Crindle Investments v Wymes

• Jurisdiction: Ireland
• Judge: Keane J.
• Judgment Date: 05 March 1998
• Neutral Citation: [1998] IESC 65
• Court: Supreme Court
• Docket Number: 117 & 120/97,[1997
• Date: 05 March 1998

CRINDLE INVESTMENTS & ORS v. WYMES & ANOR & BULA HOLDINGS

BETWEEN

CRINDLE INVESTMENTS, THOMAS C. ROCHE, AND THOMAS J. ROCHE

Plaintiffs

AND

MICHAEL J. WYMES, AND RICHARD F. WOODS AND BULA HOLDINGS AND BULA LIMITED

Defendants

[1998] IESC 65

Hamilton, C.J.

Barrington, J

Keane, J

117 & 120/97

THE SUPREME COURT

Synopsis

Company Law

Duties of directors; pursuance by directors of personal litigation; defendants were directors of Bula Holdings and Bula Ltd. pursuing litigation on behalf of companies and also personal claims; possible conflict in pursuance of both sets of claims; whether defendants obliged to withdraw personal claims; whether fiduciary duty owed to plaintiffs as shareholders; whether defendants in breach of fiduciary duty to shareholders; whether defendants" actions in breach of constitutional rights of plaintiffs; whether defendants" actions in breach of duty of care owed to plaintiffs; whether plaintiffs entitled to bring a derivative action in respect of damage caused to company

Held: Directors did not owe a fiduciary duty directly to individual shareholders; plaintiff shareholders could not bring a derivative action in respect of damage caused to the company; defendants did not owe duty of care to plaintiffs; defendants did not infringe constitutional rights of plaintiffs; defendants not obliged to withdraw personal claims; appeal dismissed

Crindle Investments v. Wymes - Supreme Court: Hamilton C.J., Barrington J., Keane J. - 05/03/1998 -

[1998] 4 IR 578 - [1998] 2 ILRM 275

Citations:

STATUTE OF LIMITATIONS 1957

COMPANIES ACT 1963 S205

COMPANIES ACT 1963 S205(3)

FOSS V HARBOTTLE 1843 2 HARE 46

WARD V MCMASTER 1988 IR 337 1989 ILRM 400

QUINN, STATE V RYAN 1965 IR 70

MESKELL V CIE 1973 IR 121

HANAFIN V MIN FOR ENVIRONMENT 1996 2 ILRM 161

PH V JOHN MURPHY & SONS LTD 1987 IR 621

COMPANIES (AMDT) ACT 1990

TUOHY V COURTNEY 1994 2 ILRM 503

PERCIVAL V WRIGHT 1902 2 CH 421

COLEMAN V MYERS 1977 2 NZLR 225

COMPANIES ACT 1963 S204

SECURITIES TRUST LTD V ASSOCIATED PROPERTIES LTD UNREP MCWILLIAM 19.11.1980 1983/6/1604

O'NEILL V RYAN 1990 2 IR 200

BURLAND V EARLE 1902 AC 83

DANIELS V DANIELS 1978 CH 406

PRUDENTIAL INSURANCE CO V NEWMAN INDUSTRIES LTD (NO 2) 1982 CH 204

1 5th day of March, 1998 byKeane J.

Keane J.

The Factual Background

2 The background to these proceedings is so well known to the parties and has been so frequently set out in detail in judgments of the High Court and of this court that the briefest of summaries will be sufficient for the purposes of this judgment.

3 More than a quarter of a century ago, four people, associated with one another through business or marriage, bought lands near Navan under which there lay a vast and valuable ore body. They are the personal plaintiffs and defendants in these proceedings and they and the various companies through which they operate are hereafter collectively referred to in this judgment as "the R Group" and "the W Group". That ore body extended under adjoining lands and it had been discovered by an exploration company, Tara Mining Limited (hereafter "Tara") who had been granted a lease for the purpose of exploiting it by the Minister for Industry and Commerce, as he was then styled. An unsuccessful effort having been made by the Minister compulsorily to acquire the minerals under the lands purchased by the R Group and the W Group, he decided to acquire a forty nine per cent interest in Bula Limited, the company formed by those two groups with a view to the exploitation of the ore body (hereafter called "Limited").

4 The development of the ore body by Limited entailed borrowing on a substantial scale by Limited from a number of banks. As security for the loans, the banks took mortgages and charges over the lands of Limited and, in addition, personal guarantees by the four personal plaintiffs in these proceedings.

