a collateral attack on the judgment delivered by Barrett J. in the earlier proceedings. Therefore, I dismiss the claim under the inherent jurisdiction of the court.
25. The claim also offends against the rule in Henderson v. Henderson. It is clear that the issue of the absent fire safety certificate was canvassed before Barrett J. in the earlier proceedings. But there does not appear to have been any argument advanced to the learned judge to suggest that a tort of negligent lending exists in contradistinction to reckless lending. This matter could have then been disposed of in the earlier proceedings had it been raised.
26. Finally, I am also satisfied that the claim is time barred by virtue of s. 11 of the Statute of Limitations 1957, as amended. The negligent act complained of, unambiguously, goes back to December 2004. If there was a breach of duty, this was a breach that was manifest or easily detectible at that time. I am also satisfied that any restructuring of the loans did not give rise to ongoing renewed obligations which were breached by the defendant. But if I am wrong about that, the last disbursement of monies from the defendant to the plaintiff was made on 28th September, 2009, and these proceedings commenced on 15th December, 2015, more than six years later.
27. The defendant is entitled to the relief claimed in paras. 1, 2 and 3 of the notice of motion. I dismiss the plaintiff’s claim.
Corbett v LSREF III Achill Investments Ltd [2016] IEHC 176
JUDGMENT of Ms. Justice Costello delivered on 8th day of April, 2016.
Summary proceedings
1. On 2nd July, 2015, the first named defendant herein (“Achill”) issued a summary summons seeking judgment against the plaintiffs herein (“the Corbetts”) in the sum of €10,554,672.28 as against Mr. Michael Corbett and the sum of €47,257,679.21 as against Mr. Michael Corbett and Mr. Kevin Corbett on a joint and several basis. The proceedings arose from the Corbetts’ default in relation to very considerable loan facilities advanced to them by Ulster Bank Ireland Limited (“Ulster Bank”). The rights of Ulster Bank in relation to two facility letters, one of 12th October, 2010, and the other of 7th June, 2011, and certain securities as more fully set out below were transferred by Ulster Bank to Achill by deed of transfer dated 17th November, 2014. On 4th March, 2015, Achill appointed the second and third named defendants as receivers over a number of properties charged by the Corbetts to Ulster Bank and which were assigned by Ulster Bank to Achill (“the Receivers”).
2. The summary summons was heard before Barrett J. in the High Court on 6th October, 2015. Mr. Jeffrey Johnston swore three affidavits on behalf of Achill and Mr. Michael Corbett swore three affidavits on behalf of the Corbetts. In addition, the Corbetts’ solicitor, Mr. Diarmuid O’Shea swore an affidavit in the proceedings. Barrett J. reserved judgment and delivered a written judgment on 22nd October, 2015.
3. It is clear from the affidavits of Mr. Corbett and the judgment of Barrett J. that the Corbetts defended the matter fully on a number of grounds, all of which were rejected by Barrett J. In his judgment, the learned High Court judge held:-
(i) Achill issued proper letters of demand in relation to the facilities of 12th October, 2010, and 7th June, 2011, on 2nd March, 2015.
(ii) A facility letter of 11th January, 2011, was cancelled and superseded by the express provisions of the June, 2011 facility letter. The facility of January, 2011 could not be resurrected and was of no avail to the Corbetts.
(iii) The facility letter of June, 2011 did not lapse or terminate simply because no funds were in fact drawn down pursuant to the terms of the facility agreement. The facility letter of June, 2011 contained a condition precedent to draw down which required the Corbetts to furnish certain security to Ulster Bank prior to Ulster Bank making available additional credit to the Corbetts. It was common case that the Corbetts did not comply with the condition precedent as to security in the June, 2011 facility letter. The Corbetts argued that as a result the terms of the June, 2011 facility letter were unenforceable by either Ulster Bank or Achill as assignee of the facility. Barrett J. rejected this argument and held at para. 22:-
“[t]he principal consequence of non-compliance with those conditions precedent is that no credit needs to be extended, no more; the facility letter remains extant.”
(iv) Barrett J. rejected the argument that the facility letter of 20th June, 2011, did not bind the Corbetts on the basis of a want of consideration as no new draw down of funds occurred. At para. 25 of his judgment he identified the consideration offered by Ulster Bank for the June, 2011 facility letter and held that there was a binding fresh agreement between the parties “the validity of which was unaffected by any want of fresh drawdown”.
(v) He rejected the argument that the facility letter of June, 2011 was not binding as the term provided for in the January, 2011 facility letter had not yet expired. At para. 27 he stated:-
“[t]here is nothing in law to stop parties to a term loan agreement agreeing, for good consideration, to cancel an existing term loan agreement and replace it with some other arrangement or simply to part ways. That is all that happened here. The notion that, in such circumstances, the new loan agreement cannot properly cancel and replace one or more previous loans is mis-founded in logic and mistaken in law.”
(vi) He rejected the Corbetts’ argument that Ulster Bank had repudiated the loan agreement by not allowing a draw down of part of the facility. The facility letter provided that Ulster Bank was under no obligation to provide the facility unless the conditions precedent were met.
(vii) Similar arguments were advanced by the Corbetts in relation to the October, 2010 facility letter which were rejected for like reasons by Barrett J.
(viii) The Corbetts argued that Ulster Bank represented that repayment or refinancing of their facilities with Ulster Bank would occur by the extension on a rolling basis of funding so that new funding would immediately replace the old funding upon its expiration. The Corbetts specifically sought to rely on certain loan amortisation schedules attached to the January, 2011 facility agreement. This argument was rejected as the January, 2011 agreement was cancelled. The extant facilities, the June, 2011 facility letter and the October, 2010 facility letter, stated that the facilities that they govern were to be repaid or refinanced by 20th August, 2011. Barrett J. stated at para. 31 of his judgment:-
“[t]he court has had careful regard to the form and substance of those agreements and, in fairness to the bank that drafted them, they could not be any clearer in what they provide.”
He continued at paras. 32-33 as follows:-
“[i]t is incumbent on all of us to approach written agreements with great caution and to seek independent legal advice when and as appropriate before signing agreements that, as here, have the potential to be financially ruinous in the event of default. A critical provision in the two facility letters appears in the closing section, close to the signature blocks. It provides that ‘This Facility Letter supersedes all prior agreements, arrangements or correspondence between the Bank and the Borrower in relation to the Facilities.’ Yet the defendants come to court arguing that there were overarching representations on the part of Ulster Bank, when executing the facility letters, that survived the execution of same. If there were overarching representations, and there is no evidence of same, nor even, e.g., a suggestion that if Mr ‘X’ or Ms ‘Y’ of Ulster Bank’s lending team were to be called to give evidence, he or she would testify to the existence of same, they cannot have survived the clause just quoted…
However, the insurmountable difficulty which the defendants face in the within proceedings is that when it comes to that ‘clear and unambiguous promise’ referred to by Griffin J. in Doran, or the equities referenced in s.28(6) of the Act of 1877, there is absolutely no evidence of same before the court, nor is there even, to borrow from the wording of Clarke J. in McCaughey, ‘a credible basis for believing that [such] evidence may be forthcoming’. There is therefore no basis in this regard for refusing the summary judgment sought.”
The claims in plenary proceedings
4. These proceedings were commenced by the Corbetts against Achill and the Receivers on 24th September, 2015. The indorsement of claim seeks reliefs (A) to (Y) as follows:-
(A) “A declaration that the Plaintiffs have no liability to the First Defendant on foot of one, each and/or all of the facility letters set out in the First Schedule hereto (hereinafter the “Facility Letters”) by reason of the fact that the said Facility Letters did not come into operation and/or the respective contractual rights of the parties as described in the Facility Letters did not become operative.
(B) In the alternative an Order for rescission and/or a declaration that one, each and/or all of the Facility Letters are invalid, void, not actionable at the behest of the First Named Defendant and/or of no effect by reason of the fact that the said Facility Letters were procured pursuant to the misrepresentation and/or deceit of Ulster Bank Ireland Limited, its servants or agents.
(C) In the alternative a declaration that one, each and/or all of the Facility Letters are invalid, void, not actionable at the behest of the First Named Defendant and/or of no effect by reason of the repudiatory and/or fundamental breach of contract on the part of Ulster Bank Ireland Limited, its servants or agents.
(D) A declaration that one, each and/or all of the mortgages set out in the Second Schedule hereto (hereinafter the “Mortgages”) are invalid, void, not actionable at the behest of the First Named Defendant and/or of no effect by reason of the fact that the said Facility Letters did not come into operation and/or the respective contractual rights of the parties as described in the Facility Letters did not become operative.
(E) In the alternative an Order for rescission and/or a declaration that one, each and/or all of the Mortgages are invalid, void, not actionable at the behest of the First Named Defendant and/or of no effect by reason of the fact that the said Mortgages were procured pursuant to the misrepresentation and/or deceit of Ulster Bank Ireland Limited, its servants or agents.
(F) A declaration that one, each and/or all of the Mortgages are invalid, void, not actionable at the behest of the First Named Defendant and/or of no effect by reason of the repudiatory and/or fundamental breach of the Facility Letters on the part of Ulster Bank Ireland Limited.
(G) A declaration that the First Named Defendant, its servants or agents are estopped and/or precluded from relying on and/or enforcing one, each and/or all of the Facility Letters and/or one, each and/or all of the Mortgages by reason of the conduct of Ulster Bank Ireland Limited, its servants or agents, including their representations to the Plaintiffs.
(H) A declaration that the purported appointment of the Second and Third Named Defendants as Receivers to each of the properties set out in the Third Schedule hereto (hereinafter the “Properties”) is ultra vires, null, void and of no effect.
(I) Further and without prejudice to the matters hereinbefore pleaded a declaration that the charge registered over the lands as described in the Fourth Schedule is void and of no legal effect in consequence of same having been procured in the absence of any reference thereto in any contractual document and in the absence of any agreement for its grant and/or in the absence of any consideration and/or in error.
(J) If necessary, rescission of one, each and/or all of the Facility Letters.
(K) If necessary, rescission of one, each and/or all of the Mortgages.
(L) An Order preventing the First Named Defendant, its servants or agents from carrying out any acts, or any further acts, for the purpose of enforcing one, each and/or all of the Facility Letters.
(M) An Order preventing the First Named Defendant, its servants or agents from carrying out any acts, or any further acts, for the purpose of enforcing one, each and/or all of the Mortgages.
(N) If necessary an injunction restraining the sale of the Properties by the Defendants or any of them.
(O) If necessary, an order that the defendants carry out all steps for the purpose of undoing the purported appointment of Receivers to the Properties and for the purpose of returning the said properties to the Plaintiffs.
(P) Damages for breach of contract.
(Q) Damages for negligence and including breach of duty.
(R) Damages for misrepresentation.
(S) Damages for deceit.
(T) Damages for unjust enrichment.
(U) All accounts and enquiries.
(V) Aggravated and/or exemplary damages.
(W) Interest.
(X) Further or other relief.
(Y) Costs.”
The precise parameters of this case were not apparent until the Statement of Claim was delivered, after Barrett J. had given judgment in the summary proceedings.
Motion
5. The defendants issued a motion dated 4th December, 2015, seeking an order pursuant to O. 19, r. 28 of the Rules of the Superior Courts striking out the plenary summons and Statement of Claim on the grounds that they disclose no reasonable cause of action and/or staying or dismissing the action on the grounds that the pleadings are frivolous and vexatious. In the alternative they seek an order pursuant to the inherent jurisdiction of the court dismissing and/or striking out the proceedings on the grounds that they are frivolous and/or vexatious and/or bound to fail and/or an abuse of process. They seek like orders pursuant to O. 19, r. 5(2) and/or r. 27.
6. They also seek an order pursuant to s. 123 of the Land and Conveyancing Law Reform Act 2009 vacating the lis pendens registered by the Corbetts in the Central Office of the High Court on 25th September, 2015, in connection with these proceedings.
Res judicata
7. At the hearing of the motion it was accepted by counsel on behalf of the Corbetts that there was a considerable overlap between the case advanced by the Corbetts against Achill in these proceedings and the defence advanced by them in the summary proceedings. Paragraphs 5-14 of the Statement of Claim plead as follows:-
“5. The Plaintiffs had a longstanding banking relationship with Ulster Bank Ireland Limited (hereinafter ‘Ulster Bank’) on foot of which Ulster Bank had extended certain funding to the Plaintiffs for the purposes of, inter alia, carrying out the purchase of lands and property for commercial development. Further to a loan agreement/facility letter dated the 11th January 2011 Ulster Bank extended finance over a number of facilities to the Plaintiffs. The said loan agreement/facility letter encompassed inter alia seven different facilities referencing the refinance of pre-existing development lands in respect of various projects and the refinance of an overdraft facility. The Plaintiffs will refer to the said loan agreement/facility letter for its full import and meaning.
6. The background against which said loan agreement/facility letter came to be offered (the terms providing for repayment and refinancing by 30th August 2011) included clear and unambiguous representations on the part of Ulster Bank over a number of years that the repayments and refinance would occur by the extension on a rolling basis of funding on foot of a new facility to replace the old one on its expiration. In this regard the Plaintiffs will refer to, inter alia, the schedules which were attached to the January 2011 letter (and all earlier facility letters).
7. It was the nature of the agreement between the Plaintiffs and Ulster Bank that the system of rolling refinance operated throughout the course of the relationship to the extent that on the date anticipated for renewal of each facility Ulster Bank would automatically issue a fresh letter of offer without request.
8. In the course of 2011 the Plaintiffs were involved in litigation with a third party namely Coffey Construction (I) Limited.
9. A facility letter dated the 7th June 2011 was issued by Ulster Bank. The said facility letter was subject to a number of conditions precedent in relation to security. Further the said facility letter included provision for the advancing of funds specifically in relation to the settlement of the third party proceedings referred to above. Save for the offer of the said additional funds specific to the Coffey Construction (I) Limited dispute and in absence of the necessity for entry into a facility at that time (given the fact that the Plaintiffs were within term under their pre-existing arrangement and given the background as highlighted above) the Plaintiffs would have had no requirement of the said June 2011 loan agreement/facility letter. In the premises the sole basis for execution of the said loan agreement was the extension of the additional/new funding and execution of the agreement came about in reliance on the representations of the Ulster Bank to the effect that the funding would be extended.
