Bluzwed Metals Ltd v Transworld Metals S.A.

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 04 February 2004
• Neutral Citation: [2004] IEHC 23
• Court: High Court
• Docket Number: Record No NO. 51 COS/1999
• Date: 04 February 2004

[2004] IEHC 23

THE HIGH COURT

Record No NO. 51 COS/1999

BLUZWED METALS LTD v. TRANSWORLD METALS S.A.

IN THE MATTER OF TRADALCO LIMITED

AND

IN THE MATTER OF THE COMPANIES ACTS1963 TO 1990

BETWEEN

BLUZWED METALS LIMITED

CLAIMANT

AND

TRANSWORLD METALS S.A.

RESPONDENT

Citations:

COMPANIES ACT 1963 S213(F)

COMPANIES ACT 1963 S205(3)

MCGEE V O'REILLY 1996 2 IR 229

MAHON V CELLBRIDGE SPINNING CO LTD 1967 IR 1

ORANGE LTD V DIRECTOR OF TELECOMS (NO 2) 2000 4 IR 159

Synopsis:

PRACTICE AND PROCEDURE

Replies to notice for particulars

Whether respondent's defence should be struck out for failure to furnish proper replies - Whether replies sufficient to enable claimant to know broad outline of case it had to meet (1999/51COS - Laffoy J - 4/2/2004)

Bluzwed Ltd. v Transworld Metals SA

Facts: The claimant applied to strike out the respondent’s points of defence and dismiss the respondent’s points of counter-claim for failure to furnish proper replies to the claimant’s notice for further and better particulars. The claimant contended that the respondent from the beginning was refusing to clarify fundamental matters. The respondent contended that the claimant was challenging the manner in which the respondent’s case was pleaded rather than the adequacy of the particulars per se. The claimant’s application amounted to a complaint that the respondent had not elected between alternative pleas.

Held by Laffoy J. in refusing the claimant’s application that the respondent had furnished sufficient particulars to enable the claimant to know the broad outline of the case the claimant would have to meet at the trial.

Reporter: R.W.

JUDGMENT of

Miss Justice Laffoy

1 delivered on 4th February 2004.

The application

2 This is the claimant's application for an order striking out the respondent's points of defence and dismissing the respondent's points of counterclaim for failure to furnish proper replies to the claimant's notice for further and better particulars dated 23^rd October 2001 as directed by order of this Court dated 19^th November 2002.

Background

3 Tradalco Limited (the Company) was incorporated in the State on 27^th October 1995 as a company limited by shares. The claimant, a company registered in the British Virgin Islands, and the respondent, a company registered in the Bahamas, are each fifty per cent shareholders in the Company. These proceedings were initiated by a Petition issued on 24^th March 1999 in which the claimant sought an order pursuant to Section 213 (f) of the Companies Act1963that the Company be wound up on the ground that it was just and equitable to do so, it being alleged that the relationship of mutual trust and confidence which theretofore existed between the claimant and the respondent had irretrievably broken down. The respondent is resisting the winding up of the Company and is counterclaiming for orders under Section 205(3) of the Act of 1963 for various reliefs, including —

4 (i) an order directing the claimant to return to the Company the value of all assets and moneys (including diverted profits) of the Company alleged to have been misappropriated by the claimant, and

5 (ii) an order directing the claimant to purchase the shares of the respondent in the Company at a value fixed on a basis which measures the worth of the Company and its assets by reference to the value the Company and its assets would have had if the claimant had not been guilty of alleged wrongdoing and had accounted for all sums due and owing.

6 By order dated 17^th May 2001 made by this Court (Lavan J.), William O'Riordan was appointed provisional liquidator (the Provisional Liquidator) of the Company. The Provisional Liquidator is not involved in these proceedings.

7 Underlying the Company there was a joint venture relationship between the claimant and the respondent, each of which was involved in worldwide aluminium trading. It is common case that there was agreement between the joint venture partners that certain trading operations of the joint venture would be carried out through the Company. These trading operations are described in the claimant's points of claim as tolling operations, sales and purchase operations and import and export operations with regard to various raw materials (such as alumina, petroleum coke, fluorspar) and aluminium products at different production plants located in the Russian Federation. There is a dispute as to the duration of this arrangement.

