National Educational Welfare Board v Neil Ryan, I.T. Upgrade Ltd and Peter O'Grady

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 14 December 2007
• Neutral Citation: [2007] IEHC 428
• Court: High Court
• Docket Number: [2007 No. 2069 P]
• Date: 14 December 2007

National Educational Welfare Board v Ryan & Ors

BETWEEN

NATIONAL EDUCATIONAL WELFARE BOARD

PLAINTIFF

AND

NEIL RYAN, I.T. UPGRADE LIMITED AND PETER O'GRADY

DEFENDANTS

[2007] IEHC 428

[No. 2069 P/2007]

THE HIGH COURT

PRACTICE & PROCEDURE

Pleadings

Particulars of claim - Allegations of fraud in statement of claim - Whether further particulars required of plaintiff - Arab Monetary Fund v Hashim (No 2) [1990] 1 All ER 673, Leitch v Abbott (1886) 31 Ch D 374 and Sachs v Speilman (1887) 37 Ch D 295 considered - Rules of the Superior Courts 1986 (SI 15/1986), O 19, r 5(2) - Application refused (2007/2069P - Clarke J - 14/12/2007) [2007] IEHC 428

National Educational Welfare Board v Ryan

RSC O.19 r5(2)

RUTLEDGE (DECEASED), IN RE; HANLY & ORS v FINNERTY 1981 ILRM 198 1981/10/1688

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 2ED 2005 PARA 5.38

BARCLAY v M'HUGH 1878 12 ILTR 176

BULA LTD (IN RECEIVERSHIP) & ORS v CROWLEY & ORS UNREP MURPHY 10.6.2005 2005/6/1209 2005 IEHC 212

LEITCH v ABBOTT 1886 31 CH D 374

SACHS v SPEILMAN 1888 37 CH D 295

ARAB MONETARY FUND v HASHIM & ORS (NO 2) 1990 1 AER 673

RSC O.19 r7(3)

1 JUDGMENT delivered by Mr. Justice Clarke on the 14th December 2007

1. Introduction

2 2 1.1 The plaintiff ("the Board") is a statutory body established under the Education (Welfare) Act, 2000. In these proceedings the Board makes serious allegations against the first named defendant ("Mr. Ryan"), a former employee, and the second and third named defendants ("I.T. Upgrade") who are respectively a company which has done significant business in the IT area with the Board and the principal of that company.

3 3 1.2 At its simplest the Board alleges that Mr. Ryan, who was at the material time the Information Technology Manager of the Board, was party to a fraudulent arrangement with IT Upgrade concerning the supply of equipment and services in the IT field to the Board. It is said that Mr. Ryan received a number of cheques drawn on IT Upgrade's account which were made payable to him personally and which totalled a sum of €136,405. It is pleaded that these payments were made by way of bribes or secret commissions and that a consequence of such bribes or secret commissions was that the Board did not receive proper value for its contracts with IT Upgrade.

4 4 1.3 Those allegations are strenuously denied by IT Upgrade. The case has reached a stage where a statement of claim has been filed and where, in the ordinary way, IT Upgrade would be required to file its defence. However, IT Upgrade has raised a very detailed notice for particulars to which it will be necessary to refer to in due course. The Board has declined to answer that notice for particulars at this stage. In those circumstances IT Upgrade maintains that the Board has failed to comply with O. 19, r. 5(2) of the Rules of the Superior Courts ("RSC") and that the Board's claim should, therefore, be struck out. The Board has also brought a motion for judgment in default of defence. However, the Board accepts that in the ordinary way, IT Upgrade would be entitled to further time to file its defence. In truth, therefore, the real issues between the parties is as to whether IT Upgrade should now be required to file a defence notwithstanding the refusal on the part of the Board to answer the particulars sought or whether the Board should be required to answer those particulars as the price for avoiding a strike out of its proceedings.

2. The Issue

5 2 2.1 In precise terms the issue before the court is as to whether the Board has failed to comply with the relevant rule which provides as follows:-

"O. 19, r. 5(2) - In all cases alleging misrepresentation, fraud, breach of trust, wilful default or undue influence and in all other cases in which particulars may be necessary, particulars (with dates and items if necessary) shall be set out in the pleadings."

6 3 2.2 It is said on behalf of IT Upgrade that the Board has not only failed to comply with its obligation to set out its allegations of fraud in sufficient particularity in the statement of claim, but has compounded that situation by refusing to answer what are asserted to be reasonable particulars. In those circumstances it is said that the court should strike out the proceedings as against the Board or, at a minimum, indicate that the proceedings will be struck out unless the Board is prepared to mend its hand by replying to the particulars sought at this stage.

