O'Neill v Ryan
| Jurisdiction | Ireland |
| Judge | BLAYNEY J.,O'FLAHERTY J. |
| Judgment Date | 16 March 1993 |
| Neutral Citation | 1993 WJSC-SC 1227 |
| Docket Number | 436/89 |
| Court | Supreme Court |
| Date | 16 March 1993 |
1993 WJSC-SC 1227
THE SUPREME COURT
Finlay C.J.
O'Flaherty J.
Egan J.
Blayney J.
Denham J.
BETWEEN
AND
AND
Citations:
COMPANIES ACT 1963 S205
FOSS V HARBOTTLE 1843 2 HARE 461
BURLAND V EARLE 1902 AC 83
CLARK V WORKMAN 1920 1 IR 107
RSC O.19 r28
K (D) V K (A) & ORS UNREP COSTELLO 2.10.92
TREATY OF ROME ART 85
TREATY OF ROME ART 86
PRUDENTIAL ASSURANCE CO LTD V NEWMAN INDUSTRIES LTD & ORS 1982 1 CH 204
GRAY V LEWIS 1873 LR 8 CH APP 1035
COCKBURN V NEWBRIDGE SANITARY STEAM LAUNDRY CO LTD & LLEWELLYN 1915 1 IR 237
RUSSELL V WAKEFIELD WATERWORKS CO 1872 LR 20 EQ 474
GARDEN COTTAGE FOODS V MILK MARKETING BOARD 1984 AC 130
REWE-HANDELSGESELLSCHAFT NORD MBHH & REWE-MARKT STEFFEN V HAUPZOLLAMT KIEL 1981 ECR 1805
MIRECO 1980 ECR 2559
PRIVATE MOTORISTS PROVIDENT SOCIETY LTD & MOORE V AG 1983 IR 339
CONSTITUTION ART 40.3
BARRY V BUCKLEY 1981 IR 306
SUN FAT CHAN V OSSEOUS LTD 1992 1 IR 425
TREATY OF ROME ART 86(2)(a)
TREATY OF ROME ART 86(2)(b)
TREATY OF ROME ART 85(1)(c)
KEANE COMPANY LAW IN IRELAND 2ED PARA 28.03
WALLWORTH V HOLT 4 MY & C 619
TREATY OF ROME ART 177
INDUSTRIAL & PROVIDENT SOCIETY (AMDT) ACT 1978
Synopsis:
ACTION
Cause
Absence - Shareholder - Company - Trade - Profits - Reduction - Competitor's unlawful actions - Breach of Treaty of Rome - Value of plaintiff's shares reduced - Plaintiff without claim against wrongdoer - Rules of the Superior Courts, 1986, order 19, r. 28 - Treaty of Rome (EEC), articles 85, 86 - (436/89 - Supreme Court - 16/3/93) - [1993] ILRM 557
|O'Neill v. Ryan|
COMPANY
Shareholder
Action - Cause - Absence - Trade - Profits - Reduction - Competitor's unlawful actions - Breach of EEC Treaty - Value of plain tiff's shares diminished - Plaintiff without claim against wrong doer - (436/89 - Supreme Court - 16/3/93) - [1993] ILRM 557
|O'Neill v. Ryan|
PRACTICE
Action
Dismissal - Cause - Absence - Shareholder - Company - Trade - Profits - Reduction - Competitor's unlawful actions - Breach of EEC Treaty - Value of plaintiff's shares diminished - Plaintiff without claim against wrongdoer - (436/89 - Supreme Court - 16/3/93) - [1993] ILRM 557
|O'Neill v. Ryan|
WORDS AND PHRASES
"Frivolous or vexatious"
Action - Cause - Absence - Shareholder - Company - Trade - Prof its - Reduction - Competitor's unlawful actions - Breach of EEC Treaty - Value of plaintiff's shares diminished - Plaintiff without claim against wrongdoer - Claim not frivolous or vexatious - (436/89 - Supreme Court - 16/3/93) - [1993] ILRM 557
|O'Neill v. Ryan|
JUDGMENT delivered on the 16th day of March, 1993 by O'FLAHERTY J. (DENHAM, EGAN, FINLAY CONC).
I agree with the judgment about to be delivered by Blayney J. dismissing this appeal and in which he has reviewed extensively the pleadings, the course of the case to date and the relevant authorities. I wish, however, to set out some brief comments of my own.
It is clear that the jurisdiction to strike outproceedings based on a consideration of the pleadings, without a full plenary hearing, should only be undertaken in a clear case; but once it is manifest that a plaintiff cannot succeed on his pleadings in making out a case, a court should say so. It is a jurisdiction necessary to be exercised on occasion to preserve a proper discipline in the conduct of litigation. This is such a case.
