Bayworld Invesments v McMahon
| Jurisdiction | Ireland |
| Judge | MR. JUSTICE T.C. SMYTH |
| Judgment Date | 19 June 2003 |
| Neutral Citation | 2003 WJSC-HC 1036 |
| Court | High Court |
| Docket Number | Case No.91/2003 Sp |
| Date | 19 June 2003 |
2003 WJSC-HC 1036
THE HIGH COURT
and
Citations:
RSC O.38 r3
RSC O.20 r1
CROCKER, RE 1936 1 CH 696
UNDERHILL & HAYTON ON THE LAW OF TRUSTS & TRUSTEES 15ED 444
INGRAM V INLAND REVENUE CMSR 1999 1 AER 297
EX PARTE COBELDICK 1883 12 QB 149
SILVER V DRAKE 1971 1QB 396
MILEY V FLOOD 2001 2 IR 50
FLETCHER HUNT (BRISTOL) LTD, RE 1989 BCLC 108
Synopsis:
COMPANY LAW
Land law
Equity and trusts - Partnership - Property - Solicitors - Practice and procedure - Furnishing of documents of company - Whether company entitled to return of documents (2003/91 - Smyth J - 19/6/2003)
Bayworld Investment v McMahon - [2004] 2 IR 199
Proceedings were issued on behalf of the plaintiff against its former solicitors (the defendants). The plaintiff had sought the return of all documents relating to its business along with its corporate seal. The plaintiffs position was that it needed sight of the documents in order to assess more fully transactions which had been entered into in the plaintiffs name. A member of the defendant’s firm (O’Brien) had also been involved in the business of the plaintiff and was a director of the plaintiff. Mr. O’Brien asserted that together with the other directors of the plaintiff they had in fact established an undisclosed trust and that when preparing contracts he was doing so on behalf of the partnership and not on behalf of the plaintiff
Held by Mr. Justice Smyth in finding in favour of the plaintiff The fact that persons in a partnership set up business under the aegis of a company does not mean that the company does not have its own legal personality with its own rights and duties together with the rights and duties of shareholders. On the basis of the evidence adduced the plaintiff was a client of the defendant and was entitled to the documents which it sought no matter what the views of the persons in the partnership were. An order x’. as made to this effect along with an order restricting the pledging of certain title documents.
MR. JUSTICE T.C. SMYTH ON THURSDAY, 19TH JUNE 2003 - DAY 3
I hereby certify the following to be a true and accurate transcript of my shorthand notes of the evidence in the above-named matter.
APPEARANCES
For the PLAINTIFF:
MR. BRIAN MURRAY S.C.
Instructed by:
IVOR FITZPATRICK SOLICITORS
For the DEFENDANT:
MR. PAUL GARDINER S.C.
Instructed by:
MR. KIRBY TARRANT,
O'GRADYS SOLICITORS,
5 UPPER FITZWILLIAM ST.,
D2.
COPYRIGHT: Transcripts are the work of Gwen Malone Stenography Services and they must not be photocopied or reproduced in any manner or supplied or loaned by an appellant to a respondent or to any other party without written permission of Gwen Malone Stenography Services
JUDGMENT OF MR. JUSTICE T.C. SMYTH DELIVERED ON THURSDAY, THE 19TH DAY OF JUNE 2003.
MR. JUSTICE SMYTH: The Defendants are a firm of solicitors who acted as the Plaintiff's solicitors up to 18th December 2002, when the Defendants' retainer from the Plaintiff was terminated. On the instructions of the Plaintiff by a letter dated 18th December 2002, Messrs. Ivor Fitzpatrick & Company, Solicitors, requested the Defendants to forward all files, title documents, correspondence and documents relating to the business of the Plaintiff, along with the Plaintiff's corporate seal, to Ivor Fitzpatrick & Company. The Defendants have steadfastly refused to do so.
In these proceedings the Plaintiff seeks, inter alia, an order directing the Defendants to release and deliver up to the Plaintiff or such other person or persons as may be nominated by the Plaintiff, all files, title documents, books, records and correspondence pertaining to the Plaintiff and its affairs, the corporate seal of the Plaintiff and all others property of the Plaintiff in the possession, custody or control of the Defendants, their servants or agents or, alternatively, an Order directing the Defendants to permit the Plaintiff, its servants or agents to inspect and make copies of all files, title documents, books, records and correspondence pertaining to the Plaintiff and its affairs in the possession, custody or control of the Defendants, their servants or agents.
