IBB Internet Services Ltd and Others v Motorola Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 09 November 2011
• Neutral Citation: [2011] IEHC 504
• Court: High Court
• Date: 09 November 2011

[2011] IEHC 504

THE HIGH COURT

[No. 11862 P/2010]

IBB Internet Services Ltd & Ors v Motorola Ltd

COMMERCIAL

BETWEEN

IBB INTERNET SERVICES LIMITED, IRISH BROADBAND INTERNET SERVICES LIMITED (TRADING AS IMAGINE NETWORKS) AND IMAGINE COMMUNICATIONS GROUP LIMITED

PLAINTIFFS

AND

MOTOROLA LIMITED

DEFENDANT

IBB INTERNET SERVICES LTD & ORS v MOTOROLA LTD 2011 2 ILRM 321 2011 IEHC 253

RSC O.19 r27

MCGEE (A MINOR) v O'REILLY & NORTH EASTERN HEALTH BOARD 1996 2 IR 229 1996/13/4130

BRITISH AIRWAYS PENSION TRUSTEES LTD v SIR ROBERT MCALPINE & SONS LTD 72 BLR 26 45 CON LR 1

THEMA INTERNATIONAL FUND PLC v HSBC INSTITUTIONAL TRUST SERVICES (IRL) UNREP CLARKE 26.1.2010 2010/49/12395 2010 IEHC 19

PRACTICE & PROCEDURE

Pleadings

Statement of claim - Particulars - Court allowing plaintiffs to deliver re-amended statement of claim - Court ordering that re-amended statement of claim be pleaded so as to make request for further particulars unnecessary - Whether re-amended statement of claim in compliance with order - Statement of claim struck out (2010/11862P - Clarke J - 9/11/2011) [2011] IEHC 504

IBB Internet Services Ltd v Motorola Ltd

Facts: A series of agreements were entered into between Motorola and the first and second plaintiffs relating to the provision by Motorola of the Wimax telecommunications network. The third plaintiff was the ultimate parent company (Imagine Companies) of both Internet Services and Broadband Services. The High Court per Kelly J. had given judgment on 6 July 2011 granting the plaintiffs leave to deliver a re-amended statement of claim. The defendants brought an action to the have the current statement of claim struck out. The Court had to consider the scope of the amendments which were permitted by the order. Motorola contended that the order of 6 July imposed an additional obligation on the Imagine Companies to particularise their claim beyond the obligation obligation in the Rules of the Superior Courts and in the caselaw.

Held by Clarke J. that the Court would give Imagine Companies an opportunity to file a new statement of claim within a time to be fixed with counsel. The re-amended statement of claim failed to meet the standard imposed by the order of 6 July in a significant and material way and not in a minor or technical way which might be legitimately overlooked or capable of being easily remedied, The Court strike out the statement of claim on the basis that it failed to comply with the existing order of the High Court.

Reporter: E.F.

1 JUDGMENT of Mr. Justice Clarke delivered the 9th November, 2011

1. Introduction

2 2 1.1 The fact that companies are regarded as having a separate legal existence or personality to their shareholders is, perhaps, the most fundamental aspect of corporate law in many countries including Ireland. That separation between companies and their shareholders confers many advantages, most particularly where the company has limited liability so that, in the ordinary way, the company's debts remain with the company and cannot be visited on the shareholders. The shareholders may lose their investment in the case of insolvency but not more. There are, of course, certain limited circumstances where the courts have been prepared to go behind the corporate structure (by engaging in what is sometimes referred to as lifting the corporate veil), but those circumstances are rare and closely defined. Our law, therefore, maintains, largely to the advantage of those who wish to engage in commerce through companies, a strict distinction between a company and those who may be involved in it such as its shareholders or, indeed, directors elected by those shareholders to run the company.

