OTE International Solutions S.A. t/a OTE Globe S.A. v Baskaran Allirajah and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice Barrett |
| Judgment Date | 01 April 2014 |
| Neutral Citation | [2014] IEHC 185 |
| Court | High Court |
| Date | 01 April 2014 |
[2014] IEHC 185
THE HIGH COURT
BETWEEN
AND
COMPANIES ACT 1963 S297A
COMPANIES ACT 1990 S204
RSC O.19 r7
MAHON v CELBRIDGE SPINNING CO LTD 1967 IR 1
RSC O.19 r3
COONEY v BROWNE 1985 IR 185 1985 ILRM 673 1985/5/1085
RSC O.19 r5(2)
MCGEE v O'REILLY 1996 2 IR 229 1996/13/4130
RUTLEDGE (DECEASED), IN RE; HANLY & ORS v FINNERTY 1981 ILRM 198 1981/10/1688
NATIONAL EDUCATIONAL WELFARE BOARD v RYAN & ORS 2008 2 IR 816 2007/44/9243 2007 IEHC 428
IBB INTERNET SERVICES LTD & ORS v MOTOROLA LTD UNREP CHARLETON 19.11.2013 2013 IEHC 541
ARMSTRONG v MOFFATT (T/A BALLINA MEDICAL CENTRE) & IRWIN UNREP HOGAN 28.3.2013 2013 IEHC 148
Company Law – Fraud - O. 19, r. 7 of the Rules of the Superior Courts – Further and better particulars – Pleadings
Facts: OTE International Solutions S.A., trading as OTE Globe S.A., commenced proceedings against a large number of parties in relation to a number of serious allegations. OTE alleged that there had been fraudulent dispositions of property within a group of companies, that directors had been involved in reckless trading, that there was misfeasance and/or breach of duty, including breach of fiduciary duty by certain directors, and a failure to maintain proper books of account. OTE sought relief under s. 297A of the Companies Act 1963 and s. 204 of the Companies Act 1990, as they believed the directors should be personally liable for the debts of the company they directed. The orders sought by OTE had potentially ruinous financial and other consequences for the directors. The respondent companies/ directors sought court orders pursuant to O. 19, r. 7 of the Rules of the Superior Courts to compel OTE to furnish the particulars of its claim and to provide further and better particulars of pleadings. The dispute between the parties largely focused on whether the details sought by way of particulars would be evidence by which OTE's pleadings were to be proved. In deciding whether to order further particulars the key consideration for the court was there should be no ground upon which it could be claimed that the plaintiff was disadvantaged by the introduction of matters that could not be fairly ascertained from the defence. The court analysed the purpose of pleadings and particulars in the context of fraud allegations and said five questions were applicable: 1) was this a case where more than a bare allegation of fraud has been made? 2) had the plaintiff gone into some detail as to how the alleged fraud took place? 3) had the plaintiff specified in sufficient, albeit general, terms the nature of the alleged fraud? 4) had the plaintiff identified the alleged consequences of the fraud? 5) was there adequate evidence to support a prima facie or stateable case of fraud?
Held by Barrett J,
Taking each of the above questions in turn Barrett J said that more than a bare allegation of fraud or other wrongdoing had been made. The plaintiff had already gone into some detail as to how the alleged fraud or other wrongdoing took place, specified elements of the alleged fraud or other wrongdoing in detail, identified the alleged consequences of the fraud or other wrongdoing, and made out a stateable case of alleged fraud or other wrongdoing. The court said there was no scope in proceedings to demonstrate the respondent had been taken at a disadvantage by the introduction of matters that could not be ascertained from the points of claim. The court, having regard to the consequences for the respondents of the claims brought by OTE, considered if the principles of natural justice and fairness should be applied to determine whether the applications should succeed. Barret J, said there were three reasons why these principles were not appropriate; first, the respondents required particulars of such exactitude that they would potentially frustrate the proceedings. Second, it was not appropriate to require such detailed particulars in a trial-court system; third, if the respondent”s applications were successful it could cause further unnecessary delay. For these reasons the court declined to give the direction and order sought in these proceedings.
JUDGMENT of Mr. Justice Barrett delivered on the 1st day of April, 2014
1. OTE International Solutions S.A., trading as OTE Globe S.A., is a limited liability company incorporated in Greece. It has commenced proceedings against a large number of parties, alleging that there were fraudulent dispositions of property within a group of companies, that there has been reckless trading to which certain directors were knowingly party, that there has been misfeasance and/or breach of duty, including breach of fiduciary duty by certain named directors, and a failure to maintain proper books of account. OTE has sought a variety of reliefs under the Companies Acts, including but not limited to orders under section 297A of the Companies Act 1963 and section 204 of the Companies Act 1990, that various directors are personally liable for the debts of a company of which they were director. The allegations made by OTE are clearly very serious allegations for any party to make. Moreover, the orders sought have potentially ruinous financial and other consequences for the directors against whom OTE has made its allegations.
2. OTE's notice of motion issued in February 2013 and its points of claim were delivered on 2 nd August, 2013. An appearance for the first to third, ninth to thirteenth, and fifteenth to nineteenth respondents was entered on 7 th June, 2013. A notice for particulars was delivered by the same respondents to OTE on 28 th August, 2013. OTE issued its replies to the notice for particulars on 23 rd September, 2013. The points of defence of the eighth respondent were delivered on 18 th October, 2013. The first to third, ninth to thirteenth, and fifteenth to nineteenth respondents issued a rejoinder to OTE's replies to particulars on 31 st October, 2013. OTE delivered further replies to particulars on 31 st October, 2013. An appearance for the fourth, fifth and seventh respondents was entered on 11 th November, 2013. On 21 st November, 2013, the first to third, ninth to thirteenth, and fifteenth to nineteenth respondents issued a notice of motion seeking, inter alia, an order of the court pursuant to O. 19, r. 7 of the Rules of the Superior Courts directing OTE to provide the further and better particulars of pleadings sought in certain paragraphs of the said respondents' notice for particulars of 28 th August, 2013. On 2 nd December, 2013, the eighth respondent issued a notice of motion seeking, inter alia, an order of the court pursuant to O. 19, r. 7 of the Rules of the Superior Courts compelling OTE to furnish the particulars of its claim sought at specified paragraphs of the eighth respondent's request for particulars dated 11 th September, 2013. It is these two motions that fall to this Court to adjudicate upon.
3. The classic statement as to the purpose of pleadings remains that of Fitzgerald J. in Mahon v. Celbridge Spinning Co. Ltd. [1967] I.R. 1 at 3 where he stated that:
"The whole purpose of a pleading, be it a statement of claim, defence or reply, is to define the issues between the parties, to confine the evidence at the trial to the matters relevant to those issues, and to ensure that the trial may proceed to judgment without either party being taken at a disadvantage by the introduction of matters not fairly to be ascertained from the pleadings. In other words a party should know in advance, in broad outline, the case he will have to meet at trials."
4. Order 19, rule 3 of the Rules of the Superior Courts establishes the golden rule of pleading, viz. that:
"Every pleading shall contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which they are to be proved…"
As will be seen hereafter, the dispute arising between the parties to these proceedings...
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