Kevin Anderson v Finavera Wind Energy Inc. and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice Ryan |
| Judgment Date | 31 October 2013 |
| Neutral Citation | [2013] IEHC 489 |
| Court | High Court |
| Date | 31 October 2013 |
[2013] IEHC 489
THE HIGH COURT
BETWEEN
AND
AND
AND
RSC O.19 r28
BARRY v BUCKLEY 1981 IR 306
ROGERS v MICHELIN TYRE PLC & MICHELIN PENSIONS TRUST (NO 2) LTD UNREP CLARKE 28.6.2005 2005/53/11045 2005 IEHC 294
MCKILLEN v MISLAND (CYPRUS) INVESTMENTS LTD & ORS 2013 2 BCLC 583 2013 AER (D) 52 (JUL) 2013 EWCA CIV 781
COMPANIES ACT 1963 S123
TETT v PHOENIX PROPERTY & INVESTMENTS CO LTD 1986 BCLC 149
CLAYGREEN LTD, IN RE 2006 1 BCLC 715 2005 AER (D) 112 (SEP) 2005 EWHC 2032 (CH)
CHAMPION PUBLICATIONS LTD, IN RE UNREP BLAYNEY 4.6.1991 1991/8/1728
HKN INVEST OY v INCOTRADE PVT LTD 1993 3 IR 152 1992/11/3720
KELLY v CAHILL 2001 1 IR 56 2001 2 ILRM 205 2001/13/3676 2001 IEHC 2
VARKO LTD (IN LIQUIDATION), IN RE UNREP GILLIGAN 3.2.2012 2012/45/13480 2012 IEHC 278
EVES v EVES 1975 3 AER 768 1975 1 WLR 1338
FITZPATRICK v DAF SALES LTD 1988 IR 464 1989/2/282
PRACTICE AND PROCEDURE
Strike out
Motion to strike out for no reasonable cause of action - Application for interlocutory injunction restraining first and second defendants from dealing with shares in third defendant and from reducing assets below present value of plaintiff's investment - Security on loan - Registration of notice as to stock - Actual notice - Constructive trust - Creation of equitable charge through promise to pay out of particular fund - Whether established that no reasonable prospect that plaintiff could succeed if case proceeded to hearing - Whether plaintiff entitled to interlocutory orders in respect of third defendant's shares - Barry v Buckley [1981] IR 306; Rogers v Michelin Tyre Plc [2005] IEHC 294, (Unrep, Clarke J, 28/6/2005); McKillen v Misland (Cyprus) Investments Ltd & Others [2013] EWCA Civ 781; Barry v Buckley [1981] IR 306; Tett v Phoenix Property and Investments Company Ltd [1986] BCLC 149; Re Claygreen Ltd [2005] EWHC 2032 (CH); Re Champion Publications Ltd (Unrep, Blayney J, 4/6/1991); HKN Invest Oy v Incotrade PVT Ltd [1993] 3 IR 152; Kelly v Cahill [2001] 1 IR 56; In Varko Ltd (In Liquidation) [2012] IEHC 278, (Unrep, Gilligan J, 3/2/2012); Eves v Eves [1975] 1 WLR 1338 and Fitzpatrick v DAF Sales [1988] 1 IR 464 considered - Rules of the Superior Courts 1986 (SI 15/1986) O 19, r 28 - Companies Act 1963 (No 33), s 123 - Motion to strike out dismissed; order granted restraining payment or other distribution or disposal of proceeds of sale of shares in third defendant until hearing of action otherwise than (a) on notice to plaintiff and (b) with his consent (2013/6852P - Ryan J - 31/10/2013) [2013] IEHC 489
Anderson v Finavera Wind Energy Inc
PRACTICE AND PROCEDURE
Dismissal of proceedings
Application to dismiss claim pursuant to inherent jurisdiction for no cause of action and no reasonable prospect of success - Company law - Loan to wind farm company - Written agreement - Security in form of lien over shares in subsidiary company - Repayment of loan sought - Interim injunction restraining dealing with shares sought - Change to structure and name of company - Charge - Constructive trust - Notice as to stock - Transfer of shares - No wrongdoing alleged - Whether no cause of action - Whether reasonable prospect of success - Whether balance of justice permitted injunction over shares - Barry v Buckley [1981] IR 306; Rogers v Michelin Tyre Plc [2005] IEHC 294, (Unrep, Clarke J, 28/6/2005); McKillen v Misland (Cyprus) Investments Ltd [2013] ECWA Civ 781, (Unrep, COA, 3/7/2013); Tett v Phoenix Property and Investments Company Ltd [1986] BCLC 149; In re Claygreen Ltd [2005] EWHC 2032 (CH), (Unrep, HC, 21/9/2005); In re Champion Publications Ltd (Unrep, Blayney J, 4/6/1991) - HKN Invest Oy v Incotrade PVT Ltd [1993] 3 IR 152; Kelly v Cahill [2001] 1 IR 56; In re Varko Ltd (In Liquidation) [2012] IEHC 278, (Unrep, Gilligan J 3/2/2012); Eves v Eves [1975] 1 WLR 1338 and Fitzpatrick v DAF Sales [1988] 1 IR 464 considered - Rules of the Superior Courts 1986 (SI 15/1986), O 19, r 28 - Companies Act 1963 (No 33), s 123 - Application dismissed and order preventing disposal of assets granted (2013/6852P - Ryan J - 31/10/2013) [2013] IEHC 489
Anderson v Finavera Wind and Energy Inc
Facts: In March 2010, the plaintiff made a loan of Can$ 1.5 million to the first defendant, a company was involved in developing wind farms. A written document was then provided, which outlined how security for the loan would be given to the lender in the form of a lien over 110 of the 220 total shares in an Irish subsidiary company called Cloosh Valley Wind Farm Ltd. However, the plaintiff soon made enquiries, which revealed transactions that potentially affected his security. Consequentially, he instituted proceedings and applied for injunctive relief in order to protect his position and give effect to the promised pledge that allegedly applied to the shares in the third defendant. On the 3rd July 2013, interim injunctions were made by the Court restraining the first and second defendants from reducing or disposing of their shares in the third defendant, and from reducing their assets below the value of the plaintiff's investment as it was at that time.
