Phelan v Goodman (No 1)

• Jurisdiction: Ireland
• Judge: Mr Justice Francis D Murphy
• Judgment Date: 24 January 2000
• Neutral Citation: [2000] IESC 43
• Docket Number: [S.C. No. 318 of 1998]
• Court: Supreme Court
• Date: 24 January 2000

[2000] IESC 43

THE SUPREME COURT

Barrington J

Keane J

Murphy J

318/98

PHELAN v. GOODMAN & EL TAHER

Between:

Paschal Phelan

Plaintiff/Appellant

AND

Laurence Goodman AND Zakaria El Taher

Defendants/Respondents

Citations:

COMPANIES (AMDT) ACT 1990

STERLING-WINTHROP GROUP LTD V FARBENFABRIKEN BAYER AG 1967 IR 97

BRITISH ASSOC OF GLASS BOTTLE MANUFACTURERS V NETTLEFOLD LTD 1912 AC 709

KREGLINGER & FERNAU V IRISH NATIONAL INSURANCE CO 2000 2 IR 586

BULA LTD V CROWLEY 1991 1 IR 220

Synopsis

Practice and Procedure

Discovery; plaintiff seeking further and better discovery; limited banking documentation in relation to a bank draft was discovered by defendant; plaintiff contending that there is a very high probability that other relevant documentation exists and is available to defendant; denial by defendant on affidavit supported by affidavit of his solicitor; whether court should order defendant to swear further affidavit of discovery; whether further and better discovery should be ordered in relation to documents in respect of which privilege is claimed.

Held: Before ordering a new affidavit of discovery to be sworn, the court must be satisfied on the evidence before it that it is making a meaningful order; appeal dismissed.

Phelan v. Goodman - Supreme Court: Barrington J., Keane J., Murphy J. - 24/01/2000 - [2000] 2 IR 577 - [2000] 2 ILRM 378

The plaintiff had been involved in a business venture with the second defendant. The plaintiff subsequently alleged that the second defendant had acted in concert with the first defendant to bring about a state of deadlock in the business venture forcing the plaintiff to sell his stake in the business venture at a substantial undervalue. The plaintiff initiated proceedings against the defendants. The plaintiff brought a motions of discovery which the defendants claimed to have complied with. The plaintiff was not satisfied with the discovery made and sought further and better discovery. The High Court rejected the application and the plaintiff appealed. The Supreme Court dismissed the appeal holding that the plaintiff had failed to satisfy the court that there was further documentation in existence in the possession of the defendants which was relevant to the case and had not yet been discovered.

1 Mr Justice Francis D Murphy Delivered the 24th day of January 2000 [NEM DISS]

2 This is an appeal from the order and judgment of Mr Justice Smyth whereby he refused the application of the plaintiff/appellant, Paschal Phelan (Mr Phelan), for further and better discovery.

3 The proceedings herein were instituted by Plenary Summons dated the 12th June, 1989. The Statement of Claim was delivered on the 13th June, 1989, and the Defence of the first named defendant/respondent, Laurence Goodman (Mr Goodman), was delivered on the 8th January 1990. The reply to that Defence was delivered on the 27th March, 1990. An Order for Discovery was made against Mr Goodman on the 4th May, 1990. In pursuance of that and further orders dated the 2nd October, 1990 and 13th November, 1990, an affidavit of discovery was sworn by Mr Goodman and filed on the 3rd December, 1990.

4 In the following four years no significant step appears to have been taken by either party to process the litigation. It does appear that both Mr Phelan and Mr Goodman either directly or through companies in which they were involved experienced severe financial problems and a public investigation of the meat industry took place which no doubt required the time and attention of all of those, including Mr Phelan and Mr Goodman, who were involved in that industry. It is nonetheless surprising that proceedings involving substantial sums of money and allegations of the most serious nature were allowed by both parties to remain in limbo for such a lengthy period.

5 Before resuming the history of the matter it is appropriate to identify the cause of action as alleged in the Statement of Claim.

