Mars Capital Ireland DAC v Edward Paul Nugent Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Faherty
• Judgment Date: 23 August 2017
• Neutral Citation: [2017] IEHC 624
• Docket Number: [2009 No. 6498 P.]
• Court: High Court
• Date: 23 August 2017

BETWEEN

MARS CAPITAL IRELAND DAC

PLAINTIFF

AND

EDWARD PAUL NUGENT LIMITED

DEFENDANT

[2017] IEHC 624

[2009 No. 6498 P.]

THE HIGH COURT

Practice & Procedure – O.122, r. 11 of the Rules of the Superior Courts 1986 – Banking & Finance – Financial loss – Negligence – Inordinate delay – Prejudice

Facts: The defendant sought an order for dismissal of the present proceedings under inherent jurisdiction of the Court or under o.122, r. 11 of the Rules of the Superior Courts 1986. The plaintiff filed the said proceedings against the defendant for negligence and breach of duty. The plaintiff had retained the defendant for providing valuation of a property, and acting upon such valuation, the plaintiff advanced loan to the borrowers which sum was to be secured against the property for which the defendant had provided the valuation. The defendant alleged that there had been undue delay by the plaintiff in the prosecution of the case. The plaintiff attributed that delay to the extraneous events wherein the economy collapsed and the rights of the defendant in the proceedings were transferred to various entities.

Ms. Justice Faherty refused to grant an order for the dismissal of the proceedings. The Court held that it had inherent jurisdiction to dismiss a proceedings. The Court, however, stated that it had to determine whether there was inordinate delay, if yes, then the Court should ascertain whether the delay was prejudicial to the interests of the defendant. The Court found that there was inexcusable delay in the present case; however, that delay was not adverse to the interests of the defendant. The Court noted that certain extraneous events were responsible for the said delay. The Court directed the parties to fulfil their discovery obligations. The Court also directed the plaintiff to file its reply to the defence.

JUDGMENT of Ms. Justice Faherty delivered on the 23rd day of August, 2017

1 This matter comes before the Court by way of motion on notice brought by the defendant for an order pursuant to the inherent and/or equitable jurisdiction of the court dismissing the within proceedings for want of prosecution by reason of the inordinate and/or inexcusable delay of the plaintiff, and/or alternatively for want of prosecution pursuant to the provisions of O. 122, r. 11 of the Rules of the Superior Courts 1986, as amended.

2 Order 122, rule 11, provides:-

‘In any cause or matter in which there has been no proceeding for one year from the last proceeding had, the party who desires to proceed shall give a month's notice to the other party of his intention to proceed. In any cause or matter in which there has been no proceeding for two years from the last proceeding had, the defendant may apply to the Court to dismiss the same for want of prosecution, and on the hearing of such application the Court may order the cause or matter to be dismissed accordingly or may make such order and on such terms as to the Court may seem just. A motion or summons on which no order has been made shall not, but notice of trial although countermanded shall, be deemed a proceeding within this rule.’

3 It is acknowledged by both sides that when the court is considering an application to dismiss proceedings for want of prosecution in accordance with the interests of justice whether brought invoking the inherent jurisdiction of the court or upon the jurisdiction conferred under O. 122, the underlying jurisdiction is the same (see Primor plc v. Stokes Kennedy Crowley [1996] 2 I.R. 459).

4 The within proceedings were originally commenced in the name of Irish Nationwide Building Society (INBS), this being the institution which retained the defendant in 2000 and in respect of which the defendant provided the valuation of the property in 2006. The circumstances in which Mars Capital Ireland Limited (Mars) came to be substituted as plaintiff in the within proceedings is dealt with hereunder.

The background to the within application

5 The pleadings in this case commenced by way of plenary summons issued on 16th July, 2009. Following the entry of an appearance dated 14th September, 2009, a statement of claim was delivered on 30th September, 2009. As appears from the statement of claim, the plaintiff alleges that in or around the year 2000, the defendant was retained by the plaintiff for the purpose of providing property valuations in order to assist the plaintiff in ascertaining whether the properties that were being offered as security for proposed loans had sufficient value to stand as security for those loans. The statement of claim charges that on or about 29th November, 2006, the plaintiff engaged the defendant to provide a valuation on a property at Cappog, Ballinode, Co. Monaghan, (‘the property’) and that on foot of these instructions, the defendant provided a valuation report which stated that the value of the property was €800,000. The plaintiff alleges that this valuation grossly overstated the true value of the property as of November 2006. At para. 8 of the statement of claim, the plaintiff states that it advanced a loan of €220,000 to named borrowers on foot of the defendant's valuation and that this loan was in addition to a previous loan of €400,000 which had been advanced on 17th August, 2004 and was secured on the property. It is alleged, at para. 9, that:-

