Moorview Developments Ltd and Others v First Active Plc and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 06 March 2009
• Neutral Citation: [2009] IEHC 214
• Court: High Court
• Date: 06 March 2009

Moorview Developments Ltd & Ors v First Active Plc & Ors

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 LINKED PROCEEDINGS

[2009] IEHC 214

[No. 9018 P/2003]

THE HIGH COURT

Mortgagee in possession - Applications for non-suit - Reliance on documents obtained from discovery - Proper approach of court on application for non-suit - Extent to which court can scrutinise evidence presented by plaintiff - Conflicting intentions of defendants regarding going into evidence if unsuccessful - Whether difficulty in applying different approaches by defendants to same evidence - Onus on plaintiff to establish prima facie case - Expert opinion - Material lack of clarity regarding documents provided to experts - Whether expert views given in evidence based on incomplete account of relevant facts - Whether evidence could be reasonably relied on by jury - Credibility of witness - History of group of companies - Development projects - Relationship between group and bank - Lending facilities - Restructuring of group -Problems with development - Sale of shopping centre - Sale of partially built development to third party - Fraud and contract claims - Whether group entitled to rectification - Whether contract as rectified breached - Fraudulent misrepresentation - Understanding as to substance of term or clause to be inserted - Ingredients of claim of fraudulent misrepresentation - Whether lack of honest belief in truth of representation - Whether intention for representee to act on statement - Necessity for intention to be proved strictly and subjectively - Whether evidence of express representation - Potential liability of receiver - Potential liability of receiver as manager - Duty of receiver managing business - Allegation of breach of duty to manage property with due diligence - Whether immunity from liability in absence of mala fides - Obligation of receiver to debenture holder - Obligation to ensure debt discharged -- Vicarious liability of receiver - Whether receiver negligent in failing to take advice - Whether prima facie evidence of negligence - Whether prima facie evidence of causal link between alleged negligence and identified consequences - Whether guarantees rendered void or voidable by fraud - Validity of cross-guarantees - Whether bank owed duties as shadow director - Potential liability of shadow directors - Whether sale of shopping centre breach of trust - Fiduciary duty - Whether breach of banker customer relationship - Allegations of unauthorised transfer of funds between accounts - Crystallisation of floating charge - Whether property not within scope of debentures - Claim based on retention of title clause - Claim that bank entered into profit sharing agreement - Leases - Waiver of illegality - Whether failure to enter into possession peaceably - Allegation of stamp duty fraud - Porterridge Trading Ltd v First Active Plc [2007] IEHC 313 (Unrep, Clare J, 7/9/2007); Moorview Developments Ltd v First Active Plc [2008] IEHC 211 (Unrep, Clarke J, 20/5/2008); Moorview Developments Ltd v First Active Plc & Jackson [2008] IEHC 274 (Unrep, Clarke J, 31/7/2008); Byrne & Leahy v Shannon Foynes Port Company [2007] IEHC 315 [2008] 1 IR 814; Heatherington v Ultra Tyre Service Ltd [1993] 2 IR 535; O'Toole v Heavey [1993] 2 IR 544; O'Donovan v Southern Health Board [2001] 3 IR 385; Hanafin v Minister for Environment [1996] 2 IR 321; McKenna An Taoiseach (No 2) [1995] 2 IR 10; Bentley v Jones Harris & Co [2001] All ER 37; Irish Life Assurance Co Ltd v Dublin Land Securities Ltd [1989] IR 253; Forshall v Walsh (Unrep, Shanley J, 18/6/1997); Medforth v Blake [2000] Ch 86; Holohan v Friends Provident & Century Life Office [1966] IR 1; Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295; Kinsella v Somers (Unrep, Budd J, 23/11/1999); Re B Johnson & Co (Builders) Ltd [1995] Ch 634; Re Salthill Properties Ltd [2006] IESC 35 (Unrep, SC, 29/5/2006); Re Salthill Properties Ltd [2004] IEHC 145 (Unrep, Laffoy J, 30/7/2004); Porterridge Trading Ltd v First Active Plc [2006] IEHC 285 (Unrep, Clarke J, 4/10/2006); Henderson v Henderson (1843) 3 Hare 100; Royal Bank of Scotland Plc v Etridge (No 2) [2002] 2 AC 773; Re Hydrodam (Corby) Ltd [1994] 2 BCLC 180; Re Tasbian Ltd (No 3) [1993] BCLC 297; Re Pftzm Ltd [1995] BCC 280; Norberg v Wynrib [1992] 92 DLR (4th) 449; Regal (Hastings) Ltd v Gulliver [1942] 1 AER 378; Phonographic Performance (Irl) Ltd v Cody [1998] 4 IR 504; Somers v James Allen (Ireland) Ltd [1985] IR 340; Hendy Lennox (Industrial Engines) Ltd v Grahame Puttick Ltd [1984] 1 WLR 485; Sadiq v Hussain [1997] 73 P & CR D44; Ropaigealach v Barclays Bank Plc [1999] 4 All ER 235 and Bula Ltd v Crowley [2003] 1 ILRM 55 considered - Companies Act 1963 (No 33), s 316A - Companies (Amendment) Act 1990 (No 27) s 172 - Rules of the Superior Courts (Commercial Proceedings) 2004 (SI 2/2004) - Applications for non-suit granted save as to issue regarding scope of debenture (2003/9018P - Clarke J - 6/3/2009) [2009] IEHC 214

Moorview Developments Ltd v First Active plc

PORTERRIDGE TRADING LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 7.9.2007 2007/51/10774 2007 IEHC 313