10. Further and in the alternative the said representations as to the extension of funding for the Coffey Construction (I) Limited dispute were made in circumstances where Ulster Bank sought to achieve the enhancement of the suite of securities it would hold without conferring any benefit on the Plaintiffs.
11. It is the Plaintiffs’ case that the said loan agreement/facility letter dated the 7th June 2011 lapsed in accordance with the terms thereof, that the loan agreement/facility letter is and/or did not become binding upon the Plaintiffs in consequence of the repudiatory and/or fundamental breach by Ulster Bank and/or that the conduct of the Bank has caused loss and damage to the Plaintiffs.
12. The said conditions precedent had to be satisfied on or before the 30th June 2011 and it is the Plaintiffs’ case that the said facility letter lapsed and the Plaintiffs were not bound by same. For the avoidance of doubt no additional funds were advanced to the Plaintiffs. Ulster Bank refused to advance the funds in relation to inter alia the aforesaid settlement of the proceedings. The said refusal constituted a fundamental and repudiatory breach of contract between the parties. Further the said position was confirmed inter alia by representatives of Ulster Bank in a meeting that took place in October 2012 and by way of email correspondence to the effect that the conditions precedent and special conditions detailed in the facility letter dated the 7th June 2011 had not been met in a satisfactory manner to Ulster Bank and the availability of facilities had accordingly lapsed.
13. It was the clear understanding of the Plaintiffs and Ulster Bank that the contract of loan as encompassed in the June 2011 facility letter could only become binding upon the Plaintiffs as borrowers if the funds were drawn down on that agreement. No funds were drawn down. For the avoidance of doubt, in so far as the said loan agreement/facility letter provided by way of condition precedent for the lapse of the facilities, the Plaintiffs’ claim that the said facility letter lapsed, same being the loan agreement or letter in which the facilities were set forth.
14. The Plaintiffs in an attempt to perform their obligations under the said facility letter provided certain securities to Ulster Bank however notwithstanding the fact that Ulster Bank regarded the loan agreement/facility letter as lapsed it purported to hold onto the said security and transfer certain securities to the First Named Defendant.”
This is precisely the same case that was made to and rejected by Barrett J. in his judgment of 22nd October, 2015. These matters are res judicata (subject to the question of an appeal and stay on the order discussed below).
8. Paragraph 15 of the Statement of Claim states “[a]s a result of the foregoing breach of contract, negligence, breach of duty and/or misrepresentation the Plaintiffs have and continue to suffer inconvenience, loss and damage.” It is clear that the claim by the Corbetts in these proceedings for damages for breach of contract, negligence, breach of duty and/or misrepresentation is based upon the matters pleaded in paras. 5-14 of the Statement of Claim. As these paragraphs raise matters which are res judicata it follows that this case now advanced by the Corbetts in these proceedings is res judicata.
9. Paragraphs 16 and 17 of the Statement of Claim deal with the facility letter of 12th October, 2010. They provide as follows:-
“16. Furthermore and without prejudice to the foregoing, Ulster Bank issued a facility letter to the First Named Plaintiff dated the 12th October 2010. The said loan agreement/facility letter contained certain conditions precedent such that certain securities provided for under the subheading ‘securities’ would be put in place prior to the 30th November 2010 in default of which the said agreement would lapse.
17. The said securities were not put in place and in the premises the said loan agreement/facility letter did not come into operation and the respective contractual rights of the parties as described in it did not become operative. The Plaintiffs will refer to the said facility letter for its full import and meaning.”
10. These arguments were addressed at the hearing before Barrett J. and rejected by him in his written judgment referred to above. Therefore, the issue pleaded is res judicata.
11. Paragraph 18 of the Statement of Claim is predicated on the allegation that the loan facilities of June, 2011 and October, 2010 had lapsed. This contention was expressly rejected by Barrett J. as I have already set out.
12. At para. 18, the Corbetts say that Ulster Bank knew or ought to have known that the facility letters had lapsed and further knew or ought to have known that by purporting to transfer the said facility letters to Achill, the Corbetts would suffer and sustain inconvenience, loss and damage. The legal and factual basis for this claim has been rejected by the High Court when it held that the two facility letters in fact had not lapsed and that Achill was entitled to enter a very considerable judgment against the Corbetts on foot of the two facility letters and the demands for repayment. It follows, therefore, that any plea alleging that this conduct was wrongful has already been decided and rejected and any case now advanced based on an allegation to the contrary is bound to fail. Thus the plea at para. 18 which provides as follows cannot stand:-
“[d]espite the aforesaid lapsing of the agreements and the fact that they were consequently non-binding on the parties, the First Named Defendant purported to act on foot of the said loan agreements/facility letters and in reliance on the securities granted thereunder and in the premises wrongfully purported to take possession of the Plaintiffs’ properties by way of the appointment of the Second and Third Named Defendants as receivers.” (Emphasis added)
The first part of this sentence does not disclose any wrongful action on the part of Achill. It therefore follows that the plea does not substantiate that it was wrongful for Achill to take possession of the Corbetts’ properties by way of the appointment of the second and third named defendants as receivers as pleaded.
13. At paras. 19-23 of the Statement of Claim, the Corbetts plead as follows:-
“19. By Deed of Transfer between Ulster Bank Ireland Limited and the First Named Defendant, Ulster Bank purported to transfer certain mortgages and charges together with a purported transfer of underlying loan agreements to the First Named Defendant. The said facility letters that Ulster bank purported to transfer were the aforesaid facility letter dated the 12th October 2010 (between Ulster Bank and the First Named Plaintiff) and the aforesaid facility letter between Ulster Bank and the First and Second Named Plaintiffs dated the 7th June 2011.
20. On foot of the said purported transfer the First Named Defendant wrongfully made demands and thereafter issued proceedings for Summary Judgment against the First and Second Named Plaintiffs. The said proceedings are now the subject of an appeal before the Court of Appeal.
21. Furthermore the First Named Defendant wrongfully purported to appoint the Second and Third Defendants as Receivers over certain assets of the Plaintiffs that the First Named Defendant claimed had been the subject of mortgages or charges transferred to it by the aforementioned Deed of Transfer.
22. The Plaintiffs defended the within proceedings on the basis inter alia that the facility letters dated October 2010 and June 2011 had lapsed, the rights imposed thereunder were not operational, there was a fundamental breach of contract by Ulster Bank, no funds were advanced and accordingly no liability was owed to Ulster Bank on foot of the aforesaid facility letters. Accordingly no liability was owed to the First Named Defendant and nor did the First Named Defendant have the power to appoint the Second and Third Named Defendants as receivers.
23. Pursuant to the provisions of Section 28(6) of the Supreme Court of Judicature (Ireland) Act 1877 the First Named Defendant has assumed the legal and equitable obligations of Ulster Bank Ireland Limited to the Plaintiffs.”
14. Achill sued the Corbetts on foot of the two facility letters and obtained judgment against the Corbetts pursuant to the outstanding obligations in respect of those facility letters. It could only have done so if the High Court had been satisfied that the deed of transfer properly assigned the facilities from Ulster Bank to Achill. The High Court also expressly held that Achill was entitled to demand repayment on foot of the facility agreements and to issue the proceedings. In reaching its judgment on 22nd October, 2015, the High Court had regard to the arguments advanced by the Corbetts which are summarised in paras. 22 and 23 of the Statement of Claim. The actions of Ulster Bank in relation to the two loan facilities and in assigning the two loan facilities to Achill and the actions of Achill in demanding repayment of the facilities and suing for summary judgment were in effect upheld by the High Court as correct and bona fide by its refusal to remit the summary proceedings to plenary hearing and by its granting Achill summary judgment against the Corbetts as set out above. It follows that these actions cannot constitute negligence, breach of duty or breach of contract or any wrongful misrepresentation on the part of Ulster Bank in the first place. It also follows that they are not matters in respect of which Achill can now be liable to the Corbetts pursuant to the provisions of s. 28(6) of the Supreme Court of Judicature (Ireland) Act 1877. It also follows that there was no negligence or breach of duty on the part of Achill in demanding repayment of the loans or issuing the proceedings.
The case against the Receivers
15. At paras. 24 and 25 of the Statement of Claim, the Corbetts plead:-
“24. As a result of the foregoing negligence, breach of duty, breach of contract and/or misrepresentation on the part of Ulster Bank the Plaintiffs have suffered and sustained inconvenience, loss and damage for which the First Named Defendant is now liable. Furthermore as a result of the negligence, breach of duty of the First Named Defendant in inter alia making the aforesaid loan demands, issuing proceedings and/or the purported appointment of the Second and Third Named Defendants as Receivers the Plaintiffs have suffered inconvenience, loss and damage.
25. In the premises all actions to enforce the securities purportedly held by the defendant in reliance on the said loan agreements/facility letters are without lawful authority and void as against the Plaintiffs.”
16. It is clear from the above that the Corbetts claim that Achill was not entitled to appoint the second and third named defendants as receivers over the properties the subject of the deed of transfer. They advance this case on the basis of alleged negligence and breach of duty on the part of Achill in making the loan demands and issuing the proceedings. For the reasons outlined above, the premise underpinning this pleading cannot be sustained. No allegation is made in respect of any actions or inactions of the Receivers themselves. This point was made in submissions to the Court by counsel for Achill and counsel for the Corbetts did not respond to dispute this submission or to advance any other reason why the case might be maintained by the Corbetts against the Receivers. No amendment was suggested that might save the proceedings. On the contrary, in written submissions it was stated that if the Corbetts are successful in the appeal “then it will be necessary to articulate the grounds upon which it is claimed that the appointment of the receivers was invalid” but, apparently upon no new grounds. In the premises, I am satisfied that the claim as pleaded against the Receivers is bound to fail.
Deceit
17. The Statement of Claim does not plead deceit against any of the defendants, but at relief (S) the Corbetts seek damages for deceit. The defendants raised particulars requesting the Corbetts to particularise the claim for damages for deceit against the defendants. On 23rd December, 2015, the Corbetts replied stating “this does not arise from the statement of claim”, but reserving the right to plead further particulars as and when the need may arise. In his affidavit sworn to resist the defendants’ motion to dismiss the proceedings, Mr. Michael Corbett averred at para. 5(f) of his affidavit:-
“[w]hile professing ignorance as to the basis for the claim in deceit in the within proceedings…the Defendants are, without explanation to this Court, disregarding the evidence already proffered to the High Court which clearly ventilates the facts underpinning this claim. In particular the averments of Diarmuid O’Shea in his affidavit of the 11th September 2015 sworn in the summary Proceedings and the attendant exhibits have for without apparent reason been disregarded by the Defendants notwithstanding service of that affidavit and its opening to the Court in the summary proceedings.”
That is the sum total of the Corbetts’ case in deceit against the defendants. From Mr. Corbett’s testimony, it is clear that such evidence as the Corbetts wish to rely upon in relation to a claim for damages for deceit in the plenary proceedings was to be found in the evidence adduced in the summary proceedings and in particular in the affidavit of Mr. Diarmuid O’Shea. From this, two points flow. One, that the evidence has already been presented to, and considered by, the High Court. It is to be inferred that it was rejected on the basis that there was no finding of deceit in the judgment of Barrett J. Two, the affidavit of Mr. O’Shea in fact makes no allegation of deceit against either Ulster Bank or Achill. Thus, even if this was an acceptable manner in which to plead deceit, which it clearly is not, there, in fact, is no claim in deceit advanced in these proceedings. This is not so much a case of the party failing properly to plead deceit so much as not pleading it at all. This cannot be countenanced and amounts to an abuse of process.
The rule in Henderson v. Henderson
18. As a general proposition the rule in Henderson v. Henderson means that a litigant may not make a case in legal proceedings, which might have been, but was not, brought forward in previous litigation. To do so amounts to an abuse of process. In the summary proceedings, the Corbetts advanced many arguments in support of their contention that Achill was not entitled to a summary judgment and that the matter ought to be remitted to plenary hearing. As set out above, these arguments were all considered and rejected by the learned High Court judge. Insofar as there were arguments open to the Corbetts in relation to these matters which they did not advance in their defence of the summary proceedings, it would be an abuse of process to allow them to advance those arguments in these plenary proceedings unless the Corbetts could point to special circumstances which would establish that such conduct did not in fact constitute an abuse of process. In the event, an examination of the Statement of Claim leads to the conclusion that no new arguments or issues were raised by the Corbetts in the plenary proceedings which had not been ventilated in the summary proceedings so the application of the rule in Henderson v. Henderson does not arise. This conclusion is underscored by the replies to particulars in the plenary proceedings where the Corbetts referred to affidavits sworn in the summary proceedings as a means of particularising their claim in the plenary procedures and provided no additional information. Thus it is clear that essentially the claim advanced in these proceedings is precisely the same as that already presented to the High Court in the summary proceedings.
Collateral attack.
19. The Statement of Claim and in particular the reliefs sought in the plenary proceedings in light of the case advanced make it clear that the continuance of these proceedings would constitute a collateral attack on the judgment and findings of Barrett J. in the High Court in the summary proceedings. That is not a matter which is permitted and amounts to an abuse of process. See Morrissey v. IBRC & Ors [2015] IEHC 200.
New issue
20. Mr. Corbett’s affidavits sworn in these proceedings raised one new issue not previously argued in the summary proceedings in relation to security taken by Ulster Bank over four identified properties and which was not pleaded in the Statement of Claim. It is clear from the evidence and submissions of Achill that any security Ulster Bank enjoys or enjoyed over those properties was never assigned to Achill. Achill asserts no right in respect of those properties and has not appointed receivers to those properties. Furthermore, solicitors for Ulster Bank have indicated that Ulster Bank is no longer relying upon the security and is prepared to release the security to the Corbetts.
