Allied Irish Coal Supplies Ltd v Powell Duffryn Intl. Fuels Ltd

• Jurisdiction: Ireland
• Court: Supreme Court
• Judge: Mr Justice Francis D Murphy,BARRON J.
• Judgment Date: 01 January 1998
• Neutral Citation: [1997] IESC 11
• Docket Number: [1984 No. 5692P; S.C. No. 229 of 1996]
• Date: 01 January 1998

[1997] IESC 11

THE SUPREME COURT

Murphy J

Lynch J

Barron J

No 5692P/1984

229/96

ALLIED IRISH COAL SUPPLIES LTD v. POWELL DUFFRYN

Between:

ALLIED IRISH COAL SUPPLIES LIMITED

Plaintiff/Appellant

and

POWELL DUFFRYN INTERNATIONAL FUELSLIMITED

Defendant/Respondent

Citations:

WILSON SONS & CO V BALCARRES BROOK STEAMSHIP CO 1893 1 QB 422

AMON V RAPHAEL TUCK & SONS LTD 1956 1 QB 357

RALEIGH V GOSCHEN 1898 1 CH 73

LIFF V PEASLEY 1980 1 AER 623

KETTERMAN V HANSEL PROPERTIES LTD 1987 AC 189

SALOMON V SALOMON 1897 AC 22

IPBS V CAULDWELL 1981 ILRM 242

POWER SUPERMARKETS LTD V CRUMLIN INVESTMENTS LTD UNREP COSTELLO 22.6.1981 1981/11/2038

REX PET FOODS LTD V LAMB BROS LTD UNREP COSTELLO 5.12.1985 1986/4/1391

COMPANIES ACT 1963 S155

COMPANIES ACT 1963 S150

COMPANIES ACT 1963 S151

COMPANIES ACT 1963 S152

COMPANIES ACT 1963 S153

COMPANIES ACT 1963 S154

RSC O.15 r14

MURPHY V MIN FOR DEFENCE 1991 2 IR 161

SMYTH V TUNNY 1996 ILRM 219

Synopsis

Practice and Procedure

Third party joinder; company formation; separate legal personality; parent company; wholly owned subsidiary; locus standi; additional evidence; whether parent company should be joined; whether wholly owned subsidiary together with parent company forms a single economic entity; whether parent should be joined so as to render its assets available to meet liability of subsidiary; whether additional evidence admissible; O.15 r.13 Rules of the Superior Courts Held: Application to join parent company refused; liberty to introduce new evidence refused (Supreme Court: Murphy J., Lynch J., Barron J.19/12/1997) [1998] 2 IR 529 - [1998] 2 ILRM 61

Allied Irish Coal Supplies Ltd. v. Powell Duffryn International Fuels Ltd.

1 Mr Justice Francis D Murphydelivered the 19th day of December 1997.

2 This matter comes before the Court by way of Notice of Appeal dated the 23rd day of July 1996 from the Order and Judgment of Ms Justice Laffoy given and made herein on the 19th day of July 1996. A Motion on Notice dated the 11th day of November 1997 seeking liberty to adduce further evidence at the hearing of the appeal was heard in conjunction therewith. The latter application was refused and the reasons for so doing are included in this judgment.

3 The substantive proceedings herein have a distressingly long history. They were commenced by a Plenary Summons issued on the 20th of July 1984. Nearly six years elapsed before theStatement of Claim was delivered on the 2nd of January 1990. In their statement of claim the Plaintiffs claim damages in excess of £1.9million for an alleged breach of contract in the delivery of coal and for fraudulent misrepresentations alleged to have been made by Powell Duffryn International Fuels Limited (PDIF) inducing the Plaintiffs to enter into the alleged contracts.

4 A Defence (and a Counterclaim for the price of the coal sold and delivered) was delivered by PDIF on the 13th November, 1990.

5 On the 12th January 1996 the Plaintiffs brought a motion claiming:-

"An order joining one Powell Duffryn Public Limited Company, Company Registration Number 298073, a limited liability company, having its registered office at Powell Duffryn House, London Road, Bracknell, Berkshire RG122AQ, England as a Defendant in theseproceedings."

6 The background to the application heard by Laffoy J, and in particular the relationship between the existing Defendant PDIF and the intended Defendant Powell Duffryn Public Limited Company (PLC) was distilled by the learned trial Judge from the affidavit of Edward Braham Henry Button sworn on the 17th of January 1996 and an affidavit of David Wesley-Rogers incorporated by reference therein: a further affidavit of Simon Varley sworn on the 22nd February, 1996, and an affidavit sworn on behalf of PDIF by Thomas Brassey sworn on the 22nd February, 1996. For the purposes of this appeal the history of the matter may be abbreviated further as follows.

