Cooney, Southern Mineral Oil Ltd ((in Liquidation)) v (No. 2)

• Jurisdiction: Ireland
• Judgment Date: 01 January 1999
• Date: 01 January 1999
• Docket Number: [94/28P and 94/30P].
• Court: High Court

High Court

[94/28P and 94/30P].

Southern Mineral Oil Ltd. (in liquidation) v. Cooney (No. 2)

In the matter of Southern Mineral Oil Ltd. (in liquidation) and in the matter of Silk Oil (Ireland) Ltd. (in liquidation) and in the matter of the Companies Act

1963.

Southern Mineral Oil Ltd. (in liquidation) and Silk Oil (Ireland) Ltd. (in liquidation)

Applicants

and

Patrick Cooney, Bridget Cooney and Brendan Flaherty, Respondents (No. 2)

Cases mentioned in this report:-

Allied Irish Coal Supplies Ltd. v. Powell Duffryn Intl. Fuels Ltd. [1998] 2 I.R. 519.

Evans Ltd. v. Charrington & Co. Ltd. [1983] Q.B. 810; [1983] 1 All E.R. 310.

Re Farmizer (Products) Ltd. [1997] B.C.L.C. 589.

O'Reilly v. Granville [1971] I.R. 90.

Re Probe Data Systems [1989] B.C.L.C. 561.

West Riding of Yorkshire C.C. v. Huddersfield Corp. [1959] 1 Q.B. 540; [1957] 1 All E.R. 669.

Practice and procedure - Application to substitute party - Limitation period - Proceedings for fraudulent trading - Liquidator - When cause of action accrues - Whether application statute barred - Companies Act, 1963 (No. 33), s. 297 - Statute of Limitations, 1957 (No. 6), s. 11(1)(e) - Rules of Superior Courts, 1986 (S.I. No. 15), O. 15, rr. 2 and 13.

Motion on notice.

The facts have been summarised in the headnote and are fully set out in the judgment of Shanley J., infra.

By notice of motion dated the 18th August, 1994, the applicants sought a declaration pursuant to s. 297 of the Companies Act, 1963, against the respondents.

By notice of motion dated the 18th December, 1997, the applicants sought to substitute the liquidator as applicant in these proceedings.

The motion of the 18th December, 1997, was heard by the High Court (Shanley J.) on the 29th April, 1998.

Order 15, r. 2 of the Rules of the Superior Courts, 1986, provides:-

"Where an action has been commenced in the name of the wrong person as plaintiff, or where it is doubtful whether it has been commenced in the name of the right plaintiff, the Court may, if satisfied that it has been so commenced through abona fide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as may be just."

Order 15, r. 13 of the Rules of the Superior Courts, 1986, provides, inter alia:-

"No matter or cause shall be defeated by reason of the misjoinder or non-joinder of parties . . . 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 appear 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 . . . be added."

The applicant companies were wound up by order of the High Court. The respondents were shareholders and/or directors of the applicants. The applicants sought a declaration pursuant to s. 297 of the Companies Act, 1963, that, in the period of six months prior to the commencement of the winding up, the respondents were knowingly parties to the carrying on of the business of the applicants with intent to defraud their creditors and that they should be personally responsible, without limitation of liability, for all the debts and liabilities of the applicants. The applicants applied to have the liquidator substituted as the applicant in the proceedings.

Held by the High Court (Shanley J.), in dismissing the application, 1, that the cause of action in relation to which relief was sought pursuant to s. 297 of the Act of 1963, accrued prior to the winding up of the companies in question and the application was, therefore, statute barred.

2. That proceedings pursuant to s. 297 of the Act of 1963 were "an action to recover any sum recoverable by virtue of any enactment" as envisaged by s. 11(e) of the Statute of Limitations, 1957 and, accordingly, the limitation period was six years from the date of the alleged fraudulent trading and misfeasance of the respondents.

Re Farmizer (Products) Ltd. [1997] B.C.L.C. 589 considered.

3. That the court would not permit a party to be added to an existing action at a time when he could rely on the Statute of Limitations as barring a fresh action being brought against him.

Allied Irish Coal Supplies Ltd. v. Powell Duffryn Intl. Fuels Ltd. [1998] 2 I.R. 519 applied.O'Reilly v. Granville[1971] I.R. 90 not followed.

4. That, in order for a court to exercise the jurisdiction given by O. 15, r. 2 of the Rules of the Superior Courts, 1986, to substitute a new plaintiff in an existing action, two requirements must be satisfied:

• (i) the mistake sought to be corrected must be a genuine mistake, and

• (ii) the mistake was not misleading or such as to cause any reasonable doubt as to the identity of the intended plaintiff.

Evans Ltd. v. Charrington & Co. Ltd. [1983] Q.B. 810 considered.Re Probe Data Systems [1989] B.C.L.C. 561 applied.

5. That, although the liquidator had acted in the mistaken belief that the companies in liquidation were possessed of the cause of action as opposed to the liquidator himself, this was not a category of mistake to which O. 15, r. 2 applied. Furthermore, it was clear that the respondents at all material times were of the view that the applicants were the companies in liquidation and not the liquidator. In the absence, therefore, of any evidence of the occurrence of a bona fide mistake, the jurisdiction given by O. 15, r. 2 could not be exercised.

6. That, although the liquidator was clearly a party who ought to have been joined pursuant to O. 15, r. 13 in these proceedings, any cause of action which the liquidator had against the respondents was statute barred.

Allied Irish Coal Supplies Ltd. v. Powell Duffryn Intl. Fuels Ltd. [1998] 2 I.R. 519 applied.

Cur. adv. vult.

Shanley J. 11th May, 1998

On the 10th February, 1995, Murphy J. ordered that an issue be tried on oral evidence in respect of the reliefs sought in a notice of motion dated the 18th August, 1994. In the notice of motion, relief was sought against the respondents for declarations pursuant to ss. 297 and 298 of the Companies Act, 1963 and for an order for the examination of the conduct of the respondents pursuant to s. 298(2) of the Companies Act, 1963 and further for an order compelling the respondents to contribute to the assets of the companies, such sum as the court might think just. It is common case that the events in relation to which the entitlement to relief is sought occurred in 1988, being the year in which each of the companies in the title to these proceedings was wound up.

After the issue of the notice of motion dated the 18th August, 1994, the respondents sought (by way of a notice of...