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 20.5.2008 2008 IEHC 211

MOORVIEW DEVELOPMENTS LTD v FIRST ACTIVE PLC & JACKSON UNREP CLARKE 31.7.2008 2008 IEHC 274

BYRNE & LEAHY v SHANNON FOYNES PORT COMPANY & MIN FOR TRANSPORT 2008 1 IR 814 2008 1 ILRM 529 2007/7/1251 2007 IEHC 315

RULES OF THE SUPERIOR COURTS (COMMERCIAL PROCEEDINGS) 2004 SI 2/2004

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 2ED 2005 PARA 19.44

HEATHERINGTON v ULTRA TYRE SERVICE LTD 1993 2 IR 535 1993 ILRM 353 1993/8/2095

O'TOOLE v HEAVEY 1993 2 IR 544 1992/12/3982

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 2ED 2005 PARA 19.46

O'DONOVAN v SOUTHERN HEALTH BOARD 2001 3 IR 385 2001/18/4927

HANAFIN v MIN FOR ENVIRONMENT 1996 2 IR 321 1996/5/1182

MCKENNA v AN TAOISEACH (NO 2) 1995 2 IR 10 1996 1 ILRM 81

BENTLEY v JONES HARRIS & CO 2001 EWCA CIV 1724 2001 AER (D) 37 (NOV)

IRISH LIFE ASSURANCE CO LTD v DUBLIN LAND SECURITIES LTD 1989 IR 253

CARTWRIGHT MISREPRESENTATION MISTAKE & NON-DISCLOSURE 2ED 2007 137

FORSHALL v WALSH UNREP SHANLEY 18.6.1997 1998/6/1685

COMPANIES ACT 1963 S316A

COMPANIES ACT 1990 S172

MEDFORTH v BLAKE 2000 CH 86 1999 3 WLR 922 1999 3 AER 97

HOLOHAN v FRIENDS PROVIDENT & CENTURY LIFE OFFICE 1966 IR 1

DOWNSVIEW NOMINEES LTD v FIRST CITY CORP LTD 1993 AC 295 1993 2 WLR 86 1993 3 AER 626

KINSELLA v SOMERS UNREP BUDD 23.11.1999 1999/15/4384

B JOHNSON & CO (BUILDERS) LTD, IN RE 1955 CH 634 1955 3 WLR 269 1955 2 AER 775

KEANE COMPANY LAW 4ED 2007 PARA 22.17

SALTHILL PROPERTIES LTD, IN RE UNREP SUPREME 29.5.2006 2006/52/10997 2006 IESC 35

SALTHILL PROPERTIES LTD, IN RE UNREP LAFFOY 30.7.2004 2004/46/10491 2004 IEHC 145

PORTERRIDGE TRADING LTD v FIRST ACTIVE PLC UNREP CLARKE 4.10.2006 2006/48/10310 2006 IEHC 285

HENDERSON v HENDERSON 1843 3 HARE 100

ROYAL BANK OF SCOTLAND PLC v ETRIDGE (NO 2) 2002 2 AC 773 2001 3 WLR 1021 2001 4 AER 449

COMPANY DIRECTORS DISQUALIFICATION ACT 1996 S22(5)

HYDRODAM (CORBY) LTD (IN LIQUIDATION), IN RE 1994 2 BCLC 180 1994 BCC 161

TASBIAN LTD (NO 3), IN RE 1993 BCLC 297 1992 BCC 358

PFTZM LTD (IN LIQUIDATION), IN RE 1995 BCC 280 1995 2 BCLC 354

NORBERG v WYNRIB 1992 92 DLR (4TH) 449

REGAL (HASTINGS) LTD v GULLIVER 1942 1 AER 378 1967 2 AC 134

PHONOGRAPHIC PERFORMANCE (IRL) LTD v CODY 1998 4 IR 504 1994 2 ILRM 241 1994/13/3940

SOMERS v JAMES ALLEN (IRELAND) LTD 1985 IR 340 1985 ILRM 624

HENDY LENNOX (INDUSTRIAL ENGINES) LTD v GRAHAME PUTTICK LTD 1984 1 WLR 485 1984 2 AER 152

SADIQ v HUSSAIN 1997 73 P & CR D44

ROPAIGEALACH v BARCLAYS BANK PLC 1999 4 AER 235 2000 QB 263 1999 3 WLR 17

BULA LTD & ORS v CROWLEY & ORS 2003 1 ILRM 55 2002/4/857

1. Introduction

2 2 1.1 These linked proceedings arise out of the collapse of a series of companies associated with Mr. Cunningham (respectively "the Cunningham Group" or "Mr. Cunningham) which occurred when Mr. Ray Jackson ("Mr. Jackson") was appointed as receiver of a number of those companies by First Active plc ("First Active"). At the time of the appointment of Mr. Jackson as receiver it would appear that a sum of €31,152,169.62 ws owing by certain Cunningham Group companies to First Active. Generally these proceedings arise out of the banking relationship between First Active and the Cunningham Group, together with the appointment of Mr. Jackson as receiver and the events that followed. One aspect of that sequence of events was a sale to Bernard Duffy ("Mr. Duffy") of a significant asset of the Cunningham Group, being a partially built apartment and commercial development at Bailey Point in Salthill, Galway ("Bailey Point").

3 3 1.2 It will be necessary to set out the issues which have arisen between the parties in more detail in the course of this judgment. However, in general terms, a wide range of issues were canvassed in the various linked proceedings the titles of which proceedings are set out in the first schedule to this judgment. The separate cases were given a designation letter as appears in that schedule. The references in this judgment to individual cases by letter refers likewise to the designation in that schedule. All of those proceedings were linked during a lengthy and complex case management process. In general terms, all of the linked cases were listed for hearing at the end of April, 2008. However, by an arrangement reached between the parties, with which I agreed, certain limited issues which arose...