‘Negligently and in breach of duty and in breach of contract, the report and valuation prepared by the Defendant its servants or agents for the Plaintiff was incorrect in relation to the valuation of the property in question. Further, the Defendant its servants or agents negligently misrepresented to the Plaintiff the value of the property.’

6 Essentially, it is alleged that as a result of the representations of the defendant as to the value of the property, the plaintiff loaned the sum of €220,000 to the borrowers which sum was to be secured against the property for which the defendant, its servants or agents had provided a valuation. It is alleged in the statement of claim that the borrowers defaulted on or about 10th June, 2007 in the repayment of the loan to the plaintiff and that the loss and damage to the plaintiff continues to accrue with interest accruing thereon in accordance with the terms of the agreement between the plaintiff and the borrowers. The plaintiff thus claims against the defendant damages for negligence including professional negligence and breach of duty, damages for negligent misstatement and damages for breach of contract.

7 Following the delivery of the statement of claim, on 29th October, 2009, the defendant raised a notice for particulars and the plaintiff delivered its replies to particulars on 17th May, 2010, following which the defendant raised a notice for further and better particulars on 21st May, 2010. The plaintiff delivered its replies to the notice for further and better particulars on 14th July, 2010. The defendant delivered its defence on 1st November, 2010, in which the defendant raised, inter alia, positive pleas against the plaintiff. In particular, the defence identifies that the defendant was retained in or about 1996 and accepts that it furnished a report in respect of the property on or about 29th November, 2006. The defendant pleads that its principal, Edward Nugent, was directed by a Mr. Brendan Beggan, who was at all material times the manager of INBS's Monaghan branch, to provide a valuation based upon the development potential of the property and that Mr. Nugent was instructed that the owners/borrowers would secure permission for eight houses. At para. 6 of the Defence, the defendant pleads that the plaintiff knew that the valuation of €800,000 was based on the valuation approach which the defendant had been instructed by the plaintiff to take, viz, based on a development value.

8 According to the affidavit of the plaintiff's solicitor Mr. Ciaran Leavy, partner in Lavelle Solicitors, sworn in response to the within application, in February 2011 the then junior counsel dealing with the case on behalf of INBS remitted a draft reply to defence and a draft letter to be sent to the defendant seeking voluntary discovery. However, it would appear that these were not formally delivered or sent to the defendant. This is said to be due to the transfer of INBS's functions to Irish Bank Resolution Corporation (IBRC) in July 2011, of which more hereunder.

9 On 21st April, 2011, the defendant's solicitors (‘Matheson’) delivered a request for voluntary discovery, addressed to Ms. Maura Madden Solicitor in INBS. No response was received to this request. A further letter issued on 13th May, 2011, seeking a response within fourteen days to the request for voluntary discovery dated 21st April, 2011. Matheson sent a further letter to INBS on 1st June, 2011, allowing a further fourteen days in which to reply. Again no response was received. According to the affidavit of Ms. Sharon O'Connor of Matheson which grounds this application, the defendant's request for voluntary discovery has still not been replied to.

10 In his replying affidavit, Mr. Leavy avers as follows with regard to events which occurred between July 2011 and October 2016:-

‘[By] a Transfer Order dated 1st July, 2011 made by this Honourable Court and pursuant to the provisions of section 34 of the Credit Institutions (Stabilisation) Act 2010, the assets and liabilities which included the Mortgage Loans of [INBS] were transferred to Anglo Irish Bank Corporation Limited. Then on 14th October, 2011 Anglo Irish Bank Corporation Limited changed its name to [IBRC] which thereafter on 31st March, 2014, agreed to sell to Mars Capital Ireland Limited all the rights, title, interest, benefit and obligations under a number of assets as identified in the Loan Sale Deed as a consequence of which Mars Capital Ireland Limited purchased a Debt Portfolio and related choses-in-action, which...