Martin McCaughey v Peter McCaughey, IJM Timber Engineering Ltd and by Order McCaughey Homes Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 18 June 2021
• Neutral Citation: [2021] IEHC 412
• Date: 18 June 2021
• Docket Number: [2019 No. 80 COS.]
• Court: High Court

Between

Martin McCaughey

Applicant

and

Peter McCaughey, IJM Timber Engineering Limited and by Order McCaughey Homes Limited

Respondents

[2021] IEHC 412

[2019 No. 80 COS.]

THE HIGH COURT

COMMERCIAL

Settlement agreement – Enforcement – Terms – Applicant seeking an order enforcing the terms of a settlement agreement entered into between the parties – Whether any claim or entitlement which the first respondent may formerly have had under the resolutions in question was released

Facts: The applicant, Mr M McCaughey, applied to the High Court seeking an order enforcing the terms of a settlement agreement entered into between the parties on 21st January, 2020. An order was also sought directing the sale of the second respondent, IJM Timber Engineering Ltd (IJM), to proceed on the basis that the first respondent, Mr P McCaughey, had no claim, right or entitlement against IJM, arising out of or pursuant to certain resolutions that were passed at an extraordinary general meeting of the shareholders of IJM on 4th December, 2017. In this context, the applicant made the case that, by the terms of the settlement agreement, any such claim on the part of Mr P McCaughey on foot of the resolutions in question was extinguished. In particular, the applicant relied on para. 1 of the settlement agreement under which (inter alia) the parties to the settlement agreement agreed that it was in full and final settlement not only of the matters in issue in these proceedings (together with two additional sets of proceedings identified in the schedule to the settlement agreement) but also “any and all claims or disputes between the parties as of the date hereof”. The applicant also relied on clause 25 by which the parties to the agreement agreed that they would have “no further claims whatsoever against each other and...that there are no other claims which any of the parties have against the other(s) or against any associated companies”. The applicant submitted that, by virtue of these provisions of the settlement agreement, any claim or entitlement which Mr P McCaughey may formerly have had under the resolutions in question was released.

Held by McDonald J that the intention and effect of paras. 1 and 25 of the agreement is that Mr P McCaughey has released any claim he may have had against IJM under resolutions 2A and 2B. McDonald J held that the language of paras. 1 and 25 is plainly sufficiently wide to cover such a release. He held that there are a number of other provisions of the settlement agreement which are consistent with that interpretation of paras. 1 and 25. He held that it was of some significance that the parties took care to spell out in a number of express provisions in the agreement the specific sums that are to be paid to Mr P McCaughey or the specified proportion of amounts realised that are to be paid to him. McDonald J accordingly ordered that the settlement agreement should be enforced on the basis that any payment claims which Mr P McCaughey may previously have had under the December 2017 resolutions have been settled and released by virtue of paras. 1 and 25 of the agreement.

McDonald J held that in circumstances where the applicant had succeeded in his application to enforce the settlement agreement, he should be entitled to his costs of that application to be adjudicated by the Legal Costs adjudicator, in default of agreement, such costs to include the costs of the written submissions and of all attendances before the court on this application but subject to a stay on the order for costs in the event of an appeal by the respondents within the time limited for that purpose, such stay to continue until the determination of the appeal.

Application granted.

JUDGMENT ofMr. Justice Denis McDonalddelivered on 18th June, 2021

The application before the court

1 By the application before the court, the applicant seeks an order enforcing the terms of a settlement agreement entered into between the parties on 21st January, 2020. An order is also sought directing the sale of IJM Timber Engineering Ltd (“ IJM”) to proceed on the basis that Mr. Peter McCaughey, the first named respondent, has no claim, right or entitlement against IJM, arising out of or pursuant to certain resolutions that were passed at an extraordinary general meeting of the shareholders of IJM on 4th December, 2017. In this context, the applicant makes the case that, by the terms of the settlement agreement, any such claim on the part of Mr. Peter McCaughey on foot of the resolutions in question was extinguished. In particular, the applicant relies on para. 1 of the settlement agreement under which ( inter alia) the parties to the settlement agreement agreed that it was in full and final settlement not only of the matters in issue in these proceedings (together with two additional sets of proceedings identified in the schedule to the settlement agreement) but also “ any and all claims or disputes between the parties as of the date hereof”. The applicant also relies on clause 25 (addressed in further detail below) by which the parties to the agreement agreed that they would have “ no further claims whatsoever against each other and… that there are no other claims which any of the parties have against the other(s) or against any associated companies…”. Essentially, the applicant submits that, by virtue of these provisions of the settlement agreement, any claim or entitlement which Mr. Peter McCaughey may formerly have had under the resolutions in question was released.

