D&L Properties Ltd v Yolanda Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice John Edwards
• Judgment Date: 01 February 2017
• Neutral Citation: [2017] IECA 11
• Date: 01 February 2017
• Court: Court of Appeal (Ireland)
• Docket Number: [2017] IECA 11 Court of Appeal Record No: 2015/000542 High Court Record No: 2015/3352P

BETWEEN/

D & L PROPERTIES LIMITED

Plaintiff/ Respondent

-AND-

YOLANDA LIMITED

Defendant/Appellants

[2017] IECA 11

[2017] IECA 11

Court of Appeal

Record No: 2015/000542

High Court

Record No: 2015/3352P

THE COURT OF APPEAL

Breach of contract – Strike out proceedings – Vexatious claims – Appellant seeking dismissal of proceedings – Whether High Court was correct not to strike out proceedings as being bound to fail

Facts: The plaintiff/respondent, D & L Properties Ltd, claimed damages for breach of contract, breach of duty (including statutory and fiduciary duty), misrepresentation and conversion; alternatively for the repayment of monies, with interest, had and received by the defendant/appellant, Yolanda Ltd, on foot of a joint venture agreement allegedly entered into between the plaintiff and the defendant on or about the 4th of November 2008 for the development of a property in London. Yolanda sought relief in a Notice of Motion dated the 29th of June 2015, namely the dismissal of the proceedings brought against it by the respondent, on the basis that there was no enforceable contract between the parties. Yolanda sought the dismissal 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 disclosed no reasonable cause of action and/or on the grounds that the plaintiff’s claim was frivolous and/or vexatious; and (b) under the inherent jurisdiction of the court on the grounds that the plaintiff’s claim was frivolous, vexatious and/or bound to fail. On the 20th of October 2015, the High Court (McGovern J) dismissed the appellant’s application and refused the relief sought. The appellant appealed to the Court of Appeal against that judgment and order of the High Court. The appellant confined its appeal to that part of the judgment related to the refusal by the High Court judge to strike out the proceedings pursuant to the inherent jurisdiction of the Court as being frivolous, vexatious and bound to fail owing to alleged non-compliance with s. 2 of the Statute of Frauds.

Held by Edwards J that, in all of the circumstances, the High Court was correct not to strike out the proceedings as being bound to fail.

Edwards J held that he would dismiss the appeal.

Appeal dismissed.

Judgment of Mr Justice John Edwards delivered on the 1st of February 2017

Introduction:

1 This is an appeal against a High Court order and judgment (McGovern J) made and delivered on the 20th of October 2015 dismissing an application by the appellant (Yolanda) and refusing the relief sought by it in a Notice of Motion dated the 29th of June 2015.

2 In the said motion Yolanda, as defendant to the proceedings, had sought the dismissal of proceedings brought against it by the respondent's (D & L) proceedings 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 disclosed no reasonable cause of action and/or on the grounds that the plaintiff's claim was frivolous and/or vexatious; and

(b) under the inherent jurisdiction of the court on the grounds that the plaintiff's claim was frivolous, vexatious and/or bound to fail.

3 The proceedings are concerned with a claim for damages for breach of contract, breach of duty (including statutory and fiduciary duty), misrepresentation and conversion; alternatively for the repayment of monies, with interest, had and received by the defendant on foot of a joint venture agreement allegedly entered into between the plaintiff and the defendant on or about the 4th of November 2008 for the development of a property in London. The sum claimed is €9,739,880 comprising a sum of €2,200,000 allegedly advanced by the plaintiff to the defendant under the said alleged agreement, plus compound interest of €7,539,880 which is alleged to have accrued up to the date of the issuing of the proceedings. Yet further interest is also claimed on the basis that it continues to accrue.

4 Yolanda's motion was brought essentially on the basis that there was no, alternatively no enforceable, contract between the parties. A defence delivered by the Yolanda pleads expressly that it received the sum €2,200,000 on foot of an agreement between it and a third party Derek O'Leary, and not on foot of any agreement with D & L. It is further pleaded in the alternative that if, which is denied, there was any agreement between the D & L and Yolanda, it was unenforceable by operation of s.2 of the Statute of Frauds (Ireland) Act 1695 (the Statute of Frauds).