6 In the Statement of Claim it is stated that Mr Phelan avers that he and the secondly named defendant/respondent Zacharia E1 Taher (Mr Taher) became approximately equal shareholders in each of the ten companies in the Master Meat Packers Group (the Group) by virtue of a series of agreements made between Mr Phelan and Mr Taher on the 10th October, 1986. It is contended that Mr Taher held his shares in the Group through a Liechtenstein anstalt known as Master Meat Anstalt. The Statement of Claim goes on to contend that Master Meat Anstalt held Mr Taher's share holding in the group companies as nominee for Mr Taher and subject to the terms of an agreement entitled "the Side Agreement" made on the 10th October, 1986, between Mr Phelan of the one part and Mr Taher of the other part. It is contended that this Side Agreement imposed a variety of fiduciary and other duties on Mr Taher. Having then averred or recited that Mr Goodman was the controller of Goodman International and that that company was engaged in the meat business in Ireland and enjoyed a dominant position in the market the substantive averment of Mr Phelan is contained in paragraph 9 of the Statement of Claim in the following terms:-

"On or before the 15th of April 1987, the first named defendant [Mr Goodman] and the second named defendant [Mr Taher] maliciously and wrongfully conspired and combined amongst themselves to breach the agreements and to defraud and damage the plaintiff [Mr Phelan] and his share holding in the Group with a view to eliminating the plaintiff [Mr Phelan] and the Group as a competitor of Goodman International with a view to establishing a monopoly in the beef industry in Ireland. The said conspiracy was deliberately and fraudulently concealed from the plaintiff [Mr Phelan] by the defendants [Messrs Goodman and Taher]. As part of the said conspiracy, the defendants [Messrs Goodman and Taher] on or about the 15th of April 1987, unlawfully procured the sale to another Liechtenstein Anstalt known as Tarsos Anstalt, of 80% of Master Meat Anstalt for a price of US $9,750,000.00 and also procured the giving of an option to Tarsos Anstalt for the purchase of the remaining 20% of the Master Meat Anstalt at a nominal consideration of US $100 and to the knowledge of the defendants [Messrs Goodman and Taher] the said sale was unlawful and in breach of the Agreements."

7 In paragraph 18 of the Statement of Claim it is alleged that as a result of the wrongdoing of the defendant a state of deadlock in the group was brought about as a result of which Mr Phelan was compelled to invoke the "deadlock provisions" contained in the 1986 Agreements. It is alleged that negotiations then took place in the following circumstances:-

"In or around the time of the said state of deadlock negotiations took place between the plaintiff [Mr Phelan] and his advisors and the second named defendant [Mr Taher] and parties who held themselves out and represented themselves to be agents of the secondly named defendant [Mr Taher] but who in fact at all material times were also servants or agents of the first named defendant [Mr Goodman], which fact was deliberately concealed from the plaintiff [Mr Phelan] by the defendants [Messrs Goodman and Taher] .... "

8 Mr Phelan ultimately sold his shares in the Group in circumstances which he described in paragraph 19 of the Statement of Claim in the following terms:-

"The invoking by the plaintiff [Mr Phelan] of the deadlock provisions in the agreements as aforesaid ultimately led to the forced sale by the plaintiff [Mr Phelan] of his share holding in the Group on or about the 16th of September 1988 at a substantial undervalue. The said servants or agents of the defendants availed of the deadlock provisions in the agreements to compel the plaintiff [Mr Phelan] to sell his shares in the group, when they had no right or entitlement to do so."

9 Mr Phelan claimed damages under a number of headings but estimated the loss suffered by him in the sum of £13,200,000.

10 In a defence comprising some 50 paragraphs Mr Goodman denies each and every of the allegation of wrongdoing by him or any agent of his.

11 The far reaching complaints of fraud, conspiracy and abuse against Mr Goodman were repeated in affidavits subsequently sworn by Mr Phelan and indeed were emphasised in the written submissions to this Court summarising the Plaintiff's claim in the following terms:-

"It is of the essence of the plaintiff's claim that his partner (being a 50% share holder in the Master Meat Group of companies) acted in concert with Goodman to secure the removal of the Master Meat Group of companies from the meat trade in Ireland and elsewhere, whether by putting them into receivership or securing ownership and control thereof. The defendants in procuring this end result committed deceitful, duplicitous acts contrary to law and to the known express provisions contained in the memorandum (sic) and articles of the various Master Meat companies, and the express and implied basis on which the partnership between the plaintiff and Taher was founded and ought to have been conducted."

12 Having regard to the case being made by Mr Phelan it is not surprising that he views the conduct by Mr Goodman of these proceedings with suspicion and invites the Court to treat the sworn statements of Mr Goodman as at best misleading and more probably dishonest. For his part Mr Goodman resents the allegations made against him and he and his legal advisors have expressed indignation and annoyance at what they see as the unnecessary difficulties created by Mr Phelan in relation to the matter of discovery. In any event by Notice of Motion dated the 31st January 1996 the Plaintiff made a second application for an order for further and better discovery by Mr Goodman. That motion generated numerous lengthy affidavits. Unfortunately, these affidavits are frequently repetitive and sometimes...