Darjojn Developments Ltd ((in Liquidation)) v Irish Bank Resolution Corporation Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 03 October 2016
• Neutral Citation: [2016] IEHC 535
• Docket Number: [Record No. 2013/907P]
• Court: High Court
• Date: 03 October 2016

BETWEEN

DARJOHN DEVELOPMENTS LIMITED (In Liquidation)

PLAINTIFF

AND

IRISH BANK RESOLUTION CORPORATION LIMITED (formerly Anglo Irish Bank Corporation Limited)

And

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

DEFENDANTS

[2016] IEHC 535

Noonan J.

[Record No. 2013/907P]

THE HIGH COURT

Practice & Procedures – O.8 of the Rules of the Superior Courts – Service of summons – Period of limitation – Good reason for the renewal of the summons – Balance of justice

Facts: The plaintiff sought an order under O.8 of the Rules of the Superior Courts to renew the plenary summons and to lift the stay on the proceedings against the first named defendant automatically imposed by s.6 of the Irish Bank Resolution Corporation Act 2013. The plaintiff contended that the liquidator did not pursue the proceedings informed by the belief that it would not be a worthwhile exercise. The plaintiff informed that later it had become apparent that a fund might be available to meet the claims against the first named defendant and thus, it became suitable for the liquidator to follow the action again. The issue arose whether the plaintiff had advanced a good reason for the renewal of the summons.

Mr. Justice Noonan refused the application of the plaintiff. The Court found that the negligence to serve the summons had been an intentional decision based on the belief that the exercise lacked usefulness and thus, the plaintiff had not advanced a good reason for the renewal of the summons. The Court, in line with the decision in the case of Moloney v. Lacey Building and Civil Engineering Limited [2010] 4 I.R. 417, held that the statute of limitation entitled a defendant that he would not be exposed to a particular claim after a certain period and thus, for the renewal of the summons, balance of justice must be assessed. The Court held that it would be the duty of the plaintiff to pursue the proceedings punctually and to proceed with the case with speed.

JUDGMENT of Mr. Justice Noonan delivered on the 3rd day of October, 2016

1 This is an application by the plaintiff for an order pursuant to Order 8 of the Rules of the Superior Courts renewing the plenary summons herein and for an order lifting the stay on proceedings against the first defendant (‘IBRC’) automatically imposed by s. 6 of the Irish Bank Resolution Corporation Act 2013.

Background

2 The plaintiff is a company which was involved in property development and construction. On 20th December, 2007, a cheque was drawn by the plaintiff's solicitors on their clients' account with the second defendant (‘BOI’) in favour of the plaintiff in the sum of €136,206.09. The cheque was crossed and endorsed ‘and co not negotiable’. The cheque was presented for payment on 24th December, 2007, when it appears to have been altered by the insertion of the payee as Anglo Irish Bank Corporation, IBRC's former name, in lieu of the plaintiff. It is alleged that one of the plaintiff's directors was indebted to Anglo Irish Bank Corporation and the cheque was purportedly altered for his benefit. The cheque was paid by the BOI to Anglo Irish Bank Corporation. The plaintiff alleges that the defendants thus wrongly converted the cheque without the plaintiff's authority resulting in the loss of its value to the plaintiff.

3 On 14th December, 2009, the court appointed a liquidator to the plaintiff pursuant to a petition brought by the Revenue. On 19th November, 2012, the liquidator obtained the leave of the court to bring the within proceedings. A plenary summons was issued on 30th January, 2013, claiming damages for negligence, breach of duty (including statutory duty), breach of contract and conversion. The summons was not served on either defendant.

4 This application was initially brought ex parte when I directed that it should be made on notice to the defendants. The application is grounded upon an affidavit of Victor Clarke, the plaintiff's solicitor. He avers that shortly after the summons was issued, a special liquidator was appointed on 7th February, 2013, to IBRC and s. 6 of the Irish Bank Resolution Corporation Act 2013 had the effect of causing an immediate stay to be placed on the proceedings. He avers that this gave rise to uncertainty as to whether the proceedings were automatically stayed although subsequent case law established that where proceedings were already in being prior to the passing of the act, an application could be made to the court to lift the stay. This was the effect of the judgment of this court (Ryan J. as he then was) in Quinn v. IBRC which was delivered on 15th March, 2013, just over a month later.

5 In his affidavit at para. 8, Mr. Clarke avers:

‘[8.] I say and believe that although case law subsequently established that proceedings in being against the second named defendant could proceed following application to this Honourable Court the liquidation then became focused on numerous other avenues including potential liquidation seeking funds in excess of €1 million. In addition I say and believe that the liquidator became unwell for a significant period of time causing further delay and an inability to obtain instructions’.

6 This affidavit was responded to on behalf of IBRC by one of the special liquidators, Mr. Kieran Wallace. In his affidavit, Mr. Wallace says that Mr. Clarke appears to suggest that a decision was made by the plaintiff not to pursue this case while other matters were in train. He also notes that the averment in relation to the alleged ill health of the liquidator is vague and unparticularised.

7 Mr. Clarke responded to this in a second affidavit. This affidavit, rather surprisingly, makes no reference to the issue of the liquidator's illness despite the challenge raised in Mr. Wallace's affidavit. Moreover, Mr. Clarke says that advice was received in March 2013 that it would be necessary to bring a motion to lift the stay and instructions were sought from the liquidator. The liquidator's instructions apparently were that there was little to be gained from pursuing the proceedings when the best possible outcome for the plaintiff against IBRC was that it would become an unsecured creditor.

8 In effect therefore, Mr. Clarke is saying that the liquidator decided not to pursue the proceedings because there was no point. However, Mr. Clarke then goes on to say that on a subsequent unspecified date, it became apparent that a fund might be available to meet claims against IBRC and thus it became appropriate for...