Lismore Builders Ltd ((in Receivership)) v Bank of Ireland Finance Ltd and Others

JurisdictionIreland
CourtSupreme Court
JudgeMr. Justice MacMenamin
Judgment Date08 February 2012
Neutral Citation[2013] IESC 6
Docket NumberS.C. APPEAL NO. 363/2006
Date08 February 2012

[2013] IESC 6

THE SUPREME COURT

Denham C.J

Hardiman J.

MacMenamin J.

S.C. APPEAL NO. 363/2006
S.C. APPEAL NO. 364/2006
Lismore Builders Ltd (In Receivership) v Bank Of Ireland Ltd & Ors

BETWEEN:

LISMORE BUILDERS LIMTIED (IN RECEIVERSHIP)
PLAINTIFF/APPELLANT

AND

BANK OF IRELAND FINANCE LIMITED, DELOITTE HASKINS AND SELLS
DEFENDANTS/RESPONDENTS

BETWEEN:

LISMORE HOMES LIMTIED (IN RECEIVERSHIP)
PLAINTIFF/APPELLANT

AND

BANK OF IRELAND FINANCE LIMITED, DELOITTE HASKINS AND SELLS
DEFENDANTS/RESPONDENTS

PRIMOR PLC v STOKES KENNEDY CROWLEY 1996 2 IR 459

COMCAST INTERNATIONAL HOLDINGS INC v MIN FOR PUBLIC ENTERPRISE UNREP SUPREME 17.10.2012 2012/7/1702 2012 IESC 50

DESMOND v MGN LTD 2009 1 IR 737

ANGLO IRISH BEEF PROCESSORS LTD v MONTGOMERY 2002 3 IR 510

Company Law - Receivership - Inexcusable and inordinate delay - Balance of justice test - Costs - Application of test - Error in law - Appeals - Interlocutory applications - Stay of proceedings

Facts: These proceedings were an appeal of a judgment of the High Court delivered on the 30 th June 2006 that dismissed the appellants” proceedings on the basis of inordinate and inexcusable delay. The proceedings had originally been brought in April 1990. It was the appellants” case that the respondents had prematurely, and without justification, appointed a receiver to the appellant companies which led to substantial losses.

Between April 1990 and June 2006, there were a number of various interlocutory applications and appeals arising from them. These included applications for security of costs, applications to join the appellant companies to combine the proceedings, particulars and discovery motions, and the motion to dismiss proceedings for want of a prosecution. A stay on proceedings was made on April 1992 until the application for security of costs was decided. Due to a number of appeals, security was not ordered until 2002. The appellants therefore claimed that the delay in the case was excusable.

Held by MacMenamin J. (with Denham C.J. and Hardiman J. concurring) that in deciding whether proceedings should be dismissed for delay, the court must first consider whether the delay was inordinate. If that is established, the court must then be satisfied that the delay is inexcusable. Finally, the court must apply the balance of justice test before deciding whether to dismiss the claim or not. The onus of proof is also on the moving party i.e. the respondents. In the High Court, the judge had asserted that once the respondents had shown there was an inordinate delay, it was for the appellants to show the delay was excusable, something they were not able to entirely accomplish. This was held to be an error in law. The High Court judge had also stated that there was a delay of sixteen years between the commencement of proceedings and the hearing. However, this calculation of time was held to include substantial periods for pending appeals which should have been taken into account. The High Court judge had therefore erred in his application of the first and second stage of the three pronged test.

Though it was not necessary to do so, the third element of the test was considered. It was held that the High Court judge had erred in applying the balance of justice test. Whilst a substantial amount of time had elapsed, the respondents had failed to demonstrate how they had been prejudiced. The appellants had also paid €500,000 into the court as security for costs which demonstrated a willingness to prosecute their claim. Further, whilst it seemed part of the delay could be due to the appellants, the respondents had also delayed matters primarily in the time it took to serve a defence. Whilst the delay was undoubtedly inordinate, it could nevertheless be excusable. As the High Court judge had failed to properly apply the relevant test by considering the onus of proof to be on the appellants, the appeal had to be allowed.

It was ordered that the appellants” proceedings would stand dismissed but that there would be a stay on the order to allow the appellants three weeks to serve a statement of claim. The respondents would then have three weeks to serve their defences. There would then be three months to complete discovery. An early application to fix a date for hearing would also have to be made.