7 4 2.3 It is clear, therefore, that the issue concerns the state of the pleadings and with that in mind it is appropriate to turn to the relevant aspects of the pleadings for the purposes of identifying the extent to which the claim in fraud as against IT Upgrade has, in fact, been set out.

3. The Pleadings

8 2 3.1 As already indicated the Board maintains, and has pleaded with some particularity, that significant payments were made to Mr. Ryan as a bribe or secret commission. It is also alleged that those payments were made by IT Upgrade.

9 3 3.2 The manner in which it is alleged that IT Upgrade was involved in a conspiracy to defraud are set out in para. 12 of the statement of claim in the following terms:-

10 a "(a) by arranging for the second named defendant to invoice the plaintiff for goods at list prices, while paying reduced prices to the suppliers of such goods.

11 (b) by arranging for the second named defendant to invoice the plaintiff for services not performed or not fully performed.

12 (c) By arranging for the second named defendant to invoice the plaintiff for purchase of services from third parties, while in fact purchasing services of a lower price and quality.

13 (d) Bu arranging to supply the plaintiff with goods comprising computer hardware of a higher specification than were actually delivered.

14 (e) By arranging to supply the plaintiff with goods comprising computer hardware of a higher specification that's was, to the knowledge of the defendants, actually required by the plaintiff.

15 (f) By over-charging the plaintiff for equipment and consumables.

16 (g) By agreeing not to pass on any discounts to the plaintiff and

17 (h) By the payment of sums by way of bribes or secret commissions to the first named defendant as aforesaid."

18 4 3.3 The remainder of the contentions set out in the statement of claim are largely consequential to the assertion set out in para. 12 which I have just quoted in full. Against that background, solicitors on behalf of IT Upgrade served a detailed notice for particulars. As an example of the general tenor of that notice for particulars, I set out paras. 9 and 10 thereof which, as will be seen, relate to paras. 12(a) and (b) of the statement of claim. They are as follows:

19 2 "9. With reference to para. 12(a) of the statement of claim -

20 (a) please furnish a copy of each and all invoices upon which the plaintiff will rely for the purpose of this claim.

21 (b) please identify, if not otherwise apparent from the said invoices, each and all suppliers of the goods to which the plaintiff refers.

22 (c) please distinguish, in respect of each and all invoices, the alleged list price for the said goods and the reduced price allegedly paid to the suppliers of such goods.

23 10. With reference to para. 12(b) of the statement of claim -

24 2 (a) please furnish a copy of each and all invoices to which the plaintiff refers for the purposes of this claim.

25 3 (b) please state with the greatest of particularity the arrangements to which the plaintiff refers as allegedly made between the first named defendant and the second named defendant.

26 4 (c) Pleases distinguish, in respect of each and all invoices, the alleged services (i) not performed and (ii) not fully performed."

27 5 3.4 Similar particulars were sought in respect of the other sub-paragraphs of para. 12 of the statement of claim.

28 6 3.5 The Board's solicitors replied by letter of 28th May, 2007 in the following terms:-

"The fraud that is alleged against your clients is one the precise ambit of which is, by its clandestine nature, impossible for our client to define without the benefit of discovery and the delivery of interrogatories. In out view, the statement of claim is adequate to allow your clients to plead. (In this connection, we accept that your clients may not be in a position to admit the nature of the contractual relationship between the plaintiff and the first named defendant). We therefore require your clients to deliver a defence before our client will contemplate providing particulars of the fraud, over and above those contained in the statement of claim. It is our client's intentions to seek discovery from and to deliver interrogatories to you clients and, once this discovery has been made and examined, and the interrogatories answered, our client expect to be in a position to particularise the fraud further."

29 7 3.6 The contending positions of the parties are, therefore, clear. IT Upgrade maintains that it is entitled to answers to each of the relevant particulars before it should be required to file its defence. The Board maintains that IT Upgrade must deliver a defence followed by the making of discovery and the answering of interrogatories before detailed particulars, beyond those contained in the statement of claim, should be delivered. That is the net issue between the parties. If the Board are right, then it is clear that the appropriate course of action to take would be to require IT Upgrade to file its defence in a timely fashion and allow the other appropriate procedures to follow with the Board delivering detailed particulars subsequent to the receipt of discovery and answers to interrogatories. If, on the other hand, IT Upgrade is correct, then the price which the Board must pay to avoid the...