Anglo Irish Beef Processors Limited v. Montgomery  IESC 60 (31st July, 2002)
THE SUPREME COURT
344 & 345/01
ANGLO IRISH BEEF PROCESSORS LIMITED AND DJS MEATS LIMITED
DEREK MONTGOMERY, SEAMUS HAND, NATIONAL COLD STORAGE LIMITED, NORDIC COLD STORAGE LIMITED
STOKES KENNEDY CROWLEY AND COMPANY (A FIRM)
[Judgments delivered by Keane C.J. and Fennelly J.; Murphy J. agreed with Keane C.J..]
JUDGMENT delivered the 31st day of July 2002, by Keane C.J.
1. This is an appeal from a judgment and order of the High Court (Kelly J) in which he refused two applications on behalf of the first and second named defendants and third and fourth named defendants respectively for orders dismissing the plaintiff's claim on the ground of inordinate and inexcusable delay in the prosecution of the claim against all four defendants.
2. The factual background to the case is as follows. On the 14th June 1989, the first named plaintiffs (hereafter "Anglo Irish") agreed to purchase from the four defendants their share holding in the second named plaintiff (hereafter "DJS") for the sum of £1. Clause 8 of the hand-written agreement provided that
"An audit of DJS shall be carried out by N. Cooke of SKC as at the 13th June 1989. The balance sheet shall be prepared on the same basis as the BS in Schedule 2. If the net assets/liabilities which is IR£2,040,468 in the pro forma in Schedule 2 as at the 13/06/89 exceeds IR£2,540,468 then the excess shall be paid to DJS by the shareholders within 10 days of being called upon to do so. The liability to do this shall be joint and several."
3. Anglo Irish maintain that the balance sheet as ultimately prepared showed net liabilities which were £1,584,857 in excess of the agreed amount of £2,540,468. The defendants say that clause 8 does not, in its terms, reflect the agreement of the parties and that the indemnity intended to be provided for by clause 8 was confined to certain trading losses.
4. The proceedings began by way of summary summons on the 28th November 1989. The defendants having resisted a motion for final judgment on the ground that the terms of clause 8 did not represent the actual agreement entered into between the parties, the matter was sent for plenary hearing. In an amended statement of claim delivered on the 10th March, 1993, Anglo Irish advanced an additional claim, namely, that they had also suffered loss and damage arising from alleged breach of warranties on the part of the defendants. This related to export refund provisions and PAYE provisions. By a letter of 15th March 2001, the defendants were informed that by virtue of a settlement entered into by DJS with the Department of Agriculture in November 1995, the claim in respect of PAYE provisions was being abandoned and that the claim under the heading of Export Refund Provisions had been reduced to the sum of £666,298.39.
5. The defence delivered on behalf of the defendants in the agreement included a counterclaim for rectification of the written agreement of 14th June 1989. The defendants also issued and served with the leave of the court third party proceedings against the third party (hereafter "SKC") claiming damages for negligence, breach of contract and breach of trust while acting as their accountants and financial advisors in relation to the disposal of their share holding in DJS. The pleadings in the main action were not closed until the 7th April 1994. Thereafter, Anglo Irish took no further steps until the 2nd April 1996 when a notice of intention to proceed was served. Again, however, the action remained dormant until a further notice of intention to proceed was served on 2nd October 1998. Anglo Irish again took no further steps until the 13th December 2000 when a third notice of intention to proceed was served. On the 30th March 2001 Anglo Irish served a notice of motion seeking leave to amend their reply in defence to the counterclaim. Shortly thereafter, the present motions to dismiss the plaintiffs claim were served on behalf of the defendants.
6. In an extempore judgment, Kelly J refused to grant the reliefs sought. While he was satisfied that the delay was indeed inordinate and inexcusable, he was also of the view that, applying the principles laid down by this court in Primor Plc -v- Stokes Kennedy Crowley  2IR 459, the balance of justice was in favour of allowing the action to proceed. From that judgment and order, the defendants have now appealed to this court. There has been no cross appeal by Anglo Irish in respect of the finding by the learned High Court judge that there was inordinate and inexcusable delay in the prosecution of the claim.
