Ulster Bank Commercial Services Ltd v Trade Credit Brokers Ltd
| Jurisdiction | Ireland |
| Judge | Quirke J. |
| Judgment Date | 04 July 2003 |
| Neutral Citation | [2003] IEHC 42 |
| Court | High Court |
| Docket Number | [1998 No. 2955P],[No. 2955 P./1998] |
| Date | 04 July 2003 |
[2003] IEHC 42
THE HIGH COURT
BETWEEN
AND
Citations:
RSC O.19 r28
RSC O.19 r1
BARRY V BUCKLEY 1981 IR 306
SUN FAT CHAN V OSSEOUS LTD 1992 IR 425
SUPERMACS IRL LTD V KATESAN (NAAS) LTD 2000 4 IR 273
LAC MINERALS V CHEVRON MINERAL CORPORATION OF IRELAND 1995 1 ILRM 161
THE ANGEL BELL 1979 2 LLOYDS REP 491
ACKMAN SCHER V POLICY HOLDERS PROTECTION BOARD 1994 1 LLOYDS 121
MCMANUS V CABLE MANAGEMENT (IRL) LTD UNREP MORRIS 8.7.1994 1994/12/3579
BANQUE KEYSER ULLMANN SA V SKANDIA (UK) INSURANCE CO LTD 1989 3 WLR 25 1990 1 QB 665
TAI HING COTTON MILL LTD V LIEU CHONG HING BANK LTD 1986 1 AC 80
SWEENEY V DUGGAN 1997 2 IR 531
PAT O'DONNELL & CO LTD V TRUCK & MACHINERY SALES LTD 1998 4 IR 191
Synopsis:
PRACTICE AND PROCEDURE
Dismissal of proceedings
Inherent jurisdiction of courts - Whether claim disclosed reasonable cause of action - Whether proceedings against second defendant should be struck out - Rules of the Superior Courts 1986, Order 19 rule 28 (1998/2955 - Quirke J - 4/7/2003)
Ulster Bank Commercial Services Ltd v Trade Credit Brokers Ltd - [2003] 3 IR 140
the plaintiff entered into a factoring agreement with the third defendant on condition, inter alia, that the third defendant take out credit insurance, as it happened with the second defendant, and that such insurance would be then endorsed to the plaintiff. A condition of that insurance policy was that the policyholder could not "assign or transfer this policy...[but could] require claims payments to be made to a named loss payee...". The first defendant was the broker appointed by the third defendant to procure the insurance policy. The only connection between the second defendant and the plaintiff resulted from the nomination by the third defendant of the plaintiff as a "loss payee" on foot of the contract of insurance between the third defendant and the second defendant. The plaintiff's substantive claim arose out of monies owed to the third defendant by trade debtors which the third defendant would not pursue for those debts and for which the plaintiff paid to the third defendant. The plaintiff, in its statement of claim, sought damages in respect of those monies, inter alia, for breach of duty and breach of contract against the second defendant. The second defendant brought a motion seeking to have the plaintiff's claim and the first defendant's claim for indemnity and contribution against it dismissed on the grounds that they disclosed no reasonable cause of action. The plaintiff brought a motion seeking liberty to amend and widen its pleadings to include a claim against the third defendant for monies or damages allegedly due on foot either of an agreement between the second and third defendants as the agent of the plaintiff or alternatively on foot of a constructive trust in favour of the plaintiff.
Held by Quirke J in dismissing the plaintiff's and the first defendant's claim against the second defendant and treating the application to dismiss the plaintiff's claim on the assumption that it would be successful in its application to amend its pleadings, that in dealing with applications to dismiss the court had to be satisfied that it would be impossible for the plaintiff to succeed and inevitable that its claim would fail, the burden of proving which is onerous and had to be discharged on undisputed facts. That the plaintiff as a "loss payee" enjoyed no privity of contract with the second defendant arising out of the contract of insurance between the second and third defendants. Accordingly, no principle of law could countenance the existence of either a trust or an agency of the type contended for by the plaintiff on the evidence as presented. That the nature and extent of the alleged duty of care owed by the second defendant to the plaintiff had not been defined by the plaintiff.
Quirke J. delivered the 4th day of July 2003 .
