Moorview Developments Ltd and Others v First Active Plc & Jackson and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 09 July 2010
• Neutral Citation: [2010] IEHC 275
• Court: High Court
• Date: 09 July 2010

Moorview Developments Ltd & Ors v First Active Plc & Jackson & Anor

BETWEEN

MOORVIEW DEVELOPMENTS LIMITED, SALTHILL PROPERTIES LIMITED, VALEBROOK DEVELOPMENTS LIMITED, SPRINGSIDE PROPERTIES LIMITED, DRAKE S.C. LIMITED, MALLDRO S.C. LIMITED, THE POPPINTREE MALL LIMITED AND BLONDON PROPERTIES LIMITED

PLAINTIFFS

AND

FIRST ACTIVE PLC AND RAY JACKSON

AND BY ORDER

BERNARD DUFFY

DEFENDANTS

AND RELATED CASES

[2010] IEHC 275

[No. 9018 P/2003]

THE HIGH COURT

BANKING

Guarantee

Mistake in guarantee - Wrongly described company - Liability capped - Whether misdescription relevant - Whether mistake capable of correction by construction - Whether mistake clear - Whether necessary correction clear - Whether evidence of indebtedness adequate - Certificate as to secured liability - Certificate not in written form - Whether credit for value of properties over whose assets defendant had security to be included in calculation of liability - Apportionment of residential and commercial purchase price - Whether portion of property sold at undervalue - Whether current liabilities proportionately overstated - Whether apportionment appropriate - Bank employee not personally involved in matters on which evidence given - Evidential weight of bank records - Separate proceedings by defendant against individual on foot of guarantee - East v Pantiles (Plant Hire) Ltd [1982] 2 EGLR 111, Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] AC 896 and Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38 [2009] 1 AC 1101 followed; Meyer v Gilmer [1899] 18 NZLR 129 endorsed - Judgment for plaintiff (2003/9018P - Clarke J - 09/07/2010) [2010] IEHC 275

Moorview Developments Ltd v First Active Plc

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 6.3.2009 2009/40/9929 2009 IEHC 214

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 17.7.2009 2009/41/10103 2009 IEHC 367

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 5.2.2010 2010 IEHC 34

EAST v PANTILES (PLANT HIRE) LTD 263 EG 61 1982 2 EGLR 111

INVESTORS COMPENSATION SCHEME LTD v WEST BROMWICH BUILDING SOCIETY 1998 1 WLR 896 1998 1 AER 98 1998 1 BCLC 493

CHARTBROOK LTD & ANOR v PERSIMMON HOMES LTD & ANOR 2009 1 AC 1101 2009 3 WLR 267 2009 4 AER 677

HALSBURYS LAWS OF ENGLAND 1ED 1907 PARA 1301

MEYER v GILMER 18 NZLR 129

BULA LTD (IN RECEIVERSHIP) & ORS v TARA MINES LTD & ORS UNREP LYNCH 6.2.1997 1997/1/219

FYFFES PLC v DCC PLC & ORS 2009 2 IR 417 2006/25/5125 2005 IEHC 477

1. Introduction

2 2 1.1 This is, at the last count, the thirteenth judgment given in relation to cases arising out of the collapse of the plaintiffs and related companies ("the Cunningham Group"). The background to these proceedings generally has been set out in many of those previous judgments and it is unnecessary to repeat it here. What might reasonably be described as the "main proceedings" ( i.e. those referred to in the title of this judgment) and the "main judgment" in same ( Moorview Developments Limited & Ors v. First Active Plc & Ors [2009] IEHC 214) dealt with many of the issues which arose in these connected proceedings. However, for the reasons set out in the main judgment, a number of issues were left over for subsequent determination. Some of the issues left over have already been the subject of decision, see Moorview Developments Ltd v. First Active Plc & Ors [2009] IEHC 367. This judgment is principally concerned with two remaining issues, being a counterclaim in the main proceedings and claim on a guarantee against Mr. Brian Cunningham personally.

3 3 1.2 The main proceedings involved a claim brought by companies in the Cunningham Group against the defendants First Active Plc ("First Active"), Ray Jackson ("Mr. Jackson") and Bernard Duffy ("Mr. Duffy"). In response to those proceedings First Active maintained a counterclaim against the first named plaintiff ("Moorview"), the second named plaintiff ("Salthill") the third named plaintiff ("Valebrook") and the fourth named plaintiff ("Springside"). The counterclaim related to monies alleged to be due by those companies arising out of loans advanced by First Active to the companies concerned and cross guarantees entered into by those companies in respect of the indebtedness to First Active of Moorview and Salthill.