5 With respect to the relief claimed under the Rules of the Superior Courts the High Court judge held that applying Order 19, rule 28, as interpreted in McCabe v Harding [1994] ILRM 105 to the pleadings and the information put before the court on affidavit, it was not possible to come to the conclusion that the pleadings were frivolous or vexatious. He concluded that in the circumstances Yolanda had ‘ not met the test required by O. 19, r. 28 to have the statement of claim struck out or the action stayed or dismissed.’

6 With respect to the relief claimed under the inherent jurisdiction of the court the High Court judge held, following a review of the relevant authorities, that where, at the hearing of such a motion, there was a conflict or dispute on an issue or issues of fact central to the proceedings, as was the case in the matter before him, that conflict or dispute required to be resolved in favour of the plaintiff and that the plaintiff's case ‘ must be taken at its high watermark’. Moreover, in so far as the defendant had sought to argue that the alleged agreement of the 4th of November 2008 was unenforceable by operation of s.2 of the Statute of Frauds, it was sufficient for the purposes of resisting the motion that the plaintiff had produced evidence, albeit of a tenuous nature, suggestive of a note or memorandum. The same, he felt, could be said with respect to evidence proffered by the plaintiff suggestive of part performance. The High Court was therefore ‘ not satisfied that the plaintiff's claim was bound to fail’.

7 In this appeal Yolanda, as the appellant, had initially been contending that the High Court judge had erred in several respects both as to matters of law and fact, as set out in its grounds of appeal. However, Yolanda now confines its appeal to that part of the judgment related to the refusal by the High Court judge to strike out the proceedings pursuant to the inherent jurisdiction of the Court as being frivolous, vexatious and bound to fail owing to alleged non-compliance with s.2 of the Statute of Frauds.

D & L's Proceedings – The essentials of its claim as pleaded

8 D & L is a limited liability property investment company registered in Ireland. The principal shareholders in, and the directors of, the respondent company are the aforementioned Derek O'Leary, and his wife Linda O'Leary. Yolanda is a limited liability company registered in Guernsey, Channel Islands and at all material times was a wholly owned subsidiary of another Guernsey registered limited liability company, Elgin Limited (Elgin). Derek O'Leary was declared a bankrupt on the 7th of January 2013, but it is understood that he has since been discharged from bankruptcy.

9 The Statement of Claim filed in these proceedings by D & L alleges a series of transactions on foot of which contractual and other legal relationships between the parties are said to have arisen. It is pleaded (inter alia):.

‘4. At all material times, the defendant owned and was developing 12 Palace Street, London (hereinafter referred to as the Development Lands), which development was being carried out ultimately as a joint enterprise as between the defendant and the plaintiff through the plaintiff's acquisition of shares in Elgin.

5. On or about 4 November 2008, the plaintiff entered into an agreement with the defendant, its servants or agents, that it would advance the sum of up to €3.8miliion to the defendant (hereinafter referred to as ‘the Agreement’). The following were express and/or implied terms, conditions and/or warranties of the Agreement:-

(a) the plaintiff would advance the sum of up to €3.8million to the defendant;

(b) the defendant would pay to the plaintiff interest of 20% per annum on sums drawndown for a period of 12 months and, thereafter, would pay a rate of 2% monthly on sums drawndown and remaining outstanding;

(c) that the monies advanced by the plaintiff would be paid following the sales of the apartments and after monies were repaid to Close Bank;

(d) the defendant would not convert the monies to its own use;

(e) that, for a consideration of GB£25 (€30), the plaintiff would receive a 12.5 per cent shareholding in Elgin;

(f) on receipt of the shareholding in Elgin, the defendant would carry out such acts as necessary for the purpose of keeping the plaintiff informed regarding the project and the defendant's business including giving access to the plaintiff of the defendant's and Elgin's respective books and records;

(g) the plaintiff would receive a consultancy fee of GB£2,000 per day plus expenses for each day that Mr Derek O'Leary attended the project;

(h) the plaintiff would receive a second charge on the Development Lands;

(i) The defendant, its servants, or agents would take all necessary steps for the purpose of effecting a second charge in favour of the plaintiff in relation to the Development Lands;

(j) the defendant, its servants, or agents would co-operate with the plaintiff as regards the financing and building of the Development Lands and furnish to the plaintiff all necessary information and documentation relating to the enterprise;

(k) the defendant, its servants, or agents would act in good faith towards the plaintiff;

(I) the defendant, its servants, or agents would not act and/or...