Raymond v Moyles

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 10 November 2017
• Neutral Citation: [2017] IEHC 688
• Docket Number: [2013 No. 1768 P]
• Court: High Court
• Date: 10 November 2017

BETWEEN

GEORGE RAYMOND, RUTH RAYMOND

AND

LAMWORTH DEVELOPMENTS LIMITED

PLAINTIFFS

AND.

EAMONN MOYLES, PHILIP YOUNG, IAN CAMPBELL

TRADING AS CONTRACT ACCOUNTING

AND

GERARD FEEHILY

TRADING AS FEEHILY O'DWYER

AND

CA LIMITED

DEFENDANTS

[2017] IEHC 688

Baker J.

[2013 No. 1768 P]

THE HIGH COURT

Practice & Procedure – O. 15 of the Rules of the Superior Courts – Contract – Contracting parties – Professional negligence – Piercing the corporate veil – Striking out of claim – Misjoinder of parties

Facts: The first, second and third named defendants filed a motion pursuant to o.15 of the Rules of the Superior Courts and sought an order that the claim filed against them should have been struck out on the grounds that they were wrongly joined as the defendants to the first and second plaintiffs' claim. The first and second plaintiffs claimed that they had contracted with the first, second and third defendants in their personal capacity without the involvement of any corporate entity and thus, the first, second and third defendants should have been liable for deficiency in the accounting and bookkeeping services in their personal capacity, in relation to the first and second plaintiffs' business. The first, second and third named defendants contended that they were improperly joined as parties and thus were not the necessary parties to the first and second plaintiffs' claim.

Ms. Justice Baker refused the reliefs sought by the first, second and third named defendants. The Court opined that though it appeared that the first, second and third named defendants were not the true contracting parties; however, it could not be said that they were not the necessary parties to the claim. The Court held that an application under o. 15 could be filed only when it was determined that a party that was not the necessary party had joined in the proceeding. The Court found that the real identity of the contracting parties would be ascertained after the construction of the terms of the contract. The Court noted that the first and second named plaintiffs had in real asserted a claim of misrepresentation by way of the present application under o.15, which was not allowed as those matters needed to be tested at trial and cross-examined.

JUDGMENT of Ms. Justice Baker delivered on the 10th day of November, 2017.

1 This judgment is given in the motion of the first, second and third named defendants for an order that the claim against them be struck out on the grounds that they were wrongly joined as defendants, or that the proceedings against them are bound to fail, are frivolous and vexatious, and are an abuse of process.

2 Lamworth Developments Limited, the third plaintiff, was struck off the register of companies and dissolved in October, 2009 and following reinstatement, was struck off again and then dissolved in April, 2014. An application has been made to restore the company to the register of companies, and that part of the motion which seeks that third plaintiff be removed from the proceedings stands adjourned.

3 The first, second and third named defendants are accountants and trade as a limited liability company, CA Limited, the fifth defendant. They argue that no grounds or circumstances exist by which the plaintiffs could seek to pierce the corporate veil, and that as at all material times the plaintiffs dealt with the firm and not with them in their personal capacities, they should be removed as defendants.

The proceedings

4 The first and second plaintiffs are husband and wife who were partners in the business of the purchase of land for the construction of residential dwelling houses. and they incorporated the third plaintiff company to develop those lands. The claim is brought arising from the provision by the defendants of bookkeeping and accountancy services to the plaintiffs for the purposes of their business.

5 The fourth named defendant is pleaded as having at all material times acted as the taxation adviser to the plaintiffs in their business, and is not associated with the other defendants.

6 The plaintiffs issued a plenary summons on 21st February, 2013, delivered their statement of claim on 1st July, 2013, and a defence was delivered by the first, second and third defendants on 16th January, 2014, in which they denied that at any material time they contracted in their personal capacity to provide bookkeeping or accountancy services to the plaintiffs or any of them, and in which they made a positive plea that the relevant contractual party was CA Limited which had invoiced the plaintiffs for those services.

7 The plaintiffs did not deliver a reply to that defence but brought a motion to join CA Limited as co-defendant and an order was made on that motion on 4th April, 2014, by the Master of the High Court. Amended pleadings were then served.

8 The relevant part of the amended statement of claim (para. 5) pleads that the accounting and bookkeeping services were provided at all material times either by the company or in their personal capacity by the first, second and third named defendants. In correspondence, the solicitor for the first, second and third named defendants sought that their client be removed from the proceedings and argued that no rational or legal basis exists on which the proceedings could be maintained after the company, CA Limited, was joined.

9 The proceedings have advanced and discovery has been made in which certain documents relevant to the matter now argued have come to light.

10 A number of affidavits have been served in the motion. The grounding affidavit of the first defendant sworn on 2nd October, 2014 is made on his own behalf and on behalf of the second and third defendants.

11 The first replying affidavit of George Raymond made on his own behalf and on behalf of all of the plaintiffs was sworn on 13th November, 2014. He avers at para. 9 that he and his wife believed that they had contracted with or engaged the first, second and third defendants in their personal capacity and had joined the company on the advice of their legal advisers, but not on account of any concession that the contract was made with that entity.

12 Mr. Raymond exhibits a series of documents and correspondence including cash flow projections and draft accounts for Lamworth Developments Limited and he points to the fact that these documents do not mention that the first, second and third defendants traded as a limited liability company. He exhibits a chain of detailed correspondence commencing on 31st July, 2006, between himself and members of staff of 'Contract Accounting'. He points to the fact that the documentation and in particular the profit and loss accounts and other trading accounts of the plaintiffs, where the firm is described as 'Contract Accounting', does not show that it traded as a limited liability company, and he is correct in this. The absence of such an identifying feature is argued to be a significant pointer to the identity of the contracting parties.

13 Eamonn Moyles swore a second affidavit on 22nd January, 2015 in which he exhibits a series of documents which he says are determinative of the question of the identity of the contracting parties. These are as follows:

(a) A printout from the CRO which shows that the business named 'Contract Accounting' was owned by CA Limited.

(b) A series of invoices addressed to the third named plaintiff from 'Contract Accounting' in each of which on the bottom right hand corner is identified the directors of the company, the registration number of CA Limited and its VAT number. These invoices date from 31st January, 2008 to 31st December, 2008.

(c) Company bank statements recording payments made by the third plaintiff directly to the bank account of CA Limited from the plaintiffs. The current account identifies unequivocally CA Limited and its registered address and the addressee as Philip Young, the second defendant. These payments were made on...