Salthill Properties Ltd and Cunningham v Royal Bank of Scotland Plc and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 30 April 2009
• Neutral Citation: [2009] IEHC 207
• Court: High Court
• Date: 30 April 2009

Salthill Properties Ltd & Cunningham v Royal Bank of Scotland Plc & Ors

BETWEEN

SALTHILL PROPERTIES LIMITED AND BRIAN CUNNINGHAM

PLAINTIFFS

AND

ROYAL BANK OF SCOTLAND PLC, FIRST ACTIVE PLC, AND BERNARD DUFFY

DEFENDANTS

[2009] IEHC 207

[No. 8540 P/2008]

THE HIGH COURT

PRACTICE AND PROCEDURE

Dismissal of proceedings

Abuse of process - Res judicata - Public interest in finality in law suits - Applicable principles - Inherent jurisdiction of court - Whether intervention necessary to avoid injustice - Pleadings - Whether jurisdiction may be exercised where dispute on facts - Whether case bound to fail - Whether plea could and should have been maintained in earlier action - Role of documents - Onus on defendant - Whether impossible plaintiff might produce evidence necessary to succeed at trial - Profit share on residential portions - Whether open to plaintiff to allege transfer pricing - Whether allegation of transfer pricing covered by prior ruling - Secret profit on sale of commercial units - Possibility of additional evidence emerging during discovery process - Prior disclosure of documentation - Allegations of breach of fiduciary duty - Whether proceedings should be struck out as against parent company - Involvement of parent company in agreements - Moorview Developments Ltd v First Active plc [2009] IEHC 214 (Unrep, Clarke J, 6/3/2009); Moorview Developments Ltd v First Active plc [2008] IEHC 211 (Unrep, Clarke J, 20/5/2008); Moorview Developments Ltd v First Active plc [2008] IEHC 274 (Unrep, Clarke J, 31/7/2008); Barry v Buckley [1981] IR 306; Bula v Crowley (No 4) [2003] 2 IR 430; Henderson v Henderson (1843) 3 Hare 100; Sun Fat Chan v Osseous Limited [1992] 1 IR 425; Lac Minerals v Chevron Corporation (Unrep, Keane J, 6/8/1993); Ruby Property Co Ltd v Kilty (Unrep, McCracken J, 1/12/1999); A v Medical Council [2003] 4 IR ???; Carlow Kilkenny Radio Ltd v Broadcasting Commission of Ireland [2003] 3 IR 528; R v Secretary of State for Health, ex parte Hackney Borough (Unrep, Court of Appeal, 24/7/1994); Medforth v Blake [2000] Ch 86; McMullen v Clancy (No 2) [2005] 2 IR 445; Bristol and West Society v Mothew [1998] Ch 1 and Corbett v Halifax Building Society [2003] 1 WLR 964 considered - Rules of the Superior Courts 1986 (SI 15/1986), O 19 - Application refused (2008/8540P - Clarke J - 30/4/2009) [2009] IEHC 207

Salthill Properties Limited v Royal Bank of Scotland plc

Facts: The proceedings related to a long running dispute in respect of the sale by the second defendant to the third defendant of a development property owned by the first named plaintiffs. The sale was divided into two transactions. It was alleged that the Banks acted wrongfully by entering an agreement which led them to make a secret profit. The proceedings arose out of a refinancing agreement. The banks sought to dismiss the proceedings. Leave to amend proceedings had been granted so as to add a claim arising out of documents disclosed.

Held by Clarke J. that it was not appropriate to dismiss the proceedings. The evidence currently available would not establish a prima facie case. It might be more difficult for the plaintiffs to survive an application to dismiss at the opening of the proceedings eventually.

Reporter: E.F.

