Phelan v Goodman and Taher and Others (No 3)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Roderick Murphy |
| Judgment Date | 04 December 2001 |
| Neutral Citation | [2001] IEHC 172 |
| Court | High Court |
| Docket Number | No. 6960P/1989 |
| Date | 04 December 2001 |
[2001] IEHC 172
THE HIGH COURT
BETWEEN
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Citations:
CIVIL LIABILITY ACT 1961 S27
RSC O.16 r12(1)(B)
RSC O.16 r12(1)(C)
CIVIL LIABILITY ACT 1961 S21
RSC O16 r1(B)
RSC O16 r1(C)
SUPERMACS IRELAND V KATESAN LTD 2000 4 IR 273
RSC O19 r28
LAC MINERALS V CHEVRON CORPORATION 1995 1 ILRM 161
JODIFERN LTD V FITZGERALD 2000 3 IR 321
ALLIED IRELAND COAL LTD V POWELL DUFFRYN INTERNATIONAL FUELS 1998 2 IR 519
BRODERIP V SALOMON 1895 2 CH 323
SALOMON V SALOMON 1897 AC 22
ASHMORE V CORPORATION OF LLOYDS 1992 2AER 486
TINSLEY V MILLIGAN 1993 3 WLR 126
BARRY V BUCKLEY 1981 IR 306
CAVERN SYSTEMS V CLONTARF RESIDENTS ASSOCIATION 1984 ILRM 24
SUN FAT CHAN V OSSEOUS 1992 1 IR 425
ADAMS V CAPE INDUSTRIES 1990 BCLC 479
PALMER COMPANY LAW 24ED 40–03 FOOTNOTE 24
BOWMAKERS LTD V BARNETT 1945 KB 65
Synopsis:
CONTRACT
Shareholding agreement
Practice and procedure - Company law - Notice of indemnity - Agency - Fraud - Litigation - Interpretation - Intention of parties - Multiplicity of actions - Damages - Alienability of shares - Beef industry - Status of joint venture agreement - Whether joint venture agreement had been breached - Statute of Limitations, 1957 - Rules of the Superior Courts, 1986 - Civil Liability Act, 1961 (1989/6960p & 1998/6979p - Murphy J - 4/12/01)
Phelan v Goodman
Facts: The plaintiff had entered into a joint venture agreement with the second defendant in respect of companies operating in the beef industry. The plaintiff alleged that the second defendant sold his shares in the companies to the first defendant allegedly in breach of the joint venture agreement. The plaintiff initiated proceedings seeking damages for conspiracy, fraudulent misrepresentation and for inducing breaches of the various agreements entered into between himself and the second defendant. The first defendant served notices of indemnity and contribution on the second defendant and his son (“the applicants”) who sought to have the same set aside. The applicants contended that the first defendant’s acts were unlawful, that they had received indemnities from the first defendant which acted as an estoppel to the notices and that the notices constituted an abuse of process. It was also submitted that one of the relevant parties was suffering from ill-health. Mr. Justice Murphy had already held that the second defendant had acted in breach of contract/the joint venture agreement with the plaintiff when he sold his shares in the companies to interests controlled by the first defendant. The applicants also relied upon this finding to support their argument that in effect the “corporate veil” between the first defendant and the related companies had been lifted and the notices should be set aside. The applicants contended that they were acting on the instructions of the first defendant, as such were agents of the first defendant and were free of responsibility for their actions. In reply on behalf of the first defendant it was alleged that the applicants had acted in breach of the duty of care owed by them to the companies and had failed to prevent wrongdoing by the plaintiff. In addition it was argued that any indemnities given to the applicants were given on the basis of warranties issued by the applicants as to the finances of the companies.
Held by Mr. Justice Roderick Murphy in refusing the application. The facility to strike out a case was a remedy that should only be applied sparingly. The court could not say, at this point, that the claims, made by the first defendant by way of notice of indemnity and contribution, should be struck out. No finding of deceit or fraud had been made and the corporate veil between the first defendant and the companies had not been lifted. The indemnities received by the applicants could not be said to be coterminous with the notices of indemnity and contribution served by the first defendant. There was room for considering what existing evidence should be accepted and how it should be interpreted. More importantly further evidence was necessary to prove intention and to resolve conflicts. The affidavits, as analysed reflected an incomplete picture of complex claim of breach of contract, conspiracy and allegations of fraud. No finding had been made that the disputed purchase of the shares by the first defendant was tainted with illegality, dishonesty or fraud. The documentary evidence by way of affidavit had not been subjected to cross or to re-examination. The application was accordingly, refused.
