First Active Plc v Cunningham

• Jurisdiction: Ireland
• Judge: Mr. Justice William M. McKechnie
• Judgment Date: 22 February 2018
• Neutral Citation: [2018] IESC 11
• Docket Number: [S.C. No. 308 of 2010],[Appeal No. 308/2010]
• Court: Supreme Court
• Date: 22 February 2018

Between /

FIRST ACTIVE PLC

Plaintiff/Respondent

-and-

BRIAN CUNNINGHAM

Defendant/Appellant

[2018] IESC 11

McKechnie J.

McKechnie J.

MacMenamin J.

Dunne J.

[Appeal No. 308/2010]

[High Court Record No. 2005/272 S]

THE SUPREME COURT

Transfer of business – Awarding of interest – Res judicata – Appellant seeking to appeal against High Court judgment – Whether High Court had right to award Courts Act interest

Facts: The High Court (Clarke J), on the 9th July, 2010, found that the respondent, First Active plc, had made out its claim on the guarantee against the appellant, Mr Cunningham, and granted judgment in the sum of €1,900,000 in favour of First Active. By a subsequent order he awarded interest pursuant to the Courts Act in the sum of €824,548.20. Clarke J's judgment also dealt with a counterclaim by First Active against certain of the companies which Mr Cunningham effectively controlled, either as a director, shareholder or otherwise (the Cunningham Group), related to monies alleged to be due by those companies arising out of loans advanced to them by First Active; this issue was also decided in favour of the respondent. The appellant appealed to the Supreme Court, raising three issues. The first concerned the transfer in February, 2010 of part of the banking business of First Active plc to Ulster Bank Ireland Ltd pursuant to the Central Bank Act 1971; it was claimed that the net effect of the resulting transfer of rights and the respondent's failure to disclose same was that the judgment obtained in this case ought to be set aside, because the party that obtained said judgment had no interest in the matter. The second related to the awarding by the High Court of Courts Act interest, pursuant to s. 22 of the Courts Act 1981, backdated to the date of initiation of the proceedings. The appellant argued that the Court had no right to award said interest, and in the alternative, that if the Court did have such a right, it should not have exercised its discretion to do so in this case. The third issue concerned res judicata and/or issue estoppel. The appellant argued that at the hearing of the guarantee proceedings, he was precluded from raising matters that were the subject of a non-suit in the main proceedings. He contended that he never had a chance to challenge certain evidence of the respondent and that as a non-suit does not prevent the same issue from being litigated again, he should now be afforded that chance. Only one of those issues, that relating to the awarding of Courts Act interest, arose out of the judgment and resulting orders under appeal. As such the respondent contested the appellant's right to argue the other listed matters on this appeal.

Held by McKechnie J that, concerning the first issue, he would substitute the name of Ulster Bank for First Active. McKechnie J held that the failure to make this procedural amendment prior to this stage did not have the consequences claimed by the appellant. Regarding the second issue, McKechnie J held that the sum of €824,548.20 was not arrived at by chance; such was simply the amount that resulted when the statutory interest rate was applied from the date of the initiation of the proceedings, something which the trial judge was well within his rights to do. McKechnie J therefore could not accept that it in any way constituted an unreasonable windfall for the respondent. Concerning the third issue, McKechnie J held that nothing urged upon the Court by the appellant in any way undermined or weakened the judge's comprehensive analysis of the issue. He was entirely satisfied that the conclusion of Clarke J on this matter was unimpeachable and, in circumstances where it had not seriously been put into dispute, did not require to be revisited.

McKechnie J held that the appeal should be dismissed.

Appeal dismissed.

JUDGMENT of Mr. Justice William M. McKechnie delivered on the 22nd day of February, 2018

Introduction

1 This appeal raises three distinct and relatively net points for determination by this Court. The first relates to the transfer of the business of First Active plc to Ulster Bank Ireland Limited, and the effect of that transfer on these proceedings; the second arises out of the awarding of Courts Act interest by the trial judge; and the third concerns the issue of a non-suit/direction and the principle of res judicata. Though the issues on the appeal can be simply stated, the lengthy litigation between the parties to this appeal has been anything but straightforward. In order to contextualise the submissions made, it is necessary first to set out a brief overview of the history of these complex proceedings. Each of the three issues raised will then be dealt with in turn.