This particular application, brought by the third defendant, was for an order dismissing the plaintiff”s case under the inherent jurisdiction that there was no cause of action and/or there was no reasonable prospect or possibility on which it might succeed. It was undisputed that the plaintiff had been given 110 shares in Cloosh Valley Wind Farm Ltd as security for the loan; however, it was said that this company was a different corporate entity from the third defendant despite them both having the same name. It was said that the plaintiff”s statement of claim did not seek any specific relief against the third defendant nor allege that it had been guilty of any conduct which could give rise to a civil cause of action. It was also said that the third defendant did not exist at the time the loan was made, that the first defendant never had any legal or equitable interest in the shares of the third defendant, that the agreement to pledge the shares for the plaintiff”s benefit was never executed, and that the articles of association of the third defendant prevented a pledge of shares of the kind sought by the plaintiff.
Held by Ryan J. that for the application to succeed, the third defendant had to show, firstly, that the plaintiff”s claim against it should be dismissed pursuant to Order 19 rule 28 of the Rules of the Superior Court. Secondly, it was said the third defendant had to demonstrate that the plaintiff had no reasonable prospect of success against it. The plaintiff had agreed that there was no wrongdoing alleged against the third defendant but thought it prudent to join it to proceedings because its shares were alleged to be the subject of the plaintiff”s lien, which meant the third defendant had to be named as a defendant in order to protect the security. It was held that although the plaintiff”s pleadings may require amendment, the Court had no jurisdiction to dismiss the proceedings against the third defendant if the plaintiff was able to demonstrate a case that was legally sound and on the basis of facts that could possibly be established.
It was determined that the plaintiff could potentially establish a lien over 110 shares in Cloosh Valley Wind Farm Ltd, which if found to be the same shares held by the third defendant, could give rise to an interest on the plaintiff”s behalf. It was also said that this possible transfer of shares could explain the plaintiff”s alleged loss of security and should be investigated along with the transactions of the other two defendants. Further, it was pointed out that although the plaintiff was not alleging any impropriety by a company called SSE Renewables (Ireland) Ltd – a company that had purchased 33 A class shares in the third defendant and was claimant to a contractual right to purchase the remainder – it was said that the plaintiff should be given an opportunity to discover whether that company was, or ought to have been, on notice of his interest in 50% of the issued shares in Cloosh Valley Wind Farm Ltd. It was held that for all of these reasons it was possible that the plaintiff could establish that he was entitled to a constructive trust in his favour over the shares in the third defendant because of transactions made by the defendants.
The third defendant”s application was, therefore, dismissed. An order restraining the distribution or disposal of the proceeds of sale of shares in the third defendant until the hearing of the action was also made.
JUDGMENT of Mr. Justice Ryan delivered on the 31st October, 2013
1. The plaintiff Mr Anderson is a retired businessman of great age. In March 2010, when he was aged 95 years, he made a loan of Can$ 1.5 million to a Canadian company engaged in developing wind farms. The agreement for the loan was contained in a written document that provided for security for the lender in the form of a lien over 110 shares in the wholly owned Irish subsidiary company that was developing a major wind farm project in Co. Galway. The issued share capital was 220 shares, made up of 33 class A and 187 class B shares, so Mr Anderson s security was over 50% of the company's shares.
2. The claim in the proceedings arises out of this loan transaction. Mr Anderson is seeking a number of reliefs in order to protect his position. His son who is a solicitor has taken over the running of the case in view of his father's age and with the latter's consent. The Andersons senior and junior became concerned about the loan in early 2011 and sought repayment. When Mr Anderson Jr...
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