The moving party in this set of Motions is Mr. Zakaria El Taher, the second named Defendant in the first proceedings and Zakaria El Taher and his son Nasser El Taher, the tenth and twelfth named Defendants in the second mentioned action. The interests of the moving parties is identical: to strike out the Notice of indemnity and the contribution dated the 26th January, 2001 by the first named Defendant in the first and by the companies (the MMP Group) in the second mentioned action. Given that identity of interest is, accordingly, convenient to refer to both of the moving parties as the El Tahers.
There are, in fact, four Motions before the Court: two originally returnable for the 1st March, 2001 and the others returnable the 13th March, 2001. The Motions returnable for the latter date are more comprehensive and form the basis for a composite application to the Court which was heard over four days from thursday the 8th to thursday the 15th November, 2001.
In the first (1989) proceedings the Court is asked to strike out the Notice of indemnity and contribution dated the 26th January, 2001 served on Zakaria El Taher by the first named Defendant, Mr. Goodman, at the commencement of the trial fixed to take place on the 15th May, 2001.
Directions are also sought. Similar reliefs were applied for to strike out the Notice of indemnity and contribution of the MMP companies.
3.0 Two Affidavits were sworn in these composite applications, that of Mr. Bradshaw, Solicitor for the El Tahers' dated the 8th March, 2001 and an Affidavit of Zakaria El Taher sworn the 1st November, 2001.
3.1 An earlier Affidavit of Zakaria El Taher sworn on 9th September, 2000 in English proceedings in the Queens Bench Division in proceedings between Zakaria El Taher and Lawrence Goodman was filed in these proceedings. No claim number is given.
An application was made by the Respondents, (Mr. Goodman and the MMP companies) to disallow this Affidavit. The Applicant, having duly served the Affidavit on the Respondents, requested its inclusion.
The Court considered that, in view of the submissions made by Counsel on his behalf and in view of the age and distant place of residence of Mr. Zakaria El Taher that the Affidavit should be considered,de bene esse, by the Court to ascertain its relevance to these proceedings and to the Motions before the Court.
The Affidavit deals comprehensively in over 60 pages with the involvement of Mr. Zakaria El Taher and, later, Mr. Nasser El Taher, in the MMP Group from the time of purchase of a 50% interest from Mr. Phelan on the 10th October, 1986, his involvement with Mr. Phelan from that date until the 15th April, 1987 when, as already determined by this Court in its ruling of 11th September last, in breach of contract he sold shares held by him through Master Meat Anstalt to interests controlled by Mr. Goodman. The Affidavit further deals with the period from that date to the 16th September, 1988 when Mr. Phelan, through the provision of a deadlock mechanism, sold to other interests controlled by Mr. Goodman.
In paragraph 17 of the Affidavit Mr. El Taher stated that he makes his Affidavit in relation to all proceedings, whether in England or Ireland, relating in whatsoever manner to the MMP Group and to the surrounding circumstances relating thereto. He further avers to the considerable effort to prepare and finalise the Affidavit as he wished it to be as comprehensive and as factual a record as possible, in case of his early decease. It was, indeed, for this reason that the Court considered it appropriate to read the entire Affidavit.
The Affidavit was not sworn in the proceedings before this Court and, indeed, was sworn, on the 9th September, 2000, over four months before the Notice of indemnity and contribution, dated the 26th January, 2001, was served. No reference is made to any matter germane to this application. Furthermore neither grounding Affidavits refer to this earlier Affidavit.
For those reasons the Court, while deeming that while it might be relevant to the proceedings, held that it was neither relevant to nor necessary for the present application.
3.2 The Affidavit of Mr. Bradshaw sworn on the 28th March, 2001 was made in support of the earlier Notices of Motion and is equally relevant to the latter Notices of Motion.
It is significant that this Affidavit does not refer to the Affidavit of Mr. Zakaria El Taher sworn on the 9th September, 2000.
Mr. Bradshaw refers to the extensive amended defence and counterclaim of Mr. Goodman of the 29th September, 2000. This, he says will necessitate extensive and complex financial calculations and analyses which would require an...
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