Leinster Leader Limited (plaintiff) v Williams Group Tullamore Limited, D. E. Williams Limited and Irish Pensions Trust Limited (defendants).
Practice and Procedure - Application to strike out plaintiff's claim for failure to show a cause of action - Whether pleadings disclosed a cause of action as against the first and second defendants - Whether plaintiff's claim against first and second defendants so unsustainable that it should be struck out - Rules of the Superior Courts 1986, Order 19 rule 28.
The High Court (before Mrs Justice Macken); judgment delivered 9 July 1999.
There was no fatal flaw in the plaintiff's case against the first and second defendants where the cause of action pleaded against them relied on proof that the principal of the third defendant had made representations to the plaintiff on their behalf. This was a matter which would be decided on oral evidence at trial. The pleadings disclosed a cause of action, and the affidavits filed in support of a motion to stay proceedings on the grounds that they were frivolous or vexatious did not show that the plaintiff's claim was so unsustainable that it should be struck out. The claim rested on a number of matters which would be the subject of oral evidence at trial.
Mrs Justice Macken so held in refusing to grant an application to strike out the plaintiff's statement of claim for failure to disclose a cause of action, and in refusing to grant an order staying the proceedings as against the first and second defendants on the grounds that they were frivolous or vexatious.
Denis McDonald BL for the plaintiff; Paul Sreenan SC and David Barniville BL for the first and second defendants.
Mrs Justice Macken said that the first and second defendants were seeking an order pursuant to Order 19 rule 28 of the Rules of the Superior Courts striking out the plaintiff's statement of claim. Order 19 rule 28 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." The first and second defendants also relied on the inherent jurisdiction of the court to stay proceedings if they are frivolous or vexatious or if they put forward a claim which must fail.
Mrs Justice Macken said that the plenary summons and statement of claim sought declaratory relief concerning a combined pension scheme, damages for misrepresentation, for misstatement, for negligence, for breach of contract and ancillary relief. The first defendant at some time had owned a 55 per cent shareholding in the plaintiff. The plaintiff had recently purchased back that shareholding. Prior to the buy-back, there was in existence a non-contributory pension scheme, which was funded by the first defendant, and which was for the benefit, inter alia, of three employees of the plaintiff. The plaintiff had contributed funds to that scheme. On the buy-back, negotiations took place concerning, inter alia, the price at which the shares would be bought back. As part of this, the plaintiff said it needed to know whether any shortfall existed in the combined pension scheme and the proper amount of the transfer payment to be made to the plaintiff's new pension scheme out of the old scheme.
Mrs Justice Macken said that in the statement of claim, the plaintiff had pleaded that prior to the buy-back, it had been represented to the plaintiff that the transfer payment to be made out of the combined pension scheme would be arranged on the basis that it would be financially neutral insofar as the proposed purchase of shares was concerned. Instead of the proposed payment of £23,874, the plaintiff claimed that the transfer payment should have been, on one calculation, £438,000, or on an alter native calculation, £54,055.
Mrs Justice Macken said that in considering whether or not to accede to an application based on Order 19 rule 28, the court should consider the pleadings only, ignoring any affidavit evidence filed: Cavern Systems (Dublin) Ltd v Clontarf Residents Association [1984] ILRM 24. From a consideration of the pleadings, it seemed impossible to suggest that the defendants could be certain that a court would not accede to the orders sought by the plaintiff. While it was not necessary to consider each and every plea, and each and every relief sought, Mrs Justice Macken said that she was satisfied that a court would be entitled to grant all of the relief sought, relying on the pleadings alone. The first and second defendants had not made out a case insofar as Order 19 rule 28 was concerned.
However, a detailed notice for particulars had been served on the plaintiff and replies had been given thereto. Mrs Justice Macken said that while a notice for particulars and its reply were not necessarily "pleadings", in case they should be considered to be so, she was prepared to look as these also, and consider whether the principles found in the cases, as applied to those particulars, made it certain that the plaintiff could not succeed. The only difference which those particulars made was that they elaborated in more detail the case pleaded against the three defendants. The first and second defendants argued that the real claim by the plaintiff was against the third defendant only, since that plaintiff relied on that defendant, and knew, on its own particulars, that it was to receive only the sum of £23,874 as the transfer payment before the closing date for the repurchase of the shares. It was also argued that advices were sought that there would be no shortfall and that those advices were given by one Mr Mortimer of the third defendant.
It was argued that Mr Mortimer was acting for a principal, the third defendant, and any alleged representation made by him could not in any way affect the first and second defendants. Finally, it was argued that once the plaintiff had been told by the third defendant what they would receive, it made no difference that a representation might have been made on behalf of the first or second defendants, though no such representation was in fact made.