21. This evidence was not contested on behalf of the Corbetts, though counsel on their behalf wished the Court to infer that this course of action was wrongful or unfair to the Corbetts and that this amounted to a new matter introduced in these proceedings which was not introduced in the summary proceedings and thus afforded a ground for refusing the defendants the relief sought in the notice of motion. This argument is without merit. Even if the Corbetts’ case is taken at its height, they do not assert that the properties were ever assigned to Achill or that Achill asserted any rights in respect of the properties. Achill has quite clearly indicated that it does not rely upon the properties as security for the debts due by the Corbetts. In those circumstances, any complaint the Corbetts may have in relation to this issue does not found a cause of action against any of the defendants.
22. I therefore conclude both on the basis of the doctoring of res judicata and an application of the rule in Henderson v. Henderson that the continuance of these proceedings against Achill constitutes an abuse of process.
Appeal and stay on the order of the High Court.
23. The decision of the High Court has been appealed to the Court of Appeal, and the High Court granted an order staying the execution of the judgment pending the determination of the appeal. The question, therefore, is whether or not the appeal or the stay affords a reason for refusing Achill the relief sought in the notice of motion.
24. It is well established that the existence of either an appeal that is pending or a right of appeal does not prevent the operation of the rule of res judicata. In McConnan v. President of Ireland [2012] 1 I.R. 449, Kelly J. reviewed the authorities in England (The Sennar (No. 2) [1985] 1 W.L.R. 490) and in Northern Ireland (Deighan v. Sunday Newspapers Ltd. [1987] N.I. 105). He held that the law of Ireland on the subject of res judicata where there is an appeal pending was no different to that of those jurisdictions. He held that the judgment of the High Court in summary proceedings was capable of raising a res judicata despite the fact that there was an appeal pending from it to the Supreme Court.
25. The Corbetts seek to distinguish this case from the authorities on the grounds that the order of the High Court is stayed. In the application to the High Court for a stay on its order, counsel for the Corbetts submitted:-
“The Court is well-aware and has made some reference in the judgment to the fact of the existence of parallel proceedings. Those parallel proceeding, one way or the other, reference the securities underpinning, as claimed by the Plaintiff, the credit agreements in place. And to that extent, there is something of a lockdown on the status quo insofar as the available recourse in substantial terms on the judgments. This in a huge amount of money, there is no question about it; the ordinary processes of execution, one can assume, wouldn’t avail in any event, to any great extent given the vast amount at issue. And, as I say, when one couples that consideration with the fact of the parallel proceeding which, one way or the other in plenary form will have to, at some level notwithstanding this judgment, proceed at some pace and be disposed of one way or the other. And when you couple that with the inevitability of the appeal, as I say, which I can assure the Court will take place; without getting into the merits of it, there are obviously issues of dispute which were ventilated before the Court…
With all of that in mind, I am simply asking the Court to both stay the costs pending the appeal and place a stay on execution pending the appeal and the determination in that regard. The process that will otherwise apply will be an inevitable application to the Court of Appeal for that stay. Some courts tend to stagger the application by saying a stay until such time as the Court of Appeal stay is made, but I say that the particular context of this case and the realities of this case and the vast sums at issue and the fact, as I say, that we have this debate on securities and nothing is going to happen in relation to the secured properties which underline this, that there is no reality other than to allow, or, I am suggesting that some allowance should be given to allow us to proceed in a vacuum, without those ancillary debates and disputes that will add cost, etc, etc, to this debate.”
26. In ruling on the application for a stay, Barrett J. held:
“[a]s regards a stay on the balance of the order, it seems to me that the losing party here have a right of appeal and I may be wrong in what I said and that a stay on the entirety of the order simply maintains the status quo until the Court of Appeal reaches its decision, so I am going to grant that stay as well.”
27. The Order of the High Court provides:-
“[a]nd IT IS ORDERED that execution of the said judgment and costs Order be stayed from the date of perfection hereof for such period as is provided for in Order 58 or Order 86A of the Rules of the Superior Courts (as the case may be) for the lodging of an appeal herein and in the event of such appeal being lodged within that period that execution be further stayed until the final determination of such appeal”.
28. On the basis of counsel’s submissions and the Court’s decision to preserve the status quo, the Corbetts argue that this case can be distinguished from McConnan; a stay on the execution of the judgment prevents the judgment from giving rise to a res judicata.
29. This argument is without merit. A stay on execution of a judgment for a period of time or pending an appeal, stays the execution of the court order. It does not reverse the decision, which stands. From the perspective of the law of res judicata, the decision remains a decision of a judicial tribunal of competent jurisdiction; it is still a final and conclusive judgment. The crucial indicia for res judicata remain unaltered.
30. Furthermore, the implication of the Corbetts’ argument is that a stay on execution of an order in one proceedings could operate to “stay” other proceedings pending the duration of the stay in the first set of proceedings. This is clearly beyond the scope of a stay order, and seeks to extend it to some from of collateral injunction. If the Corbetts wished to restrain the prosecution of these proceedings, they ought to have sought an injunction in these proceedings, not a stay in the summary proceedings. In my opinion it is quite clear that Barrett J. had no thought of staying the plenary proceedings in addition to the stay on execution of his order.
31. It is my judgment that the decision and judgment of Barrett J. in the summary proceedings is final and conclusive for res judicata purposes notwithstanding the appeal to the Court of Appeal and the stay on the execution of the Order of the High Court. The continuance of these proceedings falls foul of the principle of res judicata and the rule in Henderson v. Henderson. The cause of action advanced against the Receivers is bound to fail for the reasons outlined above. It follows that I must dismiss the proceedings on the basis that their continuance is not permissible as they are bound to fail and an abuse of process.
Lis pendens
32. The Corbetts registered a lis pendens against certain secured properties on 25th September, 2015, in connection with these proceedings. Achill seeks to have this lis pendens vacated pursuant to s. 123 of the Land Conveyancing and Law Reform Act 2009. Section 123 provides:-
“[s]ubject to section 124, a court may make an order to vacate a lis pendens on application by—
(a) the person on whose application it was registered, or
(b) any person affected by it, on notice to the person on whose application it was registered—
(i) where the action to which it relates has been discontinued or determined, or
(ii) where the court is satisfied that there has been an unreasonable delay in prosecuting the action or the action is not being prosecuted bona fide.”
33. Achill has appointed the Receivers to the secured properties to realise the sums due in respect of the Corbetts’ loans. The registration of the lis pendens in respect of these proceedings hinders the realisation of the security. Mr. Johnson swore at para. 43 of his affidavit of 3rd December, 2015, that:-
“…the Receivers are actively marketing certain of the secured properties for sale and one in particular, the Beasley Hotel site (Second Schedule, Mortgage Agreement No. 1), is close to execution of a contract for sale. I say and believe and am advised that the Receivers anticipate that the continued existence of the lis pendens registered by the Corbetts herein is likely to constitute a barrier to the completion of the said sale. I say and believe that a loss of the proposed sale would result in significant prejudice to Achill.”
In his second affidavit, sworn on 29th January, 2016, he noted that the intending purchaser of the Beasley Hotel was taking a pragmatic commercial view and may be willing to close the sale notwithstanding the lis pendens. However, he pointed out that the lis pendens is “in practical terms, causing severe commercial prejudice to Achill.” Achill values the entire portfolio as in excess of €45 million. He did not anticipate that the level of commercial pragmatism of the purchaser of the Beasley Hotel would readily be found amongst potential purchasers of the remaining properties, valued at approximately €35 million.
34. Achill argues that the plenary proceedings are not being pursued bona fide and that they do not constitute a sufficient basis for the continuance of the lis pendens. Achill submits that insofar as the lis pendens relates to the claim against the Receivers, the Receivers do not have sufficient interest in the properties against which such a registration could properly be made. This is correct and the registration of the plenary proceedings against the Receivers cannot stand.
35. In this case, the Court may make an order to vacate the lis pendens on Achill’s application as a party affected by it, either on the basis that the action to which it relates has been determined or on the basis that the Court is satisfied that the action is not being prosecuted bona fide. In view of the fact that I have dismissed the proceedings on the grounds that they are bound to fail or that they amount to an abuse of process, the action has been determined and the lis pendens should be vacated. In the circumstances, it is not necessary to consider whether the lis pendens should be vacated on the second ground advanced by Achill and I expressly make no decision on the second ground.
Conclusion
36. The proceedings are dismissed and the lis pendens is to be vacated pursuant to s. 123 of the Land and Conveyancing Law Reform Act 2009.
Danske Bank A/S v Scanlan [2016] IEHC 118
JUDGMENT of Mr. Justice Fullam delivered on the 25th day of February, 2016.
Factual Background
1. By facility letter dated the 8th September, 2008, accepted by Ms. Scanlan on the 2nd October, 2008, Danske Bank A/S (“the Bank”) provided Ms. Scanlan with a housing loan in the sum of €107,500. The principal security for the loan was a legal mortgage over the defendant’s former residence at 19 Radharc Na Sleibhte, Churchtown, Mallow, Co. Cork. This was an extension of an existing all sums legal mortgage dated the 21st August, 2003.
2. Ms. Scanlan failed to comply with the terms of an Arrears Notice from the Bank dated the 17th July, 2013. By letter dated the 7th August, 2013, the Bank demanded repayment of the outstanding balance of the loan then standing at €84,599.44. Ms. Scanlan failed to discharge the amount due. Pursuant to the powers conferred by paragraph 6 (2) of the mortgage, the bank appointed Mr Stephen Tennant receiver over the property by Deed of Appointment dated the 15th August, 2013.
3. These events gave rise to two sets of proceedings. In the first on the 6th June, 2014, the Bank issued a summary summons seeking judgment in the sum of €84,439.80. In the second, Ms. Scanlan issued plenary proceedings on the 21st October, 2014 against the Bank and the Receiver Mr Tennant, claiming €600,000 damages on various grounds including gross negligence and misrepresentation. A statement of claim was delivered on the 23rd February, 2015 wherein she claims damages in the sum of €100,000.
4. The Bank’s application is based on two motions:
(i) A motion seeking summary judgment dated the 9th September, 2014 in the sum of €84,439.80 against Ms. Scanlan (the defendant) relating to a loan made by the Bank to the defendant in September, 2008 repayment of which was demanded by letter dated the 25th April, 2014 from the Bank’s solicitors.
(ii) A motion dated the 18th March, 2015, seeking dismissal of Ms. Scanlan’s proceedings on two grounds:
(a) the inherent jurisdiction of the court to dismiss frivolous and vexatious cases and;
(b) the proceedings on their face disclose no reasonable cause of action pursuant to Order 19 Rule 28
5. Ms. Scanlan’s claim is for damages arising out of a number of grounds including that the Bank: engaged in reckless lending practices, misled her as to the nature of the agreement, engaged in excessive securitisation, breached a number of regulatory requirements and was in breach of licensing requirements as it was insolvent at the relevant time. She further claims the behaviour of the appointed receiver caused her damage.
6. When the matter came before O’Malley J. on the 2nd March, 2015, the Bank indicated that it proposed to issue a motion pursuant to Order 19 Rule 28 seeking dismissal of Ms. Scanlan’s claim on the basis that it failed to disclose any reasonable cause of action and/or under the court’s inherent jurisdiction that the claim was frivolous and vexatious.
7. O’Malley J. directed that the two motions be listed and heard together. On the 18th March the Bank issued its motion for dismissal grounded on the affidavit of Ms. Sharon Keenan, manager in the Asset Recovery Team of the Irish registered branch of the Bank.
8. The principles applicable to an application by a plaintiff for summary judgment and a defendant seeking dismissal of a plaintiff’s claim based on the courts inherent jurisdiction under Order 19 Rule 28 are similar. The court’s exercise of its jurisdiction in either situation amounts to a restriction on a party’s right of access to the courts. In an application for summary judgment the court must be satisfied that it is clear that there is no reasonable or fair probability of the Defendant having a real or bona fide defence. Hardiman J in Aer Rianta cpt v. Ryanair Limited [2001] 4 IR 607 stated at paragraph 623:
“In my view, the fundamental questions to be posed on an application such as this remain: is it ‘very clear’ that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant’s affidavits fail to disclose even an arguable defence?”
9. In a dismissal application the onus lies on the defendant concerned to establish that the plaintiffs claim is bound to fail. The defendant must demonstrate that any factual assertion on the part of the plaintiff could not be established at trial.
10. Kearns P. considered the court’s jurisdiction to dismiss under Order 19 Rule 28 and under its inherent jurisdiction at pages 2 and 3 of his judgment in Patrick Harrold v Nua Mortgages Limited [2015] IEHC 15 stating:
“Order 19 Rule 28 of the Rules of the Superior Courts provides-
“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 the 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.”
The court also possesses an inherent jurisdiction to strike out proceedings. This well established position was confirmed in Barry v. Buckley [1981] IR 306 where Costello J. stated that the “jurisdiction exists to ensure that an abuse of the process of the courts does not take place” and where a claim is bound to fail 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 the defendant.”
It is well established that this jurisdiction is one which should be used sparingly and right of access to the courts should be preserved wherever possible. In Lawlor v. Ross (unreported Supreme Court 22nd November, 2001) Fennelly J. stated that “the court should be willing to assume in favour of the plaintiff that an appropriate amendment of the pleadings might save his case.”
11. Furthermore, in O’N v. McD & Others [2013] IEHC 135 Kearns P. emphasised that with cases involving litigants in person, the courts are obliged to be “particularly cautious”.
12. Clarke J. considered the power to strike out proceedings in Salthill Properties Ltd and another v. Royal Bank of Scotland plc and others [2009] IEHC 207 stating:-
“… it seems to me that counsel for Salthill and Mr. Cunningham is correct when he says that the court need not and should not require a plaintiff to be in a position to show a prima facie case at the stage of an application to dismiss, in order that that application should fail. There have been many cases where the crucial evidence which allowed a plaintiff to succeed only emerged in the course of the proceedings. At the level of principle, this is likely to be particularly so in cases alleging fraud or other similar wrongdoing which is likely to be clandestine, if present, and where a plaintiff may only be able to come across admissible evidence sufficient to prove his case by virtue of the use of procedural devices such as discovery and interrogatories. That is not to say that it is legitimate for a party to instigate such proceedings when the party concerned has no basis for so doing. However there is, in my view, a significant difference between circumstances where a plaintiff has a legitimate basis for considering that it may have a claim at the time of commencing proceedings, on the one hand, and a situation where that party has, at that time, available to it, admissible evidence which it can put before the court to establish a prima facie claim, on the other hand.