7. It is not in dispute that the negotiations which led to the agreement of the 14th June 1989 were conducted on behalf of the defendants with the plaintiffs by Declan Collins of SKC. It is also not in dispute that the defendants were assisted by Brendan Devine, formerly a partner in Ernst and Whinny, the auditors to the defendants and to which firm Mr. Devine was a consultant. While Mr. Devine did not have any direct dealings with the plaintiffs, he took part in a number of discussions between the defendants on the one hand and Mr. Collins on the other hand, including one that took place on the afternoon of the 13th June 1989, i.e., the day before the signing of the agreement.
8. In an affidavit sworn in these proceedings, Mr. Thomas Butler, a director of the third and fourth defendants, deposed that during the course of that discussion, Mr. Collins made it clear that the indemnity to be provided by clause 8 related to trading losses to be computed by reference to accounts prepared on the same basis as previous years, that he had examined the management accounts for DJS and that the trading losses disclosed were in the order of £400,000. Mr. Butler deposed that it was on the basis of this representation that the selling shareholders felt it acceptable to underwrite trading losses in excess of £500,000.
9. Mr. Devine died on the 10th November 2000. While Mr. Butler accepted that there were other persons present, including the first and second named defendants and himself, he said that the significance of Mr. Devine's evidence would have been that, like Mr. Collins, he was a chartered accountant and, accordingly, his evidence as to what was said by Mr. Collins on the issue of trading losses and in relation to the accounts of DJS would have been particularly important. Those factual averments, although not the legal significance to be attached to them, were not contested on behalf of Anglo Irish.
10. In the course of his extempore judgment, the learned High Court judge concluded that the crucial factor, so far as the role of Mr. Devine was concerned, was that he had no face to face dealings with Anglo Irish or their representatives: those negotiations were solely carried on by Mr. Collins who, although retired, would be available as a witness. He accordingly concluded that, on balance, the absence of Mr. Devine would not imperil a fair trial. At that stage of his judgment, the learned trial judge does not appear to have adverted to the fact that, in the light of the averments of Mr. Butler, Mr. Devine's evidence would have been of considerable significance in relation to the claim against the third party.
11. It is acknowledged in this case that the applicable legal principles are as set out in the judgment of Hamilton CJ in Primor Plc -v- Stokes Kennedy Crowley  2IR 463 at p. 475 as follows:-
"(a) the courts have an inherent jurisdiction to control their own procedure and to dismiss a claim when the interests of justice require them to do so;
(b) it must, in the first instance, be established by the party seeking a dismissal of proceedings for want of prosecution on a ground of delay in the prosecution thereof, that the delay was inordinate and inexcusable;
(c) even where the delay has been both inordinate and inexcusable the court must exercise a judgment on whether, in its discretion, on the facts the balance of justice is in favour of or against the proceeding of the case;
(e) in considering this latter obligation the court is entitled to take into consideration and have regard to
'(i) the implied constitutional principles of basic fairness of procedures,
(ii) whether the delay and consequent prejudice in the special facts of the case are such as to make it unfair to the defendant to allow the action to proceed and to make it just to strike out the plaintiff's action
(iii) any delay on the part of the defendant - because litigation is a two party operation, the conduct of both parties should be looked at
(iv) whether any delay or conduct of the defendant amounts to acquiescence on the part of the defendant in the plaintiff's delay,
(v) the fact that conduct by the defendant which induces the plaintiff to incur further expense in pursuing the action does not, in law, constitute an absolute bar preventing the defendant from obtaining a striking out order but is a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case,
(vi) whether the delay gives rise to a substantial risk that it is not possible to have a fair trial or is likely to cause or have caused serious prejudice to the defendant,
(vii) the fact that the prejudice to the defendant referred to in (vi) may arise in many ways and be other than that merely caused by the delay, including damage to a defendant's reputation and business."
12. Since the delay in this case is acknowledged to have been both inordinate and inexcusable, one can proceed at once to consider whether, in accordance with those principles, the balance of justice is in favour of or against permitting the action to proceed.
13. The trial judge was undoubtedly entitled to take into account in favour of Anglo Irish the fact that they had asserted their claim against the defendants at an early stage, and that the defendants were aware of the claim that was being made against them. In addition, to some extent at least, the case was one based on documents, i.e., the true construction of the agreement of 14th June 1989. As against that, there is the remarkable fact, that, although Anglo Irish are acknowledged to be a wealthy trading corporation with access to first class professional advice, no explanation whatever was given for the quite staggering lethargy with which these proceedings were pursued. Nor can it be said that the defendants in any way acquiesced in the inaction of Anglo Irish.
