W.L. Construction v Chawke

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 19 May 2017
• Neutral Citation: [2017] IEHC 319
• Docket Number: [2008 No. 809 S.]
• Court: High Court
• Date: 19 May 2017

[2017] IEHC 319

THE HIGH COURT

Noonan J.

[2008 No. 809 S.]

BETWEEN

W.L. CONSTRUCTION LIMITED

PLAINTIFF

AND

CHARLES CHAWKE

AND

EDWARD JOSEPH BOHAN

DEFENDANTS

Practice & Procedures – Award of costs – Joinder of parties – Liability to pay costs

Facts: The defendants had filed an application to join the named person as a party to the proceedings solely for the purpose of making him liable for the payment of the costs of proceedings awarded against his company/plaintiff. The Court had earlier dismissed the company's claim and awarded the costs of the proceedings against the plaintiff/company. The defendants asserted that the entire claim was tainted by the fraud and dishonesty of the named person, and the manner in which the proceedings were prosecuted, the named person should be made liable to pay the costs.

Mr. Justice Noonan granted an order for joining the named person as a co-defendant and directed that he would be liable for the costs of the defendants. The Court held that the named person was responsible for bringing false and vexatious claim against the defendants, and thus, he should be liable to pay the costs incurred by the defendants in litigating that claim.

JUDGMENT of Mr. Justice Noonan delivered on the 19th day of May, 2017

1 I delivered judgment (‘the principle judgment’) in these proceedings on 3rd October, 2016. I dismissed the plaintiff's claim for the reasons set out therein. On 26th October, 2016, I awarded the costs of the proceedings to the defendants. The defendants' counter claim was struck out with no order as to the costs.

2 The motion that is now before the court is an application by the defendants to join William Loughnane as a defendant to the proceedings for the purposes of making an order rendering him liable for the defendants' costs of the proceedings. The plaintiff's claim was dismissed on essentially two grounds. The first was that I concluded that the claim was an abuse of process for two reasons, first that the entire claim had been tainted by the fraud and dishonesty of Mr. Loughnane and the lies he had told under oath and secondly, because the manner in which the plaintiff's claim had been presented and prosecuted in itself constituted an abuse of process.

3 The second ground upon which the claim was dismissed was that at the end of the plaintiff's case, the plaintiff had not established that there was any sum due to it and it was thus appropriate to grant the defendants' application for a non-suit.

4 The defendants' application is grounded upon an affidavit of Neal Boland, a solicitor in Smith Foy and Partners Solicitors, who represent the defendants. In essence, the basis upon which this application is brought is that the costs incurred by the defendants in these proceedings arose as a direct result of the litigation misconduct of the plaintiff which was solely and entirely orchestrated by Mr. Loughnane. Mr. Boland avers that there is no prospect of recovery against the plaintiff, a contention which is not disputed either on affidavit or in submissions by counsel for Mr. Loughnane. It is also not disputed that Mr. Loughnane is the holder of 99% of the issued share capital of the plaintiff company which is effectively owned and controlled by him.

5 It is further not disputed by counsel for Mr. Loughnane that the court has jurisdiction to make an order of the kind sought in these proceedings on the basis of three judgments of this court in Moorview Developments Limited v. First Active Plc. [2011] 3 I.R. 615, Thema International Fund Plc. v. HSBC [2011] 3 I.R. 654 and Used Car Importers of Ireland Limited v. Minister for Finance & Ors. [2014] IEHC 256.

6 In his judgment in Moorview, Clarke J. followed the decision of the New Zealand High Court in Carborundum Abrasives Limited v. the Bank of New Zealand (No. 2) [1992] 3 NZLR 757. That was an appeal from a judgment of the Master in which the Master had held that there must be impropriety, fraud or bad faith on the part of the non party before costs could be awarded. In dealing with this issue, Tomkins J. said (at page 764):

‘In his judgment, the Master said that without in any way attempting to be exhaustive, it was his view that for an applicant to succeed to obtain an order for costs against a non party the applicant must establish some form of impropriety, fraud or bad faith on the part of the non party. With respect to the Master, I do not accept this limitation. Certainly, if a non party who has been involved in or connected with the prosecution or defence of proceedings through an insolvent company has acted with impropriety or with mala fides, that could be a persuasive reason for the court exercising its discretion to order costs against such non party. But a non party could become liable for costs where he has acted without impropriety or mala fides.’

7 As appears from this passage, approved in Moorview, the issue with which the New Zealand court was concerned was whether the jurisdiction could be extended to cases where there had been no impropriety. Similarly in Moorview, it was not suggested that the party who was sought to be joined for the purposes of being made amenable to a costs order, Mr. Cunningham, had been guilty of mala fides. It was however suggested that he was a funder and potential beneficiary of the litigation and as such should be made liable. In treating of this issue in Carborundum, Tomkins J. said (at page 764):

‘Where proceedings are initiated by and controlled by a person who, although not a...