It is clear from all of the authorities that the onus lies on the defendant concerned to establish that the plaintiff’s claim is bound to fail. It seems to me to follow that the defendant must demonstrate that any factual assertion on the part of the plaintiff could not be established. That is a different thing from a defendant saying that the plaintiff has not put forward, at that time, a prima facie case to the contrary effect.”
13. The Banks application for summary judgment was grounded on the affidavit sworn on the 4th September, 2014 by Ms. Sharon Keenan, manager in the Bank’s Asset Recovery Team. The defendant filed a replying affidavit dated 17th November, 2014.
14. In the dismissal application, Ms. Keenan swore an affidavit on behalf of the Bank on the 16th March, 2015. The defendant filed two replying affidavits the first dated 29th April, 2015 and second on 19th October, 2015.
15. The damages claimed by Ms. Scanlan are stated in her pleadings to be compensation “to restore the plaintiffs’ liquidity, to restore to the plaintiff the proper value of her equity of redemption in the property and to compensate the plaintiff for unnecessary and reckless damage to the property, her business and person and good name and standing.”
16. Ms. Keenan in her affidavit of 16th March, 2015 at paragraph 3 took the approach of summarising the issues as far as possible, to correspond with the issues dealt with by Kearns P. in his judgment in the case of Patrick Harrold v Nua Mortgages Limited [2015] IEHC 15 16th January, 2015 and Danske Bank v Declan and Marion Crowe [2015] IEHC 567 dated 9th September 2015.
17. The issues summarised by Ms. Keenan are as follows:
1. The plaintiff (Ms. Scanlan) suffered loss as a result of reckless lending practices by the Bank including the loss of her job.
2. The Bank acted in contravention of the Consumer Protection Code.
3. The Bank engaged in excessive securitisation which created a false boom economy followed by a bust situation which crippled the country.
4. The Bank’s licence was invalid by virtue of insolvency thus rendering the mortgage null and void.
5. The Bank failed to provide lawful paper work supporting the appointment of the Receiver.
6. The Receiver aggressively pursued a quick sale of the property and the plaintiff’s marriage, health and piece of mind suffered greatly as a result.
7. The Receiver removed the rent roll therefore removing all available income to the property forcing the plaintiff Ms. Scanlan into complete default.
8. The Receiver did not discharge his duties correctly by leaving the house in a state of vandalism and disrepair.
Reckless lending
18. Ms. Scanlan submits that the Bank engaged in reckless lending practices which led to her suffering loss and damage.
19. There is no civil wrong of reckless lending in this jurisdiction. That is confirmed by a number of decisions both in this jurisdiction as elsewhere which are cited in the judgment of Kearns P. in Harrold.
20. At pages 10 and 11 in his judgment in Harrold, Kearns P. said:
“In relation to the plaintiff’s claim of reckless lending by the defendant, as is clear from the case law relied upon by counsel for the defendant, there is no such civil wrong in this jurisdiction. In particular the court notes the decisions on this issue in Healy v. Stepstone Mortgage Funding, ICS Building Society v. Grant, and McConnell v. President of Ireland. This aspect of the plaintiff’s claim is closely aligned to a number of other broad and general allegations he makes in relation to the lending practices of “various banks” which they plaintiff contends “created the false boom and bust situation which has crippled my country”. Blanket allegations such as these do not give rise to a reasonable cause of action in the plaintiff’s case, are bound to fail and must be struck out. That is not to say that such allegations related to the wider context of the financial crisis should not be considered by a more appropriate forum of enquiry.”
21. In light of this, the Bank submits that this aspect of the plaintiff’s claim discloses no reasonable cause of action and therefore ought to be struck out as being bound to fail.
Consumer Protection Code
22. The bank submits that it acted fairly in respect of seeking repayment of the loan and in compliance with the Consumer Protection Code. This is dealt with at para. 11 of the grounding affidavit of Sharon Keenan on behalf of the bank wherein she states “that the plaintiff was notified of her default and given an opportunity to remedy the default”. The bank submits that it is sufficient to state that it is well established by decisions of this court that non-compliance with a statutory code does not relieve the borrower of his obligations under a loan to repay the lender and that breach of under code does not provide a plaintiff with a cause of action.
23. In Harrold Kearns P. cites the decision of McGovern J. in Freeman & other v. The Bank of Scotland (Ireland) & others [2014] IEHC 284 as worth noting:
“It is clear therefore that noncompliance with a statutory code does not relieve a borrower from his obligations under a loan to repay the lender, nor does it deprive the lender of his rights and powers under the loan agreement. If that is the case so far as the statutory codes of conduct are concerned, then, a fortiori, the plaintiffs in this action cannot make the case that they are relieved of their obligations under the loan or that the bank is deprived of its rights under the loan agreements, if there has been a breach of the bank of what is a voluntary code.”
Excessive Securitisation
24. Again the bank says that numerous decisions of the High Court establish that such allegations do not disclose a cause of action. At page 11 in Harrold Kearns P. stated:
“The issue of securitization as been dealt with in detail by previous decisions of the High Court and does not warrant detailed consideration herein. However, the remarks of Peart J. in Wellstead are of particular relevance:-
“… there is nothing unusual or mysterious about a securitization scheme. It happens all the time so that a bank can give itself added liquidity. It is typical of such securitization schemes that the original lender will retain under the scheme, by agreement with the transferee, the obligation to enforce the security and account to the transferee in due course upon recovery from the mortgagors.”
The plaintiff contends that securitization, alongside other fraudulent practices of the bank, amount to a “policy of predatory targeting of customers with the long term goal of fraudulently acquiring valuable property at little or no cost”. In light of a number of previous decisions, the Court is satisfied that this aspect of the plaintiff’s claim is frivolous, bound to fail, and must also be struck out.”
Insolvency of the Bank
25. The plaintiff claims at paragraphs 29 and 49 of her statement of claim that a mortgage entered into without a bank having a valid and appropriate license is null and void. She submits that it is stipulated that an applicant must be solvent to be successfully awarded a license. The statement of claim asserts that the losses of National Irish Bank in the first six months of 2006 where €17.2 million and by 2008 the losses had increased to €552 million.
26. The bank submits that the decisions of the High Court establish that the insolvency of a bank would not affect the validity of the loan and secondly the allegations by the plaintiff do not give her a cause of action.
(a) In Danske Bank A/S v. Declan and Marion Crowe, the defendants challenged the plaintiff’s capacity to maintain summary judgment proceedings on the basis that it had never been issued a banking license in Ireland. Kearns P. agreed with the plaintiff’s position however that by virtue of the EC (Licensing and Supervision of Credit Institutions) Regulations 1992 (S.I. 395 of 1992) the requirement to hold a license authorization under s. 33 of the Central Bank Act 1971 was superseded and the transfer of National Irish Bank to Danske Bank in 2007 under the provisions of S.I. 297 of 2007 entitled Danske as a credit institution already licensed in another member state, i.e. Denmark to carrying on banking business in Ireland through a branch, namely NIB.
(b) Insolvency. This issue has been considered in a number of cases as appears in the defendants submissions in Harrold. In McCarthy, Hogan J. stated:
“It was contended that been insolvent at the time it made the loans. While that claim has been strenuously denied, it is sufficient to say – as Gilligan J. said in Freeman – that even if this were so, this would not affect the validity of the loans.”
27. In Kearney v. KBC Bank Ireland PLC and Others [2014] IEHC 260, Birmingham J. also considered a claim in relation to the alleged insolvency of the bank in the following terms –
“ The contention that the bank is or was insolvent or has failed to prove its solvency, again, assuming in favour of the plaintiff for the purpose of this exercise that this is or was the situation, something which is of course firmly denied by the bank, this does not have any impact or effect on the validity or enforceability of the loan arrangements and mortgages entered into between the plaintiff and the bank and certainly would not provide the plaintiff with a cause of action. The obligation to repay remains in full force and effect whether the bank is solvent or insolvent.”
A failure to provide lawful paperwork associated with the Deed of Appointment of the Receiver
28. Ms. Scanlan acknowledged the security provided by the existing deed of mortgage of the 21st of August, 2003 in signing the Facility Letter. A copy of the mortgage executed by Ms. Scanlan was produced in Court. The deed of appointment of Mr. Tennant dated 15th August, 2013 is exhibited with the affidavit of Ms. Keenan sworn on the 16th March, 2015.
29. Gilligan J. in The Merrow Limited v. Bank of Scotland PLC and O’ Connor [2013] IEHC 130 stated that:
“29. Since a receiver’s authority is derived from the instrument under which he is appointed, an appointment is not valid unless it is made in accordance with the terms of that instrument. This principle has been recognised by the leading commentators in this area and accepted and applied by the courts throughout the common law world.
30. Courtney, in The Law of Private Companies (3rd Ed.) has observed that:
“[t]he validity of the appointment of a receiver is dependent upon compliance with the terms contained in the debenture and the capacity of the company and authority of its officers to create the debenture ab initio.”
31. Lynch-Fannon Corporate Insolvency and Rescue (2nd ed.) has noted that “[t]he penalty for non-compliance with the formalities for the appointment of the receiver is that such appointment is void”. She has also observed that non-compliance with formalities of appointment amounts to an abuse of process.”
30. As provided for by Paragraph 6(2) of the mortgage, the deed of appointment was executed in writing by an officer of the bank in accordance with s. 24 of the Conveyancing and Law of Property Act 1881.
31. Ms. Scanlan relies on the decision The Merrow as authority to the contrary. In The Merrow the Debenture expressly required the appointment of a receiver to be executed under seal. That is not the case here.
The Receiver aggressively pursued a quick sale causing the plaintiff specific damage.
32. Ms. Scanlan has argued that the Receiver aggressively pursued a quick sale of the property and the plaintiff’s marriage, health and peace of mind suffered as a result.
33. As stated by Birmingham J. in ACC Bank Plc. v. McEllin and others [2013] IEHC 454 there is no obligation on a creditor to enforce rights at any particular time. It is the Bank’s decision as to when to act.
“ 32. More fundamentally, this argument ignores the fact that there is no obligation to enforce rights at any particular time. It is for the bank to choose the time to act. That appears very clearly from the decision of the Court of Appeal in Silven Properties Limited v. Royal Bank of Scotland plc [2004] 1 WLR 997. In that case, Lightman J. at para. 14, delivering the judgment of the court commented as follows:-
“14. A mortgagee ‘is not a trustee of the power of sale for the mortgagor’. This time-honoured expression can be traced back at least as far as Sir George Jessel M.R. in Nash v. Eads (1880) 25 SJ 95. In default of provision to the contrary in the mortgage, the power is conferred upon the mortgagee by way of bargain by the mortgagor for his own benefit and he has an unfettered discretion to sell when he likes to achieve repayment of the debt which he is owed: see Cuckmere Brick Co v . Mutual Finance Limited [1971] Ch 949, 969g. A mortgagee is at all times free to consult his own interests alone whether and when to exercise his power of sale. The most recent authoritative restatement of this principle is to be found in Raja v. Austin Gray [ 2002] 1 EGLR 91, 96 para. 29 per Peter Gibson L.J. The mortgagee’s decision is not constrained by reason of the fact that the exercise or non-exercise of the power will occasion loss or damage to the mortgagor: (see China and South Sea Bank Limited v. Tan Soon Gin (alias George Tan) [1990] 1 AC 536). It does not matter that the time may be unpropitious and that by waiting a higher price could be obtained: he is not bound to postpone in the hope of obtaining a better price: see Tse Kwong Lam v. Wong Chit Sen [1983] 1 WLR 1349 at 1355b.”
33. This issue was also considered by McKechnie J. in Ruby Property Company Limited v. Raymond Kilty and Superquinn (Unreported, High Court, 31st January, 2003). In paragraph 13 of his judgment he set out in concise form the conclusions that he felt could be deduced from the authorities. Particularly in point is his comment at subparagraph (d) which was as follows:-
“If there is no duty to wait, logically, it would appear to follow that there is no duty to sell immediately so as to avoid a possible decrease in the value of the charged asset. See China and South Sea Bank Ltd. [[1990] 1 AC 536].”
34. In this case it has now emerged that matters would have worked out better for the defendants had the plaintiffs not afforded them time. However, that is with the benefit of hindsight. Arguments that banks and finance houses should move promptly and robustly lest matters get worse would have serious consequences if they were to carry the day and be universally applied. However, for my part, I am satisfied that the position is as indicated by McKechnie J. Accordingly, as far as this argument is concerned, I am satisfied that not even an arguable case is made out.”
Removal of rent roll /Damage to premises
34. The Plaintiff submits that the receiver removed the rent roll therefore removing all available income to the property forcing the Plaintiff into complete default. Furthermore, the Plaintiff claims that the receiver did not discharge his duties correctly by leaving the house in a state of vandalism and disrepair.
35. The Bank submits that the Plaintiff defaulted on her loan and the Bank demanded payment. Thereafter, the Bank, in pursuance of the powers contained in the deed of mortgage, lawfully appointed the receiver over the property. Upon appointment, the receiver is under a duty to act in good faith. There is no basis for the allegation that the second named defendant acted otherwise than honestly and in good faith.
36. Ms. Scanlan’s allegations in the previous two sections that the receiver has acted in breach of his duties are not supported by evidence and amount to mere assertions.
Conclusion
37. The courts afford litigants in person an appropriate degree of latitude. However, they are still bound by the laws of evidence and procedure. Ms. Scanlan’s extensive blanket grounds amount to general assertions that are not backed up by evidence.
