McCann v Desmond

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 11 May 2010
• Neutral Citation: [2010] IEHC 164
• Court: High Court
• Date: 11 May 2010

[2010] IEHC 164

THE HIGH COURT

[No. 6975P/2009]

McCann v Desmond

BETWEEN

EAMONN McCANN

PLAINTIFF

AND

DENIS DESMOND

DEFENDANT

RSC O.25 r1

RSC O.63A r4

RSC O.63A r5

PJ CARROLL & CO LTD & ORS v MIN FOR HEALTH & ORS (NO 2) 2005 3 IR 457 2005/10/2026 2005 IEHC 267

CORK PLASTICS (MANUFACTURING) & ORS v INEOS COMPOUND UK LTD & ORS UNREP CLARKE 7.3.2008 2008/8/1638 2008 IEHC 93

COMPANIES ACT 1963 S260

PRACTICE AND PROCEDURE

TriaL

Modular hearing - Contract dispute - Trial of preliminary issues - Jurisdiction of court - Factors for consideration in determining whether to hold modular hearing - Whether modular hearing suitable for trial of preliminary issues in contract dispute - Whether issues capable of determination in isolation from other issues - Whether clear saving of court time and costs - Whether modular hearing prejudicial to parties - Whether application for modular hearing made in good faith - P J Carroll & Co Ltd v Minister for Health (No 2) [2005] IEHC 267, [2005] 3 IR 457 and Cork Plastics (Manufacturing) v Ineos Compound UK Ltd [2008] IEHC 93, (Unrep, Clarke J, 7/3/2008) followed - Rules of the Superior Courts 1986 (SI 15/1986), O 25, r 1 - Rules of the Superior Courts (Commercial Pleadings) 2004 (SI 2/2004), O 63A, rr 4 and 5 - Modular hearing ordered (2009/6975P - Charleton J - 11/5/2010) [2010] IEHC 164

McCann v Desmond

1 JUDGMENT of Mr. Justice Charleton delivered on the 11th day of May 2010

2 1. This is a motion to have a series of preliminary issues tried on oral evidence, with the remainder of the issues between the parties to be decided later, depending the outcome.

3 2. The plaintiff and the defendant entered into either a partnership or an arrangement whereby they would, in cooperation with each other, promote outdoor rock and pop concerts in Ireland. This venture apparently proceeded profitably from the late 1970s up to 2006. Then, both parties agree that they entered into an arrangement to terminate their relationship. It is the nature of what that agreement was that is at issue between the parties. Secondary to that, within the pleadings exchanged by the parties, assertions and counter assertions are made on the proper form of accounting as to their business venture, on the corporate vehicles that were to be used in that regard, whether these were the true principals, what arrangement was to be made concerning both expenses and promotion, what was to be the relevant profit share and whether scrupulous accounting of monies can now be relied on by each party so that they know where they stand. I will remark, on reading the pleadings, that every issue raised seems to have a response in fact as well as in law, and that every response seems to call out further opposed points of view on the main and subsidiary issues.

4 3. It is claimed to be within the terms of the arrangement entered into between the plaintiff and the defendant that the profits of the partnership would be distributed in agreed shares as between them after a prior allocation of 10% of the profits to the defendant. However, this is denied. Instead, the defendant said that he looks at profits differently to the plaintiff and that all overheads in relation to the concerts and that all promotion work were to be valued and subtracted before a profit could be assessed. When the parties agreed with each other that their business relationship should come to an end, some time in 2006, a multiplier was agreed for a buy-out on the level of profit. This was to be 4.66 times the profits, averaged out, as I understand it, over a few years. Because each side claims to understand this differently, the ultimate figures come out at variables of somewhere between, using round figures, €4M and €16M.

Preliminary Issues

5 4. The order sought from the court would see three issues tried in advance of assessing the precise calculation in monetary terms resulting from the multiplier. These issues are:-

6 (1) Who were the proper parties to the agreement/s on which the plaintiff sues?

7 (2) What was the agreement regarding the distribution of profits and, in particular, was it agreed that the "nett profits" to be distributed were to be calculated without deduction in respect of overheads or costs (as the plaintiff contends) or after deduction of such overheads and costs (as the defendant contends)?

8 (3) What was the agreement regarding the buy-out of the interest allegedly held by the plaintiff (which, the defendant contends, was actually held by Wonderland [(Limited)] and, in particular, was the agreement that the plaintiff would be paid 100% of the business valuation of 4.66 times the average nett profits for the relevant period (as the plaintiff contends) or that the plaintiff would be paid 45% of the average nett profits (as the defendant contends that this 45% of the business valuation represents his agreed stake in as a business)?

9 5. In the event of any variation from the wording of the above to the relevant notice of motion, the latter prevails. The nature of the preliminary issues to be sought is not simply legal, as in O. 25 r.1 of the Superior Courts, rather, the order sought pursuant to O. 63A rr. 4 and 5 of the Rules of the Superior Courts, a set of rules which governs the Commercial Court. This provides that the Court may make such order for the proper hearing of the cause as will enable it to dispose fairly and efficiently of the proceedings. This application might be termed a motion seeking an order of the court for a modular hearing, as opposed to an order for the trial of a preliminary legal issue. There is no doubt that, provided that it is just, a court may make the order sought in this motion. In P.J. Carroll and Co. Limited v. Minister for Health (No. 2) [2005] 3 I.R. 457 Kelly J., at p. 466 stated:-

"There is a jurisdiction inherent in the court which enables it to exercise control over process by regulating its proceedings, by preventing the abuse of process and by compelling the observance of process. It is a residual source of power which the court may draw upon as necessary whenever it is just equitable to do so."

10 6. In Cork Plastics v. Iners Compound [2008] IEHC 93 Clarke J. discussed the circumstances in which the High...