McCaughey v McCaughey and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 30 May 2024
• Neutral Citation: [2024] IECA 135
• Court: Court of Appeal (Ireland)
• Docket Number: CIVIL APPEAL No.: 2021/200

Between/

Martin McCaughey

Applicant/Respondent

and

Peter McCaughey

Respondent/Appellant

and

IJM Timber Engineering Limited

Respondent in the High Court

and

By Order, McCaughey Homes Limited

[2024] IECA 135

Barniville P.

Faherty J.

Ní Raifeartaigh J.

CIVIL APPEAL No.: 2021/200

THE COURT OF APPEAL

Settlement agreement – Oppression – Companies Act 2014 s. 212 – Appellant appealing from the judgment and order which decided all of the issues arising in the application to enforce a settlement agreement in favour of the respondent – Whether the judge had failed properly to apply the applicable legal principles to the facts

Facts: The respondent, Mr M McCaughey, brought proceedings under s. 212 of the Companies Act 2014 alleging oppression against the appellant, Mr P McCaughey, and IJM Timber Engineering Ltd (IJM). Those proceedings were settled by a Settlement Agreement providing for the joinder as a party to the proceedings of another company, McCaughey Homes Ltd (MHL), to give effect to the terms of the Settlement Agreement. An order was made by the High Court (McDonald J): (a) joining MHL as a party to the proceedings; (b) cancelling the issue of a number of shares in IJM to the appellant (as agreed in the Settlement Agreement); (c) striking out the proceedings with no order as to costs (and vacating all previous costs orders); and (d) giving liberty to re-enter the proceedings on notice “solely for the purposes of enforcing” the terms of the Settlement Agreement. Issues arose between the parties as to the correct interpretation and scope of the Settlement Agreement and the respondent brought an application to re-enter the proceedings for the purpose of giving effect to the Settlement Agreement and to obtain an order directing that the sale of IJM would proceed forthwith on a particular basis which, it was claimed, was required under the Settlement Agreement. Following objection by the appellant as to the appropriateness of the re-entry application, McDonald J delivered a ruling and made an order ordering the proceedings to be re-entered for the purpose of giving effect to the Settlement Agreement and giving procedural directions for the hearing of that application. The application was heard by the judge on affidavit. Procedural and substantive issues were raised in the course of the application. Those issues were decided by the judge in favour of the respondent. The appellant appealed to the Court of Appeal from the judgment and order made by the judge on the respondent’s application. The appellant did not contend that the judge had not correctly identified the applicable legal principles but did argue that the judge had failed properly to apply those principles to the facts.

Held by Barniville P that he agreed with the trial judge’s conclusions both as to the procedural approach he adopted in determining the respondent’s application to enforce the Settlement Agreement and as to the substantive issue of the proper interpretation of the Settlement Agreement. Barniville P was satisfied that the judge correctly interpreted the Settlement Agreement as including a compromise or release of the entitlements the appellant had to the payments provided for in Resolutions 2A and 2B passed at the Extraordinary General Meeting of IJM in December 2017. In Barniville P’s view, there was no error of principle in the judge’s determination of the respondent’s application and no injustice had been caused to the appellant as a result of that determination.

Barniville P dismissed the appeal in its entirety.

Appeal dismissed.

[APPROVED]

JUDGMENT of Mr. Justice David Barniville, President of the High Court, delivered on the 30 ^th day of May, 2024

Contents

1. Introduction	2
2. Factual Background	4
4. Settlement Agreement	8
5. Martin's Application	12
6. High Court Ruling and Order of 19th February, 2021	14
7. Subsequent Exchanges of Affidavits	15
8. The Judgment of McDonald J. in the High Court	16
9. Peter's Appeal: Submissions in Support of and Against the Appeal	25
(1) Peter's Position on the Appeal	25
(a) The Procedural Issue: Motion Re-entering Proceedings	26
(b) The Substantive Issue: Construction of the Settlement Agreement	28
(2) Martin's Position on the Appeal	31
(a) The Procedural Issue: Motion Re-entering Proceedings	31
(b) The Substantive Issue: Construction of the Settlement Agreement	33
10. Analysis and Decision on Appeal	36
(1) Scope of Review	36
(2) The Procedural Issue: Appropriateness of Motion Re-entering Proceedings	36
(3) The Substantive Issue: Proper Construction of the Settlement Agreement	40
(a) Misapplication of Principle/Misinterpretation of the Settlement Agreement	40
(b) Reliance on IJM's Financial Statements and BDO Valuation without Expert Evidence	48
11. Conclusions	49
12. Provisional View on Costs	50

