QRD Development Company No.3 Designated Activity Company

• Jurisdiction: Ireland
• Judge: Ms Justice Eileen Roberts
• Judgment Date: 12 August 2022
• Neutral Citation: [2022] IEHC 498
• Court: High Court
• Docket Number: Record no. 2022/27 COS

In the Matter of QRD Development Company No.3 Designated Activity Company

And in the Matter of the Companies Act 2014

[2022] IEHC 498

Record no. 2022/27 COS

THE HIGH COURT

Winding up petition – Without prejudice privilege – Abuse of process – Petitioner seeking an order directing that an affidavit sworn in response to a petition to wind up the company be struck out – Whether the affidavit contained substantial material which was the subject of without prejudice privilege

Facts: CW O’Brien Architects (the Petitioner) applied to the High Court by way of motion seeking an order pursuant to the inherent jurisdiction of the Court directing that the affidavit of Mr O’Brien sworn on 6 April 2022 (or in the alternative paragraphs 12-23 and Exhibit AOB10 thereto) in response to the petition to the Court dated 15 February 2022 to wind up QRD Development Company No. 3 DAC (the Company) pursuant to s. 569(1)(d) of the Companies Act 2014, be struck out and/or removed and/or deleted and/or redacted on the grounds that it (or the relevant provisions) contains substantial material which is the subject of without prejudice privilege and/or that its filing constitutes an abuse of the process of the Court. Counsel for the Petitioner accepted at the hearing that the disputed material was confined to paragraphs 12-23 and Exhibit AOB10 of Mr O Brien’s affidavit (the relevant content).

Held by Roberts J that, from an objective review of the materials, there was an agreement to settle the dispute reached by the parties on 28 May 2021 when the offer of the Company’s solicitors’ undertaking was accepted by the Petitioner’s solicitors who confirmed they would rely on it; this brought to an end the without prejudice nature of their discussions from that time. She held that material exchanged between the parties prior to 28 May 2021 remained subject to without prejudice privilege; therefore, the first email dated 26 May 2021 should be deleted from Exhibit AOB10 on the grounds that it is protected by without prejudice privilege. She did not believe that this redaction created a risk of injustice to the parties. There did not appear to her to be any specific reference in Mr O’Brien’s affidavit to that email and so no consequent change was needed to the affidavit as a result of the removal of that email from the exhibit AOB10. She refused the relief sought of deleting paragraphs 12-23 of Mr O’ Brien’s affidavit sworn on 6 April 2022 as she did not believe that the agreement referred to was without prejudice. She held that the Company would be free to comment on those paragraphs in its replying affidavit so that the Court would have the benefit of fully understanding the actual sequence of events between the parties when it came to hearing the petition and would then be best placed, knowing all this detail, to determine whether or not to make an order on foot of the petition. The Court was furthermore of the view that the retention of the relevant material (subject to the redaction of the first email in exhibit AOB10) in the affidavit of Mr O’Brien sworn on 6 April 2022 and the ability of the Company to respond to it in further affidavit(s) was in the interests of justice and would enable the Court on the hearing of the petition to be fully and appropriately appraised of all engagement between the parties up to the issue of the statutory demand grounding the petition.

Roberts J held that the parties would have six weeks within which to furnish brief written submissions on the terms of the final order and on costs and on any other matters that may arise. She held that the matter would be relisted for mention for the purpose of making final orders at 10:45 hours on 11th October, 2022.

Relief refused in part.

JUDGMENT of Ms Justice Eileen Roberts delivered on 12 day of August 2022

Introduction

1 . This application comes before the Court by way of motion on behalf of CW O'Brien Architects (the Petitioner) seeking an Order pursuant to the inherent jurisdiction of this Court directing that the affidavit of Mr Arthur O' Brien sworn on 6 April 2022 (or in the alternative paragraphs 12–23 and Exhibit AOB10 thereto) in response to the Petition to this Court dated 15 February 2022 to wind up QRD Development Company No. 3 DAC (the Company) pursuant to s569(1)(d) of the Companies Act 2014, be struck out and/or removed and/or deleted and/or redacted on the grounds that it (or the relevant provisions) contains substantial material which is the subject of without prejudice privilege and/or that its filing constitutes an abuse of the process of this Court.