38. It is the court’s view that the plaintiff’s claim discloses no reasonable cause of action and is bound to fail. Accordingly, the plaintiff’s claim against the Bank and the receiver is struck out pursuant to the inherent jurisdiction of the Court and pursuant to Order 19, Rule 28 of the Rules of the Superior Courts.
39. The court is satisfied that this matter should not go to full plenary hearing and final judgment should be entered against Ms. Scanlan. The Court was informed that the proceeds of sale of the property have been applied to Ms. Scanlan’s indebtedness leaving a balance due of €47,704.46. Liberty to apply.
McGreal v Whyte [2016] IECA 365
JUDGMENT of Ms. Justice Irvine delivered on the 6th day of December 2016
1. This is Mr. McGreal’s appeal against the order of the High Court (Hedigan J.) of 3rd July, 2015, whereby, pursuant the Court’s inherent jurisdiction, he dismissed Mr. McGreal’s claim for specific performance against the defendant (Ms. Whyte”) on the ground that it was bound to fail. Accordingly, core to this appeal are the circumstances in which a court may grant this relatively Draconian relief.
2. By order dated 19th February, 2016, Finlay Geoghegan J. directed that four issues be considered by the court on the appeal and these can be summarised as follows:-
(1) Was the trial judge correct in his decision to dismiss the claim as bound to fail upon the grounds that Ms. Whyte’s agreement in respect of the purchase of certain property was with a limited liability company and not with Mr. McGreal personally;
(2) if the trial judge was incorrect in so ruling, was Ms. Whyte entitled to the order made on the grounds that Mr. McGreal’s claim was bound to fail for want of any note or memorandum of an agreement between the parties concerning the sale of the property;
(3) whether Ms. Whyte was entitled to an order dismissing the claim in circumstances where Mr. McGreal had claimed an entitlement to enforce the contract in reliance upon her acts of part performance, and
(4) whether Ms. Whyte was entitled to the relief sought in circumstances where the undisputed evidence before the High Court was that it was Mr. McGreal who had withdrawn from the proposed contract and his solicitor who had demanded the return of the contract documents.
Background
3. By plenary summons dated 29th June, 2013, Mr. McGreal commenced specific performance proceedings against Ms. Whyte. In his statement of claim he maintains that in August, 2007 she agreed to purchase from him personally certain premises at Carra Close, Westport, Co. Mayo (“the property”) for a sum of €511,615.75 and that on the 2nd August, 2007, “the agreed deposit/contract payment was received”. That payment, in the sum of €5,000, was made by cheque drawn in favour of Mr. McGreal.
4. Mr. McGreal claims that it was an express or in the alternative an implied term of the aforementioned agreement that once he had completed certain structural alterations to the property, as had been requested by and agreed with Ms. Whyte, she would pay the balance due on foot of the contract. He claims that while he, in accordance with his obligations under the agreement, duly carried out the said works, Ms. Whyte failed in her obligations to complete the purchase. In such circumstances Mr. McGreal claims he is entitled to an order for specific performance of the said agreement and/or in the alternative an order for damages in lieu thereof.
5. In his reply to the defendant’s letter for particulars of the 10th October 2013, this is how he described the contract upon which he seeks to rely:
“Para 9:
This is a matter of evidence at the hearing. Without prejudice to the foregoing, the offer was made by the defendant to the estate agent and accepted by the plaintiff upon condition that a contract deposit was paid to him together with additional undertakings to complete certain elements of the construction work being given by the defendant. This offer, acceptance, consideration and performance constitute the legal binding and enforceable agreement entered into between the parties as a matter of law.”
6. Ms. Whyte in her defence and counter claim delivered on the 22nd May, 2014, denies any concluded contract with Mr. McGreal and pleads that insofar as there was any intended contract the same was to be between herself and a limited liability company, McGreal Construction Limited (“the company”), whereof Mr. McGreal was a director. She also pleads repudiation by Mr. McGreal on his own behalf or as agent on behalf of the company of any contract concerning the sale of the property. Ms. Whyte, in her defence, put Mr. McGreal on full proof of the existence of any enforceable agreement and any memoranda to be relied upon by him in that regard. In addition she relies upon the doctrine of laches.
7. In her counterclaim Ms. Whyte claimed that in the event of the court accepting the plaintiff’s claim to the effect that a binding agreement had been concluded between herself and Mr. McGreal, she would seek to set off against any award of damages he might recover the money which she had expended on the property. It was conceded in the High Court and in this court that her counterclaim would fall away if she established that there had been no concluded agreement between herself and Mr. McGreal.
Application to dismiss
8. By notice of motion dated 7th January, 2015, Ms. Whyte sought an order pursuant to Ord. 19 r. 28 of the Rules of the Superior Courts, or alternatively an order under the Court’s inherent jurisdiction, striking out Mr. McGreal’s claim on the grounds that it disclosed no reasonable cause of action or alternatively could be stated to be frivolous, vexatious, or bound to fail. She also sought to invoke the court’s inherent jurisdiction to dismiss the claim on the grounds of inordinate and inexcusable delay.
9. In her grounding affidavit Ms. Whyte put before the Court a substantial number of documents concerning her dealings with Mr. McGreal, his estate agent, Ms. Needham of Douglas Newman Good, and McGreal Contractors Limited for the purpose of seeking to establish beyond doubt that she had not entered into any concluded agreement with Mr. McGreal and that at all times, formal negotiations concerning the proposed sale of the property had taken place between herself as potential purchaser and the company, as the intended vendor. In particular she relied upon a Building Agreement / Contract for Sale concerning the property forwarded by Helena Boylan and Company, the solicitors acting on behalf of the company to her solicitor, Ms. Jackie Durcan, under cover of a letter dated 20th August, 2007. A complete copy of that agreement has never been produced by Mr. McGreal. Two pages of it were missing. However, Mr. McGreal accepts that the parties to that proposed agreement were Ms. Whyte as proposed purchaser/employer and the Company as proposed vendor/ contractor. Ms. Whyte also exhibited an exchange of correspondence between the said solicitors concerning the intended purchase, all of which post dates the agreement relied upon by Mr. McGreal. Ms. Whyte claims that this correspondence provides conclusive evidence:-
1. that there could never have been any binding agreement for the sale of the property between herself and Mr. McGreal personally. The proposed contract was to be with the company as vendor;
2. that no agreement was ever concluded. All of the correspondence made clear that there could be no agreement until such time as contracts were signed and exchanged, which they never were, and
3. that the reason no sale was concluded was that by letter 10th December 2008, Ms. Boylan, on behalf of the company, advised that her client was no longer prepared to sell the property.
10. In response to Ms. Whyte’s affidavit Mr. McGreal swore a replying affidavit dated 13th of April, 2015. The more critical averments in that affidavit assert the following:-
(i) that his statement of claim identifies all of the elements of the contract which he seeks to enforce by way of an order for specific performance;
(ii) that if his statement of claim is deficient he should be allowed amend it;;
(iii) that Ms. Whyte is estopped from applying to dismiss his claim given that she has delivered a defence and counter claim and he had replied thereto;
(iv) that it is for the court in the course of an oral hearing to determine whether the documents upon which he seeks to rely satisfy the requirements of the Statute of Frauds (Ireland) 1695;
(v) that as his contract with Ms. Whyte had legal effect as of the 25th July, 2007, all subsequent events are of no legal consequence;
(vi) that the contract contended for by Ms. Whyte was a legal impossibility in circumstances where he and his wife held the freehold interest in the property,
(vii) that it would be unconscionable and inequitable to allow Ms. Whyte to rely upon her own breach of duty and bad faith by permitting her to rely upon the Statute of Frauds.
Judgment of the High Court
11. While the High Court judge did not deliver a formal judgment, it is apparent from the transcript of the hearing that he was satisfied, on the evidence before him, that regardless of what Mr. McGreal might have intended or the fact that he had received a payment to him personally of €5,000, he ultimately decided to sell Ms. Whyte the property using his limited liability company to effect the transfer. The High Court Judge was clearly satisfied from the correspondence and documents exhibited that there could never have been a concluded contract for the sale of the property between Mr. McGreal and Ms. Whyte and that the vendor with whom Ms. Whyte had been in negotiations was the company. That being so, Hedigan J. concluded that Mr. McGreal’s claim for an order of specific performance of a contract allegedly concluded between him personally and Ms. Whyte was bound to fail. He did not dismiss the proceedings under Ord. 19 r. 28.
The Appeal
12. By Notice of Ordinary Appeal dated the 18th day of January 2016, Mr. McGreal has appealed the aforementioned order. That Notice focuses upon the matters already advised earlier in this judgment and also upon the alleged failure of the trial judge to consider the documents which he maintains satisfies the requirements of s.2 of the Statute of Frauds (Ireland) 1675 (“the Statute”). He makes a similar complaint concerning the failure of the High Court judge to consider the arguments and the evidence concerning his entitlement to rely upon the doctrine of part performance.
13. By Notice of Motion dated the 18th January, 2016, Mr. McGreal sought leave of this court to introduce new evidence on the hearing of the appeal. On 19th February, 2016, Finlay Geoghegan J. made an order permitting him introduce on the hearing of the appeal copies of such folio or folios of land as disclosed the registered owner of the property at the relevant time. She also permitted him file an affidavit sworn by Olivia Needham, Estate Agent, on the 18th December 2015, subject to granting Ms. Whyte the right to file an affidavit in response thereto. This she did on the 14th March, 2016. It was also in the course of this hearing that Finlay Geoghegan J. identified the issues to be considered by the court in the course of the appeal and to which I have already referred.
14. It is necessary to briefly refer to these affidavits insofar as the same were not available to the High Court Judge when he made his decision. In her affidavit Ms. Needham advises that she had acted as selling agent for Mr. McGreal in respect of the property. She confirms that she had had no dealings with any limited liability company. She states that in July, 2007 Ms. Whyte had expressed interest in the property and that on 11th July she arranged what she described as a “finalising meeting” at the property. That meeting was attended by herself, Mr. McGreal, Ms. Whyte and her father. According to Ms. Needham, Ms. Whyte requested that certain structural changes be made to the property and that Mr. McGreal advised her that he would not undertake such works without the security of a contract deposit. She states she advised Ms. Whyte that the payment of such a deposit would result in an enforceable agreement. Ms. Needham says she immediately drafted a memorandum of the agreement entered into between Mr. McGreal and Ms. Whyte and informed her that the contract deposit would be non-refundable and would have to be paid directly to Mr. McGreal.
15. Later in her affidavit, having referred to the payment by Ms. Whyte of the €5,000 she states:-
“I say also that I was present when the details of the agreement between the plaintiff and defendant, were finalised. The defendant agreed to purchase the property from the plaintiff, Roger McGreal, for the sum of €485,000 in accordance with the schedule recorded by me during the finalising meeting”.
16. I infer from the aforementioned statement that the meeting at which she states “the details of the agreement between the plaintiff and the defendant were finalised”, was some date subsequent to the 11th July, 2007.
17. Ms. Needham went on to state (i) that the sum of €485,000 was exclusive of extras (ii) that Ms. Whyte had stated that she would not require a mortgage and (iii) that she had agreed to carry out, at her own expense, other substantial works to the property.
18. At “ON1” Ms. Needham exhibits a memorandum which she states she prepared on the evening of the aforementioned meeting noting “the works the defendant agreed to complete at her cost.” At “ON2” she exhibits a list of “details of extras” agreed between Mr. McGreal and Ms. Whyte. She states that Mr. McGreal added other items to the note such as radiators, chimney alterations etc. “in order to have everything recorded on one list”. Finally at “ON3” she exhibits what she states was her general note of the meeting, which includes the names of the attendees, the date of the meeting and the general discussions that took place.
19. In her replying affidavit Ms. Whyte states that she never understood it to be the role of an estate agent to seek to bind an intending purchaser. She expresses alarm that Ms. Needham should attempt to invite the court to conclude that she had procured a binding contract for the sale of the property between herself and Mr. McGreal in respect of which she had obtained no legal advice and could not have known if there was marketable title to the property.
20. Ms. Whyte maintains that she paid the €5,000 as a booking deposit solely to demonstrate that she was seriously interested in purchasing the property. She did not understand it to be a non-refundable deposit. Ms. Whyte asserts that the documentation exhibited by Ms. Needham is not a memorandum of any agreement by her to purchase the property. Neither she nor Mr. McGreal were invited to sign any document. She says it was always understood that the negotiations were “subject to contract”. Ms. Whyte also expresses concern that Ms. Needham failed to exhibit a memo which she sent to the “vendors solicitors” dated 17th August, 2007, headed “instructions to vendors solicitors for proposed sale of property subject to contract/contract denied without prejudice” and which also noted that the “booking deposit” was awaited. This document she states supports her contention that all negotiations were subject to the normal legal formalities. Finally, she states that the reason she did not purchase the property was because it was withdrawn from the market by the vendor’s solicitor and that this had cost her dearly, as was apparent from the sum claimed by her in her counterclaim.
The submissions
21. Extensive written submissions were filed by both parties, and these have been of significant assistance insofar as they canvass, not only the evidence available to the High Court judge, but also the case law relevant to the exercise by the court of its inherent jurisdiction to dismiss a claim on the basis that is bound to fail. I do not intend what follows to be an exhaustive summary of the submissions of the parties and in this regard I would merely confirm that in reaching my conclusions I have considered in full all of the written and oral submissions of the parties. I have, however, excluded from my consideration all of the additional facts which Mr. McGreal has impermissibly included in his written submissions and which are not contained in the affidavits before the court.
22. Mr. McGreal submits that the factual and legal issues in this case are complex and are only capable of being resolved by a court in the course of a full plenary hearing. That being so, his claim should not have been dismissed on an interlocutory application. He relies in particular on the decision of Clarke J. in Moylist Construction Ltd v. Doheny and others [2016] IESC 9, [2016] 3 JIC 0401. He submits that the trial judge misdirected himself as to the significance of the correspondence inter partes by ruling out the existence of a concluded oral agreement between himself and Ms. Whyte and in respect of which he contends there is a memorandum in writing as required by s. 2 of the Statute. Other evidence supporting such an agreement was to be found in:-
1. letters from Ms. Whyte’s own solicitor which referred to him as the vendor;
2. the cheque for €5,000 dated 2nd August 2007 which was made payable to him personally, and
3. the fact that in 2010 Ms. Whyte had sued him personally for the return of the €5,000.
