Martin O'Donoghue v Thomas O'Donoghue

• Jurisdiction: Ireland
• Judge: Mr Justice Rory Mulcahy
• Judgment Date: 29 November 2024
• Neutral Citation: [2024] IEHC 665
• Court: High Court
• Docket Number: Record No.: 2023/244 SP

Between:

Martin O'Donoghue

Plaintiff

and

Thomas O'Donoghue

Defendant

[2024] IEHC 665

Record No.: 2023/244 SP

THE HIGH COURT

Consolidation – Sale of property – Wrongdoing – Defendant seeking to consolidate two sets of proceedings – Whether there were common questions of fact or law in the two sets of proceedings to warrant them being consolidated

Facts: The plaintiff, Mr M O’Donoghue, sought an order pursuant to s. 31 of the Land and Conveyancing Act 2009 directing the sale of a property he jointly owned with the defendant, Mr T O’Donoghue, a residential investment property in Athlone, County Westmeath. The defendant responded by issuing separate proceedings against the plaintiff alleging wrongdoing with respect to a separate asset jointly owned by the parties, Enodare Ltd. The defendant applied to the High Court to consolidate the two sets of proceedings pursuant to Order 49, rule 6 of the Rules of the Superior Courts. Applying the legal principles in Duffy v News Group Newspapers Ltd [1992] 2 IR 369, he contended that the parties’ three investments were all part of a joint investment strategy and that, in effect, the dispute regarding one element of that joint strategy, the property, should not be decoupled from the dispute regarding another element, Enodare Ltd. He said that there would be a saving in time and costs if all issues were dealt with together and there was unlikely to be confusion or a risk of a miscarriage of justice. The plaintiff disputed that there was any joint investment strategy but contended that, in any event, each case threw up different factual and legal issues. He argued that his case, the first in time, could be disposed of summarily and at relatively little cost, but that if consolidated with the defendant’s case, the costs of those proceedings would increase significantly and an outcome would be hugely delayed. He said that consolidation would lead to confusion.

Held by Mulcahy J that the defendant’s disputed contention that the parties’ three investments formed part of a joint investment strategy was not sufficient to establish that there were common questions of fact or law in the two sets of proceedings to warrant them being consolidated. Mulcahy J held that the resolution of the defendant’s proceedings did not require any consideration of the ownership of the property at all, save, potentially, in the most tangential of contexts. Mulcahy J held that the issues raised in the defendant’s proceedings were not clearly relevant to the question of whether the plaintiff was entitled to seek an order under s. 31, or whether, in the circumstances of the case, it was appropriate to make an order for sale. Mulcahy J noted that the shared ownership of the property was not in dispute. He held that whether the parties should be required to continue with that common ownership may involve an assessment of the parties’ conduct, but the property could not be preserved as security for a separate claim by the defendant. Mulcahy J held that the defendant was not entitled to require the plaintiff to hold on to his interest in the property as security against a notional award of damages which the defendant may obtain; he wished to obtain the benefit of a mareva-type order without making the appropriate application. Mulcahy J held that this was not a basis for ordering consolidation. He held that there was no basis for concluding that there was any benefit to consolidating the two sets of proceedings or directing that they be heard together.

Mulcahy J refused the order sought.

Order refused.

JUDGMENT ofMr Justice Rory Mulcahydelivered on 29 November 2024

Introduction

1 . The plaintiff and defendant are brothers. Each has commenced proceedings against the other in relation to assets over which it is agreed they share ownership.

2 . In these proceedings, Martin O'Donoghue seeks an order pursuant to section 31 of the Land and Conveyancing Act 2009, as amended, directing the sale of a property he jointly owns with the defendant, a residential investment property in Athlone, County Westmeath (“ the Property”).

3 . The defendant, Thomas O'Donoghue has responded to these proceedings by issuing separate proceedings against the plaintiff (Record No. 2024/2277P), alleging wrongdoing by the plaintiff with respect to a separate asset jointly owned by the brothers, a company called Enodare Limited (“ Enodare”).