Appeal allowed.

1

JUDGMENT of Mr. Justice MacMenamin dated the 8th day of February 2012.

2

Judgment Delivered By MacMenamin J. [Nem diss]

3

1. On the 30 th June, 2006, the High Court (Quirke J.) delivered judgment in the two proceedings which are the subject of this appeal. He decided to dismiss the claims brought by both plaintiffs ('the appellants') herein, by reason of inordinate and inexcusable delay. The appellants, (collectively "the Lismore companies") have appealed that decision. For brevity, the appellant in the first action will also be referred to as "Builders"; the appellant in the second action as "Homes". A further appeal, brought against the High Court judge's decision to refuse the appellants leave to amend their claim by an amended consolidated statement of claim in both cases, containing additional claims for deceit, conspiracy and misrepresentation, and purporting to quantify the appellants' damages in the sum of €45,106,108.35, has been withdrawn. However, the existence of this issue in the High Court is relevant to the appeal, in that the High Court judge dealt first in his judgment with the amendment applications and second, the applications to dismiss. This sequencing may well have had a significant bearing on the manner in which the judgment addresses the issues, a point dealt with later in this judgment.

Introduction
4

2. The procedural background to this litigation is byzantine. The cases, regrettably and reprehensibly in many senses, have been going on now for some 22 years, since the 20 th April, 1990. As this judgment explains, however, the entire fault for this does not lie solely with either of the appellants. A detailed analysis is required of the chronology of the cases. This judgment considers the conduct of both the appellants and the respondents to this appeal. It concludes that some of that procedural conduct reflects little credit on the parties. Insofar as blame can be attributed between the parties, the preponderance of the blame can indeed be laid at the appellants' door; but the respondents also must bear some responsibility. But, even ascribing blame where it lies, the fundamental question remains as to whether, the appellants have been guilty of inordinate and inexcusable delay. It is not sufficient simply to point to the very substantial period of time in question. This judgment must also take into account the systemic delays which occurred, an issue not directly addressed in the High Court judgment. The cases have involved numerous interlocutory hearings, some of them very lengthy, in both the High Court and, on appeal, to this Court. One can infer there were undoubtedly other external factors at play, including the involvement of Mr. James Kennedy, a director of the appellant companies, with the Mahon Planning Tribunal during some of the relevant periods, especially from the year 2002 onwards. It is not the task of this Court in an application of this type to make any comment, adverse or otherwise, on the character or creditworthiness of any potential witness in the cases.

The legal principles applicable
5

3. The principles applicable to applications of this type are by now well established. They were authoritatively identified in the judgment of this Court in Primor plc v Stokes Kennedy Crowley [1996] 2 IR 459, and recently re-affirmed in Comcast Int. Holdings v Minister for Public Enterprise & ors and Persona Digital Telephony Ltd v Minister for Public Enterprise & ors [2012] IESC 50. At pp. 475-476 of the judgment in Primor, Hamilton C.J. stated:-

"The principles of law relevant to the consideration of the issues raised in this appeal may be summarised as follows:-"

(a) the courts have an inherent jurisdiction to control their own procedure and to dismiss a claim when the interests of justice require them to do so;

(b) it must, in the first instance, be established by the party seeking a dismissal of proceedings for want of prosecution on the ground of delay in the prosecution thereof, that the delay was inordinate and inexcusable;

(c) even where the delay has been both inordinate and inexcusable the court must exercise a judgment on whether, in its discretion, on the facts the balance of justice is in favour of or against the proceeding of the case;

(d) in considering this latter obligation the court is entitled to take into consideration and have regard to:

(i) the implied constitutional principles of basic fairness of procedures,

(ii) whether the delay and consequent prejudice in the special facts of the case are such as to make it unfair to the defendant to allow the action to proceed and to make it just to strike out the plaintiff's action,

(iii) any delay on the part of the defend ant - because litigation is a two party operation, the conduct of both parties should be looked at,

(iv) whether any delay or conduct of the defendant amounts to acquiescence on the part of the defendant in the plaintiff's delay,

(v) the fact that conduct by the defendant which induces the plaintiff to incur further expense in pursuing the action does not, in law, constitute an absolute bar preventing the defendant from obtaining a striking out order but is a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case,

(vi) whether the delay gives rise to a substantial risk that it...

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