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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Leinster Leader Ltd. v. Williams Group Tullamore Ltd. [1999] IEHC 14 (9th July, 1999) URL: http://www.bailii.org/ie/cases/IEHC/1999/14.html Cite as: [1999] IEHC 14

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Leinster Leader Ltd. v. Williams Group Tullamore Ltd. [1999] IEHC 14 (9th July, 1999)

BETWEEN

JUDGMENT of Mrs. Justice Macken delivered on the 9th day of July 1999.

1. The first and second Defendants seek by a motion dated the 16th December, 1998 to have the Plaintiff's Statement of Claim struck out in its entirety. They seek this Order pursuant to the provisions of Order 19 Rule 28 of the Rules of the Superior Courts and also under the inherent jurisdiction of this Court.

2. Order 19 Rule 28 reads as follows:-

"The Court may order a pleading to be struck out, on the grounds 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 orjudgment to be entered accordingly as may be just".

3. Quite apart from this Rule, the Court also has an inherent jurisdiction to stay proceedings if they are frivolous or vexatious or if they put forward a claim which must fail. This inherent jurisdiction is also relied on. I propose to deal with the application pursuant to Order 19, Rule 28 in the first place, and then pursuant to the Court's inherent jurisdiction.

4. Insofar as concerns the principles applicable to the Court exercising its jurisdiction pursuant to Order 19 Rule 28, the Plenary Summons issued on the 6th March, 1998 and the Statement of Claim on the 19th March, 1998. They seek effectively, certain declaratory relief concerning a combined pension scheme, which I will describe in detail later in thisjudgment, damages for misrepresentation, for misstatement, for negligence, for breach of contract and ancillary relief.

5. Briefly, the case is to the following intent. The first named Defendant, at some time, owned a shareholding (55%) in the Plaintiff. More recently, and the date is immaterial, the Plaintiff purchased back that shareholding. But prior to the time of the buy-back, there was in existence a non-contributory pension scheme, which was funded by the first named Defendant, and which was for the benefit, inter alia, of three employees of the Plaintiff. The Plaintiff had contributed funds to that pension scheme. On the buy-back, certain negotiations took place concerning, inter alia, the price at which the shares would be bought back. As part of this, the Plaintiff says 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.

6. The Statement of Claim is detailed, and insofar as its material parts are concerned, paragraphs 13 and the following paragraphs, plead as follows:-

"13. Furthermore, prior to the purchase of the said shares by Leinster Leader, Williams and IPT represented to Leinster Leader 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.

14. In making the said representation that the scheme would be neutral to the proposed purchase of shares, Williams and IPT thereby also warranted implicitly as follows:

(a) that the transfer payment to be made out of the combined pension scheme in respect of the said three employees would reflect the contributions made by Leinster Leader in respect of such employees;

(b) that the said transfer payment would not be reduced as a consequence of any deficit in the said scheme attributable to Williams and Williams Tullamore employees;

(c) that the transfer payment would be calculated on a basis consistent with the payments made to the combined pension scheme by Leinster Leader, and that in particular, it would be calculated on a basis that would anticipate future salary increases (in the same way as the payments by Leinster Leader to the combined pension scheme had done);

(d) that no financial burden would be placed on Leinster Leader as a consequence of any failure on the part of Williams and Williams Tullamore to make appropriate contributions in respect of its own employees to the combined pension scheme.

15. In the premises, the matters mentioned in sub-paragraphs (a) to (d) of paragraph 14 above also became implied terms of the buy-back contract between Leinster Leader and Williams Tullamore.

16. Furthermore or in the alternative, in representing that the transfer payment under the combined pension scheme would be arranged on the basis that it would be financially neutral to the share purchase, Williams Tullamore well knew and intended that such representation would be understood by Leinster Leader to have the effects mentioned in sub-paragraphs (a) to (d) of paragraph 14 above.

17. In giving the said respective warranties and representations, Williams Tullamore and IPT intended and well knew that Leinster Leader would rely thereon.

18. Acting in reliance upon the said representations made by both Williams Tullamore and IPT, and further relying upon the advice of IPT, Leinster Leader proceeded with the purchase of said shares.

......

22. Further or in the alternative, if the proposed payment of [sterling]23,874 is the correct computation of the transfer payment to be made to Leinster Leader out of the combined pension scheme, then the representations given in respect of the transfer fund by each of the said Defendants to Leinster Leader at the time of purchase of the said shares were false and untrue and inaccurate and misleading, and/or were made negligently and in breach of the said Defendants' respective duties to Leinster Leader".