4 . The defendant has applied to consolidate the two sets of proceedings pursuant to Order 49, rule 6 of the Rules of the Superior Courts (“ the Rules”). The plaintiff opposes that application. In this judgment, I explain why I consider consolidating the proceedings at this stage to be premature.

Factual background

5 . In his affidavit grounding the consolidation application, the defendant avers that the brothers jointly invested in three assets – the Property, a second jointly owned residential investment property located in France, and the company, Enodare – as part of what he calls a “ unified investment strategy”. He avers that this strategy was characterised by a number of features, the most significant of which was that resources moved freely between the three investments. He gives examples of a loan to Enodare being allocated towards property expenses of the other investments, and of a top-up mortgage for the Property being used to fund investment in the French property and in Enodare. He also identifies other features, such as the fact that correspondence between the parties, including the plaintiff's solicitor's correspondence (the defendant is a lay litigant), references each of the investments. He also refers to a so-called “ joint management system” for the assets from which he says he has been excluded by the plaintiff.

6 . The defendant's claim against the plaintiff relates solely to their investment in Enodare. The indorsement of claim in his Plenary Summons seeks relief in the following terms:

“ The Plaintiff's claim is for the recovery of Intellectual Property, damages for the loss of income, breach of contract, loss of business and loss of reputation, as a result of the actions and torts of the Defendant in unlawfully removing assets from a jointly owned company, Enodare Limited, without the knowledge or consent of the Plaintiff and using same for his own personal gain and which said assets were and are jointly owned on a fifty-fifty basis by the Plaintiff and the Defendant.”

7 . The defendant elaborates on this claim in a Statement of Claim delivered in October 2024. The Statement of Claim is not in the form dictated by the Rules of the Superior Courts, but it appears that the thrust of the defendant's claim is that the plaintiff is claiming sole ownership of certain intellectual property, property which he alleges is owned by either Enodare or is jointly owned by the plaintiff and the defendant. Much of the damage that the defendant claims has been done by the plaintiff's actions has been done to the company, Enodare, e.g. loss of profits. As pointed out by counsel for the plaintiff, the defendant's entitlement to claim damages for the loss of Enodare must be open to doubt. That, however, is a matter for another day. The plaintiff denies the defendant's allegations in relation to Enodare and contends that the documentary evidence relied on by the defendant and exhibited in his affidavit grounding the consolidation motion does not support the defendant's claim in the manner alleged.

8 . The plaintiff's claim, by contrast to the defendant's, is straightforward. He asserts that the Property is jointly owned by him and his brother. It is an investment property which has typically been let to tenants. Until recently, the defendant managed this investment and collected the rents but recently has failed to account for all of the rents. The plaintiff avers that his “ trust and confidence in the Defendant has irretrievably broken down and there can be no basis for our continued joint ownership of” the Property. He seeks an order pursuant to section 31 of the Land and Conveyancing Act 2009, as amended, for the sale of the Property and the distribution of the proceeds. In his affidavit replying to the defendant's motion to consolidate, he makes clear his view that the net proceeds of sale should be distributed on a 50/50 basis.

Application to consolidate

9 . Order 49, rule 6 of the Rules provides as follows:

6. Causes or matters pending in the High Court may be consolidated by order of the Court on the application of any party and whether or not all the parties consent to the order.

10 . The parties are agreed that the applicable principles in an application to consolidate are as set out in the Supreme Court decision in Duffy v News Group Newspapers Ltd[1992] 2 IR 369 (at p. 376):

“ The legal principles are:—

(1) Is there a common question of law or fact of sufficient importance?

(2) Is there a substantial saving of expense or inconvenience?

(3) Is there a likelihood of confusion or miscarriage of justice?”

11 . It is clear that it is not sufficient to show that one of the three criteria are met to justify consolidating proceedings. In JOC v GD, JOC v KW[2017] IEHC 781, the High Court (Keane J) refused to consolidate proceedings notwithstanding the court's conclusion that there was “ an obvious commonality of questions of fact” and “ significant commonality of questions of law” and “ no obvious likelihood of confusion or miscarriage of justice” in the event of consolidation. There...