Cunningham v Springside Properties Ltd ((in Receivership)) and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 31 July 2009
• Neutral Citation: [2009] IEHC 454
• Court: High Court
• Date: 31 July 2009

[2009] IEHC 454

THE HIGH COURT

[NO. 2463 P/2005]

Cunningham v Springside Properties Ltd (In Receivership) & Ors

BETWEEN

BRIAN CUNNINGHAM

PLAINTIFF

AND

SPRINGSIDE PROPERTIES LIMITED (IN RECEIVERSHIP)

AND

BY ORDER, ARTHUR COX

AND

FIRST ACTIVE PLC

DEFENDANTS

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 6.3.2009 2009 IEHC 214

ROLLED STEEL PRODUCTS (HOLDINGS) LTD v BRITISH STEEL CORP & ORS 1985 3 AER 52 1986 CH 246 1985 2 WLR 908

HENDERSON v HENDERSON 1843 3 HARE 100 67 ER 313

BARRY v BUCKLEY 1981 IR 306 1981/9/1485

CARROLL v RYAN & ORS 2003 1 IR 309 2003 2 ILRM 1 2003/8/1753

MCCAULEY v MCDERMOTT 1997 2 ILRM 486 1997/10/3253

REICHEL v MAGRATH 1889 14 APP CAS 665

BELTON v CARLOW CO COUNCIL 1997 1 IR 172 1997 2 ILRM 405 1998/2/397

BLAIR & ORS v CURRAN & ORS 1939-40 62 CLR 464 1939 HCA 23

PRACTICE AND PROCEDURE

Strike out

Claims of plaintiff bound to fail - Principles to be applied -Whether established that claims of plaintiff bound to fail - Whether plaintiff had arguable case - Whether claims frivolous and vexatious - Solicitor undertaking - Alleged breach of undertaking - Alleged misrepresentation and misstatement - No loss demonstrated - Priority of interests of receiver over judgment mortgagee - Res judicata - Issue estoppel - Whether matters determined in earlier proceedings -Henderson v Henderson [1843] 3 Hare 100 applied; Carroll v Ryan [2003] 1 IR 309, McCauley v McDermot [1997] 2 ILRM 486, Belton v Carlow County Council [1997] 1 IR 172 and Rolled Steel Products (Holdings) Ltd v British Steel Corp [1985] 3 All ER 52 considered - Relief granted (2005/2463P - Clarke J - 31/7/2009) [2009] IEHC 454

Cunningham v Springside Properties Ltd (In receivership)

1 Mr. Justice Clarke delivered on the 31st July, 2009

1. Introduction

2 2 1.1 This case makes up part of a series of linked cases taken by the plaintiff ("Mr. Cunningham") and companies controlled by him against the third named defendant ("First Active") and a receiver appointed to many of those companies, Ray Jackson ("Mr. Jackson"). A summary of the facts relevant to the history of events between the parties was set out in a judgment dismissing the majority of the claims against First Active and Mr. Jackson (the "Moorview Proceedings") on 6 ^th March, 2009( Moorview Developments & Ors v. First Active plc. & Ors [2009] IEHC 214). At a subsequent case management hearing on 31 ^st March, 2009, Counsel for Mr. Cunningham identified two issues that remained in existence in these proceedings, being the issue of priorities as between First Active debentures and the interests of Mr. Cunningham in relation to certain properties and assets of the first named defendant ("Springside"), and secondly, issues arising out of an alleged breach of an undertaking given by Arthur Cox to this Court.

3 3 1.2 Each of the defendants have, in that context, brought an application to strike out Mr. Cunningham's claims as being bound to fail.

4 4 1.3 Having heard the applications of each of the defendants and taken time to consider the matters raised, I indicated to the parties that I had concluded that each of the defendant's applications should succeed and that I would subsequently give detailed reasons for that finding. This judgment is directed to those reasons. However, for a proper understanding of the issues which arose before me it is necessary to turn first to the factual background to those issues, with particular reference to the facts that are relevant to the undertakings which are at the heart of the proceedings against Springside and Arthur Cox, together with the facts relevant to the priorities issue that gives rise to the dispute as against First Active.

2. Factual Background

5 2 2.1 On 3 ^rd November, 2003, Mr. Jackson was appointed receiver and manager of all the undertakings, property and assets of Springside, a company of which Mr. Cunningham was a shareholder and a director. The appointment was made pursuant to mortgage debentures between Springside and First Active dated 6 ^th September, 1999 and 2 ^nd November, 2000. On 1 ^st September, 2004, Mr. Cunningham obtained a default judgment against Springside and on 15 ^th September, 2004, Mr. Cunningham registered that judgment as a judgment mortgage against certain properties owned by Springside, the relevant properties being Units 13 and 14 Drogheda Mall (the "Properties").