Background and Procedural History

2 The within appeal arises out of a series of proceedings brought by Mr Brian Cunningham (referred to in this judgment as 'the appellant') and companies which he effectively controlled, either as a director, shareholder or otherwise ('the Cunningham Group'), against a number of parties, including First Active plc ('the respondent'), Mr Ray Jackson, the receiver appointed to various Cunningham Group companies, and Mr Bernard Duffy, who purchased certain property formerly owned by the Cunningham Group from First Active as mortgagee in possession. The proceedings raise a multiplicity of issues and claims, but in short they have their origin in a banking relationship in the course of which the respondent advanced money to the Cunningham Group over a period of time, principally for the acquisition and development of certain properties. This relationship deteriorated over time, resulting in the appointment of Mr Jackson as receiver in 2003. The Cunningham Group companies are grossly insolvent.

The Main Proceedings

3 It would unduly burden the reader if I were to set out comprehensively the entire procedural history of these cases. It will suffice at this juncture to say that the main proceedings were at trial before Clarke J. (as he then was) in the High Court for 66 days. At the end of the Cunningham Group's evidence, First Active applied for a non-suit/direction in respect of all of the claims; I say 'non-suit/direction' because Mr Cunningham submits to the Court that there is a distinction of substance between the two procedures which is of direct relevance to the third point of appeal (see paras. 65-84, infra). The Court allowed this application, subject to some limited exceptions, with the learned judge's reasons being contained in a comprehensive written judgment delivered on the 6th March, 2009 ( Moorview Developments Ltd & ors v. First Active Plc & ors [2009] I.E.H.C. 214) ('the main proceedings').

4 Much more litigation was to follow. The respondent obtained judgment against certain of the Cunningham Group companies on foot of a counterclaim, and also a judgment against Mr Cunningham personally on foot of his capped personal guarantee for the debts of the Companies. The present appeal, and the issues outlined in para. 1, supra, arise out of those counterclaim and guarantee proceedings (referred to in this judgment as 'the guarantee proceedings'), the details of which are set out at paras. 7-8, infra.

5 In a separate judgment delivered on the 5th February, 2010 ( Moorview Developments Ltd & ors v. First Active Plc & ors [2010] I.E.H.C. 34), Clarke J. had determined that Mr Cunningham and the Cunningham Group were not entitled to raise, during the guarantee proceedings, those matters which had already been determined in the main proceedings; the learned judge held that such matters were res judicata and that the appellant could not therefore rely on them.

6 The appellant and the Cunningham Group brought numerous appeals against these decisions. Security for costs was granted against the appellants in respect of all bar one of the appeals, including the res judicata appeal. Such security was paid in respect of the present appeal only, and thus all others have been dismissed. No order for security for costs was made in respect of Mr Cunningham's appeal against the subsequent decision to make him personally liable to the respondent for the costs liability of the Cunningham Group in respect of the proceedings, which appeal was heard together with the instant appeal and will be the subject of a separate judgment.

Judgment under Appeal

7 The instant appeal is against a judgment of Clarke J. dated the 9th July, 2010, ( Moorview Developments Ltd & ors v. First Active Plc & ors [2010] I.E.H.C. 275, referred to as 'the Guarantee Judgment'), and consequential rulings and orders dated the 29th and 30th July, 2010. Incidentally this was the thirteenth judgment arising out of the collapse of the Cunningham Group, which gives some flavour of the breadth and complexity of the procedural history to date. The learned judge found that the respondent had made out its claim on the guarantee against the appellant, and granted judgment in the sum of €1,900,000 in favour of First Active. By a subsequent order he awarded interest pursuant to the Courts Act in the sum of €824,548.20. The judgment also dealt with a counterclaim by First Active against certain of the Cunningham Group companies related to monies alleged to be due by those companies arising out of loans advanced to them by First Active; this issue was also decided in favour of the respondent.

8 Curiously, as explored below, none of the grounds of appeal before this Court arise directly out of the written judgment itself, although the point relating to Courts Act interest flows from a subsequent and related ex tempore judgment. The judgment of the 9th July, 2010, dealt in the main with the adequacy of the evidence presented on behalf of First Active as to the indebtedness of the companies in the Cunningham Group, with an issue regarding a typographical error in respect of one of the companies named in the relevant guarantee, and with...