The Plaintiffs seeks the relief because its directors requires access to the documentation in order to be fully appraised of the company's affairs and certain transactions which appears to have been carried out in its name. The evidence suggests another motive also.
The Defendants' position in respect of the Plaintiff's corporate seal is unsustainable, for there can be no basis upon which they could withhold the Plaintiff's corporate seal from the Plaintiff. On the other hand, if (as the Plaintiff maintains) the Defendants were once its solicitors, now that their retainer is an end, they have no right to retain the corporate seal and are obliged to return it to the Plaintiff. In their letter dated 1st May 2003, O'Grady Solicitors have asserted:
"With regards to furnishing the corporate seal of Bayworld as McMahon O'Brien Downes Solicitors originally took possession of the corporate seal of Bayworld on being retained by their clients, the partnerships and have since retained the corporate seal of Bayworld on behalf of those partnerships who use Bayworld as their nominee and trustee to hold lands, we confirm that McMahon O'Brien Downes Solicitors are happy to release the corporate seal to Bayworld on receiving instructions from their clients to do so."
The seal was and is the property of the company and no one else.
(a) Procedurally.
(b) The control and authority over solicitors to compel the delivery to a client of his/her/its file.
(c) Whether the fact that another party may have an interest in that file is a reason for the Court not directing its production.
2. Whether there is some invalidity associated with the proceedings in the event that Mr. O'Brien is and was at all material times a director of Bayworld. For ease of reference I shall use the expression "Bayworld" or "company" whether referring to Bayworld Limited or Bayworld Investments."
Insofar as procedure is concerned, the Defendant in the person of Mr. O'Brien submits that it is inappropriate that the submits that it is inappropriate that the substantive issues identified ought not to be dealt with either under the Superior Court Rules governing Special or Summary Summons and in this regard refers to:-
(I) Order 38 which deals with the hearing of proceedings commenced by Special Summons. Rule (3) of the Order Provides for a hearing on affidavit. On any view of the documentation the affidavits are extensive. Furthermore, each of the parties have served noticed and did in fact cross-examine the other on his or their affidavits. At no stage in the proceedings did it appear to me that the determination of any question or questions of fact required to be deferred for more ample pleadings. The issues between the parties are amply set out in the affidavits which ultimately became argumentative. Cross-examination was not curtailed and the hearing before me was in effect a plenary hearing.
(ii) Order 20 Rule 1 which deals with a Statement of Claim provides that:
"Where the procedure is by Summary Summons or Special Summons, no Statement of Claim or other pleadings shall be delivered except by order of the Court, which order may be made in any case in which the delivery of such Statement of Claim or other Pleading appears to be requisite."
Having considered the affidavits and oral evidence and all that was urged by Counsel, I did not and do not consider any further form of pleading or hearing is necessary.
The relationships between the parties is set out in extenso in the affidavits and was amplified and clarified by oral evidence. The absence of detailed historical detail does not mean that a clear picture does not emerge sufficient to give a clear understanding of the facts which (despite some being intertwined) are relatively straightforward. The fact that persons in a partnership (which may have set up a trust for purposes which seemed good to them or upon which they were advised) carry out business under the aegis of a company, limited or otherwise, does not mean that such company does not have its own legal personality with its own rights and duties or that its directors and, more particularly, its shareholders do not have rights and duties they owe to the company and through the company to third parties and towards each other separate and distinct from whatever rights and duties they may owe to each other or any partnership or trust of which they may be a member.
I am satisfied and find as a fact on the evidence before me that in the relationship between Mr. Cox, Mr. Fitzpatrick and Mr. O'Brien, business was for years carried on in quite an informal manner. Mr. Cox and Mr. Fitzpatrick essentially left all the paperwork to Mr. O'Brien. Mr. Cox is a man of action, whose concerns and abilities seem to have been to identify sites for development and to seek planning permission. To describe him as a dealer is not to denigrate him but to use the colloquialism that best described what he did. I found him to be a truthful witness.
Mr. Fitzpatrick was by qualification a Chartered Accountant, although he did not practice as such, but was engaged or employed in industry. He was concerned largely with financial matters. I found him too to be a truthful witness.
Mr. O'Brien was a qualified solicitor of some years experience who practices...
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