The Law

8 It is also common case that the legal principles in relation to the role of particulars in civil litigation were outlined by the Supreme Court inMcGee v. O'Reilly[1996] 2 I.R. 229, where (at p. 233) Keane J., as he then was, having stated that, in considering whether particulars should be ordered, the purpose of pleadings, of which particulars form part, must be borne in mind, quoted the following passage from the judgment of Fitzgerald J., as he then was, in the Supreme Court in Mahon v. Celbridge Spinning Company Limited[1967] I.R. 1:

"The whole purpose of a pleading, be it a statement of claim, defence or reply, is to define the issues between the parties, to confine the evidence of the trial to the matters relevant to those issues, and to ensure that the trial may proceed to judgment without either party being taken at a disadvantage by the introduction of matters not fairly to be ascertained from the pleadings. In other words a party should know in advance, in broad outline, the case he will have to meet at the trial."

9 Later, at p. 234, Keane J. stated:

"In our system of civil litigation, the case is ultimately decided having regard to the oral evidence adduced at the trial. The machinery of pleadings and particulars, while of critical importance in ensuring that the parties know the case that is being advanced against them and that matters extraneous to the issues as defined will not be introduced at the trial, is not a substitute for oral evidence of witnesses and there cross examination before the trial judge."

Claimant's Submissions

10 Counsel for the claimant drew attention to the observations of Keane C.J. at the end of his judgment inOrange Limited v. Director of Telecoms (No. 2) [2000] 4 I.R. 159 (at p. 202), in which the Chief Justice commented on the length of the trial and the appeal and the need for case management of complex commercial litigation. The claimant recorded a concern that, as the respondent has not commenced proceedings in any other jurisdiction in relation to the alleged underlying partnership or joint venture arrangements, these proceedings are being used as a means of attempting to try matters in which the Irish courts have no jurisdiction and, in particular, claims in relation to the alleged underlying joint venture and the alleged misappropriation of assets from that joint venture. The respondent must particularise with clarity the claims which it is seeking to make in these proceedings so that the Court is only required to determine those claims properly within its jurisdiction and, in particular, those claims which properly relate to the Company and not to the alleged underlying joint venture, it was asserted.

11 Particulars were first sought by the claimant in a notice dated 22^nd December 1999. At the hearing of this application counsel for the claimant identified the following paragraphs of the notice as not having been properly replied to: paragraphs 1(f), 7(a), 7(d), 7(e), 7(f), 9(b), and 9(e) to (g). The claimant's contention is that the respondent from the beginning has refused to clarify two fundamental matters, namely:

12 (a) what assets are alleged to have been misappropriated from the Company as opposed to assets allegedly misappropriated from the alleged "joint venture" itself or other "joint venture" companies?

13 (b) what assets belonging to the Company are alleged to have been misappropriated by the claimant as opposed to have been misappropriated by someone else who is not a party to the proceedings?

14 It was submitted that the Court might deal with the principles which those two questions raise, rather than address the minutiae of the requests for particulars and the replies. To do so in a meaningful way, it seems to me that it is necessary to illustrate the issues and the conclusions by reference to one of the disputed items. I propose to do so by reference to paragraph 7(a) of the notice of 22^ndDecember 1999.

Paragraph 7(a)

15 The elements of the pleadings which appear to me to be relevant to paragraph 7(a) are as follows:

(1)Points of claim

16 In the points of claim (delivered on 14^th June 1999) the claimant pleaded that the then net asset value of the Company, after discharging all liabilities other than liquidation costs and expenses, was in the region of US$24,400,000.

(2)Points of defence and counterclaim

17 Points of defence and counterclaim were delivered on 15^thOctober 1999. Subsequently, amended points of defence and counterclaim were delivered on 17^th January 2003 pursuant to an order of this Court (Lavan J.) made on 19^th November 2002. I propose to refer to the amended points of defence and counterclaim. In paragraph 4, by way of response to paragraph 8 of the points of claim in which the claimant pleaded an agreement between the parties appointing the Company its nominee for the purpose of jointly carrying out certain tolling operations, the respondent pleaded the terms of the joint venture agreement between the parties. In paragraph 4(g) it was pleaded that, in addition to the Company, the trading operations of the joint venture after October 1995 were conducted through certain named joint venture companies, including Alucor Trading S.A. (incorporated in the Bahamas on 18^th July 1997), of which the claimant and respondent are fifty per cent shareholders. In paragraph 13 the respondent pleaded that "the claimant its servants or agents and/or those controlling or...