Mrs Justice Macken said that this was not clear from the pleadings. On the pleadings there was no suggestion that when Mr Mortimer made any representation, he did so as a principal. In fact, it was clear from the pleadings that the third defendant might have been acting in different capacities at different times both prior to and during the course of the negotiations, and it was clear from the replies to particulars that at least some of the representations were made orally, thereby rendering it difficult to establish, at this point in the case, the capacity in which Mr Mortimer was acting. The plaintiff, in its replies, had claimed that representations had been made by Mr Mortimer on behalf of Williams. Since there was no legal infirmity in pleading that a person from one company can make a representation on behalf of another company, this did not constitute a fatal flaw such that the plaintiff's case could not succeed. The outcome would depend entirely on the evidence which might be tendered in due course, particularly when the representation was pleaded to have been made orally.
Mrs Justice Macken said that none of the other replies meant that the pleading was fatal to the plaintiff's claim. Therefore, if "pleadings" was regarded as including the request for particulars and the reply, a court could not, with certainty, say that the plaintiff could not succeed.
Turning to the question of whether the defendants were entitled to their relief relying on the inherent jurisdiction of the court, Mrs Justice Macken said that in considering this claim it was permissible for affidavit evidence to be filed. A number of affidavits had been filed, and although there were several conflicting elements in the affidavits, there were certain principles of law which were applicable.
It must be assumed that every fact pleaded by the plaintiff in its statement of claim was correct and could be proved at trial, and that every fact asserted by the plaintiff in its affidavit was likewise correct and could be proved at trial. Therefore, any conflicts between the plaintiff and the defendants in their respective affidavits must be resolved in favour of the plaintiff. This application was unusual in that the defendants had not presented any evidence as to what their case would be, but had relied on the plaintiff's replies to particulars.
Mrs Justice Macken said that she would deal with the application on the basis that those replies constituted evidence. The essence of the defendants' argument was that, because the plaintiff did not allege that the representation was made by either the first or the second defendant, the claim was fatally flawed. It was not specified in its reply to particulars that Mr Mortimer was acting as an agent of the first and/or second defendants. Mrs Justice Macken said that this did not end the matter. While the answer might have been worded with more clarity, it had been stated quite clearly that it was Mr Mortimer who had made the representation on behalf of the first and second defendants. This was a matter for the trial judge.
While Mr Mortimer had not sworn any affidavit averring the contrary to what was pleaded, even if he had done so, it would be difficult to say that one view of the words used should prevail over another view at this point in the proceedings. While the defendants had not adduced any evidence, the plaintiff had sought liberty to file another affidavit to counter a case which the plaintiff had said that the defendants had not made on affidavit, namely, that the plaintiff had been aware of the amount which was being transferred before the buy-back was completed.
In the supplemental affidavit, it was averred that Mr Mortimer had been contacted in his capacity of representative of the first and second defendants. It was further averred that one of the concerns of the plaintiff had been that the transfer payment should reflect the value and extent of the contributions made to the fund, and that while the figure was made known prior to the buy-back, the plaintiff did not know that the actual sum did not in fact reflect the level or value of the contributions made by the plaintiff in respect of its employees.
Mrs Justice Macken said that if the representation made was proven, and was proven to have been made on behalf of the first and second defendants, and it must be assumed that these could be proven, then the plaintiff had a good cause of action. The law in relation to this particular jurisdiction was well-established. In Barry v Buckley [1981] IR 306 at page 308, Mr Justice Costello had stated that the jurisdiction existed to ensure that an abuse of the process of the courts did not take place.
This jurisdiction should be exercised sparingly and only in clear case, but it was one which enabled the court to avoid injustice, particularly in cases whose outcome depended on the interpretation of a contract or agreed correspondence. In Sun Fat Chan v Osseous Limited [1992] 1 IR 425, Mr Justice McCarthy had pointed out in the Supreme Court that experience had shown that the trial of an action would identify a variety of circumstances perhaps not entirely contemplated in earlier stages of the proceedings.
It might appear that the facts were clear and established, but the trial itself would disclose a different picture. In DK v AK [1993] ILRM 710, Mr Justice Costello had restated the principles enunciated by him in Barry v Buckley and said that the test was whether any of the claims against the defendants was so clearly unsustainable that he should strike it out. Those principles had been applied by the High Court in Ennis v Butterly [1997] 1 ILRM 28 and in Supermacs (Ireland) and another v Katesan (Naas) Limited (unreported, 15 March 1999).
Mrs Justice Macken said that applying these principles, there was no question of the court being able to come to the view at this time that any of the plaintiff's claims were unsustainable. The kernel of the claim would be dependent on the establishment of the representation(s) made, the effect of those representations vis-a-vis the timing of the buy-back agreement, the precise meaning of the prior identification of the amount mentioned by Mr Mortimer as being the correct transfer payment due, the precise meaning to be attached to the words "financially neutral insofar as the proposed purchase of shares" and other related matters. None of this was dependent on written documents or contracts.
Mrs Justice Macken said that while she had not accepted that any evidence had been tendered by the first and second defendants to support the application made invoking the court's inherent jurisdiction, even allowing that the particulars and replies constitute evidence, the defendants had not made out a case for the striking out of the plaintiff's statement of claim, in the exercise of the court's inherent jurisdiction. Mrs Justice Macken refused both reliefs.
Solicitors: Eugene F. Collins (Dublin) for the plaintiff; Arthur Cox (Dublin) for the first and second defendants.
Siobhan Stack Barrister