Moylist Construction Limited -v- Doheny & others, [2016] IESC 9 (2016)

Docket Number:236/2011
Party Name:Moylist Construction Limited, Doheny & others
 
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THE SUPREME COURT[Appeal No: 2011/236]

Clarke J.

Dunne J.

O’Malley J.

Between/

Moylist Construction LimitedPlaintiff/Appellantand

Thomas Doheny, Deloitte & Touche, Ulster Bank Limited

and Tom O’CarrollDefendants/Respondents

Judgment of Mr. Justice Clarke delivered the 4th March, 2016.

  1. Introduction

    1.1 One of the most difficult tasks with which courts can be faced involves proceedings where both sides are entirely innocent of wrongdoing but where, as a result of the decision of the Court, it will be inevitable that one or other side will suffer loss. Such proceedings have sometimes been described as ones involving “the problem of the two innocents”. The underlying proceedings which are the subject of this appeal come within that category. The plaintiff/appellant (“Moylist”) was involved as the contractor in a building contract involving 18 holiday homes known as the Greens at Ballybunion in Co. Kerry. The developer was the fourth named defendant (who is not involved in this appeal) (“Mr. O’Carroll”). Much of the funding for the purchase of the lands on which the development was to take place and the construction of the holiday homes concerned came from the third named defendant/respondent (“Ulster Bank”).

    1.2 The development occurred at what turned out to be an unfortunate time having regard to the collapse of the Celtic Tiger economy and the great recession which followed. There is no doubt but that Mr. O’Carroll owes a significant sum of money to Moylist for building works which were carried out but which were not paid for. Likewise, there is no doubt but that Mr. O’Carroll owes an even greater sum of money to Ulster Bank arising from borrowings to finance the project. It appears highly improbable that Mr. O’Carroll will ever be in a position to repay those monies. The principal asset which appeared to be available to pay either Moylist or Ulster Bank was the almost completed development. In those circumstances, it is, perhaps, hardly surprising if unfortunate that litigation ensued between Moylist and Ulster Bank which had at its core issues which could affect the question of who might be able to benefit from the sale of the almost completed development.

    1.3 Ulster Bank had the benefit of a mortgage in the form of a charge created on the 21st June, 2006, which was entered into by Mr. O’Carroll over the lands in question (which were registered lands comprised in Folio 3855F Co. Kerry). For some reason as yet unexplained, the charge was not registered as a burden on that folio until the 27th February, 2008. Ulster Bank appointed the first named defendant/respondent (“the Receiver”) as receiver under its powers arising from the mortgage. In passing, it should be noted that the Receiver is a member of the second named defendant firm although, for reasons which will shortly be explained, that firm is not a party to this appeal.

    1.4 Moylist commenced these proceedings, in which they claim that the Receiver and Ulster Bank have wrongly dispossessed Moylist of its entitlement to occupy the premises on foot of the building contract which was put in place between Mr. O’Carroll and Moylist. Moylist sought an interlocutory injunction to restrain any interference with its occupation of the lands. In response, the Receiver and Deloitte & Touche and (in a separate motion) Ulster Bank brought respective applications seeking to have the proceedings dismissed as being bound to fail. Both matters were heard by Laffoy J. in the High Court who gave judgment on the 21st April, 2010, (Moylist Construction Ltd -v- Doheny & ors [2010] I.E.H.C. 162). For the reasons set out in that judgment, Laffoy J. declined to grant Moylist the injunction sought but acceded to the applications to dismiss the proceedings as being bound to fail. It is against part of those orders that Moylist has now appealed to this Court.

  2. The Appeal

    2.1 It should first be recorded that Moylist has not sought to appeal the refusal of the interlocutory injunction. Second, it should be recorded that Moylist has not sought to appeal the dismissal of the proceedings as against Deloitte & Touche. Thus, the orders of the High Court which are the subject of this appeal are the orders dismissing the proceedings against, respectively, the Receiver and Ulster Bank on the basis of the finding of the trial judge that the proceedings are bound to fail.

    2.2 For reasons which I hope will become apparent, it seems to me to be appropriate to commence the substantive part of this judgment by looking closely at the proper application of the undoubted jurisdiction of the Court to dismiss proceedings as being bound to fail.

  3. The “Bound to Fail” Jurisdiction

    3.1 At least since the decision of Costello J. in Barry v. Buckley [1981] I.R. 306, it has been clear that the courts have an inherent jurisdiction to strike out proceedings as being bound to fail, which jurisdiction is in addition to the somewhat separate entitlement of a court to strike out proceedings under O.19, r.28 of the Rules of the Superior Courts. The distinction between the two forms of jurisdiction is analysed in Salthill Properties Ltd. & anor v. Royal Bank of Scotland plc & ors [2009] I.E.H.C. 207, which was approved by this Court in Lopes v. Minister for Justice, Equality & Law Reform [2014] I.E.S.C. 21. An application under the rules is based on a contention that the case as pleaded does not disclose a cause of action. The inherent jurisdiction under Barry v. Buckley extends to cases where it can be shown that there is no arguable basis in law and in fact for the claim made. That the facts, and in particular an analysis of documents, can be addressed at least to some extent in the context of such an application is clear form the judgment of this Court in Keohane v. Hynes [2014] I.E.S.C. 66.

    3.2 Having reviewed relevant authority in Keohane, I set out the following conclusions:-

    “6.5 It is important, for the avoidance of any doubt, that the overall principle be clearly stated. As pointed out in many of the authorities, not least in the judgment of Murray J. in Jodifern, the underlying basis of the jurisdiction to dismiss as being bound to fail stems from the court's inherent entitlement to prevent an abuse of process. Bringing a case which is bound to fail is an abuse of process. If it is clear to a court that a case is bound to fail, then the court has jurisdiction to prevent that abuse of process by dismissing the proceedings. However, as again noted by Murray J. in Jodifern, whatever might or might not be the merits of some form of summary disposal procedure, an application to dismiss as being bound to fail is not a means for inviting the court to resolve issues on a summary basis.

    6.6 It is for that reason that all of the jurisprudence emphasises that the jurisdiction is to be sparingly exercised and only adopted when it is clear that the proceedings are bound to fail rather than where the plaintiff's case is very weak or where it is sought to have an early determination on some point of fact or law. It is against that background that the extent of the court's entitlement to look at the facts needs to be judged.”

    3.3 As to the extent to which it is appropriate to engage with the facts, I continued by noting the following:-

    “6.8 What the Court can analyse is...

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