2 The settlement agreement was executed in the context of these proceedings which were brought by the applicant under s. 212 of the Companies Act, 2014 (“the 2014 Act”) in relation to the way in which IJM was being run. As described in more detail below, the applicant alleged that the affairs of IJM were being carried on by Mr. Peter McCaughey in a manner oppressive to him and in disregard of his interests. Mr. Peter McCaughey is a brother of the applicant. Those proceedings were listed for trial before me on Tuesday, 21st January, 2020. On that occasion, I was informed by counsel for the parties that the proceedings had been settled and I was asked to adjourn the proceedings until 30th January, 2020. When the matter subsequently came back before me on the latter date, I was asked to make a number of orders including an order that the parties should be at liberty to re-enter the proceedings “ solely for the purposes of enforcing the terms of settlement executed by the parties on the 21st day of January, 2020”. An order to that effect was duly made.

3 On the basis of the terms of the settlement agreement, the applicant contends that Mr. Peter McCaughey is not entitled to rely on the terms of the following ordinary resolutions which were passed at the extraordinary general meeting of IJM on 4th December, 2017:-

“2.Ordinary Resolutions Notified on or before 24th Nov 17

• A. Approval that immediately upon his exit from the company, for whatever reason, Peter McCaughey will receive a payment of not less than 5% of turnover generated from 1st Jan 2014 to date and projected forward to include all existing orders and customer commitments. This payment may be made by way of cash, assets, shares, etc, or any combination thereof, at his discretion.

• B. On confirmation from Peter McCaughey that his intention is to remain with the company. He will receive payment of €1,500,000… and given 500,000… ordinary shares. The authorised share capital of the Company will be increased to 1,500,000… shares to accommodate this.”

4 In response, Mr. Peter McCaughey argues that the application is misconceived and that there is nothing in the terms of the settlement agreement (when construed against the relevant factual background) to support the suggestion made by the applicant that the entitlements which Mr. Peter McCaughey has under those resolutions were in any way settled or compromised under the terms of the settlement agreement of January, 2020. The issue was fully argued before me on 21st April, 2021. For completeness, it should be noted that, when the application to enforce the settlement was first listed before me on 19th February, 2021, it was also argued on behalf of Mr. Peter McCaughey that the application was procedurally misconceived and that it was not open to the applicant, on a summary application to enforce a settlement agreement, to ask the court to construe the agreement. It was submitted that the appropriate course was for the applicant to issue a construction summons. In an ex tempore ruling on that day, I held that, if the applicant is correct in his interpretation of the settlement agreement, it was open to him, under the terms of the order made on 30th January, 2020 to seek to have the settlement agreement enforced but that it would be a matter for the court to determine, on the hearing of the application, whether the settlement agreement has the effect contended for. In that ruling, I observed that it frequently happens on an application of this kind that there will be debate between the parties as to the precise meaning or ambit of the settlement agreement sought to be enforced. It also has to be said that, on the present application, the same materials are available to the court as would be put before the court on a construction summons under O. 3 (7) of the Superior Court Rules.

5 That said, it is important to observe that there are aspects of the written submissions delivered on behalf of the applicant which seem to me to go beyond what is permissible on an application of this kind. In paras. 53 to 62 of the submissions, an argument is made as to the legal effect of the resolutions described in para. 3 above and a case is made that, even if the court finds that Mr. Peter McCaughey's claims on foot of the resolutions were not compromised by the settlement agreement, Mr. Peter McCaughey is nonetheless not entitled...