Doyle v Bergin (No 2)

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 20 December 2011
• Neutral Citation: [2011] IEHC 518
• Date: 20 December 2011
• Court: High Court
• Docket Number: [2010 No. 162COS]

Doyle v Bergin

IN THE MATTER OF THE COMPANIES ACTS 1963 - 2009

AND

IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT 1963

AND

IN THE MATTER OF SKYTOURS TRAVEL LIMITED

BETWEEN

MARK EDMOND DOYLE

PETITIONER

AND

JOHN BERGIN

RESPONDENT

[2011] IEHC 518

[No. 162 COS/2010]

THE HIGH COURT

PRACTICE AND PROCEDURE

Costs

Company law - Minority - Oppression - Calderbank letter - Offer made without prejudice save as to costs - Appropriate test in determining whether Calderbank offer effective - Whether petitioner won as matter of substance and reality - Petition claiming oppression and disregard of interests - Whether petitioner entitled to costs associated with unsuccessful arguments - Whether approach of petitioner affected overall costs of litigation to material extent - Veolia Water UK plc v Fingal County Council (No 2) [2006] IEHC 240, [2007] 2 IR 81 followed; Roache v Newsgroup Newspapers Ltd. [1998] EMLR 161 considered - Rules of the Superior Courts 1986 (SI 15/1986), O 99, r 1(A) - Companies Act 1963 (No 33), s 205 - Costs of proceedings except valuation costs awarded to petitioner (2010/162Cos - LaffoyJ - 2-/12/2011) [2011] IEHC 518

Re Skytours Ltd: Doyle v Bergin

COMPANIES ACT 1963 S205

VEOLIA WATER UK PLC v FINGAL CO COUNCIL NO 2 2007 2 IR 81

ELLIOT CONSTRUCTION LTD v IRISH ASPHALT LTD UNREP CHARLETON 14.7.2011 2011 IEHC 338

MCALEENAN v AIG EUROPE LTD UNREP FINLAY-GEOGHEGAN 16.7.2010 2010/30/7665 2010 IEHC 279

RSC O.99 r1

RULES OF SUPERIOR COURT (COSTS) 2008 SI 12/2008 r 1A

ROACHE v NEWSGROUP LTD 1992 CAT 1120

COMPANIES ACT 1963 S205(3)

RULES OF SUPERIOR COURT (COSTS) 2008 SI 12/2008 r1A(1)(B)

1 Judgment of Miss Justice Laffoy delivered on 20th day of December, 2011.

The law

2 1. On 29 ^th July, 2011 I delivered judgment on the substantive application in these proceedings. I granted the reliefs sought by the petitioner against the respondent, namely:

3 (a) a declaration in the terms sought by the petitioner that the affairs of Skytours Travel Limited (the Company) were being conducted in a manner oppressive to the petitioner and in disregard of his interests; and

4 (b) an order directing the respondent to purchase the shareholding of the petitioner in the Company for cash in the sum of €58,769.74 by 16 ^th September, 2011.

5 This judgment deals with where liability for the costs of the proceedings should lie. Although the petitioner was successful in the proceedings, the respondent has resisted the petitioner's application for all of the costs against the respondent and has contended that the respondent should be awarded certain costs against the petitioner. Broadly speaking, counsel for the respondent sought to support that position on two grounds.

First ground

6 2. The first ground was based on the proposition that the petitioner had not succeeded on all issues. Therefore, it was contended that the Court should adopt the approach adopted by the High Court (Clarke J.) in Veolia Water UK plc v. Fingal County Council (No. 2) [2007] 2 I.R. 81, which was subsequently considered by Charleton J. in James Elliot Construction Ltd. v. Irish Asphalt Ltd. [2011] IEHC 338 and applied by Finlay Geoghegan J. in McAleenan v. AIG (Europe) Ltd. [2010] IEHC 279.

