Mero-Schmidlin (UK) Plc v Michael McNamara & Company and Others
| Jurisdiction | Ireland |
| Judge | Mr Justice Charleton |
| Judgment Date | 13 December 2011 |
| Neutral Citation | [2011] IEHC 490 |
| Docket Number | Record Number 10074P/2010 |
| Court | High Court |
| Date | 13 December 2011 |
[2011] IEHC 490
High Court
ELLIOTT CONSTRUCTION LTD v IRISH ASPHALT LTD UNREP CHARLETON 25.5.2011 2011 IEHC 269
SALMOND-HEUSTON ON LAW OF TORTS 17ED 1977 138
TAYLOR v SMYTH 1991 1 IR 142
PACIFIC ASSOCIATES v BAXTER 1990 1 QB 993
WILLIAMS v NATURAL LIFE 1998 1 WLR 830
SHINKWIN v QUIN-CON LTD 2001 1 IR 514 2001 2 ILRM 154 2000/16/6269
RSC O.99
COMPANIES ACT 1963 S360
TORT LAW
Conspiracy
Building contract - Subcontractor - Conspiracy to deprive subcontractor of contract monies - Application for direction - Test to be applied - Whether prima facie case made out - Whether circumstantial evidence of conspiracy sufficient - Whether conspiracy made out as a matter of probability - Whether equally probable explanation available - Whether acts and declarations of alleged conspirators admissible against each other - Whether documents and circumstances allegedly evidencing conspiracy sufficient to establish prima facie case that conspiracy existed - Whether plain wording of documents inconsistent with alleged unlawful purpose - Contract - Whether nature of dispute grounded in contract - Company law - Directors - Personal responsibility - Whether directors assumed personal responsibility so as to create special relationship - James Elliot Construction Ltd v Irish Asphalt Ltd [2011] IEHC 269 (Unrep, Charleton J, 25/5/2011) followed - Taylor v Smith [1991] 1 IR 142 and Pacific Associates Inc v Baxter [1990] 1 QB 993 considered - Direction granted (2010/10074P - Charleton J - 13/12/2011) [2011] IEHC 490
Mero-Schmidlin (UK) plc v Michael McNamara & Co
Facts The case involved a large building project. The plaintiff who was a subcontractor (a glass roof specialist) alleged that the defendants conspired to keep it out of money due to it in order to smooth future business relations or for some other purpose. It was alleged that a final settlement of building debts was reached between the defendants to include monies due to the plaintiff but that it was agreed that monies due to the plaintiff would not be pursued. In addition, the plaintiff made a claim of negligence based on breach of duty. Difficulties had arisen with a glass roof that the plaintiff had been asked to supply and the resident architect had rejected the glass. The defendants had indicated that they would not give evidence and sought a direction that there was no case to answer. The first named defendant was now in receivership under NAMA. The second named defendant had pleaded that it was unable to meet any claim made. The defendants made an application for a direction at the end of the plaintiff's case that there was no case to answer.
Held by Charleton J in granting the application. The court was concerned with whether there was prima facie proof only which if not contradicted would allow the court to fairly conclude that there was a conspiracy. Once the defect with glass became known, the responsibility for it was that of the plaintiff and the plaintiff alone. It was reasonable to require the replacement of the glass. The relationship between the parties was not governed by a special relationship giving rise to liability in negligence but was instead governed by contract. The issues as to the glass and its replacement and the roof and the leaks through it continued to dog relations between the parties at the time of the alleged conspiracy and well beyond. There was no conspiracy to abuse contractual relations to keep the plaintiff out of its money and there was no conspiracy to pay the first named defendant an effectively free sum of money from the second named defendant on the understanding that the plaintiff would never get it. Each of the defendants would be awarded their costs as against the plaintiff.
Reporter: R.F.
This is an application for a direction at the close of the plaintiff's case. It arises out of a large building project called 'McDonagh Junction' in Kilkenny where the second named defendant Cedartree Construction Ltd was the employer, the first named defendant Michael McNamara and Company was the main contractor, the third named defendant Bruce Shaw Project Management Limited was the project manager and the plaintiff was the subcontractor for a glass roof. The other defendants were employees of the first three named defendants. I will refer to that later.
