Grace Healthcare (Holdings) Ireland Ltd v Brady and Another
| Jurisdiction | Ireland |
| Judge | Ms Justice Bolger |
| Judgment Date | 15 September 2023 |
| Neutral Citation | [2023] IEHC 523 |
| Court | High Court |
| Docket Number | [Record No. 2020 160 S] |
[2023] IEHC 523
[Record No. 2020 160 S]
THE HIGH COURT
Counsel for the plaintiff: Marcus Dowling SC, Ian Boyle Harper BL
Counsel for the defendant: Michael Howard SC, Ross Aylward BL
JUDGMENT of Ms Justice Bolger delivered on the 15 th day of September 2023
. This is the plaintiffs' application to strike out parts of the defendants' counterclaim. For the reasons set out below, I refuse the application. I refer to the defendant/counterclaim plaintiff as the defendant, and the plaintiffs/counterclaim defendants as the plaintiffs.
. The plaintiffs sold share capital in a company that owned a nursing home to the defendants. The defendants retained the amount of €500,000 pending finalisation of the completion accounts. Any dispute on those accounts were to be referred to an independent expert whose determination was to be final and binding. Clause 5 of the sale agreement required the defendants to notify the plaintiffs of any warranty claim by 17 October 2020 and to issue and serve any proceedings by 21 May 2021.
. These proceedings were commenced by Summary Summons issued on 30 June 2020. The plaintiffs sought judgment in the sum of €500,000 on foot a written sale and purchase agreement (the “Agreement”). It is accepted by the defendant that it has no bona fide defence to that claim and the defendant agreed to lodge the monies claimed into Court on that basis on 12 July 2021. The defendants then delivered their counterclaim on 26 July 2021 in which they advanced an indemnity claim and a warranty claims. The plaintiff seeks to have that aspect of the counterclaim struck out at this interlocutory stage pursuant to O.19 r.2 and O.21 r.14 and/or the inherent jurisdiction of the court in reliance on clause 5 of the Agreement and on the basis that the claim is a collateral attack on, and undermining of, the binding determination of the agreed expert.
. A chronology has been agreed by the parties, and same is attached to this judgment as an appendix.
. The court's jurisdiction to exclude a counterclaim is a discretionary one as confirmed by Barr J. in RE M. v. Anton Lopatin [1995] 3 I.R. 503.
. Order 19, rule 2 RSC provides that:
“ A defendant in an action may set-off, or set up by way of counterclaim against the claims of the plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and such set-off or counterclaim shall have the same effect as a cross action, so as to enable the Court to pronounce a final judgment in the same action, both on the original and on the cross claim. But the Court may, on the application of the plaintiff before trial, if in the opinion of the Court such set-off or counterclaim cannot be conveniently disposed of in the pending action, or ought not to be allowed, refuse permission to the defendant to avail himself thereof.”
. O. 19, r. 2 imposes the burden of proof on the plaintiff. Mr Howard SC for the defendant says this is not discharged if he can establish a plausible case on the basis of the material before the court. Clause 5 of the Agreement, on which the plaintiff relies, does not resolve the convenience requirement of O. 19, r. 2. It does, however, fit around whether the counterclaim ought not to be allowed. The defendants are, in principle, bound by what they signed but whether or not they ought to be allowed to pursue the warranty claim that the plaintiffs says was withdrawn, requires consideration of the estoppel/unconscionable arguments made by the defendant and, in particular, the duty to speak up, for which Mr Howard SC relies on the decision of the UK Court of Appeal in Ted Baker Plc v. AXA Insurance UK Plc [2017] EWCA Civ 4097 which identified the basis for a duty to speak out, in particular, from paras. 72 to 77 of their judgment. Paragraphs 72 and 73 merit quotation:-
“72. In relation to commercial contracts generally there is authority supporting a duty to speak in certain circumstances. In The Lutetian [1982] 2 Lloyd's Rep 140, 157 Bingham J, as he then was, regarded the dissenting speech of Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 903 as having provided persuasive authority for the proposition that the duty necessary to found an estoppel by silence or acquiescence arose where a reasonable man would expect the person against whom the estoppel was raised acting honestly and responsibly to bring the true facts to the attention of the other party known by him to be under a mistake as to their respective rights and obligations. In Moorgate Mercantile Lord Wilberforce said that the question whether there was an estoppel had to be asked “having regard to the situation in which the relevant transaction occurred, as known to both parties” and the reasonable man was to be one in the position of the party asserting the estoppel. His formulation has found favour subsequently: see the Indian Endurance [1998] AC 878, 913 where Lord Steyn said:
‘Lord Wilberforce said, at p 903, that the question is whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the “acquirer” of the property, would expect the “owner” acting honestly and responsibly, if he claimed any title in the property to take such steps to make that claim known…' at p 903. Making due allowance for the proprietary context in which Lord Wilberforce spoke, the observation is helpful as indicating the general principle underlying estoppel by acquiescence’
and the cases cited below.
