Cave Projects Ltd v Kelly

• Jurisdiction: Ireland
• Judge: Mr Justice Maurice Collins
• Judgment Date: 28 October 2022
• Neutral Citation: [2022] IECA 245
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No 2021/251

Between

Cave Projects Limited

Plaintiff/Respondent

and

Peter Gilhooley, John Kelly, John Moroney, Rory O'Brien and Joseph O'Hara

Defendants

[2022] IECA 245

Ní Raifeartaigh J.

Collins J.

Pilkington J.

Court of Appeal Record No 2021/251

THE COURT OF APPEAL

CIVIL

Want of prosecution – Delay – Balance of justice – Second defendant seeking to strike out the proceedings against him – Whether the delay in prosecuting the proceedings was inordinate and inexcusable

Facts: The second defendant, Mr Kelly, applied to the High Court seeking to strike out the proceedings against him for want of prosecution and/or delay on the part of the plaintiff/respondent, Cave Projects Ltd (Cave). The proceedings concerned a claim for the recovery of a debt of €11,785,543.11 against Mr Kelly and the fifth defendant, Mr O’Hara. The claim was compromised as against the first, third and fourth defendants, Mr Gilhooley, Mr Moroney and Mr O’Brien. The summary summons was issued by the then plaintiff, the Governor and Company of the Bank of Ireland, on 24 February 2011. Subsequently National Asset Loan Management Ltd (NALM) acquired the loan, the subject matter of the proceedings, from the then plaintiff. In or about January, 2013, Cave purchased the said loan. Cave alleged that the loan became repayable on 31 January 2008. On 20 January 2021, Meenan J refused Mr Kelly’s application. Mr Kelly appealed to the Court of Appeal form Meenan J’s decision. The appeal was heard in late June 2022. By the conclusion of the appeal hearing the Court had reached a clear view that the appeal should be dismissed. It communicated that position to the parties, indicating that the Court would give its reasons later.

Held by Collins J that the Judge’s conclusion that the balance of justice did not lie in favour of dismissing the claim was correct. Collins J rejected Mr Kelly’s contention that the Judge was not entitled to call him to give oral evidence and rejected his complaints of procedural unfairness. Regarding the concerns raised by Mr McGarry SC on behalf of Mr Kelly regarding the potentially prejudicial effect of the Judge’s finding that Mr Kelly had been untruthful in his evidence, Collins J noted that Mr Delaney SC, counsel for Cave, did not assert any entitlement to rely on that finding at trial; given Mr Delaney’s stated position it appeared unlikely that Mr McGarry’s fears would be realised. Without intending to cast any doubt on what Mr Delaney had told the Court as to the inadmissibility of that finding, Collins J was of the view that, for the sake of certainty and for the avoidance of future dispute, the Court should expressly direct that the Judge’s finding cannot be referred to or relied at trial. Collins J held that this did not in any way restrict Mr Delaney from cross-examining on the basis of Mr Kelly’s affidavit.

Collins J formally dismissed the appeal. His provisional view was that Mr Kelly should pay the costs of the appeal.

Appeal dismissed.

JUDGMENT of Mr Justice Maurice Collins delivered on 28 October 2022

PRELIMINARY

1 This is the appeal of the Second Defendant (hereafter “ Mr Kelly”) from the decision of the High Court (Meenan J) given on 20 January 2021 ( [2021] IEHC 181) refusing his application to dismiss the proceedings against him for want of prosecution and delay on the part of the Plaintiff/Respondent (hereafter “ Cave”).

2 The appeal was heard in late June 2022. At that stage, the action had been listed for hearing for 6 days, commencing on the 29 November 2022. There was therefore an obvious urgency about the determination of the appeal. The parties needed to know whether or not the trial would be proceeding so that the necessary preparations for it could be undertaken with confidence.

3 In the event, by the conclusion of the appeal hearing the Court had reached a clear view that the appeal should be dismissed. In the circumstances, it communicated that position to the parties, indicating that the Court would give its reasons later. This judgment sets out my reasons for the decision to dismiss the appeal.

THE PROCEEDINGS

4 The proceedings involve a claim for the recovery of a liquidated debt arising from facilities advanced by the Bank of Ireland (hereinafter “the Bank”) to the Defendants (who were in partnership for the purpose of acquiring land) pursuant to a number of letters of loan offer issued between 2005 and 2007. The sums advanced by the Bank became repayable on demand after the 31 January 2008. The Bank made a demand for repayment on the 5 January 2011 and, the debt not having been repaid, it commenced proceedings by way of summary summons on the 24 February 2011, seeking judgment in the sum of €11,785,543. Subsequently National Asset Loan Management Limited (NALM) acquired the facilities and the associated security from the Bank pursuant to the National Asset Management Agency Act 2009. In January 2013, Cave acquired the loans and associated security from NALM.