14. If those were the only factors to be considered, they would, suggest, in my view, that, contrary to what the learned High Court concluded, the balance of justice was in favour of striking out the proceedings. There is, however, another factor to which, in my view, the trial judge, although conscious of it, unarguably gave insufficient weight, i.e., the fact that Mr. Devine is now dead and will be unable to confirm the defendants' understanding of the advice being tendered to them by Mr. Collins as to the nature and effect of clause 8 of the agreement.
15. That evidence was critical to the defendant in maintaining their claim for an indemnity or contribution from the third party. Since, in accordance with the requirements of the Civil Liability Act 1961 and the relevant provisions of the Rules of the Superior Courts, all these issues would be tried together, it follows inevitably that, in relation to an issue of central importance, i.e., whether, assuming the claim of Anglo Irish is well founded, the defendants are entitled to contribution or an indemnity from the third party, the defendants will be deprived of a witness of critical importance as a result of the inordinate and inexcusable delay on the part of Anglo Irish in prosecuting the claim.
16. I am satisfied that, in the result, applying the principles laid down by the learned Chief Justice in Primor Plc, the delay in this case has given rise to a substantial risk that it is not possible to have a fair trial and that it has caused serious prejudice to the defendants. I am further satisfied that that was the only inference which could have been drawn by the High Court from the evidence before him on affidavit, and that, accordingly, the conclusion of the learned High Court judge that the balance of justice required the action to proceed was erroneous in point of law.
17. I would allow the appeal and substitute for the order of the High Court an order dismissing the claim as against all four defendants.
THE SUPREME COURT
344 & 345/01
ANGLO IRISH BEEF PROCESSORS LIMITED AND DJS MEATS LIMITED
DEREK MONTGOMERY, SEAMUS HAND,
NATIONAL COLD STORAGE LIMITED, NORDIC COLD STORAGE LIMITED
STOKES KENNEDY CROWLEY AND COMPANY (A FIRM)
JUDGMENT delivered the 31st day of July, 2002 by FENNELLY J.
18. I fully agree that this appeal should be allowed and that the plaintiff's claim should be dismissed for want of prosecution. I also agree both with the account of the facts given in the judgment of the Chief Justice and with his reasons, save that, at least in one respect I would go somewhat further.
19. The remarkable aspect of the history of the delay by the respondents in the prosecution of their claim is not merely that it was inordinate and inexcusable. This is a matter which is not now contested and was never seriously open to dispute. It is rather that the respondents have made no serious attempt to explain the delay.
20. The cause of action flowed from the terms of an agreement of 14th June 1989 for the sale of the appellants' shareholding in the second named respondent ("the company"). The respondents as from the autumn of 1989 believed that they had a claim for £1,584,857 based on a revised audit of the liabilities of the company, said to have been duly carried out, on their behalf, in accordance with the terms of the contract.
21. The respondents promptly demanded payment of that sum on 2nd November 1989. They issued the Summary Summons on 28th November 1989. Following a notably expeditious processing of the action in the Master's court, the case was adjourned for plenary hearing. The pleadings were closed around the end of 1990.
More than three further years were taken up with the joining of the third party, amendments of pleadings and the making of requests for particulars and replies and the process of discovery. During this period also, the respondents introduced a separate heading of claim by an amendment made on 10th March 1993. This arose from a claim by the Minister for Agriculture for repayment by the company of a sum of over £1 million in respect of export refunds paid to the company related to the export of beef to certain African countries ("the export refund dispute"). As is stated in the judgment of the Chief Justice, the pleadings in the main action were closed on 7th June 1994. No real controversy attaches to these events. It is not the period of the relevant delay.
22. The Chief Justice has referred to the complete absence of any explanation for the "quite staggering lethargy with which these proceedings have been pursued." That remark applies to the period after the middle of 1994. In the period of six and a half years from 7th June 1994 to 13th December 2000, the only action taken by the respondents in this action were:
- on the second April 1996, they served Notice of Intention to Proceed and notice of change of solicitor, the latter being necessitated by a merger of the firm of solicitors on record with another firm;
- on 2nd October 1998, they served a second Notice of Intention to Proceed;
- on 13th December 2000, the served a third Notice of Intention to Proceed.