The plaintiff alleges that the defendants conspired to keep it out of money due to it, approximately the unpaid half of the subcontract price in order to smooth future business relations or, in the alternative, to keep moneys due to the plaintiff for themselves.
Where the defendants on this kind of application indicate that they will go into evidence should the application be unsuccessful, the court should only grant a direction where there is no prima facie proof; where the defendants indicate that they will not give evidence, the task of the court is to analyse such evidence as has been given by the plaintiff in order to determine if proof amounting to a probability has been established. The court has a discretion to hear the defence case, should it be announced that there is to be one, before deciding on such an application. All of the defendants have stated that they will go into evidence should this application not be granted, so I bear this discretion in mind.
The entirety of the case made by the plaintiff has been based upon circumstantial evidence. I do not intend to repeat the analysis that I have made elsewhere as to the proper approach by a court trying a civil case based on such evidence. It suffices to say that a theory that a wrong has been committed against the plaintive is not enough; rather, the facts and circumstances upon which the case of conspiracy is made out must establish it as a probability; which probability will be destroyed in the event that on the same facts and circumstances some other equally probable explanation is available. This principle derives from the criminal law principle that a jury should not convict on circumstantial evidence unless that evidence establishes by undesigned coincidence and beyond a reasonable doubt that the accused is guilty and that no other reasonable hypothesis will fit the same circumstances. Where proof by probability is in issue, there may seem to be a logical trap in first deciding that the facts and circumstances prove a probability but then analysing the same material to see if anything else may be probable thereupon. That, however, is not so. The proper approach is to analyse the material in order to establish if a probability is established and then to return and re-analyse the material in order to attempt to find, as a safeguard, any other conclusion which might amount to a competing probability, thereby displacing any tentative finding of fact; see Elliott Construction Ltd v Irish Asphalt Ltd (High Court, unreported, 25 May 2011). Here I am concerned with whether there is prima facie proof only, that is to say a sufficiency of evidence which if not contradicted would allow a tribunal of fact to fairly conclude that there was a conspiracy. In that regard, I intend to concentrate on whether there is sufficient prima facie evidence of that tort.
A civil conspiracy occurs where two or more parties agree to further their interests to the detriment of another party by using unlawful means. That unlawful means can be the object of the conspiracy or it can be the mechanism whereby something apparently lawful is accomplished. In each case the essence of conspiracy as a tort is the coming together in a combination to agree on an illegality. It can also be the tort of conspiracy that a combination wilfully to do an act causing damage to a man in his trade or other interests is unlawful and if damage in fact is caused is actionable, unless the real and dominant purpose is to advance the lawful interests of the parties to that agreement in a manner in which they honestly believe that those interests would directly suffer if the action were not taken; see Heuston - Salmond on Torts (17th edition, 1977, para 138). It is the first kind of conspiracy which is relevant here. An agreement by an individual with his company can be a conspiracy as can an agreement between companies through individuals and an agreement between individuals and companies; Taylor v Smyth [1991] 1 IR 142.
There has been debate as to the nature of the claim taken by the plaintiff against the defendants. The plenary summons alleges various torts. I am satisfied that the claim before this Court is in conspiracy only. I accept the argument advanced on behalf of the defendants on this aspect of the application. In the letter of claim before the issue of proceedings, dated 12 October 2010, the solicitors for the plaintiff make explicit an allegation that an agreement by way of conspiracy was reached on about 1 July 2008 whereby it was agreed between the defendants, or on their behalf, that a full and final settlement of building debts between the parties to that agreement would be reached to include monies due to the plaintiff but, according to the letter, the monies due to the plaintiff would not be pursued. In evidence, Mr David Barrow on behalf of the plaintiff put forward his interpretation of the conspiracy, which was that on that date the parties agreed to the payment of the money that was due to the plaintiff but were determined that the plaintiff would never receive it because they would keep it for...
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...relationship that otherwise might be argued to give rise to a duty of care”; Mero-Schmidlin (UK) Plc v Michael McNamara and Company [2011] IEHC 490. 3 In colloquial speech, negligence means failing to do, or carelessly doing, some action and usually with a harmful result to another. The fun......