4 4 1.3 In addition, this judgment is concerned with separate proceedings [2005 No. 272 S] in which First Active sues on foot of a guarantee entered into by Mr. Brian Cunningham ("Mr. Cunningham"). There is a complication in respect of these latter proceedings which it will be necessary to deal with in due course.

5 5 1.4 Subsequent to delivery of the main judgment, these two connected matters, that is to say First Active's counterclaim in the Moorview proceedings and the claim by First Active against Mr. Cunningham personally on the guarantee, were case managed with a view to those issues being tried together. In that context issues arose between the parties as to the entitlement, in the light of the main judgment, of the Cunningham Group and Mr. Cunningham to raise certain matters of defence. What, in fact, occurred was that witness statements were filed, on behalf of the Cunningham Group and Mr. Cunningham, from which it could only be inferred that it was intended to raise matters which First Active asserted had already been determined in the main judgment. An issue as to the entitlement of the Cunningham Group and Mr. Cunningham to raise those matters was determined in a judgment in Moorview Developments Ltd & Ors v. First Active Plc & Ors [2010] IEHC 34. For the reasons set out in that judgment I came to the view that it was not open to Mr. Cunningham or the Cunningham Group to raise the relevant matters on the grounds of res judicata.

6 6 1.5 The proceedings were then listed for hearing and this judgment is directed to the issues which were raised at that hearing.

7 7 1.6 In that context, I turn to the issues.

2. The Issues

2 2 2.1 It is possible, and in my view convenient, to separate the issues raised as a defence to the counterclaim into two sets of issues.

3 3 2.2 The first submission made on behalf of the Cunningham Group (or more accurately those four companies within the Cunningham Group which are specifically the defendants to the counterclaim) concern the adequacy of the evidence presented on behalf of First Active as to the indebtedness of those companies. I will in due course turn to that question.

4 4 2.3 Second, some specific issues concerning particular amounts of money included in the counterclaim were raised. I propose dealing separately with each of those issues.

5 5 2.4 Finally, it is necessary to touch on the question of First Active's claim against Mr. Cunningham on the guarantee. Only one issue was raised under that heading. The issue concerned the fact that the relevant guarantee made reference to liabilities of a company called Moorview Properties Limited. However, the name of the first named plaintiff is Moorview Developments Limited. On that basis it is said that the guarantee is not effective, at least insofar as debts of Moorview are concerned. Before leaving that issue I should also note that in a separate set of proceedings in which the Cunningham Group and Mr. Cunningham have brought a claim against the Royal Bank of Scotland & Ors ("the RBS proceedings"), I also had to consider an application on behalf of the Cunningham Group and Mr. Cunningham for an amendment to the pleadings in that case. I will deal with the issues which arose on that application in a separate ruling. However, for present purposes, it is necessary to note that the amendment sought, if made, would claim additional relief which would, if granted, have the effect of setting aside the guarantee which is the subject matter of the proceedings with which I am currently concerned. When I noted that there was only one issue in the guarantee proceedings, it is important to emphasise that it is perhaps more accurate to say that there is currently only one issue in those proceedings but that it may, depending on the result of the amendment application to which I have referred, be necessary to give further consideration as to what is to happen to those proceedings. For the purposes of this judgment I am concerned solely with the only issue which was, on the basis of the current pleadings, before the Court in relation to the continuing validity of the guarantee and Mr. Cunningham's liability on it. I propose dealing with that issue first.

3. The Guarantee Issue

2 2 3.1 As already noted only one point concerning the guarantee was made. It is true that the liabilities in respect of which Mr. Cunningham entered into in the guarantee concerned are specified as including liabilities of a company described as "Moorview Properties Limited".

3 3 3.2 The defendant to the counterclaim is, of course, Moorview Developments Limited. The company which has potential liabilities to First Active is, therefore, Moorview Developments Limited.

4 4 3.3 One preliminary point was made by counsel on behalf of First Active. Mr. Cunningham's guarantee has, in events which have happened, been capped at the sum of the euro equivalent of IR£1.5 million. The extent to which any of the companies whose liabilities are guaranteed may owe sums in excess of that amount is, therefore, irrelevant. Provided one or more of the relevant companies owes a cumulative sum equal to or in excess of the guarantee cap, then Mr. Cunningham is clearly liable to pay that capped sum on the guarantee. It will be necessary in due course to deal with the liabilities of each of the companies who are defendants to the counterclaim. However, it does need to be emphasised that, even if there was a difficulty concerning the description of Moorview as Moorview...