73. In ING Bank NV v Ros Roca SA [2011] EWCA Civ 252 Rix LJ observed obiter that a duty to speak might arise pursuant to either contractual obligations involving collaboration and co-ordination with other business advisors or obligations as an honest business partner. He adopted the general principle contained in Moorgate Mercantile and The Indian Grace. In that case the question arose in circumstances where ING Bank failed to disclose what it knew to be a difference between it and Ros Roca on the calculation of its fee.”
. The court went on to find para. 82:-
“82. That is not, however, necessarily the end of the matter. The authorities show that whether an estoppel arises is not wholly dependent on whether the person sought to be estopped has made some representation express or implied. It may arise if, in the light of the circumstances known to the parties, a reasonable person in the position of the person seeking to set up the estoppel (here TB) would expect the other party (here the insurers) acting honestly and responsibly to take steps to make his position plain. Such an estoppel is a form of estoppel by acquiescence arising out a failure to speak when under a duty to do so.”
. And then at para. 88:-
“88. An estoppel of this nature in a contract of this kind does not require dishonesty or an intention to mislead; nor any impropriety beyond that inherent in the conclusion that the insurers should have spoken but did not. In the circumstances to which I have referred the insurers were, in my view, under a duty to tell TB that the Category 7 material was indeed outstanding and was required before the upshot of any instructions was revealed. If they had done so the documents would no doubt have been supplied. Since they did not do so it would be unjust and unconscionable to allow them to escape any liability on the ground of non-compliance with a condition precedent in relation to the Category 7 material.”
. A similar reasoning on the consequences of a party saying silent on an issue during pre-action correspondence can be seen in the decision of McKechnie J. in Finnegan v. Richards [2007] IEHC 134, [2007] 3 I.R. 671 where the court held that the defendants were estopped from challenging the validity of the plaintiff's proceedings on the grounds of having issued prior to the defendants obtaining grants of administration in circumstances where the defendants stayed silent on the issue in pre-action correspondence.
. I find merit in the defendant's submission that the plaintiffs were under a duty to speak up, or at least not stay silent from December 2020 until after the 11 May 2021 (being the date on which the plaintiffs say clause 5 required the service of the counterclaim) had passed, during which time the plaintiffs say that they were focused on the expert determination process. The plaintiffs subsequently actively engaged in consenting to the order of Hanna J. of 12 July 2021 and agreed that the deferred monies, to which the defendant accepted they were entitled, should be lodged in court and paid out in accordance with the defendants' proposed counterclaim of which they had been notified but not yet served. The also agreed a timescale for the delivery of the proposed counterclaim pleadings and requests for voluntary discovery. In those circumstances, insomuch as there is a case to be made that the defendant is bound by clause 5 of the agreement, there is also a case to be made that the plaintiffs are bound by their engagement with that consent order — and I make no finding on either point as they will be matters for the trial judge.
The plaintiffs have not satisfied the burden of proof that O.19 r.2 imposes on them vis a vis the convenient disposal of the warranty counterclaim in the pending action or whether the claim ought not to be allowed at this interlocutory stage.
....
To continue reading
Request your trial