23. The learned trial judge correctly rejected the submission of the respondent that either a Notice of Intention to Proceed or a notice of change of solicitor constituted a proceeding for the purposes of the Rules of the Superior Courts. He followed the decision of the Northern Ireland High Court in Bannon v Craigavon Development Commission  N.I. 387. Put simply, the respondents allowed a period of six and a half years to run without taking any action at all except to say, twice, that they intended to proceed but without doing so. The respondent submitted that the delay during this time was "partly explained" by the existence of the export refund dispute. This litigation between the company and the Minister for Agriculture was settled on 14th November 1995. Insofar as this litigation is proffered as an explanation for the delay, it is noteworthy that the respondent did not notify the appellants of the fact of the compromise until they sent a letter about it on 15th March 2001. Nonetheless, there is arguably some explanation for the delay to 14th November 1995.
24. The only other item mentioned as a possible explanation for delay was "the difficulties in obtaining full discovery in these proceedings." In support of this contention, the respondent said that affidavits of discovery were sworn by the Third Party on 6th April 1992 and 4th January 1993, but that "these were inadequate which necessitated correspondence with A & L Goodbody, Solicitors for the Third Party." The "correspondence," as appears from the respondents' affidavit sworn in the motion in this case, consists of a single letter of complaint from the respondents' solicitors to A & L Goodbody dated 12th October 1998 and an acknowledgment from the latter. Thus a letter was written more than seven years after the provision of the supposed inadequate discovery with no ensuing action to pursue the complaint. The letter was not even written to the appellants' solicitors.
25. It is no exaggeration, in these circumstances to say that the respondents have not even made pretense of an attempt to explain, still less offered an excuse for their quite extraordinary delay in pursuing the claim. There may, of course, be cases where the unpredictable hazards of life afflict the course of litigation. Individuals may be handicapped by poverty, illness, ignorance or absence from the jurisdiction. Documents may be mislaid, lost or destroyed. Poor or inadequate legal advice or service may, through no fault of the litigant, impede the progress of a claim. No comparable misfortune has been advanced in the present case. The claim is of a purely commercial character. On the respondents' own version of it, it is perfectly straightforward. The claimant is a well-advised, well-known company and is fully armed with all the means of pursuing its claim to judgment. Its stark failure to proffer even the vestige of an explanation for its delay is a circumstance which should not be overlooked. It looks like mute, not to say insolent, indifference, when a litigant, positioned as the respondents are in this case, evince no consciousness of the need to explain their long and egregious periods of silence. The courts are entitled to expect something more from parties who crave its indulgence.
26. The judgment of Hamilton C.J. in Primor plc v Stokes Kennedy Crowley  I.R. 459 sums up the elements that are necessary to enable the courts to dispose of motions of the present type. The important passage cited by the Chief Justice distills the essence of the extensive case-law summarised and reviewed in the preceding part of the judgment. The governing consideration is that first stated by Hamilton C.J., namely that "the courts have an inherent jurisdiction to control their own procedure and to dismiss a claim when the interests of justice require them to do so." It is always necessary for the defendant applicant to demonstrate, and he bears that burden, that the plaintiff has been guilty of inordinate and inexcusable delay. Subject to that, however, the court should aim at a global appreciation of the interests of justice and should balance all the considerations as they emerge from the conduct of and the interests of all the parties to the litigation. The separate considerations mentioned by Hamilton C.J. should not be treated as distinct cumulative tests but as related matters affecting the central decision as to what is just. In particular, as was said by O'Dalaigh C.J. In Dowd v Kerry County Council  I.R. 27 at p 41: "Litigation is a two party operation and the conduct of both parties should be looked at."
27. One of the authorities cited by Hamilton C.J. was O'Domhnaill v Merrick  I.R. 151, where Henchy J said:
"Whether delay should be treated as barring the prosecution of a claim must inevitably depend on the particular circumstances of a case. However, where as in this case, the delay has been inordinate and inexcusable, such delay is not likely to be overlooked unless there are countervailing circumstances, such as conduct akin to acquiescence on the part of the defendant, or the inability on the part of an infant plaintiff to control or terminate the delay of his or her agent." (emphasis added).