5 Since, until such time as the mine was in production, Limited would have little or no cash flow, it was obvious that it should get into production with the minimum delay. It is one of the remarkable features of the case that some fourteen years after the lands had been acquired by Limited, no mining whatever had taken place. During all that time, of course, interest had been accumulating on the large borrowings and on the 8th October 1985, the banks appointed Mr. Laurence Crowley to be receiver and manager of Limited. At this time, the banks also obtained judgment against the personal plaintiffs on foot of their guarantees. An order was also made for the winding up of the company by the High Court, but set aside by this court on appeal.

6 In 1986, Limited and an associated company called Bula Holdings (hereafter "Holdings") together with the four personal plaintiffs and defendants in the present proceedings began an action against Tara Mines Limited and a number of other defendants, including the Minister for Energy, the successor of the Minister for Industry and Commerce. These proceedings are hereafter referred to as "the Tara proceedings". The same plaintiffs also began proceedings at that time against the Receiver, four of the banks concerned and a firm of consultant mining engineers. Those proceedings are hereafter referred to as "the bank proceedings".

7 In the Tara proceedings, the plaintiffs made a number of claims against the defendants, including claims that they conspired with each other to cause economic loss to the plaintiff and, in the case of Tara, a specific allegation that they had trespassed on the Bula's ore body and unlawfully extracted and converted to their own use a significant part of that ore body. In the bank proceedings, claims were made that the receiver had acted negligently and that he and the bank who had appointed him were liable in damages to the plaintiffs. It was also claimed against the Northern Bank Finance Corporation that they were bound to continue interim finance until long term finance was available and that they and the other banks conspired with the Minister and Tara to bring about economic loss to Bula Limited.

8 Even by the standards that we have become unhappily accustomed to, the delay in bringing both cases to trial was inordinate. This was not least because of the enormous number of interlocutory applications (almost invariably followed by an appeal to this court) and the avalanche of documentation which the proceedings generated.

9 Thus, it was not until towards the end of 1993 that the trial of the Tara proceedings began at long last before Lynch J. The case was at hearing before him for two hundred and seventy seven days and in a reserved judgment delivered on the 6th February 1997, he dismissed all the claims made by the plaintiffs in those proceedings and awarded the costs to the defendants. A notice of appeal has been served on behalf of the plaintiffs and the appeal awaits hearing in this court.

10 The bank proceedings came to trial before Barr J. in the High Court early last year (1997). The plaintiffs in those proceedings were given leave by the court to amend their pleadings so as to include a claim that the title of the various banks concerned to Limited's lands and assets under their mortgages and charges and to the principal sums and interests secured by those mortgages and charges had been extinguished by virtue of the provisions of the Statute of Limitations 1957. When the action had been at hearing for seventeen days before Barr J. he was informed by counsel for the plaintiffs that it was now accepted on behalf of the plaintiffs that if the findings of fact made by Lynch J. in the Tara proceedings were upheld on appeal by this court, the plaintiff's action against the bank would also fall to be dismissed, unless they could succeed on the Statute of Limitations issue. In the light of that concession, and having heard submissions from counsel for the plaintiffs and the defendants as to what was the appropriate course in those circumstances, Barr J. decided to adjourn the trial to await the outcome of the appeal to this court in the Tara proceedings, subject to certain conditions and undertakings, including an undertaking by the plaintiffs to prosecute their appeal in the Tara proceedings diligently and expeditiously and not to institute any further proceedings against the defendants in respect of any alleged wrongdoing of which they were then aware or, in the opinion of the court, also being aware. On the application for the adjournment, the court was informed by counsel on behalf of the plaintiffs that his clients had resolved their differences with the firm of consultant mining engineers and the proceedings against them were struck out.

The s.205 proceedings

11 A serious divergence of view between the R Group and the W Group as to the manner in which the litigation on behalf of Limited and the other plaintiffs was being conducted, and possible compromises dealt with, led ultimately in January 1993 to the presentation of a petition to the High Court under s.205 of the Companies Act 1963(hereafter "the 1963 Act") in which it was claimed that the affairs of Holdings were being conducted in an oppressive manner by the W Group and in disregard of the interests of the R Group as members of Holdings. (It should be observed in passing that the interests of the R Group and the W Group in Limited is held through the medium of their respective shareholdings in Holdings, the W Group owning 60% of the shares in Holdings and thus being in control of that company.) Those proceedings and the appeal taken by both parties to this court from the order of Murphy J. were heard in camera, both the High Court and this court being of the view that the disclosure of information being presented to the court would be seriously prejudicial to the legitimate interests of the company and that justice required that the whole of the proceedings should be heard otherwise than in...