Used Car Importers of Ireland Ltd v Minister for Finance and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Gilligan
• Judgment Date: 27 February 2014
• Neutral Citation: [2014] IEHC 256
• Court: High Court
• Date: 27 February 2014

[2014] IEHC 256

THE HIGH COURT

[No. 1988 P/1995]

Used Car Importers of Ireland Ltd v Min for Finance & Ors

BETWEEN:

USED CAR IMPORTERS OF IRELAND LIMITED

PLAINTIFF

AND

THE MINISTER FOR FINANCE, THE REVENUE COMMISSIONERS, IRELAND AND THE ATTORNEY GENERAL

DEFENDANTS

RSC O.5 r13

SUPREME COURT OF JUDICATURE IRL ACT 1877 S53

FINANCE ACT 1992 S132

FINANCE (NO 2) ACT 1992 S8

BYRNE v JOHN S O'CONNOR & CO SOLICITORS & ADMIRAL UNDERWRITING AGENTS (IRL) LTD 2006 3 IR 379 2006/9/1622 2006 IESC 30

RSC O.15 r13

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS; FIRST ACTIVE PLC v CUNNINGHAM 2011 3 IR 615 2011/38/10818 2011 IEHC 117

CARBORUNDUM ABRASIVES LTD v BANK OF NEW ZEALAND (NO 2) 1992 3 NZLR 757

THEMA INTERNATIONAL FUND PLC v HSBC INSTITUTIONAL TRUST SERVICES (IRL) LTD 2011 3 IR 654 2012 1 ILRM 250 2011/47/13324 2011 IEHC 357

USED CAR IMPORTERS OF IRELAND LTD v MIN FOR FINANCE & ORS UNREP LAFFOY 1.3.2006 2006/56/12009 2006 IEHC 90

Commercial litigation - Notice of motion - Whether Mr. O"Dowling should be joined as a fifth named defendant - Whether personally liable for costs awarded in favour of defendants - Reasonable discretion of the court - Whether exceptional circumstances - Moorview Developments Limited v. First Active plc [2011] 3 I.R. 615 followed - Not a third party funder but someone with a legitimate interest in the outcome of the proceedings

Facts In the proceedings before the trial judge the plaintiff company, Used Car Importers of Ireland Limited, sought a mandatory injunction requiring the second named defendant, the Revenue Commissioners, to publish to the plaintiffs the values of the full range of new and used motor vehicles for Vehicle Registration Tax purposes. It also sought declarations of unconstitutionality in relation to the legislation which enacted the Vehicle Registration Tax, declarations that this legislation was contrary to EU law and claimed damages (€131m) alleging the actions of the defendants had caused the company to suffer loss and damage. The judge refused all reliefs and allowed the defendants to issue a motion seeking to have Mr. O"Dowling (who at the date of commencement of the main proceedings was a 50% shareholder and a director of the plaintiff company) joined as a defendant for the purposes of securing a costs order against him pursuant to O. 15. r. 13 of the Rules of the Superior Courts and s. 53 of the Supreme Court Judicature (Ireland) Act 1877.

Held The judge considered and followed three authorities in arriving at his decision - Moorview Developments Limited v. First Active Plc [2011] 3 I.R. 615, Thema International Fund Plc v. HSBC Institutional Trust Services (Ireland) Ltd [2011] 3 I.R. 654 and the New Zealand decision of Carborundum Abrasives Ltd v. Bank of New Zealand (No.2) [1992] 3 NZLR 757. The judge reiterated the fact that the plaintiff company was not in a position to meet the order which had been made against it to pay the costs of the successful defendants. He confirmed Mr O"Dowling had at least an indirect connection with the litigation, having contributed to the costs of the plaintiff"s proceedings. The judge considered the distinction between persons with a legitimate interest such as creditors / shareholders and a professional third party funder who makes a commercial decision to invest in litigation with a view to making a profitable return. He concluded Mr O"Dowling was a non-party who partially funded the litigation but was not a professional funder who had no direct or indirect connection with the litigation. The judge ruled, given the number of distinguishing factual features, the order sought had to be regarded as exceptional.

The judge concluded the submissions of the defendants were not sufficient to satisfy the Court that, in the exercise of its reasonable discretion, Mr. O"Dowling should be joined as a fifth named defendant to the proceedings and thus was not to be held personally liable for the costs awarded in favour of the defendants.

-The reliefs sought by the defendants pursuant to the notice of motion refused.