This was all evidence that could only be weighed by a court in a plenary process.
23. Mr. McGreal further submits that if the documents upon which he seeks to rely are insufficient to meet the requirements of s.2 of the Statute of Frauds, he intended to rely on his own acts of part performance in order to seek the equitable remedy claimed in his pleadings. In this regard he relies, inter alia, on the undisputed evidence that he altered the interior of the property to correspond with Ms. Whyte’s requirements and that he permitted her access to the property to carry out her own renovations which she herself values at €50,000.
24. As to the reliance by the trial judge on the correspondence and exchange of documents between the solicitors acting on behalf of the company and Ms. Whyte which commenced with the proposed building agreement and contract for sale undercover of a letter dated 20th August 2007, Mr. McGreal maintains that the fact that such documentation came into existence does not establish that he had not already concluded a binding oral agreement with Ms. Whyte. That intended transaction was devised with a view to minimising her exposure to stamp duty. He submits that the company could not in any event have contracted to sell the property as he and his wife, Carol Ann McGreal, were the joint owners of the property. If Ms. Whyte had honoured her agreement and paid the balance of €505,615.75 they would have executed the necessary transfer of the lands to include the relevant easements in favour of Roger McGreal Contractors Ltd. Only then would the company have had the locus standi to enter into the intended split contract.
25. Finally, Mr. McGreal maintains that, having demanded a substantial reduction in the purchase price which he was unable to agree to, it was Ms. Whyte who refused to complete the agreement.
26. Ms. Fogarty B.L. on behalf of Ms. Whyte, submits that the High Court judge was correct in law and in fact when he dismissed Mr. McGreal’s claim on the grounds that it was bound to fail, and that all of the contemporaneous documentation pointed to an intended agreement between Ms. Whyte and the company. She submitted also that the documentation which Mr. McGreal sought to rely upon as evidence supporting an oral agreement made between himself and Ms. Whyte was not in accordance with what is required by s.2 of the Statute and that any documentation in which Mr. McGreal was referred to as the vendor, post-dated the negotiations between Ms. Whyte and the company by many years and was of no evidential value. In these circumstances, it was submitted, that the claim could be safely dismissed without any risk of injustice.
Relevant principles
27. That the court enjoys an inherent jurisdiction to strike out or stay proceedings which it considers bound to fail has long been established. It is a jurisdiction that stems from the court’s inherent entitlement to prevent an abuse of process. Clearly, to permit a plaintiff to maintain a claim which is bound to fail would be to condone an abuse of the process of the court.
28. The court’s inherent jurisdiction to dismiss a claim as bound to fail is somewhat different for the jurisdiction of the court to dismiss proceedings under Ord.19 r.28 of the Rules of the Superior Courts. While an application under Ord. 19 r. 28 has as its foundation stone a contention that the claim as pleaded does not disclose a cause of action, the court’s inherent jurisdiction may be invoked where it can be demonstrated that there is no arguable basis in law and in fact for the claim made.
29. Because the jurisdiction to dismiss a claim has the effect of denying the plaintiff their constitutional right of access to the Courts (Article 40.3.) it is one which must be exercised sparingly (see Costello J. in Barry v. Buckley [1981] IR 306). Further, an order dismissing a claim on the basis that it is bound to fail should not be made unless it is clear that there is no risk of an injustice being perpetrated upon a plaintiff should the court accede to such an application. To justify granting such relief the Court must be satisfied on the facts of the case that the continued existence of the proceedings simply cannot be justified, that it would be manifestly unfair to the defendant to allow the claim proceed and that the claim constitutes an abuse of the process of the courts.
30. It is also important to record that the court is not entitled, in the exercise of its inherent jurisdiction, to dismiss an innovative or weak case, as was advised by Charleton J. in Millstream Cycling Limited v. Tierney [2010] IEHC 55. However, it may do so if it can be demonstrated that what the plaintiff asserts is utterly undermined by the known and readily ascertainable circumstances of the claim, usually in written form. Neither is the process to be used to seek an early determination of issues which ought, in the normal course of events, to be determined on a plenary hearing.
31. Before making such a peremptory decision, the court should be satisfied that, no matter what might arise on discovery or at trial, the plaintiff’s claim cannot succeed. Further, the court should not dismiss a claim where an amendment of the pleadings might allow the plaintiff pursue the action which, in its current form, might otherwise be dismissed as bound to fail. (See McCarthy J. in Sun Fat Chan v. Osseous Limited [1992] I.R. 425).
32. In Jodifern v. Fitzgerald [2000] 3 IR 321, a case of particular relevance to these proceedings, insofar as it concerns a claim for specific performance which the defendant sought to have dismissed on the grounds that it was vexatious or amounted to an abuse of process, Murray J. (as he then was) stated that the court should exercise caution before dismissing proceedings on a summary basis. This is what he said at page 334 of his judgment concerning the exercise of the court’s inherent jurisdiction:-
“The object of such an order 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. Clearly, therefore, the hearing of an application by a defendant to the High Court to exercise its inherent jurisdiction to stay or dismiss an action cannot be a form of summary disposal of the case either on issues of fact or substantial questions of law in substitute for the normal plenary proceedings.
For this reason, 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. It is only on the basis of such undisputed facts that the court may proceed.”
33. It is nonetheless clear from a number of recent authorities (see: Keohane v. Hynes [2014] IESC 66, and Moylist Construction Ltd v. Doheny and others [2016] IESC 9) that, for the purposes of considering such an application, the court is not precluded from engaging with the facts of the case and it may in certain circumstances engage in some analysis of relevant documentation. That said, it is clear that there are significant limitations concerning the extent to which any such engagement is appropriate. As to the circumstances in which the court may engage with the facts and in particular documentary evidence, the following is what Clarke J. had to say concerning the matter in Keohane:-
“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. Likewise, the Court can go into documentary facts where the relevant documents govern the legal relations between the parties or form the only possible evidential basis for the plaintiff’s claim (as in Lopes). As Barron J. noted in Jodifern, a court can look at a contract and it may become clear beyond argument as to what that contract means. On that basis, it may follow that a plaintiff’s claim may be bound to fail. But there may be cases where, notwithstanding the text of a contract, facts are asserted and backed up either by evidence or by the possibility that evidence might be found, which might lead to the contract being construed in some different way or the consequences for the wrong alleged in the proceedings being differently considered. In such cases, as Barron J. made clear, the case must go to trial.
6.9 In summary, it is important to emphasise the significant limitations on the extent to which a court can engage with the facts in an application to dismiss on the grounds of being bound to fail. In cases where the legal rights and obligations of the parties are governed by documents, then the court can examine those documents to consider whether the plaintiff’s claim is bound to fail and may, in that regard, have to ask the question as to whether there is any evidence outside of that documentary record which could realistically have a bearing on the rights and obligations concerned. Second, where the only evidence which could be put forward concerning essential factual allegations made on behalf of the plaintiff is documentary evidence, then the court can examine that evidence to see if there is any basis on which it could provide support for a plaintiff’s allegations. Third, and finally, a court may examine an allegation to determine whether it is a mere assertion and, if so, to consider whether any credible basis has been put forward for suggesting that evidence might be available at trial to substantiate it. While there may be other unusual circumstances in which it would be appropriate for the court to engage with the facts, it does not seem to me that the proper determination of an application to dismiss as being bound to fail can, ordinarily, go beyond the limited form of factual analysis to which I have referred.”
34. In his judgment in Moylist Construction Ltd Clarke J. when considering once again the courts inherent jurisdiction to dismiss a claim on the grounds that it was bound to fail, made clear that there are cases in which it would not be appropriate for the court to exercise such jurisdiction and that these were not limited to cases concerning factual disputes, but included those which involved issues of law or construction which were in themselves complex and would require careful analysis. He likened, by way of analogy, the courts jurisdiction to that which it exercises when considering whether it should refer a claim for summary judgment to plenary hearing. He advised that in both cases, “the reason why it is suggested that there should not be a full plenary hearing is based on a contention that there would be no point because there is either no defence (in the case of a defendant in summary summons proceedings) or no claim (in the case of a plaintiff faced with an inherent jurisdiction application) which would justify imposing the burden and expense of a full plenary hearing on the opponent in question.” In particular, he referred to his own judgment in McGrath v. O’Driscoll [2007] 1 ILRM 203, concerning issues that might conveniently be dealt with otherwise that on a plenary hearing. In particular he referred to the following brief passage at page 210 of his judgment where he said as follows:-
“So far as questions of law or construction are concerned the court can, on a motion for summary judgment, resolve such questions (including, where appropriate, questions of the construction of documents), but should only do so where the issues which arise are relatively straightforward and where there is no real risk of an injustice being done by determining those questions within the somewhat limited framework of a motion for summary judgment.”
35. In the course of his judgment in Moylist Clarke J. went on to say that there are cases which are just not suitable for an application to dismiss under the court’s inherent jurisdiction. These include cases involving factual disputes, save to the limited extent to which it is appropriate to engage with facts as identified in Keohane. However, later in his judgment he referred specifically to cases where the court might safely reach a conclusion and dismiss a claim as one which was bound to fail.
“3.15.That is not, of course, to say that there will not be cases where the legal or documentary issues may be clear and straightforward such that it is safe for the court to reach a conclusion on those questions on the hearing of a motion to dismiss. That is not to say that the fact that a plaintiff may make a large number of points, each one of which is clearly unstatable, should not prevent a dismiss from being ordered. As Denham J. observed in a different context in Bula v. Tara Mines Ltd (No.6) [2000]4 IR 412, at p.462, ‘seventeen noughts are still nothing’.”
3.16. But I would caution against the appropriateness of the use of the application to dismiss under the inherent jurisdiction of the court in relation to proceedings where, even if there are no factual disputes or any such factual issues as might arise come within the strictures identified in Keohane, nonetheless the legal issues or questions concerning the proper interpretation of documents are complex. In such cases, the very complexity of the issues (even if the court has a fairly clear view on them) makes it difficult to determine, within the confines of a motion heard on affidavit, that the plaintiff’s case is such that it can safely be said that it is bound to fail.”
Decision
36. I do not intend to approach my decision, in the sequence suggested by the issues fixed for consideration on this appeal by, Finlay Geoghegan J. I propose to structure my judgment in the following manner:-
1. The Statute of Frauds. ( Issue 1)
2. Part Performance. ( Issue 2)
3. Engagement between the company and Ms. Whyte and their respective legal advisors post the 2nd August 2007, that being the last of the several differing dates relied upon by Mr. McGreal as the date upon which he maintains he concluded a personal agreement with Ms. Whyte for the sale of the property. (Covering issues 1 and 4)
37. As is apparent from what I have earlier stated in this judgment, the first two of these issues were not addressed at first instance and are addressed now by reason of the order made by Finlay Geoghegan J. on the 19th February, 2016.
Statute of Frauds (Ireland) 1695
38. The first question I must ask myself, leaving aside all of the other issues which arise for consideration on this appeal and treating this issue and the facts pertaining thereto in isolation from events post dating the 2nd August 2007, is whether it is clear that it is unstatable for Mr. McGreal to contend that the documentation exhibited in Ms. Needham’s affidavit could arguably meet the requirements of s.2 of the Statute of Frauds and thus evidence the personal agreement for which he contends?
39. The answer to the aforementioned question is probably no. What I can say however, is that I am quite satisfied that he would have an extremely uphill battle to convince a court, on full legal argument, that the documents on which he seeks to rely could ever meet the requirements of s. 2. He does not seek to rely upon the type of formal documentation usually deployed by parties and their advisors when a contract for the sale of land is under negotiation. Further, there is no one document which contains the essential elements required by the section, namely the names of the parties, details of the property and the price. Hence he would have to satisfy a court that the documents exhibited to Ms. Needham’s affidavit, which are unstructured, informal, handwritten and extremely difficult to follow, are obviously connected with the same transaction, a task further complicated by the fact that Ms. Whyte’s signature appears only on one such documents, a piece of hotel notepaper, and in what can only be described as a highly unconventional position.
40. To my mind, the issue as to whether the memoranda relied upon by Mr. McGreal in this case might satisfy the requirements of the Statute, is nonetheless not straightforward from a legal perspective. The relevant documents require careful legal analysis and that task is not one that I believe can be conveniently or safely be engaged with in the context of an interlocutory hearing. The prevailing jurisprudence concerning the court’s inherent jurisdiction to dismiss a claim as bound to fail, cautions that only straightforward issues of law are suitable for consideration on such an application (see Murray J. in Jodifern). While I can well envisage cases were a court might readily be in a position to decide whether a particular memorandum satisfied s. 2 of the Statute, I do not believe this to be such a case. That being so, if this was the only issue in the case, I would not be disposed to dismissing Mr. McGreal’s claim at this juncture.
Part Performance
41. Even if I was satisfied that I could confidently dismiss Mr. McGreal’s claim on the basis that it was bound to fail due to the lack of a written memorandum sufficient to meet the requirements of s. 2 of the Statute of Frauds, the evidence which he put before the High Court in support of his intended reliance on the doctrine of part performance would, if it were not for the other circumstances and documentation to which I will later refer, justify allowing the action proceed to a full plenary hearing. That is not to say that I am satisfied that such evidence would likely overcome the defendant’s plea in reliance upon s.2, but the evidence was sufficient to establish that he had an arguable case based upon his acts of part performance.