1. Introduction

1 . This is my judgment in an appeal which has been brought by Peter McCaughey (the appellant, who was one of the respondents in the High Court, and who I will refer to in this judgment as “Peter”) from the judgment of the High Court (McDonald J.) delivered on 18 ^th June, 2021 ( McCaughey v McCaughey & Ors [2021] IEHC 412) and from the order made by the High Court on foot of that judgment on 2 ^nd July, 2021, which decided all of the issues arising in the application to enforce a settlement agreement in favour of his brother, Martin McCaughey (the respondent, who was the applicant in the High Court, and who I will refer to as “Martin”).

2 . As I explain in more detail later, Martin had brought proceedings under s. 212 of the Companies Act, 2014 (the “2014 Act”) alleging oppression against Peter and a company called IJM Timber Engineering Limited (“IJM”). Those proceedings were settled by a Settlement Agreement signed on 21 ^st January, 2020 (the “Settlement Agreement”). The Settlement Agreement provided for the joinder as a party to the proceedings of another company, McCaughey Homes Limited (“MHL”) to give effect to the terms of the Settlement Agreement. An order was made by the High Court (McDonald J.) on 30 ^th January, 2020, (a) joining MHL as a party to the proceedings, (b) cancelling the issue of a number of shares in IJM to Peter (as agreed in the Settlement Agreement), (c) striking out the proceedings with no order as to costs (and vacating all previous costs orders), and (d) giving liberty to re-enter the proceedings on notice “solely for the purposes of enforcing” the terms of the Settlement Agreement.

3 . Issues arose between the parties as to the correct interpretation and scope of the Settlement Agreement and Martin brought an application to re-enter the proceedings for the purpose of giving effect to the Settlement Agreement and to obtain an order directing that the sale of IJM would proceed forthwith on a particular basis which, it was claimed, was required under the Settlement Agreement. Following objection by Peter as to the appropriateness of the re-entry application, McDonald J. delivered a ruling and made an order on 19 ^th February, 2021, ordering the proceedings to be re-entered for the purpose of giving effect to the Settlement Agreement and giving procedural directions for the hearing of that application.

4 . The application was ultimately heard by the judge on affidavit with written and oral submissions being made on behalf of Martin and Peter. Procedural and substantive issues were raised in the course of the application. Those issues were decided by the judge in favour of Martin. Peter appealed from the judgment and order made by the judge on Martin's application.

5 . For the reasons which I set out in detail in this judgment, I am satisfied that the judge was correct in deciding the procedural and substantive issues in Martin's favour and that Peter has failed to advance any basis on which this Court should interfere with the findings, conclusions and orders made by the judge. The judge delivered an extremely detailed judgment in which he set out the correct legal principles applicable to the procedural issue arising on the application (which was essentially whether the re-entry of the proceedings on foot of the terms of the Settlement Agreement was the appropriate way of resolving the disputed issues of interpretation of that agreement which had arisen between the parties) and to the substantive issue (which concerned the proper interpretation of the Settlement Agreement). The judge then carefully explained why, in his view, Martin was entitled to succeed on both of those issues. Peter did not contend that the judge had not correctly identified the applicable legal principles but did argue that the judge had failed properly to apply those principles to the facts. I disagree. I am satisfied that having identified the correct legal principles applicable to both aspects of the appeal, the judge then went on carefully to apply those principles in a correct and proper manner and his reasoning was, in my view, unimpeachable. I have not been persuaded by any of the arguments advanced on behalf of Peter as to why the judgment and order of the judge should be disturbed. In my view, therefore, Peter's appeal should be dismissed.

2. Factual Background

6 . In a comprehensive judgment, McDonald J. set out the extensive background to the execution of the Settlement Agreement on 21 ^st January, 2020. I gratefully adopt that background and the helpful agreed chronology provided by the parties at the hearing of the appeal. While the issues between the parties to the appeal are extremely contentious and while the factual background discloses a long history of contention and dispute between members of the McCaughey family, it is possible to summarise the relevant factual background in what I hope are relatively non-contentious terms.

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