3 3 1.2 It needs to be noted that one of the consequences of that clear distinction is that, where the promoters of a corporate enterprise choose to run their business through a series of companies, each of those companies has a separate legal existence and personality separate not just from the ultimate beneficial owners but also one from the other. It is, of course, a matter of choice for the promoters as to what corporate structure they wish to put in place at the outset. However, where those promoters choose to form a group of connected companies, the relevant promoters concerned create a situation where there are a number of separate corporate entities each with its own separate legal existence and personality but where there may be some form of interlocking shareholding arrangements which give it its group structure. There may be many reasons why those behind a commercial enterprise choose not just to establish a company through which to carry on their enterprise, but choose to establish a number of interlocking companies within a group. One must assume that, at least in most cases, the division of the company's assets and business into separate companies is considered to have an advantage. This may well be so, not least, perhaps, because each separate company has its own limited liability. It follows that, again ordinarily and subject to very limited exceptions, the debts of one company cannot be visited on another company within the group unless there are in place obligations, such as cross guarantees, whereby the liabilities of one company are guaranteed by others.

4 4 1.3 The fact that such a structure may be seen to be advantageous does not, of course, mean that it may not also give rise to problems in certain circumstances. While the promoters may look on each company as forming part of one large group, the fact that they have chosen to establish a series of interconnected companies, means that, for many purposes, each company must be looked on as a separate entity with its own assets and liabilities. That circumstance provides the backdrop to the difficulty which has arisen in these proceedings and to the application now brought by the defendants ("Motorola") which seeks to have the current statement of claim struck out. In order to understand the precise issues which have arisen, it is necessary to say a little about the factual background to the issues which arise in these proceedings generally.

2. Factual Background

5 2 2.1 Throughout 2009 a series of agreements were entered into between Motorola and the first and second plaintiffs ("Internet Services" and "Broadband Services" respectively). The agreements related to the provision by Motorola of the so called WiMax telecommunications network. The third named plaintiff ("Imagine") is the ultimate parent of both Internet Services and Broadband Services and a number of other companies within the Imagine group. The plaintiffs are referred to collectively as the "Imagine Companies".

6 3 2.2 Leaving aside for the moment the separate identity of the various companies within the Imagine group, at a general level complaint is made that Motorola failed in its obligations under the contracts to which I have referred both as to the speed with which the relevant network was rolled out and as to the quality of the services provided. Motorola denies any failing on its part. Obviously a full trial will be required to determine the accuracy or otherwise of those allegations. The problem that has emerged, so far as the proceedings are concerned, is as to the precise company or companies within the Imagine group that can properly be said to have a legal claim to damages in the event that it is established, at trial, that Motorola is guilty of breach of contract. That difficulty has led to a significant complication in the pleading of this case which has already been the subject of a decision of Kelly J. (IBB Internet Services Limited & Ors v. Motorola Limited [2011] IEHC 253). Against that background I now turn to the procedural history relevant to the application which I have to decide.

3. Procedural History

7 2 3.1 The history of these proceedings from the time when they were commenced on the 23 ^rd December, 2010, up to the judgment of Kelly J. to which I have referred, which occurred on the 6 ^th July, 2011, is fully set out in that judgment and it is therefore unnecessary to repeat it here. Suffice it to say that, despite three notices for particulars and three responses thereto followed by the delivery of an amended statement of claim, Kelly J. indicated, at p. 8 of his judgment, that he was of the view that there was "a good deal of force" in the criticisms then made on behalf of Motorola as to the adequacy of the statement of claim.

8 3 3.2 For the reasons set out in that judgment Kelly J. made an order which, in relevant part, provides for the following:-

"And the court proposing to give the Plaintiffs a final opportunity to make the case which they wish and to do so in a form that be readily understood "

9 The court doth grant leave to the Plaintiffs for the delivery of a re-amended Statement of Claim

10 And the Court doth direct that that document must set out the case which the Plaintiffs wish to make and the facts which they propose to rely upon

11 And the court doth direct that the plaintiffs' re-amended Statement of Claim must be pleaded in such a way as to make any request for further particulars unnecessary

12 And the court doth direct that the plaintiffs' re-amended Statement of Claim must contain full particulars of all factual matters which will be relied upon as part of the plaintiffs' case" (sic).

13 4 3.3 As a result a re-amended statement of claim was delivered on the 29 ^th July, 2011. Motorola says that that re-amended statement of claim should be struck out on any or all of the following three bases:-

14 a A. It is said that the re-amended statement of claim does not comply with the terms of the...