42. In relation to this issue it is relevant to note that Ms. Whyte was not in a position to contest the fact that Mr. McGreal had carried out significant internal alterations to the property at her request and that he had permitted her access to the property so that she might carry out such works as she wished to complete. Mr. McGreal’s actions in this regard are at least prima facie consistent with the terms of the oral agreement for which he contends, even if Ms. Whyte disputes that this was the basis upon which he carried out the alterations or allowed her access to the property. It is of course to be remembered that it is Mr. McGreal’s acts of part performance, rather than any performance on the part of the purchaser, that is of relevance in this regard. I mention this legal matter only because issue number three, as directed by Finlay Geoghegan J. refers, inadvertently, to Ms. Whyte’s acts of part performance rather than those of Mr. McGreal. It is a plaintiff’s acts of part performance which gives them the equity to seek to rely upon the doctrine of part performance to cure any deficiency otherwise arising under the Statute.
Dealings between the parties post the 2nd August 2007
43. I now turn to consider the material which the trial judge appears to have relied upon when he decided to dismiss Mr. McGreal’s claim on the basis that it was bound to fail.
44. Regardless of the manner in which the first of the issues which Finlay Geoghegan J. directed be considered on this appeal is formulated, it is not clear from the transcript of the High Court hearing whether the trial judge actually made his decision based upon a finding that Ms. Whyte had entered into an agreement with the company rather than with Mr. McGreal personally. I would infer from all of what the trial judge said in the course of the hearing that he decided that the claim was bound to fail because it was wholly inconsistent with the documentary evidence, which satisfied him that there could have been no prior concluded agreement for the sale of the property between Mr. McGreal and Ms. Whyte.
45. In order to consider whether the High Court judge erred in law when he concluded that Mr. McGreal’s claim was bound to fail, it is necessary to consider in some detail not only the undisputed facts which post date the 2nd August 2007, but also the documentation which I consider material to my conclusions.
46. As to the facts, it is not disputed that Mr. McGreal is a director of McGreal Construction Limited and that as principal of that company he gave instructions to Ms. Helena Boylan, of Helena Boylan solicitors, to prepare all of the documentation to which I will later refer. He makes no complaint that anything said or done by Ms. Boylan was said or done otherwise than in accordance with his instructions. Ms. Whyte was at all relevant times represented by Ms. Jackie Durcan, of Durcan Solicitors.
The Documentation
47. On 17th August 2007, Ms. Needham sent a notice to Ms. Boylan asking her to issue contracts for the sale of the property. She furnished the name of the purchaser and her solicitor and referred to Mr. Roger McGreal as the vendor. At the top of her notice are the following words in bold capital letters: –
“INSTRUCTIONS TO VENDORS SOLICITOR FOR PROPOSED SALE OF THE PROPERTY SUBJECT TO CONTRACT DENIED WITHOUT PREJUDICE”
48. Under cover of letter dated the 20th of August 2007, Ms. Boylan forwarded to Ms. Durcan, a Building Agreement and Contract for sale. It is agreed that the company was the proposed contractor and also the proposed vendor and that Ms. Whyte was to be the proposed employer and purchaser.
49. On 22nd August, 2007, Ms. Durcan raised a number of pre-contract enquiries. Her letter named the vendor as Roger McGreal Contractors Ltd and concluded with the following statement:-
“In the meantime, please note that we do not have the authority by this, or any subsequent correspondence to bind our clients until such time as the Contracts have been signed, by both parties, exchanged, the full deposit paid, and all the special conditions complied with.”
50. On the same date Ms. Durcan wrote to Ms. Whyte regarding “the proposed purchase” from “Roger McGreal Contractors Ltd”. In her letter she advised that she had received the contract for sale and supporting title documentation and also set out for her client’s benefit some of the relevant contractual terms and in particular the proposed payment schedule.
51. On the 24th August, 2007, Ms. Boylan replied to Ms. Durcan’s letter. That letter is headed “subject to contract/contract” and refers to her client, as Roger McGreal Contractors Ltd. She noted that Ms. Whyte was anxious to proceed with the purchase and stated that she would advise her client accordingly. She ended her letter stating as follows:-
“Accordingly, we await hearing from you with Contracts duly executed by your client together with deposit, if your client intends to proceed.
“In the meantime please note that I have no authority either express or implied to bind by client in this matter, and no legally binding contract shall exist or be deemed to exist until such time as Contracts hearin, have been signed by both parties and a full deposit paid over to the Vendor. This letter and any correspondence/documents to date shall not be deemed to constitute a note or memorandum for the purpose of the Statute of Frauds”
52. On 3rd October, 2007, Ms. Boylan wrote on behalf of her client, Roger McGreal Contractors Ltd and again “subject to contract/contract denied”, requesting signed contracts and payment of the deposit. This letter spawned a letter from Ms. Durcan to her client requesting up-to-date instructions.
53. On 28th May, 2008, presumably in circumstances where she had not heard from Ms. Whyte’s solicitors, Ms. Boylan again wrote on behalf of her client “Roger McGreal Contractors Ltd” and “subject to contract” in the following relatively peremptory terms:-
“Dear Madam,
We have received instructions from our client that unless contracts are returned to this office before Friday, 6th June 2008, duly executed by your client, our client will be withdrawing from this sale.
Accordingly if you client has not executed contracts by that date, please return all documents to this office forthwith. In the meantime, we have no authority to bind our client and no contracts shall be deemed to come into existence until such time as they have been signed by both parties, exchanged and a full deposit paid.”
54. In response, by letter dated the 6th June, 2008, Ms. Durcan wrote to Ms. Boylan in terms which included the following statements: –
“We have now taken our clients instructions herein, and she has asked us to advise you that she is proceeding with this purchase.
Our mutual clients are in direct contact with each other regarding this sale, and purchase. Your client is aware that our client has expended certain monies on the house to date and your client has altered the plans somewhat to her specifications.
Our client has [sic] is now liaising with her financial institution to arrange funds for the payment of the deposit, and once they are to hand, she will make an appointment to call to this office to sign the necessary contract for sale/building agreement.”
55. On the 10th September, 2008, Ms. Boylan, in a letter headed “subject to contract/contract denied” and written on behalf of her client Roger McGreal Contractors Ltd, advised as follows:-
“We note that we have not heard from you together with contracts in this case.
We note that our client has given your client ample opportunity to execute the contracts in this case and we understand from our client that she is now looking for a substantial reduction in the purchase price of this property.
Please note that no reduction will be made. Please note that our client is no longer selling the property to your client and he is sending in his workmen to the property next Wednesday, 17th September, 2008, to remove all the changes that have been made to the property on your client’s instructions, which alterations have been made by our client at substantial cost to him to facilitate your client, detailed particulars of which and the costs of which have been served directly on your client by our client.
Accordingly, our client will be changing the property back from a three bedroom house to a four bedroom house, as it was originally, and will be removing all items and works completed so that the property may be restored to a four-bedroom residence.
Please accordingly return all contracts and title documents to us forthwith, as our client wishes to place the property on the market for sale.”
56. On 29th September, 2008, Ms. Durcan wrote to Ms. Boylan in a letter that includes the following statement:-
“We note that your client is no longer to sell this dwelling house at the contract price (my emphasis) to Karen Whyte and in those circumstances, we are now returning title documentation to vouch with contracts for sale in duplicate”.
57. In the last mentioned letter, Ms. Durcan advised that “in order to draw a line in the sand in this matter” her client would forfeit those items that had been installed in the dwelling at her cost and other items which had not been fitted could be returned to her.
58. On the 10th December, 2008, some ten weeks after her receipt of Ms. Durcan’s letter noting that the company was unwilling to sell at the agreed price, Ms. Boylan wrote to Ms. Durcan contending firstly, that she had not received the return of the contracts. Second, she stated that Ms. Durcan’s letter was inaccurate and that it was Ms. Whyte who did not wish to purchase the property at the contract price.
59. A further letter entitled “Reminder” was written by Ms. Boylan on behalf of the company on the 27th January 2009, stating that she had still not received the contracts from Ms. Durcan.
60. By letter dated the 30th January, 2009, Ms. Durcan took exception to Ms. Boylan’s claim that the contracts had not been returned. She stated that she had sent them on 29th September, 2008, and had written two further letters dated 31st of October 2008 and 27th of November 2008 seeking an acknowledgment of their receipt. The accuracy of that statement was not later challenged by Ms. Boylan.
Effect of the documentation post 2nd August 2007 on the Defendant’s application
61. It seems to me that the jurisprudence which has built up over the years in relation to summary judgment proceedings is of assistance when considering the proper approach of the court to an application to dismiss a claim as bound to fail. In summary judgment proceedings, when asked to grant judgment in the light of the evidence advanced by a defendant on affidavit to demonstrate the existence of a bona fide defence, the court must ask itself the question advised by Hardiman J. in Aer Rianta v.Ryanair [2001] 4 IR 607 namely:-
“Is it “very clear” that the defendant has no case?”
It would seem to follow that on an application to dismiss a plaintiff’s claim the Court must be satisfied that it is very clear that the plaintiff has no case or, to put it another way, that the claim advanced is bound to fail. The onus of proving that this is so clearly rests with the defendant.
62. The next matter to consider is how the court should set about answering that question. What is permissible in terms of evaluating the evidence available on what is an interlocutory hearing? Again, I believe helpful guidance can be found in a number of the decided cases concerning summary judgment.
63. A court will not withhold summary judgment and refer proceedings to plenary hearing by reason only of a bare assertion made by a defendant as to some particular situation or state of affairs which if true would provide them with an arguable defence, if there is indisputable documentation which would render such an assertion untenable.
64. The courts evaluation of such documentation on an application for summary judgement was crucial to the conclusion of Finlay Geoghegan J. in Bank of Ireland v. Walsh [2009] IEHC 220. In that case the bank brought a claim against a company director on foot of a guarantee. He did not deny executing the guarantee but claimed that the company, whose debt he had guaranteed, had a claim for damages against the bank. That being so he maintained that he was entitled to rely in his defence upon any set off to which the company was entitled against the bank in respect of the sum guaranteed.
65. What Finlay Geoghegan J. had to determine was whether the defendant’s proposed defence was more than a mere assertion and whether there was an arguable claim that the bank had committed an actionable wrong against the company with the result that it had suffered the loss alleged. In concluding that the defendant had not met the low threshold required to have the claim sent forward for plenary hearing, she expressed herself satisfied that the defendant’s assertions were not consistent with the contemporaneous documents that he had exhibited. His primary complaint was that the bank had failed to permit the company to draw down a facility of €1.9m. on 23rd September 2008, as had been agreed. In the light of that complaint, Finlay Geoghegan J. considered the available documentation concerning the facility including certain e-mails which did not refer to any such agreement. She also noted that the agreement contended for had not been recorded in correspondence post dating the 23rd September 2008. As a result she concluded that the contemporaneous documentation was inconsistent with the assertions that had been made by the defendant.
66. A similar approach was taken by Murphy J. in First National Commercial Bank v. Anglin [1996] IR 75, a case which again involved a claim by a bank on foot of a guarantee. In that case the defendant denied signing the guarantee. He asserted that he was out of the country on the relevant date i.e. 1st February 1989. In the course of his appeal against the judgment granted against him in the High Court, the defendant relied exclusively on the contention that the guarantee had been executed in September 1989, and argued that if his evidence to that effect was accepted it followed that the guarantee was void as having been given for past consideration.
67. In the course of his judgment Murphy J. made clear that a defendant could not be denied leave to defend because the court had reason to doubt his bona fides. However, he quoted with approval the approach laid down in Banque de Paris v. De Naray [1984] 1 Lloyd’s Rep 21 namely:-
“The mere assertion in an affidavit of a given situation which is to be the basis of a defence does not, ipso facto, provide leave to defend; the court must look at the whole situation and ask whether the defendant has satisfied the court that there is a fair or reasonable probability of the defendants’ having a real or bona fide defence.”
68. Thus, Murphy J. proceeded to consider all of the relevant circumstances surrounding the original loan as well as the guarantee. He looked, inter alia, at the facility letter, the resolution of the company concerning the loan and also the legal documentation emanating from the lawyers concerning the proposed security documentation. Having done so, he stated he had no difficulty concluding that Mr. Anglin had not executed the guarantee on 1st February but that he had done so on some date prior to 13th January 1989. That being so, there was no credible evidence to support his defence which asserted that the guarantee was void as having been given in respect of past consideration.
69. The aforementioned decisions are in my view of significant assistance when it comes to considering the proper approach of a court on an application to dismiss a claim as bound to fail where the defendant puts forward for the court’s consideration documentation which it claims fundamentally undermines the purported validity of the claim which the plaintiff seeks to pursue. That an approach such as that adopted by Finlay Geoghegan J. in Bank of Ireland v. Walsh and Murphy J. in Anglin is permissible on such an application would appear to be supported by the decisions in Keohane, Moylist Construction Ltd and Millstream Cycling Ltd to which I have already referred, particularly where such documentation is not disputed, where it purports to govern legal relations between the parties thereto and was authored by those with legal experience and who, at the time they prepared such documentation, were charged with the protection of their client’s interests.
70. The documentation upon which the defendant seeks to rely in this case is of that calibre. All of it, with the exception of the Notice of the 17th August 2007, which was authored by Ms. Needham, was written by lawyers. Insofar as much of the correspondence was written not on behalf of Mr. McGreal but on behalf of his company, I reject Mr. McGreal’s efforts to distance himself from that correspondence as I do his submission that the court must ignore it because the company is not a party to these proceedings. Mr. McGreal was a director and was the principal of the company at the relevant time. He does not dispute that he was the only person in a position to give instructions to Ms. Boylan on behalf of the company. Neither does he contest that in all of her dealings with Ms. Whyte’s solicitor that she acted in accordance with his instructions and with his authority.
71. Accordingly, I propose to analyse the documentation which post dates the 2nd August, 2007, in order to assess whether Mr. McGreal’s claim to the effect that he concluded a binding oral agreement with Ms. Whyte for the sale of the property on some date prior the 3rd August, 2007, amounts to anything more than a mere assertion for which no evidence or no credible basis has been put forward or, to adopt the words of Charleton J. in Millstream Cycling Ltd, is his claim utterly undermined by the circumstances which are ascertainable from such documentation.