7 PDIF is one of twenty-five companies which are wholly owned by PLC. The parent, subsidiary and associated companies together form the Powell Duffryn Group which is an industrial enterprise with interests in providing and distributing specialist engineering services primarily for the transport and energy markets. PDIF itself is involved in the international coal trade and is part of the distribution network of PLC. Mr Rogers who had been formerly employed by PLC averred that PDIF was not financially or otherwise independent of PLC but operated essentially as a department of it and not as a separate entity either as regards control, finance or operations. Mr Sutton swore that PDIF operated from various premises around the world using both the staff and premises of PLC and in particular it was emphasised that PDIF was "runmerely as a department of PLC and not as a independent or stand alone entity in any respect". Again it was said by Mr Sutton that everything of any significance which PDIF did had to have prior authorisation of PLC. In his affidavit, Mr Simon Varley on behalf of PDIF explained that PLC was directed from small headquarters in Berkshire in England whereas PDIF operated from Hedfordshire and did so as an independent legal entity which reported only to the parent company on a financial basis. Mr Varley contended that PDIF functioned with its own board and prepared its own annual accounts in the usual way.

8 There are certain facts which would appear to be in dispute between the deponents but more particularly differences of emphasis or differences in the inferences which might be drawn from substantially the samefacts.

9 In addition, the Plaintiffs/Appellants sought by the motion already referred to to introduce further evidence in this Court consisting of returns made to the Companies Registration Office in the United Kingdom in respect of PDIF for the purpose of showing that thedeponents, who had described themselves as directors of PDIF, had ceased before the date of the affidavits to be directors of that company. The purpose of introducing this information was to add emphasis to the contention that those who were or should have been involved in the management of PDIF were indifferent to the separate legal status of that company. It was conceded that the returns which would have disclosed that information were available for public inspection before the hearing before the learned trial Judge but it was contended that the particular matter had not been investigated at the time because of the positive averment by each of the deponents that they were in fact directors of the subsidiary company.

10 Whatever facts may be disputed or debated others are beyond question. It was Mr Rogers in his affidavit sworn on the 30th of November, 1995, who identified the staff of the Defendant Company as consisting of Messrs Loveridge, Varley, Brassey and himself together with two Secretaries. In addition in his affidavit (at paragraph 4) he identified his own activities on behalf of PDIF in the following terms:-

"...as Shipping and Operations Manager, where I was responsible for monitoring all contracts, chartered vessels, and monitoring the loading and discharge ofcargos from these vessels and doing the accounting associated with this. I worked under the directions of and reported to the said Mr Varley and the said Mr Brassey who were both Directors of the Defendant Company (PDIF). Mr Varley was responsible for traded coal in Eastern Europe and Mr Brassey was responsible for traded coal in Western Europe, including, inter alia, Ireland. "

11 Whilst it was the inference by and assertion of Mr Rogers that PDIF was effectively a department of PLC he expressly refers in his affidavit to a report prepared by Mr Brassey

"recommending that the Defendant Company strongly support and give full backing to the development of the industrial coal market by the Plaintiff".

12 Again he refers to reports and memoranda produced by Mr Brassey "for submission to the Board of the Defendant Company" though going on to say " and also for the purpose of the Board of the Defendant Company to submit to the Board of Powell Duffryn Group ".

13 Again he speaks (in paragraph 13) of reports which were the basis for the monthly Board of Directors Meetings of the Defendant Company.

14 These transactions unquestionably undertaken by PDIF-albeit under a stern measure of control by the parent company-reveal a very high level of commercial activity on the part of the subsidiary. The claim of the Appellants itself reveals and confirms similar facts. The essence of the Plaintiff's claim against PDIF is that the Defendant entered into a contract with it for the sale of some 300,000 tonnes of coal in the years 1985 to 1987 and did so on the basis of a variety of undertakings and representations made by the servants and agents of PDIF. That PDIF is a separate legal entity is not open to dispute. That that company has through its own servants and agents engaged in very substantial commercial activities is fully substantiated by the Plaintiffs themselves. The question raised in argument was the extent to which those activities were controlled directly or indirectly by the parent company and the legal consequences of such control.

15 In the motion to join PLC as an additional Defendant the Plaintiffs relied on Order 15 of the Rules of the Superior Courts which, so far as relevant, provides as follows:-

" 13 No cause or matter shall be defeated by reason of the misjoinder or non-joinder of parties, and the Court may in every cause or matter deal with the matter in controversy so far as regards the rights and interests of the parties actually before it. The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the names of any parties improperly joined, whether as plaintiffs or as defendants, be struck out and that the names...