28. That statement of the law indicates that the author of delay which is found to be both inordinate and inexcusable will not be absolved of fault unless he can point to countervailing circumstances. If he can, the court may be able to treat him more favourably when it comes to assess the third consideration in the cited passage from the judgment of Hamilton C.J., namely whether "on the facts the balance of justice is in favour of or against the proceeding of the case." As I have already suggested, the respondents were unable to point to any disadvantage or disability affecting them. Nor was there any delay or acquiescence of the appellants, which might redress the balance of fault.
29. In such circumstances, when the courts comes to strike that "balance of justice" in application of the comprehensive list of considerations set out in the judgment of Hamilton C.J., it will need to find something weighty to cancel out the effects of the respondents' behaviour. It will attach weight to the character of the claim and to the character of the respondents. When considering any allegation of delay or acquiescence by the appellants, it will be careful to distinguish between any culpable delay in taking any step in the action and mere failure to apply to have the respondents' claim dismissed.
30. O'Dálaigh C.J. Said in Dowd v. Kerry County Council at p. 41:
"... in weighing the extent of one party's delay, the Court should not leave out of account the inactivity of the other party. The rules of court provide for actions being struck out for want of prosecution ... the adage about sleeping dogs may be wise, but it is not specifically conceived to advance the cause of justice. In some instances, it is acted upon by a defendant in the hope that he will 'get by' without having to face the peril of being decreed. Litigation is a two party operation and the conduct of both parties should be looked at."
31. In my view, the defendant should not be lightly blamed for delay which is the fault of the plaintiff. In order to be weighed in the balance against him, it would have to amount in the particular circumstances to something "akin to acquiescence" as indicated in the judgment of Henchy J cited above. The learned High Court judge stated that there had been no suggestion that the appellants had dragged their feet or that motions had to be brought to extract pleadings from them. He went on to express the view that it was "understandable" that the personal defendants "were content to let sleeping dogs lie rather than invite upon themselves litigation claiming damages which are now in excess of £2 million." His conclusion was that this matter had to be taken into account but that he "attached only little weight to it." This approach was, in my view, perfectly correct.
32. I agree with the Chief Justice's analysis of the specific prejudice advanced by the appellants in this case, arising from the death of Mr Brendan Devine. I would add that, I agree with the conclusion of the High Court judge that the fourth-named defendant/appellant, a corporate body, suffered prejudice by reason of the fact that, initially, its auditors issued a disclaimer in respect of its financial statements which became, following a change in the applicable auditing standards, a note of "fundamental uncertainty," all by reason of the delayed litigation. Furthermore, it has long been recognised that general prejudice arises from the natural remove of the time of trial from the contested events. The learned High Court judge accepted that the memories of witnesses as to the events of 1989 would be affected. Henchy J, in a further passage in O'Domhnaill v Merrick:
"While justice delayed may not always be justice denied, it usually means justice diminished. In a case such as this, it puts justice to the hazard to such an extent that it would be an abrogation of basic fairness to allow the case to proceed to trial. For a variety of reasons, a trial in 1985 of a claim for damages for personal injuries sustained in a road accident in 1961 would be apt to give an unjust or wrong result, in terms of the issue of liability or the issue of damages, or both. Consequently, in my opinion, the defendant, who has not in any material or substantial way contributed to the delay, should be freed from the palpable unfairness of such a trial."
33. Those remarks must, of course, be interpreted in the light of the case before the court. Each case must be judged on its own merits. In the present case, the dimming of memories must tend to favour the respondents. They rely on a written agreement. It is the appellants who need to rely on oral evidence to dispute its effect.
34. Finally, the courts will take into account, depending on the facts, the prejudice from what was described by Keane J, as he then was, in Southern Mineral Oil Ltd (in liquidation) v Cooney  3 I.R. 549 at 564, "suffered by particulars defendants in having the action hanging over their heads."
35. In my view, the learned High Court judge, while correctly identifying these aspects of the case, did not attach sufficient weight to them. For that reason, I agree with the Chief Justice that the appeal should be allowed and that the action should be dismissed.
ar AIBP & Ors -v- Montgomery & Ors