7. Certain particulars were furnished in the Statement of Claim in respect of this last plea, by which it is claimed that the transfer payment to be made should have been, on one calculation, [sterling]438,000, or on an alternative calculation, [sterling]54,055.

8. There is, of course, no Defence delivered, and I will refer to the notice for particulars and the replies to that in due course. But as to the "pleadings" as such, I must now consider these. In considering whether or not to acceded to an application based on Order 19 Rule 28 the Court should consider the pleadings only, ignoring for the purposes of this rule, any affidavit evidence filed. To succeed under this Order, it must be established from the pleadings that the claim is vexatious or frivolous; seeCavern Systems (Dublin) Ltd. v. Clontarf Residents Association (1984) ILRM 24. From a consideration of the pleadings, it seems to me impossible to suggest that the Defendants could be certain that a Court would not accede to the Orders sought by the Plaintiff. All of the ingredients which would entitle the Plaintiff to have an Order in respect of misrepresentation, for example, absent any evidence to the contrary, on the Statement of Claim, are present. So too in the case of the declarations sought. So also in the case o f the allegation of breach of contract. I do not have to consider each and every plea, and each and every relief sought. I am satisfied, however, that a Court would be entitled to grant all of the relief sought, relying on these pleadings alone.

9. In the circumstances, I find that the first and second named Defendants have not made out a case insofar as Order 19 Rule 28 is concerned.

10. However, a detailed notice for particulars was served on the Plaintiff on the 17th April, 1998, and was replied to on the 31st August, 1998. The notice of motion was then issued on the 16th December, 1998. While strictly speaking a notice for particulars and its reply is not necessarily a "pleading", in case it should be considered to be so, I am prepared to look at these also, and consider whether the principles found in the cases, as applied to those particulars, makes it certain that the Plaintiff could not succeed.

11. Particulars were raised in all aspects of the Statement of Claim, but those of relevance to the present application are found at paragraphs 9-15 inclusive, and 19. On the assumption that these are to be treated as "pleadings" simpliciter, I now consider these on the same basis as pleas in the Statement of Claim. It seems to me that the only difference which the replies to particulars make to the Statement of Claim is that they elaborate in more detail the case pleaded against the three Defendants, including the case made against the first and second Defendants. These particulars have been relied upon by those two Defendants to support their application.

12. In particular it is argued by Mr. Sreenan that the real claim by the Plaintiff is one against the third Defendant only, that the Plaintiff relied on that Defendant, that the Plaintiff knew, on its own particulars that it was to receive only the sum of [sterling]23,874 as the transfer payment before the closing date for the repurchase of the shares, and cannot now therefore make any case against the first and second named Defendants. He also argued that since the claim pleads at paragraph 13, as particularised by the response number 9, that advices were sought that there would be no shortfall and that those advices were given by a Mr.Mortimer of the third named Defendant, the first and second named Defendants could not have any liability. Mr. Sreenan said that, since Mr. Mortimer was acting for a principal, the third Defendant, any alleged representation made by him could not in any way affect his clients, the first and second Defendants. He also argued that once they were 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 named Defendants, but that no such representation was in fact made.

13. However, from a pleading point of view, I do not know that this is necessarily correct. Mr. McDonald, on behalf of the Plaintiff, said the case made by it was clear and that it could only properly be decided by a trial judge hearing all the evidence.

14. On the pleadings it seems to me there is no suggestion that when Mr. Mortimer made any representation, he did so as a principal, and not otherwise. It is, in fact, clear from the pleadings that the third named Defendant may have been acting in different capacities at different times both prior to and during the course of the negotiations and it is clear from the replies to particulars that certain at least of the representations were made orally, and not in writing, thereby rendering it difficult to establish at this point in the case, whether he was, at any particular time, acting in one capacity or in another.

15. If one looks then at the particulars, the first (10) is concerned with the representations allegedly made. This is replied to by, inter alia, a claim that the person on behalf of Williams who made the representation is Ken Mortimer of Irish Pension Trust. Since, from a pleading point of view there is no legal infirmity in pleading that a person from one company can make a representation on behalf of another company, I am of the view that this cannot constitute a fatal flaw such that the Plaintiff's case could not succeed. The outcome would depend entirelyon the evidence which might be tendered in due course, particularly when the representation was pleaded to have been made orally.