It is clear that the plaintiff had already brought a petition under Section 205 of the Companies Act 1963. These proceedings were compromised and one of the conditions of the settlement was that the plaintiff should part with his shareholding in Ryanair. So he is no longer a shareholder in the company. That is enough to dispose of his complaints against the four defendants who seek to dismiss these proceedings at this stage and who will be described more fully in the judgment that Blayney J. will deliver. [The plaintiff has other claims in being, the most tangible of which - I say no more than that about it - is a claim against Ryanair for wrongful dismissal]
The basic theme of Foss .v. Harbottle (1843) 2Hare 461 is that where a wrong has been done to a company it is for the company itself to seek redress for the injury done to it, though in appropriate circumstances a derivative claim by a minority shareholder may be allowed. As was said in the Prudential Assurance Companycase [1982] 1 Ch. 204 at 224:
This is not merely a tiresome procedural obstacle placed in the path of a shareholder by a legalistic judiciary. The rule is a consequence of the fact that a corporation is a separate legal entity. Other consequences are limited liability and limited rights. The company is liable for its contracts and torts; the shareholder has no such liability. The company acquires causes of action for breaches of contract and for torts which damage the company. No cause of action vests in the shareholder. When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortune of the company and that he can only exercise his influence over thefortunes of the company by the exercise of his voting rights in general meeting. The law confers on him the right to ensure that the company observes the limitations of its memorandum of association and the right to ensure that other shareholders observe the rule, imposed on them by the articles of association.
In Burland .v. Earle [1902] A.C. 83 Lord Davey said
It is an elementary principle of the law relating to joint stock companies that the court will not interfere with the internal management of companies acting within their powers, and in fact has no jurisdiction to do so. Again, it is clear law that in order to redress a wrong done to the company, or to recover moneys or damages alleged to be due to the company, the action should prima facie be brought by the company itself.
The reasons are clear for the requirement established by this line of authority: otherwise there would be a multiplicity of actions; oppressive litigation and the company would cease to have proper control of its corporate destiny.
The practical basis for the rule is that the shareholder by becoming a shareholder in the company gets the benefit of certain immunities arising from incorporation and he, in turn, has rights and duties owed to him. As was said by Ross J. in Clark .v. Workman (1920) 1 I.R. 107 at 112:
We must first consider what is the position of a shareholder ... He does not hold his property simply at the mercy of the majority. His rights are carefully guarded, and his chief protection consists in the articles of association. Now, what do the articles of association amount to in point of law? They constitute a contract between every shareholder and all the others, and between the company itself and all the shareholders. Itis a contract of the most sacred character, and it is on the faith of it that each shareholder advances his money. (at page 112)
There can be no doubt that the plaintiff wishes to assert alleged wrongs done to the company. I would attach no importance to the possibility that because there is an allegation of conspiracy that the plaintiff has suffered some damage over and above what was allegedly suffered by the company. If there was a possibility of any such damage, which I doubt, it would be negligible in comparison with what is alleged was suffered by the company.
The most fundamental obstacle of all to the plaintiff, in my estimation, is the fact that he has now parted with his shares and has no standing whatever. I agree, therefore, that the rule in Foss .v.Harbottle cannot come into the reckoning. Therefore, a consideration of the exceptions to it do not arise either and, in any event, the only one that might have anyrelevance would be one that suggested that some "injustice" had been done to the plaintiff. I do not believe that any injustice was visited on the plaintiff.
I do not believe that the direct applicability of articles 85 and 86 of the EEC Treaty is affected in any way by the circumstances of this plaintiff. These articles are directly applicable at the suit of a proper plaintiff who has the necessary standing to assert a breach of one or other or both articles. This plaintiff has no such standing.
I would dismiss the appeal.
JOF117
JUDGMENT delivered on the 16th day of March 1993by BLAYNEY J. (DENHAM FINLAY EGAN CONC)
This is an appeal by the plaintiff against the order of Lynch J. dismissing the plaintiff's action against the third, fourth, fifth and sixth-named defendants (to which I shall refer collectively as the last four defendants). The order was made on foot of a motion brought by the last four defendants after the statement of claim in the actionhad been delivered seeking the following relief:-
2 "1. An order under the inherent jurisdiction of the Court and under O. 19, r. 28 (R.S.C.) that this action as against the said defendants (i.e. the last four defendants) be dismissed or alternatively that all further proceedings in this action as against the said defendants be stayed on the grounds:-
(a) that the plenary summons and statement of claim disclose no reasonable cause of action against the said defendants: and
(b) that such action (if any) as is disclosed by the pleadings is not maintainable at the suit of the plaintiff personally and is bound tofail.
2. Such further or other relief as may be appropriate:
3. Costs."
The first ground on which the last four defendants seek to have the action against them dismissed requires no elaboration. Under O. 19, r. 28 the Court has power toorder an action to be stayed or dismissed where the pleading discloses...
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