There are two interlinked motions before the Court;
1. By notice dated the 14 th May, 2002 the second named defendant (NCM) seeks orders pursuant to O. 19, r. 28 of the Rules of the Superior Courts, 1986 or pursuant to the inherent jurisdiction of the Court dismissing (a) the plaintiff's claim against NCM and (b) the first named defendant's claim for contribution and indemnity against NCM on the grounds that both claims disclose no reasonable cause of action against NCM and are bound to fail.
In the alternative NCM seeks an order directing the trial of certain issues of law as issues preliminary to the trial of the substantive proceedings herein.
2. By notice dated the 26 th day of February, 2003 the plaintiff seeks an order pursuant to O. 28 r. 1 of the Rules of the Superior Court, 1986 giving the plaintiff liberty to amend its pleadings so as to include a claim against NCM for monies or damages allegedly due and owing to the plaintiff by NCM on foot either of an agreement entered into between NCM and the third defendant (Nakosta) as the authorised agent of the plaintiff or alternatively on foot of a constructive trust in favour and for the benefit of the plaintiff.
By an agreement in writing dated the 29 th day of February, 1996, the plaintiff entered into a factoring agreement with Nakosta whereby the latter agreed to sell and the plaintiff agreed to purchase certain debts (called "receivables") on particular terms and subject to particular conditions including a condition which required Nakosta to take out a credit insurance policy which would enable Nakosta to recover 85% of any loss which it might sustain arising out of the insolvency of any of the debtors who were the subject of the factoring agreement. It provided further that such insurance policy was to be "endorsed to" the plaintiff.
Pursuant to its obligations under the factoring agreement Nakosta entered into a contract of insurance (No. IST/832901) whereby NCM agreed to provide Nakosta with insurance cover in the terms of its "Commercial Risks Policy" for the period from the 1 st March, 1996 to the 28 th February, 1997. The first defendant (TCB) was the insurance broker appointed by Nakosta to procure the insurance policy on its behalf.
The following terms of the policy are relevant and have been relied upon by NCM in support of its contentions:
1. Article 4.E which provided that "[W]e have shall have no liability where you sustain a loss but have not complied with the terms and conditions of the credit limit or where you have not established a credit limit before the insolvency occurs."
2. Article 5.A which provided that "[Y]ou must declare to us the value of all goods delivered or services invoiced under the contracts to which the policy applies using the form we will provide. Where appropriate a nil declaration must be submitted. Declarations must be returned to us by the time we specify."
3. Article 10 which provided that "[Y]ou cannot assign or transfer this policy or any of its benefits without our prior written consent. You may however require claims payments to be made to a named loss payee, using the form we will provide, your obligations under the policy remaining unaffected."
4. Article 13 which provided that "[P]ayments of all premiums in full at the time we require, and the due performance and observance of every stipulation or the proposal, shall be conditions precedent to any liability on our part. In the event of any breach of any condition precedent we also have the right to retain any premium paid and to give written notice terminating the policy."
5. Article 18 which provided that "[A]ny misrepresentation, whether fraudulent or otherwise or fraudulent conduct on your part (or on the part of any other person who has a legal or beneficial interest in the policy or its proceeds (in relation to this policy including the proposal) to any claim under it or to any contract to which the policy applies, will render the policy void but we may retain any premium paid and you will be liable to refund to us any payment we may have made under the policy."
6. Article 21 which provided that "[T]his policy shall be governed by and construed in accordance with English law and be subject to the jurisdiction of the English courts."
It is agreed and acknowledged by all of the parties to these proceedings that the relationship between NCM and Nakosta is and remains for the purposes of these proceedings regulated by English law and that the transactions between them will, pursuant to the terms of the policy be governed by the principles and tenets of English Law.
On the 16 th of April 1996 the plaintiff was appointed by Nakosta as a "loss payee" under the policy of insurance This authorised and requested NCM to pay any moneys which were payable to Nakosta under the policy to the plaintiff. The nomination of the plaintiff as a loss payee was effected by means of Nakosta completing and executing a form entitled "Nomination of Loss Company Payee" which provided inter alia that Nakosta authorised and requested NCM to pay to the plaintiff " the whole of the moneys payable to us under any capital or relevant Section of the above Numbered Policy"
At Note 1 the nomination provided that.
" these instructions....
(a) do not constitute an assignment, nor are they intended to confer on the payee any of the benefits of an assignee."
The plaintiff's substantive claim in these proceedings arises out of moneys allegedly owed to Nakosta by three trade debtors whom Nakosta did not pursue and will not pursue for those debts because Nakosta and the three debtors concerned have all become part of a large company group (LSPC) which...
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