Coen and Another v Doyle and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice Garrett Simons |
| Judgment Date | 21 June 2023 |
| Neutral Citation | [2023] IEHC 310 |
| Court | High Court |
| Docket Number | 2020 No. 4748 P |
[2023] IEHC 310
2020 No. 4748 P
THE HIGH COURT
Aillil O'Reilly SC and Neal Flynn for the plaintiffs instructed by Dillon Eustace
Arran Dowling-Hussey for the first, second and third defendants instructed by Ensor O'Connor
Stephen O'Connor for the fourth defendant instructed by Beale & Company
JUDGMENT of Mr. Justice Garrett Simons delivered on 21 June 2023
This judgment is delivered in respect of an application by two of the defendants to be released from these proceedings. The application is, nominally, made pursuant to the provisions of Order 15 of the Rules of the Superior Courts. The substance of the application, however, is that there is no reasonable basis for the claim against either of the two relevant defendants. This is an application more properly made pursuant to the court's inherent jurisdiction to dismiss proceedings as an abuse of process.
These proceedings involve a dispute in respect of a construction contract. It is the plaintiffs' case that they engaged the first and second defendants in respect of a design and build project involving a property in Cabinteely, Dublin (“ the construction project”). The first defendant is an individual and the second defendant is a company incorporated with limited liability. The first defendant is the principal shareholder of the second defendant.
The first defendant denies that he has any contractual liability to the plaintiffs and asserts that his only involvement in the construction project was as a director of the second defendant. The first defendant submits that he is entitled to trade through a limited liability company and has averred that he would never work as a building contractor in his own right and through the company at the same time.
The third defendant is a company which has been incorporated since the date of the construction project the subject-matter of these proceedings. The plaintiffs' case against the third defendant is pleaded as follows at paragraphs 53 to 54 of the statement of claim:
“53. Notwithstanding the incorporation of the second named Defendant, the use of the first and/or second named Defendants of the trading name Mark Doyle Building Contractors, the third named Defendant was incorporated on 12 th June, 2018 and taking the former registered office address of the second named Defendant. The third named Defendant has similar directors to the second named Defendant being the first named Defendant and Carla Fusciari and the first named Defendant is the company secretary to both the second and third named Defendants. The first set of accounts for the third named Defendant to 31 st May, 2019 showed an inter-company debt between the second and third named Defendants of €370,000.00 notwithstanding which the accounts of the third named Defendant showed a cash figure of €698,000.00 from eleven months of trading. Further, the third named Defendant registered as a trading name the name Mark Doyle Building Contractors.
54. In circumstances where the management, business and trading name of the second and third named Defendants are similar and where the profits for the third named Defendant and for its first eleven months of trading to 31 st May, 2019 showed a profit of €506,446.00 and where it appears there have been transfer of assets from the second named Defendant to the third named Defendant, the Plaintiffs seek an Order treating the businesses of the second and third named Defendants as a single entity and/or seek damages as against the third named Defendant as may arise.”
In short, the plaintiffs seek to pierce the corporate veil and to hold the third defendant liable for any damages awarded against the second defendant. The basis for this claim against the third defendant has been elaborated upon in an accountant's report filed on behalf of the plaintiffs.
At an earlier stage, the second defendant brought an application, pursuant to the Arbitration Act 2010, to have the proceedings stayed pending the reference of the dispute to arbitration. This application was refused for the reasons set out in a judgment delivered by the High Court (Barniville J.) on 25 March 2021, Coen v. Doyle [2021] IEHC 244. This earlier judgment is relevant insofar as it held that there is no written agreement between the parties. The earlier judgment expressly left over for further consideration the separate question as to whether the oral contract between the parties implicated both the first and second defendants.
The two notices of motion each refer to Order 15, rule 14 which provides as follows:
“Any application to add or strike out or substitute a plaintiff or defendant may be made to the Court at any time before trial by motion or at the trial of the action in a summary manner.”
As explained by the High Court (Baker J.) in Irish Bank Resolution Corporation Ltd v. Lavelle [2015] IEHC 321 (at paragraph 26), the purpose and effect of Order 15, rule 14 is to fix the time at which an application to add, strike out or substitute a plaintiff or defendant may be made: it is not an empowering provision.
Presumably, the motions were intended to refer, instead, to the provisions of Order 15, rule 13. This rule, insofar as relevant, provides as follows:
“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 of any parties, whether plaintiffs or defendants, who ought to have been joined, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter, be added. […].”
As appears, the rule is concerned with the misjoinder of a party, i.e. where a party has been improperly joined to proceedings. This concept requires something more than that a defendant may ultimately be found to have a good defence to the proceedings. Rather, it implies that there is some impediment to the joinder of that party.
Counsel on behalf of the fourth defendant helpfully brought my attention to the judgment of the High Court (Baker J.) in Raymond v. Moyles [2017] IEHC 688. That judgment contains a very useful discussion of the type of impediment which might ground a successful application to strike out pursuant to Order 15. The examples cited include circumstances where the presence of a party would be redundant because another party is the proper legitimus contradictor to the proceedings; where authorisation was required prior to the institution of proceedings against a party but had not been obtained; and where a party is immune from suit.
The judgment goes on to say that the jurisdiction under Order 15 is not one which can be engaged in circumstances where—as in the present proceedings—it is sought to release parties on the grounds that they were not the contracting parties. See paragraphs 25 and 26 of the judgment as follows:
“I do not consider that the jurisdiction under O. 15 by which a court may remove a party ‘improperly’ joined, or a party who was not a necessary party, is one that may be engaged in the present case. It could not be said that the first, second and third defendants were improperly joined in the sense that they are not necessary parties. It may emerge in the course of the trial that they were not the true contracting parties, but it could not be said that they are not necessary parties to the claim as pleaded.
Further, I consider that the provisions of O. 15 are more applicable to a case where it can readily be ascertained from the proceedings, from the nature of the relief claimed or the statutory or other basis of that relief that a party is not a necessary party in the true sense to the proceedings.”
I respectfully adopt this analysis as a correct statement of the law. The claim advanced by the plaintiffs in the present case is that the first defendant was one of the two parties with whom the plaintiffs entered a contract. It cannot be said, therefore, that the first defendant is not a necessary party to the claim as pleaded. The proper respondent to a claim for a breach of contract is the counterparty to the asserted contract. The first defendant has thus been properly joined to the proceedings for the purposes of Order 15. This is so notwithstanding that the first defendant refutes the allegation that he was a contracting party. It is ultimately a matter for the trial judge to determine who the contracting parties were.
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