16. The implied warranties, of which particulars were sought at 13, are, according to the reply, said to arise from the representation made, and from the meaning to be attached to the representation. Again, from a pleading point of view, it seems to me that this reply cannot mean that the pleading is fatal to the Plaintiff's claim.

17. The particular raised at 12 is replied to as being a matter of law. The request at paragraph 13 is resisted on the basis that it seeks evidence, although a without prejudice reply was furnished, and this reply has not been demurred from to date. As to request number 14, (a) is resisted on the same ground as 13, but again a without prejudice response is given that the representation was made with the intention of assuring the Plaintiff that it would not suffer any financial burden and on the basis that the Plaintiff would rely on the truth of the same. Again, from a pleading point of view, I do not see how a Court could hold that the Plaintiff could not hope to succeed at trial at this time. Request 15 is replied to on the basis that the Statement of Claim adequately pleads the matter. As to particular 19, it is alleged that this is adequately pleaded in the Statement of Claim, but again without prejudice, particulars are given of the manner in which the representations pleaded at paragraph 14 were inaccurate and misleading. From a pleading point of view, it seems to me that this cannot be considered to be a fatal plea.

18. If I were therefore to consider the pleadings as including the request for particulars and the reply, it seems to me that the requirements laid down in the several cases would not be met, and that a Court could not, with certainty, say that the Plaintiff could not succeed, or that the Plaintiff's case was bound to fail.

19. Turning now to the question as to whether or 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, it is permissible for affidavit evidence to be filed. A number of affidavits have been filed, and although there are several conflicting elements in theaffidavits, there are certain principles of law which apply in such a case, including the fact that I must assume:

(a) that every fact pleaded by the Plaintiff in its Statement of Claim is correct and can be proved at trial; and

(b) that every fact asserted by the Plaintiff in its affidavit is likewise correct and can be proved at trial.

20. These principles are accepted as being the correct principles to apply having regard to all of the cases on the Court's inherent jurisdiction to strike out and it does mean that, insofar as there may be conflict between matters averred to by the Plaintiff and the Defendants in their respective affidavits, such conflicts must be, at least for the purposes of this application, resolved in favour of the Plaintiff.

21. The present application is unusual in that, so far as the "evidence" is concerned, there is no evidence presented as to the case which the first and second named Defendants will present, but rather the evidence which is tendered in support of this application consists of the same particulars furnished by the Plaintiff as set forth above in response to the request from the Defendants. The Plaintiff has, however, filed evidence in the true sense. I propose to deal with this aspect of the matter on the basis that the Plaintiff's reply to particulars constitutes evidence also. Such evidence has been tendered by the Defendants through the affidavit of Mr. James AndrewLenny, Solicitor for the first and second named Defendants.

22. The essence of the first and second named Defendant's argument is found at paragraph 17 of the affidavit. All of the prior paragraphs deal with the pleadings, as particularised. At paragraph 17 it is alleged that because the allegations against the first and second named Defendants stem from paragraph 13 of the Statement of Claim and because in the reply to particulars raised, the Plaintiff did not allege that the representation was made by either the first or the second named Defendants, the claim is fatally flawed.

23. It is said by Mr. Lenny that the Plaintiff did not specify in its particulars that Mr. Mortimer was acting as an agent of the first and/or second named Defendants. This is true. It is not so specified but it does not seem to me that this ends the matter. It is true that the answer might have been worded with more clarity, but it is said quite clearly that it was Mr. Mortimer who made the representation on behalf of the first and second named Defendants. Mr. Lenny then goes on:-

"As a matter of law, having regard to the matters pleaded in the Statement of Claim and in the Plaintiff's replies to particulars, I fail to see how any such allegation could be made".

24. It seems to me that this is a question for the trial judge. It is not a case that Mr. Mortimer has sworn any affidavit averring the contrary to what is pleaded. And even if he did, it seems to me that, having regard to the complexity of the issues raised, it would be difficult to say that one view of words used orally, over another view of the same words, should or could prevail at this point in the proceedings.

