Primor Plc (Pmpa) v Freaney

JurisdictionIreland
JudgeMr. Justice Johnson
Judgment Date09 February 1995
Neutral Citation1995 WJSC-HC 5275
Docket NumberNo. 10037P/1984
CourtHigh Court
Date09 February 1995

1995 WJSC-HC 5275

THE HIGH COURT

No. 10037P/1984
PRIMOR PLC (PMPA) v. FREANEY

BETWEEN

PRIMOR PLC (FORMERLY P.M.P.A. INSURANCE PLC) (UNDER ADMINISTRATION)
PLAINTIFF

AND

OLIVER FREANEY AND COMPANY (A FIRM)
DEFENDANTS

Citations:

COMPANIES ACT 1963

INSURANCE (NO 2) ACT 1983 S2

INSURANCE ACTS OF THE EUROPEAN COMMUNITIES (NON-LIFE INSURANCE ACCOUNTS) REGS 1995 SI 202/1995

CELTIC CERAMICS LTD V INDUSTRIAL AUTHORITY UNREP O'HANLON 9.9.92

O DOMHNAILL V MERRICK 1984 IR 151

TOAL V DUIGNAN 1991 ILRM 135

Citations:

DUBLIN PORT & DOCKS BOARD V BRITANNIA DREDGING CO LTD 1968 IR 136

NEW BRUNDSWICK RAILWAY CO V BRITISH & FRENCH TRUST CORPORATION LTD 1939 AC 1

SPENCER-BOWER & TURNER ON RES JUDICATA 2ED 172

DOHERTY V ALLMAN 2 AC 709

IRISH SHELL LTD V ELM MOTORS LTD 1984 IR 200

AMERICAN CYANAMID V ETHICON LTD 1975 AC 396

DPP V SHREELAWN OIL CO LTD UNREP COSTELLO 29.3.82

CURUST FINANCIAL SERVICES LTD V LOEWE-LACK-WERK OTTO LOEWE GMBH & CO 1994 1 IR 458, 1993 ILRM 723

MANTRUCK SERVICES LTD & MANTON & CO V BALLINLOUGH ELECTRIC REFRIDGERATION CO LTD 1992 IR 351

ESSO PETROLEUM V FOGARTY 1965 IR 353

COMPETITION ACT 1991 S4

IRISH SHELL LTD V ELM MOTORS LTD 1984 IR 200

Synopsis:

ACTION

Dismissal

Grounds - Plaintiff - Claim - Prosecution - Diligence - Absence - Delay after issue of summons - Prejudicial effect on business and professional interests of defendant - Defendant's acquiescence - (1984/10037 P - Johnson J. - 9/2/95)

|Primor Plc. v. Freaney & Co.|

PRACTICE

Action

Dismissal - Claim - Prosecution - Diligence - Absence - Delay after issue of summons - Prejudicial effect on business and professional interests of defendants - Insurance company's claim against defendant accountants - Alleged breaches of duty by defendants from 1975 to 1983 - Plaintiff's action instituted in 1984 - Motion to dismiss action brought by defendants in 1993 - Defendants” acquiescence in 1990 in discovery of documents - Contemporary documentation preserved - Relevance of defendants” conduct since summons issued - Action not dismissed - Plaintiff's motion in 1994 to strike out defence - (1984/10037 P - Johnson J. - 9/2/95)

|Primor Plc. v. Freaney & Co.|

Synopsis:

CONTRACT

Terms

Compliance - Enforcement - Method - Injunction - Enforcement of negative covenant - Defendant licensed to sell plaintiff's milk in defined area - Defendant obliged to account for proceeds of sales - Defendant covenanted not to distribute milk of other milk suppliers - Defendant's distribution of such other milk - Interlocutory relief granted to plaintiff - (1995/7008 P - Kinlen J. - 29/9/95) - [1996] 1 I.R. 37

|Premier Dairies Ltd. v. Doyle|

INJUNCTION

Interlocutory

Fair question - Contract - Terms - Compliance - Enforcement - Breach of negative covenant - Defendant licensed to sell plaintiff's milk in defined area - Defendant obliged to account for proceeds of sales - Defendant covenanted not to sell milk of other milk suppliers - Interlocutory relief granted to plaintiff - ~Res judicata~ - Prior decision by court of equal jurisdiction in same litigation - (1995/7008 P - Kinlen J. - 29/9/95)