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 6.3.2009 2009 IEHC 214

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 20.5.2008 2008 IEHC 211

MOORVIEW DEVELOPMENTS LTD v FIRST ACTIVE PLC & JACKSON UNREP CLARKE 31.7.2008 2008 IEHC 274

RSC O.19 r28

BARRY v BUCKLEY 1981 IR 306

BULA LTD v CROWLEY (NO 4) 2003 2 IR 430 2003/7/1464

HENDERSON v HENDERSON 1843 3 HARE 100

RSC O.19

SUN FAT CHAN v OSSEOUS LTD 1992 1 IR 425 1991/10/2412

LAC MINERALS LTD v CHEVRON MINERAL CORP UNREP KEANE 6.8.1993 1993/12/3862

RUBY PROPERTY CO LTD & ORS v KILTY & SUPERQUINN UNREP MCCRACKEN 1.12.1999 1999/22/7264

A (A) v MEDICAL COUNCIL & AG UNREP SUPREME 19.12.2003

CARLOW KILKENNY RADIO LTD & ORS v BROADCASTING COMMISSION OF IRELAND 2003 3 IR 528 2004 1 ILRM 161 2003/8/1714

R v SECRETARY OF STATE FOR HEALTH, EX PARTE HACKNEY LONDON BOROUGH COUNCIL UNREP EWCA CIV 29.7.1994

MEDFORTH v BLAKE 2000 CH 86 1999 3 WLR 922 1999 3 AER 97

MCMULLEN v CLANCY (NO 2) 2005 2 IR 445

BRISTOL & WEST BUILDING SOCIETY v MOTHEW (T/A STAPLEY & CO) 1998 CH 1 1997 2 WLR 436 1996 4 AER 698

CORBETT v HALIFAX BUILDING SOCIETY 2003 1 WLR 964 2003 4 AER 180

1 Mr. Justice Clarkedelivered on the 30th April, 2009

1. Introduction

2 2 1.1 This is a further set of proceedings arising out of the long running dispute between companies associated with the second named plaintiff ("Mr. Cunningham") ("the Cunningham Group") and its bankers. There has already been a trial ("the main trial") of many issues arising between those parties generally, which is the subject of a judgment in Moorview Developments Limited & Ors v. First Active plc & Ors (Unreported, High Court, Clarke J., 6 ^th March, 2009) ("the main judgment"). The background to the relationship between the parties generally and the issues which arose subsequent to the appointment of a Mr. Ray Jackson as receiver over significant assets of the Cunningham Group are fully set out in that judgment, and it is unnecessary to repeat them here.

3 3 1.2 As appears from the main judgment, one of the sets of issues which arose between the parties at the main trial concerned the sale by the second nameddefendant ("First Active") to the third named defendant ("Mr. Duffy") of a significant development property at Salthill in Galway which was owned by the first named plaintiffs ("Salthill"). First Active gave effect to that sale in its capacity as mortgagee in possession. However, for reasons which are gone into fully in the main judgment, the sale of the property concerned was ultimately divided into two separate transactions being in relation to, respectively, the residential and commercial portions of the property concerned. For reasons which are again set out in the main judgment, the sale of the commercial portion of the property was delayed by reason of the existence of various court proceedings some of which were before the court in the main trial while the sale of the residential portion completed in 2005.

4 4 1.3 In that context it is said that negotiations took place between Mr. Duffy and the first and second named defendants ("the Banks"), which involved a variation in the agreement previously reached for the sale of the Salthill development to Mr. Duffy, together with the provision of funding by the banks in favour of Mr. Duffy. While it is accepted that First Active was involved in such negotiations, it is denied by the first named defendant ("RBS") that it was directly involved. RBS is the ultimate parent company of First Active. In any event, in relation to those arrangements, it is said that the Banks have acted wrongfully by entering into an agreement which led to the Banks, in their capacity as lenders, making a secret profit out of a transaction, where, in the capacity as vendor as mortgagee in possession, a duty is said to have been owed to Salthill and Mr. Cunningham to achieve the best price. That allegation forms the backdrop to these proceedings.

5 5 1.4 In circumstances which it will be necessary to analyse in a little more detail, the Cunningham Group, in the context of the previous proceedings to which I have already referred, sought on a number of occasions to amend its proceedings for thepurposes of including a claim in relation to an alleged secret profit arising out of the series of transactions to which I have referred and to earlier financing arrangements which were said to have given rise to a similar secret profit. For reasons set out in a judgment of 20 ^th May, 2008, ("the May amendment ruling") Moorview Developments Ltd & Ors v. First Active Plc & Ors [2008] IEHC 211, I declined to allow an amendment relating to the earlier arrangements save in respect of one aspect of same to which I will refer in due course. Again in a judgement of the 31 ^st July, 2008, ("the July amendment ruling") Moorview Developments Ltd & Ors v. First Active Plc & Ors [2008] IEHC 274, I declined to allow an amendment in relation to the transactions the subject matter of these proceedings. Thereafter, these separate proceedings were commenced.

6 6 1.5 The Banks have brought this application in which they seek to have the proceedings dismissed under either O. 19, r.28 of the Rules of the Superior Courts ("Order 19") or the inherent jurisdiction of the court as first identified in Barry v. Buckley [1981] I.R. 3006. This judgment is directed to those issues. I propose turning to the facts in a little more detail before going on to consider the specific issues which arise.

2. Facts

7 2 2.1 These proceedings arise out of a refinancing agreement entered into on the 22 ^nd April, 2008, between First Active and Mr. Duffy. In May, 2008 shortly after the main trial opening, the Cunningham Group applied for leave to amend so as to add a claim, arising out of documents disclosed by First Active, to the effect that First Active had, it was said, agreed to accept a secret profit in respect of the sale of Bailey Point. However, that application related to an allegation arising out of the original arrangement for the purchase of Bailey Point in 2005. In any event I allowed part ofthe Cunningham Group's application (in relation to an allegation of secret profit on a part of the site known as the "back site") but refused to allow the Cunningham Group to advance a claim in respect of the residential element of the sale and the balance (other than the "back site") of the commercial element. The decision in respect of the part of the application refused is currently under appeal to the Supreme Court.

8 3 2.2 In the course of the application in May, 2008, First Active...