6 3 2.2 On 27 ^th October, 2004, Mr. Cunningham issued a special summons seeking a well charging order, the taking of an account, an order for vacant possession and an order for sale of the Properties. In May 2005, Mr. Cunningham's well charging application in respect of the Properties came before the Court. The matter was heard by Dunne J. in this Court on 9 ^th May, 2005 and a well charging order was granted. However, Dunne J. declined to make an order for sale, because of the fact that Mr. Jackson was in the process of marketing the Properties and on the basis that it was argued that the interests of Mr. Jackson as receiver had priority over those of Mr. Cunningham as judgment mortgagee.

a) Undertaking given by Arthur Cox, Mr. Jackson and First Active in relation to the Proceeds of sale of the Properties.

7 2 2.3 During the course of the hearing before Dunne J, Arthur Cox instructed Counsel to give an undertaking to the Court that upon the completion of a sale by Mr. Jackson, Mr. Cunningham would be notified of such completion and the relevant proceeds of sale would be held for a further 14 day period. It is also said by Arthur Cox that the Court was informed at that time that there was the possibility of a sale by First Active as mortgagee in possession and that the same undertaking would apply in that event. However this was not expressly reflected in the Order made by the Court, which stated as follows:-

"And the solicitor for the Defendant undertaking that any sums realised in the sale of the lands comprised in the second Schedule hereto will not be discharged without prior notification to the Plaintiffs and such monies be retained for fourteen days by the Defendants from the date of such notification."

8 In the context of the Order the reference to the defendant is, strictly speaking, a reference to Springside although it is not disputed but that the necessary instructions came from Mr. Jackson in his capacity as receiver of Springside.

9 3 2.4 In substance the process identified by Dunne J. in her order was that Mr. Cunningham was to be notified of a sale of the Properties and, in effect, given 14 days in which to bring any proceedings or applications that might be considered appropriate in the light of the sale concerned. Mr. Cunningham stated that the purpose of this undertaking was to allow him the opportunity to apply to the Court in respect of the proceeds of sale which he alleged were payable to him in priority to any other person. Between 9 ^th May, 2005 and 27 ^th July, 2005, correspondence passed between Arthur Cox and the solicitors for Mr. Cunningham in which it was stated that there was a possibility that First Active might sell as mortgagee in possession and that, in such an event, the undertaking given to the Court was that a period of 14 days notice would be given to allow Mr. Cunningham to a bring any fresh application that he might wish to bring.

10 4 2.5 In a letter of 13 ^th June, 2005 from Arthur Cox to the solicitors for Mr. Cunningham the final sentence states:-

"I confirm, as indicated to the Court, that in the event of a sale by the bank as mortgagee in possession the sale proceeds will be held by this office in accordance with the spirit of our undertaking as the sale had been effected by the defendant."

11 There is nothing in that correspondence which disputes, on behalf of Mr. Cunningham, the description of what happened in court or the characterisation of the status of the undertaking in the event of a sale by First Active as mortgagee in possession.

12 5 2.6 On 6 ^th December, 2005 Mr. Jackson, as receiver, entered into a contract for the sale of the Properties to a James McCartan, as purchaser. The relevant contract expressly provided, at special conditions 5 and 6, for a deed of transfer to be supplied either by Springside (acting through the receiver) or by First Active, selling as mortgagee in possession. A sale as mortgagee in possession was thought possibly to be required, in order to sell clear of subsequent encumbrances.

13 6 2.7 On 18 ^th December, 2005, First Active went into possession as mortgagee and agreed to sell the Properties in that capacity so that the proceeds of sale would go directly to First Active, or more accurately would go to Arthur Cox, in the capacity as the solicitors who acted for First Active. It was, of course, in those circumstances, First Active who would execute and deliver the relevant assurance as mortgagees in possession.

14 7 2.8 Subsequently, on 1 ^st June, 2006, the sale to Mr McCartan was closed by Arthur Cox, acting for First Active. In accordance, it is said, with the Order of the Court of 9 ^th May 2005, notification was given to Mr. Cunningham by Arthur Cox that the sale had closed and that the proceeds were being held for a 14 day period. This was done by a letter, also of the 1 ^st June, 2006. The letter concerned refers to the Court Order of 9 ^th May, 2006 and states as follows:-

"As you are aware, on that occasion, counsel for Mr. Jackson undertook to the Court that as soon as the sale of the two units relevant to your proceedings was completed you would be notified and further that the sale proceeds would be held for a period of 14 days. In addition counsel for Mr. Jackson indicated that the sale might be concluded by First Active as mortgagee in possession and this is what has now transpired."

15 8 2.9 The relevant 14 day period was...