|Premier Dairies Ltd. v. Doyle|

LICENCE

Terms

Compliance - Enforcement - Method - Injunction - Enforcement of negative covenant - Defendant licensed to sell plaintiff's milk in defined area - Defendant obliged to account for proceeds of sales - Defendant covenanted not to distribute milk of other milk suppliers - Defendant's distribution of such other milk - Interlocutory relief granted to plaintiff - (1995/7008 P - Kinlen J. - 29/9/95) - [1996] 1 I.R. 37

|Premier Dairies Ltd. v. Doyle|

1

Judgment of Mr. Justice Johnson delivered the 9th day of February, 1995

2

This is an application brought by the Defendants for an Order to dismiss for want of prosecution an action for damages brought against them by the Plaintiff in which the Plaintiff alleges breach of contract, negligence and breach of duty against the Defendants. The Plaintiff is a Public Limited Liability Company incorporated under the provisions of the Companies Act, 1963with the object of carrying on the insurance business. On the 14th day of November, 1983, an Order was made by the High Court pursuant to the provisions of Section 2 of the Insurance (No. 2) Act, 1983placing the Plaintiff under administration and appointing one Kevin J. Kelly to act as administrator of the Plaintiff. By subsequent Order made on the 9th August, 1989 Peter Fitzpatrick replaced Kevin J. Kelly as administrator and he is the administrator at the present time.

3

The Defendants are a firm of chartered accountants who carry on a practice within the jurisdiction. Their principal place of business is situated at 45, Northumberland Road in the City of Dublin.

4

For each of the Plaintiff's financial years from the 31st of December, 1967 to the 31st of December, 1982 inclusive, the Defendants were appointed and retained as the statutory auditors of the Plaintiff pursuant to the provisions of the Companies Act, 1963and were officers of the Plaintiff accordingly. As auditors to the Plaintiff it is claimed that the Defendants were under duty at common law to exercise reasonable skill and care in reporting that the annual accounts of the Plaintiff gave a true and fair view of the financial position of the Plaintiff or alternatively to qualify their report on such annual accounts. Furthermore, it was claimed that the Defendants were under statutory duties set out in the Statement of Claim to exercise reasonable skill and care in reporting that the annual accounts of the Plaintiffs give a true and fair view of the financial position of the Plaintiff, or, alternatively to qualify their report of the said annual accounts. Furthermore, the Defendants were under statutory duties which are more particularly set out in the Plaintiff's Statement of Claim.

5

(a) They were bound, inter alia, to exercise independence of judgment in the relation to the expression of their audit opinion of the aforesaid annual accounts.

6

(b) To exercise a reasonable degree of competence and diligence in relation to the expression of their audit opinion on the said accounts.

7

(c) To ascertain whether annual evaluations were made in respect of outstanding claims.

8

(d) To direct the attention of the management to the failure to make annual evaluations of outstanding claims.

9

(e) To satisfy themselves as to the reasonableness of such evaluations as were made in respect of outstanding claims.

10

(f) To ensure that the accounts conform to the requirements of the statements of the standard accounting practice issued by the Institute of Chartered Accountants in Ireland.

11

(g) To ensure that the reports made by them in respect of the annual returns made by the Plaintiff to the relevant Minister pursuant to the provisions of the Insurance Acts of the European Communities (Non-Life Insurance Accounts) Regulations were accurate.

12

It is claimed in the Statement of Claim that the Defendants, for each of the years from 1975, failed properly to carry out their duties in accordance with their obligations, with the result that the accounts for the various years did not give a true and fair view of the position of the Plaintiff company. It is further claimed that as a result of this failure and breach of duty and breach of statutory duty the Plaintiff, in the month of October 1983 following investigation, carried out into its affairs, on behalf of the Minister of Trade, Tourism and Commerce, was placed under administration, and that the losses incurred as a result of the said breach of duty on the part of the Defendants amounted to in excess of £172,000,000.

13

I have been facilitated by the provision by the parties of an agreed statement of the relevant steps taken in these proceedings since the appointment of the administrator and I herein set them out as I feel these are the essential elements which enabled me to come to the decision in the case.

14/11/83

The Plaintiff placed under administration.

31/01/84

Letter from Arthur Cox to Defendants advising of claim.

06/03/84

Letter from Arthur Cox stating the drafting of proceedings was in the course of finalisation and asking if Orpen Franks were authorised to accept service of such proceedings.

21/12/84

Date of issue of Plenary Summons against Defendants and also against Messrs. Stokes, Kennedy, Crowley.

17/12/85

Date of Service of Plenary Summons on the Defendants.

20/12/85

Appearance entered on behalf of the Defendants.

08/01/86

Statement of Claim delivered to...

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