72. I well recognise that in taking this approach I must proceed with great caution because my conclusions have the potential to deny Mr. McGreal the opportunity of having his claim determined at a full plenary hearing, to which he is otherwise entitled. As McCarthy J. advised in Sun Fat Chan I must be certain that nothing could turn up at the trial or in the course of discovery which could render my analysis of the validity of Mr. McGreal’s claim incorrect. Likewise, before I could conclude that his claim is one that is bound to fail, I would have to be certain that there is no risk that an injustice might be done to Mr. McGreal by determining the possible validity of his claim in the course of an interlocutory hearing.
73. Notwithstanding the limitations under which the court must operate when urged to dismiss a claim as bound to fail and the caution advised in the authorities to which I have already referred, I am satisfied that defendant has established clearly that the existence of the contract for which the plaintiff claims specific performance is fatally undermined by the known and readily ascertainable circumstances contained in the documentation to which I have already referred.
74. It is not disputed that on the 20th August, 2007, on the instructions of Mr. McGreal, his company, with the benefit of legal advice, commenced negotiations with a view to selling the property to Ms. Whyte on the terms and in the manner proposed in the Building Agreement and Contract for Sale forwarded to Ms. Durcan on that date. That approach by the company is wholly inconsistent with the existence of a prior binding agreement for the sale of the property between Mr. McGreal and Ms. Whyte. If such an agreement had been concluded, the company could not have offered the property for sale. Neither could it ever have done so without Mr. McGreal first releasing Ms. Whyte from that agreement. That legal position is not undermined in any way by Mr. McGreal’s submission that the building agreement and contract for sale were to be deployed in order to reduce Ms. Whyte’s potential liability for stamp duty. Either there was or was not a binding agreement between Mr. McGreal and Ms. Whyte. The intended parties were only in a position to execute the building agreement and contract for sale absent the existence of a prior binding agreement. Neither is it relevant that at the time the company was negotiating with Ms. Whyte the property was in the ownership of Mr. McGreal and his wife. It was for the company to procure title to the property such that it could complete the proposed sale to Ms. Whyte.
75. For the following twelve months formal correspondence was exchanged between the Company’s solicitors and Ms. Whyte’s solicitor, all of which is wholly inconsistent with the existence of any prior concluded agreement. The property could not have been “on the market” if Ms. Whyte was already contractually bound to purchase it, as is alleged by Mr. McGreal. Why would Ms. Boylan, on Mr. McGreal’s instructions, have written a myriad of letters entitled “ subject to contract/ contract denied” stating she had no authority to bind the company until contracts were signed and exchanged, if all along Ms. Whyte was already contractually bound to purchase at the price specified in the proposed contract?
76. There is no shortage of evidence in the present case, to allow me safely to conclude that Mr. McGreal’s claim is bound to fail. I ask myself how the company, on Mr. McGreal’s instructions, could have called upon Ms. Whyte to complete the contract documents so as to bind her to purchase the property from the company (as per Ms. Boylan’s letter of 3rd October 2007) if she had already contracted to buy the property from Mr. McGreal? I also question how Ms. Boylan, when demanding the return of the contract documents on 10th September 2008 could, having regard to Mr. McGreal’s present claim, state the following:-
“Please accordingly return all contracts and title documents to us forthwith, as our client wishes to place the property on the market for sale?”
It goes without saying that the company could not place the property on the market for sale if, as Mr. McGreal maintains, there already existed a binding agreement pursuant to which he was bound to sell the property to Ms. Whyte.
77. Having considered all of the evidence placed before the court on the present application, I am quite satisfied that the legal and factual proposition which Mr. McGreal seeks to advance in these proceedings is wholly and utterly undermined by documentation authored on his instructions. It matters not that the company rather than Mr. McGreal was the client of Ms. Boylan for the purposes of that correspondence. The company could only give instructions to Ms. Boylan via Mr. McGreal and to that extent he must be fixed with full knowledge and responsibility for the effect that any such correspondence has on these proceedings. All of the documentation upon which the defendant relies was brought into being for the purposes of governing the dealings between the company and Ms. Whyte and it is wholly inconsistent with the agreement for which Mr. McGreal contends.
78. Because of the view that I have taken of the documentation concerning the proposed sale of the property by the company to Ms. Whyte, it is not necessary for me to engage with the last of the four issues which Finlay Geoghegan J. directed might be considered on this appeal. Accordingly, I will do no more than make the following observation in relation thereto.
79. Regardless of the wording of this issue as set out in the schedule to the court order of 19th February, 2016, it is clear that “the plaintiff” did not withdraw from any proposed contract. It was the company, albeit on the instructions of Mr. McGreal, that was responsible for the letter of the 10th September 2008, in which Ms. Boylan advised Ms. Durcan that her client was no longer willing to sell and wherein she sought the return of the title documents. Accordingly, save that what is stated in that letter is inconsistent with a prior concluded agreement between Mr. McGreal and Ms. Whyte, the legal effect of that letter is immaterial to my conclusions on this appeal. That said, the assertion made by Ms. Boylan in her letter of 10th December that it was Ms. Whyte that withdrew from the proposed sale is one which on the face of the correspondence would appear to be difficult if not impossible to sustain. In her letter dated 6th June 2008, Ms. Durkan made clear that Ms. Whyte was willing to proceed with the purchase. While Ms. Boylan’s letter of 10th September, 2008, does indeed refer to a request apparently made by Ms. Whyte to Mr. McGreal for a reduction in the purchase price, no mention is made of her being unwilling to pay the proposed price. Indeed, Ms. Durkan in her letter of 29th September, 2008, noted that the company was no longer willing to sell the property at the contract price and that it was in these circumstances that the title documentation was being returned. Regardless of further correspondence concerning the circumstances in which the dealings between the company and Ms. Whyte were terminated, that particular assertion was never been denied. Nonetheless, as already stated, my view on this particular issue is not material to my conclusion as to how this appeal should be resolved.
80. Finally, I should state that for the purposes of determining the outcome of the appeal I have not found it necessary, and neither do I think it would have been appropriate, to consider the relevance, if any, of the fact that Mr. McGreal allowed some five years to elapse between the date when negotiations between the company and Ms. Whyte were brought to an end and the commencement of these proceedings. Delay of that nature, while clearly material to any claim for equitable relief, is in my view a matter for the court’s discretion at a plenary hearing.
Conclusion.
81. Having considered the evidence that was before the High Court judge and such additional evidence as was admitted on this appeal, I am satisfied that Mr. McGreal’s appeal must be dismissed. The High Court judge did not err in law when he decided to exercise the Court’s inherent jurisdiction to dismiss his claim as one which is bound to fail. The continued existence of those proceedings cannot, in my view, be justified. The claim which Mr. McGreal seeks to advance is one which is utterly undermined by the facts and circumstances to be found in documents and other correspondence authored by a solicitor in accordance with his instructions. It is untenable, in light of the documentary evidence to which I have referred in the course of this judgment, for Mr. McGreal to argue that his claim, which depends upon him establishing that, prior to the 3rd August, 2007, a binding contract for the sale of the property was concluded between himself and Ms. Whyte, is not one which is bound to fail.
82. In reaching my conclusions I am mindful of the fact that the inherent jurisdiction of the court to dismiss a plaintiff’s claim on the grounds that it is bound to fail is one which must be exercised sparingly and only in circumstances where there is no risk that in making the order sought, an injustice might be perpetrated on the plaintiff. After all, the effect of the exercise by the court of that jurisdiction is that the plaintiff is thereby denied their constitutional right of access to the court. That notwithstanding, for the reasons earlier advised in this judgement, I would dismiss the appeal.
83. For these reasons I would dismiss the appeal.
Irish Permanent Building Society v Seamus Caldwell (Registrar of Building Societies), Irish Life Building Society, Irish Life Assurance Co Ltd, Robert Willis and Others
IPBS v ILBS
1979 No. 6557 P
High Court
21 December 1979
[1979] I.L.R.M. 273
(Keane J)
KEANE J
delivered his judgment on 21 December 1979 saying: This is an application pursuant to O.19, r.28 of the Rules of the Superior Courts for an order directing that the plaintiffs’ pleadings herein be struck out and the action dismissed on the grounds that the pleadings disclosed no reasonable cause of action or that the action is frivolous or vexatious. It is conceded on behalf of the applicants that, for the purposes of this application, it is necessary to assume that any averments of facts claimed in the statement of claim delivered on behalf of the plaintiffs on 23 October 1979 will be supported in evidence if and when the action comes on for hearing.
The plaintiffs are a building society registered under the provisions of the Bulding Societies Act, 1976. They claim that the granting by the first-named defendant, who is the Registrar of Buildings Societies under that Act, of a certificate of incorporation under s. 11 of that Act to the second-named defendant on foot of an agreement by the defendants (other than the first three defendants) is null and void, as is the purported registration of the rules of the second-named defendant.
Para. 4 of the statement of claim sets out a number of grounds on which it is claimed that the registration of the second-named defendant and the granting to it of a certificate are void and ultra vires. In particular, it is claimed that the second-named defendant is not a Building Society within the meaning of s. 2 of the Act of 1976, that there was no agreement on the rules pursuant to the requirements of the Act, that the second-named defendant is a subsidiary of the third-named defendant (the Irish Life Assurance Co Ltd) and is not an autonomous body capable of being controlled by its members and that the rules did not comply with the requirements of the Act of 1976, insofar as those rules provide for multiple votes by single members.
It is submitted on behalf of the defendants that the plaintiffs have no locus standi to maintain the present action. It is pointed out that the statement of claim contains no allegation that the plaintiffs suffered or will suffer any damage as a result of the registration of the second-named defendant as a building society or the grant of a certificate to them and that it is not alleged that any proprietary or other right peculiar to them will be in any way infringed by such registration or the grant of such a certificate. It is submitted on their behalf that the Act of 1976 plainly entrusts the control and regulation of building societies to the first-named defendant and provides for the prosecution of persons who act in contravention of the provision of the Act.
The defendants submit that, where a statute prohibits the doing of a particular act affecting the public, no person has a right of action against another merely because he has done the prohibited act. They say that it is incumbent on the party complaining to allege and prove that the violation of the statute has caused him some peculiar injury beyond that which he has sustained in common with the rest of the public by the infringement of the law. They say that, in the absence of any allegation in the statement of claim that the plaintiffs have suffered any such peculiar injury, the proceedings are on their face not maintainable. In support of this submission, they rely in particular on the judgment of the House of Lords in the recent case Gouriet v Union of Post Office Workers [1978] AC 435.
It is submitted on behalf of the plaintiffs that the law in this country is not as it was stated by the House of Lords in Gouriet’s case. So far as the present application is concerned, the plaintiffs appeared to concede, by implication at least, that they had neither alleged nor were in a position to prove that they had sustained or would sustain any peculiar injury by reason of the registration of the second-named defendants or the grant to them of a certificate. They did maintain, however, that as a building society, they had an interest in the orderly and proper regulation of building society business. But so far as the question of locus standi is concerned, their submissions essentially rest on the basis that the law in this country is not as stated in Gouriet’s case and that there is nothing to prevent a private citizen from asserting that a violation of a peculiar statute had taken place, even in circumstances where he could not show that he had sustained or would sustain any peculiar injury as a result of the alleged violation.
I may say at once that, in the authorities which have been cited to me and which I have consulted myself, I cannot detect any fundamental difference between the law in this country and England such as is alleged to exist by Mr Gleeson. It is of course, the case that our courts have taken a different view as to the extent of the supervisory jurisdiction which they exercise over the decisions of inferior tribunals, in which connection it is only necessary to refer to the observations of Mr Justice Henchy delivering the judgment of the Supreme Court in Kiely v Minister for Social Welfare [1977] IR 267 at p. 281. But this is very far from saying that the approach of our courts is necessarily different from that of the English courts so far as the right of a private individual to maintain an action such as the present is concerned. It is at least arguable that the limitations recognised by the common law on the right of a private citizen to assert a right public to its nature, without the intervention of the Attorney General, were not affected by the provisions of the Constitution of Saorstát Éireann: see Moore v Attorney General [1930] IR 471. I think it is by no means clear that this principle was in any way affected by the enactment of the present Constitution and I think it was accepted by Kenny J when he was a High Court judge in an unreported decision of Buckley v Holland Clyde. In that case, he declined to entertain a claim by a private citizen for an injunction to restrain a development which was alleged to be in contravention of the provisions of the Local Government (Planning and Development) Act, 1963. It is now clearly possible for such an action to be maintained under the provisions of the Local Government (Planning and Development) Act, 1976 but that, of itself, would appear to indicate a recognition by the Oireachtas that, in the absence of an express statutory provision, a private individual cannot maintain an action such as the present.
But that is not the question which arises on the present application. The question I have to decide is as to whether the proceedings should be struck out in limine at this stage. It has been said on high authority that the procedure sought to be invoked in the present case should not be applied ‘to an action involving serious investigation of ancient law and questions of general importance: perCozens-Hardy MR in Dyson v Attorney General [1911] 1 KB 410 at 414. The issues raised by the present proceedings involve difficult questions as to the relationship of the present Constitution to the pre-existing law concerning the assertion of public rights by a person other than the Attorney General. It can, of course, be said, as is urged with much cogency by Mr O’Neill SC on behalf of the applicants, that such questions can be resolved on the present application adversely to the plaintiffs simply on the pleadings as they stand. But, if one has regard to the practicalities of litigation in our courts, it seems to me undesirable that such a question should be finally resolved, at least so far as the High Court is concerned, in a summary manner on an application of this nature. I do not overlook the fact that the English procedure is different to this extent, that an application of this nature is made in chambers and cannot be the subject of an appeal. By contrast, under our procedure, the decision of the court on an application of this nature would, I think, be manifestly susceptible to an appeal to the Supreme Court. Despite these considerations, I am not satisfied that, on an application of this nature, the High Court should finally determine the difficult and complex question of law involved. I think that the plaintiffs are entitled to a full and unhurried consideration of the questions they have posed for a resolution by the High Court and that this cannot, in a practical manner, be achieved within the limitations of a motion such as the present.
It follows that the application for an order striking out the proceedings as disclosing no cause of action must be dismissed.