O'Mahony v Promontoria (Gem) DAC

• Jurisdiction: Ireland
• Judge: MR. JUSTICE HAUGHTON
• Judgment Date: 08 February 2018
• Neutral Citation: [2018] IEHC 63
• Docket Number: RECORD NO. 2017/7866
• Court: High Court
• Date: 08 February 2018

PDECLAN O'MAHONY, DIAMOND DEVELOPMENTS LIMITED, BRIDE VIEW DEVELOPMENTS LIMITED, AMBLEDENE LIMITED

AND

KATHLEEN O'MAHONY

Plaintiffs

and

PROMONTORIA (GEM) DAC

Defendant

[2018] IEHC 63

RECORD NO. 2017/7866

THE HIGH COURT

COURT 25

Contract - Breach of contract - Exemplary damages - Special damage - Balance of probability test - Breach of constitutional rights - Prima facie - Specific performance - Adverse inference

Facts: The plaintiffs filed an action for specific performance against the defendant. The plaintiffs also sought an order for exemplary damages against the defendant. The defendant also filed a counterclaim against the second named plaintiff. The key issue in the present proceedings was related to the application of 'balance of probabilities' or the 'prima facie' test. The plaintiffs asserted the breach of contract against the defendant. The plaintiffs claimed that the defendant had agreed in consideration of the relevant amount to transfer the residual loans to the plaintiffs and release all of the security, making the plaintiffs debt free. The defendant filed an application for the dismissal of the plaintiffs' claim. The defendant denied the existence of any binding agreement; however, the defendant did not call any of the witnesses at the trial of the action after the plaintiffs' witnesses had been cross examined.

Mr. Justice Robert Haughton ordered for specific performance of the agreement with two variations. The Court held that the first named plaintiff should have been awarded exemplary damages but nominal in nature as due to the defendant's conduct, the first named plaintiff had run into financial difficulties. The Court dismissed the defendant's counterclaim against the second named plaintiff. The Court observed that it was entitled to draw adverse inferences against the defendant for the absence of any witness for testifying at the trial.

APPROVED JUDGMENT DELIVERED BY MR. JUSTICE HAUGHTON ON THURSDAY 8TH FEBRUARY 2018.

MR. JUSTICE HAUGHTON: Good afternoon. Gentlemen,

I don't have a typed up judgment but we have a stenographer in court.

INTRODUCTION

This is an action for specific performance of an alleged agreement dated 20th June 2017 and there is a full Defence and a Counterclaim against the Second Plaintiff for 39 million odd. This is my ruling and judgment in respect of the Defendants' application for a direction and a dismissal of the proceedings on the basis that after closing of the Plaintiffs' case, their case is not made out on the balance of probabilities. The application was made on Day 4 after hearing the Plaintiff's three witnesses who underwent cross examination on the basis that the Defendants' witnesses would testify and give certain specified evidence on matters in dispute between the parties.

It therefore came as a surprise to the Court and also seemingly Counsel for the Plaintiffs when the application for a direction was made by Mr. MacCann who indicated that the defence would not be going into evidence. He submitted, therefore, that the Court must decide his application on the balance of probabilities on the basis of the evidence before it. He conceded that this meant that the Defendant could not pursue its counterclaim against the Second Named Plaintiff.

Some debate ensued as to how the Court should approach his task. In his response, Mr. Sreenan for the Plaintiff submitted that because of the manner in which the cross examinations were conducted, it was not open to the Defendant to apply for a direction without going into evidence and on indicating that evidence would not be called. He submitted that it would be fundamentally unfair and unjust to apply the test of balance of probabilities in circumstances where Mr. O'Mahony's good name and integrity were impugned in cross examination and the Defendants' witness statements. He submitted that such a process would be unfair, as Mr. O'Mahony would be deprived of the opportunity through cross examination of defending his good name and integrity. He, therefore, suggested that the Court should apply the lower test of whether the Plaintiff's evidence disclosed a prima facie case.

