HKR Middle East Architects Engineering LLC, Jeremiah Ryan and Patrick Stafford v Barry English

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Denis McDonald
Judgment Date31 May 2021
Neutral Citation[2021] IEHC 376
Docket Number[2017 No. 6277 P.]

[2021] IEHC 376

THE HIGH COURT

COMMERCIAL

[2017 No. 6277 P.]

Between
HKR Middle East Architects Engineering LLC, Jeremiah Ryan and Patrick Stafford
Plaintiffs
and
Barry English
Defendant

Unjust enrichment – Liabilities – Costs – First plaintiff applying to the High Court to revisit the principal judgment in order to correct an alleged error – Whether the High Court fell into error in finding that the only unjust enrichment claim made in the proceedings by the first plaintiff on foot of the transfers to the BVI entity was in respect of its unpaid liabilities

Facts: The High Court (McDonald J), on 10th May, 2019, delivered judgment ([2019] IEHC 306) in the proceedings (the principal judgment) on issues of liability. In the principal judgment, McDonald J dismissed all of the claims made by each of the plaintiffs, save for one of the claims made by the first plaintiff, HKR Middle East Architects Engineering LLC (HKRME), namely its claim that the defendant, Mr English, had been unjustly enriched by payments which had been made by HKRME to a BVI entity under the defendant’s control. Those payments were made by HKRME with the cooperation and at the direction of the second plaintiff, Mr Ryan, who was the beneficial but not the legal owner of HKRME at the relevant time. At the time of the payments, Mr Ryan’s shares in HKRME had been transferred to the defendant but at that time the defendant was holding Mr Ryan’s shares in HKRME as “caretaker” for Mr Ryan. The latter had arranged that the shares should be transferred to the defendant as part of a number of steps which were taken by him in order to hide assets from his creditors. As outlined in the principal judgment, McDonald J came to the conclusion that the HKRME claim in respect of unjust enrichment was limited to the amount of its unpaid and lawful liabilities and he directed that an account should be taken of those liabilities. HKRME contended that McDonald J made a significant error in his principal judgment in his finding that its claim was confined in that way. In those circumstances, HKRME applied to McDonald J to revisit the principal judgment in order to correct that alleged error and to permit HKRME to pursue a claim against the defendant in respect of the entire of the monies transferred to him (with the cooperation of Mr Ryan).

Held by McDonald J that he was not persuaded that there was an error in his principal judgment in limiting the unjust enrichment claim of HKRME to the amount of its liabilities. He held that no sufficient basis had been advanced to show that the application fell within the narrow categories of case where it may be appropriate for a court, prior to the perfection of its order, to revisit a finding made in its judgment. He refused this application.

McDonald J’s provisional view was that, having wholly failed in its application, HKRME, as the moving party, must be liable for the costs of the defendant in relation to this application subject, in accordance with the usual practice of the Commercial Court, to a stay on the order for costs pending the ultimate determination of the proceedings.

Application refused.

JUDGMENT (No. 3) of Mr. Justice Denis McDonald delivered on 31st May, 2021

Introduction
1

On 10th May, 2019, I delivered judgment (neutral citation [2019] IEHC 306) in these proceedings (“ my principal judgment”) on issues of liability. The proceedings had been at hearing before me over the course of 24 days commencing on 8th November, 2018 and concluding on 15th January, 2019. In my principal judgment, I dismissed all of the claims made by each of the plaintiffs, save for one of the claims made by the first named plaintiff (“ HKRME”) namely its claim that the defendant, Mr. English, had been unjustly enriched by payments which had been made by HKRME to a BVI entity under the defendant's control. These payments were made by HKRME with the cooperation and at the direction of the first named plaintiff (“ Mr. Ryan”) who was the beneficial but not the legal owner of HKRME at the relevant time. At the time of the payments, Mr. Ryan's shares in HKRME had been transferred to the defendant but, as explained in the principal judgment, at that time, the defendant was holding Mr. Ryan's shares in HKRME as “ caretaker” for Mr. Ryan. The latter had arranged that the shares should be transferred to the defendant as part of a number of steps which were taken by him in order to hide assets from his creditors.