5 Cave now pursues Mr Kelly for payment. It also sues the Fifth Defendant ( “Mr O'Hara”) but he is not a party to this appeal. The proceedings as against the First, Third and Fourth Defendants have been compromised.

6 Given the nature of the application at issue, it is necessary to set out in some detail the chronology of the litigation prior to the issue of the motion. The events range from 2011 to 2019, when Mr Kelly's motion to dismiss issued.

2011 — On 5 January 2011, the Bank demanded repayment of the debt due under the loan facilities. The proceedings were issued by summary summons on 24 February 2011, less than two months later. An appearance was entered by Mr Kelly on 28 April 2011. On 9 September 2011, the Bank issued a motion for summary judgment. On 22 November 2011, Mr Kelly and the Fifth Defendant secured an adjournment to file replying affidavits. On 7 December 2011, NALM acquired the facilities from the Bank.

2012 — From January to March 2012, the motion for summary judgment was adjourned to enable Mr Kelly to file a replying affidavit. His affidavit was sworn on 15 May 2012. From May 2012 to December 2012, the proceedings were adjourned as NALM were engaged in the sale of the facilities.

2013 — On 22 January 2013 Cave purchased the facilities from NALM, and on 6 February 2013, it was substituted as plaintiff in the summary proceedings. In March 2013, the motion was adjourned to allow Cave to file a replying affidavit. On 27 May 2013, the proceedings were discontinued against the First, Third and Fourth Defendants. There were adjournments in May — June 2013 to allow further affidavits to be filed.

On 21 July 2013, Mr O' Hara issued a motion for security for costs. That was listed for hearing on 26 July 2013 but was not reached in the list that day and was adjourned to 12 December 2013. Mr Kelly was given liberty to issue a similar motion but did not do so. Cave's motion for judgment against Mr Kelly was listed on 11 November 2013 and on that date, he applied to adjourn the motion until the resolution of Mr O Hara's security for costs application. On 2 December 2013 Mr Kelly filed a further affidavit raising new grounds in defence of the claim against him. On 12 December 2013 Mr O' Hara's motion for security for costs was compromised. It was only after this, on the 6 January 2014, that Mr Kelly issued his own motion for security for costs.

2014 — As noted above, on 6 January 2014 Mr Kelly issued a motion for security for costs. On the 28 April 2014, his application was refused. The summary judgment proceedings then proceeded to hearing before Noonan J on the 14 November 2014.

2015 — On 16 January 2015 Noonan J gave judgment on the motion for summary judgment. For the reasons set out in some detail in that judgment ( [2015] IEHC 14), the motion was refused and the proceedings were remitted for plenary hearing. Noonan J observed in his judgment that there was a multiplicity of issues potentially arising for determination at the hearing, though he also noted that there was little dispute on the facts and that most of the debate had centred on questions of law (at para 30).

7 One of the issues raised by Mr Kelly in the course of the summary judgment application was Cave's settlement with the First, Third and Fourth Defendants. In an affidavit sworn in support of Cave's motion by its solicitor, Mr Thomas Kelly, on 29 November 2013, he gave the following information about the settlement:

“I further say with regard to the settlement with Mr. Gilhooley, Mr. O'Brien, and Mr. Moroney that Cave Projects Limited settled with them for a monetary payment of €100,000 each. I say as part of the settlement those Borrowers also agreed to transfer their interest in the following lands into the name of Cave Projects Limited:—[Mr. Kelly then refers to ten identified folios of land] I say that as part of the agreement to discontinue proceedings against those three Borrowers Cave Projects Limited reserved Its right to continue proceedings against the other two Borrowers. I beg to refer to the settlement agreements upon which marked with the letter ‘K1’ I have endorsed by named prior to the swearing hereof.”

The documents exhibited at “ K1” set out terms of the settlement entered into by Cave with the relevant Defendants.

8 Cave initially brought an appeal against the refusal of summary judgment but that appeal was withdrawn in March 2015. On the 29 May 2015, Cave delivered a Statement of Claim. On 3 June 2015 Mr Kelly served a notice for particulars, which went unanswered for a considerable period (replies were only delivered in November 2018). On 19 November 2015, Mr Kelly delivered a Defence and Counterclaim.

9 Mr Kelly's Defence and Counterclaim requires proof of the loans and their terms. It does not admit any breach or default by Mr Kelly in observing the terms of any facility letters and pleads that he was a stranger to the allegation that the Defendants had...