7 3. In the Veolia case, having stated that, where the winning party has not succeeded on all issues which were argued before the Court, ordinarily, the Court should consider whether it is reasonable to assume that the costs of the parties in pursuing the set of issues before the Court were increased by virtue of the successful party having raised additional issues upon which it was not successful, Clarke J. continued (at para. 2.9):

"Where the court is so satisfied, then the court should attempt, as best it can, to reflect that fact in its order for costs. Where the matter before the court involved oral evidence and where the evidence of certain witnesses was directed solely towards an issue upon which the party who was, in the overall sense, successful, failed, then it seems to me that, ordinarily, the court should disallow any costs attributable to such witnesses and, indeed, should provide, by way of set off, for the recovery by the unsuccessful party of the costs attributable to any witnesses which it was forced to call in respect of the same issue. A similar approach should apply to any discrete item of expenditure incurred solely in respect of an issue upon which the otherwise successful party failed."

8 Later (at para. 2.14) Clarke J. qualified the application of such approach, stating:

"It seems to me that an approach along those lines is appropriate in more complex litigation involving a variety of issues even where, in the overall sense, one party may be said to have succeeded and the other party may be said to have failed. Before leaving the general principle I should, however, add that it seems to me that an approach such as ... I propose applying in this case, may not be appropriate in more straightforward litigation, notwithstanding the fact that some element of a plaintiff's case or a defendant's defence may not have succeeded. The fact that such an additional issue was raised should only affect costs where the raising of the issue could, reasonably, be said to have effected the overall costs of the litigation to a material extent."

9 4. It was contended on behalf of the respondent that the petitioner was not successful to the extent that, in relation to the valuation by the Court of the petitioner's shareholding, the arguments advanced by the petitioner in relation to -

10 (a) the proper date at which the valuation should be carried out, and

11 (b) whether the value of the shares should be discounted or not,

12 were rejected by the Court. While that is true, I am absolutely satisfied that the arguments advanced and the approach adopted on behalf of the petitioner could not be said to have affected the overall costs of the litigation to a material extent for the following reasons. Following the opening of the case by counsel for the petitioner, the substantive application was at hearing for three days. The principal witnesses were the petitioner and the respondent. Apart from approximately one half of one day which was taken up with the evidence of the two accountants, one on each side, who testified, all of the Court time was taken up with the evidence of the petitioner and the respondent. That was primarily due to the fact that, as counsel for the petitioner put it, the respondent contested liability "tooth and claw". Accordingly, having regard to what actually occurred at the hearing, I consider that it would be wholly inappropriate to conclude that the presentation of the legal arguments advanced on behalf of the petitioner on the issues in relation to the valuation of the petitioner's shareholding, which issues had not been previously addressed in any authority in this jurisdiction, unnecessarily elongated the proceedings, although it left the Court with difficult issues to decide.

Second ground

13 5. The other ground advanced on behalf of the respondent was based on the fact that the solicitors for the respondent issued what was described as a " Calder bank letter" to the solicitors for the petitioner on 18 ^th February, 2011. That letter, which was headed "WITHOUT PREJUDICE SAVE AS TO THE ISSUE OF COSTS" stated as follows:

"In the interests of minimising the costs in this case we have been instructed by our client to formally offer the sum of seventy five thousand and one euro (€75,001) in return for the purchase of your client's shareholding of 1580 in [the Company] and in return for your client striking out the claim currently before the High Court bearing record number 162COS/2010."

14 The sum of €75,000 is to be discharged on the following basis:-

15 1. The sum of fifteen thousand euro (€15,001) ( sic) to be discharged within four weeks of the date of acceptance of this letter:

16 2. The sum of sixty thousand euro (€60,000) to be discharged in monthly installments of €10,000 per month over the course of five months. The installment payments will commence eight weeks following the acceptance of this letter.

17 In the event that the within sum is accepted, our client offers your client's reasonable legal costs arising directly from the proceedings up to the date of this offer, provided such offer is accepted within twenty one days of the date of this letter, your client's costs to be taxed in default of agreement."

18 6. The response to that offer was contained in the petitioner's solicitors' letter of 24 ^th February, 2011, in which the offer was rejected on the following basis:

"The amount offered is unacceptable and furthermore the proposal of phased payments in unacceptable."

19 We also believe that the proposed payment plan is an affection of impecuniosity.

20 This matter is not an...