2

As outlined in the principal judgment, I came to the conclusion that the HKRME claim in respect of unjust enrichment was limited to the amount of its unpaid and lawful liabilities and I directed that an account should be taken of those liabilities. HKRME contends that I made a significant error in my principal judgment in my finding that its claim was confined in that way. In those circumstances, HKRME has applied to me to revisit the principal judgment in order to correct that alleged error and to permit HKRME to pursue a claim against the defendant in respect of the entire of the monies transferred to him (with the cooperation of Mr. Ryan). Were I to correct this alleged “ error”, this would have a significant impact on the value of the HKRME claim against the defendant. Between April, 2012 and March, 2013, a total of US$8,094,873 was transferred by HKRME to the BVI entity controlled by the defendant. The amount required to discharge the liabilities of HKRME is substantially smaller. According to a schedule attached to the plaintiff's response to a request for particulars raised prior to the trial, the amount due in respect of the unpaid liabilities of HKRME was stated to be AED8,483,686.28 which equates to approximately €2,061,536. For completeness, it should be noted that, subsequent to the principal judgment, further particulars have been provided of what are alleged to be the unpaid liabilities of HKRME and the amount now claimed equates to approximately €3,291,550. It will be necessary, in due course, to consider the reasons why I came to the conclusion that the HKRME claim was limited to its unpaid liabilities. It is sufficient, at this point, to record that the claims made on behalf of HKRME in these proceedings were made in parallel with claims made by the first and second named plaintiffs, Mr. Ryan and Mr. Stafford, that the monies transferred from HKRME to the BVI entity were held on trust for the children of Mr. Ryan under a trust known as the Ryan Children's Trust (“ the RCT”). For reasons which are explained in the principal judgment, I came to the conclusion that, at least insofar as it purported to relate to the monies transferred to the BVI entity, the alleged trust was a sham and that the intended beneficiary of the transfers (subject to the unpaid liabilities of HKRME) was not any such trust but was instead Mr. Ryan himself who had put the relevant arrangements in place with a view to concealing assets from his creditors. One of the extraordinary features of these proceedings is that Mr. Ryan, who was the principal witness for the plaintiffs, actively made the case that many of the arrangements which he had put in place were shams and were designed to create a false picture in the event of a “ look back” by his creditors. I found that the creation of the RCT fell into the same category.

3

Before addressing the facts, it may be helpful, at this point, to identify the relevant legal principles which apply to an application of this kind – namely where the court is asked, prior to the perfection of the court order, to correct what one or more of the parties characterises as an error in its judgment. I should make clear that, as of now, no order has been perfected on foot of the principal judgment. This has arisen in circumstances where the proceedings have not yet been concluded. The issue in relation to the quantification of the unpaid and lawful liabilities of HKRME has yet to be heard and the perfection of the order has been deferred until the determination of that issue.

The applicable legal principles
4

As the authors of Delany & McGrath on Civil Procedure, 4th Ed., 2018, at para. 25.53 note, it has long been accepted that, following the delivery of judgment by a judge, the judge has jurisdiction to revise or alter the decision at any time up to the point when the order to be made on foot of that judgment has been perfected. Delany & McGrath cite, in this context, the decision of the Court of Appeal of England & Wales in Re Suffield & Watts (1888) 20 QBD 693 where Fry L.J. said at p. 697:-

“In Re St. Nazaire Co shews that, when an order or judgment of the High Court has once been perfected, the Court has no jurisdiction to alter it. So long as the order has not been perfected the judge has a power of re-considering the matter, but, when once the order has been completed, the jurisdiction of the judge over it has come to an end.”

5

However, in the same paragraph, Delany & McGrath explain that, while this jurisdiction can be used to correct an error in a judgment or to clarify a finding in the judgment, there is a relatively high bar that must be surmounted by an applicant before a court will intervene. In short, where a court is asked to reverse its conclusion or substantially change the judgment, strong reasons will have to be identified by an applicant seeking the correction of an alleged error. This is reflected in the modern case law (addressed below). In contrast, there is greater scope for a judge, after judgment has been delivered but before perfection of the order, to amplify the reasons for a decision.

6

The relevant principles are discussed in Re McInerney Homes Ltd [2011] IEHC 25. In that case, Clarke J. (as he then was) quoted a lengthy passage from the judgment of Wilson L.J. in the Court of Appeal of England & Wales in Paulin v. Paulin [2010] 1 W.L.R. 1057 at para. 30 and held that the passage in question correctly represents...

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