TEST: BALANCE OF PROBABILITIES OR PRIMA FACIE CASE

In the course of argument, I considered Hetherington v Ultra Tyre Service Limited and at page 541 of that decision, Chief Justice Finlay said the following:

'If a Defendant to an action being tried by a judge sitting without a jury applies for a direction on the basis of the evidence adduced by the plaintiff is not sufficient to establish a case against him, I think it is reasonable for a judge, if he sees fit on a trial to enquire from that person as to whether he intends to stand on that application. If he indicates that he intends to give evidence in the event of the application failing, the Judge may well properly defer the decision on the issue as to whether a case is being made out by the Plaintiff until he has heard all the evidence.'

Judge McCarthy agreed, stating:

'I agree with the judgment of the Chief Justice. In respect of the latter part of it, I would like to express my own view that in any claim for damages for negligence, a trial judge should ordinarily decline to make any finding on the issues of negligence unless and until all parties have been heard by way of evidence and submission on such issues.

This decision was considered more recently by the Supreme Court in the case of Schuit v Mylotte and in particular, in the judgment of Mr. Justice O'Donnell. It is not, I think, necessary to go into the facts of that matter, where there were several defendants with claims of contribution inter se. At page 10 of his judgment, he states:

'While it is undoubtedly easier to address these matters in hindsight, it does appear to me that the complexity of this case illustrates the wisdom of the approach taken by McCarthy J. in Hetherington, where he seemed to consider that the appropriate course for the Court to take when it had been indicated, particularly in a multi party case, that the Defendants intended to go into evidence, was simply to adjourn the application until all the evidence was heard. Furthermore, there is much sense in the course which is often adopted on an application for a nonsuit. If the Court is disposed to grant the application, it gives its reasons for so doing, but if it is concluded that the application should be rejected, the Court gives its decision but does not given reasons at that stage because it is considered that it may distort the trial and the prospect of compromise if the Court gives its views on the state of the case at any given stage.'

It is clear from these authorities that if a Defendant seeks a direction in a civil matter, firstly the Court must be informed as to whether, in the event that a direction is refused, that Defendant intends to call evidence. Secondly, if so, that the Court may decide the application by deciding whether the Plaintiff has made out a prima facie case, but it may defer deciding the application until after the defence evidence is called.

However, neither of these propositions support this Court addressing the current application on a prima facie basis. It seems to me, as I stated in the course of argument, that I must approach this ruling, which is effectively my final judgment, on the basis that the Plaintiffs must establish their case on the balance of probabilities. This, indeed, is an approach that finds support in the judgment of President Ryan in The Court of Appeal in O'Leary v HSE 2016 IECA 25.

At paragraph 55, he says:

'The next question is whether the cross examination could have denied the Defendants the opportunity of applying for a nonsuit. There is no logical basis on which this could be the case, but the question as to whether there is some rule of practice or procedure which might apply in favour of the Plaintiff in the circumstances. I am specifically concerned with the issue of cross examination. Counsel for each of the Defendant parties put to the Plaintiff's two experts certain statements that their witnesses were going to make or that were contained in the reports from their expert witnesses whereby it would contradict the experts giving their evidence. This did not constitute going into evidence and neither is there some other rule that would prevent the parties applying for a direction. Indeed, it would have been remiss of Counsel not to put their case to the expert witnesses but by so doing, they were not advancing down a path that stopped them making the case at the end of the Plaintiff's evidence that they did not have a case to meet. It would be a rule that was unjust and unfair and would make no sense if such were the case. There is no such rule.'

And he went on to state in the following paragraph:

'Such putting of the defence evidence is always done with the implied but unspoken (usually, but not always) understanding that this evidence would be given,

If the Plaintiffs do make out their case on the balance of probabilities, then they are entitled to succeed. The fact that the Defendant has chosen not to call witnesses, despite the manner in which the Plaintiffs' witnesses were cross examined, is something from which the Court may draw one or more appropriate inferences. This, combined with the opportunity that Mr. O'Mahony has had to give his own evidence and answer to cross examination, in my view, affords him some opportunity to establish and defend his good name and reputation. While he may not regard this as sufficient, this is not a defamation action, it is an action for breach of contract and the Court's primary task is to decide the contractual issues presented by the Pleadings and the evidence.

STATUS OF DISCOVERED DOCUMENT AS EVIDENCE

Three other matters should be mentioned. First, on Day 1, I rose briefly to enable agreement to be...