Moylist Construction Ltd v Doheny

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 04 March 2016
• Neutral Citation: [2016] IESC 9
• Court: Supreme Court
• Docket Number: [S.C. No. 236 of 2011],[Appeal No: 2011/236]
• Date: 04 March 2016

[2016] IESC 9

THE SUPREME COURT

Clarke J.

[Appeal No: 2011/236]

Between/

Moylist Construction Limited

Plaintiff/Appellant

and

Thomas Doheny, Deloitte & Touche, Ulster Bank Limited

and

Tom O'Carroll

Defendants/Respondents

Planning and development – Building contract – Dismissal of proceedings – Respondents seeking dismissal of proceedings on grounds that they were bound to fail – Whether the case made on appeal differed considerably from the case made in the High Court

Facts: The plaintiff/appellant, Moylist Construction Ltd, 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 defendant, 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 defendant/respondent, Ulster Bank Ltd. 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. Ulster Bank appointed the first defendant/respondent, Mr Doheny, as receiver under its powers arising from the mortgage. Moylist commenced proceedings claiming that the receiver and Ulster Bank 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 the second defendant/respondent, Deloitte & Touche, and (in a separate motion) Ulster Bank brought respective applications seeking to have the proceedings dismissed as being bound to fail. On the 21st April, 2010, the High Court (Laffoy J) declined to grant Moylist the injunction sought but acceded to the applications to dismiss the proceedings as being bound to fail. It was against the orders of the High Court dismissing the proceedings against the receiver and Ulster Bank on the basis of the finding of the trial judge that the proceedings were bound to fail that Moylist appealed to the Supreme Court. Both Ulster Bank and the receiver argued that the case made on appeal on behalf of Moylist differed, to a very considerable extent, from the case made in the High Court.

Held by Clarke J that, to the extent that some of the argument ranged over issues which, it was said, had not been raised by Moylist in the High Court, he would, at least for the purposes of this application, be nonetheless prepared to take them into account. Clarke J held that quite a number of the points said to be new were, to a significant extent, purely legal or documentary and, where documentary, were based on the same documents which were already before the Court. Clarke J held that in the light of the latitude which can properly be shown in respect of legal arguments, and in particular in circumstances where to do otherwise might lead to a plaintiff?s case being dismissed when it was not truly bound to fail, he would not exclude from Moylist the opportunity to rely on such arguments in this case. Clarke J concluded that this case was just too complex to be properly disposed of in the context of an application to dismiss as being bound to fail. Clarke J noted that it may or may not have appeared to be so complex when the motion was originally brought; indeed, the bringing of that motion had to be seen in the context of the fact that similar issues were required to be addressed in the context of the application for an injunction brought by Moylist in which it would have been necessary for Moylist to establish that it had a fair case to be tried. However, given the way in which the application to dismiss developed, it seemed to Clarke J that it was, at a minimum, no longer appropriate to deal with those issues in the context of a motion to dismiss, referring to McGrath v O?Driscoll [2007] ILRM 203.

Clarke J held that he would allow the appeal and discharge the order of the High Court dismissing the proceedings as being bound to fail. Clarke J held that the proceedings should follow their ordinary course in the High Court.

Appeal allowed.

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:-

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