1 1. The defendants to these proceedings seek, by way of notice of motion dated 15th March, 2013, an order pursuant to O. 5, r. 13 of the Rules of the Superior Courts or s. 53 of the Supreme Court of Judicature (Ireland) Act 1877, or pursuant to the inherent jurisdiction of the court joining Mr. Niall O'Dowling as a fifth named defendant to the within proceedings, and an order directing that Mr. O'Dowling be personally liable for the costs awarded in favour of the first, second, third and fourth named defendants as against the plaintiff in these proceedings.

2 2. The judgment was delivered in these proceedings by Murphy J on 15th March, 2013. This case was heard over 33 days from March to June, 2012, The plaintiff company sought a mandatory injunction requiring the second named defendant, the Revenue Commissioners, to publish to the plaintiffs the values for Vehicle Registration Tax (hereafter "VRT") purposes of the full range of new and used motor vehicles and to publish revised values from time to time. The plaintiff also sought a number of other reliefs including declarations of unconstitutionality in relation to the legislation which enacted the VRT and declarations that this legislation was contrary to EU law. The plaintiff also sought damages against the defendants arising out of this allegedly wrongful interference with its constitutional and EU rights. The claim for damages was in the region of €131m. The court refused all reliefs sought by the plaintiff. On the same date as the judgment was delivered Murphy J gave liberty to the defendants to issue the motion herein seeking to have Mr. O'Dowling joined as a defendant for the purposes of securing a costs order against him. On 21 ^st March, 2013, Murphy J. awarded costs of the action in favour of the defendants as against the plaintiff company and the motion currently before the court was adjourned to allow it to be prepared for hearing.

3 3. The plaintiff to these proceedings is a limited liability company which operated a business based on the importation and resale in Ireland of used motor vehicles particularly from Japan and member states of the European Union. VRT was introduced from 1 ^st January, 1993, by s. 132 of the Finance Act 1992, as amended by s. 8 of the Finance (No. 2) Act 1992. The plaintiff complained that the manner in which this VRT system was operated was lacking in transparency and made it impossible for the plaintiff, when purchasing and selling stock, to calculate the correct VRT liability which it owed to the Revenue Commissioners in relation to each vehicle. The business of the plaintiff has been in progressive decline and the plaintiff claimed in that the actions of the defendant caused it to suffer loss and damage. The court refused all the reliefs sought by the plaintiff in these proceedings.

4 4. During the course of the main proceedings a substantial amount of time was given to the oral testimony of Mr. Niall O'Dowling, the subject of the proceedings currently before the court. It is clear that Mr. O'Dowling was at the date of the commencement of the main proceedings a 50% shareholder and a director of the plaintiff company. His co-director and co-shareholder was Mr. Fintan Riordan. However, according to the decision of Murphy J, Mr. Riordan said in his evidence that Mr. O'Dowling left the plaintiff company in 1995 as the company could not afford to pay two salaries at a sufficient level. Murphy .1 stated at p. 235 of his decision that "no satisfactory explanation was given as to the reasons or to the terms of Mr. O'Dowling's departure". The court, in relation to the evidence given by Mr. O'Dowling and Mr. Riordan, stated at p. 168 of the decision that "there is no evidence to prove the allegations made".

5 5. This Court has had regard to the decision of Murphy J. in coming to its conclusion on the motion as currently before the court.

6 6. In an affidavit sworn to ground this motion Mr. Dec?an Sherlock, Deputy Revenue Solicitor, avers that the plaintiff company had insufficient funds to maintain this litigation. Mr. Sherlock relies on a number of statements made by Mr. O'Dowling in the course of his evidence in chief, cross examination and re-examining during the trial of the main proceedings in order to conclude that Mr. O'Dowling was substantially involved in funding the proceedings which were concluded with the decision of Murphy J. in March, 2013. Mr. Sherlock notes that on Day five of the trial it was confirmed by Mr. O'Dowling under direct examination by counsel for the plaintiff that he had ceased to act as a shareholder and a director of the plaintiff company in autumn or late summer of 1995. No exact date for this change in company ownership was available to the court. Mr. Sherlock also avers that Mr. O'Dowling confirmed this fact under cross-examination on Day six of the trial. Mr. Sherlock then refers to a number of admissions made by Mr. O'Dowling in relation to the funding of the litigation. On day nine of the trial, 20 ^th March, 2012, Mr. O'Dowling stated under cross examination by counsel for the defendants that he had, from his own personal monies, funded the costs incurred in the proceedings brought by the plaintiff company up to that date. He stated that he had paid legal expenses incurred by the plaintiff company as they arose in the proceedings, he had made payments to counsel for the plaintiff for legal services provided by them to the plaintiff during the proceedings, he had paid for the preparation of all expert reports tendered in evidence in the proceedings and had maintained the proceedings and kept them going from his own personal funds. On Day 10 of the trial, 21 ^st March, 2012, Mr. O'Dowling stated under re-examination by counsel for the...