Devlin v O'Driscoll

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian O'Moore
• Judgment Date: 30 November 2020
• Neutral Citation: [2020] IEHC 630
• Date: 30 November 2020
• Court: High Court
• Docket Number: [2020/287 COS]

BETWEEN

KEVIN DEVLIN

PLAINTIFF

AND

JOHN O'DRISCOLL

APPLICANT

AND

SGC GLOBAL ADVANCED TECHNOLOGIES LTD

RESPONDENT

[2020] IEHC 630

Brian O'Moore

[2020/287 COS]

[2020/1061 P]

THE HIGH COURT

Oppression proceedings – Stay – Plenary proceedings – Respondents seeking to stay oppression proceedings until the determination of plenary proceedings – Whether the applicant could maintain the oppression proceedings without having his name on the respondent’s register of members

Facts: The applicant, Mr O'Driscoll, in proceedings brought pursuant to the provisions of s. 212 of the Companies Act 2014, claimed that the affairs of two companies were being conducted in a manner oppressive to him or in disregard of his interests as a member of SGC Global Advanced Technologies Ltd (SGC). Mr O’Driscoll was not registered as a member of SGC. While he asserted that he was entitled to be registered as a member of SGC, and had (in other proceedings) sought an order pursuant to s. 173 of the 2014 Act requiring SGC to rectify its register to reflect his claimed ownership of shares in that company, it was common case that as things stood Mr O’Driscoll was not a member of the company. The respondents to the s. 212 proceedings, Mr Devlin and SGC, therefore brought a motion seeking to stay the action until the other proceedings had been determined. Those other proceedings (the plenary proceedings) were the ones in which Mr O’Driscoll made his claim under s. 173. He made this claim by way of counterclaim in partial response to the plenary summons issued on behalf of Mr Devlin. That writ sought specific performance by Mr O’Driscoll of an alleged agreement between the two men by which Mr O’Driscoll sold his interest in SGC to Mr Devlin.

Held by the High Court (O’Moore J) that it could not accept the submission on behalf of Mr O’Driscoll that s. 212 allows a person to initiate and prosecute an action under the section without being on the register of members provided that, at some time before or in the course of the final judgment in the claim, the applicant is found to be entitled to an order placing him or her on the register. Looking generally at this submission, O’Moore J noted that s. 212 (1) allows a member (and only a member) to apply for an order under s. 212; the making of this application, through the initiation of proceedings, can only properly be done by someone who qualifies as a member through registration. Considering this submission more narrowly, O’Moore J noted that Mr O’Driscoll’s claim for oppression did not seek any order rectifying the register of members so as to include him; in itself, this correctly recognises that the claim of the applicant to be acknowledged as a member of the company is not to be determined in an application under s. 212. O’Moore J held that Mr O’Driscoll should have established his standing as a person on the register of members separately and independently from the oppression proceedings and without having his name on the register of members, Mr O’Driscoll could not “maintain” these proceedings in the ordinary sense of that word; he could not support or continue them.

O’Moore J found in favour of SGC and Mr Devlin, and made an order staying the oppression proceedings until the determination of the plenary proceedings.

Stay granted.

JUDGMENT of Mr. Justice Brian O'Moore delivered on the 30th day of November, 2020.

1 In these proceedings, brought pursuant to the provisions of section 212 of the Companies Act 2014, the Applicant (Mr. O'Driscoll) claims that the affairs of two companies are being conducted in a manner oppressive to him or in disregard of his interests as a member of SGC Global Advanced Technologies Ltd. (SGC).

2 There is one immediate problem with this claim. Mr. O'Driscoll is not currently registered as a member of SGC. While he asserts that he is entitled to be registered as a member of SGC, and has (in other proceedings) sought an Order pursuant to section 173 of the 2014 Act requiring SGC to rectify its register to reflect his claimed ownership of shares in that company, it is common case that as things stand Mr. O'Driscoll is not a member of the company.

3 The Respondents to the section 212 proceedings, Mr. Devlin and SGC, therefore brought a motion seeking to stay this action until the other proceedings have been determined. These other proceedings (‘the plenary proceedings’) are the ones in which Mr. O'Driscoll makes his claim under section 173. He makes this claim by way of counterclaim in partial response to the Plenary Summons issued on behalf of Mr. Devlin. That writ seeks specific performance by Mr. O'Driscoll of an alleged agreement between the two men by which Mr. O'Driscoll sold his interest in SGC to Mr. Devlin.

4 At the risk of oversimplifying matters, the Respondents say that the section 212 proceedings are doomed to fail as things stand since Mr. O'Driscoll is not registered as a member of SGC. They say that only a registered member of a company can maintain such proceedings. The Respondents argue that they are entitled to an Order striking out this claim at this time, but do not seek such relief as (i) Mr. O'Driscoll would be less distressed by a stay than by a strike out and (ii) the Court would be more comfortable granting a stay than making an order striking out the claim. Whatever may be the truth of these alternative altruistic motives on Mr. Devlin's part, the stay sought by Mr. Devlin properly reflects the fact that it is quite possible that Mr. O'Driscoll may eventually obtain an order that he be registered as a member of SGC and (if he does) it is a better use of time and resources that he then resume prosecution of the current application under section 212 rather than be forced to start similar proceedings anew.

5 Mr. O'Driscoll initially hotly disputed the stay motion. He swore an affidavit on the 23rd of October 2020 stating that it was ‘neither impermissible nor unusual’ for section 212 proceedings to be coupled with separate proceedings which would establish the entitlement of the ‘claimant for oppression’ to be on the register of shareholders. He also gave evidence that the value of his interest in SGC, his alleged exclusion from SGC, and Mr. Devlin's alleged knowledge that he was attempting to obtain Mr. O'Driscoll's interest in SGC ‘at a massive undervalue’ were all matters which would be addressed in the plenary proceedings and in the section 212 proceedings. His lawyers extrapolated from these averments that it would be inefficient ‘in terms of time and costs’ for the stay to be granted as this would result in two separate trials, with significant duplication of evidence.

6 During the course of the hearing of the stay motion, it became clear that both...