2 . Counsel for the Petitioner accepted at the hearing that the disputed material is confined to paragraphs 12–23 and Exhibit AOB10 of Mr O Brien's affidavit (the Relevant Content). On the basis that this is agreed and that this Court has formed the view that the remaining provisions of Mr O'Brien's affidavit are correctly included as matters relevant to the Petition, this judgment will be confined to a review of the Relevant Content.

Background

3 . The Petition dated 15 February 2022 (the Petition) follows on from a statutory 21-day demand dated 8 December 2021 delivered to the Company on that date and issued pursuant to Section 570 of the Companies Act 2014.

4 . The Petitioner alleges that the Company is indebted to it in the total sum of €299,393.47 arising out of 5 invoices dated between October 2019 and March 2020 for architectural services provided by the Petitioner in respect of a development site at Cookstown Industrial Estate, Dublin 24 (the Site).

5 . The Company denies that it is indebted to the Petitioner in the amount claimed or at all. In brief terms the debt is said to be disputed on the basis that the services were not rendered at the request of the Company or at all; that the Petitioner's contract was with another party to whom some invoices are addressed and/or that the Company is entitled to set off against the claimed debt its own losses sustained as a result of the Petitioner's negligence regarding a Declaration of Identity furnished in respect of the Site. These matters are briefly referenced by way of background but it forms no part of this Court's function on this motion to determine the validity or otherwise of the Company's claimed defences.

6 . The parties engaged unsuccessfully with each other for some time regarding payment of the debt claimed by the Petitioner. On 5 May 2021, the Petitioner issued a Section 570 Notice to the Company – this is not the same Section 570 Notice as the Notice dated 8 December 2021 on which the Petition is based, although the debt claimed in each Notice is the same.

7 . Following service of the Section 570 Notice on the 5 May 2021 the parties began to engage more meaningfully with each other. At that time the Company was in the course of negotiating the sale of the Site to a third party purchaser. Mr Curtis on behalf of the Company averred on affidavit that the threat of winding up proceedings at that time was a very serious matter for the Company and had the potential to disrupt or even derail the sale of the Site. He avers (at paragraph 9 of his affidavit sworn 22 April 2022) that “ for this reason, initial without prejudice discussions took place by way of telephone calls between me and Arthur O'Brien, wherein a proposal was discussed whereby the dispute could be resolved by way of the payment of an agreed amount from the proceeds of sale of the Site.”

8 . Mr Curtis acknowledges that further without prejudice discussions took place between the respective solicitors for the parties on 26 May 2021. The outcome of those discussions was a proposal that in return for the Petitioner not proceeding with a winding up petition, an undertaking would be provided by the Company's solicitors to pay an agreed sum to the Petitioner from the proceeds of the sale of the Site in full and final settlement of the Petitioner's claim. All parties agree that the 26 May discussions were without prejudice.

9 . By way of email on Thursday 27 May 2021 at 16.01, the Petitioners solicitors wrote to the Company's solicitors in the following terms which email was headed “Without Prejudice”:

“ Please see attached draft form of undertaking wording for your consideration. I trust this will assist in narrowing and concluding our discussion, following on from yesterday's call.”

There is no disagreement that this was correctly a without prejudice communication being correspondence exchanged for the purposes of trying to resolve a dispute.

10 . Shortly following receipt of this email, the Company's solicitors responded at 17.02 on the 27 May 2021 by email which was not headed without prejudice saying:

“ See attached clean and compare draft undertaking. Just to be clear we will only be providing this undertaking once unconditional binding contract is in place and we have clarity on the various pay aways. In this regard our primary concern will be the funder redemption.

Can we get confirmation that you are not proceeding with the petition please?”

11 . That email attached a revised version of the draft undertaking which had been furnished by the Petitioner's solicitors earlier that day. The changes to the previous draft were redlined and a clean new version was also attached. The revised version remained headed “Draft undertaking” and it remained intended to be given on “[DWF Letterhead]” but the Company's solicitors also added a new execution block intending the undertaking to be signed by a “ Partner” of that firm “ For and on behalf of DWF (Ireland) LLP”. The new version included the following additional wording inserted by the Company's solicitors; “ We understand that a settlement has been reached between CW O'Brien Architects Limited (“CW”) and QRD whereby CW have agreed to accept €200,000 (inclusive of Vat) in full and final settlement of all and any monies due and owing to CW (the...