25. The foregoing affidavit is the extent of the evidence filed for the first and second named Defendants. However, in the course of the hearing of the motion, on the first day, it was said by Counsel on behalf of the Plaintiff that the first and second named Defendants were seeking to make a case which they had not made on affidavit, and that the Plaintiff should be given an opportunity to adduce a further affidavit. I agreed to this course of action, since a motion of this nature is, in my view, a very serious motion indeed and everything which is desired to be said should be before the Court.

26. Mr. Iain Stewart had already sworn an affidavit in response to Mr. Lenny's affidavit, in which he set out in detail the background to the matters giving rise to the proceedings. He stated essentially, that so far as concerns the representations, that the pension issue was raised on the day of the buy-back of shares, when a Mr.Corcoran of the first/second Defendants confirmed that the Plaintiff would get what was due to it, and also prior to that time, in or around January 1993. At that time he says he was directed by Mr. Corcoran to contact Mr. Ken Mortimer, as the latter would be in a position to provide the information necessary on behalf of the first and second named Defendants. He went on to say that he knew Mr. Mortimer was wearing a number of different hats, and that he was at that time contacting him in his capacity as representating the first and second Defendants. He also averred that he was informed by Mr. Mortimer that the transfer payment to be made out of the combined pension would be arranged on a basis which would be financially "neutral" to the proposed buy-back contract.

27. In the supplemental affidavit sworn by Mr. Stewart, he adduced evidence to counter the matters which were raised by Counsel on behalf of the first and second named Defendants during the course of the initial hearing, namely that the amount of the transfer payment had been reported by the third named Defendant to the Plaintiff on the 25th March 1993, before the completion of the buy-back contract. Mr.Stewart stated that one of the Plaintiff's concerns was to ensure that the amount which was being transferred would reflect the extent of the contributions made to the fund, and that if there was any question that the Plaintiff was not to receive a transfer payment reflecting the value and extent of the contribution, the Plaintiff would have taken this into account in its negotiations as to the price to be paid for the shares under the buy-back agreement.

28. Mr. Stewart also stated that while the figures were made known prior to the closing date of the 25th March, 1993, neither he nor any person on behalf of the Plaintiff knew at that time that the actual sum mentioned, namely, [sterling]23,874, did not in fact reflect the level or value of the contributions made by the Plaintiff in respect of its employees. It seems to me that if the representation made is proven and it is proven that it was made on behalf of the first and second Defendants, and I must assume these can be proven, then the Plaintiff has a good cause of action.

29. Mr. Stewart stated that it was not until April 1993 that it was discovered that the amount was not correct, and that there was a significant shortfall. The actual shortfall is not material for the purposes of this decision.

30. The law in relation to this particular jurisdiction is well established and the starting point is invariably the case of Barry v. Buckley (1981) I.R. 306 in which Costello J. (as he then was), stated at p. 308:-

"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: perBuckley LJ in Buckley v. Grierson (1908) 1 KB 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".

31. The issue again arose in the case of Sun Fat Chan v. Osseous Limited (1992) 1 I.R. 25 where, in the Supreme Court, it was stated by McCarthy J.:-

"Generally the High Court should be slow to entertain an application of this kind and grant the reliefs sought.

Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated in 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 thatqualification, 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".

32. Again, the same matter arose for further consideration in D.K. v. A.K. (1993) ILRM 710 in which Costello J. again enunciated the principles which he had previously stated in Barry v. Buckley, supra, and said:-

"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".

33. All of the above cases, and the principles to be applied, were again considered and applied by the High Court in Ennis v. Butterly (1997) 1 ILRM 28, and in Supermac's Ireland and Another v. Katesan (Naas) Limited, unreported, 15th March, 1999.

34. Even applying the principles with the rigour which McCarthy J. recognised in Sun Fat Chan v. Osseous Limited, supra, it seems to me that there is no question of the Court being able to come to the view at this time that the claims of the Plaintiff are unsustainable, nor are any of them. The kernel of the claim will be dependent on the establishment of the representation(s) made, the effect of those representations vis-à-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.

35. None of this is dependent on written contracts or documents of the type referred to by Costello J. in D.K. v. A.K., supra, but on the contrary the representations, in particular, being allegedly made orally, will have to be considered in light of the overall evidence tendered.

36. While I have not accepted that any evidence was tendered by the first and second named Defendants to support the application made invoking the Court's inherent jurisdiction, even allowing that the particulars and replies constitute evidence, I find nevertheless that these Defendants have 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.

37. In the circumstances I refuse both reliefs.

jkLeinst